The fate of Windsor’s alternative entertainment complex

THE URBANITE
October 20, 2014

In 1980 a teenager began work as a dishwasher in The Old Fish Market Restaurant, located in a historic downtown building. From bartender to manager and owner, for over 30 years Jay Zeman has been a fixture at 156 Chatham St. W. Last month, he was barred from the premises.

For years, the building’s four establishments, The Loop, Pogos, Coach and Horses and FM Lounge, have been run by Zeman and partner Mike Primeau. Today, the 25 employees — some of whom have worked there for nearly 20 years — call The Loop complex home.

Now, artifacts such as the hot dog machine and an arcade game at Pogos, as well as gifts from customers are slowly being removed by employees and new management.

On Sept. 20, Zeman was denied entry into the building that has become a staple in not only his own life but the lives of Windsor’s artistic community.

“A big part of what we do is support the local arts scene … we put the money back into what supports us,” said Zeman.

UNDER NEW MANAGEMENT

The Loop complex’s liquor licence was to be revoked last month, but the building’s owner, Lee Brothers Limited was granted a temporary, one-year transfer.

“We got a letter from the AGCO (Alcohol and Gaming Commission of Ontario) informing … they were going to take away the liquor licence from The Loop,” said Sam Katzman, the new operator, whose family and parent companies Lee Brothers Limited and Katzman Enterprises also operate Cheetah’s, Alley Katz and other adult entertainment businesses in Windsor and the United States.

Katzman said learning of the licence termination was “a huge shock. These guys were great tenants. For 15 years we never spoke to them, they paid their rent, we never even came into the building, so it came as a big shock to us …”

“We willingly transferred our liquor licence to [Lee Brothers Limited] basically for safe keeping, to make sure the business wasn’t affected,” said Zeman. “What the AGCO did as part of the transfer, they attached a document of sanction saying [the directors] couldn’t work for the licensee. We did not expect we’d be prevented in taking part in the business. Part of what we’re trying to do now is clear our name with the AGCO.”

Katzman’s team realized they were faced with two options after receiving notice from the AGCO: “let them take it away, or transfer it and operate it, for lack of a better term ‘Save the Loop,’ save the staff, save the culture, and that’s what we decided to do.”

Lee Brothers Limited registered two separate businesses named The Loop under its corporation in September.

“The previous operators built a great business of 30 years, they really were able to understand the customer like I’ve never seen before,” said Katzman, referring to Zeman and Primeau. “… what we’re doing is following that paved path, keeping the status quo, all four bars … are remaining open as before.”

Local live music will still be featured prominently throughout the building and Katzman explained there is talk of bringing in larger touring acts.

“Without [Zeman] here there’s a big piece of soul missing,” said FM Lounge bartender Randi Lunau.

ANOTHER DANCE AT THE LOOP

The change of operators only affected business minimally with Pogos being shut down for one day. “The staff have been a great help, all the same staff are still here, and they help us learn about the business.”

“We develop real estate in the United States, we own different stores in the Carolinas. We don’t only do what people see on Chatham Street (Cheetah’s of Windsor). We have a diverse portfolio and we’re willing to learn about this business like we learned about other ones. We think of ourselves as quick studies,” said Katzman.

Katzman has injected capital to finance repairs to the roof and mechanical systems throughout the building to regulate heating and cooling, while the space has also seen a thorough cleaning.

The Loop complex is a special place to many Windsorites and Katzman said he doesn’t want to compromise the environment that has been established.

“Without [Zeman] here there’s a big piece of soul missing,” said FM Lounge bartender Randi Lunau. “There is very low turnover, I’ve been here almost seven years. I think there’s maybe two or three bartenders that have been hired since me but nobody leaves this place. Even if you quit you’re still part of the family.”

Lunau said she is considering moving on to other employment opportunities. One security employee has already tendered his resignation.

One of the main reasons customers keep coming back is the staff, and Katzman explained that while “change is always concerning to people” that it’s “natural” and that concern among staff has “settled down.”

Curtis Byrne, who has tended bar in The Loop complex for nine years, is still unsure of the new management.

“I don’t like the idea of working for strip club people. I feel like that’s a different enterprise altogether. I feel like there’s an element of greed and vanity, and a bunch of other shit that we never had to deal with. Now, that being implemented into our whole world has made it a lot harder.”

“Working for [Zeman], he took great pride in talking about drinks and spirits and beer. He has an impeccable palette. So him showing me how to taste beer, I feel like I didn’t really know how to bartend before I worked here,” he said, adding that Zeman and Primeau were “the best bosses I’ve ever worked for.”

When asked if there was a role for Zeman or Primeau to play in the new business, Katzman replied, “No. They can’t. And that’s [from] the AGCO.”

Zeman sees his exclusion from the business differently. “I think they kind of looked at it as an opportunity to screw somebody over, and jump in and take somebody else’s business that they built up over 20 years,” he said.

“What’s important is the people who know how to operate the business, (bartenders) Derek (Stonehouse) and Ian (Phillips), have been screwed. Everything was in place for business to continue operating as it always had … so [they] could of easily maintained the operation exactly the way I left it when I wasn’t able to go into work on Sept. 20,” said Zeman. “Now you have [the Katzman’s who] make more money on a midnight on a Friday than we make all week long. That’s great, so you guys know how to make money, but you don’t know how to operate … It’s a niche market, it’s arts based, we’re not about the money. … that’s not why The Loop exists, why the Coach exists. … we’re a freakin’ community centre … the customers that go there is because we’re not a corporate, profit-maximization vehicle.”

Katzman maintains that he’s not trying to “steal the business,” but was only left with two options: to run the business or shut it down.

“We were put in the position where we had no choice but to ‘Save The Loop’ … we weren’t prepared to sign a lease, especially when the obligation was over $100,000 a year (in rent), to two people (Stonehouse and Phillips) who we did not know. We approached them to be managers and we spoke to them about potentially doing something down the road, but surely we weren’t going to do it without knowing them.”

KEEPING THE COMPLEX TOGETHER

While patrons line the bar stools each night, the businesses of The Loop complex have for over a decade dealt with legal and financial challenges unbeknownst to many.

Writs of seizure and sale of property were filed by the Federal Court against 1214651 Ontario Limited and Winsong Limited — the corporations managing the four bars — in 2002, 2004 and 2008 for discrepancies related to GST payments, the Income Tax Act and SOCAN music licensing fees, which themselves totalled over $25,000 plus costs.

Zeman said he can recall at least three times when the government has entered his building to take possession of alcohol and money in the till.

On June 10, 2013, the CRA and Ministry of Finance registered security liens of $373,413 and $860,700 against 1214651 Ontario Limited, and $1,163,212 against Winsong Limited, for seizure and sale of inventory, equipment, accounts and other assets. The ministry previously filed a lien on March 21, 2013, of $649,203 against Winsong Limited.

“There are absolutely no security issues whatsoever standing,” said Zeman. “CRA are completely happy, and we don’t owe a cent … all of that is current … to the best of my knowledge.”

A representative with the Ministry of Finance, who declined to provide her full name, said businesses who don’t file their tax returns are subject to assessments up to 25 per cent higher. She blames improper accounting and legal advice for many corporate defaults.

“There are people out there that want to take advantage, and people who say, ‘I’ve hired this person to do this for me and they didn’t.’ All we can say is, ‘we’re sorry you’re in this position but at the same time let’s get you out of this,” she said.

From 2008 to 2013, Wingsong Limited and 1214651 Ontario Limited appealed provisional assessments by the CRA in the Tax Court of Canada for non-filing of income tax returns for 2001 through 2005. As of January 2013, tax arrears amounted to $1,152,279.59 for Winsong.

In an affidavit by Primeau to the Ontario Superior Court of Justice in November 2013, he claimed “accounting and tax filing issues caused problems for the corporations many years ago. Part of the problem was the accounting firm responsible for filing the returns was in Toronto. The firm was taking instructions from a former shareholder (John Wood).”

Primeau didn’t respond to requests for interview. Zeman said he didn’t know about the tax problems until recently.

“All the notices were going to the Toronto accountant, and we weren’t privy to this in Windsor. I think they (CRA) assessed originally at $1.4 million, ” said Zeman. “We didn’t find out about this until the day before it had to be appealed in federal tax court.”

One appeal was dismissed and others settled with “significant corporate tax liabilities” of which the companies had no means to pay, according to Primeau’s affidavit.

Non-filings for 2006-2008 were eventually filed in 2012. Ultimately, however, both corporations were dissolved by the government: Winsong Limited in April 2012 and 1214651 Ontario Limited in July 2014.

Primeau indicated in his affidavit he didn’t receive the required 90 days notice from the government in advance of the dissolution of Winsong. According to correspondence between the Ministry of Finance and the corporation’s lawyer, Craig Allen, in July 2013, Winsong Limited had an outstanding balance of $663,085.65 which needed to be paid before the company could be revived.

Primeau and Zeman incorporated a new company, 2409352 Ontario Inc., in March 2014 to handle operations for the businesses. By September, the AGCO was going to pull their liquor licence, so Katzman created new companies to handle takeover of The Loop complex.

“It becomes a messy game at this point…,” said Zeman. “I think this in depth experience of dealing with our landlord has taught us many lessons about how certain people operate their business. And it’s never a business model that I’ve employed … no one likes swimming with sharks, right? And that’s what those guys do best. It’s just a different way of doing business.”

“Unless I buy the building (laughs) … you want to invest some money? Think we should do a Kickstarter?”