Former business partners divided by legal troubles

It was a business opportunity that just couldn’t miss: an exclusive contract to run the only place to get a cup of coffee or a sandwich in the busy downtown Las Vegas Regional Justice Center.

But miss it did. In fact, it was such a bad deal that no experienced restaurant operator wanted any part of it.

Now, nearly seven years after a trio of political insiders — builder Leon Benzer, lawyer David Amesbury and former police Lt. Benjamin Kim — were given what they thought would be a license to print money, the former partners are mired in an epic legal dispute. And that fight is overshadowed by the fact that all three may be charged in an unrelated federal investigation of fraud and corruption involving homeowners associations across the Las Vegas Valley.

Dissolution of any partnership is bound to be traumatic, but consider this: Amesbury reportedly is cooperating with prosecutors and trying to work out a plea deal, which could mean testifying against Benzer, a chief target of the HOA investigation.

Benzer filed suit earlier this month against Amesbury, accusing him of hijacking their failed partnership, Courthouse Cafe LLC. Benzer also accuses Amesbury, the company’s managing partner and former lawyer, of legal malpractice and theft of company funds.

"He was supposed to be looking out for the interests of the company, but he failed miserably to do that," said Benzer’s lawyer, Sigal Chattah. "We don’t know what this guy was doing with the company the past four years."

Amesbury has gone to court seeking a receiver to oversee the Courthouse Cafe’s dwindling assets. He charges that Benzer abandoned the business to avoid paying his share of its financial obligations.

Amesbury accuses Kim in his court papers of letting his mortgage company foreclose on a home he put up as collateral for a $1 million construction loan the partners took out. Amesbury charges Benzer also has allowed his home to slip into foreclosure.

Amesbury says he is the only partner "who continues to work toward a resolution to this unmanageable financial situation."

In hindsight, the situation was financially unmanageable from the start.

LITTLE RESTAURANT EXPERIENCE

The three partners, none with significant experience in the restaurant business, incorporated the Courthouse Cafe in September 2004, and quickly won the contract for the courthouse eatery.

Amesbury said both he and Kim, a longtime friend, got the idea to bid on the project after hearing it discussed around the courthouse, where Amesbury and his wife, Victoria Villegas, a chief deputy district attorney, often can be found.

Amesbury said the two men needed someone to handle construction of the restaurant inside the courthouse and were introduced to Benzer through Kim’s girlfriend, Lisa Nicklin, who later became his wife . Benzer became a partner, as well.

Competition for the county’s business, it turns out, wasn’t stiff. Clark County had solicited management proposals from 21 different businesses, including some of the biggest food service firms in town, but only the Courthouse Cafe responded with a proposal.

One firm, California-based Compass Group, which has restaurants at University Medical Center and the Las Vegas Motor Speedway in its business portfolio, wrote back saying the operating expenses needed to maintain the facility under the county’s financial requirements would essentially not make the venture profitable for the company.

Amesbury said he now understands why no one else wanted the contract.

He said the county required bidders to pay the full cost of finishing out raw space in the courthouse, and required a full-service restaurant open from 7 a.m. to 5 p.m., forcing the added expense of having two shifts of workers instead of one.

The location was better suited as a breakfast bar and sandwich shop, rather than a full-blown restaurant, Amesbury said. Business dropped dramatically by 2 p.m.

"In retrospect, we were suckers," Amesbury said. "We thought we were competing with the likes of Marriott and the other big caterers and were going to make money."

Benzer and Amesbury agree on one thing in their court papers: The county exaggerated its revenue projections for the restaurant, dooming the business from the day it opened in January 2006.

The restaurant never saw the predicted foot traffic or steady flow of food orders from juries, and it had to deal with additional large construction expenses because of the courthouse’s design flaws.

Those problems would stress any partner­ship, but relations began to sour after FBI agents executed search warrants across the Las Vegas Valley in the HOA investigation in the fall of 2008.

HOA INVESTIGATION

Authorities say all three partners were involved in a scheme to rig HOA board elections to push for construction defect lawsuits against builders. Legal work and multimillion-dollar repair contracts then would be funneled to participating lawyers and companies.

No charges have been filed in the investigation, but Justice Department lawyers from Washington are said to be working out plea deals with 25 to 30 targets and expect to seek indictments for as many as two dozen high-level players.

Amesbury represented one of the HOA boards under federal scrutiny. Investigators believe Benzer’s Silver Lining Construction company obtained construction defect contracts in the scheme. And Kim’s wife ran Platinum Community Services, an HOA management company that was searched in the 2008 FBI raid.

The relationship between the three men deteriorated further, along with the operations of the restaurant, as word surfaced about Amesbury’s cooperation with federal authorities.

Then in January, as business continued to slide, Amesbury struck a deal to let Capriotti’s Sandwich Shop, a national franchise based in Las Vegas, take over the county lease, officially ending the Courthouse Cafe’s stormy reign at the courthouse.

Capriotti’s is now doing a brisk business, gleefully handling long lunchtime lines.

PARTNERS AT ODDS

While no longer in the restaurant business, the Courthouse Cafe partnership remains mired in financial problems. The company owes thousands of dollars in state and federal taxes, and faces foreclosure on the $1 million construction loan.

Benzer and Amesbury now speak to each other only through their lawyers. Neither partner claims to have had any recent contact with Kim, who reportedly took a stress-related retirement from the Las Vegas Metropolitan Police Department last year.

"Disagreements between the board members and in-fighting amongst the board members have brought the daily operations of the LLC to a complete standstill," Amesbury wrote in court papers in January asking for the receiver to sort out the financial mess.

District Judge Kathleen Delaney has refused to appoint a receiver, concluding that Amesbury failed to state any claims that would allow her to take action.

Further heightening tension between the partners is Benzer’s lawsuit, which Amesbury said he plans to respond to in court.

Benzer, seeking at least $4.5 million in punitive damages, contends Amesbury refuses to show him the company’s books. He alleges Amesbury has "misappropriated" and "commingled" LLC funds for personal use, "rendering the company on the brink of collapse."

Benzer also accuses Amesbury of mishandling a 2008 lawsuit against the county over boiler room problems that closed the cafe for several weeks while misleading him to believe the "multi­million-dollar lawsuit would be settled with both monetary concessions and specific performance that would benefit the cafe and its individual members."

Records show Amesbury settled the county lawsuit in January for $5,202, without consulting Benzer.

Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135.

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