Jerry Payne, attorney and ex-strip club owner, vs. the IRS and the Houston Chronicle

The Long Shot

Jerry Payne can be a hard guy to keep on track.

It's not because when you go to interview him — whether it's at 1:30 or 2 on a weekday afternoon — he immediately asks if you want to join him in a beer. Truth be told, he just nurses a bottle through the ensuing hours.

And it's not because he talks blithely of having “a puff of marijuana” once in a while. Because whatever Payne is during a conversation, a mellowed-out stoner he's not.

Strap yourself in and hang on when Payne starts talking.
Photos by Daniel Kramer
Strap yourself in and hang on when Payne starts talking.
Payne and his daughter Julia; he all but gave up his law practice to help her.
Daniel Kramer
Payne and his daughter Julia; he all but gave up his law practice to help her.

But following his point can often be tough, because it comes at 100 miles per hour, and it's usually at the end of four or five tangents, discursions or a backstory he's suddenly remembered to provide.

Then again, there's a lot of story to tell: palling around with both George Bushes; finding himself the somewhat hapless owner of a Houston titty bar; taking on the IRS in a decade-long battle featuring stripper-obsessed federal agents; and, nowadays, fighting the Houston Chronicle and its parent, the media giant Hearst Corporation, over claims the Chron faked its circulation numbers and Hearst itself is a monopolizing, bullying threat to press freedom.

About the only time he isn't going 100 mph is when his 38-year-old daughter Julia walks in the room. Born with cerebral palsy and “general retardation,” she has had a difficult time adjusting to adult life. The long-divorced Payne has essentially taken five years off from his practice to focus on her, a slow, often frustrating project that appears to be succeeding.

When Julia leaves, it's back to the pinball-type conversation. What becomes clear is that Payne is a guy who loves taking on long-shot battles, and so far has done pretty well at them. The Chronicle fight is probably the longest shot of all, but he's not flinching.

It is, after all, the third of Payne's fights against intimidating opponents, and the track record is there for anyone to see.

The First Battle:

In which Payne takes on furtive Greeks and Germans, horny feds, conniving state bureaucrats and the all-powerful IRS

Even after he got a law degree from UT in 1966, Payne had a varied career; at one time he was an Austin real-estate developer until the 1980s bust hit. Still, he never saw himself owning a “gentleman's club,” especially one that helped usher in the Galleria area's nationwide reputation as a Mecca for the upscale table-dance experience.

As with almost all things Payne, the details are voluminous, complicated and involve more technicalities than anyone wants to read. In essence, though, he took over Caligula XXI (And what name screams “class” more than Caligula?) in the late 1980s because its owners couldn't pay the legal fees they owed him.

The two owners had hired Payne to help them get their liquor- and sexually-oriented-business licenses. The pair — the multinational team of Gerard Helmle and Leo Kalantzakis — then had a falling-out. It's the kind of thing that can happen when charges of dealing drugs or of being a drug informer start getting tossed around.

Kalantzakis left for parts unknown and Helmle struggled to get the proper licenses while the drug accusations hung in the air. So he sold the club to Payne, who figured he wasn't going to get any other payment for his time spent representing the two.

Payne quickly found that — especially before such clubs “matured” into the huge businesses they are today — running a legal practice is no training for running what he always refers to as “a titty club.”

“Who do you get to run the club? Titty-bar managers are not my favorite category of people to pay money to,” he says.

Payne had great ideas for injecting some business discipline into the operation. “I would do things, have meetings and have key personnel, and then I'd leave it,” he says.

But what he calls “the kid in the candy store” philosophy soon struck. “There's so much cash and so much stuff — I can set it up [rules], but it needs daily care and handling by someone who's an owner who makes or loses that money,” he says.

The titty-bar industry as a whole turned its back on Payne's noble efforts to reform things. As the city discussed an SOB ordinance in late 1996, Payne stepped forward. “I wanted to form the Houston Association of Adult Entertainment,” he says. “I got [HPD] vice involved, I got TABC involved, all so there would be uniformity of conduct and all of these logical things. But none of the titty bars would do it...I tried to get HPD vice and the clubs out of a general condemnation of each other, but topless-club owners are just not organizable.”

Despite being thwarted in his attempt to be the Great Reformer, not to mention the troubles with managing things, Payne's club did make money. It went to a trust for his daughter. But it also triggered Payne's ten-year fight with the IRS.

Payne paints a dark picture of the beginnings of the fight, saying people he'd pissed off — like one of the former owners, like an HPD vice cop — sicced the authorities on him. The lengthy investigation included one IRS agent being fired for enjoying the talents of a rival club's strippers (His defense, which essentially was “Hey, some of that, I paid for!!” didn't wash).

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Is he the guy that sold Caligula to the Italian Mafia guy? If so, he should be investigated for that. He looks like a jew.

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