Investors suing the now-disbanded management team behind Maple & Ash restaurants say they have the “smoking gun” that proves the operation diverted millions of dollars in Paycheck Protection Program aid to such personal indulgences as traveling by private jet.
Allegations of the misuse were originally leveled at former partners James Lasky and David Pisor by financial backers of the high-volume restaurants in April. An attorney for the company operating the two Maple & Ash branches dismissed the assertions at the time as groundless.
“The PPP funds were properly applied for and were forgiven,” the lawyer, David Wexler, said in a statement issued back then. Federal records indeed show the loans were forgiven, meaning the government did not detect any evidence of wrongdoing.
But court documents unsealed this week include claims by investors in the restaurants—two of the highest-volume eating places in the country—that they ultimately obtained proof of the malfeasance. Information obtained through subpoenas served on banks used by Lasky and Pisor showed PPP money was put into accounts from which the pair and their holdings drew funds for purposes not permitted under the aid program, including personal expenses, according to the investment group.
Among the stated misuses was the diversion of funds intended for Maple & Ash to other restaurants run by Lasky and Pisor’s management company at the time, What If Syndicate.
According to the investors, the company and its principals promised to restore the funds for their intended use of paying Maple & Ash’s employees and keeping the restaurants alive while dining rooms across the nation were shut to slow the spread of COVID-19. A total of $7.6 million was loaned through PPP, with the stipulation that the loans would be forgiven if the money was used solely for expenses covered by the program.
Although the proof of misuse was referenced, it was not actually included in the court documents that were made public Wednesday.
Pisor said he’s doubtful about the assertions. “I believe we got the money correctly, and we filed for forgiveness correctly,” he told Restaurant Business. But, he adds, “I wasn’t there. I’d checked into a rehab [facility].”
In any case, he says, liability for the actions were assumed by Lasky when the two dissolved their partnership early this year.
The investors’ claims of having proof were included in court documents unsealed at the instigation of The Chicago Sun-Times and Chicago public-broadcasting station WBEZ. They argued that the papers never should have been sealed from public view. Copies were obtained by Restaurant Business.
The revelation could further complicate the ongoing legal battle between Maple & Ash’s current and former operators and investors who put up $3 million in total to open the restaurants. One branch is in Chicago, and the other in Scottsdale, Ariz.
The former had sales last year of about $30.3 million, the fourth highest of any independent restaurant in the country, while the latter had revenues of $23.5 million, placing it 12th, according to Restaurant Business’ annual sales ranking of individual full-service establishments.
The restaurants have been at the center of considerable legal wrangling in the past year or so. Disputes between Lasky and Pisor led to the split of What If Syndicate into two companies, a move that resolved the conflict. The two Maple & Ash branches were grouped into a new concern called Maple Manager, headed by Lasky, while Etta and several other of What If’s brands were grouped into a venture called Etta Collective, led by Pisor.
If the former partners or their ventures did indeed misuse PPP funds, as the investor group alleges in its pending lawsuit, they could be subject to severe federal sanctions.
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