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October 20, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Pelham man sues for $300,000 bar tab on Hell’s Kitchen investment

A Pelham investor claims that a Rockland bar and restaurant operator embezzled funds meant for developing Scallywag’s Irish Pub in Hell’s Kitchen.

Michael J. Bowe sued Michael T. Doyle in U.S. Bankruptcy Court, White Plains, on Sept. 23 to stop Doyle from using bankruptcy to avoid paying back a $300,000 loan.

Doyle used a “set of false books and records,” Bowe charges, to “siphon cash from his businesses … for his own personal benefit.”

Attorneys representing Doyle in two bankruptcy actions did not immediately respond to a request for comment.

Doyle, of New City, filed Chapter 11 reorganization petitions in June, one for his personal finances and another for a business, Walkinstown Inc., the corporation that operates Scallywag’s.

Both petitions cite the Bowe loan and a lawsuit that Bowe filed in Supreme Court, Manhattan, accusing Doyle of fraud. The bankruptcy petitions automatically stopped the lawsuit from proceeding.

Bowe describes Doyle as an acquaintance of more than 30 years. In 2012, according to court records, Doyle asked for a bridge loan to finance the purchase of Albert Hall Tavern, a gastropub at 508 9th Ave.

Bowe loaned $300,000 at 6% interest. He claims the deal was structured as a 50-50 joint venture. Bowe would design and pay for the new enterprise’s rebranding and intellectual property. Doyle would manage the business and get $4,167 a month until the loan was paid back in March 2013.

But Doyle did not pay back the loan when it was due, Bowe claims in the bankruptcy court complaint, and refused access to the business records.

Bowe filed the Manhattan lawsuit in May 2018, demanding $350,000 and accusing Doyle of fraud and breaches of the loan agreement and joint venture agreement.

He claims that Doyle admitted in 2015 to keeping “multiple sets of books for different audiences, including state tax authorities and creditors.”

Doyle “has been engaged in a longstanding income and payroll tax fraud,” Bowe alleges in the bankruptcy complaint. And he claims Doyle admitted to fraud at a creditors meeting when he stated, “There was people off the books.”

Bowe points to an apparent discrepancy between the Walkinstown bankruptcy, in which Doyle shows an annual payroll of $520,000, and a federal tax return that puts the payroll at $232,069.

Bankruptcy court should not discharge the loan debt, Bowe argues, because Doyle “engaged in a fraudulent scheme to misappropriate and embezzle funds.”

Besides Scallywag’s, Doyle has interests in D&C Dry Cleaning in New City, Albatross Bar in Astoria, Queens, Doylers bar and restaurant in midtown Manhattan, and previously in the now closed Doyler + Dunney’s II bar and restaurant in Pearl River.

He declared assets of $139,850 and liabilities of $788,213 in his personal bankruptcy; and assets of $80,625 and liabilities of $212,863 in the Scallywag’s bankruptcy.

He makes about $13,000 a month from his ventures and his income last year was $156,000.

Scallywag’s made from $1.1 million to nearly $1.3 million a year in the two years before bankruptcy.

Bowe is represented by Matthew B. Stein and David R. Koch of Kasowitz Benson Torres, Manhattan.