DC Eagle allegedly withheld tens of thousands in PPP loan money from employees
The longtime gay leather bar filed for bankruptcy in June, freezing its bank accounts and causing checks to bounce.
Months after the DC Eagle closed due to alleged mismanagement, former employees say they have still not been paid for past-due wages, even though the bar received tens of thousands of dollars from the federal government’s Paycheck Protection Program.
Bank accounts belonging to D.C.’s longest-running LGBTQ leather, kink and BDSM club have allegedly been frozen amid an ongoing legal fight between Eagle co-owners Ted Clements and Peter Lloyd, preventing an estimated $35,000 in federally provided funds from reaching former employees to cover lost wages during the COVID-19 pandemic.
Former employees and an attorney for Lloyd accuse Clements — majority owner of the business entity Eagle N Exile LLC, which operated the bar — of having the Eagle’s accounts frozen before employees could be paid with the funds. They also allege that he failed to pay wages, utility bills, and vendors prior to the Eagle’s closure.
The closure of the DC Eagle, which had served Washington-area patrons for nearly 48 years, came as a shock to some of the bar’s lower-level employees, who were informed of the decision to close during a Zoom meeting in early May.
While many lamented the end of a bar that had played such a significant role, not only as an employer, but as one of the first spaces where they felt secure in their LGBTQ identities, some also reported that they were still owed checks for hours worked prior to the Eagle’s closure.
Miguel Ayala, who served as the DC Eagle’s marketing promotions manager, claims that he assisted Lloyd in applying for a PPP loan — a program implemented by the federal government as a way to assist small businesses affected by the ongoing COVID-19 pandemic — in the hope of obtaining money to compensate the bar’s employees.
He says the application was submitted in late April, weeks after the bar closed to customers amid the raging global pandemic.
“When we closed on March 15, there were no more shifts,” says Ayala. “There was no money to pay employees. Because we closed in the middle of a pay period, we had checks owed to employees. We applied, and got a notice around April 28 or 29 that we were approved. So I let Peter know that right away.”
Ayala claims he and Lloyd “had a primary concern and fear that the money would be mishandled by someone other than us,” and so Lloyd opened a separate bank account, attached to Eagle N Exile, “where we would be able to store that [PPP] money until it was distributed.”
“Our goal was to distribute the money to employees immediately,” says Ayala. “And Peter had already gone through and done the math of figuring out the average amounts of most of the employees’ checks.”
But Ayala says that as he and Lloyd were setting up the payroll system and preparing to reimburse employees, Lloyd received a call from BB&T Bank around May 5 informing him that the Eagle’s accounts had all been frozen, at the request of Clements’ lawyers.
Ayala claims he and Lloyd sent an Excel document to Clements’ lawyers outlining what the plans for the PPP money were, with most of it going to compensate employees, as required by guidelines established by the Small Business Administration, but he claims that Clements’ lawyers did not respond.
“Ted did respond in an email directly to me, not to anybody else, saying that the lawyers have the money and there’s nothing we can do with it, and that a judge or trustee will figure it out,” says Ayala. “I’ve since replied and let them know: this is not money that the bar earned or made in any way. This is not the bar’s money. This is money that the government has given to the bar to use in a specific fashion, primarily to help employees. So it’s not subject to anything in terms of bankruptcy, if that happens, or liquidation of the business. It should be distributed immediately.”
Ayala says he received no follow-up reply from Clements or his lawyers. If the money isn’t used to help compensate employees, the money must be returned and it is the Eagle’s responsibility to pay it back.
“I’m sure the government will find out [if the money isn’t used] because there are deadlines to the use of this money,” Ayala says. “Luckily for us, in this situation, the government extended those deadlines recently until the end of the year, which is good, because if this has to go to court or something, I’m hoping someone of sound mind will say, ‘Yes, this is a PPP loan. This has to be used in a particular way and should be used immediately.’ But at this point, the money is just sitting there. And even if we wanted to return it to the SBA, Peter and I can’t because the accounts are frozen.”
In a statement, Glen Ackerman, the attorney representing Lloyd, told Metro Weekly that the Eagle had received $45,633.36 in PPP money from the government, which was deposited into an Eagle N Exile account at BB&T bank in May 2020, but the funds have not been distributed to employees.
Ackerman told Metro Weekly that the Eagle N Exile had filed a petition for bankruptcy in the U.S. Bankruptcy Court for the District of Columbia on June 26.
“The Eagle’s bankruptcy filing identified the Small Business Administration as a nonpriority unsecured claim in the amount of $56,298.63 for an alleged payroll protection program loan,” Ackerman said in the statement.
Ackerman said that an attorney representing the Eagle had filed the Eagle’s petition for bankruptcy without contacting himself or Lloyd, and that the attorney, Donald F. King of Odin, Feldman, & Pittleman, did not respond to Ackerman’s request to engage.
In addition, Ackerman said that he is drafting a complaint for Lloyd — who is the minority owner of the Eagle N Exile — alleging Clements, the majority owner, has “breached his fiduciary duties he owed to the Eagle N Exile and to Mr. Lloyd.”
Ackerman added: “Mr. Lloyd is seeking damages in excess of $1,000,000. The Eagle in Exile and Mr. Clements are represented by Stephen O’Brien, of Milos O’Brien. The relationship between Mr. O’Brien and Mr. Ackerman is strained because Mr. O’Brien refuses to provide any financial documentation.”
Ackerman claimed in an email to Metro Weekly that he obtained a copy of the Eagle’s petition for bankruptcy from a friend who practices bankruptcy law, but alleges that the petition is not accurate because it fails to identify all of the Eagle’s creditors, or those people or entities to whom the business owes money. (Disclosure: The Eagle currently has an outstanding balance with Metro Weekly. The Eagle failed to identify Metro Weekly as a creditor in its bankruptcy filing.)
In addition, Ackerman claimed that Clements stopped paying attention to the Eagle’s day-to-day operations in 2018, including neglecting to pay rent, the building’s electricity and water bills, vendors, or to “timely fund the payroll account, and to pay taxes.”
“Mr. Clements did, however, make several payments to his spouse, Dr. Thomas Kristie, for an alleged loan,” Ackerman said.
Multiple calls seeking comment from Clements, O’Brien, and King were not returned as of press time.
Ryan Oberlin, a former manager with the DC Eagle who left in 2018, provided copies of notifications from Comcast and Rubicon Global, a software company specializing in waste management, that were sent to him in June seeking payment for overdue bills. Oberlin responded to the company informing them that he was no longer the contact person for the account, and giving them Clements’ personal information.
Oberlin says he had previously listed himself as the point of contact and set up the bills for automatic debit so that Clements couldn’t refuse to pay them. He alleges that Clements emptied the accounts, but did not update the contact information or cancel the services, even though Oberlin had provided Clements with all the necessary account information on his last day, in December 2018.
Ayala says that the Eagle owes a significant amount of money in past due bills, surpassing the amount of the PPP loan. But the money could help reduce the debt the bar owes.
However, he’s primarily concerned with the estimated $35,000 that has been earmarked for almost 25 employees who were never reimbursed for their work, including bartenders, security, maintenance professionals, and performers, including some of the bar’s drag queens and DJs.
“From what I know, there are at least six or seven employees who have had checks bounce, and some of those checks are for $25. But now they’ve been charged $30 for the checks that bounced,” Ayala says. “We could use the money to reimburse them, because it’s part of the payroll expenses. But the problem is when they froze the account, they froze everything. And that’s why some of those checks bounced.”
Jon Rybka, who worked as lead bartender on Friday and Saturday nights, claims that he did not receive his last paycheck.
“It was only 100 bucks or so, but still,” says Rybka. “I reached out to Ted and asked him about my last paycheck, and it bounced twice. So I texted him and he basically sent me a message saying, ‘Talk to my lawyer.’”
He then claims he received a letter in the mail from Clements’ lawyers, along with a copy of the bankruptcy filing, listing him as one of the bar’s creditors. He says that he knows of another creditor, who allegedly loaned the bar a substantial amount of money to help keep it afloat, who has also not gotten his money back.
“I’m a little pissed at Ted,” says Rybka. “I mean, I sat there, and even talking with you, I defended him, thinking he was going to do the right thing, and all of this shit happened. I feel kind of betrayed by what I thought was a friendship, but obviously, he didn’t give a shit.”
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