SACRAMENTO (CBS13) — Some employees who worked at a midtown Sacramento restaurant lashed out after learning the business was closing and wouldn’t have enough money to give workers their last paycheck.

Co-owners Joseph Madrid and James Lombardi laid off all their staff Monday after problems with the IRS came to a head, forcing them to shut down their restaurant.

“Times are tough, business is down, it’s a struggle out there,” Madrid said. “It came down to taxes.”

The business owes more than a half million dollars in back taxes and doesn’t have enough money to continue operating, the owners said. They also don’t have enough money to pay their former employees about a week’s worth of wages.

Madrid and Lombardi threw an employee-only party Monday to give away the last food and drink, but the farewell party turned tense when workers realized they wouldn’t be paid.

“We’re pissed,” said former employee Raven Russell. “My family is going to suffer majorly from it.”

Some employees started trashing the business and grabbing what valuables they could find, while others raided the refrigerator for what was left of the restaurant’s beer and food.

“The arguments got heated because I’m sitting here, going, ‘I don’t know what to tell you. There is no more money,’” Lombardi said.

One enraged worker even pulled a knife out, but nobody was injured.

“I’m not looking for any sympathy and I don’t think James is either,” Madrid said. “It is what it is.”

Some disgruntled employees say they plan on reporting the business owners to the California Department of Industrial Relations.

Comments (36)
  1. Marc Sac says:

    IRS=taxes=money for non-workers=business going under=disgruntled employees. Yeah big Gov!

    1. dunphy says:

      actually, it’s poor financial management from the employers. but if blaming a faceless government entity for bad choices, knock yourself out. I figure any business that can’t make payroll is probably at fault.

  2. Darius Brown says:

    This is the funnest story yet! hopefully I can win mega miliions and help these people out! Now that would be a good news story?

  3. charles Donaldson says:

    Back taxes could also include payroll taxes not paid on employee accounts. I hope
    there is enough assets to pay off the employees.

  4. Kmac says:

    The employer knew what was going on many many months ago. That is so messed up to throw a farewell party on false pretenses. They probably knew what the outcome would be, there business is trashed, assets taken, they can throw their hands up and claim “they didn’t know it would come to this and couldn’t control what was going on”. It’s just like the home owners that go into foreclosure, get mad and revengeful and trash the home and take what they can because they lived beyond their means. The owners had some heavy paychecks themselves, I’m sure, where else did that money go?

    1. Old Hippie says:

      Bingo. Nobody just wakes up one morning and finds out that they’re a half-million bucks behind…

    2. roneida says:

      absolutely…employers like this make a lot of pressure for governments to require payroll taxes in advance … at least an estimete based on the previious payroll. Unless your business gets hit with a huge natural disaster, you know where you are. Capitalism can not overcome the shame of the greedy people who refuse to ethically play by the rules.

      The problem is that the government isn’t sharp eough to beat the crooks…smart guys are always on the side opposite the burreaucrats.

      1. Shawn S says:

        Wow. I’m guessing you’ve never had to run your own business. The reality of paying taxes and bills and making payroll in this economy is a lot more difficult on reality than it is for an armchair quarterback criticizing from the outside.

  5. JT says:

    The employeer had to know months in advance that things were not going well. It’s not as though it happened overnight. I believe the employeer should have to sell off assets or bonds, something to pay these people what they are owed.

  6. Just Sayin' says:

    I used to work at a local restaurant in mid-town that was owned by two brothers and one time most of our paychecks bounced on the same weekend the brothers flew to Las Vegas with the Maloofs! Gee I wonder why there was no money in the account?

  7. Mark Barros says:

    The one owner just opened up a cigar lounge. I guess that is where the money went.

  8. Aldo1887 says:

    Send all those employees to Fatman Cigars, Joseph Madrid’s new business, a cigar/alcohol lounge in midtown sac (not too far from Hangar17.) He took care of himself just fine, it is all his employees who are paying for his poor management, because most folks working in restaurants can really afford to work for free, I am sure that last week of profits went straight into Joseph’s pocket. This guy brings new meaning to the word “Lowlife.”

  9. just me says:

    This is a posting from Joseph’s cigar society on12-03-2010, 02:53 PM. The cigar shop was opened prior to hanger 17 closing.
    A buddy of mine is opening a new cigar shop in downtown Sacramento on 10th and R. It was going to be open today but due to delayed shipment it should open next week. It will be two stories. On the bottom will be the retail part with a large custom built walk-in humidor that is absolutely beautiful. There are also some leather chairs and a TV for those who want to stay and smoke. Early next year the top part will be made into a private members only lounge complete with lockers that will be the official place for the Sacramento Cigar Society. The place is looking GREAT! Hope to see some of the Cali guys stop by to check it out.
    Check out the Sacramento Cigar Society on Facebook!

  10. Just me says:

    Look what you can buy when you don’t pay your employees. Heres a link to check out the pictures of fat man cigars

  11. Phrank says:

    I lived next door to those A-Holes and they were nothing but problems. The whole neighborhood didn’t want them around due to the loud noise and parking problems in the area. But they greased some palms w/ the City and got their permit. And that whole party in lieu of pay sounds right up their ally. These guys were always dishonest and it’s nice to see karma come in and kick them in the butt. I’m just sorry for their employees…..

  12. Smuckers says:

    “Sorry it is what it is”…Geez, these guys have no remorse!

  13. Opinionated says:

    I happen to know quiet a few of the employees personally and what Joseph Madrid said happened didn’t happen the way he said. There was no employee only party after letting his employees know they would no longer have a job via text message on Monday afternoon they would no longer have a job and they could come in from 3-7 the day following to pick up their pay checks. When employees found out not only did they no have a job any longer they also were shorted a weeks pay and were angry that is when the BEER not food (because the food was already gone along with most of the front house items i.e. televisions and alcohol ) the beer was OFFERED by James as a peace offering to the employees. Many of them stated ” i don’t want your beer, i want my money.. i have a family to support.” in response they got rude remarks from both owners. I think its funny that in the segment Madrid claimed he, himself would be looking for a new job when he knew he was set with his Fat mans cigar shop just up the way! Almost every Hanger 17 employee had issues cashing checks and were on the run from cash checking places because Madrid failed to pay. The head Chef interviewed for the segment had been with Madrid’s company for roughly 3 1/2 years and during that time received no breaks/ lunches and worked seven days a week on many occasions with not a penny of over time paid EVER! Its shameful that this man could stand there any just say “sorry..there is just not enough money.” I hope someone out there reads this and can help these employees get what is rightfully theirs.

    1. eagle_eyes says:

      and Mr. opinionated…….you should get your facts straight. Are you so ignorant to believe that they would throw those employees a party and tell them they weren’t gonna get paid…you’re a moron buddy!!!!

      1. Opinionated says:

        First of all I’m a GIRL ! second of all I’m not ignorant… so before you go around assuming things you should get your facts straight because what i wrote is what happen. I know 6 employees personally from hanger 17 so i can safely say my facts have been well researched. Maybe instead of name calling you should try researching because your petty names are just making you look like the ignorant one.

  14. Maxine says:

    I too, know some of the employees personally at Hangar 17 and you shouldn’t always believe what you hear. There are always two sides to every story and unfortunatly you only heard one side! Have you ever heard the old saying
    ” Opinions are like a**holes…. everyone has one!” It is easy to for people sit on their computers and blog about things they have no personal knowlege of. Maybe you should run your own business instead of talking smack about how others run theirs! Oh, and maybe while you’re at it you could hire these employees!

  15. jenny swimmer says:

    If palms were greased, they would still be in business. So obviousely that was not the case. I think everyone out there with their two sense should try operating a business in the city of Sacramento and see how long your money last. When the city runs short of cash, they squeeze the small businessman.
    More and more businesses are closing, generally due to a bad ecomomy, not neccessarily bad management. I work for a large corporation which has doors closing. Signs of the time, people!! Perhaps Channel 13 should have ALL the facts straight before they run with a story!

  16. Opinionated says:

    The side of the story i know is true Maxine so maybe you also need to hear the other side of the story. Its not the fact the restaurant closed; people were up set about its the lack of money to pay them for the hard work they put in. I know employees whom last week who worked ten or more hours on St. Patrick’s Day non stop with out breaks only to not be paid?! If the money was not there the employees should have been notified sooner then they were. That also does not excuse the lack of breaks or lunches provided for the length of some workers. The economy has nothing to to do with the lack of respect given to his much deserving employees. Oh and Maxine instead of trying to attack my level of knowledge i suggest you check your facts.

    1. eagle_eyes says:

      Once again, you don’t have you facts straight……they all got paid!!!!

      1. Opinionated says:

        Okay so the 6 employees i know personally are all lying? Somehow i don’t think so… check your facts.

  17. Shawn J. says:

    I can’t believe how unscrupulous people can be in this day and age. It’s a shame for something like this to happen. And for Joey Madrid to say he is looking for a new job that is quite a joke. As mentioned he is the owner of Fatman cigars in Sacramento and spent a pretty penny in the place and on inventory of cigars and accessories. Additionally, he also has quite a stash of his own cigars in his house etc. He is making money charging people for a membership to use the lounge there so that they can consume liquor and play poker etc. I have lost respect for Joey and his partner upon reading this article and I hope they come through and pay their employees.

  18. concerned business owner says:

    I just wanted to weigh in on this. Yes running a business is tuff (I have been in Business in Sacramento for many years), especially within the city limits of Sacramento, but to not have paid your employees their last weeks pay is downright shameful and very arrogant. I am sure these two gentlemen have been smart enough to put aside money in some sort of retirement account over the years or at least have a credit line that they could draw on to satisfy the wages for their employees. I think that paying the penalty on a early withdraw would be a lot easier at creating good will than the bad karma created by not paying them. One thing they may learn from all this is that Sacramento can be a very small town……

  19. eagle_eyes says:

    What’s sad is when people and the media don’t get their facts straight……cause if they did, they would realize that all, and I mean ALL those employees got their full pay foR the work that they did. Do you really think Joey and

  20. Shawn S says:

    Owning a business in a hostile environment like California is never an easy task. It’s clear that the two owners built their restaurant from the ground up – it’s never easy to be the captain of a ship that goes down. They tried to make the best of a bad situation, but this is the kind of economy where not every business can make it.

    For employees to behave the way they did is shameful. It couldn’t have been easy on either end, but in a recession, it doesn’t always work out the way you hoped. It’s laughable to think this is what the owners wanted, and it’s clear that they kept things going and kept paying their employees as long as they possibly could.

    We should all be mad at the kind of business climate that forces good businesses to close, not at a couple of guys that take a chance building a business that doesn’t work out in the end.

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