Documentstrace Kwon's rise, fall
At one time, entrepreneur Gene Kwon seemed the Wunderkind of Salt Lake City's upscale eatery business, owning historic buildings and operating some of Utah's most popular restaurants.
But early on, Kwon was falling behind in tax payments and taking loans from friends to stay afloat, even as he opened more restaurants, state investigators allege.
Kwon, 43, has been charged in Salt Lake City's 3rd District Court with theft, securities fraud and a pattern of unlawful activity. The criminal counts are in addition to civil lawsuits that have been filed against him through the years as his finances and personal life spiraled out of control.
Save for a brief appearance while surrendering to Utah authorities two weeks ago before being released, Kwon hasn't been seen much in Salt Lake since leaving town in 2007, owing creditors millions.
He's scheduled for a Utah court date May 13, but otherwise hasn't talked much about his troubles. Reached last Wednesday, he declined comment other to say answering questions "would not be appropriate at this time." His exact whereabouts are unknown, but court documents say he lives in Washington state.
The documents also lay out the charges against him, helping paint a picture of a small business empire where success came fast, and disappeared even more quickly.
Kwon's restaurant career began in 1991 when he started running his family's Mikado restaurant in downtown Salt Lake City. He had just returned to Utah after landing a tennis scholarship at the University of Washington in Seattle.
Within four years, Kwon opened a second Mikado and then the Kampai in Park City. He eventually owned 11 upscale eateries and had title to six commercial buildings. In 2005, he was named the Ernst & Young Entrepreneur of the Year.
Creditors now say Kwon also was living the fast life, squandering money on fast cars, private jets and exclusive country clubs, leaving them out millions of dollars.
He was divorced in 2009. His ex-wife, Hillari Kwon, said she did not know that longtime family friends were lending her husband money. She said she has since signed over her assets to one of Kwon's creditors.
"It was a nightmare," she said. "Everything turned out to be a big facade. Aside from the one restaurant, I don't think anything was ever profitable."
Beginning in 1998 and continuing through 2003, Gene Kwon was named in numerous tax liens totaling hundreds of thousands of dollars, investigators say. The liens stopped for about three years, and then more were filed. Ultimately, most of the back taxes were paid off.
From April 2005 to November 2006, Kwon raised $2.7 million from at least five Utah investors, according to charging documents. In each case, he allegedly offered promissory notes, telling investors they would make a substantial profit, with little or no risk.
Investor Kirk R. Blosch, told investigators he met Kwon shortly after Kwon began managing the Mikado in Salt Lake City. The two began playing golf regularly, and through the years, Blosch lent Kwon money, according to the documents. Kwon repaid the loans, with interest, within 60 to 90 days.
In 2006, Kwon allegedly phoned Blosch, saying he had purchased the Pierpont building in Salt Lake City to house the state's first Ruth Chris Steakhouse. The documents say Kwon needed money to remodel the building, promising Blosch he would be repaid as soon as escrow funds were disbursed. Blosch and two partners lent Kwon $1 million, the documents say, and when the loans were not repaid, Kwon allegedly signed over various properties, though some of the land was encumbered. The investors loss in principal was $475,000.
Kwon also asked family friend Micha Christensen for money to help fund the Ruth's Chris franchise, according to the documents. When the notes were not repaid, Kwon allegedly disclosed to Christensen that he did not own the building he had promised as collateral.
Investigators say Max Sabour also loaned Kwon $134,000 to help open Ruth's Chris. For many years, Sabour allegedly had loaned money to Kwon to finance a business that imported silk flowers for Kwon's other restaurants. Sabour rolled over the principal from the early investments until he was receiving about $14,000 in monthly interest payments, the documents say. Sabour later learned that Kwon allegedly did not own the downtown Mikado and that a family member had quit the import business years before.
Other investors included a frequent diner at the Mikado and a golfing partner who had been introduced to Kwon through mutual friends, according to the documents.
Kwon's friend and one-time business associate, Chris Watkins, had described Kwon as "a very competitive guy. Not in a boisterous way, more internally."
The two had been members of the Davis High School golf and tennis teams. Watkins recalled those times during a 2006 interview for a Tribune story about what was described as "Utah's new food empire."
"He pushes things to the limit," Watkins said of Kwon. "He's not the guy that will take it to the status quo and be happy with it."
Theft » Two second-degree felony counts
Securities fraud » Four second-degree counts
Pattern of unlawful activity » One second-degree count
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