Mr. S.O.B.

Rick's CEO Robert Watters wants to make sexually oriented businesses respectable. So why, in his adopted hometown, does he get no respect?

The ramshackle white building with a blue door sat in the shadows of the Galleria, at the business end of a mostly residential neighborhood. Across a field was the planned site of the Men's Club, a topless bar that would cater to suit-wearing men with credit cards.

Thanks to an unseen benefactor, the scruffy little building at Fairdale and Rice became a Pentecostal church. "We had been praying for help, and we were very thankful," says Jorge Garay, an elder of the Iglesia Misionera Pentecostes.

God indeed works in mysterious ways. In 1989, Robert L. Watters -- owner of Rick's Cabaret, Houston's highest-profile topless bar -- paid the building's rent for the church. He was attempting to thwart the Men's Club, a potential competitor, by forcing its chosen site into violation of Houston's licensing laws. If the club's proposed spot were too close to a church, it would run afoul of the city's sexually oriented business ordinance.

Watters is proud of his ruse. He says he was driving one day when he saw the First Hispanic Pentecostal Church and got the idea to stop in and ask if its members wanted a second outpost. Pentecostals generally frown on topless bars, but the church didn't quibble over the Lord's funding mechanism. The rent was paid, and who paid it wasn't an issue. Seven years later, the Iglesia Misionera Pentecostes boasts about 100 members.

"Isn't it a wonderful thing to have created?" asks Watters with a sly smile.
He, too, was blessed. His competitor's license was postponed -- at least, until Houston Police Department vice officers discovered his connection to the new church.

It was a clever manipulation of the law, and a strategy that reveals much about Robert Watters. The balding, bespectacled 45-year-old lawyer hopes to be at the forefront of a major change in the lucrative topless industry. Watters wants to tame and upgrade topless bars; to titillate in a clean, expensively furnished room; and to make Rick's a nationally recognized brand name with branches across the country.

If any topless club can accomplish that, probably Rick's can. The club was one of the first in the country to take topless dancing upscale. It markets itself as a businessman's hangout, a place where white-collar guys can cut deals while ogling beautiful women. Rick's has been featured in men's magazines and TV shows, and in Houston, it ranks easily as the city's most famous sexually oriented business.

Last fall, Watters dragged topless dancing up another notch in respectability when he successfully had Rick's Cabaret International Inc. listed on the NASDAQ Small Capitalization market. It was the first topless club to be listed on a stock exchange, and its shares hover around a healthy $5 1/4 apiece. (Watters, now CEO, retains a controlling ownership.)

In his quest to gentrify the topless business, Robert Watters has rankled many -- especially those in his own back yard. He is described in unflattering terms by the police and regulators who keep an eye on his business. He and Rick's have been the targets of numerous lawsuits, many of which pitted partner against partner. And since making public his plans to open a Rick's near tony Southampton, he's attracted the wrath of neighborhood groups, city councilmembers and even his own industry.

In general, Watters has countered opposition with shrewd, lawyerly end runs, such as his support of the Iglesia Misionera Pentecostes. But his smooth moves have not earned him an adoring public. He's helped make Houston one of the world capitals of topless dancing, but the city shows no gratitude. Since announcing Rick's new location, Watters laments, "I've become Public Enemy Number One."

Even by the standards of oil-boom Houston, Salah Izzedin, the Lebanese oil man who brought Watters to Rick's, entertained extravagantly. His Post Oak townhouse's foyer was extraordinary; his indoor pool was magnificent; and a sumptuous feast was often set at a mammoth dining table for sports stars, River Oaks types and others. One partygoer recalls that the predatory-looking Izzedin would program the numbers of dozens of topless dancers into his phone and call them one by one, addressing them as "Shweetie" and inviting them to his soirees.

As the night was ending for staid attendees, serious partiers headed upstairs. An oft-invited guest recalls climbing the curved staircase, mirrored on the sides and underneath, to offerings of cocaine and pliable women. (Izzedin, who did not respond to attempts to reach him for this story, has denied lawsuit charges that he was involved in drugs and womanizing at Rick's itself.)

Watters never attended the oil man's parties, but even so, Izzedin's flashiness must have come as a shock to the tax-law specialist, a Canadian citizen with an impressive resume. In 1973, he received a bachelor of law degree from the London School of Economics; in 1975, he graduated with a taxation law degree from the Osgoode Hall Law School in Toronto. In London, he qualified to be a solicitor and practiced law.

In 1979, Watters moved to boomtown Houston with his then-wife, Claudia Heater, who'd been raised in Italy. Watters explains that his wife wanted to explore her Texas roots; her grandfather lived where the Lakeside Country Club is today.

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