This weekend, there will be no lines, no VIP tables and no dancing at E Olive Way nightclub The Social following its courtroom defeat in a desperate bid to hold onto its liquor license. CHS has learned more about the issues that tied up the club’s failed, yearlong bid for a liquor license and the troubled financial past of one of The Social’s key creators who in 2010 walked away from more than $10 million in debt as his architecture firm imploded.
According to King County and United States Bankruptcy Court records, the designer behind The Social and the key partner working on the project with his then-fiancee Laura Olson, architect Chris Pardo has gone through years of legal and financial battles as his company PB Elemental crashed to earth during the recession and a series of partners have taken him to court over business dealings and money owed.
In 2010, Pardo completed a Chapter 7 bankruptcy and, in the process, walked away from more than $10 million in debt — of which, more than $9 million was owed to a Lynwood financial operation known as City Bank which had made loans to Pardo to finance PB Elemental’s aggressive slate of projects around the world. Regulators seized City Bank and sold its remaining assets that same year.
Pardo’s troubled financial dealings emerged in The Social’s fight with the state liquor board as investigators discovered what the state Attorney General’s office called “misrepresented facts” in Olson’s application for a liquor license for the club. While the state has not yet elaborated on the nature of the misrepresentation, Olson’s statements submitted to the court documented problems with a liquor license application Olson had previously submitted for the steakhouse project she, Pardo and investors had launched on 12th Ave:
Manhattan Drugs lives on — it’s now Manhattan . But the lawsuit Olson refers to reveals the the trouble behind the scenes of the project that caught the attention of the state investigators.
Lawyers for Olson and Pardo’s partner in the project Jin Yong Park filed a $500,000 lawsuit in 2012 alleging fraud and financial shenanigans. “Today, although Manhattan Drugs is a successful restaurant, Pardo’s false representations have been at least partially exposed and he has defaulted on every obligation to Park,” the complaint in the case reads.
Park’s lawyers documented the soured partnership:
Park’s lawyers also said that Pardo did not disclose his multimillion bankruptcy to their client.
The lawyers also documented a cascading series of financial problems the partnership encountered, each, Park contended, putting him in deeper and deeper to try to salvage the project:
As Pardo scrambled to have the restaurant completed by a 2011 year-end deadline, Park’s lawyers wrote that another deal was struck marking Park a 74% owner of the business as Pardo was forced to cede his share of Manhattan Drugs as the project needed yet more money to be completed.
To make the contractual deadline, Parks said Pardo cut several corners to achieve a New Year’s Eve opening:
Pardo’s lawyers denied the allegations brought by Park and accused the partner of mismanaging the restaurant and charging personal expenses to the company.
Both parties agreed to settle the case in July 2012.
“We are not at liberty to discuss the settlement due to the confidentiality agreement, but were able to resolve the matter with terms we found satisfactory,” Pardo said in a statement sent to CHS.
Pardo, however, faces another lawsuit from former business partners. Elemental Design sued the architect last year in a dispute alleging that Pardo quit the company only to start his own venture with nearly the exact same name:
Pardo’s lawyer answered the allegations saying Pardo had been given permission to contact Elemental clients and that disputed architectural designs could not be claimed as trade secrets. “The domain name and Facebook page were never owned by plaintiff and it had no legal right to prevent Pardo’s use of them,” the lawyer also noted.
The case joins a series of suits that continue to emerge in the wake of PB Elemental’s 2008 meltdown – the latest is a suit brought by an investor over his $250,000 loan made to Pardo and the design firm in the midst of its 2008 financial troubles.
What’s next for Pardo, Olson and their investors in the $700,000+ nightclub is not clear.
“We are working through the appeal/hearing process to re-obtain the license,” Pardo writes. “In the short term the space may be used for private and nonprofit events/functions.”
Olson, who declined to make a statement on the record for this article, is moving forward with her company the Pterodactyl Group — backer of Hill concerns Po Dog, Auto Battery, Grim’s and The Woods — apparently without Pardo.
The Seattle Eater web site, currently edited by an in-the-know restaurant industry PR veteran, reported this week on Olson’s latest project — the downsized Anchors Down in Ballard.
“The original concept was going to be Queen of Norway with then business partner, Chris Pardo,” the site dishes. “But when the two parted ways, Olson redirected her energy into a nautical-themed bar…”