Agents from the Texas Comptroller's Office visited the beleaguered Heights restaurant Down House on April 19 and "demanded $29,000 in cash from the employees," according to a lawsuit filed by the restaurant's owners against the state agency Sunday.
The suit, and an accompanying emergency motion for injunctive relief filed Monday morning, accuses state agents of threatening and bullying the restaurant's employees and upsetting customers, and the owners are seeking a restraining order.
But Sunday's filing disrupted the proceedings by claiming that state agents "demanded to be taken to the safe located in the office in the back Down House....Several guests and employees asked if Down House was being shut down."
The suit continues:
"The Agents and officers came through the kitchen and stood over the Down House manager while she opened the safe. The manager of Down House contacted Christopher Cusack, the president of Down House...and told him what was happening. The employee informed the agents that Mr. Cusack was on his way and that Down House was in bankruptcy.
The agents then informed the employee of Down House that she could be arrested if she refused to comply....The Down House safe contained eight dollars. The agent took the Down House funds from the Down House manager even after she notified them that Down House was in a chapter 11 bankruptcy case.
The agents and the officers then went to the Down House cash register behind the bar of Down House and took all of the money out of the Down House cash register. The total was approximately $691. The agents and officers were then led to another room still visible to all guests."
When Cusack arrived, he informed the agents again about the bankruptcy, and confirmed that the agents had threatened employees with arrest, the suit alleges.
The suit also claims that one agent told Cusack, "It's not about the money, it's about sending a message to you, your staff, and everyone else that if you don't pay, we will shut you down."
However, the suit alleges that agents called their supervisor while still at Down House to verify if the restaurant was in bankruptcy. The agents were told that it was, and that they couldn't seize any cash, according to the suit.
"The damage done to the customer base and employees of Down House will be difficult to calculate, but it is significant. Customers in Down House at the time may never return. Employees of Down House will never be the same. Employees of Down House may continue to talk about the actions of the agents to other customers and employees of other affiliated restaurants of Down House."
In a lengthy Facebook post Sunday night, Cusack accused local media, including the Houston Press, of not contacting him for stories about the Treadsack restaurants.
"Members of the press, please consider a thorough interview with me. I'm happy to provide discussion, documentation, or other verifiable information that would help the public get a more true sense of what's happening."
Cusack also claimed that his restaurants' employees were "being punished" by media coverage of Treadsack's struggles.
Although the initial comments to his Facebook comment were supportive, Houston Chronicle food critic Alison Cook called Cusack to task, noting that fellow Chron food writer Greg Morago had reached out for comments "on more than one occasion."
Cook also added, referring to a Chron story about the bankruptcy woes:
"We all sat there crunching the documents for a couple of hours, and I distinctly remember that there was a call out to you. So I am not sure what the issue is. I know this is painful for all concerned. Personally, I am rooting for your restaurants to pull through. I am on very clear record as an admirer of Bernadine's and Hunky Dory. But the idea I am 'punishing' your employees is repugnant to me, and to be honest, it smacks a bit of buck passing."
The thread has since been deleted.
It should be noted that, for months, Cusack and business partner Joey Treadway have not responded to the Press's interview requests. However, Cusack did answer questions we emailed him this morning, which we're still going through. (We also reached out to the Texas Comptroller's Office, and are waiting on them as well.)
But, addressing the investors and vendors who are listed as claimants in the bankruptcy, Cusack wrote:
"The plan here is to submit a plan to the court that includes all creditors including all vendors and investors, have that plan approved, and continue doing business so we can pay everyone back. Our agreements with investors are based on a percentage of net sales, and we believe that the judge will be able to approve a plan that includes payback for everyone. Filing Ch. 11 has nothing to do with voiding debt or charging off debt for us. Filing had everything to do with preventing our landlords from shutting us out, which would have ensured that no one would have the chance to be paid."
We'll keep you posted.
Update, April 24, 2:50 pm: A spokesperson for the Comptroller's Office told us that the seizure order for $29,000 was served against a separate corporate entity that is not part of the bankruptcy case.
Here's the deal: "Down House Ventures, LLC" is the entity that is currently in bankruptcy court. But because the restaurant's location in the Heights was dry when it first opened, the owners — like many other businesses in dry areas throughout the state — established a "private club" in order to legally sell alcohol. It's this corporate, nonprofit shell, "Club Down House NP," that owes $29,000, and which is not part of the bankruptcy proceedings.
Comptroller spokesperson Chris Bryan told the Press that Cusack told agents which assets belonged to the restaurant, and which belonged to the club.
"Apparently, the funds were commingled, but he said to the agents that he would be able to separate those out," Bryan said.
Bryan also denied that agents threatened anyone with arrest — for one thing, he said, they don't have the authority to arrest anyone.
As for the menacing quote alleged in the lawsuit, Bryan said that agents who were there say it's not accurate.
"Mr. Cusack had said to them that he couldn't believe that they were going through this whole process for such a small amount of money, and that [the agents'] response was, 'It isn't the amount of money, it's about going through the process and making sure...each taxpayer goes through the same process,'" Bryan said.
Update, April 26, 8:55 am: A federal judge has signed off on an agreed preliminary injunction between Down House and the Comptroller's Office. Comptroller's agents or representatives are barred from entering Down House for any reason other than "eating or having beverages." The Comptroller also "will not take any actions to seize, freeze, garnish, restrict, or limit the use of bank accounts of Down House."
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