“All I know is that when I got involved and started looking at things, I just thought, ‘My God, what a mess this is,’ ” says Cohen, the 75-year-old president and chief executive of the Tabard Corp., the family- and employee-owned restaurant and hotel carved out of three late-19th-century rowhouses near Dupont Circle.
“One of the things I’ve learned,” Cohen adds, “is the fact that something is profitable doesn’t mean it’s well managed.”
The two sides — former and current employees; the owner and her advisers — are locked in a battle in which they are fighting for the same goal. They both say they want to save the Tabard Inn, a 91-year-old boutique hotel that long ago reached iconic status for its idiosyncratic, antiques-rich decor, its sumptuous weddings and its widely praised weekend brunch. And both sides are willing to stir the pot, whether with staff firings or potential lawsuits, to ensure that the Tabard continues pampering locals and international visitors for years to come.
Where the two sides differ is on how to move the Tabard forward — and how much of the past to take with them.
The matriarch of the Cohen family, Fritzi, says she wants to drag her business into the 21st century and install a proper accounting department and the kind of fiscal and management controls required of a company owned in part by its employees. She quickly adds that she would have preferred to make these modifications out of public view, in large part, she says, because she doesn’t want to embarrass her own flesh and blood. Jeremiah Cohen, her son, served as general manager of the Tabard for 18 years, until his firing in May. He was the man, says newly installed Tabard board member Keith Stavrum, who cultivated an environment in which employees allegedly worked overtime but weren’t always paid and in which one manager was apparently selling Avon products out of the basement.
To former and current employees, however, Jeremiah Cohen was part of what made the Tabard Inn special. He was not only a link to the founding principles behind the business but also the GM who nurtured its family-like environment, where people would work for years, sometimes decades, defying the high turnover rate of the hospitality industry. He understood the special issues of a building that was more than 100 years old. He oversaw a business that generated bonuses twice a year for employees, and he inspired deep loyalty among the staff.
Jeremiah Cohen, these employees say, is just one victim among many in a family power struggle over the Tabard Inn. They worry that Fritzi Cohen, a longtime liberal activist, has lost her way. They fear the aging matriarch’s decisions are being driven by a pair of men, including Stavrum, who is also Fritzi Cohen’s companion back in Washington state, where the couple live.
Keith Stavrum, 56, used to live in Minnesota, where the Stearns County District Court has outstanding felony warrants against him. One of them is for attempted coercion.
A family battle brews
The legend inside and outside the Cohen family is that Fritzi and Edward Cohen saved the Tabard Inn from certain destruction when they purchased the hotel and real estate in 1975. A developer had petitioned the D.C. Board of Zoning Adjustment for the right to demolish the rowhouses that make up the Tabard and build an eight-story office building. The board, however, rejected the petition on the grounds that the developer couldn’t adequately prove the office building would “not create dangerous or other objectionable traffic conditions” in the 1700 block of N Street NW.
Regardless, the incident would serve as public notice that Fritzi and Edward Cohen were fighters, willing to struggle for the long-term viability of their historic hotel and restaurant, among the other things they believed in.
Fritzi Cohen says she has fought for the environment and against wars; in 2008, she sued the state of Washington for spreading herbicides into her oyster beds in Willapa Bay, near the Moby Dick Hotel, which she and Edward bought in 1988. Her late husband was a former Washington Post editor and reporter who later started a nonprofit “to help people find jobs in the day-care and health-care fields,” according to Edward Cohen’s November 1999 obituary in The Post. The couple even launched an organic farm in rural Virginia and manufactured Tabard Farm Potato Chips.
“The first time I walked into the Cohen [private] household, I walked into a kitchen with state-of-the-art appliances, an unfinished floor and these old wooden cabinets,” says Suzanne Knapik, the former accounts payable clerk and restaurant floor manager, who resigned May 20. “And on them was a bumper sticker that says, ‘If you think the system’s working, then ask the man who isn’t.’ That is who I went to work for.”
Fritzi and Edward Cohen stayed true to their politics by starting an employee stock ownership plan (ESOP) at the Tabard in 1993. After one year, employees who worked 1,000 hours or more annually would automatically become participants in the ESOP, Jeremiah Cohen says. After six years, employees would be fully vested. It could prove a nice nest egg to those who devoted their careers to the inn. The ESOP owns 30 percent of Tabard Corp.’s shares, but the ESOP’s overall value, including shares and other investments, has increased from $300,000 in 1994 to more than $1 million today, Jeremiah Cohen says.
Fritzi Cohen is officially the trustee of the ESOP, a role on the board that requires her to make decisions in the best interest of the employees who own those shares. But an ESOP, which comes with a host of federal regulations, also requires a company’s board of directors to designate a plan administrator, who may or may not direct the actions of the trustee.
It was when Fritzi and Edward Cohen moved to Washington state in the mid-1990s to run the Moby Dick that they appointed Jeremiah general manager of the Tabard. As part of his duties, Jeremiah also performed, he says, “controller-type responsibilities” for the hotel and restaurant as well as record-keeping functions for the ESOP. The former GM says the Tabard board never designated him as the ESOP plan administrator.
Yet it was Jeremiah Cohen’s role with the ESOP that raised red flags with Fritzi Cohen and a consultant she hired last year, Jack Veale, a specialist in family-owned and ESOP businesses. (Veale says he signed a confidentiality agreement and cannot speak on the record). Stavrum can speak, and he says Jeremiah Cohen “mishandled” the ESOP, noting the general manager never hired a plan administrator even though Fritzi Cohen asked him five years ago to do so.
The Tabard had to pay lawyers and administrators about $400,000, Stavrum says, to correct the mistakes in the ESOP and reconstruct documents. “There was no paperwork at that time,” the board member says.
“I haven’t really wanted to talk about our problems in terms of the IRS, but we have some very serious problems with the IRS looking at our ESOP, and also as a result of that, we are potentially subjected to serious fines,” Fritzi Cohen told a group of Tabard managers during a March 21 meeting, according to a transcript supplied to The Post. (Fritzi Cohen says that she agreed to let the employees record the meeting over the objection of her attorney.)
Those problems, Cohen explained in the same meeting, were largely why she started making changes at the Tabard this year. She hired an accountant to implement new systems and establish tighter fiscal controls. She voted her three children, including Jeremiah, off the board of directors and installed Stavrum and others. She then eased Jeremiah out of the GM role and into the newly created position of director of business development. Fritzi Cohen asked the other department managers if they could step up and fill the void. She wanted to see if they could operate without a general manager.
Firings and resignations
The Tabard managers who attended the March meeting could not comprehend some of the changes that Fritzi Cohen had made. More to the point, they could not understand what the daily operations of the Tabard Inn had to do with the administrative problems of the ESOP. Why couldn’t the board of directors just fix the problems with the ESOP and let the Tabard continue to run as it always had? In the meeting, managers repeatedly pressed Fritzi Cohen to explain the correlation, but, according to the transcript, no explanation satisfied them.
What’s more, Tabard managers said time and again at the meeting that they felt disrespected by what they perceived as a new, top-down decision-making process. It wasn’t the Tabard way of doing things, in which decisions were made collectively after input from different managers and employees.
“I’ve never seen management like that in my life, and I worked with a multimillion-dollar company,” board member Stavrum interjected, according to the transcript.
“Which company was that?” asked Jared Wilayto, then hotel manager.
“Horizon Roofing, the biggest one in five states. It was mine.”
Horizon Roofing was founded by Dan Scepaniak, who once hired Stavrum as a foreman for the company and then later as a subcontractor, says Kurt Scepaniak, now president and owner of Horizon Roofing, which is based in Waite Park, Minn. Tabard employees would eventually learn more about Stavrum’s interactions with the roofing company: that in 2004, the chief of police for Waite Park filed a complaint with the Stearns County attorney’s office, alleging that Stavrum tried to coerce thousands of dollars from Horizon in a complicated defective-roofing scheme. The Stearns County District Court then issued a warrant for Stavrum, which remains outstanding, says Michael Lieberg, chief of the criminal division in the Stearns County attorney’s office; the office, he adds, declined to extradite Stavrum from Washington state for the charge.
Stavrum denies any wrongdoing with this and the other complaints in Minnesota. He says his attorneys are “dealing” with the legal actions. “If there was a real big problem, don’t you think they’d arrest a person? They aren’t. They’ve never talked to me about any of this stuff, and that’s it.”
As employees were finding out more about the Tabard’s new board member, however, they were also finding their ranks thinned, either by firings or resignations.
Wilayto was fired May 24, he says, for not following Stavrum’s directions and for not fulfilling his duties as hotel manager. Wilayto had worked at the Tabard for more than seven years. After handing in her two weeks’ notice on May 23, restaurant manager Neidra Holmstrom abruptly quit the next day when she saw Wilayto escorted from the Tabard. “It became a very negative environment,” Holmstrom says. She had been at the Tabard for six years.
Designer and project manager Irene Mayer was fired May 30 when her job was eliminated. She had been with the Tabard since 1981. Erin Claxton, special events manager and wedding director, decided to resign May 26 “because I felt it was only a matter of time until they were going to fire me.” She had been with the Tabard for a decade.
“The upper echelon that has left,” Stavrum says, “I would say that these people were way overpaid for the amount of work they knew how to do as managers. . . . There are some disgruntled employees that quit or left or whatever, but that was because they could not perform their duties as directed by the president.”
Jeremiah Cohen remembers the day he was fired. Early on May 6, he was handed a letter of reprimand, the first he had ever received in 20 years at the Tabard, he says. The letter listed seven ways in which he had failed to do his GM job (even though he was no longer in that position) and “adhere to company policies and procedures.” They included failure to properly train managers, failure to maintain complete and accurate employee records, insubordination and possession of a weapon on the property. The weapon was a pellet gun, Jeremiah Cohen says, used to shoot rats, and it hadn’t been touched in years.
By 4 p.m. the same day, Jeremiah Cohen says, he was fired and escorted out of the inn that he and his parents had transformed into a D.C. institution. Despite two decades of service, Jeremiah Cohen says he’s received no severance upon his termination and that his mother is contesting his unemployment claim. Cohen would later be one of seven employees officially banned from the Tabard Inn, according to a June 1 memo from the new hotel manager.
More than a month after his ouster, Jeremiah Cohen says he has still not received an official letter of termination; nor did his reprimand memo include any allegations of unpaid overtime, which was one of the main reasons Stavrum gave for firing the former GM. “There were people being abused and overworked and not being paid their overtime,” Stavrum says. “We’ve gone back two years, and we’re paying the overtime owed to these people.”
Fritzi Cohen declines to discuss the particulars of her son’s firing, other than to explain her change of heart. “Jeremiah would say to me, he said, ‘But Mom, you told me what a wonderful job I was doing!’ I thought he was doing a good job until I got into the intricacies of the business on a very serious level,” Fritzi Cohen says. “My mind changed that he was the wrong person for the job that he was in.”
Jeremiah Cohen acknowledges that he was remiss in not hiring an ESOP administrator but notes it is actually the board’s duty to do so; what’s more, the former GM says it cost closer to $120,000 to fix the ESOP’s problems. He was also aware that his mother and her advisers were concerned about unpaid overtime but says their accounting was inflated. The Tabard’s attorney apparently told Jeremiah Cohen that accountants had found as much as $1 million in unpaid overtime, the former GM says. Jeremiah Cohen says he conducted his own internal audit and found the unpaid overtime amounted to about $6,000 a year, mostly to employees who worked multiple jobs within the Tabard.
“I made a good-faith effort to pay overtime,” Jeremiah Cohen says. By his estimate, he says 98 percent of the overtime was properly paid.
His sister, Sarah Cohen, owner of Route 11 Potato Chips and a former Tabard board member, says she asked her mother for documentation of the overtime allegations several times and never received any. The lack of evidence bothered her, Sarah Cohen says. “It would have helped [Fritzi] garner my support if I had seen proof of the allegations,” she adds.
Sarah Cohen and her siblings, Jeremiah and Joshua, were voted off the board of directors in January by the Tabard Corp.’s shareholders, which essentially boils down to Fritzi Cohen. The president of the company represents a majority of shares in the Tabard Corp.: She owns 35 percent outright; she is co-trustee of her late husband’s trust (which owns 35 percent); and she is the trustee of the ESOP’s shares. A simple majority of shareholders can determine the board’s makeup, Jeremiah Cohen says.
The former GM has a few theories as to why he was relieved of his many duties at the Tabard. Jeremiah Cohen says he was the “fall guy” for his mother’s troubles. He says he twice challenged Fritzi Cohen in the past year about her participation in the ESOP, because, he notes, she does not work the required 1,000 hours annually. Jeremiah Cohen says his mother now owns more than 20 percent of the ESOP’s shares and value. (Fritzi Cohen’s response: “I think that officers might be exempted from that” 1,000-hour requirement. “I have put in so much time in dealing with the Tabard, particularly in the last two years. I put in vastly more than 1,000 hours.”)
Furthermore, the former GM says the IRS conducted an audit in 2010, which the Tabard passed. But auditors challenged Fritzi Cohen’s compensation, which they apparently viewed as high for someone who lives in Washington state and hasn’t been on the Tabard property much, Jeremiah Cohen says. He declines to name the amount of money, but notes that there are potentially steep fines involved with the IRS ruling, which his mother is appealing.
The final nail in his coffin, Jeremiah Cohen says, may have been his decision to confront Fritzi Cohen with his findings on Stavrum.
Jeremiah Cohen unearthed not only the felony warrant tied to the Horizon Roofing allegation but two others from the Stearns County District Court. One is for marijuana possession in 1995 (to which Stavrum pleaded guilty but then violated probation, says Lieberg from the Stearns County attorney’s office), and the other alleges that Stavrum took more than $4,000 in food stamps and other public assistance while employed at Horizon. The warrants are outstanding, but the Stearns County attorney’s office has decided not to pursue extradition. (Fritzi Cohen declined to comment on the IRS audit and her relationship with Stavrum; Stavrum maintains his innocence on all charges.)
“It’s a tragedy for the Cohen family and for our employees,” Jeremiah Cohen says. “I essentially crossed the second love of my mother’s life, and I’m paying the price for it.”
Employees strike back
The changes at the Tabard Inn have affected the morale of the remaining staff, which in turn has affected the personable service that has defined the establishment for years, says Carolyn E. DeWitt, a Tabard employee who works as a bartender and host and in other roles. DeWitt spoke on the record during a period when the Tabard had installed a policy forbidding employees from talking to the press; those who violated the edict would be terminated, according to an e-mail from early June. The policy was rescinded later that month.
“One thing the Tabard has taken pride in is this desire to go above and beyond,” DeWitt says. “I would say Tabard employees have always been overachievers. Because of the uncertainty and the negative workplace, the ability to go above and beyond is fading.”
Taking a page from the old Edward and Fritzi Cohen playbook, employees, past and present, have decided to become activists themselves in an attempt to reclaim the workplace they love. More than 30 people with ties to the place — patrons, current employees, staffers from long ago, even those who recently resigned or were fired — have pooled their talents to launch the Save the Tabard campaign.
They were compelled to start the campaign, DeWitt says, after the firings, resignations and other changes began to increase the Tabard’s liabilities. It’s not just the liability of potential lawsuits from terminated employees, she adds, but the liability that these changes could devalue the Tabard Corp., which would affect those who own shares in the company.
As part of its campaign, the team is asking the public to patronize the Tabard to show “support for the employees and the institution,” DeWitt says. They’re also asking people to sign a petition to urge the Tabard board and officers to open up a dialogue with past and present employees. Finally, the team is hoping the public will contribute to an Indiegogo campaign so they can buy Fritzi Cohen’s 35 percent interest in the Tabard Corp. and her share of the real estate. (They will return the money if the bid fails.)
“We’re trying just to appeal to the Fritzi that we know, the Fritzi that talks about wanting the employees to take over [full] ownership,” says Wilayto, the former hotel manager. “She talks with great pride about she and Edward starting the ESOP, and I think she’s being filled with a lot of ideas, but ultimately we’re just trying to say, ‘Look, Fritzi, let’s do this. Let’s fulfill what you started all those years ago.’ ”
Last month, in fact, the Save the Tabard team made a pitch to Fritzi Cohen to buy her out, but it never received a response.
“We tried to reach out and solve the situation, but they won’t engage in discussion with us,” says DeWitt, organizer of Save the Tabard. “So at the moment, there are no lines of communication.”
The Save the Tabard crew may find it difficult to reestablish communication with Fritzi Cohen and her inner circle. First, she says she never seriously considered the employees’ buyout offer because it came with no check, or earnest money, to underscore its sincerity. Second, she says she considers the people who were fired or who resigned “lousy managers, and I got to see it first hand.” Third, she says that many current and former employees have developed a warped perspective on the “Tabard culture” that she and her late husband started.
Their interpretation, she says, is merely self-serving.
“If you have a job where you don’t have any real rules or regulations and you get paid well, you get used to that,” Fritzi Cohen says. “The business had a good run, but the way it was run needed to come to an end or it would have meant disaster,” Fritzi Cohen says. “I’m not sure the Tabard would have continued being profitable.”
If you ask Fritzi Cohen who is behind all the changes — she as president and chief executive, or Stavrum and Veale, as some suspect — she will draw a clear line in the sand.
“The fact is, I am the person where the buck stops on this business. I am the president, and I am the CEO,” she says. “I am learning what business is all about, and they should have understood that.”
Just as Jeremiah says the unpaid overtime and ESOP problems are red herrings designed to steer attention away from his mother’s financial troubles, Fritzi Cohen says the employees’ obsession with Stavrum and Veale is a distraction from the issues the board has uncovered. And, frankly, she’s tired of dealing with what she views as a smear campaign against the two men in her life.
“They’d stoop to anything,” Fritzi Cohen says about her detractors. “And do you think it makes me feel more kindly to them?”