Skip to primary navigation Skip to main content

More detail on the One Sunset disaster

Stokes, leonard

Can indictments be far behind?

And perhaps a few more firings?

We've known since last spring, when Pat Lakamp and I reported on the city's bankrolling of One Sunset,that the $160,000 in loans and grants City Hall and the ECIDA put into the business were a terrible investment.

An audit done by the city comptroller that was released Monday provides more gory details.

"The use of these funds were mismanaged from the very start," the audit concluded.

City and county development officials come off as incompetent, at best, and possibly complicit in the fleecing of the public.

What's more, it's pretty clear that unknown parties flat out stole from the business.

The audit found that $27,985 of the ECIDA loan can't be accounted for, nor can $38,000 of inventory. And there's the matter of money lent to pay bills that were never paid.

Here are the "highlights:"

-- The restaurant lost money every month it was open. For example, the "business plan," and I used the term loosely, projected a $154,020 profit the first 3 1/2 months of operation. Instead, it lost $178,126. And that's not counting the sales tax that the restaurant collected, but never turned over to the state.

-- One Sunset owner Leonard Stokes's credit score was so bad that it should have disqualified him from borrowing.

-- The Buffalo Economic Renaissance Corp. made exceptions left and right to help Stokes, pictured above. His business was given a $30,000 grant without having to make a required match. BERC made additional exceptions when it lent Stokes money despite his poor credit score. The agency also failed to hold Stokes to several loan terms. Most egregious - it lent him $40,000 to pay off vendors, but he never paid the debts.

-- BERC took Stokes' word that he invested $119,000 in the restaurant without ever receiving supporting documentation. Then again, the audit said BERC never reviewed his original business plan, either. No need to, I guess, given that Pat and I previously reported that city officials who were supposed to review it actually wrote it. 

-- The ECIDA failed to do its homework before deciding to lend Stokes $50,000. In fact, One Sunset had expenses of $53,711 and sales of just $14,889 the month before the IDA awarded Stokes the loan.  

"If the ECIDA had performed adequate due diligence,as they publicly stated in newspaper reports, they would have discovered the downward trend in revenue and presumably would have never approved the new loan," the audit said.

Michelle Barron,the BERC vice president who was neck deep in the One Sunset deal, right down to buying the bar stools and helping manage the restaurant, was fired over the summer. Eric Gadley, the agency's chief lending officer whose fingerprints are also over the deal, still has his job. And that would be because why?

Likewise, no one at the ECIDA has paid a price for that agency's actions. Criticize the city all you want - please - but don't forget about the IDA.

Hey, Chris Collins, do you tolerate this kind of behavior in your businesses?

Why are you tolerating it at your IDA?

Brown on primary night While the audit doesn't address the question of Mayor Byron Brown's possible role in the restaurant deal, Darryl McPherson, the city's chief auditor, told Brian Meyer in an interview that Brown's hands are clean.

"What happened at BERC [with One Sunset] had nothing to do with the mayor," McPherson said Monday. "This wasn't about him tampering with operations."

I'm not sure what McPhearson is basing this on. I don't know if Brown played a role or not, but I'm skeptical that Barron and Gadley wandered this far off the reservation of their own volition.

I say this because (1) BERC didn't cut this many corners or ignore so many of its own policies for other business deals it has made and (2) Brown has a documented history of involvement with Stokes, most notably when he interceded right before police were ready to arrest Stokes. 

Like I said, I'm not saying Brown greased the skids for Stokes on the restaurant deal. I'm just saying.


(Follow this blog and my reporting on Facebook and Twitter. Have a story tip or something you want to share? e-mail me.)  


City Hall | Economic Development | One Sunset
comments powered by Disqus