The Pearl’s Property Will Go to Auction If Taxes Aren’t Paid by April 22

Last week’s dramatic events surrounding The Pearl — more than $83,000 raised on GoFundMe to save the lesbian bar, only to be refunded as The Pearl LLC dissolved — came to an unfortunate head on April 15 when the City of Denver changed the locks at the iconic Mercury Cafe building that The Pearl had been leasing for a year and seized The Pearl’s property because the business owed more than $56,000 in unpaid taxes.

Employees were able to retrieve their personal belongings, but under Section 53-26 of the city’s municipal code, any assets used by The Pearl for business purposes cannot be returned until the taxes are paid. And Denver Department of Finance Communications Director Laura Swartz says that if The Pearl doesn’t pay up by Wednesday, April 22, the seized property will proceed to auction.

“The taxpayer will then have all the way up until the date of auction to pay, which is generally a two-month process,” Swartz says. “Quick clarification: this auction would be for the tangible business property in the building, not for the building itself. There will not be any action against the real estate itself.”

The group of five people who owned The Pearl does not own the Mercury Cafe building at 2199 California Street. That location is still owned by Danny Newman, wife Christy Kruzick, and business partner Austin Gayer, who bought it from Merc founder Marilyn Megenity in 2021. They, at least, have been paying their property taxes, which are $60,000 a year.

But when the building will be able to open its doors (or if it ever will again) to the poetry, swing dancing, music, astrology and tarot reading groups that have been meeting there for decades is still up in the air.

The Mercury Cafe went up for sale again in 2024, but did not find a buyer. Instead, Newman leased it last spring to The Pearl founder Dom Garcia and a group of other owners, including Ashlee Cassity, Jonathan Mora, and husband-and-wife team Benjamin Oakes and Christy Rivera.

When The Pearl could not meet payroll, owners and shift leads decided without Garcia’s input that they would close the business this month, and announced the closure in an April 11 social media post. In response, Garcia put up a GoFundMe to save The Pearl without input from other owners or staff, and community members who did not want to see the city’s only lesbian bar disappear raised more than $83,000 in 48 hours before The Pearl employees put out a statement that they “could not in good conscience” accept the funds with the probability of the business tanking again in another few months.

By Tuesday, April 14, Garcia paused the GoFundMe, refunded the donations and dissolved The Pearl LLC. Records show that right after Garcia dissolved the business, Rivera filed an article of reinstatement.

So The Pearl might have been able to continue operating for a few more weeks…if its property hadn’t been seized by the city for unpaid taxes.

“The first time I became aware of the $56,000 owed in taxes was when someone sent me a photo of the notice on the door,” Cassity said in an April 18 statement. “Tax notices were being sent to a personal address instead of the business, and I was blindsided by this information.”

She added: “I will be paying my portion of the unpaid taxes, because this was money paid by customers, and it is unacceptable that it was not properly handled. I will also be contributing $1,350 to The Pearl staff fund to support the employees who unexpectedly lost their jobs and income.”

“Other owners blamed me for back taxes, but the taxes were never my responsibility,” Garcia told Westword last week. “I have proof of that in our operating agreement, but they blamed me.”

Most of the taxes The Pearl owed are sales taxes; another small portion is for occupational privilege taxes. Swartz says the timing of the distraint warrant wasn’t because of tax day on April 15, but “the city’s responsibility to intervene.”

The notice came in the form of a jeopardy assessment, which Swartz says “means there is a legitimate concern of the entity going out of business.” Which it has.

Things aren’t looking too hot for Garcia’s other business, Sinners Salon. On Saturday, April 18, staff at the Sinners South location decided to leave their jobs.

“In light of the information gathered around the closing and seizure of The Pearl, a business owned and operated by the same people that own and operate our salon, we cannot morally or ethically stand by Sinners LLC,” a statement posted on Instagram by Sinners South staff reads. “We, the staff of Sinners South, came to this business for a collective dream; a salon environment that values the independence, autonomy and expression of each stylist, while upholding and protecting a safe space for marginalized individuals. We no longer feel that Sinners LLC can follow through with this vision.”

This continues to be a developing story; check westword.com for updates.