A Costly Lesson for Blue Lotus
"Newman is not a collectible person!"
by Sally Mitani
For months there was a sign in the window of Town Center Plaza, next to the now-closed Eastern Accents, announcing a forthcoming Blue Lotus Carryout and Blue Lotus Hookah Lounge. Thirty-six-year-old Khaled Mohamed was excited about his venture. He had found a way around Michigan's strict laws governing smoking in restaurants--the smoking lounge and the restaurant would be separate businesses. "We would cook the food in the restaurant and deliver it to you in the smoking lounge."
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.
With so much money already invested,
Mohamed and his lawyer decided to go ahead with the repairs and sue Newman for their expenses. In March, he won a default judgment for $422,095--only to learn what so many people before him have learned: "Newman is not a collectable person!" (Newman didn't return calls.)
Around this time, the building was foreclosed on, and a management company called Broder & Sachse was appointed to collect the rent. Mohamed--broke, with his uncollected judgment against Newman--was promptly evicted. He says the furniture "is for sale at a cheap price, if anyone wants it. Dale Newman ruined my life. How can he not be in prison?"
Carol Sun, Newman's oldest tenant, also explains why she was forced to close her Eastern Accents restaurant when the building was foreclosed. "Almost all the old tenants in the building had reached some sort of unofficial 'accord' with Dale with regards to rents paid--tenants would withhold [rent] for something Dale did/didn't do, and Dale would accept," she writes. When Broder & Sachse took charge of the building, though, the books showed the rent owed--but not the credits. The new manager sued, and Sun decided to leave rather than fight it.
The Broder & Sachse era was short. The building was eventually bought by Barbat Holdings, LLC. Nina Juergens, owner of Salon Vertigo, which is still open there, says only that she hopes for "no more drama."
Ken Singh, owner of Banditos, also survived the foreclosure, and is optimistic. "I've been here since 1991," he says. "All the businesses on the street are mom and pops. The new landlords are going to make the building look really good, from what I hear."
[Originally published in July, 2013.]
On July 21, 2013, Jack Manning wrote:
Can't understand why this creep is "not" collectible. He should have gone through that jail house door if he didn't pay the Court Judgement. There is something wrong here.