Stripping for Lower Taxes? A Scandal Concerning the US Tax Office and the Threat of 25 Years in Prison

Shares of the American company RCI Hospitality Holdings recorded Wall Street fell by more than 10 percent after the accusation came to light New York State Attorney General, who accuses the company's managers of, among other things, they paid the tax official with stripper services for favorable decisions tax. The defendants, who face up to 25 years in prison, deny the charges.

The scandal concerns RCI Hospitality Holdings, the owner of the chain strip clubs in the US, whose top managers were accused of long-term tax fraud and bribery of a tax official from New York In a statement issued by the company and the accused employees, they deny allegations. The scandal has already had an impact on the stock price of the listed company. Nasdaq in New York.

Although the rate has been in a clear downward trend for a long time and this year it has given back about 40 percent by Wednesday (in 2023 it fell by 23.9 percent, the year later by 13 percent), in response to allegations from law enforcement agencies, the price fell even further to over 55%, giving back 10.4% in just one session.

According to the indictment, RCI managers had bribe an official from the New York State Department of Taxation and Finance by offering him numerous free trips to strip clubs, hotels, meals, and also private dances, which he allegedly paid for with vouchers worth up to $5,000, he received to avoid paying over $1,000 in the years 2010–2024. $8 million in taxes owed from the sale of so-called "Dance Dollars" — internal currency used in clubs to rent private dances.

RCI Hospitality Holdings is behind the popular in the United States Rick's Cabaret and Bombshells club chains. The former is the flagship and the company's historic brand, founded in 1983 in Houston as a pioneer the concept of elegant clubs for men, combining performances by beautiful topless dancers with high-quality restaurant services. It has gained a reputation and It is known, among other things, as a meeting place for celebrities and models. In 2007, the company purchased Tootsie's Cabaret in Miami, considered the largest strip club in the world. A US tax official allegedly used the vouchers there.

Bombshells, on the other hand, is a brand of restaurants and sports bars launched by RCI in 2015, which aimed to diversify company revenues by entering the restaurant and sports market. This concept combines the atmosphere of a sports bar with food and entertainment, expanding offerings beyond just strip clubs. RCI boasts that it operates a total of 69 clubs in 13 states.

The indictment names the president and CEO. RCI Eric Langan, Chief Financial Officer Bradley Chhay, Chief Operating Officer Ahmed Anakar, as well as the club's accountants and managers. In the event of a conviction of the president, director operational and accounting officer, a sentence of up to 25 years in prison for fraud is possible The remaining defendants face up to 15 years in prison for corruption.

"RCI directors shamelessly exploited their clubs for striptease to bribe people and avoid paying millions of dollars in taxes" – said prosecutor Letitia James in her statement. The indictment revealed the contents of a text message the tax auditor sent to an RCI accountant with whom he went clubbing, which allegedly involved bribery. “This was the best trip I ever had in Florida. The girls were very beautiful and nice… I hope we can go again before summer,” the text reads.

For years, top executives of @RCIHHinc bribed a former New York tax auditor with trips to their strip clubs, meals at restaurants, and thousands of dollars in cash to avoid paying over $8 million in taxes.

Today we're charging them with dozens of crimes for their illegal scheme. pic.twitter.com/AE2HanUVf9