ST. PETERSBURG — Vegas Showgirls, a strip club dogged by legal problems, is set to go on the auction block next month because of the recent foreclosure by its lender.
The club, at 10568 Gandy Blvd., allegedly was the site of forced prostitution in two recent trials involving human trafficking. One ringleader pleaded no contest; another man was found not guilty. Neither worked for Vegas Showgirls, and managers there stated at the time that the club was not involved in the activities.
In June, Florida Community Bank was awarded a final judgment of foreclosure against the club by the circuit court. The bank filed suit two years ago, stating that the club's parent company, Vegas Management, was in default on $2 million it borrowed in 2009 to finance a remodeling.
Tampa lawyer James Lowy, the head of Vegas Management, paid $1.9 million in 2008 for the 7,570-square-foot property.
Lowy, 47, could not be reached for comment. But general manager Jason Byers said there are no plans for the property to be sold.
"I know everything is going well. I'm here every day doing the books," he said. He said paperwork is going through to get refinancing from another bank. First Community has been trying to rid itself of Vegas Management ever since it acquired the loan by taking over another bank, he said.
"They don't want us because they are a Bible type of bank. They don't want gentlemen's clubs. They don't want liquor stores," Byers said.
Lowy also owns the Spirits 365 liquor store next to the strip club, as well as another store in Seminole. Both offer online ordering and delivery. "Let Spirits 365 help save a DUI — you drink we drive," its website touts.
Representatives of First Community could not be reached for comment.
According to St. Petersburg police spokesman Mike Puetz, there have been two calls for service to Vegas Showgirls in the past year. One was for burglary; one, for lost property.
When the initial foreclosure suit was filed two years ago, the bank also was seeking Vegas Showgirls' liquor license. In late August, it filed another suit against the nightclub seeking protection of its right to the liquor license.
The license alone could be worth as much as $185,000 to First Community, according to Horace Moody, who heads a liquor license consulting and brokerage firm called the Beverage Law Institute in Tallahassee.
"They are probably going to engage someone like me to sell the license for them," he said. "It's a commodity. Its value depends on what county it's in and what's going on in that county."
The state controls the number of active liquor licenses based on the population of each county. New licenses aren't issued until a county's population increases by 7,500. One new license was issued last year in Pinellas, and none will be up for grabs in an annual state lottery this year. So anyone who wants to open a business and serve liquor has to buy from an existing business, or an entity or person who owns one.
Moody said alcohol licenses often are used as collateral with private lenders, though banks tend to shy away from dealing with them.
"It's not real estate, but I think it's excellent collateral," he said. "You don't have to pay somebody to mow the lawn or keep the place up. And you don't have to show the property to interested buyers. It's just a piece of paper."
The Vegas Showgirls building is scheduled to be sold at auction starting at 10 a.m. Oct. 6 at realforeclose.com.
Lowy, a partner at Donaghy Lowy Attorneys at Law, was managing editor of the Journal of Law and Public Policy while in law school at the University of Florida.
Contact Katherine Snow Smith at (727) 893-8785 or firstname.lastname@example.org. Follow @snowsmith.