Skip to primary navigation Skip to main content

Due diligence, ECIDA style

The folks at the Erie County Industrial Development Agency who lent One Sunset $50,000 a year ago when the joint was tanking must have taken exception to Mayor Byron Brown saying Thursday that the IDA, along with his development agency, should have done a better job of vetting the restaurant's loan applications.

I say this because on Friday the IDA put its public relations firm to work -- on the public's dime, of course  -- to issue a release that declared, among other things that "due diligence is a way of life for us."

I called Al Culliton, the IDA's chief financial officer, into whose mouth the flak placed the words, to ask him exactly that "due diligence" was involved. I knew from previous interviews Pat Lakamp and I had done with Culliton and other officials at the IDA that the agency did not break a sweat in scrutinizing One Sunset before cutting a check to restaurant owner Leonard Stokes.

But hey, sometimes you gotta ask the question more than once.

Culliton's response, in shorthand: The IDA obtained a personal credit history on Stokes, but not a corporate credit check of the business because the search came back empty.

The IDA also reviewed the restaurant's business plan, one which Michelle Barron helped to write and which included a bogus claim by Stokes that he was a manager at a restaurant in Cincinnati when, in fact, he was kitchen help.

Culliton also said they interviewed Stokes, but the IDA official hung up on me before I could ask whether they asked Leonard about the financial health of the restaurant. Stokes told us back in May that by the time he applied to the IDA for money, the restaurant was *"majorly in the hole" and that the loan represented One Sunset's  "last stand."

Now here's the thing. If Culliton had told someone in his shop to do what Lakamp and I did in the course of reporting our initial story on One Sunset and simply checked public records and talked to people in government, the IDA would have learned that One Sunset was in the process of leaving behind a long, ugly paper trail that would have sent up warning flares.

Lawsuits, liens, judgments, unpaid taxes -- stuff like that.

But no, we learned in our interviews with IDA officials back in May that the deliberations involved city officials, including Michelle Barron, saying the restaurant was a good investment and chatter among committee members about how nice it was to have an upscale restaurant oriented towards black professionals and, oh, the paper's restaurant critic give it a nice review.

Culliton, got hot and bothered when I asked him if the credit report they ran on Stokes' personal finances turned up evidence that he was late on his child support payments.

"That's an inappropriate question," he said.

Well, actually, Al, it's not.

It turns out just a few months after you cut Stokes a check, the state suspended his driver's license for being behind in his child support payments. (He later had it restored).

Knowing that might have set off a warning flare, consideering that the only credit report you had was on Stokes, rather than his business.

You see, sometimes you have to ask the impolite questions because sometimes you wind up learning things that stop you from lending money to a business on the brink of failure.


Economic Development | One Sunset
comments powered by Disqus