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

However, state District Judge David Godbey short-circuited her next attempt to evict Kahn by forcing the case into mediation. Norman and Kahn reached a settlement whereby he would buy out her interest. Terms included a down payment of $35,000 due November 9, followed by monthly payments of roughly $8,700 per month for 24 months. But when Kahn failed to produce a final settlement draft or make any payments, Norman hunkered down for their fiercest round of sparring yet.

On December 22, Charlott Norman again moved against Steve Kahn, this time in the form of a crude corporate takeover attempt. Armed with documents proving she was now the general partner of the business operation, Norman hoped to physically seize the Dragonfly premises.

Accompanying her was Santiago Pena, who had fallen into a financial black hole because of Kahn. He says he is owed more than $120,000 from his Dragonfly labors and more than $78,000 for his work on the Ocean Club. He even cites the emotional turmoil created by his association with Kahn as the cause for the breakup of his marriage. Small wonder he joined forces with Norman by providing her with his key to the nightclub. But exactly what happened after their entry is still the subject of much dispute.

Ask Dragonfly chef Erick Chavez and Steve Kahn, and they will say that at 7:30 a.m., Norman and Pena ripped the side door of the restaurant off its hinges and forcibly made their way inside, tripping the security alarm in the process.

When Kahn and Chavez arrived at roughly 7:45 a.m., they claim, they found the intruders, joined by "three or four other individuals, looked like biker kind of individuals, long hair, tattoos, people of that nature." Chavez says the biker gang immediately took over the place, terrorizing them by brandishing guns, knives, and other weapons. Both Kahn and Chavez claim they asked the group to leave, a request they refused. So Kahn called the police.

Norman's and Pena's accounts of the day differ considerably and are partly substantiated by police reports, which make no mention of a forced entry or any bikers assaulting Kahn and Chavez with weapons. However, their entry did trigger the security system, and the police were called to the scene, followed by Kahn and Chavez. When Kahn insisted the officers arrest Norman and Pena for breaking and entering, they refused after Norman produced paperwork proving she was a partner. Before the police left, they asked whether anyone was armed.

Pena said he was and produced a valid carrying permit. Whereupon Kahn demanded that he be allowed to carry a gun as well. Since he was ostensibly on his own premises, the cops gave him the OK, says Pena, and "Steve ran out to his truck and grabbed a gun and came back and was putting the gun in the front of his pants there, and walked around with it like that." Norman would later secure a gun from her car--but only for protection, she says

What followed was a session of cop pingpong: Kahn or one of his cohorts would punch 911, the cops would arrive, Kahn would demand they arrest Norman and Pena, and the officers would explain they couldn't get involved in a civil matter and leave. Between 7:30 a.m. and 10:42 a.m., this episode was repeated four times, until one officer threatened to make an arrest for abuse of the 911 system.

Pena desperately wanted to leave, but Norman persuaded him to stay, she says, until 11 a.m., when her pair of bodyguards arrived. Her attorney, Gary Sibley, provided them, and as it turns out, Kahn's description of them wasn't far off: They were longhaired, leather-jacketed, and menacing. Norman and her companions essentially became squatters, occupying the premises for the day.

By the afternoon, Kahn had seen enough. So he went to the courthouse and secured an emergency temporary restraining order against Norman. At 6:30 p.m., a Dallas County constable arrived to escort her and the bikers, who were armed only with pocketknives, off the premises. Kahn had successfully thwarted Norman's second coup attempt.

Kahn would claim that Norman, Priebe, and Pena tried to overthrow him yet a third time when he was arrested by the TABC on New Year's Eve and charged with possession of cocaine. On January 8, under pressure from TABC officials, Priebe surrendered the Dragonfly's liquor license to the agency. Kahn charges that Priebe had no authority to surrender the permit since he had been forced out of the operation the previous summer. Of course, that only raised several questions: The courts had yet to decide whether Priebe's ouster was lawful, whether Kahn was still the general partner, or whether Norman had successfully usurped him of that position. Without a liquor license, however, Norman and Priebe had essentially shut out Kahn by shutting down the Dragonfly.

In February, Kahn countersued Priebe, Norman, and Pena for $5 million, charging them with slander, perjury, assault, entrapment, and breaking and entering. Kahn maintains that these activities were all part of a broad conspiracy to pry him from the Dragonfly's reins through smear tactics and a false arrest. Among other things, the suit alleges that Pena, acting in concert with Norman and Priebe, planted cocaine in Kahn's black Ford Explorer and then tipped off TABC agents. Kahn claims he has evidence that "certain individuals" made phone calls New Year's Eve day to Dragonfly employees indicating that "something big is going to happen to Steve tonight." Kahn and his attorney, John Schorsch, also say they are in possession of TABC documents indicating Pena's involvement in the raid. "It's not hard to plant drugs in somebody's car," says Kahn. "That will come out in the wash as well."

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