OUT OF JOINT

A LIQUOR LICENSE PROBE OF A WEBB AIDE'S TAXPAYER-FINANCED BAR SIZZLES, THEN FIZZLES.

Eight years ago, after he won a low-interest, $50,000 loan from the City of Denver to build a restaurant and bar in west Denver, Don Sandoval brushed aside criticism that the loan was improper. Sandoval was a state senator at the time, and Denver's auditor had complained that the city wasn't supposed to give taxpayer-backed loans to public officials. "I should be entitled to [the loan] just like anybody else," Sandoval said.

But Sandoval, now Mayor Wellington Webb's assistant on international trade, doesn't appear to have been treated "just like anybody else" in a more recent controversy involving his Bull Ring lounge, at 3570 Morrison Road.

Last summer, investigators for the city's Department of Excise and Licenses charged that Sandoval had violated state liquor laws by illegally turning control of the Bull Ring over to a Mexican chef named Miguel Pinales. According to both a Denver city attorney and a police detective, the alleged violation--illegal transference of a liquor license--was serious enough that Sandoval's license could have been revoked. But the city later declined to prosecute, saying it had a conflict of interest because of Sandoval's status as a political appointee.

The city bumped the case over to the Colorado Department of Revenue's Liquor Enforcement Division. But now, almost six months later, the state has dropped its investigation entirely--and recently gave Sandoval the green light to continue operating the Bull Ring under a new agreement with different managers.

Pinales, meanwhile, is struggling to get back on his feet. After clashing with the politically connected Sandoval last August, he lost both his job and the home he was renting from Sandoval just behind the lounge. Though he's found other work and a new place to stay for himself, his wife and their four young children, Pinales says he lost his $5,000 life's savings to Sandoval, and he wants his money back.

"I was thinking he was honest and believed his word," says Pinales, 51. "He hurt my whole family."

Sandoval was a state senator for fifteen years before joining the Webb administration as the mayor's "Assistant for International Trade and Economic Development," a post that pays him more than $47,000 a year. One of Sandoval's jobs is to boost business ties between the city and Mexico, though he does not speak Spanish.

El Reportero, a Spanish-language newspaper in Denver, first reported Sandoval's dispute with Pinales last year. Reporter Eduardo Plata says he got interested in the case when Sandoval moved to evict Pinales from the bar last summer. "I think he's taking advantage of Mexicans," Plata says.

Sandoval says that he feels sorry for Pinales but that Pinales brought his misfortune on himself. Pinales, Sandoval says, was evicted because he wasn't paying his bills while running the bar. Sandoval says that Pinales caused a lot of property damage at the building and that he is even considering suing Pinales to recover his losses. But "he doesn't have any money," Sandoval says. "We're wondering whether it's going to be worth it."

Sandoval, 60, opened the Bull Ring in 1986. According to an old news report, he planned to build a small shopping center and gas station at the Morrison Road site, which lies within an area targeted for economic-revitalization loans from the city. Sandoval got $50,000 at 3 percent interest from Denver's Community Development Agency and borrowed $160,000 more from a bank. He paid off the community-development loan in 1993, records show, but the bar is the only business on the property, and there are no gas pumps.

Instead of running the bar himself, Sandoval has hired a series of managers to operate it, says Carol Dawson, owner of a carpet store across the street from the Bull Ring and president of a Morrison Road business group. Dawson and other neighbors say the lounge has seen high turnover among managers over the years. "There's obviously some sort of problem," Dawson says.

Pinales, a native of Mexico City who's worked as a chef at the Brown Palace, the downtown Hilton and other restaurants, says Sandoval approached him to run the Bull Ring in the summer of 1993. Pinales, who hoped to eventually buy the business, agreed to operate the lounge for a percentage of net profits. A "management agreement" signed by Sandoval required a $5,000 deposit from Pinales, as well as weekly payments of almost $1,400. Pinales got to live rent-free in a house Sandoval owned behind the bar--and keep any bar profits as his salary. In addition, the agreement gave Pinales the right to purchase the Bull Ring from Sandoval for $60,000.

"That was my hope--to buy the whole business," Pinales says. Pinales, who speaks only halting English, says he didn't understand all the fine print in the contract. But he says his conversations with Sandoval led him to believe that it gave him the power to run the bar in his own way. "He put in my head this was a lease," Pinales says. "When we closed this deal, he said, `Now you can do anything you want; it's your place.'"

Sandoval's attorney, Remigio Pete Reyes, denies that the agreement amounted to a lease, saying that Pinales was actually only an employee of Sandoval's.

The distinction is important, because liquor licenses are not transferable, says Detective Michael Patrick of the Denver Police Department. Patrick, assigned to Excise and Licenses from the city vice bureau, points out that applicants for licenses are subject to strict scrutiny by regulators. "To allow transfers to go through without controls would open up the system to the highest bidder without regard to their character," Patrick says.

An illegal transfer, Patrick says, is "certainly a violation that could result in a [license] revocation."

Sandoval points out that Pinales never signed the management agreement. Pinales says he doesn't remember why he didn't sign the contract but that he abided by its conditions and considered it binding on both parties.

Business at the Bull Ring was "fair" during his first few months, Pinales says. At the beginning of last year, however, the lounge suffered a severe slowdown. So Pinales hired two business advisors who helped him bring in customers. Among other ideas, the advisors suggested staging a "Friday night disco" every week. Business at the Bull Ring increased sharply. "They did a good job," Pinales says.

Sandoval, however, says Pinales's changes brought an undesirable crowd to the lounge. "You should have seen the parking lot--it was a haven for drug dealers," Sandoval says. The new clientele also damaged Bull Ring equipment and furniture, he says.

Officer Mark Roggeman of the Denver Police Department paints a different picture of the bar under Pinales's tenure. Roggeman, a community-resource officer who handles neighborhood complaints, remembers that "business was booming" at the Bull Ring last summer but that it wasn't a source of trouble for police. "We weren't dealing with that as a nuisance at all," Roggeman says. "We never got a complaint from a citizen or anybody."

Sandoval says that, in addition to allowing property damage and criminal activity, Pinales simply wasn't paying his debts at the bar. Last August he kicked Pinales out. "The poor soul, I feel sorry for him," Sandoval says. "But I had to go ahead and terminate him."

Pinales, who claims he made all his payments to Sandoval, complained to Denver police, alleging that Sandoval had illegally broken their agreement. The department turned the matter over to Excise and Licenses, which regulates bars in the city.

Detective Patrick says he reviewed Sandoval's written management agreement and concluded it was illegal. "There's no question he [Sandoval] had unlawfully relinquished control of the business," Patrick says. Patrick had Assistant City Attorney April Snook file a complaint against Sandoval alleging nine violations of state and city liquor laws.

Shortly afterward, however, Snook says she determined that Excise and Licenses shouldn't be handling the case. Like Sandoval, department head Balvino Chaves is a Webb appointee. Snook says Chaves, who ultimately would have ruled on what sanctions to impose on Sandoval, had a conflict of interest that would create "an appearance of impropriety." She recommended the city transfer the case to the state Liquor Enforcement Division.

Reyes, Sandoval's attorney, recalls that Snook told him the city considered the whole Sandoval-Pinales flap to be a minor matter that would not have resulted in any kind of penalty for Sandoval. "There wasn't a violation" of the code, Reyes says. "It wouldn't have even gone to a hearing."

Snook says that's not true. Like Detective Patrick, she describes Pinales's allegations as "extremely serious" but says the city recused itself from the matter before she could reach any conclusions. "There was a strong chance it could have resulted in a [license] revocation," Snook says.

The state, however, ended up taking a much softer stance on the matter. Licensing administrator Matt Cook says the division looked at Sandoval's management agreement with Pinales and didn't find any major cause for concern. The division helped Sandoval craft a new agreement with the current managers of the lounge and then ended the investigation in December, Cook says.

The state's probe was less than exhaustive, however. Pinales says no one from the Liquor Enforcement Division bothered to contact him for his side of the story. "They never called me at all," Pinales says.

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