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
“I had a long-standing business relationship with Mr. Pulido whereby he provided me with business advice and acted for me as a paid consultant,” Hojati recounted in a sworn court declaration filed in 2009. “One of the services he performed was to assist me in finding business opportunities and to help with issues related to the City of Santa Ana.”
Pulido’s mandatory disclosure statements reveal no such payments. The court files include copies of checks from Hojati to Gemayel, but none to Pulido.
In late April or early May 2007, Pulido contacted Hojati. “Miguel wanted me to agree to invest money and to talk with George [Gemayel] and get George to back off [threats to take over Abel Food Services],” Hojati recounted in court filings. He also privately discussed the catering business with Gemayel. “While [Gemayel] was very interested in taking over the business for himself, he did not want to anger the mayor whose father was one of the owners,” said Hojati.
Next, Pulido—not Salazar, the official owner of Abel Food and the onetime proprietor of the city’s bankrupt Bodega Club—conducted a meeting about the company’s future without Salazar’s presence. Hojati was offered 51 percent of the business if he would pay $1.18 million and assume the $430,000 note to Fullerton Community Bank, as well as guarantee about $365,000 in Abel Food’s unpaid rent to Gemayel. Because of his trust in Pulido and Gemayel, Hojati claims in court documents that he accepted the arrangement and, with all three men happily discussing the potential for future vending profits, created A&G Quality Food Services Inc. to replace Abel Food Service.
But the deal began to falter from the outset. Gemayel, whom Hojati considered a dear friend, announced that Abel Food actually owed him $775,000 in unpaid rent—a whopping $410,000 more than Salazar had reported. Gemayel demanded that Hojati pay the higher amount for Abel Food, but neither Gemayel nor Salazar produced records at the time to back up their numbers, according to court documents.
Hojati and Salazar weren’t compatible either. While awaiting escrow for A&G to takeover, Hojati assumed control over the company’s accounting. The men fought continually about decisions, even though by January 2008, their arrangement was finally able to consistently pay about $28,000 in monthly rent. According to Patrick Carroll, Hojati’s attorney, Gemayel attempted to take an ownership position in the vending operation after Hojati’s cash infusion and the business began to become profitable.
But escrow never closed. After the purchase agreement collapsed, Salazar tried to remove Hojati from the warehouse, accused him of committing “substantial fraudulent activity” and demanded the return of missing Abel Food accounting records that Hojati had stored at his auto-repair business. By September 2008, Salazar had hired an armed security guard in an effort to block Hojati’s access. He even hired GlassRatner, a forensic accounting firm, which determined that—according to a detailed report filed in court—“Hojati and A&G embezzled at least $458,383.”
Gemayel, who declined to be interviewed for this story, still hadn’t been paid all of Abel Food’s back rent and was frustrated. At one point, he brought in Orange County Democratic Party boss Frank Barbaro, a lawyer, to negotiate peace. That move failed, too.
Hojati wasn’t happy either. He claimed he’d been tricked into making a “substantial” investment in Abel Food and was now being pushed out. He said Salazar’s group didn’t know anything about smart business practices, hadn’t put a dollar into the effort in a year despite taking paychecks and were, he said in a court complaint, “clearly using the monies to pay personal non-venture expenses.” He demanded back $800,000 he said he’d invested after Pulido had brought him into the deal.
In late 2008, the battle landed in Orange County’s central courthouse. Salazar and Hojati and Gemayel filed civil complaints against one another. The filings claim embezzlement, fraud and gross mismanagement. Gemayel sued both in hopes of getting his unpaid back rent. But key portions of the proceedings hit a legal roadblock when Abel Food filed Chapter 11 bankruptcy in federal court in September 2008 and, later, the parties agreed to take their cases off calendar until corporate reorganization wins judicial approval. In a separate move, Hojati and Gemayel reached a settlement but made the terms permanently confidential.
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When asked to comment about his involvement with Abel Food and if he had any idea who might have embezzled hundreds of thousands of missing dollars, Mayor Pulido called those potential questions “legal matters,” and had Charles McClung, his personal lawyer, respond. According to McClung, there is no story here. He says Pulido got involved in this “convoluted . . . complicated” situation solely because he’s a mayor concerned about enhancing local business opportunities.
“The mayor and his father have known Abel Salazar for years and years and years,” said McClung. “Miguel, the dad, is a business partner of Salazar’s. Miguel [the mayor] got involved in this in his consulting capacity. He’s worked with all the parties so that they have good business relations. Miguel is friends with everyone. He didn’t want them to fight.”