Michael Rose said he met Jon Ferraro through a mutual friend in 2006 or earlier. Already experienced in the strip club business, Rose agreed to act as a consultant to Ferraro, who was planning to open the first Silk on West Silver Spring Drive, on Milwaukee’s northwest side. Rose attended the opening of the first Silk and helped Ferraro on Silk locations that later opened in Juneau in Dodge County and Middleton outside of Madison.
Ferol LLC was created May 16, 2009. On May 29, 2010, a second business, Six Star Holdings was created.
In February 2012, Six Star and Ferol filed an amended and supplemental complaint that challenged the theater and public entertainment club ordinances, as well as continued to challenge the tavern and tavern-amusement ordinances. However, in March 2012, the City repealed the theater, public entertainment club, and tavern-amusement ordinances and at the same time enacted a new ordinance governing “public entertainment premises.”
In August 2013, U.S. District Judge Lynn Adelman ruled that Milwaukee’s 1920s-era ordinances governing theaters were unconstitutional. If Ferraro could prove he was serious about opening a club, he could be entitled to damages, Adelman ruled. In the trial, Silk’s attorney Jeff Scott Olson asked the jury to award up to $1.3 million, based on lost revenue. The city asked the jury to provide no award.
In September 2013, Rose proposed laundering money in a new club, “investing $200,000 into a new club that Rose was developing in Las Vegas.” After the agent told Rose his client couldn’t openly invest in Rose’s new club, Rose assured him that the “client’s investment would be secret and that he would pay the client 12% of any profits as false expenses for services that we not actually performed.” The cash was provided by an undercover FBI agent posing as a businessman trying to launder cash, according to federal court documents. A cellphone warrant filed in Milwaukee says Ferraro began talking to the undercover FBI agent in September 2013, the same month Rose was proposing to launder money through the new club in Vegas. Ferraro exchanged three dozen text messages and phone calls over the next 18 months with the FBI agent, according to the warrant.
Ferraro and Rose were named in a tavern and liquor license application for a Gold Club in Las Vegas, which was approved in May 2014 by officials in Nevada’s Clark County. The club was at 6370 Windy Road, between the airport and Interstate 15. Ferraro chronicled plans to open the Las Vegas club on his Instagram and Twitter accounts. Rose said he and Ferraro had agreed to open a club geared toward locals and tourists and not try to compete with the bigger, high-end clubs in Vegas. But as the opening neared, Ferraro wanted to change the business plan and to try to compete with the bigger clubs, Rose said. Rose declined to give details, but he said they involved pricing and it was a significant dispute. “It was like you set up a business to sell pizza and then you change and want to sell tacos,” Rose said. The club closed in summer 2014, about six months after it opened, “due to a lack of capital,” Rose said. When the business closed, Rose said Ferraro owed him money and the relationship between them soured.
A federal jury on February 19, 2015 awarded Silk Exotic owner Jon Ferraro (through his company, Ferol) $435,500 but did not clear the way for Silk to open a club downtown.
Ferraro was indicted along with Rose and others by a federal grand jury in San Francisco on February 24, 2015, but Ferraro’s name was not listed in court documents in California. His indictment would not become public for over a year.
A federal appeals court on April 13, 2016 upheld a $435,500 jury award in favor of a nude dance club owner who claimed the city of Milwaukee violated their rights during efforts to open a club downtown. “This case requires us to visit the world of strip clubs —establishments that no one seems to want, officially, but that are somehow quite lucrative,” wrote Judge Diane Wood in the opening line of a decision by the 7th U.S. Circuit Court of Appeals. “The City is fighting a losing battle over a regime whose time has passed,” Wood wrote for a three-judge panel.
City officials approved a nearly $1 million payment to a strip club owner who has been fighting for years to open a new club downtown. Milwaukee Mayor Tom Barrett signed off on the deal Thursday, July 14, 2016, just over a week after the city’s Common Council voted unanimously to approve the settlement. The nearly $970,000 payout to Silk Exotic comes about a month after Milwaukee’s city attorney urged aldermen to authorize the deal to avoid further legal fees.
“Should the city continue to litigate the attorney’s fee award, attorney’s fees will simply grow,” City Attorney Grant Langley wrote last month in a letter to aldermen. “There is not a reasonable likelihood of success for continued appeal of the fee award.” Langley’s June 8 letter also noted that his office had defended the case for more than five years.