Estranged investors in one of Chicago’s most successful restaurants say they have proof the founders of the Maple & Ash steakhouse engaged in “rampant misappropriation” of federal pandemic relief funds and diverted millions of dollars into other accounts, according to newly unsealed court records obtained by WBEZ and the Chicago Sun-Times.
The plaintiffs in a lawsuit against Maple & Ash say they gathered “smoking gun” evidence that federal Paycheck Protection Program funds were funneled away from the restaurant for personal use — including more than $2 million toward the purchase of a Learjet in 2021.
Accusations of PPP misuse by the city’s highest-grossing restaurant surfaced publicly in April, and a lawyer for Maple & Ash again denied any wrongdoing on Tuesday.
“Once again, all funds were properly applied for, utilized for operations, and forgiven,” attorney Doug Wexler said in a statement. “Ultimately, Maple & Ash will prevail on each issue put forth by the Plaintiffs.”
The newly unsealed records from the case in Cook County Circuit Court feature greater detail about the alleged fraud, with the aggrieved investors alleging that none of the pandemic relief funding from Washington actually ended up at the restaurant in Chicago’s Gold Coast neighborhood or another Maple & Ash restaurant in Scottsdale, Ariz.
Cook County Judge Alison Conlon last month ordered the unsealing of the court records because lawyers for WBEZ and the Sun-Times petitioned for it.
The PPP program was set up shortly after the start of the coronavirus pandemic in 2020, and officials quickly spread huge amounts of federal taxpayer dollars to businesses across the country. The forgivable loans were meant primarily to help recipients cover payroll costs at a time when they were forced to shut down. But widespread corruption has plagued the program in Chicago and nationally.
Records show the Chicago and Arizona outposts of Maple & Ash received about $7.6 million in PPP funds from the U.S. Small Business Administration.
The plaintiffs in the lawsuit say the government forgave those loans after Maple & Ash co-founder James Lasky, who is a defendant in the case, signed applications swearing the money had been used appropriately.
The investors in Maple & Ash say the managers of the business also told them in May 2021 that “reserves have been replenished through use of PPP funds.”
That was all untrue, according to a complaint filed under seal in April and made public recently.
“These statements were all false and fraudulent,” the lawyers for the plaintiffs wrote, adding that the restaurants “never received a dollar of these funds.”
Instead, records show the money from the government went into other accounts and ultimately was spent “to pay personal expenses” for Lasky and former co-owner David Pisor, the plaintiffs say.
The chief financial officer for the management company even wrote in an email that “virtually no PPP $ was sent to the restaurant(s),” according to the lawyers for the estranged investors.
They say they used subpoenas to get documents that show “the rampant misappropriations of PPP funds” and “massive payments of millions of dollars in undisclosed and improper payments.”
Lasky and Pisor are accused of then getting direct personal payments and also using the money for “personal expenses for both of them, such as credit card payments, country club dues and private jet expenses,” according to court documents.
Pisor and Lasky settled a separate legal fight between them in January, and Pisor noted on Tuesday that he was no longer involved in Maple & Ash or any pending litigation. Pisor added that he did not sign documents for the PPP loans or handle the finances for that issue while he was recovering at a substance-abuse clinic.
“The documents speak for themselves,” he said. “I had nothing to do with it.”
Statements show payments for Learjet, “Beverly Country”
A previously sealed filing by the plaintiffs included bank statements indicating payments of about $2.2 million in 2021 to Aero-Space Reports Inc., an aircraft title and escrow company, for a plane.
The tail number for that aircraft corresponds to a 12-seater 2007 Learjet purchased in December 2021 by a company whose president is Lasky, according to court and business records.
The bank statements in the court filing also show more than $32,000 in payments to “Beverly Country.” There’s a Beverly Country Club on Chicago’s Southwest Side.
The plaintiffs allege those expenditures were among “dozens of self-dealing transactions in which the Defendants secretly siphoned millions of dollars” from the restaurants, including the PPP loans.
The restaurant in Chicago had 220 employees with an average monthly payroll of $748,695, and the Scottsdale location had 168 employees with an average monthly payroll of nearly $600,000, court records show.
The Maple & Ash steakhouse in the Gold Coast recorded the highest total sales of any restaurant in Chicago and is the fourth-highest-grossing restaurant in the country, raking in about $30 million a year in sales, according to the Restaurant Business trade publication. The sister restaurant in Arizona came in 12th in those national rankings for 2022.
According to court records, Lasky and Pisor started Maple & Ash in Chicago about eight years ago and raised about $3 million from the plaintiffs in the lawsuit and other investors. A few years later, they raised about $3 million more for the expansion to Scottsdale.
But investors — who include Dylan Bates and Ryan Anetsberger — said the dividends they got from the “very successful” restaurants were smaller than expected and they had difficulty getting financial information, so they sued last year.
An attorney for the plaintiffs, Michael Forde, declined to comment Tuesday.
Cook County Judge Clare Quish allowed many filings in the case to be made under seal — outside of public view, contrary to normal practice in most lawsuits. But Quish recused herself from the case without explanation on May 8, five days after the lawyers for WBEZ and the Sun-Times filed a motion asking that the case files be opened.
The lawyers for the station and the newspaper, Steven Mandell and Brian Saucier, argued the documents had been improperly filed under seal.
The defendants opposed unsealing the files. At a June 23 court hearing, Wexler argued there was “no new article here” because the media reported on the PPP fraud allegations in April.
But Conlon — the judge who replaced Quish in the case — dismissed Wexler’s argument, saying there was “a gross overuse of sealing in this case … and it needs to be rectified.”
According to a transcript of the hearing, Conlon said, “I don’t want to talk about what news articles may or may not be published. That’s way beyond my purview.”
Many PPP fraud accusations in Chicago and nationwide
No criminal charges have been filed in connection with the fraud alleged in the lawsuit.
The accusations come as Chicago has emerged as an epicenter in the national wave of pandemic relief fraud. The state of Illinois recently followed the federal government in extending the statute of limitations for prosecuting such corruption.
In Chicago, dozens of public employees have been fired or have quit under suspicion of defrauding the $800 billion PPP initiative.
Steven Cyranoski, interim inspector general for Cook County government, has rooted out more than 25 such employees. People lied on loan applications that they ran beauty salons, landscaping companies and other businesses. They used the loans to buy cars and homes, travel and even pay for a wedding — but didn’t use their money to cover payroll expenses. In an interview last month, Cyranoski said he notified prosecutors of his findings, but didn’t know of any criminal charges being filed.
The inspector general for City Hall says her office is continuing to investigate PPP fraud among police officers, firefighters and other city workers. She hasn’t made any of her findings public.
There are similar accusations against employees at other local government agencies, including the Chicago Park District, WBEZ and the Sun-Times have reported.
According to researchers at the University of Texas, Cook County was an epicenter of PPP fraud along with other cities such as New Orleans and Detroit. Cook County had a “suspicious loan rate” far higher than in New York or Los Angeles, they found. Some people in inner-city Chicago were getting loans for supposedly being farmers, the University of Texas researchers found.
And earlier this year, the Sun-Times found clusters of people with addresses in homeless shelters were getting PPP checks for businesses that were probably fictional.
Dan Mihalopoulos is an investigative reporter on WBEZ’s Government & Politics Team. Frank Main is a Chicago Sun-Times reporter.