A dozen years ago, a then-unknown chef named Jose Garces won financial backing from a New Jersey couple and a major Philadelphia food vendor to open Amada, the place on Chestnut Street that launched a meteoric career.
In the years that followed, Garces has gone on to open a dizzying array of acclaimed restaurants across Philadelphia and its suburbs, in Manhattan, Chicago, Washington, Palm Springs, Scottsdale, and Atlantic City. He’s a cookbook author and a TV personality, an Iron Chef and an honoree of the James Beard Foundation.
But his relationship with his early supporters has gone south in a fury of lawsuits.
This week, the firm of food vendor Jim Sorkin, one of those original backers, sued Garces and seven of his enterprises, saying the restaurateur had stiffed the company for $858,000 in unpaid bills for food.
The suit is part of a rash of litigation brought against Garces since last fall, charging him with shorting food suppliers on their bills, a Center City landlord for rent, and investors for unfulfilled promises of cash to be generated by his restaurants.
Garces, in a statement Tuesday, said he was finalizing plans to fix “financial challenges.” He did not detail his fiscal issues or his solution.
“Our ratings and reviews remain as strong as ever, as has our overall commitment to a quality experience for our guests. Those guests continue to be loyal and our revenues are consistent,” Garces said. “Our business issues are not having, and will not have, any impact on the level of service we provide to our customers. “
In a sustained expansion only exceeded locally by restaurateur Stephen Starr, Garces, 45, has opened or managed 29 restaurants since 2005, serving Spanish, Mexican, American and Japanese cuisine. Of those, he is still operating about half, including 10 in Philadelphia.
The harshest suit against him was filed in January by Tom and Maria Spinner, a couple from the Trenton suburbs who joined Sorkin as early investors in Amada. Even before their investment, their son, Tim, worked side by side with the chef and was mentored by him before the younger man opened his own eatery.
In all, the Spinners say they have invested more than $2.5 million in Garces’ restaurants. They were along for the ride as Garces saw his reputation soar to put him in the Philadelphia company of such chefs and entrepreneurs as Starr, Neil Stein, Georges Perrier, Susanna Foo and Marc Vetri.
In their suit filed in state court in Monmouth County, N.J., the Spinners say their business relationship with Garces ran smoothly and profitably in the early years, with the couple duly receiving “distributions” from the restaurants’ cash flow. When Garces moved to New York City, opening an Amada there in 2016, the Spinners say, they invested $700,000 for a promised 20 percent return.
They claim, though, that Garces eventually ended the cash distributions. Moreover, they say, Garces — without notifying them — took out a $9 million line of credit from M&T Bank to pay off debt and open new businesses, putting his restaurants up as collateral.
In the end, they say, Garces was hitting them up for more money with no real intention of paying it back.
His “wrongful actions,” they claim, amount to “a massive, self-interested and continuing fraud -– in substance and operation a Ponzi scheme – at the expense of his investors.”
Garces declined to grant an interview for this story. James E. DelBello Jr., his lawyer in the Spinner case, dismissed the lawsuit as an action of a “disgruntled investor who is unhappy with the performance of certain investments, which happens in the restaurant industry.”
“They participated in some winning and some losing restaurants,” DelBello said. “The investors understand the way the operations were run. And some performed and some didn’t.”
The investors’ suit is one of six brought against Garces in the last eight months.
One contended that Garces had failed to pay $110,000 in rent on a restaurant property at 707 Chestnut St., where he operated a restaurant known initially as Chifa and later as Rosa Blanca. The latter was closed in 2015, but Garces owed money on the lease. The suit was settled in January. The terms weren’t public.
In all, four food purveyors have sued as well. They include a South Jersey firm, J. Abrogi Foods, seeking $54,000; First Choices Food Distributors, on Essington Avenue in South Philadelphia, seeking $80,000; and FarmArt, of Folcroft in Delaware County, seeking $86,000. The invoices, included as exhibits, cites orders ranging from cilantro and chives to kale and squash.
The biggest suit was brought by Julius Silvert Inc. of East Luzerne Street, in lower North Philadelphia, which has been providing food to Garces since he opened Amada in 2005. The firm, owned by the family of original investor Jim Sorkin, says Garces owes it $848,000 for food provided to six of his restaurants.
The suit says Garces signed a note in September promising to pay the firm back, but never made a payment.
Litigation aside, Garces has not slowed down. Last month, he said in a statement that his company anticipated “new beginnings with the anticipated revival of Amada and Distrito Cantina in Atlantic City coming this summer.”