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‘Topless bar’ to stay open, pay city disputed back taxes, legal fees

VIP's A Gentlemen's Club | John H. White~Sun-Times Library

VIP's, A Gentlemen's Club | John H. White~Sun-Times Library

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Updated: December 19, 2012 12:22PM

A clout-heavy joint that bills itself as “Chicago’s only full liquor & topless bar” would stay open — and pay the city $2.5 million in disputed back taxes and legal fees — under a settlement in the works to end a 19-year legal battle.

Since 1993, City Hall has been trying to shut down, what’s now known as VIP’s A Gentlemen’s Club, 1531 N. Kingsbury, on grounds that the club’s dancers expose too much of the female anatomy.

Attorneys representing owner Perry Mandera, ex-husband of state Sen. Iris Martinez (D-Chicago), have insisted that VIP dancers do not show too much breast and derriere.

They’ve also challenged the constitutionality of a city ordinance that makes it illegal to sell liquor and offer semi-nude dancing at the same establishment.

Last month, the legal odyssey ended.

For the second time, the U.S. Supreme Court took a pass on the case, thus affirming lower court rulings in the city’s favor.

That put the ball in Mayor Rahm Emanuel’s court.

On Wednesday, Corporation Counsel Stephen Patton outlined terms of a draft agreement — pending the mayor’s final sign-off — that would allow the club to stay open under terms he called favorable to Chicago taxpayers.

It calls for Pooh Bah Enterprises, Inc., the club’s operator, to pay the city $1.5 million in amusement tax revenues dating back to 2000 and to calculate those taxes going forward at a rate higher than club owners would prefer to pay.

VIP had previously claimed an exemption from the amusement tax that’s supposed to be reserved for “live cultural events.”

The agreement further stipulates that, if there is even one violation over a one-year period of the adult entertainment ordinance, the club would be shut down for good. Club owners would also be required to reimburse the city for $1 million in legal fees spent fighting the club since 1993.

Patton said the city intends to spend the $2.5 million on victims of domestic violence — either by establishing a new shelter for up to 60 families of abused women and children or by helping them with subsidized rent.

Why not shut the place down now that the legal battle has been decided in the city’s favor?

“Our job is not to impose our personal preferences [on the mix of nudity and liquor] but to do what’s right under the facts,” he said.

“If my option is to shut ‘em down and forego this revenue — a source of funding that could make a huge impact in an area where we’d like to do more — or do a victory lap and say, ‘Nineteen years. We won,’ [shutting them down] is not in the best interest of the taxpayers or the city.”

Patton noted the club pays $125,000 in annual sales taxes, $125,000-a-year in amusement taxes and $60,000 in annual property taxes. He further maintained that the licensing dispute dates back 19 years and that the current owners have a “clean record” with no violation of the anatomy coverage requirements.

He argued that it makes far more sense to “resolve this in a way that gets the city $2 million to $2.5 million in revenue that we would not otherwise receive” than to shut the club down and attempt to recover outstanding taxes the city claims are due.

“Good luck with that,” he said.

David Epstein, an attorney representing Pooh Bah, had no immediate comment on the settlement.

The club now called VIP’s originally opened as a nightclub in August 1991, owned by James Levin, then the president of Tru-Link Fence. It did not offer nude dancing and wasn’t turning a profit either, court records show.

Levin — who would subsequently plead guilty to minority contracting fraud involving fence contracts at the Chicago Public Schools — took $800,000 in loans from Mandera, changed the club’s name to Thee Dollhouse and reopened, with semi-nude dancing, on Feb. 10, 1993.

About two weeks later, undercover Chicago police officers went to the club and found that “dancers at times wore thongs that exposed their buttocks and wore latex . . . that exposed portions of their breasts” — violations the city has been fighting ever since to close the club over.

As the city’s liquor commissioner, then-Mayor Richard M. Daley revoked Pooh Bah’s liquor licenses and tried to close the club.

Pooh Bah then initiated its long legal challenge..

In August 1993, Mandera became Pooh Bah’s sole owner, after Levin couldn’t repay the loans, court records show.

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