San Diego’s Cohn Restaurant Group will, at least for now, be running some of the businesses belonging to The Patio Group – several eateries linked to a San Diego executive accused of defrauding investors.
The local hospitality heavy-hitter owned by David and Lesley Cohn announced Tuesday The Patio on Lamont in Pacific Beach, Surf Rider Pizza in La Mesa and Ocean Beach, and Saska’s in Mission Beach would be placed "under the operational guidance" of the Cohn Restaurant Group (CRG) starting Sept. 30.
"We understand this is a challenging situation, but we believe The Patio on Lamont, Surf Rider (OB and La Mesa) and Saska’s are great restaurants that guests will continue to enjoy into the future," David Cohn said in a prepared statement. "We look forward to working with the teams at each location so they can continue to provide great food, ambiance and hospitality."
As of now, The Patio Group still owns those four eateries, but CRG will step in to operate them, David Oates, a spokesman for American National Investments (ANI), the parent company of The Patio Group, told NBC 7.
However, Oates confirmed The Patio on Goldfinch in Mission Hills and Fireside by the Patio in Liberty Station will not be operated by CRG and will close on or around Sept. 30 – the day after San Diego Restaurant Week wraps up. Both of those restaurants, plus The Patio on Lamont, are currently participating in the bi-annual dining event.
Oates acknowledged that the decision to shutter The Patio on Goldfinch and Fireside by the Patio would impact many employees. He said the decision was difficult for ANI and was only reached after exhausting all other options.
"The decision to take this step came only after evaluating viable alternatives," Oates told NBC 7.
The Patio Group restaurants were operated by renowned San Diego business executive Gina Champion-Cain, who is accused of defrauding investors out of $300 million through her real estate company, American National Investments.
A 19-page civil complaint filed last month by the Securities and Exchange Commission against Champion-Cain alleged she had misled investors into believing they had an opportunity to fund high-interest, short-term loans to people seeking California liquor licenses.
SEC claimed Champion-Cain would tell investors they could make a return on each license that was approved. She allegedly fabricated documents, according to the complaint, and then allegedly used the money from investors to fund her other businesses like The Patio chain restaurants, Saska’s, coffee shops, lifestyle brands and rental properties.
After the civil complaint was filed, ANI said it planned to appoint a receiver for Champion-Cain's company and would "cooperate with authorities throughout this process."
The SEC said approximately 50 people, nationwide, were victims of Champion-Cain's alleged fraud scheme.
Last month, Alex Ozols, a San Diego-based criminal defense lawyer not involved in this case offered legal insight to NBC 7.
He said a case like this may not involve an indictment right away. Instead, Champion-Cain has agreed to give up her company to a receiver and that receiver is now tasked with trying to recover as much money as possible. Ozols said how much the receiver is able to recover by taking control of Champion-Cain's businesses is likely to impact the outcome of her case.
"They can get a certain amount of money back," Ozols explained. "I mean, if it's in the hundreds of millions, that would definitely help. If the company doesn't have a lot of money left, that's going to be a big problem for her."
Oates told NBC 7 ANI's assests were frozen amid litigation. A receiver was then appointed, and that receiver opted to place four of The Patio Group restaurants under the "operational guidance" of CRG.
But, again, that agreement did not include any other businesses belonging The Patio Group.
The Patio Group also ran Himmelberg's in the East Village, Bao Beach in Mission Beach, and Swell Coffee Co., which has cafés in Mission Beach and Del Mar. Oates confirmed Wednesday that Himmelberg's had already closed and Bao Beach and the two Swell Coffee Co. locations were also set to shutter. He said Surf Rider in Crown Point was also closed for business.
Oates told NBC 7 these other ANI businesses are also set to close soon:
- Surf Life
- Mission Beach Surf Co.
- Luv Surf Boutique
- Patio Express Mission Hills
- Patio Express Mission Beach
Also under the brand was The Patio Marketplace, which includes two coffee shops in San Diego and two in Irvine, California. ANI confirmed The Patio Marketplace coffee shops would continue to be operated by The Patio Marketplace, LP.
And, La Casa del Zorro – a resort and spa in Borrego Springs also operated by The Patio Marketplace, LP – is unaffected, as desert resort is not part of the ongoing SEC litigation involving Champion-Cain.
Cohn Restaurant Group's Involvement:
The Cohn Restaurant Group has been around for nearly 40 years. The hospitality collective runs 27 restaurants including well-known spots like Corvette Diner, The Prado at Balboa Park, Coasterra, Island Prime, and Indigo Grill, just to name a few.
NBC 7 reached out to CRG for more details Tuesday and the hospitality group confirmed it doesn't plan to change much about The Patio on Lamont, Surf Rider or Saska's.
"These are great San Diego brands, and even as a temporary management group, the Cohn Restaurant Group would like to continue to run them the way they've been run," a rep with the company said.
CRG said the employees of those four restaurants will keep their jobs amid the operational switch. The company also told NBC 7 it would look to keep some of the employees of the two Patio restaurants set to shutter.
"The most important thing is to keep the doors open, operate to the best of our ability, and to take care of the guests," the rep added.
CRG said the court-appointed receiver for Champion-Cain's American National Investments company had not asked the group to run any of the other Patio Group businesses, and the four Patio restaurants now under CRG's watch are the company's "only area of focus" when it comes to the Patio brand.
Oates confirmed there were no plans to add any more Patio properties to Cohn's roster.
"We look forward to maintaining operations at the remaining restaurants with the operational guidance of the Cohn Restaurant Group," he added.
And, as for the status of the SEC litigation against Champion-Cain, Oates confirmed nothing, at this point, has been settled and litigation is ongoing.
He said he could not discuss further details about the litigation.