Investors Suing Sovereign Tap Over New Restaurants

PLAINFIELD, IL — Three downtown Plainfield restaurant owners are due in court this week after a group of investors filed a lawsuit against the business. Sovereign partners Dale Lewis, Jessica Watson Gomez and Rafael Gomez arebeing sued by investors who claim the restaurateurs have improperly funneled thousands of dollars in investments to launch several more businesses. A group of demonstrators also held signs outside the restaurant, 24205 W. Lockport St., over the weekend, claiming the business owes $92,000 in unpaid rent — something the restaurant owners dispute, saying the building is in foreclosure.

The lawsuit, filed Aug. 15 in Will County, claims that investors Margaret Burke, Mike Bakos and Travis Bonifas contributed at least $225,000 to help establish Sovereign, with the money to be used only for startup costs, remodeling and inventory for the farm-to-fork restaurant. According to an investor agreement, while Lewis, Jessica Watson Gomez and Rafael Gomez contributed no money, Burke says she put in $180,000 for the business, with Bakos chipping in $20,000 and Bonifas investing $25,000.

The lawsuit accuses management of converting the income and assets of Sovereign to help establish, fund and operate three other businesses: Crusade Burger Bar in Yorkville; 1836 Drink Lab & Provisions, slated to open soon in Yorkville; and the still-in-development Sanctuary project in Plainfield. The lawsuit claims Crusade and 1836 Drink Lab will also compete with Sovereign by drawing customers from the same geographic area.

According to the suit, investors learned in August 2016 that Gomez had used $10,000 from Sovereign to open Crusade, while attributing the expense to "research and development" for the Plainfield restaurant.

During a June 2017 meeting, "Gomez admitted that a large amount of money had been taken from Sovereign and used for opening and operating Crusade," the lawsuit claims. Additional money was also paid to local attorney John Argoudelis for legal fees associated with the new business, according to court documents.

Argoudelis — who represents Sovereign as well as Lewis, Jessica Watson Gomez and Rafael Gomez — said he believes the investors are suing out of spite. "It's just a business dispute," he said. "(Burke) is mad that she didn't get included in future restaurants and Crusade in Yorkville," he added, saying the partners — now part of a group known as Minor Threat Restaurant Group — have repaid Burke $75,000 over the last two years.

Argoudelis called the investors' claims a "fake lawsuit," adding that the partners have provided the investors with all requested financial records and an audit has been conducted. A hearing in the case is set for Nov. 8.

Lewis, who in 2014 told Patch he was not involved with Sovereign despite running the business' Facebook page, spoke on Monday said the partners initially used Sovereign profits in the early stages of developing Crusade Burger Bar.

"We took profits from Sovereign to expand and open up the other restaurant in the very beginning," he said. Now, he said, both restaurants are doing well and are profitable.

"Our investors will be made whole in the long run," he said. "They just wanted to have an internal audit, which we agreed to."

Previously, O'Sullivan's restaurant operated out of the Sovereign location. Another restaurant, Bin 48, opened in the same location after O'Sullivan's closed, but shut down in 2014 when the owner decided to retire.

Argoudelis also responded to the weekend demonstrators, who held signs claiming the restaurant owners are "squatters" and haven't paid rent in a year. Argoudelis said Sovereign stopped paying rent after the landlord failed to make promised HVAC upgrades. Lewis said the restaurant's parking lot is also in need of repair.

"The landlord went into foreclosure some time ago," Argoudelis said. He said the Sovereign partners paid to put in wall air conditioning units to keep customers comfortable over the summer, and have been paying rent into escrow since last October. "They've been trying to purchase the building for a couple of years, even before this started," Argoudelis said.

Will County court records indicate foreclosure proceedings on the property began in September 2016, and a foreclosure judgment was entered Oct. 17, according to Will County records. A status hearing in the case is slated for Feb. 15, 2018.

Lewis said Argoudelis has been communicating with the bank directly. Safe Harbor Realty, a receiver assigned to act as a go-between for the bank and the tenants, filed a forcible entry suit against Sovereign on Aug. 18. A hearing in that case is set for Nov. 21.

"It's unfortunate that it's taken this turn and become a public thing, and that's unfair," Argoudelis said, adding that he believes some may judge the Sovereign partners unfairly due to the closing of Lewis' previous downtown Plainfield businesses, O'Sullivan's and Finnegan's Irish Pub. Finnegan's closed in 2011 after its liquor license was revoked due to unpaid taxes.

"Sovereign is not going out of business," Argoudelis said. "It's a very profitable business and they paid all their bills."

Sovereign addressed the weekend demonstrations with a Facebook post.

"It’s come to our attention that we have picketers outside Sovereign claiming we owe unpaid rent. We have had multiple critical maintenance issues with our building that our current landlords have refused to address," the business said on Saturday in a Facebook post that has since been deleted. "As of October of 2016 We made it very clear that we would not being paying rent until those issues were handled as it hampers our day to day operations and the comfort of our guests. On top of that the current building owners have been foreclosed upon and no longer have rights to this building and are delinquent on back property taxes. We are open and will continue to be open!"

Patch photo by Shannon Antinori