Ex-strip club owner disputes license-transfer payment

Says she was `duped' into accepting low offer

August 30, 2004|By Scott Calvert | Scott Calvert,SUN STAFF

A former strip club owner on The Block in downtown Baltimore did not get a fair price for her business licenses and is entitled to money from Larry Flynt's Hustler Club or the landlord, the trustee in her bankruptcy case contends.

Amanda Toth is owed more than the $35,159 she received in cash and debt write-off from her former landlord's company, trustee Brian Goldman wrote in a complaint filed in U.S. Bankruptcy Court in Baltimore. The Hustler Club's company is using her licenses for her defunct Club Custom House.

The court appoints trustees to help people in bankruptcy proceedings maximize assets to pay off debts.

Toth filed for bankruptcy last year and says she agreed to the price for the licenses only because of her dire financial situation.

"I guess `duped' is the word," Toth said in a recent interview.

Goldman does not say how much money he thinks Toth should get, whether from Hustler Club or the landlord. However, he says the liquor and adult entertainment licenses at Ritz Cabaret in Fells Point fetched $900,000 two years ago.

That sum, however, was for the entire business and might have included assets beyond the two licenses, said Douglas Paige, spokesman for the Baltimore liquor board, which regulates adult entertainment in the city.

Paige noted that another strip club, the El Dorado Lounge on East Lombard Street, was sold for $400,000 last year - an amount that covered both the licenses and the building.

Hustler Club lawyer Robert Biederman declined to comment on the trustee's complaint, as did a lawyer for the trustee. Jack Gresser, Toth's former landlord, did not return a message.

Because the liquor board does not issue new adult entertainment licenses or new versions of most kinds of liquor licenses, applicants must find someone willing to sell existing ones.

According to Goldman's complaint, Toth's licenses took an indirect route to the Hustler Club, which opened in the same space as Club Custom House.

In 2001, the complaint says, Toth agreed to sell both licenses to A.E. Holding Inc. for $5,000 and debt forgiveness of $30,159. Public records do not say who owns A.E. Holding, but the Erdman Avenue building listed as the company's address is co-owned by Gresser, Toth's former landlord on Custom House Avenue. He has a video business at the location.

Toth said she transferred the licenses to Gresser to pay back rent. "He was going to seize them from me," she said.

Toth said she felt that she could not sell them on the open market because Gresser told her he wasn't sure he wanted to lease the Club Custom House space to another strip club, even though it was done with the Hustler Club.

He also said it could be hard to find a properly zoned building for a strip club.

Toth's financial troubles deepened in February 2002 when she was arrested and charged with operating a bordello in a South Baltimore bar she managed. She was found not guilty in Circuit Court.

The trustee's complaint says A.E. Holding in turn sold the licenses to the corporation now running the Hustler Club. It says that sale was apparently folded into a lease between the club and A.E. Holding, making it impossible to tell what was paid for the licenses.

However much A.E. Holding received, Goldman's complaint states that Toth "did not receive fair consideration" for her licenses.

The trustee asks Judge James E. Schneider to force A.E. Holding or the Hustler Club to turn over Toth's "property" or "a sum of money equal to its value."

Sun staff researcher Elizabeth Lukes contributed to this article.

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