Proposed Love nightclub buyer Dean Smothers appeared before the D.C.'s Alcoholic Beverage Control Board yesterday and was told by chairperson Charles Brodsky that he must submit all outstanding paperwork by Friday or the board would not approve the transfer of the property's liquor license from nightlife mogul Marc Barnes' Okie Dokie LLC to Smothers' Impact LLC.
During the fact-finding hearing, Brodsky and Commissioner Mital Gandhi expressed concern over back taxes owed by Smothers for his Northeast nightclub the Scene. The D.C. Office of Tax and Revenue shut down the Scene earlier this month, after ownership failed to pay more than $92,000 in sales and other taxes. In early October, D.C. Attorney General Peter Nickles objected to the transfer of sale, citing Smothers' tax issues as reason.
Both Brodsky and Gahndi said they were trying to determine whether Smothers was using the tax from food and beverage sales at the Scene to finance the purchase of the city's largest nightclub, rather than handing it over to the District of Columbia.
“Let’s say you do a million in sales, let’s say 10 percent of that is tax turned over to the District of Columbia," Brodsky said. "We want to make sure that you’re not taking that money and, instead of paying the city, using it as investment capital, and then going back to the city and saying, 'Hey, I can’t pay this, can you put me on a payment plan?' We want to make sure you’re not using the city’s tax base to fund a new business."
The attorney for Smothers' Impact LLC said a payment arrangement for the back taxes was in place. The attorney also asked for a 45-day extension to the Dec. 10 deadline for Smothers to submit outstanding paperwork; the ABC board approved the transfer of sale in October, contingent upon its receipt of key documents, including paperwork related to the building sale. Smothers' attorney stated that closing had been delayed, but that it was expected to take place this morning.
After an hour of explaining the back tax situation and the closing delays, Brodsky stopped the hearing, and turned down the request for an extension.
“I’m a pretty smart guy...but you guys have run rings around my head with these numbers," he said. "I’m against the transfer right now, I have no understanding of what’s going on. If you don’t have the documents Friday, we will not be approving the transfer of the license and you will need to reapply.”