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and that the Club, with an SB permit, would earn a net profit of over
$1 million per year.
On March 14, 1990, in the above litigation, the City of Houston
decided in favor of the Club and issued the Club an SB permit for an
indefinite period of time.
Mixed Beverage Permit Issue
During the years in issue, petitioner also provided extensive
legal representation to 2618 Inc and to the Club in litigation
against the Texas Alcoholic Beverage Commission (TABC).
During 1987, largely because of the criminal charges pending
against Helmle, TABC refused to renew the Club's two mixed beverage
permits necessary to sell alcohol to patrons. Sales of alcoholic
beverages constituted the majority of the Club's gross receipts. As
discussed further below, in order to increase the likelihood of
receiving mixed beverage permits from TABC, petitioner nominally
arranged to buy out Helmle's stock interest in 2618 Inc.
After TABC failed to act on the Club's application for the mixed
beverage permits, petitioner filed suit in a State court against TABC
on behalf of 2618 Inc and the Club seeking actual damages of $2
million and punitive damages of $10 million.
In August of 1988, a settlement agreement was reached between
TABC and the Club wherein no damages were awarded, but TABC agreed to
issue the mixed beverage permits to the Club effective September 20,
1988.
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