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Sex, drugs, and city council

Dawn Rizos, owner of the now-defunct Caligula XXI, admits the club had its license yanked in 1992 because employees were caught selling cocaine.
Mark Graham

The $7,700 bribe paid to former Councilman Al Lipscomb wasn't about traffic cops hassling people at a bar, the way the city council and police chief make it sound. The man who paid Lipscomb was in trouble because his employees kept getting arrested for selling cocaine.

Pretty big difference.

Hey -- shouldn't we have known about the cocaine? I came across that information only because I asked to go through the exhibits the U.S. attorney had prepared for Lipscomb's trial last month in Amarillo, where he was convicted of taking bribes from a taxi company.

There it was, packaged up and pretty, ready to roll: Dallas Police Department arrest records, city of Dallas license review board procedures, all straight from city records and all of it evidence of a drug link to the Lipscomb bribe scandal.

You hear anybody from City Hall mention this? Was there a press conference? Did I miss something? All I heard about was the mayor and Southwest Airlines CEO Herb Kelleher and various clergy going up to Amarillo to say Al Lipscomb was a poor puppy dog who'd lost his way.

I'll ask it again. What about the cocaine?

When Lipscomb's taxi-bribe trial concluded, U.S. Attorney Paul Coggins revealed that Nick Rizos, owner of a defunct sex club called Caligula XXI on Northwest Highway, paid Lipscomb $7,700 in 1992. (Rizos has been given immunity by the feds in exchange for his cooperation.)

Coggins said the Rizos bribe evidence wasn't introduced at the Amarillo trial because it wasn't needed. Assistant U.S. Attorney Mike Uhl knew before the trial was over that he already had Lipscomb nailed on the taxi bribes. But a source close to the federal investigation, speaking on the condition that he not be identified, told me the information I saw in the box of government exhibits was evidence that would have been presented to the jury in explaining the $7,700 payment.

According to the exhibits, several employees of Caligula, which burned down in November and is the subject of an ongoing arson investigation, were arrested by Dallas vice officers in an eight-month period from late 1991 to the summer of 1992 for selling cocaine. The federal files contain specific arrest information for three employees whom police claimed to have observed selling drugs at Caligula. One of those arrested was charged in two separate cocaine incidents in a period of a few months.

The drug-arrest records were presented to a city board when the "sexually oriented business" license for Caligula was suspended for 15 days in May 1992. Rizos and his wife, Dawn Rizos, went to City Hall to try to get the suspension lifted.

Lorlee Bartos was chairwoman of the license appeal board that heard the case. "My recollection is that their place was one of the worst," Bartos told me last week. "They were doing lap dances, and they had drug sales going on. I'm not a prude. I think that part of society is always going to be there, but you need to regulate it."

Bartos remembers from her tenure on the license appeal board that some sex clubs in Dallas did obey the law and run their shops according to it. "I voted every time in favor of the Million Dollar Saloon, because every other business around them on Greenville Avenue always came in and said they were a great neighbor."

That's not her memory of Caligula, nor is it her memory of the Rizos family. "They would play these elaborate shell games, ownership flips within the family, so that they could say, 'Oh, no, that's not me that did that, that's that other guy who's no longer here.' It's like what every slumlord in Dallas does to stay a jump ahead of the law."

In fact, when I spoke to Dawn Rizos (her husband is out of the country), she told me that she did remember the drug arrests, but that all of it had to do with a bad partner, a relative who was involved in the business early on. "We had to split with him because he was just irresponsible," she told me on the phone. "It wasn't all cocaine. I think they were selling methamphetamines too. The waitresses were selling. We had a bunch of TABC [Texas Alcoholic Beverage Commission] violations."

The methamphetamines were news to me. I was taking notes pretty fast.

She told me that the bad partner was tossed out in 1989 and that after he was gone she personally instituted a system of locker searches and drug dogs to make sure no more bad people could come to work at her club.

We talked about the fact that the cocaine arrests and the 15-day license suspension happened in 1991 and 1992, two years after the bad partner had been sent packing and presumably after the locker searches and the drug dogs had been brought in. She said that all of the gentlemen's dry-hump clubs in Dallas were getting threatened with license suspensions in 1992. Her license was yanked, she said, because she had a bad lawyer. She got rid of that bad lawyer. Sent him packing too.

 

She said she used the first half of the 15-day suspension to replace the roof on the club, and then just opened back up during the second week and operated without the special sex-club license.

"I didn't let the girls dance. They just played Monopoly and Parcheesi with the customers instead," she told me.

I couldn't make this stuff up.

Dawn Rizos insisted there was no connection between drug arrests at Caligula and the $7,700 payment. "No, that was a long time before," she said, referring to the arrests. I asked her what the payment was for. She said, "How should I know? It was a gift."

A law enforcement official who spoke to me on background said The Dallas Morning News had inaccurately reported that the money paid to then-Councilman Lipscomb by Nick Rizos was not tied to the club's attempts to hang on to its "sexually oriented business" license. He insisted that the two things -- the license and the bribe -- were directly linked.

In late 1992 or early 1993, Lipscomb arranged a meeting between Rizos and Lt. John Sullivan of the Central Patrol Division. According to Rizos' lawyer, Bill Roberts, two things happened after the meeting: 1. Enforcement at Caligula fell off, and 2. Rizos paid Lipscomb the money.

Sullivan said in an official memo two weeks ago that he did not remember who in the police department had directed him to meet with Rizos. Sullivan did not return my call asking for comment on the cocaine connection at Caligula.

When the sex-club bribe came to light after Lipscomb's conviction for the taxi bribes, the version put forth both by members of the council and by police Chief Terrell Bolton was that it all had to do with traffic cops coming on Rizos' parking lot and hassling his patrons.

Bolton said, "In that particular scenario, I am not so sure the patrol response was the appropriate response anyway."

The Morning News has been reporting it the same way. It told its readers Rizos was upset because "officers were making almost daily checks of vehicles parked at the club."

What about the cocaine? The methamphetamines? The waitresses selling? The "bunch of" TABC violations?

Treating it the other way -- as if the cops were picking on some rowdy fraternity boys -- is part of the culture on this issue downtown. They make it look like a bunch of anti-sex bluenoses in the neighborhood had talked the police into doing some kind of penny-ante harassment against the customers, and Rizos was just trying to get them to cut him a break.

And then John Loza, chairman of the council's public safety committee, said, "The city is not going to get anywhere by trying to delve into something that happened eight years ago."

Why not? Is that remotely the reaction you'd want to hear from your elected officials downtown?

Lawyers for Lipscomb have pointed out that the issue was never tried in court, and they deny that Lipscomb accepted an illegal contribution from Rizos. I tried several times to reach Lipscomb through Scottie Allen, his lawyer and spokesman, but Allen did not return my calls.

Bill Roberts, lawyer for Nick and Dawn Rizos, told me that my phone call to him was the first time he'd ever heard anyone mention drug activities in connection with the Rizoses. Dawn Rizos says there has never been a drug arrest at one of her establishments since the 1992 payments were made to Lipscomb.

"No, never," she said. "I dare you to find them. Call the city. Call City Hall. They all know us."

I bet they do.

This whole scenario takes place in the context of a drawn-out DEA investigation of drug dealing by Dallas sex-club owners that apparently never went anywhere.

It first came to light in 1996 when a Dallas police officer was arrested for taking out a contract on the life of Dallas Cowboys football player Michael Irvin. The story, as told by Dallas police officials and reported in the News at the time, was that Dallas cop Johnnie Hernandez and Irvin were mad at each other over a topless sweetheart both of them had dated.

The only journalist who wrote a story telling people in plain language what the Johnnie Hernandez deal really was all about was veteran investigative reporter Hugh Aynesworth, who lives here, reports for The Washington Times, and writes books. Readers in Washington D.C., but not in Dallas, found out that Hernandez was part of a ring of Dallas police officers who were deeply involved in the drug trade.

 

Hernandez was no mere bodyguard, according to federal documents cited by Aynesworth. He even helped negotiate a drug deal in the presence of an undercover DEA agent.

(There has never been any suggestion, in either official statements or published accounts, that Nick and Dawn Rizos in particular were a focus of this probe. The probe was always characterized as being aimed at "owners" generally.)

Apparently, the Hernandez arrest derailed the DEA sex-club probe. Francis E. Seib, the current DEA special agent in charge in Dallas, told me last week that the investigation was never renewed.

But in light of all the publicity surrounding the Hernandez-Irvin affair, the current members of the Dallas City Council can't claim they never had an inkling that sex clubs and sex-club corruption might be linked to the drug trade. In this context, isn't it a little frightening that the first reaction of city officials, including members of the council, was to try to damp down interest in the Rizos affair when it came to light? Only two city council members, Donna Blumer and Laura Miller, seem even to be alarmed.

And now we have to wonder why. Are there more on the council who take cash bribes from sex-club owners? Why would Al Lipscomb be the Lone Ranger?


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