CEO BUSTED After Bribing Tax Auditor with Florida Trips and "$5k-a-Day Private Dances…

Find you someone who audits your taxes the way RCI Hospitality accountants audit their taxes… LOL jk 

Just like you can’t have peanut butter without jelly… you can’t have a publicly traded strip club operator running a long con on Uncle Sam with “Dance Dollars” and comped private dances without getting some form of criminality with it.

(Source: Giphy) 

Case in point: Five execs at RCI Hospitality, including CEO Eric Langan, were indicted yesterday for a tax fraud and bribery scheme so brazen it reads like the Wolf of Wall Street Part Deux. For instance, since 2010, RCI brass allegedly bribed a New York state tax auditor with 13 Florida “business trips” where he was gifted up to $5k per day for private dances at RCI-owned clubs, including the legendary Tootsie’s Cabaret in Miami. The guy wasn’t subtle either. After one jaunt in 2022, he texted RCI’s controller: “This was the best trip I had in Florida. The girls were very beautiful and nice…I hope we can have another trip before the summer.” Top-tier hospitality… I like it.

(Source: CNBC) 

But alas, it obviously worked. Over 14 years, RCI dodged more than $8M in NYC and state taxes, all tied to their “Dance Dollar” racket (customers swapping cash for funny money to redeem for private dances). By my rough math, they shelled out maybe six figures in bribes to erase eight figures in taxes. Bigly.

With that said, the crew just couldn't resist leaving a paper trail. In 2018, Langan texted his ops director: “I think I got the sales taxes in New York to 350 plus interest possibly. Tim [Winata] is discussing with the auditor tonight ;).” Imagine being dumb enough to negotiate a felony on SMS. And yet, it’s not even surprising even by a little bit. The cast of characters reads like the next Netflix docuseries hit: the CEO, CFO, controller, ops director, and a regional manager, plus the three NYC clubs (Rick’s, Vivid, Hoops) all got slapped with conspiracy, bribery, and tax fraud charges. One more name is under seal, which means the finale hasn’t even aired yet.

(Source: Giphy) 

The least surprising part of it all though is that RCI stock fell ~16% after hours, which feels light considering the AG dropped a 79-count indictment on a publicly traded strip club. Then again, maybe investors are used to management’s creative interpretation of “compliance.” As of right now though, RCI has clawed back some of its losses, sitting at -9% on the day… but the stain is sticky, and the stain ain’t coming off of this one. Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.