By On the occasion of our 20th anniversary
By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
Nevertheless, Mor moved ahead: Irezumi, which means “tattoo” in Japanese, opened in May 2008 in Metro Pointe, adjacent to cash cow South Coast Plaza. With its rock & roll-meets-Yakuza interior, the unconventional sushi lounge hoped to appeal to tenants in the complex’s office buildings.
But by Sept. 2, Irezumi had shut its doors. Those office buildings, Posniak says, ended up helping to contribute to the downfall of Irezumi.
“We opened a restaurant to cater to mortgage professionals that was adjacent to two large buildings that had a 98 percent occupancy rate when we signed the lease. And when we took possession, that occupancy rate was 30 percent.” Posniak laughs a little. “We didn’t make it.
“I’ve opened 10 restaurants. I’ve had 600 employees. I’ve had 115 investors. And in a business that has a high failure rate, if you look at the law of averages, I should have one success per 20 restaurants,” Posniak explains.
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But according to Irezumi investor Robert Darvish, the sushi lounge’s failure had less to do with the law of averages than with Posniak’s negligence.
Darvish’s expansive office is on the fourth floor of a building just across from where Irezumi once stood. A large picture window spanning an entire wall of the office looks over Metro Pointe below.
Darvish sits behind an impressive glass-and-steel wraparound desk, which sparkles with such things as crystal penholders. He wears a striped button-up, the top few buttons casually undone. Framed certificates hang behind him.
The 39-year-old Darvish, president of a mortgage-planning firm, had invested $100,000 in Irezumi. He gestures out his panoramic window: “See all those restaurants? All these restaurants have been open for at least a year.” Darvish rattles off a list of establishments: Finbars, Cosí, Karl Strauss, Boudin.
In early November, Darvish filed a federal lawsuit against Posniak, Garbutt and two other members of Mor, alleging violations of federal securities and anti-fraud laws. The accusations range from the commingling of funds and misrepresentations to inconsistencies and inaccuracies in the investor package.
“The first agreement [to become an investor] was made in November of 2007. [Irezumi was] supposed to open December of ’07—actually, there was a sign over there,” he says, gesturing again out the window, “that said they were opening summer of 2007.”
According to Darvish, Irezumi’s opening date had been pushed back at least once a month from December 2007 to May 2008. “They were running behind, so I said, ‘I’ll pay you partially right now, and the remainder after opening.’ I paid them $30,000 upfront, but after that, they kept having delays and delays and delays. The delays were stalls in the construction,” he pauses, “and by ‘stall,’ I mean, nobody being there for long periods of time. We’re not talking about typical construction delays.”
He says he exchanged e-mail with both Posniak and Garbutt starting on March 4. The following day, Posniak responded, with Garbutt cc’ed, that the stalls were due to problems with the city.
“There were numerous delays [with Irezumi],” Posniak explains now when asked about the construction delays. “The key delay we had was with the city with our permits—you know, those things take time. If you look at Irezumi, we signed the lease in April 2007, and we opened in the end of May 2008. I don’t think that’s bad in the restaurant business.”
Calls made to both the building and planning departments for the city of Costa Mesa indicated a permit for the demolition of the space was issued in July 2007. A permit for interior alterations was issued March 7, 2008. No paperwork at either department revealed any difficulties in the issuing of the permits.
In addition to the delays, Darvish turns to a page in the investor booklet that was provided to him when he entered the project. It lists the three investors in Irezumi as the Garbutt family trust ($150,000), Tom Perez ($75,000) and the Mor Project ($25,000). “This is prior to me coming in,” he explains. “Then, on a form they gave to me printed on July 28, 2008 . . . now look at this,” Darvish says, pointing. “Amount of money collected from investors: $100,000 from me, Garbutt had $125,000, and Tom Perez $25,000. Total: $250,000. When I had met them before, [Posniak and Garbutt] had said they had $250,000 back then. So, in reality, not including mine, there was only $150,000.” Darvish pauses. “Whatever I’m saying, everything is backed up by documents.”
Irezumi did open its doors on May 17. But not without more grievances.
Darvish says he discovered through Irezumi employees that they had not been paid—he then heard through the management that contractors had been left unpaid, which ultimately resulted in a mechanics’ lien against the building.
“After the restaurant was open, and I found out people were not getting paid, I sent them a letter, and we had a meeting, and I asked for a profit-and-loss statement. They delayed it and delayed it and delayed it,” he says. “On June 5, Brian sent me an e-mail saying everything was good at Irezumi and they were off to a good start—they just needed money for marketing. And that’s when I requested for them to give me financials.”
Darvish pulls up another e-mail on his computer screen. “He said they weren’t available yet [that same day], so I made another request on the 23rd, and they provided me with partial financials on June 30.”