Theater of the absurd: How bad deals, shenanigans have brought Orpheum to the brink

2012-06-27T11:00:00Z 2012-07-19T07:38:04Z Theater of the absurd: How bad deals, shenanigans have brought Orpheum to the brinkSTEVEN ELBOW | The Capital Times | selbow@madison.com madison.com

The Orpheum Theatre in downtown Madison evokes iconic images of the past: the art deco front, the grand kitsch of the French Renaissance interior, the iconic "Orpheum" sign soaring over State Street. It's been part of the downtown landscape since 1926, a priceless limestone anchor that ties the city to a bygone era.

Over its more than 80-year history, the venerable theater has hosted some of the nation's biggest names, including Louis Armstrong, Buddy Holly, Frank Sinatra and Bob Marley.

"Without question the Orpheum is one of Madison's real jewels," says Ald. Mike Verveer, whose district includes the storied movie palace. "I think when folks are asked what are some of the most important historic buildings in the city, the Orpheum would be on most anybody's list. The Orpheum has been part of Madison's cultural history for generations."

But unbeknownst to the vast majority of its admirers, recent years have imbued the historic theater with another sort of history, a dark undercurrent of betrayal, vindictiveness, financial machinations, arson and general nastiness.

And, of course, litigation. A lot of litigation.

The feud between co-owners Henry Doane and Eric Fleming, which began shortly after they entered into their partnership about a decade ago, has brought the theater to a crossroads, and its future hinges on a number of court cases that involve debt and allegations of fraud and a host of other financial misdealings — including the mysterious disappearance of $175,000, allegedly given to a man named Marcus DaMarko, who has vanished without a trace.

"Somebody should make a movie," declared Doane at an Alcohol License Review Committee meeting last year.

If they made one, you wouldn't be able to catch it at the Orpheum, which no longer has regular screenings. The restaurant is closed. The building now serves primarily as a venue for weddings or the occasional concert, and even then the front of the house is dark.

So far this year Madison fire inspectors have conducted three inspections at the theater that found numerous violations, including blocked exit doors, exit doors that didn't open easily, and doors that didn't open at all.

Fire Department spokeswoman Lori Wirth says many of the violations are repeat offenses.

"I believe we're going to pursue a little stronger remedy this time around," she says.

Verveer said he's concerned that the Orpheum's days as a cultural icon could be numbered. While the stage has been meticulously renovated, the ceiling plaster is cracked, sewer backups plague the theater bathrooms, the towering sign is faded and the general maintenance is suffering.

"It really concerns me that the long-standing feud between the owners has caused irreparable harm to the Orpheum," he said.

Two weeks ago troubles with the Orpheum re-entered the public stage when the city yanked its liquor license because its Department of Revenue seller's permit was invalidated. Doane, it turned out, canceled the permit without consulting with Fleming. The city has reinstated it until June 30, when it expires. At this point, it's anybody's guess whether the city will issue a new one.

What Doane hoped to gain from canceling the seller's permit is unclear. But it had a lot to do with the efforts of Fleming, who currently runs the Orpheum, to oust Doane from the operational side of the business by setting up his own company, Orpheum of Madison, so he could evict the company he owns jointly with Doane, Orpheum Theatre Co. of Madison.

In a strange aside, the day after the ALRC recommended pulling the liquor license, an employee at the Orpheum called the police to report a break-in. Police spokesman Howard Payne says the burglary ties into another investigation being conducted by the department, so he can't talk about it. But Fleming says one computer was stolen, and files containing business records were deleted from another.

The smoldering bitterness between the co-owners seems to reignite at regular intervals.

For instance, last week Doane said he had just become aware of Fleming's plans to scrap the building's original air conditioner, the first in Madison and possibly the first air conditioner in any Wisconsin building, further fueling his ongoing concerns over the toll Fleming's operation of the Orpheum is taking on the historical value of the building.

"It shows the nature of his character as far as what he thinks is historic," says Doane.

The machine, housed in a room that measures about 1,200 square feet, is a mechanical behemoth of wheels, compressors and pipes.

"It's an impressive piece of equipment. It looks like the boiler room of an ocean liner," says Doane. "It looks exactly like it did when it was put in in 1927."

Fleming says the machine is using up valuable storage space, and in addition, he says, it's surrounded by asbestos.

"It's a bunch of old pipes," he says. "I mean, there's no value in taking up space in a basement."

Fleming later called to say he contacted the Wisconsin Historical Society to assess any potential historic value.

"If somebody wants to preserve those, I'd be more than happy to work with somebody," he says.

If anyone questions his commitment to historic preservation, he says, they should look at the newly renovated stage.

Keeping the historical integrity of the stage, he says, added about $50,000 to the project, restoring the original curvature, refurbishing the proscenium, recreating the sight lines.

"I don't think anybody realizes how painstakingly my architect and I restored that stage in order for us to get historic tax credits," he says.

•    •    •    •

The problems between Fleming and Doane appear steeped in personality conflict. Fleming, a wiry 40-year-old smooth talker, exudes intensity.

He describes himself like this: "I do brokerage work. I have a real estate license. I'm a business consultant. ... Those are the things I do. I'm more of a directional person. I'm not good at sitting behind a desk or day-to-day activities."

Doane, nine years his senior, is soft-spoken and, considering his very public profession, relatively shy. In the soap opera that is the Orpheum, he plays the part of the victim.

"It's been a difficult situation for a long time," he says. "I've gone through every kind of humiliation known to mankind, so I'm kind of immune to it at this point."

By 2007 the partnership had gone so sour that Doane keyed Fleming's car in broad daylight. He eventually pleaded guilty to criminal damage to property, but the charge was dismissed after he entered into a deferred prosecution agreement.

Fleming took over operations of the Orpheum from Doane in April 2011, when their company was in financial straits and the theater came under threat of foreclosure.

Fleming claims he was able to make the operation profitable, but his personal financial troubles stemming from a bad real estate deal in Waukesha County have left the ownership of the building in limbo.

About five years ago, Fleming and a small group of investors launched a venture to cash in on the go-go real estate market. They bought 43 acres of land in Sussex in Waukesha County, laid plans for a residential development, and you can probably guess what happened next.

"The real estate market crashed and we couldn't develop it," said Fleming.

So what's that got to do with the Orpheum?

Plenty. The bank foreclosed, and a Waukesha County judge ordered Fleming on the hook for $1.5 million to pay his creditors. All his assets were fair game.

But by the time his creditors got around to seizing Fleming's assets, he had transferred 99 percent of his ownership in the Orpheum, plus 99 percent of his holdings (his 1 percent allows him to stay on as a managing partner) for properties on the 300 block of State Street and property he owned on North Livingston Street, to his girlfriend, Olesya Kuzmenko, for a grand total of $175,000, Fleming says. Make a mental note of that figure because it is a recurring theme in this tortuous saga.

According to Fleming, it was a fair price.

"She bought two assets that were underperforming, basically had no market value," he said. "They were worth less than their debt, and one property that had some value. So when you put that together, she actually overpaid for the properties."

To buy the properties from Fleming, Kuzmenko got a $175,000 loan from Tom Bergamini, a principal at the environmental firm SCS BT Squared and a prominent member of Downtown Madison Inc.

Bergamini says he's been friends with Fleming, Kuzmenko and Doane for some time. But his loan was strictly a business deal, no more.

"It was just a straight-up loan, a good rate of interest," he says. "I can't earn anything on the money market these days."

Bergamini submitted an affidavit in the Waukesha County case claiming that the loan was on the up-and-up, says Roger Sage, the assigned creditor's attorney, who was hired to track down Fleming's assets. The creditor is challenging another mortgage against the Orpheum, this one to the tune of $190,000, owned by JoAnn Fleming, Eric Fleming's mother.

The validity of the mortgages are important because, if they are not backed by real cash, whoever buys the properties will also have to pay for the mortgages, plus interest.

One might see Fleming's sale of the properties to Kuzmenko as a bald attempt to shelter his assets. Fleming says he made the sale as a way to raise money to pay off some of his debt.

But then the story takes yet another bizarre twist.

At some point, Fleming claims, he withdrew $175,000 he got from Kuzmenko in $100 bills from his bank account, put the cash in a plastic bag and handed it over to a guy identified in court records as Marcus DaMarko, and never saw it again.

"I loaned somebody money," says Fleming. "I loaned him money to invest in something. I haven't talked to him since so I don't have the money currently."

So, a reporter asks, you were taken?

"Essentially."

•    •    •    •

So why, one might ask, would Kuzmenko, who paid $175,000 for her share of all three properties, bid millions for them when they went up for sale in a court-ordered auction?

On April 16, the Waukesha County court auctioned off the Orpheum and the 300 State Street property — a mix of commercial storefronts and residential units Fleming won through arbitration after relations with a couple of business partners went sour.

Enter Gus Paras, Fleming's former best friend, now his sworn enemy.

Paras, a longtime restaurateur and downtown businessman with a thick Greek accent, came to the April 16 auction in Waukesha County court with the intention to buy the Orpheum, which he did for $2.25 million after Kuzmenko, through her lawyers and with Fleming present, pushed up the bidding from $1.9 million.

Paras stayed for the auction of the properties on the 300 block of State Street, which Kuzmenko again bid up from $1.9 million, going head-to-head with Paras until Kuzmenko bid $2.25 million.

That's when Paras folded and left Kuzmenko holding the bag.

When Kuzmenko was unable to come up with a down payment to secure the sale, the judge ordered the sale of both properties to Paras for $1.9 million apiece — the amount of the bids before Kuzmenko started driving up the price.

"I keep going and they expect me to go higher, and I say, 'It's yours now,'" Paras says. "She never thought I'm going to do that. I called the bluff, and I'm proud."

The court record would seem to support Paras' assertion that Kuzmenko and Fleming were pushing up the bidding to get the best price.

"I'm trying to understand why you wouldn't use the bid that Mr. Paras put in, versus going back" to $1.9 million, Fleming said in court after the bidding, according to transcripts of the proceeding.

Robert Steuer, the attorney playing the role of auctioneer, explained: "The reason for that is that he was induced to raise his bid by the competitive bidding by Ms. Kuzmenko. And if she doesn't show that she was able to make those bids in good faith, then it would be unfair to him to allow them to raise his bidding. So, we would have to go back."

•    •    •    •

The properties aren't all that Fleming sold to his girlfriend. He also sold her his firm Rainmaker Development LLC, a company he formerly owned and which did some restoration work at the Orpheum, under the direction of Fleming, who paid himself a commission. Fleming says that last summer, the Orpheum spent about $350,000 on renovations.

A good portion of that money came from an escrow account, set up at Monona State Bank for repairs needed after an arson fire in 2004 — the third, and most serious, fire at the Orpheum in the span of a year. Two of those fires were ruled to be arson; no cause was ever determined for the other one.

It's not the first time Fleming had set up a business, sold it to a girlfriend, and subsequently been accused of fraudulent business practices.

Local foodies might remember Crave Restaurant and Lounge, which Fleming opened in 2003 and closed in 2009. The restaurant gained notoriety after a November 2008 incident in which an employee and two patrons chased another patron, Eduardo Cademartori, into the street. One of the other patrons struck Cademartori, killing him with one blow.

Weeks before that, Fleming was charged with disorderly conduct for being intoxicated, grabbing a patron and pouring a drink on his head.

Both incidents got Fleming in hot water with the Alcohol License Review Committee.

But Verveer, a long-time ALRC member, says debt threatened to get Fleming into more trouble. By state law a municipality cannot renew liquor licenses of those who are in debt to liquor distributors, Verveer says, and Fleming was in debt.

In 2007 Fleming sold Crave to another company, Evarc (Crave spelled backward) under the control of his former girlfriend, Christina Bishop, then convinced the ALRC to issue a liquor license to the new company.

Verveer says he was subsequently contacted by a liquor distributor who told him that Fleming hoodwinked the city.

"He said, 'Why did you let him do that? He owes us money,'" Verveer recalls.

In late 2008, at least one vendor, Neesvigs Inc. of Windsor, sued to get its bills paid, alleging fraudulent transfer and conspiracy. The parties eventually came to a settlement.

Fleming, who maintains that Crave was profitable and always paid its bills, says there's nothing suspicious about selling off businesses.

"This is what I do for a living," he says. "I create things and I sell them. That's what I've been doing for 20 years."

And in that time Fleming has amassed a considerable record of litigation, a review of court records shows. He has sued Paras twice, once because he claimed Paras breached an agreement by not fronting Fleming money to buy The Pub, a downtown bar, which Paras eventually bought. That case is unresolved. Then he sued Paras, who was storing Fleming's inventory from Crave, for auctioning off the items. The court sided with Paras on that one.

Fleming's two former partners, who with Fleming co-owned property on the 300 block of State Street and the building that formerly housed Crave, went through a protracted court battle that ended in arbitration, which resulted in Fleming being awarded the State Street property that was up for sale at the court-ordered auction.

In other pending cases, Doane is suing Fleming to protect his investment in the Orpheum, and the restoration company that did repairs at the Orpheum after the 2004 fire is suing Fleming, claiming that Fleming, who controlled the Orpheum operations at the time, stiffed it for $52,000.

There's more, but you get the idea.

But Fleming doesn't see himself as a litigious person. When asked why he so often ends up in court, he says: "I guess that's because of the other people. It's not because of me. But you can guess who's won most of those. It's me. They're usually settled in my favor."

•    •    •    •

Several of Fleming's business partners and associates didn't return messages seeking comment. Those who did, aside from Paras and Doane, wouldn't talk on the record. Those who spoke off the record didn't have nice things to say.

"I've never done anything to deserve the negative treatment that I've been getting," Fleming says. "I'm very compromising. I'm willing to do whatever it takes to make things work — as long as it's profitable."

Fleming is at a loss to explain why his business dealings so often end in bad blood.

"I ask myself that question all the time," he says. "And I honestly don't have the answer other than, you can see with Henry and Gus, they're very jealous of my success."

Paras, whose own business success seems to have blessed him with plenty of money with which to buy things, doesn't deny that there's something personal going on. To show Fleming who's in the driver's seat, he bought part of Fleming's debt, just when, according to Fleming, he was negotiating to pay it off.

Now, whatever assets of Fleming's turn up, Paras gets a cut. Roger Sage, the guy who's tracking down Fleming's assets, he works for Paras.

"I raised $175,000 to pay (the debt) as part of the agreement we were working on," says Fleming. "And again, ex-friend of mine Gus Paras came into the picture and started screwing around with this."

Paras explains why he took that step: "One of the things is he sued me and cost me a lot of money. The other thing is I watched people he screwed so bad he put them on their knees ... That's why I went out of my way to do it. Someone has to stand up to the guy."

For both Fleming and Paras, the mutual animosity was an abrupt change of heart. They were friends until about a year and a half ago.

"I used to work with him believing someday he'll change," says Paras. "But you know what? Instead he turns on me."

When Fleming first tried to get a liquor license for his company, Orpheum of Madison, to squeeze Doane out of the picture, Paras showed up at the ALRC meeting to urge committee members to renew the license for the operating company Doane owns with Fleming.

"We're looking at one guy here who's a bully," he said of Fleming. "He's pushing his way around. Let him bring his financial statement and see if he has the money to take over the Orpheum. The only thing he's doing right now is moving money from one account to another as far as I know."

While addressing the committee, Paras revealed that he has made five offers for the Orpheum in the past, all of them rejected.

Now, if the courts invalidate Fleming's transfer of his assets to Kuzmenko, the Orpheum is Paras' — if he still wants it. While technically Paras would own the whole enchilada, he says the most likely scenario would be a partnership with Doane.

But Paras says the building needs a huge infusion of cash to make it the premier entertainment venue it should be, probably between $750,000 and $1 million.

"That's if you do the work yourself," he says. "You hire a contractor to do it and it will be more than that."

If he goes ahead with the purchase, he says, "I will never make money."

But still he's leaving the door open.

"I like the property," he says. "I'd like to save the Orpheum because it's the Orpheum. I care about this town."

Copyright 2015 madison.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(12) Comments

  1. barefoot
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    barefoot - June 28, 2012 1:29 pm
    Gus Paras has been a solid downtown businessman for 40 years. Henry Doane has a ~20 year track record with places like Tornado Club, Blue Marlin and Orpheum.

    Eric Fleming, on the other hand, is an slimy, insincere weasel. "Shenanigans" sums up this whole mess indeed, and it's clearly his doing. I hope this article is ends up #1 on a google search for "eric fleming madison".

    The Orpheum of the early 2000's had some issues, but it was a really fun place for dinner, Sunday brunches, and the occasional concert. The sooner it can get back to business, the better. Preservation-wise, it's an awkward space. Maybe there should be an architect's competition to come up with ideas on how to make the space more viable while retaining the entry foyer and the stage.
  2. rms
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    rms - June 27, 2012 9:29 pm
    What a shame. Look at what they did to the Paramount and Fox Theaters in Oakland, California. Where is the Civic Pride?
  3. WI_Expat
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    WI_Expat - June 27, 2012 8:56 pm
    Tidbit of historical trivia on Orpheum...when the stage section of the theater was converted to a second screen in the sixties, the entry was the old stage door, hence the name of the second screen. But the box office was the old holding room for animals used in vaudeville acts when the theater first opened.

    In the 30's during a heat wave, the Orpheum ran shows 24 hrs a day to allow Madisonians to come into one of the few air conditioned (Whittenmeier water washed air to be precise) places in Wisconsin at the time.
  4. lloll
    Report Abuse
    lloll - June 27, 2012 2:29 pm
    If the WSJ is around in 100 years and people still read the news in some similar format, there's an "Odd Wisconsin" article to be written about the Orpheum and Fleming.
  5. laurac
    Report Abuse
    laurac - June 27, 2012 2:02 pm
    nordstroms? thats your answer? lets definitely tear down buildings that have formed this city into what it is and lets definitely put in a department store.

    you can move if thats what you value. i hear the chicago suburbs have nordstroms.
  6. WI_Expat
    Report Abuse
    WI_Expat - June 27, 2012 12:58 pm
    The 60's was when the Orpheum unfortunately when they gutted to stage for a second screen and attempted to "modernize" the look. This was the same time the original air conditioning actually was put out of service.

    I worked at the theater in the 70's. Still have the functional blueprint and startup instructions for the original air conditioner that were rescued from a pile of trash being shoveled out at the time.

  7. ken E P
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    ken E P - June 27, 2012 11:38 am
    I know, Gus loves Madison.
  8. midwestguy
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    midwestguy - June 27, 2012 11:04 am
    Snooty Elites-

    We GET that you hate historic preservation, and the city of Madison is thankful that your brand of preservation does not reduce it's identity to a giant strip mall.
  9. snootyelites
    Report Abuse
    snootyelites - June 27, 2012 10:47 am
    Orpheum exceeded it's design life long time ago. At one time a bank may have looked at it as an asset - now its a money pit. The taxpayers will probably have to bailout Orphuem, if the preservationists have their way. Mike Verveer is still the problem - he is too connected with all these bad actors at the hip and then there is alcohol. Downtown needs new leadership.

    Turning this building and the adjacent buildings into a large mall with a cozy entrance on state street is more appropriate. May be Nordstroms can anchor it. You can always keep a movie theater with decorations galore.

    Between nostalgia and fiscal sanity the latter always prevails, unless you are deluding yourself! That's when leadership matters.
  10. YankeeBubba
    Report Abuse
    YankeeBubba - June 27, 2012 10:37 am
    I know Gus from the old 'Athens' days and he's not someone you'd want to cross!
  11. midwestguy
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    midwestguy - June 27, 2012 10:24 am
    The Orpheum deserves better than being held hostage by Fleming, who sounds like one of those pathological business types that shows like "Dateline" like to profile. The court will hopefully rule against his lack of accountability by allowing Paras to purchase the debt on the theater at a fraction of the current value.
  12. number6
    Report Abuse
    number6 - June 27, 2012 7:08 am
    175,000 in 100s? Right.
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