Unpaid August Wilson Center creditors seek help from judge
Prominent businessman and former Steeler Chuck Sanders paid $90,000 for the August Wilson Center for African American Culture's liquor license, helping lift the center out of a criminal case, clearing the path for its sale and giving him a valuable asset to start a restaurant inside the shining Downtown facility.
Sanders, CEO of Urban Lending Solutions and owner of Savoy Restaurant in the Strip District, said by phone Monday that he hopes to open a Savoy Restaurant or Savoy Bistro within the black cultural center. If all goes as planned, the center's reflective glass doors could reopen to the public in mid-2015 under the ownership of a new nonprofit supported by three local foundations.
“The foundations have the reach to make it work,” said Sanders, named an honorary August Wilson Center board member for loaning it personal money while its financial situation deteriorated. “I want to be a part of that.”
An Oct. 13 letter from the center's court-appointed receiver demanding contributions from 13 of the center's former board members and officers prompted Sanders to make an offer on the liquor license, the proceeds of which the center will use to pay a group of stagehands and the Internal Revenue Service. Receiver Judith K. Fitzgerald sent the letter three days after Allegheny County District Attorney Stephen A. Zappala Jr. filed criminal charges against the center, accusing it of payroll theft.
The charges sent Fitzgerald scrambling to prevent the criminal probe from halting an $8.49 million purchase of the center by a coalition of foundations, a sale made possible through an $8.85 million deal struck Sept. 29 by the receiver, mortgage holder Dollar Bank and the Pittsburgh Urban Redevelopment Authority.
In the letter, Fitzgerald said the center's former leaders had a “duty” to contribute to $85,000 in “outstanding obligations” racked up while they served on the board in 2013. She threatened to sue them if she did not receive immediate payment.
“I definitely interpreted it as we better all get together to come up with the money, or our names can be dragged through the mud or maybe even criminal charges could be filed,” Sanders said. “I've given over $150,000 to keep this center up and running, so it really struck a wrong chord with me.”
“Part of Mr. Sanders' willingness to pay what he paid for this liquor license was to satisfy the board officers and directors in meeting some of the outside obligations of the center,” Fitzgerald confirmed.
The deal for the liquor license appears to salvage the sale of the debt-ridden center, though Allegheny County Common Pleas Judge Lawrence O'Toole has to resolve an obstacle raised in court Monday.
Scott Hare, attorney for International Investigative Services, objected to the sale because the black cultural center owes it about $245,000.
It's not fair the receiver found extra funds to pay $41,500 to stagehands and artist fellows while nothing will go to nearly $1 million worth of “unsecured creditors” such as the security firm, Hare argued.
The receiver's attorney, Michael Shiner, said O'Toole has the authority to discharge such “junior creditors” through a judicial sale — and must to avoid a Nov. 3 foreclosure. He compared Hare's objections with a “stick-up or an extortion job.”
“Let's not forget Dollar Bank is sitting in the wings here,” added Shiner, attorney for Fitzgerald, who stands to make $590,000 under the deal to share with her team of attorneys and consultants.
“We don't want to have to deal with a sheriff's sale,” said Eric Schaffer, attorney for Dollar Bank, slated to get $7.9 million of the $8.6 million it's owed.
O'Toole pressed counsel for the state Attorney General's Office on why it has yet to hand over a report analyzing the center's finances.
“Apparently the people who started it were financial nitwits or whatever, but I did order an audit of the accounting, so are we going to get one?” the judge asked.
The Attorney General's Office plans to issue a summary report — not an official audit — at the end of the month, the office's counsel told O'Toole.
Attorney General's Office spokesman J.J. Abbott noted the sale is separate from the financial review. He said the office did not see a reason to issue its report before the sale closes.
“If we were to bring an action it would be against individuals, not the center itself,” Abbott said.
Fitzgerald said she does not believe any criminal wrongdoing led to the center's demise. The center, which opened in 2009, fell into conservatorship in November after construction overruns saddled it with $11 million in debt.
“There was financial mismanagement, but the difference between criminal mismanagement and somebody simply not having enough money to pay bills is a big difference,” Fitzgerald said, “and what happened here is the center ran out of money.”
Natasha Lindstrom is a staff writer for Trib Total Media. She can be reached at 412-380-8514 or firstname.lastname@example.org.