Two of Denver’s most popular strip clubs must pay $14 million in penalties and back pay over stolen wages in what Denver Auditor Tim O’Brien described as one of the most “extraordinary cases he’s ever conducted.”

The clubs, he added, “violated almost every provision.”

Denver Labor Executive Director Matt Fritz-Mauer said that the allegations are “the tip of the iceberg” in an investigation leading to months of litigation ahead with RCI Hospitality Holdings, Inc., a multimillion dollar adult entertainment company. 

Denver Labor is a division of the Denver Auditor’s Office.

Together, the clubs must pay the affected workers about $11.3 million in restitution. That amount is based on the $2.6 million in actual wages stolen, plus 300 percent in damages and 12 percent in annual interest, the auditor’s office said.

Denver’s Diamond Cabaret and Rick’s Cabaret and Steakhouse are two of approximately 86 adult entertainment venues owned by RCI Holdings, one of the country’s largest adult entertainment corporations with venues from Miami to Texas and Arizona. 

The company owns $250 million to $280 million in properties across the United States, according to its first quarterly Zoom meeting with investors.

RCI President and CEO Eric Langan told Zoom listeners earlier this month that the company owns 84 to 86 nightclubs and sports bars, which its website calls “well-managed and high-cash flowing.” 

The Denver investigation

In a wage theft investigation that opened with The Diamond Cabaret in May 2023 and Rick’s Cabaret in July 2024, the Denver Labor Department alleged that clubs required strippers to pay a “house fee” of up to $85 per shift and an additional $8 “promo fee” before working.

The wage theft investigation also includes food and beverage workers, who make $15.59 per hour, plus tips. It alleged that managers routinely took tips for work performed by these workers, so they made less than they should have.

Devynn Dewey strips to pay for college, where she is studying to be an attorney. She told the labor department that the job takes a toll on people who “deserve this moment of accountability.”

She compares the job to gambling. Some nights there is little money to be made from tips, and some nights are good. 

“There’s an idea that these workers make an extraordinary amount of money. The truth is, the workers live paycheck to paycheck,” Fritz-Mauer said.

He added that dancers are different because they rely solely on tips but must pay a $93 fee to dance, which made it hard to make any money when nights were slow. He said strippers told him that they have gone home with less money than they started with because they had to pay fees just to work in the building.

Because there’s a stigma and an aura of mystery around strip clubs in general, Fritz-Mauer explained that dancers are misunderstood.

“Entertainers are mothers and sisters and neighbors and the people you see at the mall or go to church with and they don’t talk openly about what they do,” he said.

Dewey said it’s scary to speak out against a multimillion dollar company, but “Eyes are on them. Their business model has been built on exploiting their workers.”

She said it’s time for people who work in sexually-oriented businesses to speak out unashamedly.

“They’ve been told they don’t have rights or power and that nobody cares about them. The truth is they do have rights and they do have power and we do care,” said Fritz-Maurer.

When the investigation first got underway, some dancers and workers came to the city labor department on their own as whistleblowers.

“We worked hard to develop a reputation and to connect with workers through networks,” Fritz-Mauer said. 

The told investigators tipped workers were required to place a portion of their earnings into what’s called “The Rusty Envelope,” named for the regional manager, according to Fritz-Mauer.

In September, the city auditor’s office looked into specific records related to contracts, contact information and dancers’ payments. The office said it asked the clubs for those records before finally issuing subpoenas.

“This is the first time we are using this subpoena power and, without it, we would be unable to conduct our investigation into whether dancers’ rights are being violated,” O’Brien said at the time.

RCI’s attorneys challenged the subpoenas and lost in Dec. 2024. 

The issue is now before an administrative hearing officer who is challenging this in Denver District Court.

RCI fights back

RCI Hospitality put the gloves on Thursday morning with a statement from its Denver attorneys, The Litigation Boutique LLC, accusing Fritz-Mauer of being on “a reckless mission — one that disregards legal boundaries, tramples on due process, and seeks to strip hardworking entertainers of their autonomy.”

The email blast went on to say that Denver Labor is using “government power as a bludgeon” and worker protection as a pretense, “wielding subpoenas like weapons, demanding excessive documentation without a lawful basis, and violating the privacy of individuals who have chosen a profession that Denver Labor refuses to respect.” 

RCI has dealt with these same types of worker and entertainer allegations in other states. There have been two class action lawsuits, one of them filed over a decade ago in New York and a more recent lawsuit in Texas.

Central City Rick’s Cabaret woes

RCI has other issues with another Colorado strip club, which may or may not open in Central City. 

On Nov. 22, just as Central City was getting ready to celebrate Christmas, a runaway RV crashed into the Rick’s Cabaret and Steakhouse building at 130 Main St., which has been under construction for over a year. The RV’s brakes failed as it flew down Central City Parkway, hit a gas main, and left a hole in Rick’s brick side wall. 

The man driving the RV was unhurt, but damage to the building did not help the already-postponed opening date for the adult entertainment venue. 

In August 2024, RCI filed a federal lawsuit against the mountain gambling municipality, claiming its civil rights were violated when town leaders denied its request to open the Rick’s Cabaret and Steakhouse on historic Main Street. 

It alleged that Central City violated RCI’s civil rights when it sold the large building at 130 Main St. in the historic downtown “for a specific stated economic purpose and then abandoning the process of reforming its regulatory regime to accommodate that stated purpose.”

Central City Mayor Jeremy Fey opted not to comment on the future of Rick’s Cabaret in downtown nor on the Denver developments.