Show Him the Money
Breeding is a funny thing. Cross a dragon and a lion and you get Drálion. But what do you get if you pollinate iron with a little creative bookkeeping? Steel Restaurant & Lounge, at least if operator Khanh Dao's partner Mike Chen is to be believed. Chen, who is suing Dao for allegedly running afoul of their partnership agreement among other things, claims he owns 51 percent of the limited partnership Steel Restaurant & Lounge LTD, a stake he got in exchange for $100,000. He also claims he's put up more than $187,000 in unsecured loans since October 2000. But instead of making partnership disbursements and significant loan repayments from the $4 million to $6 million in annual revenues Chen estimates Steel reaps (hard to know where that figure comes from since he claims Dao won't let him peek at the books), he alleges Dao has diverted the cash. Where? According to the lawsuit, to little things like making rent and mortgage payments for herself, family members and employees; covering car payments for the same general brood; taking expensive vacations under the guise of company business; putting family and friends on the payroll in exchange for little or no work; and utilizing "the restaurant's petty cash account like a cash machine for personal use." In addition, Chen charges that Dao has used Steel assets to buff up Drálion by making lease payments for the new restaurant from the Steel partnership checking account, diverting supplies and wine from Steel's wine cellar to Drálion and deploying Steel employees at Drálion. Though Dao couldn't be reached for comment, in court papers she denies all of Chen's allegations. Nonetheless District Court Judge Karen Johnson imposed a ruling barring Dao from using Steel as a cash machine and from channeling Steel assets to Drálion. The ruling also blocks Chen from entering Steel or Drálion except to examine the books. The dispute is scheduled for a hearing on March 27.
Operator Patrick Colombo (Ferré, Crú) says he is backing away from launching a restaurant in the former Eccolo space, at least for now. Instead, he hopes to expand his portfolio in NorthPark Center of all places as part of the mall's upcoming $200 million-plus expansion project that will include a Nordstrom department store and a multiscreen theater. Colombo is trying to nail down the space between Neiman Marcus and Nordstrom where he'll open an American tavern concept called Central 75. "If you look at NorthPark, it's mainly focused with a lot of chain operators," he says. "So for them to go at an independent is a little bit of a leap for them." If all goes well, Colombo hopes to open the restaurant before Christmas 2004.
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