Debevic's business partners say they've been denied their cut, sue partners over restaurant's closing

By Dan Churney | Nov 7, 2015

A food fight has broken out in Cook County Circuit Court between partners involved in Chicago’s famed Ed Debevic’s restaurant, with two investors alleging some of their partners used fraud to siphon away their slice of the corporate funds.

A food fight has broken out in Cook County Circuit Court between partners involved in Chicago’s famed Ed Debevic’s restaurant, with two investors alleging some of their partners used fraud to siphon away their slice of the corporate funds.

Larry P. Kanar and Marshall N. Dickler filed a complaint Wednesday against the following partners, officers and shareholders of the various corporations that operated Ed Debevic’s: Jeffrey A. Himmel, John Fyfe, Joan Fyfe, Ivan Himmel, William Kamm and certified public accountant James Zdarsky. The suit also names the corporations as defendants.

Ed Debevic’s, which opened in 1984 at 640 N. Wells St., closed Oct. 4 and is to be demolished to make way for a residential tower. The restaurant’s owners have said the retro-themed eatery will reopen in 2016 at a new location.

Kanar and Dickler are alleging they were the victims of fraud, and breaches of contract and fiduciary duty. They want a judge to order defendants to account for income and expenses of the corporate entities, as well as to surrender funds defendants improperly obtained that were owed plaintiffs. Plaintiffs also want a judge to permit them to remove Himmel as manager of some of the Ed Debevic’s corporations and for them to assume those posts themselves.

The proposed sale of the restaurant property this fall precipitated the suit, according to plaintiffs, with Jeffrey Himmel the suit’s chief target. Himmel is chief partner in Ed Debevic’s and one of the investors who own the restaurant property. Himmel is also a Chicago lawyer, real estate broker and president of Bravo Restaurants Inc., which also owns the Gino’s East pizzeria brand.

Plaintiffs alleged that over the years, Himmel improperly funneled Ed Debevic’s money into his own pocket and his other business interests, with some of these activities only recently coming to light.

Erie Wells LLC is the corporation that owns the real estate on which sits the restaurant. When Erie Wells bought the Ed Debevic’s property at the southwest corner of Wells and Erie streets in 2005 for $4.5 million, more than $296,000 in overpayments were made, which were returned to the investment group. However, plaintiffs claimed Himmel took and kept the overpayment returns for himself. Plaintiffs further alleged that around the same time, they took out a $500,000 loan for construction and repair of the restaurant building, but the money was not spent for those purposes. Rather, they alleged Himmel took the money.

Jumping forward to 2015, plaintiffs said their investment group has entered into a contract to sell the Debevic’s real estate. As part of the contract, $550,000 in earnest money was put down, of which $150,000 is unaccounted for. Plaintiffs also claimed Himmel is trying to cut their portion of the proceeds of the pending sale by presenting and invoking fraudulent documents.

In preparation for the sale of the Debevic’s real estate, plaintiffs claimed Himmel closed the restaurant Oct. 4 and auctioned off assets Oct. 19, both without authorization from his partners. They want a financial report of the assets sale.

Plaintiffs further alleged Himmel plans to divert proceeds from the real estate sale, which is set to close by Nov. 30. In this connection, plaintiffs want proceeds from the sale to go into either a trust, an escrow account or into the hands of the court for proper disbursement.

Plaintiffs said they also invested money in a Debevic’s restaurant in the Yorktown Shopping Mall. The restaurant closed in 2011 and plaintiffs alleged they were not repaid and Himmel diverted money and income from this establishment to his other businesses and to his own use. Plaintiffs cited federal tax returns that allegedly showed “overlapping,” “excessive” and “unjustified” payments for operating expenses. Further, plaintiffs claimed income from the Yorktown restaurant was improperly mixed with income from other businesses.

Kanar and Dickler seek damages and among their other injunction requests, an order barring defendants from using funds from any of the Debevic’s corporations to pay for their defense against the suit.

Dickler is a lawyer and his Arlington Heights firm – Dickler, Kahn, Slowikowski & Zavell – is representing him and Kanar. Cook County Circuit Court Judge Rodolfo Garcia is assigned to the case, with a case management conference set for March 3. 

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