Lord of the Fly

Investors in the Dragonfly Bar & Restaurant say they were fleeced by partner Steve Kahn, but he claims his accusers had him framed

"Dragonflies have a ferocious appetite," said Kahn in The Dallas Morning News, explaining the bar's "nouveau eco" theme and its relationship to Lower Greenville nightlife. "Their sexual ability is abundant, and they're always mating and finding companions." Priebe told the newspaper he and Kahn planned to open several bars with the fly theme, including the Bar Fly and the Fruit Fly. It was a strategy they thought would catapult them to the pinnacle of Dallas' nightclub scene.

"I've been in the club business for quite a while," says Kahn, "and it was a cool name and a cool concept." And that concept was how Priebe sold Norman on both Kahn and the Dragonfly: a tony crossover nightspot that included a restaurant, jazz lounge, cigar bar, and dance club slated for the former London Tavern space on Greenville Avenue.

Norman recalls that the first time she met Kahn she didn't care for him. "I just got the feeling that he was not an aboveboard kind of guy." But his resume, which included key roles in clubs like Eden 2000, Blue Planet, and Prime Time 21, impressed her. And she could see that his persuasiveness and charisma were just what the project needed to draw attention and crowds. Even though a bit smarmy, he definitely had the gift of gab. And he would be a good front man.

Tall and wiry with slicked black hair, 38-year-old Kahn is a dark, brooding man with a stark, angular face. His speech is rapid and spasmodic, his words running together almost in a slur. Some find his approach unpleasant and grating, others manipulative and convincing. But almost no one disputes that Kahn has a knack for uncovering personal vulnerabilities--whether they be greed, vanity, or pity--and exploiting them mercilessly.

"I didn't like Steve. But that didn't mean I couldn't do business with him," Norman says. Yet if she had taken the time to peek into Kahn's past, she may have reached a different conclusion.

Kahn comes from a family of fiercely independent entrepreneurs who have a nasty habit of suing the hell out of one another. In the late '70s, his father, Charles Kahn, launched a wholesale shoe business that he quickly expanded into 10 retail stores. In the '80s, through his son Bruce, Charles became involved in the nightclub business, an enterprise that eventually drew him and both of his sons into a series of club ventures.

In 1991, Steve Kahn, along with his mother, Marcia Kahn, started Condom Sense on Greenville Avenue, a retail prophylactic business that gained popularity during the campaign for safe sex. It was, Kahn says, his proudest moment as an entrepreneur. "We enhanced plenty of relationships," he boasts. "The mentality changed in our society--you know, the safe-sex thing. The divorce rate started to slow down. People were getting in tune with their sexuality and were hopefully doing it as couples."

In 1993, Marcia filed suit against Steve, accusing him of embezzling $18,595 from Condom Sense and spending the money for his own personal use instead of covering business expenses and debts. The case would be settled in 1995. Condom Sense on Lower Greenville was sold to Jamal Alshalabi, a Dragonfly investor, in 1997. Marcia still operates the Condom Sense on Electronic Lane in Dallas.

Marcia had already been sued in December 1990 by her son Bruce, who claimed that he had purchased a dining-room table, couch, and refrigerator and stored it in his mother's house for safekeeping. Only she refused to return the items. The case was eventually dismissed for "want of prosecution."

In 1996, Steve and his father were sued by nightclub owners M.M. Halabi and Abdul Galil Noaman, who alleged fraud and conspiracy in connection with the Kahns' operation of Prime Time 21, Eden 2000, and The New Mirage clubs. Halabi and Noaman were partners with Charles Kahn in the corporations that ran these clubs, each with roughly a one-third interest. Charles had installed Steve as manager of some of the clubs over the strenuous objection of the other partners.

Among the allegations were that Charles Kahn diverted corporate funds to cover personal expenses and that father and son had conspired to wrest control of the clubs from Halabi and Noaman. As part of the settlement, ownership was divided between them: Charles took control of Eden 2000; Halabi and Noaman became exclusive owners of Prime Time 21 and The New Mirage. Steve Kahn was also permanently enjoined from being on the premises of either Prime Time 21 or The New Mirage.

On July 10, a week before the settlement became final, Charles Kahn took his own life. Marcia Kahn had sued him for divorce six months earlier, and police reports reflect that he was despondent over the end of his marriage. One acquaintance says his depression was exacerbated by the financial strain caused by the Halabi case.

In July 1998, brother Bruce filed suit against Steve for breach of contract, alleging Steve diluted his 30 percent ownership interest in 35 Royal Entertainment, a company they formed to operate the Ocean Club & Video, a sexually oriented business venture that figures prominently in the demise of the Dragonfly. Steve was accused of procuring additional investors primarily for his own personal benefit. On February 12, the brothers, having reconciled their differences, filed a joint motion to dismiss the case.

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