This is a David vs Goliath Tale
A story about how one of Miami’s most legendary live music venues is fighting to survive in the wake of a global pandemic while confronting unscrupulous Miami developers committing landlord crimes.
This is a case of small business owners refusing to be bullied or have the courts, the police, or government aid weaponized against them.
On August 4, 2020 Francisco Herretes, City of Miami Chairman of Art in Public Places, reaches out to reconcile, prior to landlord retaliation, with tenant Franklin Dale and District Live Agency after Herretes' partner Mallory Kauderer absconds with Churchill's government aid for COVID mandated shutdown of bars and restaurants.
In regards to who is calling the shots in Little Haiti:
Herretes - And so what happens really honestly, is whatever Jim wants we need to do, because he is trying to organize us so we can go get the money and he's paying for the ride. Cause he says, I'm going to get the fucking money. I'll get the money, but I'll pay for the ride. But, so, so, all right. So, so even though um, he is not an owner of Mallory's companies and he's not right now an owner of the portfolio, he does have security on the portfolio. He has a say in everything, right. Um, you know, if Jim says we do not do this, we can't do it. And similarly, if he says, yeah, this is what we're going to do - this is the plan. And that's what we do. And, and from a certain point, you know, we're going to start transitioning our operation. Hopefully when we get a deal one, we'll start transitioning a lot of our operation over there. Because once it goes into that new company, that new company is starting from scratch with, uh, with an opportunity zone project that has to be audited. So it has to be audited every year. It's an expensive process, but it's also a very careful process. And in your experience, you know, that, you know, if, if Mallory's ever audited like that and we, you know, we DIE...like, so, so I mean, we’d get slaughtered. So, so this is not, this cannot be that type of operation.
In regards to how Kauderer, Leavitt do business and treated tenants:
Herretes - The way we've been doing with you and the way we, you know, the advice we've been giving or not giving or pushing or not pushing or whatever it is, you know, we've been doing with all of our tenants, and it doesn't work, right. It doesn't work. It just leads to animosity and it doesn't really have any results.
In regards to the investments made/credits earned by DLA:
Herretes - Midgard acknowledge all of that. So that's what we need to do is kind of account for, you know, what that investment has been and make the allowances and the leases and, and get you credited and get you up to date. And, and obviously set a plan going forward, some abatement going forward because of the emergency and to get you guys opening.
In regards to Kauderer taking SBA EIDL $150,000 through/from the business:
Herretes - So they went ahead and they use the operation. That’s a fact that was done, they use the operation and they got the PPP loan, which you used for rent and for other things, and it was used fine. And you don't have to repay. And you got an SBA loan, you know that is right now in their account, but they got that SBA loan. I mean, they don't need, they don't need your company to get that SBA loan they got that SBA loan. Thing is you know, what the fuck are you doing? Because if you, if I take away the opportunity, your opportunity to use your operations, to get a loan, to get your SBA right then, um, and I'm basically competing with my tenants.
In regards to Kauderer retaining possession of the SBA funds:
Herretes - I know why we are in the position that we are. I know that this is not your fault. I know. Okay. I'm looking at this and it is tangled right now. And I'm just being very clear with you on where you are, right. You signed a lease.
Dale - Well, we'll hold on a second. I, and I appreciate your telling me where I'm at. I just want to really focus on where Mall's at in this situation.
Herretes - But I need that, but I need you, I need you to understand about these loans so I can, so I'm trying to explain why, even though the SBA loan, even though the SBA loan doesn't have a requirement by law, that it must be used in Churchill's operation. It doesn't have that requirement whatever we want to say about it. It doesn't have that, but like the PPP does. SBA does not. But, But what did happen was like you mentioned, they did use accounts payable and financials and your income and your, and your payroll and your, and everything regarding the Churchills operation, they do that and they did use Mallory's personal guarantee. And they got a loan by doing that, you know, by doing that, they took your opportunity from doing exactly the same thing.
Dale - I understand.
Francisco - Because now you can't come in with District Live and do it appropriately. On your own for your own as you should have done as, as, as they should have done when. They didn't do it that way. So what I'm saying is you know Mallory has a problem right now. He looked at it, I guess he looked at it, I guess when he did it and he thought, okay, I'm being cute and I'm taking the money here. And so FD's not controlling it, but he knows there’s it's an emergency so he doesn't want to get, you know get caught with his pants down.
Mallory Kauderer hired Franklin Dale (The Beverage Group) in 2014 as his nightlife and hospitality advisor to "save" Churchills Pub and to help him develop hospitality on his properties in the NE 2 Ave corridor. Once known as Rock Road, Kauderer enlisted Dale, a seasoned multi-unit operator to revamp the south side of the dilapidated district with vibrant hospitality concepts.
Starting in 2019, Dale was finally able to initiate the vision of developing a live music district for Miami. Dale brought in human and financial capital to get the vision off the ground under the newly formed District Live Agency.
With Churchills Pub, a local institution often referred to as "the CBGBs of the South" as its cornerstone, DLA sought to solidify Churchills' place in the national live music scene by adding an outdoor stage (in yellow).
They also began work on Histori, a novel "grown and sexy" wine restaurant + open-air venue concept that would also have two stages for live performances (in red and green).
Finally, DLA took over offices adjacent to Histori and across the street from Churchills, and even built out a 4 room AirBnB/Green Room for traveling bands (in green).
A one-in-a kind footprint with ultimate connectivity!
Mallory Kauderer, Francisco Herretes, James Goldstein, CPA Manal Oliver, and Donita Leavitt wanted to "HELP" Churchills Pub owner-operator DLA obtain pandemic aid.
The business receives Payment Protection Program PPP funds which were to be applied to payroll and rents.
It is later discovered that this was not exactly the case.
The Landlord "front-runs" the tenant to apply for an SBA EIDL Loan, using the businesses financials including income, cost of goods, vendor balances, etc..
Despite the monies being deposited into the correct operating account, Landlord uses his agent's banking access to wire himself $149,000.
On June 12, 2020...4 months into a forced closure of bars and restaurants due to COVID, the business gets its needed and well-deserved financial aid from the government.
On June 12, 2020 (yes, the SAME day), the Landlord unilaterallly decides that they need these funds more than the business. These monies, although going straight to landlord, would NOT be credited as rent. Why?
The Landlord makes the decision, with NO discussion with owner-operator Dale, that Churchills is going to give his real estate holding company a generous "loan" of $149,000...virtually ALL of the SBA EIDL monies intended to get the operation back up and running out of the pandemic.
Kauderer sold the business to Dale and District Live Agency in April of 2019.
The Herald, covering the Pub for its 40 year anniversary, highlighted the sale on page 2.
James Goldstein's Assistant Director of Real Estate Development for Downtown Little Haiti Opportunity Zone Jamie Myhre was giddy about wine restaurant and live music venue concept Histori after doing a walkthrough with Dale, and suggested that Goldstein was too.
She requests expense ledgers from District Live Agency across their rental portfolio so that Kauderer could include them as his own in refinance applications with the banks, as noted in the texts with Kauderer (above).
Kauderer "175 details on monies spent on renovations. 5524 detail on monies spent on renovations and any fees"
Dale "What's this for?"
Kauderer "The package for the bank on Refinancing that group of folios. After that will need a lease done on 175. Those are part of the loan package for the application to the bank. Roofer into 5528 so it gets repaired"
However, with Histori needing to overcome a couple major hurdles to get open, Myhre and Goldstein seemed genuinely interested in helping support not only Histori, but also DLA's other projects next door and across the street at Churchills.
Even though they took the money from Churchills business, Kauderer and partner Donita Leavitt were angry with Dale for not cooperating or participating in their scheme. Regardless, everyone wanted to find a resolution and the chance to advance the projects.
On a call with Dale in late July 2020, Goldstein, having full knowledge that Kauderer "got caught with his hand in the cookie jar", requests that DLA write Kauderer and Leavitt a letter stating their grievances and outlining steps towards a fair resolution so that the projects could advance.
Nobody, especially Dale, DLA, and Histori, wanted to give up their $250k+ investment into the businesses (and Kauderer's properties)...especially in the midst of a pandemic where they were robbed by the Landlord of their rightful government aid.
In fact, in an August 17th Memo of Understanding sent to Kauderer, Leavitt, Herretes, and Goldstein, DLA outlined not only a willingness to reconcile, but also to deepen their commitment to the project in the form of signing new, long-term leases across properties.
At a critical time when everything was closed and people were scared, DLA was fully committed and prepared to see the light at the end of the tunnel.
In response to DLA's Memo of Understanding, the crew of Kauderer, Leavitt, and Herretes (likely with Goldstein's blessing) initiate sham retaliatory evictions against DLA and Histori across properties.
Churchill's Pub: 5501 NE 2 Ave
Histori + Event Space: 5524/5528 NE 2 Ave
DLA Headquarters + AirBnB: 175 NE 2 Ave
An already out of control situation gets worse.
Instead of working together to move the District forward, Kauderer, Leavitt, and Herretes push forward with egregious retaliatory evictions across properties against DLA.
Using disgusting self-help tactics, Team DLHOZ double-down to cover up Kauderer's grift.