Shares of RCI Hospitality Holdings Inc Rick dropped on Tuesday following an indictment of five executives associated with three Manhattan strip clubs. Here’s what investors should keep in mind:
Catch the details on Rickstock here.
What I Know: On Tuesday, New York Attorney General Leticia James announced serious accusations involving extensive tax fraud and bribery schemes against the company.
According to prosecutors, from 2010 to 2024, RCI executives allegedly funneled money to New York state tax auditors to dodge over $8 million in sales taxes. The bribes reportedly included cash, luxury trips, and entertainment at company-owned venues. Additionally, the company supposedly neglected to pay sales tax on its internal currency known as “Dance Dollar.”
Among those charged are CEO Eric Langan and CFO Bradley Chai. Charges against them include conspiracy, bribery, and criminal tax fraud. Reports indicate that Langan was directly involved in discussions with the auditor and approved payments linked to the bribery.
What Else: The investigation revealed that the auditor received at least 13 complimentary trips to Florida, where he was compensated up to $5,000 daily for private dances at RCI venues.
In total, five executives and three clubs—Rick’s Cabaret, Vivid Cabaret, and Hoops Cabaret and Sports Bar—were implicated.
A recent press release from the New York State Attorney General’s Office emphasized that the charges are merely accusations. The defendants hold the presumption of innocence unless proven otherwise in court.
Rick Price Action: Data from Benzinga Pro shows that Rick’s shares closed down 15.94% on Tuesday, settling at $28.79. The stock’s highest value over the past year was $61.66, while its lowest was $28.00.
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