Blake Ewing businesses failed to pay $80k in taxes.

[TheArtist]

What I find most upsetting is that it looks like he goes to Barnes & Noble a lot, but not one purchase from DECOPOLIS Books.  Any series, any book you want, we are happy to get it for you!

But anyway, yea does not look good.  I still wish him the best, he has imho been a very good City Councilor.  Perhaps not the best businessman.  However, there are a couple of things with this that I can see, that depending on how you look at it, could change the majority of the perspective. 

[davideinstein]

The docket or document?  If the suit was filed today, it won't be on the docket yet.

Subscribe to the Frontier or buy the story for $5, the entire 50+ page suit is posted there.  I've managed to read about 1/3 of it so far.  The Frontier also does a pretty good summary of all the issues with the businesses but the suit lays out a lot of the financial transactions according to the plaintiffs accounting of it.  Pretty damning stuff, if it's true.

/edit, just noticed that KOTV published the complaint in it's entirety.

Misspoke. Document.

Read through the entire lawsuit. I'm not as concerned about this as the taxes. Appears as though the The Max makes a lot of money. Only skeptical thing on there is the personal food. That's a waste if you're trying to profit.

[davideinstein]

What I find most upsetting is that it looks like he goes to Barnes & Noble a lot, but not one purchase from DECOPOLIS Books.  Any series, any book you want, we are happy to get it for you!

But anyway, yea does not look good.  I still wish him the best, he has imho been a very good City Councilor.  Perhaps not the best businessman.  However, there are a couple of things with this that I can see, that depending on how you look at it, could change the majority of the perspective. 

Honestly, it looks like he got over his head on having too many businesses without a good support group under him. I still don't understand how you miss the taxes if you're keeping up with P&L's. My issue on taxes is that he's holding public office. A personal lawsuit regarding a business doesn't matter as much to me.

[saintnicster]

Transferring money from The Max, and from Folks?  Fun times!

[davideinstein]

Transferring money from The Max, and from Folks?  Fun times!

How do we know it wasn't a business to business loan?

[Breadburner]

How do we know it wasn't a business to business loan?

Lol...If you are this naive you are in trouble....

[davideinstein]

Lol...If you are this naive you are in trouble....

Not naive. I'm asking questions on the other side. Naive would be only listening to one side of the lawsuit.

[Conan71]

Not naive. I'm asking questions on the other side. Naive would be only listening to one side of the lawsuit.

Really?  It didn't sound like that when you removed yourself from the conversation when this was still about being out of trust on collected sales taxes.

I'd like to hear CF's take on the filing if he can comment.  I know he may represent clients in that part of downtown and can't comment on the merits of the suit.  I know Blake's business interests also involve at least one or two members on this forum.

I question some of the wording in the suit and I'll be curious how it stands up when it goes to court.    

Taking the allegations in the Zenthoeffer suit, this suit, and the 19 tax liens, it would appear there's been a cash flow issue amongst the businesses at various times.  Whether or not that was due to personal enrichment or simply over-extension and Blake was directing the cash flow to cover losses is for someone else to judge.  

He may only be guilty of being too deft in his management style and trusted the wrong people to manage his affairs.  I did that once and assumed if there was money in the account when I needed it, all was good.  After that management style imploded on me, I've never forgotten that lesson.  I am a partner in four different business entities and still have a full time day job.  Every day, I know- to the penny- how much cash I personally and each business has on hand and how much is owed.  Taxes are always a priority and vendors are always paid on time.

People do make mistakes.  Blake may have trusted the wrong people or perhaps too many people trusted his ability to return a great ROI and he got over-extended with easy credit to over-extend his resources too quick without time to adjust and find the right people to manage his interests with limited input from him.

I have no axe to grind with Blake, but this is taking on the appearance of a business empire which grew too quick, trying to take advantage of lower rents and real estate prices which existed 6-8 years ago.  One thing about Blake is he is a visionary.  Perhaps he saw the upshot on downtown and he wanted in before it got too expensive to to be a player.

You do have to question how a business like Joe Momma's which was reporting a profit of $1.2 million ended up only showing a net income of 2% unless it was shifting money via the Engine Room to support other entities.  Creating a marketing or management arm like The Engine Room to collect marketing or management fees is a pretty brilliant move if you need to shift cash around.

Just my opinions, mind you.  Better legal minds will eventually get to the bottom of it.  

[TheArtist]

How do we know it wasn't a business to business loan?

Yes there are a lot of unanswered questions and what was presented only had part of the info to make any real judgment.  

One part that jumped out at me was where it stated that a tax payment was made and then noted that the Max didn't own any real-estate.  I can pay thousands in property taxes and not own real-estate, but things like equipment and such can count as property. So perhaps it is the other partners who don't really know all the details of how a business is run.  

Also per the purchases, I really don't know the particulars of how those businesses are set up and mine may be different, but if you were to look at a DECOPOLIS bank account and saw that I used the business debit card at Home Depot to buy a Skeleton, and at Party City to buy a Pirate Costume... what might you think?  You may think I am using it for personal business but I was not.  It was for "props and displays" for the business. https://www.facebook.com/decopolis/photos/pcb.1454898017860259/1454895027860558/?type=3&theater
Poor guy didn't pay attention to the sign!
 https://www.facebook.com/decopolis/photos/pcb.1454898017860259/1454894894527238/?type=3&theater

Or if I perchance I do purchase something at a store that is personal use with the business Debit or Credit Card I will have it listed as "Member 1 Draw" which basically means its part of my pay.  So whatever ones pay is from the business if its a percentage or set monthly rate or whatever, then that "Member 1 Draw" comes out of that. A "Member 2 Draw" would be for the other business partner.  If say DECOPOLIS LLC is in need of money, we want to add another product line, etc. I can make a Draw from say my other business, William The Artist LLC, and put that money into DECOPOLIS as a "Member 1 Equity"

Whenever I come into the store the person who looks at the bank statement will ask me about purchases or deposits like those.  "Whats this and what category is it to be listed under?" They will ask. And every so often I wander in and pull a wad of receipts out of my wallet and put them in a different employees tray and they know to either 1. Find the bank transaction if its already in our system and then scan in and "attach" the receipt to it. or 2. If the transaction is not yet in the system, then they create it (and then its matched to the bank later) and categorize it.  So as long as all the receipts, transactions and categories are there and match and are correct, you should be good to go.  At least thats how I understand it and hope thats ok! lol

The other thing I found interesting was that they were claiming that the "Fur Shop" and his other businesses were basically "Blake Ewing" and thus they could go after those businesses to get the money they say they are owed by Blake.  But then if you went with the same logic and said that "The Engine Room" was Blake Ewing" and it helped with some management aspects and promotions, etc. Might that possibly mute some of their claim that Blake wasn't doing the things because "The Engine Room" was doing it (but then they are saying his other businesses are him), or money went to "The Engine Room" (aka Blake)?  Anyway, need more info that was presented to make a judgment.

[Breadburner]

Lol...Yes it was a B2B without your partners knowledge...That's legit....I'm sure the folks he was involved with at Archer Market thought it was ok too....

[cynical]

Also, many downtown leases are triple net, meaning that real estate taxes, insurance, and building maintenance are the responsibility of the tenant. It is not necessary to own real property to be responsible for real estate taxes.

One part that jumped out at me was where it stated that a tax payment was made and then noted that the Max didn't own any real-estate.  I can pay thousands in property taxes and not own real-estate, but things like equipment and such can count as property. So perhaps it is the other partners who don't really know all the details of how a business is run.  

[Cats Cats Cats]

They are using his public image for a pay day.

[DowntownDan]

None of this changes that he has been a good representative for smart urban development even when he is outvoted or loses to special interests.  I can separate that from his business acumen unless he intentionally defrauded the public i.e. embezzlement.  I haven't seen any such allegations.  He's making up he sales tax part it seems and the courts will resolve whatever private disputes he's facing.

[DTowner]

I like Blake and think he's been a great councilman.  However, this is serious stuff.  What's alleged in a lawsuit is just that - allegations.  However, in light of the history here, these allegations look pretty credible.  The folks who ran the grocery store essentially made similar allegations - that he was moving money between businesses and deprived them of promised funding and any chance of success.  That was settled quickly.  The failure to rebuild Joe Momma's after the fire was another red flag - either there was no/inadequate insurance or the insurance money went elsewhere to more pressing needs (and reopening White Flag would not account for all of it).  Then there was the failure to pay taxes.  This lawsuit appears to be putting all those previous pieces of the puzzle into place.

Lax management does not account for the specific types of transactions alleged in the lawsuit.  I've long worried whether Blake could manage what is essentially a full-time elected position while running a large number of restaurants and clubs.  Money has a way of disappearing in these types of businesses without strong oversight and management.  He's been around long enough to know that and trying to blame "others" now is not very believable.

[Conan71]

None of this changes that he has been a good representative for smart urban development even when he is outvoted or loses to special interests.  I can separate that from his business acumen unless he intentionally defrauded the public i.e. embezzlement.  I haven't seen any such allegations.  He's making up he sales tax part it seems and the courts will resolve whatever private disputes he's facing.

Yesterday, The Frontier did run a pretty nice companion story to the one about the financial difficulties his businesses have been facing which focused on the appreciation people have of him as a councilor.