A Costly Lesson for Blue Lotus
The sign came down shortly after the building, owned by the infamous Dale Newman, went into receivership. For years, Newman had skated on the edge of foreclosure, but this year it finally happened.
Mohamed is still dumbfounded by how he was outfoxed by the wily Newman. "I lost everything!" he says. Unfamiliar with Newman's reputation in Ann Arbor, Mohamed, who is from the Detroit area, had looked at the space and been charmed by Newman. "He's an old man! He's going to meet God soon! I thought an old man like this would never cheat me." At his most benign, Newman is an unconventional landlord with a soft spot for young entrepreneurs, but he is more widely known as the scofflaw who owed $30,000 in parking tickets and more than a half-million dollars to Detroit Edison.
So Mohamed signed a ten-year lease with Newman for the space and Newman immediately began wheeling and dealing. "He said the rooftop AC isn't working, so he gave me six months' free rent if I replaced it. And he also wanted a $15,000 deposit in an escrow account in case I left town." Mohamed meanwhile bought a $50,000 smoking license from the State of Michigan and ordered $80,000 worth of custom-made furniture from Egypt.
Mohamed says shortly after beginning work on the building, he got a shocked call from his engineer, who was up on the roof dismantling the AC unit. There was no ductwork for air conditioning anywhere in the building.