Character matters. It's a state law. So what about owners of strip club with violent past?
Update: The Indiana Alcohol & Tobacco Commission voted Tuesday to effectively shut down three bars with lengthy histories of shootings, assaults and other problems.
As violence went largely unchecked at Club Onyx, a south side strip club that drew as many as 100,000 visitors a year, a group of secretive out-of-state owners quietly raked in the cash.
One of them is a former political consultant accused of embezzling hundreds of thousands of dollars while working for a California casino in the 1990s. He was convicted of tax evasion and forgery, but later had his record expunged.
Another is a 60-year-old woman in rural Illinois with seemingly no experience in the adult entertainment industry.
Bad bars: Indianapolis strip club closes after police raid
Her son, however, is an executive with one of the nation's largest strip club chains. He was accused of trying to hide his assets after being hit with a $7 million court judgment for defrauding a former employer. He denies those accusations and has never been charged criminally.
Then there is RCI Hospitality Holdings, a publicly traded adult entertainment company that has contributed to the campaigns of top Indiana Senate leaders. Its lobbyist claims RCI has nothing to do with Club Onyx in Indianapolis, even though it owns the Onyx brand and listed the Indianapolis club as "licensed location" until IndyStar began making inquiries.
Even the club's hired attorney seemed confused about who's calling the shots.
“I'm still trying to sort out the ownership of that as well,” said Mark Webb, an influential Statehouse lobbyist and former ATC official who began representing the club several weeks ago.
Read IndyStar's investigation: 49 killed, 154 shot or stabbed: How Indiana law protects bad bars
The club closed last month after a police raid that led to the arrest of several workers on drug, alcohol, gun and prostitution charges. Now, the future of its liquor license is uncertain. The backgrounds of its owners is raising new questions about whether they meet the state's licensing requirements for a "high and fine reputation" and "good moral character."
The Indiana Alcohol & Tobacco Commission is scheduled to decide Tuesday whether to uphold a Marion County board's recommendation to deny the club's license renewal.
The club has come under scrutiny because of rampant violence and other problems. Police have connected at least six shootings to the club since 2021. The gunfire left one person dead and five wounded. At least 10 other people reported being assaulted, sometimes by the club's security or employees.
Despite the problems, the club prospered handsomely. One of its owners, who lives in a $2 million home on a private golf course in Tennessee, said the club drew more than 100,000 patrons annually. Another representative for the club valued it at $7 million.
Police and local alcohol board members say the lack of clear leadership has contributed to the mayhem. A tangle of at least five limited liability companies and three trusts comprise the club's ownership. Public information for those entities is limited, making it impossible to identify all of the parties involved. The confusion also has made it difficult to determine who to hold accountable.
But IndyStar's ongoing investigation into violence-plagued bars was able to trace details about the ownership — and some of the people behind those obscure groups. The new revelations came from Alcohol & Tobacco Commission documents obtained through a public records request, as well as state and federal court records, campaign finance reports and other sources.
Jerry Westlund: From indicted casino consultant to strip club mogul
Charles G. “Jerry” Westlund Jr. acquired what had been the Classy Chassy strip club at 4444 S. Harding Street in 2020.
Westlund is a former political consultant who was indicted in 1997. He was accused of embezzling $380,000 from a Southern California casino and its campaign to fend off ballot measures that would have allowed rival casinos.
Authorities claimed he used some of the casino’s campaign cash to buy low-rent apartment houses in Long Beach and Compton, according to a Los Angeles Times article.
Club Onyx Indianapolis: 5 things to know about the troubled strip club facing loss of its alcohol permit
A Los Angeles jury found Westlund guilty on six counts of evading state income tax and two counts of forgery, but acquitted him of embezzlement charges. He was ordered to pay more than $240,000 in back taxes, interest and penalties, California tax officials told the Times.
Westlund later had the convictions expunged.
After consulting casinos, he turned to strip clubs. As of 2021, he owned or partially owned 34 clubs across the country, he said in an interview with the Professional Adult Nightclub DJ Association.
In Indiana, he owns at least five clubs including: The Pony near Indianapolis Motor Speedway; Jiggles and Jaguars on Pendleton Pike; Club Onyx on the southside; and Ponytails in Evansville. In the summer of 2018, Westlund brought Stormy Daniels to Indianapolis for two shows at The Pony.
He lives in an 8,000 square-foot house on a prestigious golf course called The Governor’s Club in Brentwood, Tenn., a suburb of Nashville, according to paperwork filed with the Indiana Alcohol & Tobacco Commission. The home was briefly listed for $2.9 million in 2021.
Records show the ATC knew about Westlund’s criminal history. He and his attorney at the time, former ATC Chairman Bart Herriman, disclosed the convictions on Westlund’s liquor license application, even though it wasn’t required.
IndyStar reviewed the club’s liquor license filings and a recording of Westlund’s Aug. 3, 2020, appearance before the Alcoholic Beverage Board of Marion County. There is no indication that the ATC or local board members questioned him about the past conviction.
Almost as soon as his license was approved, Westlund transferred half of his ownership interest to another company. He alerted the ATC, but it's unclear what scrutiny the agency gave to the new owners.
ATC General Counsel Ashley Merritt did not answer specific questions about Club Onyx, but said ownership changes are "reviewed by Commission staff." Any new owners must comply with the state's “high and fine” reputation requirement, she said.
Westlund did not return phone messages from IndyStar.
Ryan Carlson: 'Owner's representative' accused of fraud, hiding assets
On paper, Westlund’s co-owner is an obscure limited liability company incorporated in Wyoming that appears to be controlled by Janet Carlson. The 60-year-old woman lives in a modest home in a neighborhood surrounded by farms in the small village of Viola, Illinois. She has no other known connections to the adult entertainment world.
But she's not the one who showed up at the Indianapolis City-County Building to defend the club’s liquor license at a Marion County alcohol board hearing earlier this month. Instead, it was her son, Ryan D. Carlson, chief executive officer for Deja Vu Services, one of the nation’s largest strip club owners.
Carlson, who arrived at the meeting in an open-collar shiny red shirt with a gold chain around his neck and a large ring on his pinky finger, has a controversial history in the industry, court records show.
The 31-year-old previously managed a Las Vegas topless club called Club Paradise.
In June 2014, Las Vegas Metro Police and IRS agents raided the establishment as part of a credit card fraud investigation. Several people were indicted, but Carlson was not among them.
Roughly five months later, Club Paradise’s owners sued Carlson, two other managers and three dancers. The club accused the group of defrauding the club through an elaborate racketeering scheme from May 2013 to June 2014.
Carlson and the other defendants created and inflated hundreds of unauthorized credit card transactions for unsuspecting patrons, the club claimed. They then pocketed the overcharges.
In one instance described in court documents, Carlson and his co-defendants allegedly created, forged and inflated 12 transactions related to one patron by more than $35,900.
The club also accused Carlson and the other managers of stealing $50,000 from a safe. They tampered with security cameras, then replaced stacks of $100 bills with singles, taking care to leave a single $100 bill on each end, according to an affidavit from one of the club’s owners.
When the club pressed Carlson and others to take a polygraph test shortly before the raid, they refused and resigned, the club said.
In 2017, a Nevada state court entered a default civil judgment against Carlson and his co-defendants in the amount of $7.3 million, clearing the way for Club Paradise to garnish his wages in an attempt to collect on the debt, court documents show.
That's when Carlson began looking for ways to hide his income, according to Club Paradise. He began to work with one of Club Paradise’s rivals, Deja Vu Services, at one point managing the company's club, brothel and hotel in Tijuana, Mexico, according to Club Paradise’s lawsuit.
He then reduced his income to zero by increasing his federal tax withholding rate to 100%, the lawsuit says. This resulted in his entire net income being paid in a single, lump-sum tax refund, which is not subject to garnishment. He also explored renting a New York City apartment through his employer at their expense.
Club Paradise sought a judge’s permission to more closely examine Carlson’s finances, but he filed for Chapter 7 bankruptcy a day before the hearing.
Club Paradise argued Carlson’s debt to the club should not be discharged in the bankruptcy because it was the result of fraud.
An email that surfaced as part of the bankruptcy case described a trust that Deja Vu's accountant suspected he was using to hide income and circumvent the garnishment.
“You have been angling to find SOME way to get around the garnishment for months now. This is not the first attempt, far from it,” the accountant wrote in a Jan. 25, 2019, email to Carlson.
The trust would not have any business dealings outside of Carlson's presence, the accountant wrote.
“This has been structured to place 2-3 layers between the clubs and yourself, but that is still what it comes down to," she said. "This is structured to get you compensation without the compensation being traceable by (Club Paradise owner) Sam (Cecola) or subject to garnishment.”
In another email, Carlson acknowledged a trust that he said “lists him nowhere in the trust documents.” The name of the trust is not disclosed in the emails.
Carlson eventually settled the case with Club Paradise's owner for $400,000. He admitted no wrongdoing.
The email’s description of Carlson’s trust bears a striking resemblance to the ownership structure of the LLC that co-owns Club Onyx with Westlund.
While still under the cloud of the $7.3 million judgment, a new limited liability company, CDR Indianapolis LLC, was formed in Wyoming. The new company is owned by three other LLC’s. Those LLC’s, in turn, are owned by trusts. The trust that holds a controlling stake is called The Tiger Trust.
Its sole beneficiary is Carlson’s mother.
The trust, through those same LLC's, also co-owns three other Central Indiana strip clubs with Westlund — The Pony, Jaguars and Jiggles.
At the recent Marion County alcohol board hearing, Carlson referred to himself as the “owner’s representative.” He told the board his mother is an “invalid” and “elderly.” When asked if he had power of attorney, he said, "I could get it if needed."
IndyStar sought to confirm Carlson’s description of his mother. When reached by phone, she hung up when a reporter identified herself and explained the reason for the call.
Carlson did not respond to phone calls and emails from IndyStar. Webb, his attorney, said his client “has nothing more to add.”
RCI: Strip club chain contributed to Indiana Senate leader Rod Bray
There’s yet another player in the Club Onyx saga, but its name doesn’t appear anywhere on the club’s liquor license. Its financial ties to the club remain unclear.
RCI Hospitality Holdings, a publicly traded company with more than 40 strip clubs across the country, owns the Club Onyx brand, which it describes as the “Nation’s No. 1 Hip Hop Strip Club.”
Prior to the club’s closure last month in the wake of an IMPD raid, RCI Hospitality listed the Indianapolis club on its website, calling it a “Licensed Location of the Onyx Brand.” But after an IndyStar article about the police raid, the Indianapolis location was removed from the company’s website.
In an email, a spokesperson for RCI said it does not own the Club Onyx in Indianapolis, but did not answer follow-up questions about whether it had a branding agreement with the owners. The Indianapolis location, however, operated in a manner similar to RCI's other Club Onyx locations, hosting rap battles and featuring hip hop artists and influencers.
At the Marion County alcohol board meeting, Carlson blamed the concept for the club's problems, which he attributed to the "old regime." He pledged to rebrand the club if allowed to retain its license, prompting a sharp response from board chairman Tyler Graves.
"Just to be clear," Graves said. "You are the old regime."
Campaign finance records suggest RCI, which also owns PT’s Showclub on Pendleton Pike in Lawrence, recently stepped up its lobbying efforts at the Indiana Statehouse.
The company contributed $1,000 each last year to Indiana Senate leader Rod Bray, R-Martinsville, and his No. 2 at the time, Sen. Mark Messmer, R-Jasper.
The contributions highlight the deep influence alcohol interests have at the Statehouse.
Webb, who represents Club Onyx and PT’s Showclub, said he made the contribution on behalf of RCI during a fundraiser for Bray at Mallow Run Winery in Bargersville. Bray’s campaign reported collecting nearly $55,000 from about 25 contributors on the day of the event, which was paid for by Wine & Spirits Distributors of Indiana.
The contribution to Messmer, who did not respond to a message from IndyStar, was made during a fundraiser at another alcohol establishment: the 1933 Lounge at St. Elmo’s Steakhouse.
Webb said his lobbying activities on behalf of RCI and PT’s Showclub had nothing to do with Club Onyx, even though Club Onyx was listed on the company’s website at the time.
“I've only been asked to represent Onyx in the last probably four weeks,” he said earlier this month.
Despite IndyStar's ongoing investigation — which revealed an unusual state law protects bars from cities and local police, even when they have lengthy histories of violence — Bray has dismissed the need for reform. The investigation also found that lax oversight, understaffing and poor enforcement by the ATC allowed violence at bars and clubs to fester.
"They're not there to enforce or prevent murders or fights or violence,” Bray said of the ATC. “You know if the city is serious about that they'll put a law enforcement officer outside of those bars and the prosecutor will take those very seriously."
When asked about the strip club campaign contribution, Bray said through a spokeswoman that he “was not aware of the business dealings of RCI Management when he received their donation to his campaign last year.”
IndyStar asked Bray’s spokeswoman what he planned to do with the campaign contribution now that he knows it came from a strip club company.
She replied: “He said he hadn't considered what to do with the contribution.”
Contact IndyStar reporter Tony Cook at 317-444-6081 or tony.cook@indystar.com. Follow him on Twitter: @IndyStarTony.
Contact IndyStar reporter Alexandria Burris at aburris@gannett.com. Follow her on Twitter: @allyburris.
This article originally appeared on Indianapolis Star: Bad bars: Who benefited from one of Indy's most violent clubs?
