Artistic Stitch Hustles Marcus LemonisMay 23, 2015 | By: Sean Murray
Another New York business has stabbed The Profit TV star Marcus Lemonis in the back. The first was Brooklyn-based Stein Meats.
In Season 2, Lemonis transformed Queens-based Artistic Stitch into Queens Vibe. Owners Sal and Nic were questionable characters at best. There was a mountain of debt, the landlord hadn’t been paid in years, and the business itself was in the red.
Lemonis offered $660,000 in return for 50% equity and 100% financial control of the business. He immediately wrote checks for $300,000 to transform the location and make the landlord whole. With the operational issues fixed and the look reinvented, Lemonis departed and promised to check in later.
In Season 3, viewers saw what happened next. Sal and Nic drained the company’s cash to pay themselves, undid the store’s entire transformation, kept the money that was supposed to go to the landlord, and liquidated a $27,000 printer Lemonis purchased and apparently stole the proceeds.
— Marcus Lemonis (@marcuslemonis) May 20, 2015
There has been no mention of a lawsuit, in part perhaps because Lemonis lost his recent lawsuit against Stein Meats.
Lemonis has previously claimed the handshake deals made on the show are the actual agreements. There might be a written agreement put together later on, but the deals negotiated verbally are enough to get him to write checks for hundreds of thousands of dollars.
“I’m a big believer that a person’s word and handshake are the best signature you can have,” he told USA Today.
Except in the State of New York, he’s made a horrible mistake.
Judge Dora L. Irizarry dismissed all of Lemonis’ claims against Stein Meats and explained that his oral agreements did not meet the requirements under the law to have a valid contract and he therefore could not claim a breach.
Lemonis’s contract claim is unenforceable under New York law. Under New York’s Statute of Frauds, codified in New York’s Uniform Commercial Code (“U.C.C.”), “a contract for the sale of personal property is not enforceable by way of action or defense beyond five thousand dollars in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.”
Of particular interest to the alternative business financing industry might be the dismissal of the tortious interference claim.
Under New York law, a tortious interference of contract claim must allege “(a) that a valid contract exists; (b) that a ‘third party’ had knowledge of the contract; (c) that the third party intentionally and improperly procured the breach of the contract; and (d) that the breach resulted in damage to the plaintiff.”
Lemonis failed on the first count as his oral agreement was not accepted by the court to be a valid contract, but the burden of proof required for tortious interference would’ve been pretty tough regardless.
With Artistic Stitch, Lemonis says on the show that he was hustled and he proceeds to confront Sal about the wrongdoing and theft. Sal apologizes for taking all the money, but nothing is offered to make amends. Lemonis seems to be content just cutting his losses and walking away.
But what’s worse is that the landlord makes an appearance on the show and claims he has not been paid rent in 3 years. The money he was supposed to get paid was hijacked by the business owners.
I find it extraordinary that the Artistic Stitch landlord let those people get away with not paying rent for 3 years #TheProfit
— KELLIE ANDREWS (@kvandrews22) May 20, 2015
— Russ burry (@aplusruss) May 20, 2015
— Mike G (@mpg611) May 20, 2015
The landlord was furious. The confrontation almost ended in a physical fight between the store’s employees and the landlord. Through it all, Sal the owner didn’t seem to care.
Marcus Lemonis spent a month at Artistic Stitch. He got to know the owners and employees on a personal level. They screwed him the second he turned his back.
It turns out that behind every small business, are people, and not all of them are good.Last modified: January 29, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.