Blonder’s ex-CFO: $1.3M moved from Yellowfin
Partners claim businessman manipulated profits at restaurant; plaintiffs’ case expected to finish
Over the course of a decade, more than $1.3 million was transferred from the Yellowfin restaurant in Edgewater to Harvey Blonder’s other companies, Kris Kohlmann, his former chief financial officer, testified Wednesday.
Blonder is being sued by his Yellowfin partners Jamie Kujawski, Paul Hetzel and Mike Loprete, who say he manipulated the restaurant’s profits to avoid paying them and to channel funds toward his other ventures. The Annapolis businessman and restaurateur is facing several counts in the multimillion-dollar lawsuit, including breach of fiduciary duty, gross negligence and fraud.
Kohlmann took the stand Wednesday and her testimony and cross-examination bled into Thursday morning as the jury trial in Anne Arundel County Circuit Court approaches the end of its first week. A civil trial can end at any time if the parties reach a settlement.
Following the death of Blonder’s longtime executive, Robin Bailey, Kohlmann began working for the HB Properties management company in 2017. She served as Blonder’s top financier when the partners voted to remove him as Yellowfin’s primary manager a year later.
Kohlmann described HB Properties as an “umbrella company” that provides administrative services to the 90-odd businesses across Blonder’s portfolio. Though the plaintiffs say they understood Blonder would be in charge of Yellowfin himself, Blonder has argued he was contractually permitted to hire his affiliate companies to oversee and service the restaurant.
For the 16 years his company, The Ritz, was the managing member of the Edgewater restaurant,
Blonder received between $200,000 and $250,000 annually in management fees. Blonder testified that money was used to pay for HB Properties’ salaries and operations.
In 2019, Kohlmann said she resigned after “butting heads” with Blonder over “concerning business practices.” On the stand, she said she was alarmed by intercompany transfers, overpriced services and disparate rates between Yellowfin and other Blonder companies.
For instance, invoices presented Thursday showed Blonder had purchased two hand dryers in 2005 before selling them back to Yellowfin at a higher price 12 years later. In another example, Yellowfin paid approximately $28,000 in checks for legal fees. Another check reimbursing the entire amount was written to Blonder’s company Securities Fortress and listed in Yellowfin’s ledger as having gone to the lawyers.
After the restaurant’s partners filed their civil complaint in 2021, Kohlmann agreed to work as a consultant for the plaintiffs’ legal team to review HB Properties’ bank documents and tax filings. In that role, Kohlmann compiled and detailed the “money out” from Yellowfin accounts to Blonder’s other businesses.
Early in her testimony, Blonder’s attorneys sought to invalidate her as a witness saying she could only provide “opinion testimony” because she reviewed documents as a consultant rather than a Blonder employee. Circuit Judge Pamela Alban dismissed the objection and considered Kohlmann’s consulting work as firsthand knowledge.
Of the $1.3 million she identified, more than $224,000 went to Blonder’s
Land and Sea banquet company and approximately $75,000 went to Liberty Marina. While the marina offered maintenance services to at least 40 Blonder businesses, Kohlmann said 30% of its labor fees came from Yellowfin jobs.
Despite the large sums of money invoiced to them, current Yellowfin employees testified that the outside Blonder entities were either inefficient or unnecessary.
Paul Kerner, the restaurant’s assistant general manager, said marina employees were called to work on the same job, a pipe leak, two or three times a month.
“I just didn’t trust them,” he said.
The invoices for that kind of service were processed at HB Properties and charged Yellowfin a rate twice as high as other Blonder businesses. Kohlmann described the difference as a “source of friction” between her and the restaurateur.
“It was not equitable,” Kohlmann said. “The optics of that weren’t good.”
The trial began Monday with jury selection and an attempt by Blonder’s legal team to delay the proceeds after the plaintiffs filed an additional claim over the weekend of $1.1 million beyond the more than $3.3 million in damages they were seeking. A circuit court judge determined the defense was made “sufficiently” aware of the circumstances of the request and opted to move forward.
The following day, Blonder took the stand to defend the business decisions he’s made since opening the fish and steak house in 2001. Blonder, through The Ritz, was named managing member of the restaurant, a title that gave him “exclusive access and control” over Yellowfin’s finances and records. When asked whether the Yellowfin partners knew that Blonder had farmed out control of its administrative business to HB Properties, he said Tuesday “it was not necessary” to tell them.
The plaintiffs’ case is expected to finish Friday afternoon, according to attorney Richard DeTar, and Blonder’s defense will begin Monday.
Blonder and his attorneys Robert Kostecka and Steven Preller declined to comment for this story.
DeTar and his associate Steven Brown also declined a request for comment.