By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
The suit also states that former owner Gentry, before his ouster, had hired a consultant to audit Rick's liquor sales; he discovered that more than $1 million was missing from Rick's Cabaret.
By 1988, Fontenot and Watters had turned against Izzedin. During Rick's early days, Izzedin had spent little time at the topless club. When he was there, he was quiet and unobtrusive. But as time wore on--according to his partners' complaints, stated in court records--Izzedin became a party animal, aggressively pursuing dancers and waitresses.
Fontenot and Watters recounted telling Izzedin that his "behavior in picking up and dating numerous of our employees and dancers simultaneously was giving us significant cause for alarm."
The problems reached a new low in January 1988, when a young man came to the club complaining that the "owner of Rick's" had picked up his 16-year-old girlfriend in a black Mercedes and driven her to the owner's house for dinner.
The "owner" was said to be Izzedin.
Watters and Fontenot wrote a letter to Salah the next day, complaining about his conduct. "Apparently [the girl] wears braces and looks even younger than 16 years," the men wrote. "This behavior on your part is totally unacceptable to both of us. People who own and work in a highly visible and successful topless nightclub must maintain standards of behavior that put them above attack for illegal and immoral sexual behavior."
Izzedin responded six days later with a handscrawled, personally delivered note. "I sincerely want to put an end to all the furor and rumors," he wrote his partners. "In all honesty, during the past year, I might have dated a girl too many from the club and women like to talk. However, I never realized the magnitude of the talk (my fault, nobody is perfect). Especially for a man of my position in this city."
Izzedin denied taking the teenager to dinner, however, maintaining that he'd only given her a ride home.
The accusations of sordid behavior only got worse, with Fontenot and Watters later charging, in a 1991 lawsuit, that Izzedin had pressured female employees into having sex and had provided narcotics and promoted prostitution at the club.
And around the same time Fontenot and Watters complained about the 16-year-old, police arrested several of Rick's dancers for prostitution after they'd propositioned undercover Texas Alcoholic Beverage Commission agents inside the club. Rick's was also cited several times for lewdness and drunkenness among its employees, further damaging the club's image. Male agents wrote lengthy reports about dancers fondling and rubbing the agents' genitals, and described how some dancers and waitresses had offered them sexual favors for a fee.
Later that year, Fontenot and Watters decided to force Izzedin as far away as possible from the club's daily affairs--voting themselves president, vice-president, secretary, and treasurer of the corporation that controlled Rick's Cabaret. The move left Izzedin as the only owner who wasn't a club officer as well.
Two weeks later, Izzedin resigned from the corporation's board of directors, saying he wasn't comfortable with the way Fontenot and Watters ran the topless club.
When he left, Izzedin took with him some damaging information about the way Rick's remaining owners had handled the club's receipts. He used it to strike back at his former partners.
In a letter to Fontenot and Watters, included as an exhibit in Young's lawsuit, Izzedin admitted stealing unreported revenues from Rick's and asserted that they had, too.
"I have amended my 1986 federal income tax return to reflect income I received that I did not previously report," he wrote. He demanded that Fontenot and Watters also declare unreported income for 1986 and 1987. If his ex-partners did not respond within 16 days, he warned, he would send a copy of the letter to the IRS.
Izzedin instructed his accountant, Gene B. Reynolds, to report the pilfered money, according to Reynolds' testimony for Young's suit. Izzedin also told the accountant to change IRS corporate income tax statements in which he'd reported stock transfers that "had not actually taken place," Reynolds said.
Izzedin also switched positions in the Vernon Young suit, joining the one-time investor in asking the courts to take control of Rick's by appointing a trustee to oversee operations. The trustee, appointed to preserve the disappearing assets of the still-profitable club, would take over in March 1989.
Fontenot and Watters would later find out that Izzedin was trying to open a club called Rick's Mansion at the Composite Drive location in Dallas. The men sought an injunction against Izzedin from using Rick's trademark. They also moved quickly to get a liquor license for a fictitious bar named "1,001 Arabian Nightmares"--to be located virtually next door.
The court ruled that Fontenot and Watters acted in bad faith when they acquired the liquor license. The men eventually hammered out a settlement with Izzedin; the trustee would turn over Rick's in Houston to Fontenot and Watters (Fontenot would eventually withdraw from Rick's altogether), and Izzedin would get the Dallas property.
He named it Cabaret Royale.
The first few years of Cabaret Royale were heady and seductive.
Izzedin sent agents into other Dallas topless clubs to recruit the prettiest, classiest dancers and waitresses.