'Restaurant' co-owner Jeffrey Chodorow: convicted felon with long legal history
By Wade Paulsen, 04/20/2004
On last night's premiere of the second season of NBC's The Restaurant, viewers learned that success had gone to the head of Chef Rocco DiSpirito, the conceited and apparently philandering celebrity chef featured in the original series. Perhaps the Australians read Rocco correctly when they rejected his personality and the original series. However, what viewers may not know is that Rocco's antagonist in the battle for control of "the restaurant" -- Rocco's on 22nd Street -- is a convicted felon with a long history of pursuing litigation battles.
Jeffrey Chodorow, the financier who owns 50% of Rocco's on 22nd Street through his China Grill Management, was convicted in 1994 of federal charges of defrauding the U.S. Department of Transportation ("DOT") and obstructing a pending proceding of the DOT. In return for his guilty plea to these charges, charges that Chodorow committed bankruptcy fraud and fraudulently concealed assets from creditors were dropped against him.
The factual history of the case against Chodorow can be found here. The crimes evolved from the purchase of once-bankrupt Braniff Airlines by Chodorow and his partner at the time, Arthur Cohen, in 1988. In 1989, Chodorow and Cohen led Braniff into a second bankruptcy filing, but in 1990 they regained control of the Braniff name to launch a new airline led by Braniff's current CEO, Scot Spencer.
The DOT refused to issue the certificates required for Braniff to restart due to its concerns about Spencer's criminal record and his poor leadership prior to Braniff's second bankruptcy. In May 1991, the DOT said that it would issue the required certificate of operation to Braniff only if it received sworn affidavits from Chodorow, Spencer and Cohen attesting that Spencer would hold no position and have no involvement in Braniff. All three men filed such affidavits on May 31, and Braniff was issued its certificate and began operations in July 1991.
There was just one problem with the affidavits -- they simply weren't true. In reality, Spencer was the untitled head of the reformed Braniff, and Chodorow had undertaken a money-laundering scheme with an advertising contractor to pay Spencer for his services. Braniff overpaid the advertising contractor, who withheld a 15% commission, out of which he kept 4% (his real payment) and rebated the remainder directly to Spencer (10%) and Spancer's father (1%). Since the standard advertising commission had been 15% prior to 1980, the transaction wasn't facially obvious as a scam.
In August 1991, in order to relieve itself of its restarting debts, Braniff filed a third bankruptcy petition under Chapter 11. Chodorow was named president and CEO. As a "debtor in possession," Braniff was required to file reports with the court about its uses of cash, but it never listed the hidden payments to Spencer and his father, which ultimately totaled over $250,000. In addition, Braniff made $97,500 in overpayments to the advertising contractor, which were then forwarded directly to Spencer.
In March 1992, the DOT and the Federal Aviation Administration told Chodorow that they had been informed that Spencer, not Chodorow, was actually running Braniff. Chodorow then filed another false affidavit, swearing that Spencer had not been involved with Braniff in any capacity since its relaunch in July 1991. Ultimately, Braniff lurched into liquidation in July 1992 -- and all of the details of Chodorow and Spencer's scheme became public.
However, public tolerance of white-collar crooks and perjurers was much greater in 1994 than it is now, just 10 years later -- and despite his two separate sworn lies to the U.S. government and his role in bankrupting Braniff twice, Chodorow got little more than a slap on the wrist. According to Fox News, Chodorow claimed that his 10-year-old son suffered from Tourette's Syndrome and required him at home, and so Chodorow was sentenced to only four months of prison time and four years of supervised probation afterward ... while Spencer, his co-defendant, was sentenced to over four years in prison and three years of supervised probation thereafter. This despite the fact that the trial court judge wrote that Spencer "was incompetent and I don't understand how anyone could have entrusted him with the operation of this airline."
We hope the lawyers for Martha Stewart, who was also convicted of lying to the U.S. government, have been paying attention.
Despite Chodorow's felony record, he has not had any trouble getting liquor licenses for his various operations. Fox News reports that this is because liquor licenses are handed out by state liquor boards that are only concerned with state felony convictions, not federal ones like Chodorow's.
Fox News also reports that Chodorow, like many wealthy individuals accused of wrongdoing (such as, for example, O.J. Simpson), has moved his prinicpal residence to Florida, which permits individuals to keep their "homesteads" regardless of value in the case of personal bankruptcy.
Chodorow and his wife Linda have also been involved in more than 20 filed legal cases since his 1996 prison term. Thus, to him, the dueling lawsuits against Chef Rocco may just be business as usual.
The NY Daily News reports that Chodorow has also been in hot water over his ownership of the Manhattan Gentlemen's Club, a seedy nightspot that operates an escort service. At the time, Chodorow's publicist said that he had tried to sell his stake, but the buyer was unable to close the deal after being sentenced to an 8-year prison term for swindling New York City's transit authority out of $10 million.
If Chodorow wins his lawsuit against Chef Rocco, Rocco's on 22nd Street is a thing of the past. Fox News reports that workers at the restaurant say that Chodorow plans to close the place on June 1, after the second season of the The Restaurant finishes airing, and to open a Brazilian steak house there. One waiter told Fox News, "There won't be a third season of The Restaurant."
All we can say is "thank goodness."
In an article in New York Magazine clearly sympathetic to him, Chodorow is proud of the fact that he is the only one of hotel baron Ian Schrager's business partners who has retained a working relationship with him. Perhaps that's because Schrager, the former co-owner of NYC's infamous Studio 54, is, like Chodorow, a convicted felon, having spent 13 months in federal prison for tax evasion. As we have always heard, "birds of a feather flock together."
In the article, Chodorow also says that Rocco's decision to countersue him was "like attacking a 900-pound gorilla." We wonder if the accumulated weight of Chodorow's misdeeds has helped push him toward the half-ton mark.
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