Envy owners mired in legal mess

  • Article by: MAYA RAO , Star Tribune
  • Updated: September 8, 2012 - 7:47 PM

They face lawsuit, tax-fraud allegations following club's closing.

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Envy has been shut down since a raid by revenue agents last month. Legal claims have piled up against owners James and Susan Beamon.

Photo: Jeff Wheeler, Star Tribune

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Before they showed up in the downtown Minneapolis club scene, Susan and James Beamon were struggling to get by.

In 2009, James Beamon wrote a letter in a Hennepin County child support case that said he made minimum wage and drove a 13-year-old Mercedes while his wife was "on full disability and her income is very limited."

In just a few years, they became players in one of the Warehouse District's hottest nightspots, taking in thousands of dollars in a weekend and registering a new Cadillac Escalade.

Now the party is crashing to an end -- and tax fraud investigators and former business partners are trying to untangle what went wrong.

Authorities last month raided Envy Night Club, which the Beamons bought in 2011, after telling a judge that the couple may have been skimming cash from the club and failing to pay taxes. The city in August also successfully pressed Envy and Bootleggers -- a club across the street that was also allegedly run by Susan Beamon -- to relinquish their liquor licenses. Those who did business with the Beamons have sued them in recent months, trying to recoup their money.

The Beamons have not been charged, and they did not respond to requests for an interview. Nobody came to the door at the couple's blue and white house in Brooklyn Park, where Wizard of Oz figurines decorate the lawn and a sign by the door reads, "Nobody gets to see the wizard, not nobody, not no how."

But a Star Tribune review of public records offers a window into how the Beamons entered the entertainment business, and the controversy that followed.

Before buying Envy, records show Susan Beamon owned a Blaine-based company called Kerry Logistics. She married James Beamon in early 2009, according to documents. Later in 2009, when the mother of one of his children took him to court seeking child support, James Beamon said he worked for Kerry Logistics making $7.25 an hour. A court magistrate said in a January 2010 order to pay child support that James Beamon could not adequately explain his sources of income.

Owner or not?

By late 2010, Envy owner Deepak Nath was shopping the club to Susan Beamon and several other investors who expressed interest, including Clayton Burton.

According to a lawsuit Burton filed in March against Susan Beamon, she took a lead role, and told Burton he would be general manager and have a small ownership stake.

The Beamons formed Grand Group Entertainment and borrowed $203,691 from Nath to complete the purchase, records show.

But Burton claimed Susan Beamon later told him the club would not employ him, and declined to let him cash out his 6 percent ownership. She suggested hiring him at Kerry Logistics, and then firing him so he could collect unemployment checks, the suit said. Burton said he refused.

"As time went on, she wanted to be more involved. ... She was confident she could do it, and that's when the wheels fell apart," Burton said.

When his attorney began pursuing legal action against Susan Beamon, she responded in an e-mail in May 2011, "I am not the owner of Envy."

Only the month before, Susan Beamon had submitted an application for a liquor license under her and her husband's names. Police completed background and financial reviews and recommended approval. She acknowledged on the application that her restaurant and bar experience was limited to a four-year stint in Miami ending in 1993.

Court records also show that in the few years leading up to the application she had judgments issued against her topping $11,000 in unpaid bills for credit cards, furniture, and restoration work.

Unpaid bills

In July, Burton won a judgment against Susan Beamon for $185,000, which he is still trying to collect. Nath -- who also owns Bootleggers -- has also sued the Beamons, claiming they owe him $138,811 after defaulting on their loan. Nath told the city that Susan Beamon had run day-to-day operations there since May, though she was not licensed to do so, according to officials. He did not respond to requests for comment.

Others pursued the Beamons for money. A business partner won a judgment against Susan Beamon for $1,502 in December 2011 after claiming he had provided entertainment and promotion services for Envy but was not paid for several months, while a security firm filed a claim in June 2012 saying Envy owed the company $616.30 in unpaid invoices. Also that month, a Hennepin County judge ordered a judgment against Susan Beamon for nearly $1,000 in plumbing bills.

Tax problems

Meanwhile, the Minnesota Department of Revenue investigated tips that the Beamons were not reporting cash income from the bar.

A search warrant said the club had not paid an estimated $40,000 to $50,000 in sales tax from admissions and food. It alleged that the Beamons had not filed 2010 and 2011 tax returns, and showed low or negative income on earlier returns.

Finances were only one problem at Envy.

The 18-plus crowds that Envy and other clubs in the Warehouse District attracted on Sunday nights could spur mayhem after the 2 a.m. closing time. As young people jostled on the street, yelling and sometimes throwing punches, police officers sprayed mace to keep everyone moving. Security guards at Envy regularly jumped in to break up melees on the sidewalk.

The club enhanced its security after city regulatory officials last year found it lacking. Envy agreed to quarterly reviews of its security operation, to stop using glasses at the bar, and to send a representative to security meetings for downtown entertainment providers.

But in early August, the city told Envy and Bootleggers that it planned to revoke their liquor licenses. Officials said in Envy they found underage drinking, marijuana smoking in the bathrooms, and fights inside, while the management failed several times to meet with police to address the city's concerns. The city also alleged that Bootleggers allowed customers to drink after 2.30 a.m. and owed $1,500 to the city for false alarms.

On Aug. 30 -- the same day that authorities raided Envy -- James Beamon submitted papers to the city withdrawing the club's liquor license.

Now, the doors of the once-boisterous venue are locked shut.

Maya Rao • 612-673-4210

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