By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
"John had become one of my regular customers at JR's. He told me, 'You've got the experience to run a bar, so if you move to Laguna Beach and manage the Boom, you'll be an owner,'" said Foutch, who owned and ran a Kansas City bar called Pegasus from 1986 to 1988. "Craig and I said yes. He was very persuasive."
During the next Easter weekend, Attebury and Foutch drove from Texas to Orange County and checked out the Boom with Halderman. Within 90 days, all three were living together in Halderman's Dana Point house, preparing to make an offer for the bar. Foutch, who had gotten a job as a bartender at the Boom to get an inside view of the business's potential, reported back a thumbs up. For six months, Foutch said he and then-owner Sid Bryan negotiated without success. They came to terms on April 24, 1992, when Halderman—operating as the newly created JTC Laguna Resorts, Inc.—purchased the Boom's bar, restaurant and 23-room Coast Inn hotel complex (and some adjacent property on PCH) for $3.06 million.
After borrowing more than $200,000 from a relative and dipping into his pension and other savings, Halderman made a $700,000 down payment, according to court records. Bryan, owner of the Boom since 1979, had been eager to sell for years, and—although he had been seeking $6 million—he was delighted to finally find a buyer. (Minutes before the deal was finalized, a neighboring businessman who was disturbed by the close proximity of a gay bar offered to pay the three partners $100,000 to withdraw their offer, hoping he could eventually acquire the Boom and bulldoze it into a parking lot. They declined.)
Despite the need for substantial repairs and remodeling, the triumvirate took over with great expectations. They were touted in the Blade , a local gay publication, as out-of-town "baby boomer" saviors. "We're trying to make this a friendly place where the atmosphere is more like a community or a family than a commercial establishment," Attebury told the Blade. Nevertheless, the commerce wasn't bad. Thanks in part to an exodus from Los Angeles following the Rodney King riots, the new ownership's second weekend saw tremendous financial success, hauling in about $100,000 in a four-day period.
But the seeds of disaster were sown in the deal they cut in 1992. The specifics of the deal called for Halderman to serve as JTC Laguna Resorts' president, Foutch as secretary and Attebury as treasurer. Foutch and Attebury were to take over the Boom formally within the first two years, making Halderman a silent partner, according to court records, including Halderman's testimony in a December 1995 deposition. In that deposition, Halderman conceded the existence of an oral agreement between the partners and described the terms as calling for the younger men to assume tot loan on the business, repay Halderman his upfront money at 8 percent interest, reimburse his penalty taxes for saving and pension withdrawals, and give him one-third of the Boom's profits until death. Foutch and Attebury would manage the day-to-day operation and be entitled to one-third each of the profits. Both said they worked 70-hour-plus weeks and took greatly reduced salaries (initially $18,000 a year), choosing instead to pour most of their portion of the profits back into the business.
In the Boom's first year under their management, Foutch and Attebury said the Boom's income more than doubled from $800,000 to $1.65 million, including about $250,000 in cover charges. "The Boom was making money hand over fist. In the early days, profits were growing between 15 and 20 percent every quarter," Attebury said. Sources said the business's receipts climbed above $2 million in 1994.
Importantly, however, Halderman had declined repeated requests to put the partners' agreement in writing and sign it, Attebury now alleges in court records. It wasn't long before the dreams—and the three-way business relationship—began to unravel.
According to Foutch and Attebury, the first significant sign of trouble among the men appeared in September 1992, a year and a half after the three moved in together. Foutch and Attebury, who shared a bedroom in Halderman's house, said their privacy was invaded, the graphic details of which they promise will come out at the trial. Both moved out and took a room at the Coast Inn. The next problem, according to Foutch, was that Halderman reneged on a promise to buy him a brand-new, limited-edition $200,000 Viper sports car if the Boom's revenues doubled in the first year, a goal he says he achieved. (Halderman had previously given him a $30,000 Dodge Stealth.) By February 1994, Foutch said he noticed a number of odd business practices and discrepancies for cash receipts. According to court files, he asked Halderman for an accounting of the bar's profits and renewed his demand for a written contract. Both, he said, were refused.
"Craig and I had worked so hard for so long and had been surviving on about $14,000 take-home pay," Foutch said. "So I went to John and said, 'It's time to divvy up the profits so we can live.' Remember, on what I was making, I couldn't even afford an apartment in Laguna. He told me there were no profits and refused to show the books…I believe there was at least $750,000 in profit."