GILFORD — The town's insurance company has agreed to pay $118,000 to the owner of a Kimball Road strip club for economic and non-economic losses to settle a lawsuit regarding a drug raid in October of 2011 and the subsequent actions of the town in hindering the owner's ability to reopen it.

The settlement for Willard Drew, the owner of the former Mardi Gras North, brings to a close a nearly two-year-long legal battle between him, the state Drug Task Force and the town, including Selectman Gus Benavides, Town Administrator Scott Dunn and two former selectmen, Kevin Hayes and John O'Brien.

"The parties represent that the purpose of this agreement is to 'buy peace' from further dispute and controversy between and among the parties..." reads the settlement agreement, which is public by law.

The court ruling is final and prevents Drew from taking any further action against the town or the individuals named in the suit.

According to the pleadings filed in the United States District Court for the District of New Hampshire, beginning in June of 2011 the New Hampshire Drug Task Force began an investigation into drug sales activity at the Mardi Gras. The investigation culminated in a raid on Oct. 11, 2011, by members of the task force, the Gilford Police and two SWAT teams, which resulted in the arrest of five dancers and two patrons. Three of the dancers were working in the club that evening and other police agencies had warrants to arrest the two dancers and two patrons who were not at the club that night.

The problems for the town began when the three selectmen, the town's code enforcement officer and the town's health officer, went with the Gilford Police to the property and entered the building at some point either during or immediately after the police action.

Drew's suit claimed, among other things, that his Fourth and Fourteenth Amendment rights were violated when town the officials conducted an inspection of the premises without any probable cause and contrary to established law. He also said his reputation and good standing in the community were irreparably harmed by the town because of actions that occurred in the year after the raid when he was trying to re-establish his business.

At the time of the investigation and raid, Drew was leasing the business to a company called the Mardi Gras North. He had no active role in its day-to-day operations. Although it continued to be open for a while, ultimately the Mardi Gras North closed and, unable to continue on alone and in the face a Liquor Commission inquiry that Drew said was triggered by the town, he voluntarily surrendered his liquor license in December of 2011.

Drew said his later attempts to reopen the business with a business partner were thwarted by the selectboard, which "placed unreasonable obstacles" against him by denying him an exotic dancing license.

He also claimed defamation because the board asked him to answer a number of questions about how his new business was to be operated and those questions included references to elements of a methamphetamine lab being found at the club. He said the questions also implied that the club was known as a place people could buy drugs and had "a recurring history of repeated violation of liquor laws related to serving visibly intoxicated persons and the consumption of alcoholic beverages by employees."

Drew claimed that these were not true, that the town should have known the implications were false and that it acted maliciously when asking about the claims and making them public. After an investigation and a hearing by the state Liquor Commission, Drew was cited for three minor violations and fined a total of $450.

Claims made against the state Drug Task Force and its agents were dismissed late last year because of sovereign immunity.

The suit says that of the $118,000, $92,000 will be paid to Drew and $26,000 will be paid to attorney David Bownes. Both portions of the settlement are taxable.

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