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When a New York newsstand owner faced off against a Texas strip club cowboy in Atlanta in 1993, the winner walked away with the Gold Club. The two men were former Texas banker and real estate speculator John D. Kirkendoll and Steven E. Kaplan, part-owner of Penn Books in Manhattan’s Penn Station and now the central figure in a federal racketeering trial in the U.S. District Court for the Northern District of Georgia. Kirkendoll opened his first nude dancing club, the Atlanta Gold Club, in 1987 with the backing of Texas investors. The pricey, flamboyant strip club was an immediate smash, and Kirkendoll soon began expanding the Gold Club franchise to other cities. By late 1993, however, a financially strapped Kirkendoll needed a well-heeled partner. That’s when Kaplan made his appearance, assuring him that his New York financial connections would end the club’s money problems, according to his statement in court records. But within a month of signing a partnership deal, the two men were fighting for control of the club. Both accused the other of deceit and breaking the law. The dispute led to a physical confrontation at the club after Kirkendoll enlisted two armed bouncers, announced he was rescinding the deal, and ejected Kaplan’s staff. The stand-off at the strip club door quickly spilled into the courts and prompted U.S. District Court Judge J. Owen Forrester to note that each side regarded the other as “crooks.” Forrester swiftly appointed a receiver to run the club for seven months until the dispute finally was resolved. When it ended, Kaplan walked away with the Gold Club. But a court settlement dictated he would pay $3.5 million for the club, far more than he originally offered. The following account has been drawn from federal court records associated with Kirkendoll’s suit and Kaplan’s countersuit. Remarks and allegations attributed to the men are taken from their affidavits filed in the lawsuits. HOW KAPLAN DID IT Here is how Steven Kaplan came to own Atlanta’s most celebrated strip club: Kirkendoll was 28 when he built Atlanta’s Gold Club with Texas investment money. A 1979 graduate of Oklahoma State University with a bachelor’s degree in finance, Kirkendoll worked for six years in the commercial lending department of the First National Bank of Dallas. In 1985, Kirkendoll joined a private investment banking firm specializing in venture capital and leveraged buyouts. He said he counted among his significant accomplishments the leveraged buy-outs of two radio stations and financing of a day care center and a car wash. In 1986, a strip club known as the Million Dollar Saloon was reaping vast profits for its investors in Dallas. “It was suggested to me that I consider building and operating an adult entertainment nightclub in Atlanta,” Kirkendoll said. MONEY PROBLEMS By 1993, Kirkendoll had built Gold Clubs in Atlanta, Miami Beach, Fla., New York, Baton Rouge, La., Dallas and Houston with cash he raised from his Texas partners. But he was in financial trouble. The Miami Beach, Dallas and Houston clubs had closed or were in bankruptcy. In Miami Beach, he had defaulted on his mortgage. He had been sued for failing to pay the rent on the two Gold Clubs in Texas. Creditors had filed at least 18 suits against Kirkendoll or the corporations that operated the Gold Clubs. They alleged that Kirkendoll had failed to pay more than $1.8 million to lawyers, accountants, investors, advertising firms, landlords and construction companies that had built or renovated his clubs in Miami Beach, Dallas, Houston and Atlanta. In Atlanta, the Gold Club owed $125,000 in federal and state payroll and withholding taxes. There also was an outstanding jury verdict of $335,700 awarded to a patron who was beaten senseless by a Gold Club bouncer at a 1990 bachelor party. The mounting debts apparently didn’t stop Kirkendoll from taking on new obligations. He was opening new clubs and had contracted to remodel the Atlanta Gold Club, which, after six years in operation, was showing signs of wear. It was during the assault trial that Kirkendoll said an employee of Kaplan’s first approached him. Kaplan would say later that Kirkendoll initiated the meeting. But clearly, Kirkendoll needed Kaplan’s money, and Kaplan told him he wanted an Atlanta club. The two decided to work together. According to Kirkendoll, Kaplan called him within a few days and offered to provide 100 percent of the financing for a new Gold Club in Chicago that Kirkendoll wanted to build “and be my money partner in all deals going forward.” NEW YORK MEETING The next day, Kirkendoll flew to New York City where he met Kaplan, Kaplan’s brother, Ronnie, and one of Kaplan’s managers. They toured the Kaplan brothers’ Penn Books newsstand and pizza parlor. “They explained to me that the bookstore business had been operating for years and years, had always run quite profitably, and that the pizza restaurant, although newly opened, was operating at a profit,” Kirkendoll said. The group then traveled to Boca Raton, Fla., where Kirkendoll toured Club Boca, a nightclub that Kaplan had opened in 1991. “Kaplan told me on several occasions that I would never need to raise money from private investors again, that my days of selling individual limited partnership units at $30,000 each were over, and that from here on out I would never have another money worry in my life,” Kirkendoll said. Kirkendoll said Kaplan claimed to be finalizing a $1 million line of credit “from some New York-based financial institution.” FATHER STARTED BUSINESS Kaplan, according to his criminal defense attorney, Steven H. Sadow, “is a legitimate businessman” who worked hard for a living. His father, “Big George” Kaplan, had started the New York newsstand that was the family’s livelihood in one of the busiest train stations in the country. Then Steven Kaplan had parlayed the family’s profits into two New York nightclubs and the one in Boca Raton. His entrance into the nightclub business in New York, had, in fact, made him a victim as opposed to a partner of New York mobsters who had muscled him for protection money and a percentage of his profits, Sadow has said. But he was apparently successful, and friends describe him as “a self-made millionaire” who would carry as much as $40,000 in cash. By the time Kaplan took over the Atlanta Gold Club, he was rich, according to a former club manager, Thomas Cicignano, who recently testified for government prosecutors against Kaplan in Atlanta. Kaplan and Kirkendoll quickly agreed that Kaplan would provide all the funding for Gold Club renovation in Atlanta and new clubs elsewhere in return for a half-interest in the operation. Kaplan and his managers would run the clubs. Kirkendoll would spend his time and Kaplan’s money expanding the Gold Club franchise in other markets. Originally, according to Kirkendoll, Kaplan was to invest $850,000 in Gold Club franchises. He would give Kirkendoll another $250,000 to cover the Atlanta Gold Club’s debts. Kirkendoll and his Texas investors would receive another $275,000. And he would pay $400,000 to remodel the Atlanta Gold Club. Total price: $1.77 million. DEAL CHANGES RAPIDLY But within weeks, Kaplan had changed the deal, slashing the total offer to $625,000, according to Kirkendoll. Nevertheless, Kirkendoll traveled to Massapequa, N.Y., on Christmas Eve 1993 to complete it. He left with a check for $25,000 for himself and Kaplan’s promise to pay $100,000 that the club owed in overdue payroll taxes. The rest of the deal was murky. Kaplan also agreed to pay Kirkendoll an additional $500,000 in monthly installments. But there was a catch. The payments were to be made only “if and as available” from Gold Club profits. According to court records, Kaplan never paid the $100,000 due Jan. 10, 1994. And three weeks later, Kirkendoll had wrested control of the club from Kaplan and attempted to rescind the deal. Months later, Atlanta attorney Kenneth L. Millwood, on behalf of Kirkendoll’s investors, TA Texas Partners, described the Gold Club sale as “not the same transaction to which the limited partners gave their consent.” Once they had a deal, Kaplan moved quickly to imprint his style on the Gold Club, Kirkendoll said. His first act was to fire the old management staff and bring in his own people. “He told me to trust him, and that he knew what he was doing with respect to management changes,” Kirkendoll said. CHANGES AT THE CLUB Kaplan’s managers had their own way of doing things, Kirkendoll said. They allowed some dancers and other employees to work without city permits. Once, when city inspectors arrived to check employee permits, “some of Kaplan’s men ran out the door and some others acted like customers of the club,” according to an affidavit signed by Kirkendoll’s brother, Alan, who handled some of the club’s accounting duties. Kaplan also dropped a Gold Club policy barring managers from dating the dancers, Kirkendoll said, and some managers began dating their employees. Kaplan fired the contractors who were remodeling the club and hired his own, whom he paid each day in cash from club receipts. The new workmen remodeled the club without obtaining any permits, Kirkendoll said. Accounting practices also changed. Kaplan eliminated daily bank deposits and stopped making daily accounting reports that included the number of customers, alcohol sales, and total revenue, according to Alan Kirkendoll. Charles Patrick Rolling, who had managed the club for Kirkendoll, said he watched the new managers dump the day’s cash receipts on a table in an office, count it, and then remove a portion before taking the remaining money to the bank. Kirkendoll said he was most surprised by Kaplan’s handling of liquor purchases. “The plan that Kaplan and Kaplan’s club manager, Lyle Goodman, laid out was a plan that they had in existence in their Boca Raton night club for the prior couple of years, they said,” according to Kirkendoll. “This plan called for illegal deliveries of bootleg liquor to be made to the club on a weekly basis. Since these deliveries would not be recorded by any wholesaler, the city and state alcoholic agencies would have no record of this inventory being in the club. “As such, we would be able to sell this inventory and take all the profit from this inventory, and not report income tax, state sales tax or alcoholic beverage tax on it.” When Kirkendoll complained that selling the bootleg liquor could cause the club to lose its liquor license, he said Kaplan’s accountant called him “a good little Boy Scout.” Kaplan also had his own payroll system, Kirkendoll said, with most employees receiving cash instead of checks. Rolling said Kaplan told him his $1,000 weekly salary was too high. In the future, he said, he would get a $300 weekly check, $300 in cash from club receipts and $150 a week in cash from Kaplan. Together, the money equaled Rolling’s former after-tax weekly take-home pay. THE DEAL WITH DELTA There was also a deal with Delta Air Lines to fly “for almost nothing,” Kirkendoll said. The scheme involved buying advance tickets at deep discounts and then altering them for other flights. Five years later, federal authorities indicted two Delta employees, along with Kaplan, and charged them with defrauding the airline. The two employees, Aaron Maker and Lawrence Wooten, allegedly received special treatment at the Gold Club in return for helping to alter the tickets. They are still awaiting trial. The allegations against Kaplan are part of the racketeering complaint in the current trial. In his own statements in affidavits filed in court records, Kaplan said he was the victim of Kirkendoll’s deceit. He calls Kirkendoll a “financial con man and scam artist” who left dozens of suits and bankruptcies as well as a “trail of unpaid creditors and investors.” Kaplan said he brought in his own managers because Kirkendoll had routinely skimmed club cash receipts, including depositing club revenues directly into his personal bank account. Kaplan said Kirkendoll didn’t pay withholding taxes or Georgia income tax. Revenue from the club’s parking lot fees and cigarette sales didn’t appear on the books. He called Kirkendoll’s brother, Alan, a “womanizer and abusive personality” who was disliked by employees and systematically skimmed tens of thousands of dollars from the club. “I wish to emphasize that I am a legitimate businessman and experienced nightclub operator. I follow the law and do not resort to armed ‘goon squads’ to resolve business disputes,” said Kaplan. “I am yet another victim of Kirkendoll, who has left a trail of deceit and dishonesty from Georgia to Florida to Texas, and perhaps elsewhere.” On Jan. 27, 1994, the two men’s brief partnership reached a crisis when Kirkendoll ousted Kaplan from the Gold Club. Kirkendoll’s lawyers simultaneously had secured an emergency temporary restraining order from a Texas state court judge that barred Kaplan from the club. The restraining order, Kirkendoll’s attorneys wrote in court papers, “prevented a potential bloody physical conflict over control of the premises.” Kaplan countersued in federal court in Atlanta. In an effort to pull the club away from Kirkendoll, Kaplan and his lawyers suggested that a receiver be appointed to manage the club “under the strictest supervision” and put a halt to Kirkendoll’s “ongoing looting of the business.” On Feb. 17, 1994, Judge Forrester did just that. After sending federal marshals to the Gold Club to secure it, he appointed Atlanta attorney Andrew J. Ekonomou to take over the club and all its assets. Three weeks later, Kirkendoll and Kaplan quietly settled out of court. They agreed to leave the club in receivership until the deal was formally closed. That agreement made Kaplan the exclusive owner of the Atlanta Gold Club, its trademark, its liquor license and the land lease. Kirkendoll kept the Chicago Gold Club and the right to use the name elsewhere. This time, Kaplan agreed to pay Kirkendoll $3.5 million to seal the deal. Both men remain in the strip club business and continue to use the Gold Club name in different cities. Kirkendoll has just returned from Paris, and federal authorities have not said whether he’s scheduled to come to Atlanta and join the long list of former managers who have testified about alleged illegal activities they witnessed at the Gold Club.

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