Investors in Tempe bar hit with IRS penalty
It was more bad news for some who invested in a Tempe bar owned by Julian Wright as the IRS has sent notifications that they owe money.
According to one shareholder, the IRS sent notification that money is owed for the Canteen bar.
“He’s costing his investors almost a quarter of a million dollars because he didn’t do something right,” the investor said. “We’re paying penalties and interest and the investors had nothing to do with it.”
The shareholder said it makes no sense that those who invested in the Canteen are liable to the IRS. “According to him (Wright), he sold have the business to someone else and they took it over. Then the other owner put in that they put in a million dollars in assets, when it was really only $300,000 in assets for depreciation. So why aren’t they paying it instead of us paying it.”
For some investors, there was another potential loss as Wright abruptly closed the Gringo Star Street Bar on the popular Mill Avenue. The closure left shareholders to wonder if they will see any income from the sale, which Wright said was $300,000. The Tempe bar opened in 2013, offering arcade games, food, drinks, dancing and street art. The 6,500 square foot bar on the corner of 5th Street and Mill Avenue was once home to the Library Bar and Grill, another of Wright’s bar/restaurants. Gringo Star’s opening was highly anticipated from both a consumer and investor standpoint.
Shareholders said when the bar first opened, it appeared to be a sound investment. They said they did see a return on the funds they entrusted with Wright.
But after a couple years, they said things started going south. They no longer received dividends and Wright was difficult to reach. They allege when they asked questions about their investment or the financial health of the Gringo Star Street Bar, they were either ignored or not given an answer. When they did receive an answer, they allege it wasn’t a favorable one. In fact, two investors said Wright would answer with a “F**k you” if he didn’t like what was being asked of him. Veritas News was provided with a string of text messages allegedly between a shareholder and Wright that does show crude language.
One investor said he has received no explanation for the money owed the IRS. He said he was told that Wright didn’t want to get into a pissing match with the new owner.
“He’s supposed to be fiscally responsible to us,” the shareholder said. “We invest with him to make money.”
Wright is the president of Fork & Dagger Restaurant Group. He has opened and closed bars in and around Tempe. In October, ABC15 reported Wright’s plans to open Equal Parts, a “rustic northern Italian” eatery in downtown Chandler had been scrapped for a different concept. The new concept will be called Las Palmas Cantina.
Wright has been featured in several Phoenix New Times stories. He has also been featured in a promotional video for Tempe.
Learning the IRS wants the investors to pay penalties and interest didn’t sit well for those who already anticipate a loss from Gringo Star.
Gringo Star Street Bar’s Jan. through Oct. 2017 profit and loss statement indicates the establishment took a negative 37 percent change in sales. The 2016 profit and loss statement also indicates a loss of revenue.
Arizona Leisure’s website states, “Without a doubt, Tempe’s Mill Avenue District is the hottest entertainment center in Arizona. It is the hot spot in the Valley of the Sun Phoenix area with the highest concentration of restaurants, cafes, microbreweries, sports bars, unique shopping and nightlife than any other place in the Metro area.”
The location of the bar and its proximity to the university leaves one investor baffled as to Gringo Star’s demise.
“It’s a popular area and a college hangout,” the shareholder noted. “I thought it would be a good investment. Lots of foot traffic.”
College students and foot traffic weren’t enough to keep Gringo Star out of the red, according to another shareholder. “It was mismanaged. They were giving out too many comps and not watching the bottom line.”
What will happen next, the shareholders said they aren’t sure. Those interviewed said they hope to receive some money from the sale, however, noted they won’t be surprised if they don’t.
“We probably won’t see a nickel. I’ll be surprised if we do,” said one investor.
They are hoping after the bills are paid that there will be something left for the investors to receive. For those invested in the Canteen, the Gringo Star profits could pay the IRS.