by Mark Friedman on Monday, May. 20, 2002 12:00 am
Now, while Michael is working through his Chapter 7 bankruptcy proceeding, he is preparing to go before the Little Rock board of directors to appeal the Planning Commission's rejection of his request to keep his private club, Costello's, open later at night.
On May 9, the Planning Commission rejected his request to rezone the property at 1717 Rebsamen Park Road, the location of Costello's and his Cross-Eyed Pig barbecue restaurant, so that it could stay open until 2 a.m. It currently is required to close at 10 p.m., the planning commission said.
Michael did not return a call for comment.
The commission is trying to place Michael's appeal on the agenda of the board's June 4 meeting.
Several residents in the area are opposed to the idea of the club staying open later because of the excessive noise that comes from it.
Residents near Michael's business aren't the only group that has a beef with Michael.
Michael, 39, has been sued by former business partners and even the Arkansas State Medical Board. Both Howard Cannon of Arkadelphia and Dr. David Harshfield of Little Rock said they hired Michael to handle the books for their businesses, but instead, Michael ran the companies into the ground.
Both men still have lawsuits pending against Michael.
Harshfield dropped one of his lawsuits on April 16 after Michael agreed to pay off a $22,500 line of credit he took out in 1999, where he used Harshfield as a guarantor. Harshfield also agreed to forgive the balance of a $40,000 loan if Michael paid off the $22,500.
It didn't take long for Michael to default on the $22,500 loan. He didn't make the first payment of $437, which was due April 1, according to a lawsuit Harshfield filed in Pulaski County Circuit Court on April 23. The new suit seeks the $22,500 loan plus the outstanding amount of the $40,000 loan, which was $36,000.
But Michael had been having money problems for some time.
On Sept. 4, Michael and his management consulting company, Michael Management Inc., filed for Chapter 7, listing $73,607 in assets and $511,030 in debt. Michael told the bankruptcy court that his annual income in 1999 and 2000 was $30,000.
Michael's largest creditor was the Newport office of Union Planters Bank of Memphis, which gave Michael a $190,000 loan. His stock in Cross-Eyed Pig Grill and Catering Inc. was used as collateral, but its value was listed in the bankruptcy filing at $1.
Michael's landlord also is trying to collect $3,500 in back rent.
While the pecking order of creditors is being worked out, some residents around the 1700 block of Rebsamen Park Road have launched a campaign to reduce the noise from Cross-Eyed Pig.
"There is a band or solo entertainer performing outside on the deck every evening, that infringes on our ability to relax, enjoy outdoor activities and most importantly, sleep," Roger W. Clark, who lives near the restaurant, said in an e-mail to Donna James of the Planning Commission on May 3. "Since this business began at this address, we have quietly endured the problems this establishment has brought us, however, enough is enough."
Clark asked the commission to prevent loud music at the Cross-Eyed Pig.
Other neighbors have complained about the loud music as well as the customers on the deck.
"There also have been fist fights on the deck and people screaming loudly enough to be heard in my apartment," said David Edwards in a March 26 letter to the manager of the Rivera Apartments at 3700 Cantrell Road. "I was particularly disturbed by a woman's voice repeatedly screaming 'Please don't hit me!'"
The noise complaints date back to March 2001.
On May 1, Michael's attorney, Christopher Travis of Little Rock, asked the Planning Commission to amend the zoning for the property so the business could close at 2 a.m. Monday through Friday and at 1 a.m. on Sunday. Two other private clubs in the area remain legally open until 5 a.m., but Michael doesn't wish to stay open that long, Travis said in his letter. And Michael asked that the Cross-Eyed Pig be permitted to stay open until 11 p.m.
Travis also said the use of the deck is in compliance with the zoning rules and any noise violation is for a court, not the Planning Commission, to decide.
According to an economic study filed with the Planning Commission, the Cross-Eyed Pig averages $1,600 a day in revenue.
Michael told the Arkansas Times recently that he couldn't make Costello's work as a cigar bar. So it's now a "private club that sells alcohol, beer, that provides a seating area and music," Michael told the Times.
Michael also told the paper that he's constantly checking to see if his music is too loud.
"The last thing I want to do is offend my neighbors," he said in the May 10 article.
Dr. David Harshfield, a Little Rock radiologist, said he knew he didn't like Michael the moment he met him.
In 1997, Harshfield and two friends opened Java Golf Inc., a small retail golf shop that sold cigars and served coffee and bagels in the morning and had beer and live music in the afternoons and evenings.
But they didn't have enough time to run the company. A college roommate of Harshfield's told Harshfield that Michael could help him run his business.
"Nobody liked this guy from the get-go," Harshfield said. "The guy just came into the business, and the next thing you know, he owns everything."
Harshfield said Michael sold shares of the company and transferred the company's paperwork into his name.
In his complaint filed in Pulaski County Chancery Court on Nov. 22, 2000 — the lawsuit he later settled — Harshfield accused Michael of diverting funds designated for Java Golf, which did business as Costello's. Harshfield said he established a line of credit at Bank of America to be used for Costello's, but Michael used $50,000 of it himself.
Harshfield also accused Michael of diverting a portion of an $85,000 line of credit with Pinnacle Bank for his own use. An investor for Michael — believed to be business associate Brad Simmons of Little Rock — has paid off that line of credit.
"I'm fortunate enough to have a job where I've got enough money to pay for an attorney," Harshfield said. "But these other people didn't."
Harshfield estimates he's lost about $150,000 dealing with Michael.
The case was settled out of court and dismissed April 16.
In a November deposition filed in connection with his bankruptcy, Michael said Java Golf's assets included between $15,000-$20,000 worth of cigars and probably $4,000-$5,000 worth of liquor.
Michael said the alcohol license was worth about $4,000.
Michael also said in the deposition that he sometimes loaned Costello's $3,000 to pay bills, although the company would repay him.
"I would consider that in the ordinary, necessary action of business," he said. "Sometimes it runs short on funds, and I give it money."
Harshfield's experience with Michael was reminiscent of Howard Cannon's. In June 2000, Cannon, owner of defunct Canon Security Group Inc. in Arkadelphia, sued Michael and Simmons in Clark County Circuit Court for more than $5.15 million, saying they conspired to cheat him out of his business.
There was a preliminary hearing in Cannon's suit last summer, but the actual case file couldn't be located last week, according to court personnel. The only information available was a confirmation that the suit is still pending. Michael and Simmons have denied all the allegations.
In the suit, Cannon said Simmons used his credit to borrowed $120,000 from NationsBank (now Bank of America). He then lent the money to Canon Security in exchange for a promissory note from Cannon and an agreement that Simmons would obtain a one-third interest in CSGI if Cannon defaulted on the note. But, according to Cannon's lawsuit, Simmons then "filed a fraudulent promissory note with an addendum that provided for him to receive 100 percent of CSGI upon default of the Simmons loan with NationsBank on July 8, 1998."
Meanwhile, Michael "acted to destabilize and defraud CSGI by taking, without authority or other entitlement, more than $30,000 from CSGI" between may 1997 and October 1998, Cannon claimed.
The first business associate to have a legal dispute with Michael was Rick Freeland, who, with Michael and Simmons, helped found Cross-Eyed Pig. In January 2000, after firing Freeland as manager and accusing Freeland of misusing company money, Michael and Simmons bought out Freeland's interest in the restaurant.
Freeland denied any misuse of the money and said he had set up a separate account in order to protect the business. Freeland, whose recipes were used by Cross-Eyed Pig, has since opened Mr. Mason's Pit Bar-B-Q at 915 W. Capitol Ave. in Little Rock with partners Mary Rose and James Hendren.
The Arkansas State Medical Board filed a complaint against Michael in Pulaski County Chancery Court on Oct. 11 for Michael adding an MD after his name in Southwestern Bell's Little Rock/North Little Rock telephone directory.
On Nov. 8, the board received a court order preventing him from promoting himself as a medical doctor and using "MD" after his name in residential and business phone numbers. He also has been known to put MD after his name on personal checks.
There has been no suggestion that Michael has ever tried to practice medicine; instead, the MD is rumored to be an inside joke regarding his sexual prowess.
The 2002 phone book still has "MD" after his name.
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