The King of Diamonds Gentleman's Club in Inver Grove Heights has filed for bankruptcy, but owner Susan Kladek plans to keep the doors open.
Kladek filed for Chapter 11 bankruptcy protection on Friday in U.S. Bankruptcy Court in Minneapolis. The business owes $1.9 million to Alliance Bank of St. Paul, $1.7 million to the IRS, and more than $1 million to the Minnesota Department of Revenue.
"The business has a good cash flow," Kladek said. "It just can't withstand the tax burden that Larry left the business with."
Kladek bought the business from her husband, Larry Kladek, who was sent to federal prison last year for failing to pay taxes on more than $1.2 million in unreported income. Susan Kladek said the two are in the process of getting a divorce.
"It was unbeknownst to me how tremendous that debt would be," she said.
The strip club has been trying to improve its image by holding food drives, and the Kladeks have allowed Hmong farmers to rent garden plots on their 78-acre farm.
With a $2.4 million project underway to transform the nearby historic Rock Island Swing Bridge into a recreational pier, some Inver Grove Heights residents have become more vocal about seeing the King of Diamonds closed.
"I'm supportive of the pier," Kladek said. "It's a fantastic thing for our community. There's nothing offensive outside my building or anything different than any other business in the state of Minnesota, so I don't know why there needs to be any conflict."
JACKIE CROSBY
