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

"On a regular basis, I submitted actual material and labor costs to Steve Kahn," Lookingbill says in his sworn statement. "At that time, he instructed me to add a varying amount to the actual costs as a contractor's fee, and Steve Kahn required me to kick back all or a portion of the contractor's fee to him, which I did."

With Priebe's removal and Lookingbill's charge of graft, Norman grew more determined to eject Kahn and gain control of the Dragonfly before her investment zeroed out altogether. "This was everything that my husband left me," she says. "I might go down, but not without a fight."

On July 2, both Norman and Priebe filed a lawsuit against Kahn alleging he had committed fraud, breach of a fiduciary duty, and misappropriation of partnership funds. They requested a permanent injunction to remove Kahn as general partner and in his place install CCMN Inc., a corporate shell that Norman formed to take over the Dragonfly once and for all. But once the Dragonfly managed to open its doors on August 5, Kahn proved more tenacious and resourceful than she could ever imagine.

Weekend nights at the Dragonfly, lines of the young and the restless roped around the block as if the entrance held the key to life's pleasures. Each wannabe patron shuffled past Santiago Pena's metal dragonfly sculpture clinging to the outer wall and past bouncers with headsets at the front door. They crushed toward the bar and a row of stools with dragonflies sculpted into their metal chair-backs. Pena's black granite water wall dribbled above the bar. They pushed past odd jellyfish-like sconces clinging to the walls and moved through a tunnel canopied by a copper canvas, channeling them into a room that harbors a small wine and cigar bar. They hung onto the spiral staircase reaching up to the expansive mezzanine overlooking the dining room below. They jammed onto the rooftop patio, taking in the thick summer air, struggling to order drinks from the outdoor bar on the west wall. During dinner, they chewed on selections from an "eclectic new American cuisine" that included 20,000 Leagues Calamari and Texas Cross Quail.

Jazz filled the dining room during dinner. But at roughly 10:30, the tables were pushed aside and the floor was cleared. Colored lights were switched on, and the place was pumped into a high-energy dance club with the deadening throbs of house music. From the iron railings on the rooftop patio, people leaned and waved at cars creeping down Greenville Avenue, summoning even more bodies into the stuffy environs.

"It was almost unpleasant to be there," says an early Dragonfly frequenter. "It was just a mob of people. Every inch was packed. It would bottleneck on the spiral staircase, and it just became rows of standing people, unable to move."

Kahn seemed to revel in the Dragonfly's charged atmosphere. He rented a house down the street from the venue that he christened his "entertainment house." At least three sources close to the Dragonfly say he would brag about how he would lure small groups of women to the house and indulge in long sessions of sex.

Kahn scoffs at such talk. He says he rented the house so his managers could go to the bathroom. "When a manager has to use the restroom at the Dragonfly," he says, "you can't stand in line and ask people to get out of the way."

Every weekend the pace was the same, so much so that Kahn imposed a five-dollar cover charge in an attempt to keep the crowds manageable and generate much-needed revenue. Kahn referred to the Dragonfly as a five-star restaurant, but Dallas restaurant critics ripped the place apart, belittling its badly formulated and executed menu and its makeshift jazz stage that made dining clumsy. The place reverberated with noise, but bad food and jarring sounds didn't stop the crowds drawn to its bristling singles scene from coming. The space was perpetually plugged with Dallas beautiful people--scantily clad and fearlessly forward.

But as the Dragonfly swelled with success, the struggle for control of it intensified. Dissatisfaction with Kahn was running at a fever pitch among many Dragonfly investors. "I had doubts of ever seeing my money out of it with him in charge," says one limited partner who spoke on the condition of anonymity. "There was a lot of smoke, but no fire; a lot of suspicion, but not necessarily hard evidence. Any hard evidence that should have existed was covered up by sloppy records and bookkeeping."

In late September, Norman and Priebe played on this discontent, embarking upon a scheme to secure the proxy votes of two other investors to remove Kahn as general partner and put Norman's CCMN Inc. in his place. To secure a majority of votes, Norman and Priebe had to guarantee to buy the two investors' shares once Kahn was removed.

On September 28, with the necessary proxy votes in hand, Norman went to the Dragonfly and slapped Kahn with a notice of removal as general partner. The only problem was, Kahn refused to leave, laughing at Norman's attempt to fire him. Then he called the police, telling them that Norman was no partner of his, but a trespasser; he demanded that she be arrested. As proof, Kahn showed the police the Dragonfly lease, which bore his name as tenant. Not wanting to involve themselves in a civil matter, the police let Norman off with a criminal trespass warning and told her to leave. Norman had no choice but to pursue her remedy in court.

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