Judge: Aspen restaurateur Scott DeGraff must pay $3.9 million | AspenTimes.com

Judge: Aspen restaurateur Scott DeGraff must pay $3.9 million

Rick CarrollThe Aspen TimesAspen, CO Colorado

ASPEN – A federal judge has ordered Scott DeGraff to pay nearly $4 million to a New York lender, marking the latest setback for the Aspen businessman.U.S. District Judge Lewis T. Babcock entered the ruling Oct. 26. The judgment was recorded Monday in the Pitkin County Clerk and Recorder’s Office.Babcock’s order said the “undisputed facts” show that “DeGraff was provided with $3,000,000 … DeGraff then failed to fulfill the terms of the promissory note.”As of Oct. 25, DeGraff was on the hook for $3,941,917 to D&R’s Retirement Plan LLC, which is controlled by four principals with whom DeGraff once did business, according to court papers. Since Oct. 25, the judgment grows at $1,273 per day until it’s paid off, court transcripts say.Since DeGraff moved here a few years ago from Las Vegas, his entrepreneurial fling in the Aspen-Snowmass area has achieved dubious results.In December 2008 he opened Junk and Liquid Sky at the Base Village in Snowmass, only to close them for good at the end of the ski season. A lease he signed in May 2009 to reopen the Red Onion in Aspen was terminated before the historic tavern did a day of business (it’s now owned and operated by Jennifer Colosi and her brother, Thomas Colosi).And his bid to open a Junk Aspen on South Mill Street was derailed earlier this year because both the City Council and city liquor authority rejected his application for a liquor license. Their reasoning: An assortment of liens and other allegedly unpaid bills put his “moral character” in question. The restaurant eventually obtained the license after it assured the liquor authority that the restaurant would be owned and operated by DeGraff’s wife, Liza. Scott DeGraff could not be reached for comment Tuesday, but court filings shed light on the loan dispute that was originally filed in Pitkin County District Court in July 2009. The case was eventually transferred to the U.S. District Court in Denver.D&R alleges that it loaned $3 million to DeGraff in March 2008, with a fixed annual rate equal to 10 percent on a cumulative, non-compounding basis. The loan was intended to help fund DeGraff’s Junk Investors LLC entities, including Fun Worldwide LLC, which has an office on Aspen’s Main Street.The loan became past due in March 2009, leading to the lawsuit.Babcock apparently was not persuaded by DeGraff’s counterclaim, made in September 2009, that said the lenders – comprised of David Blumenfeld, Edward Blumenfeld, Brad Blumenfeld and Richard Mack – had balked on an agreement to lend him $10 million. The funds, DeGraff had argued, were to be used to help launch a restaurant/bar concept nationwide, including the Aspen-Snowmass market.But only $3 million of those funds came through, while DeGraff had to make personal advances of more than $2 million to open the Junk and Liquid Sky establishments in Snowmass Village. The Aspen Red Onion lease was terminated, DeGraff’s counterclaim alleged, “because of a lack of capital which had been promised by the third-party defendants [the three Blumenfelds and Mack] and which could no longer be raised in the economic recession.”The termination led to multiple liens filed by contractors and subcontractors, DeGraff’s counterclaim contended.”DeGraff and the Junk brand have received negative press coverage concerning the liens and lawsuits,” the counterclaim said. “The public reputation of the Junk brand and DeGraff were damaged as a result.”Throughout the federal lawsuit proceedings, DeGraff had been represented by the Denver law firm Davis Graham & Stubbs LLP. But in July, the firm ceased representation in part because DeGraff “has failed to timely pay for legal services … in connection with this lawsuit,” wrote attorney Tom McNamara, a member of the firm, in a motion to withdraw as counsel. There were other reasons to withdraw as well, McNamara wrote, but disclosing them would potentially violate the attorney-client privilege.Since the firm pulled out, DeGraff has represented himself, according to court documents. rcarroll@aspentimes.com