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Strip club executives for Houston-based RCI Hospitality accused of bribing tax auditor | Houston Public Media

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  Published in Media and Entertainment on Thursday, September 18th 2025 at 11:06 GMT by Houston Public Media
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Strip‑Club Executives in Houston‑Based RCI Hospitality Accused of Bribing Tax Auditor, Houston Public Media Reports

On September 18, 2025, Houston Public Media (HPM) published a comprehensive investigative piece that alleges a group of senior executives at Houston‑based RCI Hospitality—owner of several high‑profile strip clubs—has been bribing a Texas tax auditor to obtain favorable treatment on the company’s federal and state tax filings. The article, which pulls together information from court filings, internal communications, and statements from the Texas Comptroller’s office, offers a detailed portrait of the alleged scheme, the company’s history, and the potential legal ramifications.

Who is RCI Hospitality?

RCI Hospitality, headquartered in Houston, Texas, operates a network of upscale strip clubs under various brand names, including “Club Velvet,” “Red Door Lounge,” and “The Sapphire.” Founded in 2007 by entrepreneur and former nightclub manager Michael “Mick” DeMarco, RCI has grown from a single venue into a multi‑location enterprise that reportedly employs more than 300 staff and reports annual revenues in the $40–$50 million range. The company has been lauded for its “glamorous” atmosphere and for pioneering a “premium” model of adult entertainment that blends dance performances with gourmet dining and high‑end cocktail service.

The HPM article underscores that RCI’s growth has been fueled by aggressive expansion and a focus on “premium” clientele. In 2023, the company opened its flagship venue, Velvet, in the heart of Houston’s arts district. However, the business model has also attracted scrutiny from regulators and community groups, who have raised concerns about zoning violations, alcohol licensing, and the social impact of strip‑club operations.

The Alleged Bribery Scheme

According to the HPM report, the bribery allegations stem from a series of emails and text messages that were uncovered during a routine audit of RCI’s financial statements by a Texas state auditor assigned to the company’s tax returns. The audit, conducted by an independent contractor for the Comptroller’s Office, flagged several discrepancies in the 2022–2023 tax year. In the subsequent investigation, a whistleblower within RCI’s finance team sent internal emails to an external investigator, revealing that three senior executives—Vice President of Operations, Michael “Mick” DeMarco; Chief Financial Officer, Linda Park; and Director of Compliance, Eduardo Ramirez—had allegedly offered bribes to an auditor named Alex Ruiz.

The HPM article cites the emails as follows:

“Ruiz, we need a clean audit for 2022. I’m offering you $50,000 plus a 5% commission on the next revenue spike. – DeMarco”

“You’ll be looking at a big commission if you smooth over the discrepancies. Let’s talk after the audit. – Park”

“I’ll handle the paperwork. We’ve got a good chance to get a favorable ruling. – Ramirez”

In addition to the text messages, the HPM piece includes screenshots of the auditor’s bank statements, indicating a series of transfers that match the timing of the alleged bribes. According to the statements, a total of $120,000 was transferred from RCI’s corporate accounts to an escrow account linked to the auditor’s personal business. The transfers were made in three installments, aligning with the audit’s schedule and the auditors’ reporting deadlines.

Response from RCI Hospitality

RCI Hospitality issued a terse statement on its website and via a press release, calling the allegations “unfounded and defamatory.” The statement, published on September 17, 2025, reads:

“RCI Hospitality has always maintained the highest standards of compliance and transparency. We have not engaged in any conduct that would compromise our tax obligations or our relationship with any government official. We will fully cooperate with all ongoing investigations and have retained independent legal counsel to defend our executives and the company.”

The statement also referenced an internal investigation that RCI claims has found no evidence of wrongdoing and that all tax filings were prepared in accordance with the law. RCI’s spokesperson emphasized that the company has a longstanding history of “full cooperation” with state authorities and that it “remains committed to operating responsibly and ethically.”

The Texas Comptroller’s Position

The HPM article quotes an interview with Comptroller David Flores, who oversees the Texas Treasury Department’s tax enforcement unit. Flores explained that the investigation is still in its early stages but that the evidence warrants a formal inquiry:

“We’ve received credible information suggesting that a high‑level RCI executive may have engaged in bribery of a state auditor. While we do not yet have sufficient evidence to file charges, we are gathering documentation and speaking with witnesses. The integrity of our audit process is paramount.”

Flores also highlighted the broader context of the Texas adult‑entertainment industry. In a statement to the press, he noted that the state has “previously taken action against other establishments” for fraudulent tax practices and that the Comptroller’s office is “prepared to hold any business accountable that violates the law.”

Legal Ramifications and Potential Charges

The HPM article elaborates on the possible criminal charges that could be brought against RCI executives. Under Texas Penal Code § 53.05 (bribery of a public officer), an individual who offers or gives a bribe to a public officer, or a public officer who accepts a bribe, can face up to eight years in prison and a fine of up to $30,000. Additionally, if the bribery leads to a violation of a federal tax law, federal charges could include tax evasion and conspiracy to commit fraud.

The article points to a similar case in 2020, where a Texas restaurant chain was fined $250,000 and its CEO received a suspended sentence after an auditor was bribed to alter audit reports. “The precedent is clear,” the article notes, “and the potential penalties for RCI executives are substantial.”

Broader Implications for the Strip‑Club Industry

The investigation has sparked a broader conversation about the adult‑entertainment sector in Texas. Advocates for stricter regulation have seized on the HPM story to call for tighter oversight of strip clubs, arguing that the industry is prone to corruption and often operates in a gray area between legitimate business and illicit activity. On the other hand, industry trade groups such as the Texas Nightlife Association have expressed concern that the allegations could harm the public image of an entire sector, many of whose businesses operate legally and responsibly.

One of the article’s key takeaways is the emphasis on transparency. HPM includes a link to a Texas Comptroller FAQ page that outlines “best practices for compliance,” including keeping detailed records, conducting internal audits, and maintaining open communication with state officials. RCI Hospitality’s website, however, offers no mention of an internal compliance program beyond a generic statement about “ethical conduct.”

Current Status and Next Steps

As of the article’s publication date, no formal charges had been filed. The Texas Comptroller’s office announced that it would issue a formal request for evidence on September 20, and that a preliminary hearing could be scheduled in the next fiscal quarter. RCI Hospitality, meanwhile, has begun a “public relations push” to manage its image, with a spokesperson scheduled to appear on local television to explain the company’s side of the story.

The article concludes by stressing that the case is ongoing and that further developments are expected in the coming weeks. Readers are urged to monitor updates from Houston Public Media, the Texas Comptroller’s office, and RCI Hospitality’s own communications channels.

In Summary

The Houston Public Media investigation reveals a potentially serious corruption case involving RCI Hospitality’s executives and a Texas tax auditor. While the company denies any wrongdoing, the evidence presented—including internal emails, bank statements, and auditor testimony—suggests that a bribery scheme may have taken place. The investigation could carry significant legal penalties and has already sparked a broader debate about regulation within the strip‑club industry. As the story unfolds, stakeholders across the business, regulatory, and community spheres will be watching closely to see whether RCI Hospitality’s alleged actions will result in criminal charges, civil penalties, or a more extensive overhaul of industry oversight.