The Yassine Sixth Street Noir

Legends, rumors, unpaid taxes ... and coke on the side

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The feds will want their cut first, but they're not the only people in line. Sparks is no stranger to the Yassines because he's also hearing a class action lawsuit brought by 200 or so former bar workers. Accord­ing to that suit, Yassine bars, including Qua and Fuel, had a bad habit of not paying their staff, instead letting them get by just on tips. Unfortunately, that's not exactly legal: If the firm had filed the proper paperwork, then they could have paid their tipped workers less than minimum wage, but the suit alleges that never happened. Sparks has ordered the parties to reach some kind of scheduling agreement by mid-May, but with the state and the IRS looking for millions in unpaid taxes, those employees will be hard-pressed to get the back pay they believe they deserve.

"I'm shocked – shocked! – to find that gambling is going on in here!" – Captain Renault, Casablanca

The Yassine Sixth Street Noir

So if all this was going on, how did no one know it?

Well, there's a big difference between suspecting and knowing. In fact, for many people, the Yassines were model businessmen. The court records are filled with letters from employees and character references imploring the judges to release the accused on bond. They were major employers, and jailing them left 150 to 200 workers without jobs. For others, they were like Sixth's notorious Midnight Cowboy Oriental Massage: the worst-kept secret, but everyone kept mum until March 2011, when the cops kicked down the door and charged owner Chong Lee Rogers with aggravated promotion of prostitution.

No one expects club owners to have spotless hands, and the Yassines had their share of legal troubles. Most were standard fare. In 1999, they were sued by Joe Hand Promo­tions – the company that provides closed-circuit pay-per-view boxing and UFC events to bars – and then in 2007 and 2008, ASCAP went after them for unpaid royalties. Add to that the fury of PETA over the sharks and stingrays under the dance floor at Qua, and things look rough but not out of the ordinary. However, both Judge Green and Judge Sam Sparks consider the three principal men severe flight risks, with family overseas and an unknown – but in theory large – amount of cash sloshing around in foreign bank accounts. Yet that decision may be out of the judges' hands; even before these arrests, Steve was fighting a deportation order, and Mike is suing the U.S. government for the slow-motion handling of his citizenship request.

The legal scrambling has caused inevitable Downtown shock waves, even among the oldest and most unflappable of the old guard. Carl Daywood is a Sixth Street institution, proudly proclaiming a life spent living and working on the street as a Realtor specializing in bars and clubs. He rankles at the commonplace slur "Dirty Sixth" and voiced amazement about the accusations against the Yassines. Sixth Street, he said, is a neighborhood, and everyone knew and liked the Yassines. "The number one thing is shock," he said. "All of us were shocked that this came up."

All? Not precisely. Ask Fred Schmidt of Wild About Music about the Yassines, and he pulls no punches. He said, "There's been no surprise. It's just been, 'Wow, what's taken so long?'" Neighbors have opposed the Yassine liquor licenses for years, and back in 2002, Treasure Island was on a list of seven bars busted when TABC found falsified information on license applications (see "Bars, or Behind Bars?," Feb. 1, 2002). Schmidt does not mince words about Day­wood, either. He said, "Half the time, I just don't know what planet Carl is on." He argues that, as a member of the Downtown Austin Alliance security and maintenance committee, Daywood should have known about the problems. "That's the group that APD and TABC and everybody goes to and says: 'Hey, this is a problem operator. What do you guys think?'"

"You're dead. Lay down." – John Kellogg, Johnny O'Clock

The money laundering and coke allegations will at least see their days in court. But what about all the other wild, swirling stories? Three months ago, Mike Yassine was just a club owner with a few civil suits and a couple of rumors dogging him. Now every little accusation, proven, unproven, unprosecuted, or just accelerated over a few drinks, is part of the public record and the sensationalized news cycle.

Nothing caught fire like the headline claims about Hezbollah, the Lebanese political party and militant group. Only problem? There's no substance. During the initial detention hearing, Sofer made a passing reference to a moment in the raid on Mike's house. According to Sofer, the Yassines' father was there and told the FBI that the boys' uncle, Mohammed Ishmael, was in Hezbol­lah. So far, the feds have done nothing more to claim a connection to terrorism; sources close to the family say the feds have it backward, and that in fact, far from being a Hezbollah supporter, the senior Yassine was afraid of them – they had blown up his house. But that one little reference by Sofer, inflated by sensationalist reporting, has become fuel for right-wing, anti-Islamic conspiracy websites that connect anyone with dark skin and a little bit of cash to global jihad.

What no one doubts is that the Yassines had plenty of money and were sending some of it to Lebanon. That's not exactly shocking. After all, their mother and uncle still live there, and Mike is generous when it comes to his family. In court, federal prosecutors said he was basically giving Steve a $9,000 a month stipend when his regular job distributing Kowabunga didn't cover the bills. He would hardly be the first American immigrant to send cash home.

The Yassine Sixth Street Noir

So far, there is no indication that the IRS is currently pursuing other illegal activities beyond failure to file. The only eyebrows raised are about how much money there was, how vague the money trail is, and how much more cash could be floating around. Aside from $45,000 in checks to his uncle, Mike had bought his mother a $700,000 house in Beirut, and the IRS is trying to crack the almost-impossible nut of transfers among Swiss bank accounts.

Was there a crime? Maybe, maybe not, but there's no sign yet of the feds bringing any charges relating to illegal international cash transactions or terrorism. That's also true of the old but persistent rumor that Mike was connected to the 2000 disappearance of his business partner, Paresh Patel (see "Dancing About Architecture," Oct. 6, 2000.) Again, the rumor mill has been running fast for years. One story was that Patel, last seen with $15,000 in cash, disappeared back to his native India to avoid debts and lawsuits. But the circumstances of his disappearance – his Lexus abandoned in East Austin, the fact he never picked up his two young sons – suggested foul play. There was a wild and unproven rumor in 2004 that the Texas Syndicate killed him and buried him under the Buda H-E-B – a rumor H-E-B denies – and Sixth Street scuttlebutt followed that trail back to Mike's door. That has been given some potential credibility after confirmation from the Austin Police Department that the cold case homicide unit regards him as a "person of interest." But there's been no prosecution, just as there is no prosecution to date concerning allegations that Ruales engaged in witness tampering in Williamson County. Prosecutors have raised all these issues in court, but there are far more headlines than actual charges. The occasionally irascible Sparks has already started to fulminate on the more sensational reporting.

For now, that may be the biggest problem for the Yassines. Even if the coke and money laundering charges collapse, their bars have been seized and liquor licenses suspended, their professional reputations shredded, and the state of Texas is already pulling millions from their coffers. That's all before the IRS finishes looking into their finances. The consensus is that, whatever happens in court, Yassine Enterprises and all its affiliated companies are done.

The next question for Downtown is: Who takes their place?

"Forget it, Jake. It's Chinatown." – Walsh, Chinatown

Sixth Street abhors a vacuum. "I've got inquiries every day, people looking for locations," Daywood said; he has little doubt that the old Yassine properties will go fast.

What kind of tenants? That's where Schmidt and Daywood butt heads. The pair are not exactly best buddies, having sparred over control of the 6th Street Austin Association (see "Fork in the Road on Sixth Street," Nov. 25, 2011). Ask Daywood what the street means and he talks about the night life, the bars, live music, and restaurants. Schmidt wonders what's supposed to happen during the daytime and pushes for more retailers. It's not just a personal fight: The pair represent differing factions of the Downtown community, and there is little doubt that each side is eager to take the nine prime pieces of real estate vacated by the Yassines off the market. There are already renters eyeing some of those spaces, and the Downtown Austin Alliance has a retail recruitment program in place to bring what Schmidt called "a more balanced mixture" to Sixth. "This is what we wait for," he said. "When there's any change in lease, that we can hopefully intervene and say, 'You know, this is a great opportunity to think about change in use.'"

By sheer numbers, the bars have the upper hand on East Sixth. Over at the Downtown Austin Alliance, Associate Director Molly Alexander is looking at 71 storefronts, and 54 of them are single-serving bars. She's actively recruiting new tenants to fit the DAA's view of an 18-hour-a-day, seven-day-a-week street, and with five Yassine bars either on or near Sixth, that's a lot of desirable real estate up for grabs. For her, shifting the balance over to retail won't cut the amount of money that's spent in clubs: Add more stores, she said, "and the bars that remain will do incrementally better." She has a list of clients lined up, waiting to diversify the street, and some of them may be interested in the old Yassine properties, but the legal wrangling and the seizures mean they're stuck revving their engines. Plus, no one is sure exactly what the existing leases look like, whether the Yassines were renting directly or were subtenants. "We just don't know what the time frame is, how long things will be held up, how long the lease is – we just have no idea," Alexander said.

The first club has already gone, but not the way Schmidt might have liked. Spill is on the way to becoming Bourbon Girl, another part of the expanding Carmack Concepts empire. That's the bar firm owned by the Womack brothers – Chad, Wes, and The Bachelor star Brad – and their business partner Jason Carrier. According to Chad, their plan is to tap the growing convention market with a high-end bar. There's no malice against the Yassines – in fact, Chad points out he used to work for them and they were business neighbors for years – it's just business. Developer David Kahn owns the Spill property, and he quickly evicted the Yassines. He already rents properties to Carmack, and since their two signature bars – Chuggin' Monkey and Dizzy Rooster – are right across the street from Spill, it's a natural fit. "We wish, frankly, that David would slow down just a bit," Schmidt said.

Not that he's opposed to bars on Sixth; his mixed-use model for Sixth requires bars. What he wants out are the "bad operators [and] the low-hanging fruit," the bars that are flipped every six months by overambitious college kids with too much cash and no brains for business. In their place, he'd like to see a mixture of retail, restaurants, and bars. Take Midnight Cowboy, run by his friend Tim League of the Alamo Drafthouse. A year ago, it was the butt of drunken snickering about happy endings; now it's a high-end cocktail lounge whose website plays up the building's history of "licentiousness."

That's an old tension – between a Sixth Street that loves its dangerous history and a Sixth Street that runs the risk of repeating it. It's a fight that started long before the Yassines arrived, and will go on long after they drift into Austin legend and lore.

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Yassine Enterprises, Hussein Ali Yassine, Mike Yassine, Steve Yassine, SWAT, FBI, Austin Police Department, APD, Sixth Street, Downtown, Downtown Austin Alliance, Warehouse District, bars, real estate

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