RCI Hospitality ($RICK) Long-Running Tax Evasion and Bribery Scandal Case

S.D. Texas

Court

4:25-cv-04477

Case number

12/15/2021

Class period Start

09/16/2025

Class period End

11/20/2025

Lead Plaintiff motion deadline

$RICK investors filed a claim against RCI Hospitality Holdings for engaging in a decade-long tax fraud and bribery scheme, misleading investors about its internal controls and legal risks, and artificially inflating its stock price.
After New York Attorney General Letitia James indicted top executives for fraud and bribery, $RICK fell 26% over two days in September 2025.
$RICK investors can join this case to be notified about potential recovery.
Case Details:

Between December 15, 2021, and September 16, 2025, RCI Hospitality repeatedly assured investors that it maintained robust internal controls, complied with tax laws, and operated within legal boundaries. The company’s annual reports emphasized compliance at its clubs, strong financial controls, and management’s “no tolerance” policies around misconduct.

But in reality, top executives at RCI—including CEO Eric Langan and CFO Bradley Chhay—were orchestrating an illicit tax fraud and bribery scheme spanning more than a decade. According to a criminal indictment filed by the New York State Attorney General, RCI avoided over $8 million in sales taxes between 2010 and 2024 by bribing a New York tax auditor with all-expense-paid trips to strip clubs, including cash for private dances, hotels, and fine dining.

Executives falsified records to hide these bribes, labeling them as “promotional” expenses. RCI also manipulated its internal books to underreport revenue from in-house currencies (known as “Dance Dollars”), thereby avoiding tax liabilities. Despite the ongoing misconduct, the company’s public filings failed to disclose the scope of its legal exposure.

On September 16, 2025, the New York AG’s office unsealed a 79-count indictment against RCI, three of its New York strip clubs, and five executives, including Langan and Chhay. The charges included criminal tax fraud, bribery, and conspiracy.

That day, $RICK fell 16%. The next day, it dropped another 10.4%.

Based on these events, $RICK investors filed a claim against RCI, alleging the company:
It engaged in a decade-long tax fraud and bribery scheme to avoid over $8 million in taxes.
It falsely assured investors about its compliance programs and internal controls.
It concealed material legal risks and criminal liability, inflating its stock price.
Investors argue RCI misled the market about its financial integrity, exposing shareholders to steep losses once the fraud was revealed.

Case Type

US Securities Class Action

Case Status

Lead Plaintiff Appointment

Alleged Offence

Misleading Statements,

Financial Misrepresentation,

Fraud

Suspected Party

Management

Security Type

Stocks

Trade Direction

Long

Shock Event Date

09/16/2025

Filing date

09/21/2025

Lead Plaintiff Deadline

11/20/2025

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