RCI Hospitality Holdings Under Investigation Following Indictment: What Investors Need to Know

RCI Hospitality Holdings Under Investigation After Indictment

On September 16, 2025, RCI Hospitality Holdings, Inc. (NASDAQ: RICK) experienced a dramatic fall in share price, dropping nearly 16% as investors reacted to urgent news from the New York Attorney General's Office. The allegations against the company, CEO Eric Langan, CFO Bradley Chhay, and additional executives include serious offenses such as bribery and criminal tax fraud. This indictment has raised significant concerns regarding the company's financial practices and compliance with legal standards.

Background of RCI Hospitality Holdings

RCI Hospitality is known for its operations of adult entertainment venues, including several strip clubs in Manhattan. Prior to the indictment, the company had maintained assurances regarding its adherence to financial regulations and the adequacy of its internal controls. However, the recent developments have led to questions regarding the veracity of these claims.

Details of the Indictment

According to the indictment filed by the New York Attorney General, RCI and its executives are accused of engaging in a scheme to bribe a tax auditor. The objective of this conspiracy was to evade assessment of unpaid sales taxes during ongoing audits. The indictment mentions numerous benefits offered to the auditor by RCI, allegedly amounting to millions of dollars in taxes owed.

The serious nature of these allegations has sparked interest from national shareholder rights law firm Hagens Berman, which has initiated an investigation into whether the company misled its investors regarding financial compliance and internal controls.

Investor Response and Share Price Impact

The immediate result of the indictment was a significant downturn in RCI’s share price, reflecting the market's reaction to the potential implications of these serious charges. Investors are now left grappling with uncertainty about the company's future and the accuracy of its prior financial disclosures. Hagens Berman has urged those affected by the drop in share prices to submit information and consider their legal options.

Importance of Transparency

These events underscore the critical importance of transparency in corporate governance, especially in industries vulnerable to legal scrutiny like the adult entertainment sector. The ongoing investigation will be keenly watched, as it may uncover further irregularities and lead to heightened regulatory scrutiny.

Whistleblower Opportunities

In light of these allegations, whistleblowers who possess non-public information regarding RCI are encouraged to come forward. The SEC has programs in place to reward individuals who provide substantive information that aids investigations, possibly allowing them to receive a portion of any financial recovery.

Conclusion

As further developments unfold regarding RCI Hospitality Holdings and its executives, investors should stay informed about the outcomes of the ongoing investigation. The repercussions of these allegations could influence shareholder trust and financial performance in the future. Those who have sustained losses due to falling stock prices may have the opportunity to seek restitution through legal channels.

In this volatile environment, being vigilant and informed is crucial for investors connected to RCI Hospitality Holdings. Legal experts recommend monitoring the situation closely as it continues to evolve.

For more information about the investigation or if you believe you may have pertinent information regarding the case, you are invited to reach out to Hagens Berman's legal team.