Good-faith investments in bad-faith businesses

1 year ago

I recognize a pattern in Presque Isle; tell me if this sounds familiar: A business person makes an investment in a distressed asset; our community rallies in cautious support; predictable obstacles emerge; the investor vanishes; citizens are left holding the bag. Fingers are pointed, but as time passes, we forget. Or worse, we grow cynical. 

We shouldn’t await the next nail-biter business venture to address our mistakes. These incidents offer lessons regarding how we can navigate future business investments while protecting community members from inevitable misfortune.

Three examples come to mind, with the Aroostook Centre Mall being the most recent. Let’s not forget the disastrous collapse of the late Presque Isle Inn & Convention Center. The third example, and my personal favorite, is the ambitious Mexican food franchise whose expansive corpus still haunts several storefronts at the mall, Pronto Burrito. 

After researching the investment company that purchased the mall in 2019, Kohan Retail Investment Group, I realized that there was never a plan to resuscitate the floundering business. Alternatively, according to an article from The Real Deal about their other investment properties, not paying taxes or utilities while collecting revenues may have been the point. 

The outstanding tax bill is the rub. The children potentially left without childcare or a gymnastics studio — that’s the rub. The last-minute high-pressure fire sale? El rubbo-mundo. If no promises are made, no promises are broken.

After 30 years of population decline and the resulting economic challenges, Aroostook County is vulnerable to predatory businesses and snake-oil salesmen. The founder of Pronto Burrito, Jasper Ieronimo, aspired to launch 10 locations in three to five years. If that’s not ambitious enough, he simultaneously opened a Southern barbeque, a sticky bun shop, a pizzeria, and a bargain clothing store. If this causes a raised eyebrow, trust your instincts.

On Dec. 1, 2021, according to state records, The Maine Department of Labor pursued penalties from Ieronimo, demanding three different workers be paid. In April 2022, the agency further penalized Ieronimo for not keeping appropriate labor records, and for failing to pay an employee for 133 hours of work over three weeks. In this letter, the agency cited 23 violations and penalties. 

Call it what you want — a scam, a scheme, or bad business — in the end, he left a trail of unpaid contractors, shuttered storefronts and empty promises.

When the PI Inn closed, local news reported that the owner, Cang Quach, had negotiated housing into many of his employees’ contracts. Providing some housing at a hotel could make sense, but housing an entire staff at a dilapidated hotel? That decision exposed his employees to inevitable harm. It wasn’t just bad business, it was negligent.

Our community’s response to these failures could be to grow more skeptical of outside investors, but I don’t think that’s the right response. Outside investors are critical to the future of any region; The County is no exception. However, our sometimes-desperate outlook should not blind us to warning signs. 

On March 9, the Central Aroostook Chamber of Commerce held its annual dinner in the Northern Maine Community College gymnasium. The evening’s speakers — Josh Tweedie, Michael Chasse, Matthew McHatten, Jamie Guerette and several more — highlighted the abundance of intelligent, community-minded leaders who call Aroostook home. 

The solution isn’t to cool toward investors or close our minds to creative solutions. The solution is to complete due diligence before exposing our community to risk. Support regulators, city officials, lenders, and local journalists working to ensure legitimacy and accountability. When possible, tap our local business community for insights. This region may be vulnerable, but we’re not naive. 

Sometimes decisions are beyond the public’s control, but then there should be an honest disclosure before community members make good-faith investments in bad-faith enterprises.

Griffin Goins lives and works in Presque Isle.