Was It Something We Said?

Just as our review of The Wharf@Bayview Marina hit the streets, the doors of The Wharf, tucked over Lake Ray Hubbard, slammed shut. Word came via e-mail from the restaurant. "THE WHARF IS CLOSED," it barked.

Khanh Dao is out. Partner Mike Chen is in. The coup d'état at Steel, the inventively chic Japanese/Indo-chine restaurant and lounge founded by Dao in 2000, is the cresting of a contentious legal tussle triggered earlier this year. In a lawsuit, Chen accused Dao of siphoning restaurant funds for personal use and utilizing "the restaurant's petty cash account like a cash machine." He later alleged Dao ordered the shredding of financial documents to cover her tracks and urged the court to toss her in jail. Yet before Dao could shop for a jumpsuit, she and Chen reached a settlement in August. Details of the settlement are bound by a confidentiality agreement, and Chen refused to comment. But a source close to the tussle says the agreement provided Dao with a specific time frame in which to raise the necessary funds to buy out Chen's interest. The booty quest apparently never got traction. With a restaurant racked by debt and legal controversy, the source says Dao had difficulty scaring up the cash. So with her hands empty as the deadline hit, she was forced to sign her ownership interest over to Chen and shepherd a smooth transition process, turning over all restaurant records, files and inventory. Only instead of smooth, the process was testy. "It's been a dogfight for everything," says the source, adding that Dao had the phone service shut off, instantly throttling the processing of credit card transactions.

To get the restaurant back on rails, Chen pulled in restaurateur Patrick Colombo, whose restaurants Ferré and Crú include Chen as a limited partner. "We have to build back the records for the last two years. There's no good financial information," Colombo laments. "I know that there's going to be a bunch of skeletons jumping out of the closet."

Dao, who didn't return calls for comment, submitted a written statement on the transition. "After months of efforts, I am pleased to announce that all my attention and focus will be with The Dralion Restaurant. I see this as an opportunity to capture the culinary and social excitement of Steel Restaurant and transport that a few feet up the street to a larger and, in many important ways, a superior venue...We will add to that Steel's intimate excitement of sushi and premium sakes."

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