Chubby’s heir accused of skimming $324K from Northside restaurant
The majority owner of Chubby’s, a restaurant and cultural institution in north Denver, is being sued for allegedly pilfering hundreds of thousands of dollars in company funds.
The lawsuit, filed by minority owners Friday in Denver District Court, suggests the 56-year-old Mexican-American restaurant could be in financial trouble as a result of the alleged skimming. It is the most recent of several public family feuds to emerge from Chubby’s.
In the 1960s, a 59-year-old mother of 10 named Stella Cordova took an 85-cents-per-hour job at a burger joint in Sunnyside. When the owner sold the failing business in 1967, Cordova bought it, kept the name Chubby’s and changed the menu to Mexican-American.
Cordova worked at Chubby’s until shortly before her death in 2009 at age 100. By then, the massive Cordova family — Westword estimates it had grown to at least 170 people — included factions who were benefiting from, and at odds over, the Chubby’s name.
Because Stella Cordova did not trademark Chubby’s until 2004, restaurants calling themselves Chubby’s popped up all around Denver and its suburbs. Stella owned only the initial Chubby’s at the corner of 38th Avenue and Lipan Street and gave her blessing to just three others: two owned by her son Tony, and one owned by a grandson, Julian.
In 2007, Julian Cordova sued a cousin, Leonard Cordova, for running restaurants called Chubby’s Bubbachinos that Julian claimed were benefiting from the Chubby’s legacy. The case was settled and Leonard Cordova renamed his restaurants Bubba Chinos.
Julian, meanwhile, operates The Original Chubby’s, which has three locations in the north metro. Those should not be confused with the initial Chubby’s restaurant in Sunnyside, which Stella left majority ownership of to her grandson and primary heir, Danny Cordova.
“Many have tried to replicate us, but there are none like us,” the website for Danny Cordova’s restaurant states. “We are not affiliated with any other Chubby’s in the area, so if you want the best, you need to come to the ONLY — The Original Chubby’s Burger Drive-inn!!!!”
Ownership in that restaurant is split between nine people. Danny Cordova owns the largest share, 62 percent, and eight others have shares of either 5.4 or 2.7 percent.
Two of the minority shareholders, Anita Cordova and David Dickinson, who each own 2.7 percent of the restaurant, are plaintiffs in the new lawsuit. Among other demands, they are asking a jury to remove Danny Cordova as the top executive at Chubby’s.
The plaintiffs say they have obtained company documents that show Chubby’s had $481,910 in taxable income in 2016 but -$165,202 in 2021. In that time, Danny Cordova increased his salary from $95,640 in 2016 to $204,720 in 2021, according to the lawsuit.
Payouts to shareholders declined from $351,835 in 2016 to $27,631 in 2021, in part because Cordova loaned himself $600,000 from the company, Dickinson and Anita Cordova say.
“An independent analysis of all bank records of Chubby’s for the year 2020 revealed $323,865 in expenses that appear non-related to the operation of…Chubby’s,” they alleged.
That includes $1,246 at a casino in Black Hawk, $1,263 at the MGM Grand in Las Vegas and “116 separate transactions from www.wish.com in December 2020 alone.”
The plaintiffs say employees at Chubby’s have told them that Danny Cordova is also hiding profits from shareholders and using company funds to pay for construction at his home. The plaintiffs want him to step down as manager and pay them higher dividends.
“No care was shown for the financial health of the business,” they claim.
It’s not clear how the plaintiffs are related to Danny and Stella Cordova. Their attorney, Adam Ausmus with the Ausmus Law Firm in Greenwood Village, declined to say. Dickinson and Anita Cordova also declined to be interviewed about the Cordova family and their case.
In a June 2022 letter that was cited in the lawsuit and obtained by BusinessDen through an open records request, Ausmus warned an attorney for Danny Cordova that a lawsuit would be filed. He said Cordova’s actions “could rise to the level of fraudulent self-dealing.”
“It appears that Danny Cordova is using the business’s accounts as his personal bank account,” Ausmus wrote in that letter last year. He later added, “The business has steadily lost profitability since 2015 despite no notable decrease in business at the restaurant.”
Tom Mangan, an attorney for Danny Cordova, declined to comment on the case.
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This story was reported by our partner BusinessDen.
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