By Charles Lam
By R. Scott Moxley
By Gustavo Arellano
By R. Scott Moxley
By Gustavo Arellano
By R. Scott Moxley
By HG Reza
Less of Mor
Hollywood nightlife mogul Anton Posniak set out to remake the OC scene. Now he’s got more lawsuits than restaurants here
Anton Posniak wears the uniform of every young, nightlife-loving entrepreneur: fancy jeans, a striped dress shirt and a firm handshake. Throughout an evening conversation at a table at Blanca, the harbor-side restaurant he opened earlier this year in Newport Beach’s Lido Village, he makes references to literature, sports and current events. At one point, Posniak exchanges pleasantries with Blanca’s sushi chef in what sounds like fluent Japanese, which isn’t surprising—he graduated from UC Berkeley with a degree in Asian studies and spent time in Japan. He later says that he tried picking up Mandarin. He makes eye contact, he listens, and he speaks with eloquence and conviction.
Seems like just the kind of guy to help lead a dining-and-nightlife renaissance, which is exactly what he did in Hollywood. As one of the driving forces of Star Group Management (SGM), he opened 10 LA hot spots, including Ivar, Nacional and Paladar—the kind of places that attract the best-known names, all of whom are dying to be on thelist.
Posniak says he arrived in Orange County determined to do something similarly spectacular here under a new corporate banner: the Mor Project.
This was to have been a magical year for Mor (Gaelic for “great”), with five flagship venues slated to open: Irezumi, a sushi lounge; Blanca, a molecular-gastronomy-oriented Spanish-Italian restaurant; Revolver, a 25,000-square-foot club/venue/restaurant to replace the now-defunct Galaxy Theater; the Rustic Vine, which was to feature seasonal wine-country cuisine at the Irvine Spectrum; and Fleur de L’Age, with its Napa Valley region-centric menu.
Irezumi opened its doors this past spring inside Costa Mesa’s Metro Pointe shopping plaza. Its reasonably priced, irreverent menu—hot dog sushi?—was generally well-liked. (Even by us: see Edwin Goei’s “That’s Just How They Roll,” June 5.)
But now, months later, Irezumi has shut its doors, leaving vendors and employees unpaid, while Blanca has lost its star chef and drastically altered its cuisine to burritos and sashimi, with its own fair share of employees seeking back pay. Neither Rustic Vine nor Fleur de L’Age opened at all.
Many former and current Mor Project employees are placing the blame squarely on their CEO. A single post on a gossip website called the Dirty Newport became a lightning rod for Posniak’s local detractors; the Aug. 28 item dubs him the “biggest scum bag in LA/OC.”
The entry went on to accuse Posniak of spending investors’ money and say that he has no way of proving where the money had gone. “The two restaurants he did manage to open are losing sugnifficant [sic] amounts of money, and the other three he lost his lease on,” the poster asserts. It alleges Irezumi was overbudgeted and its subsequent revolving door of employees were unpaid. It links to a July 30, 2008, Daily Pilot story on the repossession of Blanca’s kitchen equipment. The Dirty Newport entry ends with a statement on Posniak’s supposed nonchalance and tendency to place blame on others.
The entry has garnered 85 responses, most of which were posted by parties involved, according to several sources—including former employees—who spoke to the Weekly on the condition of anonymity.
But others were not content to merely gossip about Posniak. One of his former partners has filed suit against him, as has the mighty Irvine Co.
If any of this controversy bothers Posniak, he doesn’t let it show. (He’s certainly no stranger to litigation, having been a party in at least 21 lawsuits in LA County, according to court records.)
“You know, I’m in a high-profile business,” a horn-rim-bespectacled Posniak says, sitting under a heat lamp at Blanca. “I’m the CEO. And if things don’t do well, if things aren’t on track, it is my fault.”
* * *
The now-36-year-old Posniak started SGM in 2001 with partner and fellow South African expat Alan Nathan. The two met as teenagers in San Diego and saw their first success in 1999 with a still-popular sushi joint, Tengu in Westwood Village. SGM set its sights on Hollywood, which was a virtual ghost town by the early 2000s, and played a major role in reviving the district’s nightlife, boasting the second, third and fourth liquor licenses in Hollywood at the time.
Posniak moved to OC in 2006, hoping to bring some of his Hollywood success with him. He founded the Mor Project in 2006 along with a friend and investor from Tengu named Brian Garbutt.
“I think we’re a creative force,” Posniak says of the Mor Project team. But even before his venues began to open, he saw troubling signs in the OC economy. “When we started taking possession, which was in the beginning or mid- of 2007, things started going a little sideways. Mortgages were on its way out, the credit industry was on the way down, banks were suffering,” he explains.
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.
* * *
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.”
That’s when things got especially troublesome for Darvish. He pulls up another document on his (well-organized) computer, showing the account ledger of all of Mor Project’s payouts for Irezumi out of a Wells Fargo bank account. “I requested copies of all documents, but they only gave me partials,” he explains, scrolling through the provided six pages out of a total of 41.
Darvish points out several transfers from company 52, Irezumi, to company 55, Blanca. Darvish says he wired his last investment installment of $40,000 on April 7. As his complaint states, that very same day, funds were transferred from the Irezumi account to Blanca’s in the amounts of $7,500, $1,200 and $6,500. On May 27, an additional $4,500 was transferred.
Garbutt, a commercial-real-estate broker, denies the allegation of commingling. “Eighty percent of the money was mine. And some of it were loans made to the company. The amount of money invested by investors—it wasn’t very much money—was 100 percent spent on the businesses,” he explains. “Any claim of commingling funds would be my money, and I don’t agree with that. . . . If I own two businesses, and money was going back and forth, that’s not commingling, that’s my money.”
When told of Garbutt’s statement, Darvish responds that none of that was ever disclosed to him. “His money was an investor, and my money was an investor, also. Throughout this document,” he says as he thumps on the thick Irezumi investor booklet, “there’s nowhere anywhere anything indicating to me that there will be money lent to Irezumi. It just talks about investors. The thing is, even if it was lent, why was it pulled out to a point where they couldn’t pay contractors and they couldn’t pay employees?”
Posniak responds that the funds were being transferred from two separate accounts under Irezumi—a general account and a payroll account.
He admits that Irezumi was underfunded from the very beginning. “It was underfunded because of the capital markets and the banks. A portion of our funding was through equipment leases. That was part of our plan,” he says. “We signed the Irezumi lease in the middle of April 2007. We were committed; we were funded. We had already engaged and moved forward. So when you’re $350,000 into your process, you can’t just throw in the towel. You need to get it open and try to refinance it yourself.”
* * *
Blanca opened April 25, 2008, to exceptional reviews of its unique, coastal-themed Spanish-Italian cuisine. Its location is gorgeous: two dining rooms connected by an outdoor patio facing Newport Harbor’s twinkling lights, luxurious yachts and even the occasional booze cruise drifting by.
The restaurant was especially noted for its highlight of crudo, a delicate raw fish finished with such seasonings as sea salt, olive oil and lemon juice.
“We opened this restaurant, you know, molecular gastronomy, and it was amazing,” Posniak says. He indicates around him while seated at that table alongside the harbor. “Nick Weber was probably one of the best chefs I’ve ever worked with. The problem was, when you open a restaurant, you have a honeymoon period—you’re the cool new restaurant. We had that. But what’s eventually going to happen is that honeymoon period dissipates.”
So business began to taper off. And it wasn’t long after that the gossip mill relayed that, just like at Irezumi, employees weren’t getting paid at Blanca, either. Numerous anonymous sources confirm that the Mor Project’s former circle of employees were also not receiving their allotted salaries. The money they were owed swelled, as did frustrations.
“Anton kept telling everybody, ‘Oh, money’s coming in two weeks, we have $500,000 in two weeks, we have an investor . . . everything! Two weeks. Meanwhile, we haven’t been paid in six weeks, eight weeks, 10 weeks—we’re broke. None of us can live,” one former employee claims.
Jeffrey Grasso, 39, has been the general manager of Blanca for five months. “We were busy for a couple of months, but it was never a reassuring thing on a daily basis. We have a high check average, and not everybody in this economy can afford that,” Grasso says. “You can come out once in a while or for special occasions, but we’ve got vendors to pay, labor to pay—all that compiled as the restaurant slowly was getting a name.
“In my 23 years of experience, I’ve never experienced so many good food reviews. Nick Weber, incredible. Hands down to that man.” Grasso holds his palms up. “But one man, our food, our location is not enough for the public to know where we’re at.”
Less than 25 percent of the original staff remains at the eight-month-old Blanca—and Weber was among the casualties.
Both Posniak and Grasso confirm that employees went unpaid. Former employees say that, at one point, fliers were even passed around Lido Village, where Blanca is located, by an unknown person bringing into question the business ethics of the restaurant.
“Absolutely, they’re not [getting paid]. And that’s what happens when you have a restaurant that fails. Employees, vendors, landlords don’t get paid. You’ve got a business, and when you got no more money to put in, restaurants fail. When that happens, all you can do is try to mitigate and try to get everyone taken care of,” Posniak says.
He stresses that there is a plan to pay everyone what he or she is owed.
Grasso says that the negative gossip about Posniak continues to hurt Blanca’s bottom line. “A lot of the time, the reason Blanca has been slow is because the community said, ‘Down with Anton, down with Mor Project; we’re not going to support them.’ But in actuality, the more people do not support us—the new Blanca, if you will—the less we’ll be able to pay people.”
Grasso sits at one of the solid black tables in the dining room, cushioned white seats surrounding him. There are cooks in the kitchen just to the right, chattering while a radio plays lightly in the background. And there really is a “new” Blanca set in motion here.
In addition to a swap to the more affordable authentic-Mexican cuisine customized by Blanca’s old kitchen staff-cum-cooks and sushi bar, Posniak has stepped down from operations to an investor.
“We all had an agreement—look, the bad press that’s out there is bringing Blanca down. People are not coming here because they feel like they’ll be supporting a certain individual,” Grasso says.
Grasso explains that he came to Blanca just as staff began walking out and unrest was growing.
“As far as I can see on the books, we owe a vendor we didn’t pay,” he says. “They came by and repossessed.” There are agreements among employees that the repossession of the kitchen equipment—and that Daily Pilot article—weren’t exactly ethical as far as how the equipment was repossessed and who exactly had contacted the local press about it. While equipment-financing lines failed to come in due to what Posniak says is the poor state of the economy, commitments were already made, and thus equipment was delivered.
Meanwhile, Grasso says, things were happening left and right—unpaid employees, repossessed equipment—and he states that when questioned, Posniak responded with nonchalance, “’Hey, don’t worry about it. We’re going to take care of that; in two weeks we’re getting money coming in from a deal.’ It was a lot of talk. And it was sad—these are people’s lives that you’re dealing with. And these are people’s vendors that we all have personal relations with in order to get into this company, and now we’re screwing them.”
Grasso, who is owed past paychecks, says that no employee has been paid in full just yet. He says that the average amount owed is about a month’s pay. “Everyone is owed something; some are getting a full paycheck, and some are getting half or partial. But the fact of the matter is that they’re even getting paid gives them hope.”
His personal goal is to get everyone paid up by the end of the year, but he admits that’s not too realistic, due to the waterside location and the winter months coming up, the impending tax season, and the inevitable slow first quarter of the year for all restaurants. He estimates that an aim to wholly repay employees by the summer of next year is more likely.
Grasso, however, does believe an unfair portrait of Posniak has been painted by many who have not done their research. “I think that Anton has made some poor business decisions, and that has given him a bad reputation. He’s not going to get a Christmas card from me,” he chides. “But I could’ve left at any time. And these people talking to you? They could’ve left any time as well. No, it’s not right, and no, they should be getting paid still, most definitely, but if you don’t like an individual, and you don’t like what he’s doing, then leave.”
Grasso adds that since Posniak has stepped down from operations in August, many people have come out of the woodwork wanting to help Blanca.
“The message is not ‘Down with Blanca!’ and ‘Ha, ha, we showed Anton!’” he emphasizes. “The game plan is now to come and support Blanca. Yeah, yeah, Anton’s out. Yeah, yeah, Anton’s an idiot—whatever you guys want to say. Fine,” he says, with a wave of his hand. “He’s out of operations. It’s me, my partners—we collaborate.
“I believe in the project of this restaurant,” Grasso concludes. “And I believe that I’m an individual that can gather enough individuals that believe in me and be positive enough that we can make something of this place.”
* * *
The Mor Project is still in existence, not as a managing company, but as an investor. Posniak still holds a stake in Blanca under the Mor group along with another managing partner.
“I think Jeffrey is doing a fantastic job, and I don’t think right now there’s anything I can contribute other than advice when he needs it, help when he needs it. I think for this place to be successful, he needs the room to be able to navigate and run the operations that he does,” Posniak says.
Plans for the Rustic Vine, once set to open at the Irvine Spectrum, have been scrapped. Posniak says that, following Irezumi and Blanca, a decision was made to let go of projects that were unrealistic, and the Rustic Vine was one of them. Both Posniak and Garbutt are involved in pending litigation filed by the Irvine Co. in August for breach of contract.
Plans for Fleur de L’Age, which was set to open in Laguna Canyon, have been vacated as well, because of a landlord/tenant dispute with the prior occupant.
And it wasn’t until Norman Goodin, the landlord of the Mor Project’s original offices on Pacific Coast Highway in Newport, filed a lawsuit on April 30 for $4,001 in unpaid rent and late fees did Mor choose to vacate the premises—only to have the Mor Project end up paying $19,337.27 in damages (and $2,931 in attorney fees), according to court records. As for those 21 other cases, 10 are still pending, including: a collections case with the Ford Motor Credit Co.; Nathan and Posniak as defendants in a small-claims case with a Santa Monica-based escrow company; and Posniak as the plaintiff against Starwood Hotels.
The big question now for the Mor Project, Posniak and Garbutt is the issue of Revolver, a once-ambitious nightclub and mega venue set to take over the rundown Galaxy Theatre with big plans, big dreams and even a big design scheme—its interior was once going to revolve every six months, with themes such as addiction and the Bible. Rooms were going to be made into clouds, into heaven, into hell; there were going to be eight full-service bars and multiple VIP areas. But now all that has changed—the approach will be smaller, less grandiose, Posniak says. Many of the nameless former employees state that Revolver was the big project everyone wanted to be involved with, the one project that was going to make up for it all.
As for the ownership of Revolver, Posniak says he’s currently in the midst of a settlement discussion with Garbutt—each of them currently owns 33 percent of the business. “We’ll probably learn in the next few days what the result is. We’d like to move on. My intention is not to open Revolver to make a profit; it’s to settle all issues with employees and vendors, and hopefully, Brian Garbutt will be accommodating to that end.”
For his part, Garbutt says he’s “currently in works to disassociate any involvement with the Mor Project and the future development in the Galaxy Theatre. This disassociation should be resolved within a couple of weeks.”
The Irezumi and Rustic Vine lawsuits aren’t the only legal matters facing Posniak right now. Posniak has filed suit in LA County against his former SGM partner, Alan Nathan, with whom he parted ways after 15 years of working together, alleging contractual fraud. Hearings for the case are scheduled for early December.
When asked, Posniak now believes he’s no longer helping to change Orange County nightlife.
“No, not anymore,” he replies now, smiling. “I wanted to contribute creativity. I wanted to provide controversy. I wanted people to talk.”
“And I guess they are.”