RCI Hospitality Executives Indicted in New York State Tax Fraud and Bribery Case
Five senior executives of RCI Hospitality Holdings, a publicly traded operator of strip clubs, have been indicted by New York Attorney General Letitia James for their alleged involvement in a multi-million-dollar criminal tax fraud and bribery scheme. The charges include conspiracy, bribery, and criminal tax fraud, stemming from an extensive effort to evade New York state and city taxes.
Details of the Alleged Bribery Scheme
The indictment alleges that RCI executives bribed a New York State Department of Taxation and Finance auditor and his supervisor with 13 complimentary multi-day trips to Florida. During these trips, the auditor reportedly received up to $5,000 per day for private dances at RCI-owned strip clubs, including the well-known Tootsie’s Cabaret in Miami.
Additionally, the company’s controller and accountant, Timothy Winata, is accused of traveling from Texas to Manhattan at least 10 times since 2010 to deliver further illegal bribes at RCI’s Manhattan clubs: Rick’s Cabaret, Vivid Cabaret, and Hoops Cabaret and Sports Bar. These clubs have also been indicted.
Impact on Tax Payments and Corporate Oversight
The Attorney General’s office stated that the bribery facilitated favorable treatment during six separate sales tax audits, allowing RCI to avoid paying more than $8 million in taxes between 2010 and 2024. The taxes in question relate to sales of “Dance Dollars,” a currency customers purchase to redeem private dances at RCI venues.
CEO Eric Langan is specifically accused of overseeing negotiations with the auditor and approving the payment of bribes. Text messages cited in the indictment reveal discussions between Langan and other executives about reducing the company’s tax liabilities.
Executives Charged and Company Response
Alongside Langan and Winata, Chief Financial Officer Bradley Chhay, Director of Operations Ahmed Anakar, and regional manager Shaun Kevlin have been charged. A sixth individual has also been indicted but will be arraigned later, at which time the indictment will be unsealed.
Following the announcement, RCI’s stock price dropped nearly 17%. Attorney General James condemned the executives, stating they “shamelessly used their strip clubs to bribe their way out of paying millions of dollars in taxes.” She affirmed her commitment to fighting corruption and ensuring tax compliance.
In response, RCI’s legal counsel, Daniel Horwitz, denied the allegations, emphasizing that the individuals and clubs are presumed innocent and pledging to defend against what they describe as “overreaching charges.” Horwitz noted that the company had previously disclosed the Attorney General’s investigation in SEC filings and maintains a policy of paying all legitimate taxes.
FinOracleAI — Market View
The indictment of RCI Hospitality’s top executives on charges of bribery and criminal tax fraud is likely to exert negative pressure on the company’s stock in the near term, as evidenced by the nearly 17% share price decline following the announcement. The reputational damage, potential legal penalties, and operational disruptions pose significant risks. Investors should monitor developments related to the legal proceedings, any potential regulatory sanctions, and the company’s ability to maintain operations amid heightened scrutiny.
Impact: negative
