Mallard's closes after all

Mallard's Restaurant in Modesto closed its doors Thursday, while the owners face a criminal investigation and a $1.6 million civil lawsuit in federal court.

The 21-year-old business at 1700 McHenry Ave. closed after lunch, leaving 51 employees out of work and many customers sad to see the end of what formerly was one of the few places for fine dining in the city.

"Before downtown got spruced up, this was the place to have a nice meal," said Bryon Moore, 47.

Now a San Diego resident, Moore said he went to Mallard's regularly when he lived here and still ate there a few times a year.

He and his lunch partner, Barry Hickerson of Modesto, said they were stunned to hear the restaurant was closing.

"Since the first month it opened, it was consistently excellent," said Hickerson, 53. "They had a very committed staff. But it's had its challenges in the last couple of years."

The two men added that the service and food were lacking on their last visit Thursday, when Moore found a bone in his turkey sandwich.

Problems with the bill led a manager to give them their meal for free, they added.

Other issues at Mallard's have come to light in the last few weeks. The San Joaquin County district attorney's office, along with several state agencies, carried out a search warrant last week at Mallard's, seeking information on payroll taxes.

That warrant stemmed from a Stockton Mallard's that closed last month. Employees there said they were unable to collect unemployment benefits.

Both restaurants were owned by the Sang family, who could face criminal charges over the failure to pay payroll taxes.

Richard Sang ran the restaurants with his sons Richie and Brookes Sang. None of them could be reached for comment Thursday.

Modesto employees learned Wednesday that Mallard's would close the next day. Managers initially said they planned to keep the restaurant open through the end of the year.

A Mallard's chef, John Psarras, 37, said he walked off the job Thursday, angry that employees were losing their jobs so close to the holidays.

"It's a dark cloud in there," he said, adding that in the four months he's worked there, every paycheck has bounced. "What am I going to do for Christmas?"

Psarras said he hoped he and other employees would find work at other restaurants soon.

Managers told employees not to cash their final paychecks, but instead to seek payment from the state Employment Development Department, which has been investigating Mallard's.

Collin Montanana, 21, said he was not surprised that the restaurant closed.

"When the checks stopped cashing, the owners were never around, and you stopped getting liquor, you could see it coming," he said.

The closure means the cancellation of at least a dozen holiday parties planned for Mallard's over the next month.

Lynnell Ford and Anita Oseguera, of Modesto salon Creations, said they came by Thursday to check on a brunch for salon employees Sunday.

"We called last week and they said they would be open, but we thought we should check for ourselves," Oseguera said. "The whole mood in there was sad."

Stan Dimond, Mallard's general manager, said the restaurant would refund all deposits for holiday parties.

Dimond, who was part of the staff when Mallard's opened in 1986, said he was sad and disappointed that the restaurant was closing.

"I can say it's really a shame," he said. "This restaurant has not done anything bad. It's unfortunate to see the turn of events that destroyed it."

Dimond said a state agency ordered the business to close, though another employee said the Sangs made the decision.

Many employees, patrons and outside observers said Mallard's took a downward turn when original owner Dan Costa, a Modesto entrepreneur, sold the Modesto and Stockton locations to the Sangs two years ago.

Costa said Thursday that shifts in consumer eating habits, along with a detached ownership, may have sealed the restaurant's fate.

He recalled that when he opened the Modesto location, the place was so popular that he had to call fire and police officials when people began jumping a wall to get into the restaurant's overcrowded bar and courtyard.

"We didn't have less than $10,000 in total daily sales anytime in the first two years," he said. "There's not much you can do once it's in the hands of someone else."

Costa said he and Dimond plan to open another restaurant in a different location sometime next year. "Today's concept would be a lot smaller," he said.

Mike Nelson, Costa's brother and owner of Mike's Roadhouse in Modesto, said Mallard's could have survived if the ownership had been fully committed.

"Our local economy is great, and my numbers are good," said Nelson, who managed Mallard's during Costa's ownership. "Nobody was more talented than Stan (Dimond), but he didn't control who paid the bills."

Mallard's employees said the owners leased the restaurant from McHenry Village, a shopping center at the corner of Briggsmore and McHenry avenues.

A sales associate at Phillips Lighting & Home, a neighbor to Mallard's, said he doubted the closure would have much effect on other McHenry Village stores. "Most people that were there were there only to eat and leave," Tim Gray said.

But Candy Caviglia, a sales associate at Paper Habit in McHenry Village, disagreed.

"I think it's going to be a loss for Modesto and for the village," she said. "There were people who would go there for lunch and then browse here, and vice versa."

Besides the criminal investigation, the Sangs face a number of difficulties.

While carrying out the search warrant, the California Department of Industrial Relations fined Mallard's $100,000 for its failure to carry workers compensation insurance.

The restaurant also owes more than $10,000 in Stanislaus County property taxes. And a civil suit filed earlier this month by a Seattle lending firm alleges that the Sangs misrepresented their financial status and committed other fraud when applying for loans, since defaulted.

The plaintiff is seeking $1.6 million in that lawsuit, which led to an ongoing audit of Mallard's financial records.

In the early 1990s, Richard Sang was sentenced to nearly four years in federal prison after pleading guilty to fraud charges related to operating restaurants in the Pacific Northwest.

Bee staff writer Ben van der Meer can be reached at bvandermeer@modbee.com or 578-2331.

This story was originally published November 30, 2007 at 12:00 AM with the headline "Mallard's closes after all."