If Ewing abides by terms of a settlement agreement, the lawsuit will be settled and dismissed, the plaintiff says.
More than two months after City Councilor Blake Ewing publicly said investors of The Max Retropub were allowed to review company books, investors allege they have yet to be granted access.
However, a settlement to the lawsuit between Ewing and his investors will occur if Ewing complies with terms of the agreement, plaintiff Mark Perkins said Saturday. Perkins ran for mayor of Tulsa as an independent candidate in 2009.
In response to a request for comment Saturday, Perkins said via text: “We signed a settlement agreement that contained several conditions, which, when fulfilled, would result in a dismissal of the lawsuit. If and when they are fulfilled, the plaintiffs will dismiss the lawsuit without prejudice and the parties can issue a statement at that time.”
Investors filed a lawsuit Oct. 13 accusing Ewing of fraudulently transferring more than $300,000 out of the business to fund his other businesses. The following day, Ewing posted a lengthy statement on Facebook, stating he tried to work through the investors’ concerns prior to the suit being filed.
“They have refused to review the company’s books or to meet to discuss their concerns, instead basing their claims on conspiracy theories derived from incomplete financial information,” Ewing said in the Facebook post.
The amended petition filed Dec. 16 claims the investors have yet to see the business’s books and that they’re legally entitled to them. After Ewing posted the statement to Facebook, investors made a written request to Ewing’s and The Max’s attorneys but claim they haven’t been permitted access.
The lawsuit is the second by a group of investors or business partners to claim that Ewing has siphoned money away from the business and spent it on his other businesses. Another group of investors who planned to open a downtown grocery store with Ewing as its manager made similar claims in a 2014 lawsuit.
Ewing settled that suit and it was dismissed.
The newly amended lawsuit by investors in The Max alleges Ewing on several occasions acted negligently as bar’s manager. It states Ewing didn’t pay the bar’s rent, let its insurance expire and borrowed money without the investors’ approval.
The suit also states Rob Durbin, attorney for Ewing and The Max, hasn’t acted in the best interest of the bar. Attorneys for Ewing have not filed an answer to the suit but he has publicly stated that he has tried to resolve investors’ concerns but has been unable to do so.
On July 29, Durbin told investors The Max’s insurance had expired. It’s unknown how long the bar was open without insurance, according to the lawsuit. When Perkins suggested closing until it was renewed, Durbin allegedly advised against it.
In October, Perkins received an email containing a notice of cancellation of The Max’s insurance, the suit alleges. Perkins also got a call from its insurance agent saying the bar’s insurance was again set to lapse by the end of that day.
Though a notice of cancellation was sent to Ewing on Oct. 4, 2015, The Max’s insurance hadn’t been paid since Perkins paid for it on July 29, 2016, the suit alleges.
The suit is seeking to have Ewing terminated as manager of the 80s-themed bar, a request investors have made several times before.
In July, Perkins and other members of the board of directors met with Durbin to discuss issues facing the business, the suit states. During that meeting, board members voted unanimously to request Ewing resign as manager. However, Durbin backed Ewing as manager.
The following month, Perkins emailed Durbin on behalf of members of the board of directors, again calling for Ewing’s termination as manager, the lawsuit states.
“If you think it is in the best interest of the company to continue forward with a manager who has, without question, misappropriated company funds and created a situation where the Tax Commission is filing liens and garnishments against our business … a bar that finds itself without general liability insurance, and a tenant that pays its rent, please advise us as to why it is in The Max’s best interest to continue with the same manager,” Perkins’ email said.
On Aug. 16, and again a few days later, Perkins wrote Durbin requesting Ewing’s removal, as well as recovery of the bar’s misappropriated funds. Durbin responded by saying he didn’t think he should discuss the matters as The Max’s attorney.
However, on Aug. 31, Durbin and Ewing attended a settlement meeting in Perkins’ office, the lawsuit states. At the meeting “it became clear that Ewing, Durbin and The Max would oppose any claims that were brought by unit holders.”
The amended lawsuit accuses Ewing of borrowing money for the business without approval of the board of directors.
The lawsuit accuses Ewing of “massive acts of malfeasance and misappropriation” by using The Max’s generated funds to pay expenses for his other businesses — Joe Momma’s Pizza, The Fur Shop and The Phoenix — through a company called The Engine Room LLC. Some payments to Joe Momma’s Pizza occurred after the restaurant was closed due to a fire last year, the suit alleges.
Ewing transferred more than $300,000 to The Engine Room from 2010 through 2015, the suit claims.
In addition to propping up Ewing’s other businesses, funds from The Max also went for the city councilor’s personal use, the lawsuit alleges.
The charges include “various restaurants, gas stations, furniture stores, baseball games, bars, hotels, airlines, veterinary clinics, musical instrument stores, bicycle shops, bookstores, consumer electronics stores, auto mechanics, flower shops, fast food chains, movie theaters, yacht clubs, skate shops, and other businesses.”
The lawsuit’s allegations aren’t the first controversies Ewing has faced with his businesses. Ewing has a pattern in which he borrowed heavily to open multiple businesses at the same time, clashed with investors seeking financial information and his businesses failed to pay state sales and beverage taxes already collected, an investigation by The Frontier and NewsOn6 earlier this year found.
Over the past two years, Joe Momma’s Pizza investors repeatedly asked Ewing for financial accountability and questioned what happened to insurance proceeds after the fire last year, according to emails obtained by The Frontier.
Four businesses in which Ewing had ownership — Legend’s Dance Hall, The Max, The Fur Shop and The Phoenix Cafe — failed to pay the state more than $140,000 in sales and beverage taxes collected since 2010, records show.
The state has cited Ewing and his businesses for failure to pay state sales and beverage taxes in at least 19 separate tax liens filed since 2010. (Here’s a link to the most recent liens filed this year.)
Your financial support for our investigative journalism is now tax deductible. Click here to become a Friend of The Frontier.