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

That someone Kahn knew turned informant against him seems a foregone conclusion; that someone planted drugs on him is another matter entirely. Pena strenuously denies having acted in either capacity. "All of it is BS. All he's trying to do is not pay the bill that he owes. I've never seen cocaine, man. I don't know what it looks like, much less plant it."

Even Chavez believes that Kahn's charge that a Pena-led trio framed him by planting drugs in his car is hogwash. "I'm willing to bet that's 99 percent not true," he says. "[Kahn] ran his mouth saying that I'm the one that put them in his car. And then he said the valet did it, that Pena did it."

However, Chavez maintains that Priebe, Pena, and Norman were involved in a corrupt conspiracy to boot Kahn. He has sworn under oath that he and other Dragonfly employees were offered payments in an attempt to solicit testimony detrimental to Kahn. Chavez charges that Norman called him on his cell phone one evening and offered him $35,000 to testify against Kahn. Chavez says he asked for $50,000.

Norman adamantly denies tampering with any potential witness or offering anyone a bribe.

"Pena was in cahoots with Charlott for a long time," says Chavez. "That building is a moneymaker, and she wants to run it...She wants to be the queen of everything."

After seven months of legal wrangling, Charlott Norman finally had her way in court. On March 12, Judge David Evans granted her a temporary injunction, finding that the September proxy vote was legitimate and done according to the terms of the partnership agreement; she had every right to remove Steve Kahn from his position as general partner and install CCMN Inc. The judge will likely rule on Kahn's countersuit in the fall.

But that didn't stop Norman. On March 16, she was at the Dragonfly with a locksmith in tow, changing every lock in the place. Once inside, Norman walked to the bar, her eyes scanning the room. This was the first time she'd been there since a constable escorted her off the premises 10 weeks ago. A thick, musty smell soaked the air. Drywall was peeled back in spots on the ceiling near the front windows. Crushed cigarette butts dotted the concrete floor veiled with a layer of dust. The Dragonfly had a leaky roof.

"It looked better than I thought," Norman offers. "I didn't know what to expect."

Several minutes later, Brad Priebe strolled through the front door. This was the first time he had been in the bar since shortly after it opened in late summer, when Kahn had him and his girlfriend thrown out by four bouncers--people Priebe hired, he says.

Norman fully intends to raise the Dragonfly from its financial swamp, though it won't be easy. She says the TABC is hesitant to issue a new liquor license if there's even a hint that Kahn would have a hand in its operation. (TABC officials declined to comment.) She may also have to file bankruptcy. In its five short months of operation, the Dragonfly generated somewhere between $1.1 million and $1.4 million in gross sales. Yet its investors say they have yet to see a dime of it.

After reviewing Dragonfly sales and invoice records from the restaurant's computer files, Norman says that at least $400,000 is unaccounted for. She discovered that the operation owes tens of thousands of dollars in TABC taxes along with a significant chunk of the original construction costs. Large outstanding balances are due the plumber, the electrician, and the refrigeration system and booth-seating contractors. One subcontractor told the Dallas Observer he's owed roughly $30,000, and Kahn stated flatly that he'd never see a penny of it. Kahn has taken a similar position regarding contractor Santiago Pena, claiming the man who he once said had "saved his ass" was owed nothing.

From his tiny, disheveled office in the Arcadia, Kahn denies any misuse of Dragonfly funds. "Every dollar is documented in the checking account," says Kahn. "The money is reconciled every single night. I don't touch a penny, and every penny is accounted for." But when asked to present hard proof--financial reports, bank statements, corporate ledgers--he offers nothing besides his own indignant attitude.

Kahn says he personally pumped more than $264,000 into the Dragonfly, though many close to the operation believe most of it came from various loans made to him by his Ocean Club investors. What isn't in doubt is that he pulled money out at a rapid rate to pay himself back, a move Chavez says severely hampered the Dragonfly's ability to pay TABC taxes.

"If he put in all this money," says Norman, "we had no idea what it was for or where it went."

Kahn, wearing jeans, cowboy boots, and a Road Runner cartoon T-shirt, says his fight is anything but over. One day he will prove he was unfairly maligned and send the Dragonfly aloft again. "There's absolutely below zero evidence on anything they've alleged. I mean, it never happened.

"I have no enemies," he stresses. "I'm a very passive individual. I try to do the right thing as much as I can. And I've done the right thing in relation to everybody."

He leans back and thinks for a moment. Then he lunges forward, gesturing dramatically with palms open. "I'm the best partner you could ever have. My hands are clean.

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