By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A group of Bahamian entrepreneurs from “underprivileged” backgrounds lost their “credibility” when the collapse of Jamie Dingman’s Nassau restaurant empire undermined a key promotional event.

Young Digerati Group (YNG), one of the plaintiffs in a lawsuit seeking a combined $1.13 million in damages from Mr Dingman, is alleging that he never informed them all his hospitality ventures had closed two months prior to their promotion.

YNG is claiming that it paid a $500 deposit to Mr Dingman, son of world-renowned entrepreneur, Michael, in July 2014 for use of the Harbour Terrace - private space at his Island Smoke House Restaurant.

The Bahamian group, though, discovered just days before their event that the Harbour Terrace “was filthy” because it had not been cleaned, and that all utilities to the property had been cut off.

Despite Mr Dingman promising them that all necessary payments had been made one day before their promotion, YNG is alleging it had to pay a further $3,000 itself to reconnect all utilities and obtain permission to use the space from the landlord.

“Although all of the Out West Hospitality properties had been closed in August, Dingman withheld this information from plaintiff YNG Group, a small local business that had contracted with Dingman in or about July 2014 to host a promotional event on October 31, 2014 at the Harbour Terrace, a private event space Dingman planned to operate on the second floor of the Island Smoke House,” the lawsuit alleged.

“YNG Group is operated by a group of young men from underprivileged and mostly single-parent households in the Bahamas. Having little in the way of personal funds to support their small business, the members of YNG Group have sought to raise capital and build their business by expanding their network in the Bahamas. The promotional event YNG Group planned to host at the Harbour Terrace was intended to support these entrepreneurial efforts.

YNG Group is alleging that Mr Dingman’s Out West Hospitality, the holding company for his Nassau ventures, agreed to rent the Harbour Terrace to it for $1,500.

The $500 deposit was paid, and YNG Group said it advertised the promotion “widely”.

“Just days before the event was to be held, the space remained uninhabitable,” the lawsuit, obtained by Tribune Business, alleges.

“The power and water had been shut down for lack of payment and, without access to power and water, the venue was filthy and in need of a deep cleaning to prepare the space for the crowds that were expected for YNG Group’s event.

“Two days before the scheduled fundraiser event, a representative of YNG Group e-mailed Dingman, pleading for him to restore the power and water and have the space opened the following morning, so that YNG could set up and prepare for the event.

“Dingman replied simply: ‘Bill was paid today, thanks for e-mail’. But the following day, October 30, 2014, just one day before YNG Group was to hold their promotion – neither the water nor the power had been restored. Dingman then evaded YNG Group’s phone calls and failed to respond to their pleas.”

YNG Group alleged that it was forced to work with the landlord to ready the Harbour Terrace, while also paying the outstanding light and water bills.

“Despite incurring these additional expenses, YNG Group was not able to make the event successful,” the Bahamian entrepreneurial group claimed.

“Because Dingman left the property in such an uninhabitable state, YNG Group lost not only its deposit with Dingman, the additional amounts it had to spend to rebook the space directly with the landlord, and the out-of-pocket costs that it incurred to make the space useable, but also its credibility and the expected promotional benefits that would have come to the company from the execution of a successful event.”

Tribune Business exclusively revealed on Christmas Eve how some of Mr Dingman’s Bahamian creditors and former employees have joined forces with US investors and executives to demand compensation over his failed Nassau ventures.

They are alleging that Mr Dingman “defrauded” them and “stole money and services” in his bid to develop a local hospitality business, and that he has now effectively abandoned them and “fled the Bahamas altogether”.

Among the Bahamian plaintiffs are Wulff Road-based businesses, Tile King and FYP (For Your Place); People First ( Bahamas), the employment agency; YNG Digerati; Mr Dingman’s former general manager, Jason Rolle; and Tyrone Adderley, a contractor.

Mr Dingman’s efforts to build a Nassau-based restaurant and hospitality business included taking over the iconic Traveller’s Restaurant in western New Providence via a lease arrangement.

That venture failed and the property shut again, until members of the Bain family, its owners, re-opened it again this summer.

He also leased two units in the Klonaris brothers’ Elizabeth on Bay plaza on Bay Street for two other restaurant formats, both of which have also closed.

Tribune Business also previously revealed how Mr Dingman leased the Beach Club Cafe from Sandyport’s developers, viewing this as his “signature property”. The venture never opened, and the lease was pulled.

The lawsuit, filed in the southern New York federal courts on December 21, also discloses how one US citizen allegedly invested $343,000 with Mr Dingman’s failed ventures in the forlorn belief it would lead to Bahamian permanent residency.

Erik Gordon was allegedly induced to invest after receiving a presentation “purporting” to come from the Shipston Group, the international private equity firm founded and headed by Mr Dingman’s father, Michael.

There is no evidence to connect the Shipston Group or Michael Dingman to his son’s Nassau restaurant businesses, but the lawsuit implies that Jamie Dingman was trading on his father’s name and businesses.

Mr Gordon alleged that he was introduced to Mr Dingman in late 2011 by a mutual friend, Ryan Giunta, who is another plaintiff in the lawsuit.

Mr Gordon claimed he visited Mr Dingman in the Bahamas in April 2013, where he was shown Traveller’s Restaurant and introduced to the latter’s plans.

Mr Dingman then approached Mr Gordon about investing in Out West Hospitality, the holding company for the various Nassau restaurants, in return for an equity stake.

Mr Gordon alleged the Traveller’s Restaurant presentation, purporting to come from the Shipston Group, was sent to him in November 2013.

Mr Dingman allegedly owned 4,999 of Traveller’s Restaurant’s 5,000 ordinary shares, with the remaining share held in trust by Chris Wells, a Graham, Thompson & Co attorney.

“On November 6, 2013, Dingman told Gordon that he viewed the Traveller’s ‘as a stepping stone for more exciting things that lie ahead’, noting: ‘We are up to eight restaurants and bars, with the super majority having all the proper documentation and permitting locked up, and most being open by the end of this month’,” the lawsuit alleged.

“In addition to telling Gordon that his investments in the Traveller’s would earn him equity shares in Out West Hospitality, Dingman also represented that, upon completion of his planned investment schedule, Gordon and Dingman would each be 50 per cent equity owners in Out West Hospitality.”

The lawsuit claims the 50/50 pledge was false, as Mr Dingman had already promised equity stakes to Atlantis PR chief, Ed Fields, and Bahamas resident, Lenjohn van der Wal, for investing $25,000 and $50,000 into his venture respectively.

However, Mr Gordon allegedly wired $100,000 to Traveller’s Restaurant’s bank account in the Bahamas. Mr Dingman acknowledged receipt, saying he would receive a 10 per cent equity stake in Out West Hospitality in return.

Mr Gordon then increased his investment to $250,000 via another $150,000 wire transfer in December 2013, for which he was promised a further 10 per cent of Out West Hospitality’s equity - taking his total holding to 20 per cent.

“Dingman further assured Gordon that Gordon’s shares would be properly registered with the appropriate Bahamian authorities by the beginning of 2014,” the lawsuit alleged.

“This was material to Gordon’s investment decision because he was interested in building investments in Bahamian enterprises sufficient to meet the minimum threshold for obtaining permanent residency in the Bahamas.

“Dingman was well aware that Gordon’s decision to invest with him was motivated in part by a desire to obtain permanent residency in the Bahamas,” the action further claimed.

“Dingman never registered Gordon’s Out West Hospitality investment with the Bahamian authorities as promised, thwarting Gordon’s efforts to build Bahamian investments sufficient to put him on a path towards permanent residency.”

Mr Dingman allegedly repeatedly told Mr Gordon he had injected up to $1.3 million of his own money into building the Nassau businesses, a claim that the lawsuit dismissively rejects.

“After Dingman’s failure to disclose to Gordon any of the company’s financial records despite Gordon’s repeated requests, Gordon eventually turned to Out West Hospitality’s attorney, Chris Wells of Graham Thompson, seeking capital tables, profit and loss records, and cash flow statements,” the lawsuit claims.

“Gordon’s requests went unanswered, notwithstanding the fact that he was purportedly a 50 per cent partner in the company whose financials he sought to review.”

Mr Dingman then allegedly asked Mr Gordon to transfer $18,000 to People First, the Bahamian employment agency, on March 7, 2014, to ensure Out West Hospitality’s payroll was covered.

With Mr Dingman blaming a “busy travel schedule” for his inability to make the payment, Mr Gordon said he made the $18,000 transfer five days later to ensure the Bahamian staff were paid.

After making a further $75,000 investment in Out West Hospitality, Mr Gordon said Mr Dingman asked him on March 27, 2014, to finance $32,000 of the past due payments that he owed to Mr Giunta.

Mr Giunta declined Mr Gordon’s offer, arguing that he should not assume responsibility for Out West Hospitality’s debts when he was owed more than $100,000.

When asked about the state of Out West Hospitality’s finances, Mr Dingman alleged replied on April 22, 2014, that he was in ‘a Peter paying Paul situation’ - implying that funds were being transferred from one restaurant format to the next to pay the bills.

This appears to have prompted the plaintiffs to demand that the US court ‘pierce the corporate veil’, on the grounds that Mr Dingman used the restaurant companies “to evade and conceal personal liabilities” by transferring assets and debts between them.

“Upon information and belief, Dingman also disregarded the corporate form by utilising employees of one company in service of his other companies,” the lawsuit alleged, “failing to engage in corporate formalities such as election of directors and maintenance of corporate records; inadequately capitalising his companies; and failing to ensure that his companies had sufficient income and/or assets to meet their liabilities........

“Piercing the corporate veil is necessary to prevent Dingman from avoiding liability and evading creditors through his abuse of the corporate forms of Out West Hospitality, the Traveller’s, and the Island Smoke House.”

“Despite Dingman’s assurances that Out West Hospitality and the company’s purported subsidiaries were operating profitably on a combined basis, by August of 2014, all of the businesses had closed their doors with no indication of when they might re-open,” the lawsuit alleged.

“On September 9, 2014, Dingman wrote a joint letter to all Out West Hospitality investors finally acknowledging that all of the businesses had been closed. Dingman continued, however, to misrepresent the financial condition of Out West Hospitality.

“’Dear Investors,” he wrote. “In August we decided to shut down due to reorganisation, bad weather, the ‘off’ season and to give time for the new team to reboot.

‘I am proud and pleased to announce that we have closed a partnership with a third-party managing partner, who has immense experience in the restaurant, hotel and leisure business’.”

None of Mr Dingman’s ventures has, however, re-opened.