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No Cash Back

Some Tasca investors are nervous about the money. So was the state of Texas.

The story began as a sort of business-school fairy tale. A student in the University of Houston's business incubator program, Rasheed K. Refaey, came up with a model business plan for a class. The plan was modified and refined; two other young men with an interest in the same line of work joined Refaey as publicly announced partners. The founder and dean of the school, William Sherrill, a former member of the board of governors of the Federal Reserve Bank, took an interest in the project, a sort of Obi-Wan Kenobi to Refaey's precocious Luke Skywalker.

Refaey graduated in 1995. He and his two partners, Charles Clark and Grant Cooper, all worked together at the Post Oak Grill, serving up meals to the beau monde and honing their skills. As Houston attorney Melina B. Cain recalls, Refaey came to a downtown law firm seeking legal advice. Cain remembers taking a liking to the young entrepreneur -- so much so, in fact, that she invested $10,000 of her own money in his venture, and encouraged two people she knew, Michael Majors and John Humble, to invest as well. It was, at the time, her first restaurant investment.

The venture, which a classmate of Refaey's remembers as first being "a wine and cheese bar, and then a place with an extensive wine list," was finally cast as a Spanish-inspired tapas bar. Clark recalls that Refaey did not know what a tapas bar was until he and Cooper took him up to Dallas to visit a place called Café Madrid. Cain was enthusiastic about the concept because, she says, "I love Spanish food, and I have a lot of Spanish friends."

Tasca and the Red Cat stand side by side.
Monica Fuentes
Tasca and the Red Cat stand side by side.

Location Info

Map

Post Oak Grill

1415 S. Post Oak Lane
Houston, TX 77056

Category: Restaurant > American

Region: Galleria

Thirty partners put up $250,000 to fund something called Tasca Ventures LLC, with Refaey as the general partner. There was also an SBA loan through Omnibank. In 1998 Tasca Kitchen & Wine Bar (713-225-9100) opened at 908 Congress, just off Travis. It was a pioneering move at the time, as few restaurateurs regarded the Market Square area as anything other than a place where one could provide quick lunches for office workers.

The restaurant, serving both authentic tapas and entrées, became a quick success. Dozens of reviews and articles praised the food and the team that had assembled the venture and installed it in a long-derelict building. On August 27, 1998, Refaey, who a year earlier had been a waiter, was given the Future 500 Award by the Center for Entrepreneurship and Innovation at his alma mater. His social life began to involve women who would not normally be linked with a waiter, such as a principal in a modeling agency. Photographs of him at charity events also began appearing. In April 2000 he purchased a condominium on the 25th floor of the Spires, a high-rise on Holcombe Boulevard. The following month, the Small Business Administration's Houston district office named Refaey the "Young Entrepreneur of the Year."

It was also around this period that Refaey parted company with Clark and Cooper. (See "Tsk, Tsk, Tasca," by George Alexander, April 13, 2000.) At the time, it seemed to be a case of miscommunication, one side speaking the formal language of the business school, the other speaking more colloquially.

Then, when the Tasca partners were informed that a new entity had been created, Big Tejas Inc., and that a competing restaurant, Red Cat Jazz Café (713-227-2200), was going to be opened next door at 924 Congress, several partners became most uneasy. The original partnership agreement stated that no one had the right to compete with the Tasca trade name. Also, Refaey had to have the approval of the majority of the limited partners to commingle partnership funds with the general partner or an affiliate.

A limited partner with a $5,000 investment, Michael Majors became worried, and he and Cain hired CPA Robert T. Stevenson to meet with Refaey and prepare a summary, a thumbnail sketch of their investment's financial health and dealings. In a summary dated July 18, 2000, Stevenson opined that "Tasca is a profitable entity," but that there were "transactions between Tasca and Red Cat." He concluded, "It is my opinion that what has been happening regarding the transfer of funds to a competing entity without approval from the owner/partners is, at best, a conflict of interest and, at worst, a breach of fiduciary duty."

Majors then approached Refaey and was told he could not have his money back directly but could sell his interest to another party. Majors says Refaey then arranged this, and he received his $5,000 back. Speaking of his experience, Majors says, "It was terrible. The guy did not keep us informed of anything."

The creation of Red Cat and the leasing of space for a second Tasca on Post Oak Boulevard at San Felipe does not seem to bode well for those limited partners who have not found a way to be paid back. On July 13 the Comptroller of Public Accounts placed two liens against Tasca Ventures LLC. One was for alcohol taxes, paid by all holders of a TABC mixed-beverage license. It was in the sum of $6,555.84, which included penalties, for unpaid March 2001 taxes. The second lien was for sales taxes for the same period in the amount of $8,745.60.

Steve Hughes, who works in the enforcement division of the comptroller's office, reports, "There was an action taken between July 12 and July 13. We call these limited seizures -- they usually don't have the full amount on hand." Since the "action" -- which usually involves armed, plainclothes agents coming into a bar and asking the customers to leave, then presenting the bill to the person in charge -- Hughes reports, "They have gotten square, and we have closed the collection case for the particular period that covers." Hughes also found that an action was taken around June 22 to collect alcohol taxes of $7,868.94 at the Red Cat.

What the future holds for Refaey and his investors is uncertain. The treasurer's report to the partners reveals net income from the Red Cat for the second quarter of this year to be $362. Refaey did not return our call for comment.

What began as a fairy tale has turned into a morality tale, or perhaps a fable, such as the one about the goose that laid the golden eggs.

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