Politics
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Michael Avenatti.
- Michael Avenatti, whose profile has skyrocketed in recent months as Stormy Daniels' attorney, is under fire in relation to Tully's - a coffee chain he purchased in 2013 - even though Avenatti says he sold his interest.
- Dozens of lawsuits (many of which are still unresolved) allege that Tully's parent company, Global Baristas, failed to pay rent and suppliers.
- Business Insider spoke with six former Tully's workers who said they witnessed signs of financial woes, such as inadequate upkeep and issues with suppliers.
- Some former employees told Business Insider that Avenatti was seemingly involved in financial matters at the chain - one says until all locations abruptly closed in March. Avenatti refutes these claims.
- Avenatti's explosive rise coming soon after the closure of all Tully's locations puts both the lawyer and some former employees of the coffee chain in an uncomfortable position.
The Seattle-based coffee chain Tully's, acquired by Michael Avenatti in 2013, abruptly shut down all of its locations earlier this year.
While the closures were shockingly sudden and put hundreds out of work, the news - which came just as Avenatti's profile exploded as Stormy Daniels' attorney - may have long been written on the wall.
Half a dozen former workers told Business Insider that the company appeared to show signs of financial difficulty for years, such as payment-related issues and suppliers refusing to deliver orders. More than 45 suits have been filed against Tully's parent company, Global Baristas, since it was purchased by Avenatti in 2013. In 2017, the company owed roughly $5 million in unpaid taxes to the Internal Revenue Service, according to a federal tax lien.
Avenatti, who is listed as Global Baristas' sole governing person in filings made with the State of Washington, said that he sold his stake in the company for a profit at an undisclosed time and now serves purely as an outside attorney for the company.
Business Insider spoke with half a dozen former Tully's employees to understand what it was like working at the chain before the sudden closures. Of those with whom Business Insider spoke, multiple said that Avenatti was internally understood to be Tully's owner and someone with control over financial decisions.
"Whatever role I had with Tully's is irrelevant to the case I am handing for Ms. Daniels," Avenatti said in an email to Business Insider. "One has nothing to do with the other. Never before has a lawyer in a case been attacked personally like this over garbage."
Working at Tully's
According to six former workers who spoke with Business Insider, Tully's was dealing with significant financial struggles in recent years. These ex-employees shared different stories from their individual coffee shops of experiences including the chain having trouble making payments - some to suppliers, some to landlords, and even employees.
One former employee - who held various roles at Tully's over her three-and-a-half years at the chain - started working for the company soon after Avenatti acquired the chain out of bankruptcy with actor Patrick Dempsey as his partner in 2013. Dempsey and Avenatti, the two members of Global Baristas LLC, beat out Starbucks and five other bidders with a $9.15 million offer to buy Tully's more than 40 locations in Washington state.
Dempsey soon sued to be let out of the partnership, alleging Avenatti failed to disclose that he took out a $2 million loan to buy Tully's. The case was settled out of court, with Dempsey dissolving his relationship with Avenatti and cutting ties with Tully's. Dempsey did not respond to Business Insider's request for comment.
Even though the chain got off to a rocky start under new leadership, the employee said there was a lot of initial enthusiasm about revamping the company.
"It was really exciting," she said. "And then we started to realize that nothing was happening."
While many who spoke with Business Insider had some positive things to say about certain coworkers and their time at the chain, all said that financial problems appeared to plague Tully's - at times often making it difficult to work.
Five of the six ex-employees Business Insider spoke with asked to remain anonymous, in order to speak frankly and without fear of retribution. All employees shared paystubs or other documentation proving their previous employment at the chain.
"Corporate always postured that we were in good financial straits, but the feeling with myself and other managers was that we had been struggling for years," a manager who worked at the chain for three years said. "All of the locations I worked at were in disrepair, with inadequate maintenance on equipment, furniture, counters, signage, etc. I don't think we ever purchased new equipment, just recycled old units."
The employee who worked at the chain for three-and-a-half years recalled waiting weeks for items to be repaired, typically having to fix things herself. Once, she said, a neglected shop in Mercer Island, Washington was forced to shut down after its drive-thru roof collapsed when the corporate office failed to find the money to fix a leak.
According to this same employee, workers were forced to wait to get Avenatti's explicit approval to drop off the check for the week's supply of coffee beans from Dillanos Coffee Roasters every single Friday. The worker, who had first-hand knowledge of the situation, said Avenatti would often wait until the last minute to give his okay because otherwise, the check might bounce. Avenatti denied the claim.
Three different employees told Business Insider that, at times, managers or the corporate home office would ask them to wait until a certain time of day to attempt to cash paychecks.
Former Tully's employee Beth Eno sued Global Baristas in August 2017 after being fired by the company soon after she told her manager she was pregnant, The Seattle Times reports. Eno won $120,585 in a default judgment when Global Baristas did not respond to the unlawful-termination suit. However, The Seattle Times reports, Eno has so far only received $34.08 seven months after the judgment.
Avenatti told Business Insider that he was either unaware of issues described by employees or that there were topics that Tully's current ownership group should comment on. He additionally said that the Eno judgment was not his responsibility and never has been, but that he understood the pregnancy not to be the reason for the firing.
All of Business Insider's attempts to call phone numbers associated with Tully's for comment failed to connect. When Business Insider emailed Suzy Quinn at the address provided as Tully's and Global Baristas press contact in late April with questions for this article, the message bounced back the next day. According to Quinn's LinkedIn, she began working to manage media relations on Stormy Daniels' lawsuit in March.
Supply drop
Tully's financial problems also created issues with suppliers.
Real Greek Yogurt sued parent company Global Baristas in April over charges that it failed to pay invoices. And, in early May, David Morris - the founder and co-CEO of Tully's supplier Dillanos Coffee Roasters - tweeted that Avenatti owed him more than $160,000 for coffee beans.
"So @StormyDaniels hot shot lawyer @MichaelAvenatti, owes my small company @Dillanos $160,179 for coffee," a now-deleted tweet read. "He talks a big talk about integrity. We trusted him. Retweet if you think he should pay up!"
Two days after posting the now-deleted tweet, Morris told Business Insider that the tweet got Avenatti "to call" to settle the issue. Later the same day, Morris tweeted: "Twitter did not delete my tweet, I did. My company @Dillanos Coffee Roasters worked out an arrangement with @MichaelAvenatti."
Morris did not respond to Business Insider's follow-up request for comment. Avenatti said he has no comment on the incident, calling it "irrelevant."
Multiple former employees said issues with suppliers were a common problem.
"We'd suddenly stop getting supplies from vendors due to outstanding balances," Robert Sifuentez, a former manager, said. "They'd usually resume at some point."
A former female barista who worked at the chain for roughly six months in 2017 said that suppliers quit delivering products twice to her store, citing a lack of payment.
"The first time it occurred it was handled really quickly," the ex-worker said. "The second time we were concerned about running out of coffee and the stores ran out of espresso yet continued serving espresso-based drinks ... The upper-level management came by and suggested how to blend the coffee we had to fake espresso."
Global Baristas has also been hit by lawsuits over rents from landlords, with at least 14 unlawful detainer cases since 2017. One case, filed in April, claimed Global Baristas owed more than $25,000 after failing to pay rent starting in December. The most recent case, filed May 1, states Global Baristas owes $5,934.50 after failing to pay rent in February and March.
"So what?" Avenatti said earlier in May when asked for comment for a previous Business Insider on Tully's. "Many companies abandon locations and have landlord tenant disputes. How many landlord tenant disputes has MacDonald's [sic] or Starbucks had during their lifetime?"
Global Baristas did not respond to any of Business Insider's attempts to contact the company, through either listed press contacts or via Avenatti.
The mysterious owner
Robert Sifuentez
Sifuentez's paycheck from March 2018, with Avenatti's signature.
Avenatti's role at Tully's remains unclear.
Avenatti was the founder and original sole member of Global Baristas, the company that acquired Tully's in 2013, according to a complaint filed by Dempsey. Dempsey's departure left Avenatti as company's sole owner in 2013.
Avenatti says he sold his stake in Tully's before the chain's downward spiral, telling The Washington Post in late March he had made a profit by selling his piece of the firm at an undefined time. Now, he says he acts as the company's general counsel.
"I have represented the company since I sold it as to various matters and may continue to do so if the new ownership group wants me to," Avenatti said.
Avenatti is listed as Global Baristas' sole governing person in filings made with the State of Washington. In a January divorce filing, Avenatti's wife said he had "ownership interests" in the company," according to The Wall Street Journal. Avenatti's signature appears on Sifuentez's and another employee's final paychecks in March 2018.
Avenatti said the paychecks were signed with an "electronic signature that was used for years." Avenatti reiterated he acts solely as Global Baristas' general counsel and no longer owns the company, saying that there "was nothing improper" about him signing the paychecks.
According to four former workers who spoke with Business Insider, including one who worked closely with the corporate office, Avenatti appeared to them and other Tully's employees to be the owner and financial decision maker behind Tully's parent company, Global Baristas. The two other former employees that spoke with Business Insider and who had worked as baristas told Business Insider that they had minimal interaction with the corporate office and knew very little about the chain's ownership.
"Honestly, when a customer asked who owned Tully's, I couldn't even give them an answer because I had no clue," said a barista who worked at the chain for more than three years.
An ex-worker with first-hand knowledge of operations at the corporate office said that Avenatti signed off on payment-related decisions until at least mid-2017 (when she left the company). According to the employee, Avenatti would need to okay any major purchase or expense. For example, she said, every Friday workers would wait - down to the minute - for his explicit approval to drop off checks to coffee suppliers.
Three other former employees, two of whom worked as managers, said that Avenatti appeared to have the authority to sign off on financial decisions based on their conversations with corporate offices.
"Email correspondence from our corporate office would refer to him as the owner," a former manager, who worked at the chain for three years, said. "In many instances corporate would send emails citing Avenatti as the reason they would be unable to act on an issue or policy change. He was never referenced as an advisor as he now claims." (The former manager was unable to provide a specific time-frame to these emails.)
"My landlord at the Virginia Mason location, not to mention my bosses, would always mention Michael by name when there were payment issues," Sifuentez said.
"Not true to the best of my knowledge," Avenatti said. "I have not referred to myself as the owner for a very long time because I haven't been."
Avenatti said that claims that he played a major role in financial decision making were "untrue," asking Business Insider: "Who said this?"
Avenatti declined to discuss who purchased his stake of Global Baristas or the identity of the current owner, though he said the new ownership group was not Doppio, another company owned by the lawyer. He also declined to tell Business Insider when he sold the company when asked multiple times.
Earlier in May, when asked for a way to contact Global Baristas' current owner, Avenatti said that he had passed the reporter's contact information "on to the company," and that the company would respond to Business Insider's questions about Global Baristas if "they wish to speak with you."
"I asked them to contact you if they wished to discuss and I encouraged them to do so," Avenatti said in an email to Business Insider on Thursday. "It is up to them."
No person or company contacted Business Insider.
Tully's mysterious closures
The abrupt closure of all remaining Tully's locations earlier this year comes after a succession of prior struggles.
Global Baristas failed to pay $4,998,198 in federal taxes last year, according to a tax lien filed by the IRS in August. That is in addition to thousands of dollars in state taxes the company failed to pay over the years, according to more than 20 state tax liens filed in California and Washington. Most recently, in early April, Washington state issued a warrant claiming Global Baristas owed more than $721,000 in state taxes.
Avenatti told Business Insider that, to the best of his knowledge, Global Baristas has paid the taxes it owed, though he also said it was not his responsibility.
In September 2017, the news broke that 12 Tully's located in Boeing plants would close, a major blow to the small chain. In a January complaint, Keurig Green Mountain - which owns Tully's brand - demanded that Global Baristas stop using the brand, alleging that the company failed to pay $500,000 in licensing fees for 2016 and 2017.
In March, every single one of the locations suddenly shut down. Originally, representatives said the locations had closed because they ran out of coffee. For employees, it was an abrupt loss of a job - no matter the explanation.
"Dozens of people showed up for work on that March morning to find they were without a job," said the employee who worked Tully's for eight years. "Many are college students that needed to work to help lighten the financial burden on their parents, to reduce as much as possible any future student loans, and to cover their day to day cash needs. Many are single moms that seriously depended on their income to support their families."
Less than a week after the stores shut down, Quinn - Tully's head of communications, who is now working as Stormy Daniels' head of media relations - told the Associated Press that the company was "rebranding," an effort that could take months. Avenatti told Business Insider earlier in May that while he has a limited role as an outside attorney, he believed Tully's was still planning to open rebranded locations.
At least two former Tully's in the Seattle area have already reopened under new names and ownership, completely separate from Global Baristas. The owner of a Tacoma building that used to host a Tully's opened a new coffee shop, called Bostwick Cafe, in the space in April, The News Tribune reported. Bostwick Cafe is completely separate from Global Baristas and Tully's, but reportedly hired all former Tully's employees. Café Hitchcock Express opened as a pop-up in another former Tully's, with plans to become a permanent coffee shop in the future.
None of the workers that spoke with Business Insider said that they have faith Tully's stores would reopen.
Avenatti's awkward position
Drew Angerer/Getty Images
Michael Avenatti.
Avenatti's domination of the news cycle coming so soon after Tully's closures has put both the lawyer and former Tully's workers in uncomfortable positions.
The lawyer has gone from a relatively unknown figure to a celebrity in his own right. While fame has brought the lawyer a social media fan club, begging for shirtless pictures of Avenatti, it also means increased scrutiny - especially as Avenatti delves into the financials of Michael Cohen and President Donald Trump.
Avenatti's position at Tully's and Global Baristas - as well as when and how that relationship has changed - remains unclear. It is clear, however, that the chain was facing financial struggles during the years after Avenatti became first associated with Global Baristas.
The first warrant for unpaid taxes was filed against the company in 2014, alleging Global Baristas owed the state of Washington $340,669 in unpaid taxes less than a year after the acquisition of the chain. Global Baristas paid the taxes and satisfied the warrant in 2015, but tax issues continued to plague the chain. Seven more warrants were filed over taxes in the state of Washington in 2015, plus three more in 2016.
In its lawsuit against Global Baristas, Keurig Green Mountain alleges that Global Baristas failed to pay licensing fees for 2016, sparking the lawsuit. According to a federal tax lien, in 2017, the company owed roughly $5 million in unpaid taxes to the Internal Revenue Service.
These lawsuits do not come up frequently on Avenatti's around-the-clock cable news appearances. And, when they do come up, Avenatti has aggressively defended himself.
Avenatti made headlines when he reportedly threatened to sue the Daily Caller. Avenatti reportedly also harshly criticized the Hollywood Reporter for an (at the time unpublished) piece and threatened to sue legal website Law & Crime for another critical article.
Following the publication of Business Insider's original piece on Tully's earlier in May, Avenatti blocked the reporter who wrote both this article and the previous article on Twitter. When asked for comment, Avenatti said it was "inadvertent" that the reporter had been blocked, and unblocked the account within hours.
Michael Avenatti has blocked reporters whose reporting he views as negative.
"Journalists have an obligation to get their facts straight and not engage in irrelevant hit pieces, which is what we are seeing with stories about Tully's," Avenatti told Business Insider in an email when asked for comment.
Meanwhile, other business dealings of Avenatti's have become a topic of discussion in the New York legal system.
In May, Avenatti petitioned to appear in a criminal case involving President Donald Trump's longtime lawyer Michael Cohen. Lawyers for Cohen and Trump have presented Avenatti's past financial dealings, including a recent $10 million judgment against his law firm Eagen Avenatti, as evidence that he should not be admitted in the case. On Wednesday, Trump's lawyer Joanna Hendon argued in court before US District Judge Kimba Woods that Avenatti's attempts to distance himself from Eagen Avenatti - which he has said is not related to the Stormy Daniels case - are misleading, citing emails about the case that used the Eagan Avenatti firm's name.
"When someone, especially a lawyer, is prepared to be not straightforward, and cute, and I would say misleading, with the court, on the tiniest of matters, it raises a serious question about how that person, how that lawyer will conduct themselves on the more serious matters," Hendon said.
Avenatti has said that these financial issues, both related to Eagen Avenatti and Tully's, have nothing to do with his role as Stormy Daniels' attorney.
Former employees are also in an uncomfortable spot
The rise of Avenatti also puts former Tully's employees in an unusual place - especially those, like Sifuentez, who describe themselves as "anti-Trump."
As Avenatti gains a massive social media following, Sifuentez has started using his Twitter account to insult and criticize the lawyer, asking in one tweet whether Avenatti thought he "could jump into the spotlight and not get scrutinized?"
Sifuentez has never met Avenatti, though he has been personally contacted by the lawyer. On March 8, the day after the Tully's where he worked shut down, Sifuentez anonymously spoke with The Seattle Times about closures.
The next day, Sifuentez was fired by his location's
Robert Sifuentez
Sifuentez's call log shows Avenatti reached out to him.
"Even though I was unnamed in the initial story, Avenatti knew it was me who talked," Sifuentez said via email. "Not hours after the story was published, Avenatti HIMSELF tried calling my phone, several times. I didn't answer, and no message was ever left. I assume he wasn't pleased."
When Sifuentez spoke on the record in a second Seattle Time article, Avenatti called again, in addition to blocking Sifuentez on Twitter.
Avenatti told Business Insider that Sifuentez is a disgruntled former employee who "has no idea what he is talking about." According to Avenatti, he called Sifuentez "twice to ask him about his concerns and his complaints. He never called me back."
To have Avenatti constantly on television, especially so soon after the abrupt closure of Tully's locations, has fostered feelings of resentment among some former employees who feel the lawyer has not taken responsibility for the chain he once purchased.
"It very much felt like Avenatti was more than content to leave me, my colleagues, and my customers out in the cold ... so that he could chase the limelight," Sifuentez said.
Sifuentez is of the opinion that Avenatti should be held accountable for whether or not landlords and suppliers got paid, the confusion that engulfed the chain as locations abruptly closed, and the as yet unrealized promise of reopening Tully's locations.
"I'm as anti-Trump as a person can possibly be, and watching him insert himself into the national dialogue as some sort of righteous crusader makes me simultaneously laugh and vomit," Sifuentez said.
Other former Tully's workers also feel let down by Avenatti.
Seeing Avenatti on television now, "is like a stab in the heart," the employee who worked at the chain for three-and-a-half years said. "And it makes me angry."
"Who claims this?" Avenatti said when asked to respond to workers' saying he was at least partially responsible for chain's financial struggles and store closures. "How would they know?"
If you've worked at Tully's or Avenatti's other business ventures and have a story to share, email ktaylor@businessinsider.com