The long, costly battles to regulate suburban strip clubs
Just south of Elgin, surrounded by green space and struggling industrial sites, lies Kane County's last strip club.
The sign for Blackjacks Gentlemen's Club advertises a “full liquor bar” despite the business having no liquor license. A white banner hanging from the building reads “Dancers Wanted.”
Kane County Board members voted - twice - to say that's exactly what they don't want. Those votes spawned a $16 million lawsuit by the pending new owners of the club. The outcome may determine the future of the strip club or any adult businesses in the county. As others have discovered, limiting an industry protected by the Constitution but rife with criminals, violence and deep pockets can be a long, costly road.
Diamonds drama
Neighboring DuPage County found Diamonds wasn't its best friend when strip club owners became interested in an industrial area near the DuPage County Airport in 1999. Before the county even ruled on the zoning use, the would-be owners of the club, Palmetto Properties Inc., sued the county for creating unconstitutional restrictions.
At issue was a county and state ban on strip clubs operating within 1,000 feet of a forest preserve.
Diamonds prevailed when a court ruled the county could not implement the vague state law without its own rationale for creating buffers between adult and other land uses.
“They had to have places in the county for them to legitimately express their First Amendment rights,” said Paul Hoss, county planning and zoning administrative coordinator. “And the court said to the county, 'I don't think you have an appropriate number of places.'”
After three years of research, the county crafted a legal defense for buffers by citing fears about strip clubs fueling crime and killing property values and development. The county also shrank the buffer between strip clubs and inaccessible sections of forest preserves, allowing Diamonds to open.
The club never served alcohol; state law bans liquor sales in clubs featuring full nudity. But a loophole allowed Diamonds' patrons to bring in their own booze.
That turned fatal when club bouncers forced an intoxicated customer into his car. Driving away, he smashed head-on into a pregnant woman, killing her and a passenger in the patron's car.
A court ruled Diamonds partially responsible and ordered a $1 million settlement. Subsequently, the county banned alcohol in all adult businesses.
In 2011, the club closed when a judge ruled the state could take land running through the middle of Diamonds that was needed to widen North Avenue.
With Diamonds' legacy still a recent memory, land for new strip clubs is at a premium.
“We have not had any new clubs follow up once they check out the available sites,” Hoss said, adding that prices might be too high.
A history of violence
Lake County became a magnet for strip clubs in the 1970s thanks to a sheriff and county board president who ushered in the clubs in trade for kickbacks.
During corruption trials, the owner of the Cheetah II Lounge, in what is now Vernon Hills, testified to paying Sheriff Orville “Pat” Clavey $1,000 a month to allow the strip club to operate. The club burned to the ground in 1982, but not before waging an unsuccessful legal battle against a county law banning nude dancing in places that sold liquor.
At the same time, an infamous strip club from Chicago, the L&L Club No. 2, relocated to Lake County and became the site of an execution-style murder. Two men with sawed-off shotguns killed owner George Christofalos in the parking lot in 1979.
Chicago mobster James “Duke” Basile told federal prosecutors during a 1989 trial, when he became a government witness against four fellow crime syndicate members, that Christofalos' murder was a mob hit.
The crime followed another murder at the club just a year before. The victim, bartender Mark Thanasouras, had previously served time for taking payments from strip club owners while he worked as a Chicago police commander. And Christofalos' brother, Eugene, was arrested in 1982 on prostitution charges after a raid on his Lake County-based Venus Supper Club.
Two other strip clubs, the Roman House in Lincolnshire and The Cheetah on Half Day Road, were also havens for prostitution.
In 1998, the county cracked down on strip clubs with a new law that was immediately challenged in court. The law was revised in 2001 to clarify that it was written to address crime, deterioration of neighborhoods, instability of nearby businesses, the spread of disease and a “dehumanizing and distracting influence” upon young people.
The law established a licensing process, outlawed total nudity and made lap dances illegal. The owners of Dancers and Baby Dolls strip clubs, along with an adult video shop, challenged the constitutionality of the law. They lost a lengthy court battle in 2003. The court found the law did not infringe upon free speech because it did not ban adult expression, a key factor in successfully worded zoning laws restricting adult businesses across the country.
During the legal battle, Lake County sheriff's officers testified to 202 police reports generated by the county's adult establishments between 1979 and 2001. Those include at least one prostitution sting in the parking lot of Baby Dolls that resulted in seven arrests in six hours. Officers said there were also 405 calls to the establishments that did not generate formal reports.
Based on that, a court ruled “that the weight of the evidence in the record shows a nexus between the ordinance and the harm it seeks to alleviate,” a key aspect of laws in DuPage and Lake counties.
Dancers continued to operate in defiance of the county law. The club didn't shut its doors until 2007 when a judge ruled it owed $135,000 in fines for its scofflaw activities.
“It's over; we're done,” Michael Chrissman, the owner of Dancers at the time, told the Daily Herald. “The bottom line is the county just doesn't want strip clubs.”
Baby Dolls also received a $204,500 fine in 2007. The county collected part of that fine in 2010 as the club closed.
Despite those results, Eric Waggoner, the county's director of planing, building and development, said he's not sure the ordinance had a major impact on chasing strip clubs out of the county.
“The industry was sort of hobbling along anyway,” Waggoner said. “In my opinion, the one big factor in the slow death of adult entertainment in Lake County is just that the Internet has become a medium of expression for the adult industry, and such a prevalent one that I'm not sure that the strip club businesses can really compete.”
Having robust development has also limited where strip clubs can operate. Every commercial development and residential rooftop pushes areas for strip clubs farther out.
“For the most part, we're a fairly dense suburban county,” Waggoner said. “There are not a whole lot of locational opportunities for adult entertainment here.”
The final frontier
Kane County was one of the fastest-growing areas in the nation a decade ago. But it's also the only county in the state with a farmland protection program.
The nearly $33 million invested in keeping rural areas in place has the unintended side effect of creating sites ripe for strip clubs. Blackjacks opened in 1996, before the county even had full rules to regulate it.
The county still took a shot at the club by pulling its liquor license when its current owners went to prison for tax evasion and illegal gambling convictions in 2012. Without liquor, the club can stay open 24 hours, feature full nudity and employ dancers as young as 18.
A new ownership team wants to buy and revamp Blackjacks. Debra Diaz owns clubs in the South suburbs and Indiana. Michael J. Peter is a strip club icon once featured on “Lifestyles of the Rich and Famous.” Before serving time in prison for mail fraud, he owned or managed more than 50 clubs across the country.
Diaz and Peter believe selling liquor is the only way the club can turn a fair profit. John Hoscheit and 16 other Kane County Board members don't care about the club's profits or the promise of new sales tax dollars. The board voted last month to deny Diaz and Peter a license. Now they are suing the county to get the license and $16 million they say they've lost in potential income.
Hoscheit, who declined to discuss the lawsuit, said in an interview before it was filed he'd prefer the strip club die in favor of just about any other commercial business. However, “the business is entitled to operate as they've continued to operate.”
Hoscheit also noted then that he doesn't receive many complaints about Blackjacks as it is. He expects that would change if the club had alcohol and new popularity.
“What they want to create is really more suitable for a municipality where there could be closer and more available public safety supervision,” he said. “The message is to move your business if you want to intensify the use by four or five times. That's what they are promising with the tax and job creation estimates they gave us. And that's the type of use that would require more public safety involvement.”
The lawsuit doesn't concern itself with Kane County's ability to police the site. It accuses the county board of violating the would-be owners' constitutional rights, just as other clubs claimed in past suits in DuPage and Lake counties. Unlike those counties, Kane doesn't have an ordinance with a justification built on a history of criminal activity or documented crime.
Neither did Bedford Park, a South suburban community of about 600 people, when it tried to block Diaz from opening a strip club within its borders. After more than six years in courtrooms, and about $400,000 in legal fees, the new Ocean Gentlemen's Club opens this fall.
“We had some concerns about the weakness of the state law about strip clubs as it was drafted,” Village Attorney Larry Gryczewski said. “We reached out for assistance with the case, but we were sort of left out there by ourselves. We determined it was in our best interest to just resolve the matter.
“The bottom line is we might not like their type of business, but it's still a legal business.”