Taken to the Cleaners
Celebrity restaurant owner Jimmy Rodriguez has dropped out of sight recently, but those looking for him might try stopping by a gritty spot in the South Bronx called the Bathgate Industrial Park, where his latest business is located. It's neither a glittering nightclub nor a posh eatery like Rodriguez's old joints, where actors mingled with sports stars and politicians. Those placesJimmy's Bronx Café, Jimmy's City Island, Jimmy's Uptownhave closed, leaving behind a string of debts. Jimmy's Downtown, on East 57th Street, was supposed to reopen last month but remains shuttered.
His new enterprise has a lot less cachet: It is a 23,000-square-foot dry cleaning plant called Kleener King which he bought recently from a longtime pal. But if the mounds of rumpled clothing there seem a far cry from models and movie stars, the plant has this in common with his other enterprises: It too is in a heap of trouble.
This month, the founder and former owner of Kleener Kingan old neighborhood friend of Rodriguez's named José Aguiaris expected to plead guilty to charges stemming from misuse of state funds. It is a long and dramatic fall for Aguiar, who, like his friend Jimmy, not so long ago was being hailed as a Latino business superstar.
Now both Aguiar and his company are in bankruptcy court. The Port Authority of New York and New Jersey, Kleener King's landlord at the industrial park, is suing to evict the firm, currently listed in Rodriguez's name, from the site. Two government-backed agencies that agreed in 1999 to make low-interest loans totaling $3.5 million to help create scores of jobs and a dry cleaning chain are suing to recover their money, claiming they never received a dollar in repayments. The contractor who built the plant is suing Aguiar for $500,000 he says he was never paid.
Most significantly, following a probe by the Port Authority's inspector general, the state attorney general's office has negotiated a plea bargain with Aguiar under which his firm will plead guilty to a felony count of misusing funds, while Aguiar will accept a petty larceny conviction and repay $50,000 in exchange for a guarantee that he will not serve time in jail.
Seated in a leather-cushioned chair in a conference room on the second floor of the plant he built with the Port Authority's funds, Aguiar, 42, said these days he is merely a consultant to his friend Rodriguez. He has long served as a consultant to Rodriguez's restaurants, he said, and is currently helping out the owners of Xbar, an expensive "gentlemen's" club slated for the West Fordham Road location of the former Jimmy's Bronx Café.
How often was Rodriguez at the plant to oversee his new business? "Maybe once in a blue moon," Aguiar acknowledged. But as he watched some 30 workers on the floor below stuffing clothes into machines, Aguiar insisted that it was now all his friend Jimmy's operation.
"All we ever tried to do here was create employment," said Aguiar. "But the forces were against us."
They weren't always.
In 1999, Aguiar was named Business Man of the Year by the Daily News' Viva Magazine. His supporters, ex-Bronx borough president Freddy Ferrer and former Bronx Democratic Party chief Roberto Ramirez, brought then senate candidate Hillary Clinton to Kleener King headquarters that year to pose for a photo op as she called for a higher minimum wage. Aguiar had a compelling personal story, one that appealed to politicians, newspapers, and those investment bankers willing to make a leap of faith: Born in the Bronx, he had dropped out of Columbia University in 1982 to help his ailing parents, both from Puerto Rico, with their tiny dry cleaning business. He bought more stores and developed a plan to expand his chain to more than 30 outlets, centralizing dry cleaning operations at a single plant.
Not everyone was persuaded. The New York City Investment Fund, a private entity that lends funds to emerging businesses, rejected his application, saying it wouldn't be profitable. Aguiar turned to Ferrer and others for support, saying he wasn't getting a fair shake. Soon, the Bronx Overall Economic Development Corporation and the federally authorized Upper Manhattan Empowerment Zone combined with the state's Empire State Development Corporation to loan Kleener King $3.5 million. The Port Authority agreed to lease him space in its industrial park and to advance him $2.5 million to build the new plant.
Aguiar was supportive of those who supported him.
For Ferrer's 2001 mayoral race, Aguiar personally contributed $4,500; Kleener King employees anted up another $2,250. At Jimmy's Bronx Café, then the chicest spot in the borough, Aguiar and Rodriguez threw Ferrer a political fundraiser. In June 2001, the dry cleaning executive wrote the single largest check$2,500to a fundraiser for the Bronx Democratic Party, then headed by Ramirez. When Ramirez's protégé, Councilman Adolfo Carrion, ran to succeed Ferrer as borough president, Aguiar donated $3,500 to the race.
"I did the same as any Bronx businessman who wanted to show support," Aguiar said.
Despite the political backing for Aguiar's venture, some looked askance at his plan. "He just wasn't a business person; he tried to do all this without a management infrastructure," said an executive familiar with his business proposal. "The Port [Authority] never should have given him a lease. He shouldn't have gotten the loans."
The bottom started to fall out two years ago. Aguiar's parent corporation that owned the chain of stores, Kleener King Satellites Inc., filed for bankruptcy. A year later, when creditors sought to compel him to make good on his debts, he filed personal bankruptcy. On court records he claims a monthly income of $2,000.
Among those left holding the bag when the bottom fell out was Kirk Ortega, whose Ortega General Contracting Ltd. built the plant and who is suing both Aguiar's firm and the Port Authority for $500,000 he says he is still owed. Ortega said that as the $2 million project was nearing completion, Aguiar stopped paying him, forcing him to dig into his own pocket to pay subcontractors. Later, according to Ortega's lawsuit, he learned that Aguiar had continued filing requisitions to the Port Authority, using Ortega's name. Aguiar has denied it, and his attorney, Murray Richman, said that those allegations are not part of the charges against his client.
The fallout at Kleener King isn't a topic that its former enthusiastic backers are eager to discuss. A Port Authority spokesperson declined comment, saying the matter was under litigation. Blair Duncan, an attorney for the Upper Manhattan Empowerment Zone, said the organization is seeking to attach Aguiar's assets in an effort to recoup its loss. The Bronx Overall Economic Development Corporation issued a statement acknowledging that the loan was in default.
"Sometimes these things do flop," said Ferrer last week. As borough president, he said that he had authorized legal action to collect the loan when he learned Aguiar was behind in payments. "Obviously no one thought this was going to fail," said Ferrer.
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