Sunday, April 10, 2005

Spanky's spiral

Roanoke businessman Roland "Spanky" Macher discusses the troubles in his life, professionally and personally.

The Ticker business blog

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Roland "Spanky" Macher's past smolders at his feet - ruins of a restaurateur career spanning more than 30 years.

The professional life of this Roanoke businessman, a self-described rogue and "extreme character," has featured many fiery moments. And more than a few people have gotten burned along the way, including investors, former employees, lenders, tenants and, Macher insists, Spanky himself.

Macher dreamed once of an empire. He envisioned scores of restaurants bearing his distinctive stamp. He says he hoped to help steer the revitalization of Roanoke's Old Southwest neighborhood. He ran for city council.

Today, Macher is 52 years old, divorced and bankrupt. He says his mother, Shakie, supports him financially. His Spanky's restaurants, including the firstborn store in Harrisonburg, have closed. From 1992 until the closing in December of the last Spanky's, Macher operated, off and on, a total of 16 restaurants, including the ill-fated Star City Diner in downtown Roanoke.

Macher faces the prospect of federal criminal charges related to his alleged failure to pay about $277,700 of employees' withholding taxes, according to bankruptcy court filings. Neighborhood complaints about a controversial rental property he once owned on Mountain Avenue led last month to an indictment. A grand jury investigation of the property resulted in a misdemeanor charge of maintaining a public nuisance, which can carry a fine of up to $10,000.

Spanky Macher has become an object of enmity and scorn and a regular visitor of late to courtrooms. In Fredericksburg, he was convicted March 29 of three misdemeanor counts of failure to pay meals taxes of $6,633.75 for a Spanky's restaurant that once operated in the city. (That same day he paid the taxes owed.) During a recent hearing related to bankruptcy filings, Macher repeatedly cited Fifth Amendment protections against self-incrimination when questioned about withholding taxes allegedly owed to the federal government.

In papers filed March 28 in U.S. Bankruptcy Court in Roanoke by Macher and his attorney, Mark Black, Macher declared total assets of $396,169 and total liabilities of about $3.2 million. Creditors large and small include his mother, numerous banks, former tenants and many others. The Times World Corp., which publishes The Roanoke Times, has a claim of $1,268. Carilion Roanoke Memorial Hospital has a claim of $840.58. Court papers show Macher owes First Union/Wachovia $30,000 for a promissory note. Roanoke Restaurant Services has a claim of $159,654.

There are 16 pages listing creditors holding "unsecured nonpriority claims." An unsecured claim is a claim or debt for which a creditor holds no special assurance of payment, such as a mortgage or lien or other specific collateral. Carter "Chip" Magee, a Roanoke lawyer who specializes in bankruptcy law, said unsecured creditors generally receive little or nothing when assets are liquidated.

Initially, Macher filed in November 2000 for Chapter 11 bankruptcy protection, which allows debtors to keep their businesses while reorganizing. In September 2004, at Macher's request, the court converted the case to Chapter 7, which focuses on liquidating whatever assets remain.

During a March 24 creditors meeting, bankruptcy trustee Evelyn Krippendorf asked Macher why he had, while in bankruptcy, transferred ownership of three rental properties to his mother without court permission. He replied that there was a favorable interest rate for refinancing; he said the properties needed work; he said he could not get a related loan because of his financial problems but that Shakie Macher could. Krippendorf later said there could be repercussions for those ownership transfers if her investigation determines there was equity in the properties that should have gone to creditors.

After the hearing, Black said the goal of his client and Shakie Macher was to improve the rental properties, including the house at 518 Mountain Ave. Black added, "Spanky did not have a full understanding of the bankruptcy process. He did not realize there were certain procedures you need to go through."

His complaints

Macher recently agreed to discuss the downward spiral of his financial and personal circumstances. For about an hour, he described how he believes he has been misled, cheated or otherwise let down by professionals.

He complained about being pushed aside in business dealings by members of his family. He blamed health inspectors for shutting down his Star City Diner in 1999 and for alerting other health departments where he had restaurants about the diner's cockroach infestation. He blamed the exterminator for the roaches' tenacious tenancy.

Macher closed the diner that same year.

In short, he blamed his troubles on nearly everyone but himself. When asked about this finger-pointing, Macher turned pensive.

"When I closed the diner ... that was a very difficult thing," he said. "The harder I tried, my level of effectiveness wasn't as good as before. My right decisions ended up becoming wrong decisions and that's a very difficult thing to deal with."

He said he lost his ability to motivate employees and communicate his restaurant standards to them because of "just overwhelming problems that had developed," problems he said were professional and personal. The personal problems included the end of his marriage, he said.

"And somewhere along the line ... I would say I lost my cutting edge. I lost the ability to take what I believe in and tell you."

At least one former employee recalls the restaurateur's skill as a motivator and credits Macher with launching his career. John Chapman, 41, now executive chef for Lynnhaven Fish House Restaurant in Virginia Beach, said he worked for Macher more than 20 years ago at Fantastic Fenwick's restaurant and club in Virginia Beach.

"He basically took me aside and taught me the business from the ground up," Chapman said. "To this day, and always, I want to make that man proud because he gave me my first start."

Michael Milstead, 28, now manager of the famous Pump Room restaurant in Chicago, also started his career at a restaurant run by Macher - the Spanky's in Fredericksburg. "I learned a lot about the business in that restaurant," Milstead said.

But Chapman said he also learned what not to do by watching Macher at Fantastic Fenwick's. "He burned a lot of bridges here in Virginia Beach," Chapman said. He said he and Macher remain on good terms "because I never gave him an opportunity to take advantage of me."

What others say

Macher's critics in Roanoke contend he sometimes takes advantage of people down on their luck by housing them in one of his downscale apartments and promising the occasional odd job. Macher's detractors say some of these people quickly owe money to Macher for rent and become, in effect, his indentured servants, providing a ready supply of cheap labor.

Macher said he sometimes gets bitten when extending a helping hand. But he did not reject completely the indentured servant characterization.

"There's probably some truth to that," he said.

Spanky Macher has been long estranged from Richard Macher, 50, his brother and former business associate. In 1978, Richard and Spanky Macher, in partnership with their parents, opened the first Macado's restaurant in Roanoke.

In 1985, Spanky Macher returned to the family business as an employee. He helped manage and open new Macado's restaurants and also helped manage the Spanky's restaurants.

In 1992, Richard Macher split the two businesses and resigned as president of Spanky's, which Spanky Macher began to manage separately. Richard Macher remained as president of Macado's Inc. but Spanky Macher was no longer a Macado's employee. That, said Spanky, "was the beginning, the real beginning of the drama."

In retrospect, Spanky Macher said he wishes the Spanky's restaurant that began it all, opening in Harrisonburg in 1974, had not started as a family business.

"As we were building an empire, a financial empire ... we were destroying a family at the same time," he said.

Today, there are 13 Macado's restaurants and another planned for Marion. Recently, Richard Macher, president of Macado's Inc., reluctantly and carefully discussed the split in 1992 with his brother, whom he said can be an angry and vindictive man. He said the two have not spoken in years.

"We just had different viewpoints of where we wanted our lives to go and different personality traits," Richard Macher said, which led him to believe the businesses would benefit by being separated.

Richard Macher said his brother's career had "moments of genius." As an example, he cited Spanky's idea to install a '57 Chevy as part of the decor for the Blacksburg Macado's. Richard described Spanky as creative and contagiously enthusiastic, a person whose skills as a visionary have not always been accompanied by attention to detail. He said Spanky, like their educator sister Robin Albrecht, might have made a great teacher.

Spanky Macher had predicted Richard's explanation for their split would be something like, "Probably because he was afraid of where I am today. He was afraid of where I was going."

Is there a chance, because of federal tax problems, that Spanky Macher will be going to jail? He doesn't think so. Black, Macher's attorney, replied, "I have no way to comment on that."

Meanwhile, Macher, who said his mother has speculated he might have had an attention deficit disorder since childhood, has new projects in mind. They include a "SpankyVille" line of hand-painted children's furniture and a line of caskets for pets.

Spanky has three children. He said it pains him when his public problems and "speckled reputation" affect them, a situation he said is exacerbated by his voluble personality and related media attention.

But, he said, "I can't change the personality that I am."

The spiral

Sept. 12, 1974 - Roland "Spanky" Macher and family members open their first restaurant, Spanky's Delicatessen, in downtown Harrisonburg.

1976 - A second Spanky's restaurant opens in Lexington.

1978 - After a falling out with his father, Spanky Macher moves to Virginia Beach, where he opens his first Fantastic Fenwick's restaurant. (A few years later, Macher files for bankruptcy.)

- With Spanky Macher in Virginia Beach, Richard Macher and the brothers' parents open in downtown Roanoke the first Macado's restaurant.

1984/1985 - Spanky Macher returns to Roanoke and becomes an employee of Macado's Inc. He helps manage restaurants in the Spanky's and Macado's chains.

January 1989 - Spanky and Richard Macher announce plans to open an antiques mall in a former A&P grocery store building downtown. The store is later razed for construction of what is now the Wachovia Tower.

1990 - Spanky Macher runs unsuccessfully as a Republican for Roanoke City Council. A news article about his candidacy reports that Macher "did not obtain building, electrical and plumbing permits for repairs and renovation work last year on nearly a dozen buildings he owns, mostly rental property in Old Southwest." He says his contractors failed to acquire the permits.

1992 - Richard Macher splits the two restaurant chains, Spanky's Inc. and Macado's Inc., into separate businesses. Spanky Macher manages the Spanky's chain.

February 1995 - Spanky Macher opens Star City Diner at the corner of Jefferson Street and Campbell Avenue.

March 1999 - Spanky closes Star City Diner after the city health department revokes the restaurant's food permit because of problems with roaches and related concerns. The site is now a parking lot.

November 2000 - Spanky Macher files a petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Virginia.

March 2004 - A letter from the office of the U.S. Attorney for the Western District informs Spanky Macher he is the target of a federal grand jury investigation. The investigation is said to focus on Spanky Macher's alleged failure to pay employees' withholding taxes. (Recently, Assistant U.S. Attorney Pat Hogeboom, who signed the letter, refused to confirm or deny that an investigation is under way.)

September - Bankruptcy court Judge William Stone grants Spanky Macher's motion to convert his bankruptcy from Chapter 11 to Chapter 7.

October - A special grand jury convenes to investigate whether alleged drug dealing, prostitution, loud music, trash and other social ills emanating from one of Spanky Macher's rental properties in Old Southwest, at 518 Mountain Ave., amount to a public nuisance. That same month, Spanky Macher and Macher Properties convey the property to his mother, Shakie. He had earlier conveyed 518 Mountain Ave. to Macher Properties in 2002, without permission from the bankruptcy court.

December - The last Spanky's restaurants, in Fredericksburg and Harrisonburg, close.

March 2005 - Roanoke Circuit Court Judge Jonathan Apgar orders Spanky Macher to pay court costs and $500 in compensatory damages to former Harrison Avenue tenants Roland and Joanna Hunter, who told the court Macher had briefly turned off their water and later their electricity even though their lease specified utilities were included.

- Roanoke prosecutors announce that a grand jury investigation of the rental property at 518 Mountain Ave. has resulted in a charge of maintaining a public nuisance, a misdemeanor that can carry a fine of up to $10,000.

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