In 2022, Paul Lolli, then Middletown’s city manager and now a member of city council, called it a “calculated risk” to approve a forgivable loan agreement with Primo.
“We need to dare to win,” Lolli told council in October 2022. “We can’t live in failure.”
Later that year, Primo Middletown opened in the Murphy’s Landing building in downtown. Jay Moorman, owner of the property, said the Castillos signed a 10-year lease with an option to buy. He said Primo remains open and frequent patrons said it was busy last week.
The $200,000 loan, which came from the Civic Development Fund, is attached to the restaurant meeting certain commitments, including having a yearly payroll of at least $1 million after five years. If certain benchmarks aren’t met, the owners have agreed to pay the loan back over five years, Jacob Schulte, economic development program manager, said at the time.
Now the owners are being accused of using the assets of Cincinnati Restaurant Holdings for their personal business, including subsidizing their two restaurants, Primo in Middletown and Unexpected Burgers and Bourbon in downtown Cincinnati.
The Castillos also are accused of not paying sales tax and using funds to make monthly rental payments on their residence in Mount Adams, travel expenses and purchase Cincinnati Bengals tickets for their family, according to documents.
Nelson Castillo oversaw day-to-day operations and was the point of contact with vendors for Prime Cincinnati, according to the filing. He was placed in a position of “considerable trust and was afforded a high level of autonomy and access to Prime’s business operations,” the filing said.
Castillo managed Prime and his wife was a book keeper.
Corporate owners were tipped off about the potential missing funds by Prime investors, according to court documents.
The Castillos were terminated from their leadership positions on Nov.. 25 following an extensive investigation, according to the filing.
As retaliation for being fired, the Castillos used, manipulated, blocked access, and deleted Prime’s social media pages, website, and employee internal platforms so that the corporation, Prime’s employees, and Prime’s customers cannot access the programs, the lawsuit says.
In the lawsuit, Cincinnati Restaurant Holdings, LLC is asking for at least $25,000 in damages from the Castillos on eight issues, an amount to be proven at trial.
The corporation, represented by Porter, Wright, Morris and Arthur LLC, is asking for a jury trial on all issues.
Middletown’s acting City Manager Nathan Cahall said the city recently was aware of the lawsuit and he had no comment at this time.
The Castillos could not be reached for comment.
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