Feb. 4, 2009 12:00

Downtown Babylon


Greed and iniquity in Greensboro's nightlife industry

The marquee above Rocco Scarfone’s N Club, the only electronic billboard on Elm Street, displays a visual sequence showing sharks nosing around the depths of the sea, then an infantry line of orange taxis in an urban scene that evokes New York City’s 8th Avenue, before announcing, “Welcome to Greensboro’s Times Square.”

When Joey Medaloni owned the building and the business, which houses both the N Club and the Red Room, the aforementioned venue was advertised as “often imitated, never duplicated,” while the latter entity was tagged “the Studio 54 of Greensboro,” alluding to the New York City nightclub infamous for a celebrity clientele, heavily sexualized atmosphere and rampant drug use. A former stripper from Reidsville who used charm, business savvy and hard work to transform himself from an entertainer to a nightlife impresario and business owner, Medaloni is widely credited with making downtown Greensboro a regional entertainment destination.

He opened the N Club in 1998, and Much and Heaven later. By 2006, he owned both buildings. He also acquired Babylon, a pioneering nightclub also on South Elm Street, and turned it into the Sky Bar. “From 2000 to 2003, the N Club was the place to be,” said one bartender who requested anonymity to avoid offending the once and perhaps future prince of downtown nightlife.

“Everybody wanted to work there.” To this day, many of Medaloni’s former employees remain loyal to the man, citing his doting attention to staff and scrupulous management of crowds at his businesses.

“Joey caught a lot of flak with people on Elm Street calling him racist, biased and unfair,” said Michael Umphenour, a former employee. “He had strict guidelines for making sure it was a safe environment. He enforced a dress code. He kept traffic controlled. Joey controlled Elm Street. If city planning or the police department had a gripe about too many cars being in the street in front of his clubs, Joey would do his best to make sure it was addressed.”

And though he sold the last of his two downtown properties almost two years ago, Medaloni established a formula in the downtown nightlife industry that has been altered little since his departure: personal mystique and an escapist image evoking an urban sophistication out of proportion to the city’s provincialism and modest size — ultimately a faade concealing hard-nosed business acumen, raw competition and sometimes caddish personal behavior.

“The downtown bar district has and remains fiercely competitive, as it draws its customer base from only a limited pool of customers,” contended two nightclub investors from Charlotte and Raleigh in a civil lawsuit last year. Deron Justin Allen and Dorsey Milburn III had hoped to get in on the action when they bought the Sky Bar business from Medaloni. They leased the building at 221 S. Elm St. from Medaloni and hired him as a temporary consultant.

It didn’t end well for the two out-of-town prospectors: Medaloni’s four nightlife entities up the street — the N Club and the Red Room at 117 S. Elm St. and Much and Heaven at 113 S. Elm St. — flourished, but the Sky Bar would close within four years, amid a flurry of reports of drug use and violence.

Medaloni sued Allen Brown Investments, the company formed by the two investors, last year for unpaid rent and compensation for damages to the premises. Allen and Brown, in turn, argued that Medaloni had embarked on a deliberate campaign to destroy their business to benefit his own clubs and grab a larger share of the market. The three settled out of court last month. The property was later leased to a Mexican restaurant, which has since closed.

Medaloni, who is now 37, appeared to have accomplished his goal by 2006. Rumors abounded that he was contemplating a run for mayor. He sold the N Club for $1.8 million that summer to Rocco Scarfone, a Brooklynborn entrepreneur with experience in nightclubs, sports franchises and limousines.

Then, in early 2007, Medaloni sold Much and Heaven for $950,000 to a partnership that included Scarfone and two businessmen who are significantly less well known.

Scarfone, with a 25 percent stake in the property and business, was hired to run day-to-day operations. Dr. Lenin Peters, a High Point doctor originally from India who was said in 2005 to be worth $26 million, is another partner. A founding member of Thomasville-based Bank of North Carolina, Peters holds a seat on the bank’s board of directors. Among his fellow directors is Charles T. Hagan III, the husband of US Sen. Kay Hagan. Peters entered the partnership after separating from his wife. Peters declined to comment for this story.

The third partner is Greg Harrison, a Sedgefield resident with investments in the temporary staffing business. Scarfone succeeded Medaloni as the public face of downtown nightlife, but Medaloni’s departure from Greensboro would only add to his mystique. A website copyrighted 2007 describes Medaloni as a master captain who has traveled between the East Coast, the Bahamas and Mexico for the past 10 years. A lawsuit filed by Medaloni in December states that he is currently a resident of Miami Beach, Fla. and resides on a boat he owns that is primarily berthed in Miami Beach and the US Virgin Islands.

“At the time of the sale, I said, ‘I’m going to take some time off after ten years of working with no vacation,’” Medaloni said recently.

“I will return to Greensboro someday, and I don’t know which way the wind will blow, if I’ll get into politics or what.” The sale of the two businesses came with the stipulation that for five years Medaloni would not open a membership nightclub within 100 miles of the N Club, and that for 10 years he would not so much as publicize any bar, restaurant, nightclub or livemusic venue within 100 miles of Much and Heaven.

Interviews with two former Medaloni employees and court documents suggest that staff loyalties did not easily transfer to Scarfone once he assumed control of operations at the N Club and Much. Joey Medaloni’s younger brother, Matthew, has long performed as DJ Spinny at the N Club and Heaven but has evidently harbored ambitions to follow his brother into the management side of the business. Scarfone alleged in an affidavit that Joey approached him about joining him in a new venture at Childress Vineyards in Davidson County, but Scarfone rebuffed the overture. So when Matthew opened a new venue near Guilford College called the Mixx Martini Bar and Restaurant last October, it touched off acrimony and litigation.

“In businesses like Mixx and the Elm Street Entertainment Businesses, novelty and the existence or lack of existence of similar competitors means a lot,” Scarfone said in a Dec. 9 affidavit. “Moreover, to a great extent these businesses are subject to irreparable harm from new, similar venues, especially in a city the size of Greensboro. This is why the non-compete agreements refer, among other things to the ‘unique talents’ of Joey Medaloni.”

It might have seemed a personal slight to Scarfone that some of the former staff from Much were now working at the Mixx. “Many of the people employed or utilized by the Mixx are those previously employed or utilized by Much,” Scarfone said in the affidavit. “Indeed, the manager, greeter, valet, barback and bartender for the Mixx are all persons with long-term relationships with Joey, who also worked at Much.” Joey Medaloni’s lawyer, Kenneth Gumbiner, seemed to scoff at the argument in a riposte by formal letter: “I will repeat what I have already said: ‘Joey’s brother worked with Joey for over 10 years and knows the same people that Joey knows.’”

The tone of Scarfone’s affidavit comes across as belittling in its characterization of the younger Medaloni brother. “I have known Matthew Medaloni since 2006,” he says. “Prior to his involvement with the Mixx, Matthew had never operated a restaurant, bar or nightclub.

Matthew Medaloni used to clean the N Club and Heaven, and he worked as a DJ at the N Club and Heaven. He has never managed or owned an entity like the Mixx or any of the Elm Street Entertainment Businesses. I also know from having spoken with Matthew as recently as this summer that he does not have the financial capability to furnish even a small portion of the necessary capital to operate a restaurant, bar or nightclub, or to secure a loan for the same.” Scarfone reported that Much, Heaven and Carmine’s, the restaurant he operated at 113 S. Elm St., together lost $50,000 in business from mid-October through mid-December as a result of the Mixx’s opening, and that if Matthew Medaloni’s martini bar continued to operate, Much and Heaven might go out of business.

Joey Medaloni has steadfastly maintained that he has invested no money in the Mixx and has done nothing to promote or publicize the bar, notwithstanding a few visits to look the place over at his brother’s invitation.

Scarfone’s lawsuit against Medaloni for alleged violation of the non-compete agreements was returned in kind with a lawsuit alleging that Scarfone had defaulted on payments for the N Club and Much. Scarfone, in turn, denies the allegations brought by Medaloni.

Curiously, the outward squabbling between Scarfone and the Medaloni brothers masks the reality that financing for Much and the Mixx has come from the same person. Greg Harrison is a partner in the company that owns the property and businesses at 113 S. Elm St., and an investor in the Mixx. “I have been told that Mr. Harrison confirmed to you that he is the principal investor in the Mixx and that Joey Medaloni has nothing whatsoever to do with either the financing or ownership of the Mixx,” Gumbiner said in a letter to Amiel Rossabi, Scarfone’s lawyer. “I believe he also confirmed that Joey has not operated, promoted or publicized the Mixx because he is aware of his non-compete and has been careful to observe it.” Harrison’s primary business activity is not nightclubs.

He has been working in the temporary staffing industry since at least 1999. Harrison is tied to a staffing agency that is currently under suspicion of hiring undocumented immigrants and manufacturing fraudulent identification documents in Oregon.

In December 2006, The Business Journal reported that two of Harrison’s staffing agencies, US Staffing and US Labor, were acquired by StaffCo Management Group, which was re-branded as American Staffing Resources. Harrison confirmed to ***YES! Weekly*** that he served on the company’s board as a creditor after the acquisition.

In April 2007, Harrison formed Trinity Operations with Rocco Scarfone and Dr. Lenin Peters. In May, they bought Much and Heaven from Joey Medaloni. Whether coincidentally or not, the following month would prove to be eventful for American Staffing Resources.

On June 12, federal agents with Immigration and Customs Enforcement, or ICE, raided Fresh Del Monte Produce, a fruit and vegetable processing plant

in Portland Ore., and detained more than 160 illegal immigrants that were allegedly hired by American Staffing Resources. ICE also executed a search warrant at the Portland offices of the staffing company, where they seized employment applications and rosters, Social Security cards and computer drives that day, an agency spokeswoman said. Three people people identified by ICE as American Staffing Resources workers were indicted. Spokeswoman Lorie Dankers told YES! Weekly: “The investigation is not closed and is considered an ongoing investigation.”

ICE Special Agent Maximillian Trimm, the lead investigator in the case, said in an affidavit in 2007: “I have probable cause to believe that the businesses known as American Staffing Resources and Fresh Del Monte Produce are engaged in a continuing criminal conspiracy that includes the unlawful employment of illegal aliens and the manufacturing, delivering and possession of illegal identification documents.”

Harrison said that after the raid, American Staffing Resources’ lenders foreclosed on the company; he bought 60 percent of the assets; and a group of investors asked Harrison to run the new company, which is called Compensation Management, located at 307 S. Swing Road in Greensboro. Harrison said he is the chairman of the board.

Harrison said he was unaware of any ongoing criminal investigation of the staffing company. “From what I understand, they cooperated completely, and there were no issues with the company. There was a rogue employee that worked at the facility and created some documents.”

A former maintenance manager at Fresh Del Monte reportedly told Trimm that “when the hypothetical scenario of immigration agents showing up at FDMP to execute an immigration raid was posed, everyone agreed that American Staffing Resources would ‘take the hit’ due to the fact that they did the actual hiring, and that FDMP managers could just claim ignorance of their knowledge of the production workers’ illegal status.”

Federal investigators and prosecutors would conclude that up to 90 percent of the employees hired by American Staffing Resources to work at Fresh Del Monte were illegal aliens using stolen Social Security numbers.

Trimm’s affidavit states that a confidential informant wearing surveillance equipment paid a woman named Margarita Amezcua-Salvador at American Staffing Resources’ Portland office to obtain a fraudulent Social Security card for him so he could work in the plant. Court documents indicate that Amezcua did not speak English and ended her formal education after first grade.

The investigation found evidence that workers were paid $7 an hour — 80 cents below Oregon minimum wage. Workers, mainly women and mostly from Mexico and Guatemala — including a number of children — reportedly endured three inches of water on the production floor, and wore regular sneakers or shoes that were soaked with water even though the workers were supposed to have been provided with boots. The confidential informant told agents that he found electrical cords laying beneath standing water and dirty conditions in the bathroom and cafeteria.

A former maintenance manager said forklift operators were not properly trained and supervisors constantly berated workers with threats that they would be fired if they did not work hard enough.

Drug sales were reportedly rampant at the Fresh Del Monte. Jose de Jesus Zarazua-Lopez, a manager at the plant who was hired by American Staffing Resources, had been previously convicted of trafficking heroin, and another manager was said to have been actively selling drugs and laundering the proceeds through a store owned by his wife in Portland. One former employee said he observed drug transactions between employees and the taco truck servicing the parking lot during lunchtime.

Zarazua pleaded guilty last February to unlawfully residing in the United States after being convicted of an aggravated felony. He received a reduced sentence of 27 months in prison in exchange for providing “substantial assistance” to the government and agreeing to testify in any grand jury or trial, if called by the state. Allegations of criminal suspicion have also dogged Joey Medaloni, although no credible evidence has been brought forward.

In his Dec. 9, 2008 affidavit, Rocco Scarfone made an allegation about Medaloni that he might wish he could take back. Last summer, when Joey Medaloni approached him about letting Matthew join a new venture Scarfone was working on at Childress Vineyards, Scarfone said that Joey told him Joey’s name could not be on the project because he was under investigation by the IRS and the “US Attorney General’s Office,” but that he would provide “consulting services.” Scarfone said he declined the overture.

Scarfone declined to comment to YES! Weekly about the allegation. Joey Medaloni downplayed that and other allegations, writing in an e-mail on Sunday that “alleged and fact are a big difference; alleged normally ends up not correct or one sided.”

Local public affairs officers with the IRS and US Attorney’s office said their respective agencies are unable to confirm or deny any ongoing investigation as a matter of policy.

Known for his ability to charm civic leaders and his courteous treatment of his nightclub staff, Joey Medaloni could also demonstrate flashes of temper, according to court records. In 2006, he completed an anger management class to dispose of two separate assault charges from the previous year after he allegedly threw a glass of wine in Caroline Hart’s face in a domestic incident and allegedly bloodied Edward Taliaferra Parks’ nose. Medaloni acknowledged that he completed the anger management class, but said the charges were going to be dismissed anyway.

A legal entanglement with a Brazilian housecleaner and sometime model who claimed to be Medaloni’s lover similarly reveals the onetime nightlife businessman as someone with little tolerance for personal affront. Medaloni sued Priscilla de Miranda Sylva of Raleigh that year for causing him “embarrassment, distress and mental anguish” by recording a video of him at a Greensboro sushi restaurant and posting it to the social networking site MySpace under the heading “Joey Medaloni AKA Joey Angelo Cane AKA Cheater.”

In fact, the nightclub owner was originally named Joey Cain, but a former employee says that he legally adopted his stage name to avoid bringing shame to his family. In 1998, Joey’s younger brother followed suit by legally changing his name from Brian Matthew Cain to Matthew Angelo Cain. In her counterclaim, Sylva said she

conferred with Medaloni’s other girlfriend at the time, Lindsay Richardson, and the two women launched a plan to confront Medaloni. They recruited a bartender from Club Rumba named Michelle to film the confrontation at Sushi 101. Medaloni’s suit against Sylva also accused the woman of slandering him by telling an unidentified person that she saw Medaloni deliver a controlled substance to someone in a drug deal. Sylva denied making the statement.

Sylva tried to prove her relationship with Medaloni by seeking his confirmation of more than 50 text messages sent through April 2006. “Work like you don’t need the money and love like you’ve never been hurt,” read one from 5:14 a.m. on Jan. 22. “Give me just one chance. Do we have a date Thursday?” “We are at sea. Thinking of you and do we have a date for Thursday?” read another one from 3:18 a.m. the following day. And on April 8 at 12:12 p.m.: “Good morning, rock star.” Medaloni retaliated in his own interrogatories by requesting proof from Sylva that she held legal residency in the United States. Sylva objected to the question on relevancy ground, but responded that she held a 10-year visa. The lawsuit ultimately died in mediation, with Medaloni, Sylva and Richardson agreeing to bear their own legal costs.

The squabble between Joey Medaloni and Rocco Scarfone that erupted last fall resulted in a restructuring of the intertwined South Elm Street entertainment concerns.

In his own lawsuit, Medaloni claimed that Scarfone had defaulted on payments for the N Club and that Scarfone, Greg Harrison and Dr. Lenin Peters had defaulted on the note for Much. Scarfone denied falling behind on payments, but he resigned from running day-to-day operations at Much and Heaven.

Harrison said that Scarfone was replaced by Peters who, in turn, brought in publisher Diego Gomez and former Montego Bay nightclub operator Araya Wossen to manage Much and Heaven. Carmine’s, Scarfone’s restaurant in the Much building, was discontinued and replaced with a new eatery called Level 2. A week later, Scarfone opened Zen Sushi & Sake Bar across the street.

In return for Scarfone’s resignation at Much, Medaloni stated in a Dec. 19 pleading that the lawsuit against Harrison and Peters would be dismissed, but his claim against Scarfone would be maintained.

Medaloni and Scarfone settled out of court last month. Some of the terms are confidential, but Medaloni’s lawyer said recently that his client intends to abide by his non-compete agreements, and that he had not done anything to support the Mixx except to “wish his brother well.” “From my talks with Joey, he is very content in the Virgin Islands running a lucrative charter boat business,” Scarfone said. “Joey has nothing he wants to do downtown.”

Attention from the legal wrangling has put Medaloni in an awkward position. “My image means a lot,” he said. “I love Greensboro. One day I will return to Greensboro.”

Despite a visible decline in club patronage on South Elm Street and at venues across the city, Scarfone insisted that the recession has had little impact on his businesses.

“Our clubs are doing very well,” he said. “We just opened up Zen Sushi. There are two other locations that will be under construction soon. There’s a third one we’re negotiating. These are nightclubs and restaurants that will employ quite a few people. I care about downtown. I’m on the board of Downtown Greensboro Inc.” Scarfone has enjoyed the support of Keith Holliday, the former mayor and former banker who is a vocal downtown proponent.

Last October, Scarfone announced an alliance with the Carolina Theatre, where Holliday now works as president, to bring major music acts to the historic venue. The prog-rock band Yes played in December, and 1980s hard rock group Tesla is scheduled to play later this month.

“Here’s the beauty of Rocky and downtown is that [the nightclubs] bring people in from Thomasville and Kernersville, everywhere and all around,” Holliday said. “So these are kids who are discovering Much and N Club and Inferno for the first time. There’s a pipeline of kids who are coming to Greensboro for the first time, and that helps everybody.”

Reached on Jan. 27, the day after Joey Medaloni left Greensboro to return to the Virgin Islands, Rocco Scarfone insisted that all was well within the extended family that comprises the city’s nightlife industry.

In a pleading by Medaloni’s lawyer on Dec. 19, Medaloni and Scarfone were described as “extremely adverse parties.” Now the language of legal compromise holds that the dispute has been “amicably resolved.”

“Me and Joey are friends, like before,” Scarfone said. “Me and Matthew are friends, like before.”

Joey Medaloni concurred. “I am still friends with Rocco Scarfone,” he said. “Me and Greg are great friends, obviously. Matthew and Lenny are working together.”

At least publicly, all the players are on the same team. “Greensboro’s dark shadow is over,” Medaloni said. “The sun is shining again.

Everybody gets along. Sometimes people get mad and start talking to lawyers, and before you know it you’re in a lawsuit.”

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