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Attorney sees no conflict over S.L. club

Salt Lake police are certainly familiar with Club Vortex, a private club in Exchange Place.

Officers have repeatedly responded to fights at the club, patrons so intoxicated they could not walk, minors drinking alcohol, employees drinking alcohol on the job, public nudity and even patrons engaged in simulated sex acts, according to police reports."We perceive it as a nuisance," said Assistant Police Chief Larry Stott. "We've had lots of problems there."

The most recent problems resulted in the club being shut down for five days during the Christmas holidays as a penalty for violating city ordinances governing its business license.

Despite the club's reputation, it's received only two slaps on its business wrist. The most recent shut-down and another by the Alcoholic Beverage Control Commission for violations in 1994.

And that has Jack Simantob, an owner of the Commercial Club Building who is involved in lengthy legal efforts to evict Club Vortex, wondering if the lack of action by state alcohol regulators has anything to do with the fact that Nicholas Hales, the chairman of the Alcoholic Beverage Control Commission, is also one of the attorneys for Kaleidoscope Productions, the company that owns and operates Club Vortex.

"I am offended you would even ask me that question (if the representation is a conflict of interest)," Hales said. "Absolutely not."

And state alcohol regulators agree with Hales. Earl Dorius, the head of the licensing and compliance division for the Department of Alcoholic Beverage Control, says Hales - nor any other member of the commission - has never contacted compliance officers about Club Vortex or any other club.

In fact, the process of enforcing state liquor laws and imposing sanctions against clubs for liquor violations is set up independent of the liquor commission.

First, the officers who investigate possible violations work for the Department of Public Safety, not the Department of Alcoholic Beverage Control.

Alcohol control investigators make recommendations on fines and license suspensions without any contact with the liquor commission, which meets once a month to rule on any sanctions.

Hales insists that the law firm for which he works, Woodbury & Kesler, represents the company that owns the club only in its bankruptcy proceedings, that he did not know when he became involved in the bankruptcy case that Kaleidoscope Productions owned Club Vortex and held a liquor license, that his firm only recently became involved with Kaleidoscope Productions and that Club Vortex was not a party in any action before the commission when his firm took the case.

Hales said two other attorneys, neither of whom is with his firm, represent the club on liquor matters.

"I would never represent a client with issues before the (liquor) commission," Hales said. "In my six or seven years on the commission, I have turned down several cases where I was asked to represent liquor licensees."

There is nothing specific in the law that would prohibit commissioners in their private practice from representing licensees. The law specifies only that commissioners cannot hold a financial interest in companies with liquor matters before the commission.

The closest state law comes to addressing the situation is a section of the state ethics law that states a public officer, employee or legislator may not "accept other employment that he might expect would impair his independence of judgment in the performance of his duties."

"If there is not a specific rule against it (commissioners representing clients with matters before the commission) then there ought to be," said Jerry Fenn, who recently resigned as chairman of the liquor commission. "I never worried about whether there was a rule or not, I simply refused to represent any clients in the liquor business."

Fenn and Hales, both of whom are attorneys, say they routinely recused themselves from ruling on cases where other attorneys in their law firm represented clients with liquor matters before the commission.

Fenn believes the commission, a quasi-judicial body with the power to grant and revoke lucrative liquor licenses, must avoid every appearance of conflict of interest. And if any commissioner is involved with any company that appears before the commission, then the appearance of conflict could have a "chilling effect" on the entire process.

Could that "chilling" process be why Club Vortex has not been brought back before the liquor commission since mid-1996, despite repeated visits from Salt Lake police?

"No one even knew my firm was representing them," Hales said. "I have never spoken to anyone in the (Department of Alcoholic Beverage Control) about Club Vortex."

No one, with the exception of the building landlords trying to evict the business. Simantob said his representatives have delivered stacks of police reports documenting offenses that could be construed as violations of the club's liquor license. But liquor regulators have yet to act on that information, he said.

The reason they haven't acted, said Dorius, is because they can't.

Club Vortex is in a two story building and it's only a private club on the upper floor. The show that the club was penalized for hosting occurred on the bottom floor.

Thus the Department of Alcoholic Beverage Control had no jurisdiction to act on the police reports regardless of their seriousness.

"This happened off of our licensed premise," Dorius said. "It had nothing to do with the liquor license."

The problems at Club Vortex led Salt Lake City on Dec. 12, 1996, to initiate its own legal action against the club to revoke its private club business license.

The city said the grounds for revocation were "the operation of a public nuisance by failing to control customer actions" and "alleged violations of Salt Lake City ordinances regulating sexually oriented businesses," as well as violation of regulations over businesses that sell alcohol.

At the core of the city's action was a "Fetish Ball" on Oct. 30, 1996, during which patrons simulated spanking and whipping of other patrons. Some patrons even performed the "flagellation" for other patrons while locked in a cage. Flagellation of the buttocks, even if simulated, is in violation of state law.

However, Salt Lake hearing officer Michael W. Crippen ruled that the actions of the club and its patrons did not constitute a public nuisance, and that revocation of the license was an excessive remedy.

Crippen did place the club's license on probation for one year and ordered business suspended for five days.

State liquor regulators knew about the action being taken by Salt Lake City, but the "Fetish Ball" incident took place in the club's lower level, so only the city had jurisdiction, not the Department of Alcoholic Beverage Control.