THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, June 5, 1995 TAG: 9506050025
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY JOE JACKSON, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 240 lines
Once, before his business empire began to crumble, Nabil D. Kassir told his executive secretary that the Oceanfront was a dangerous place. Beneath the lights, the good times, there was one reality: Only the wary survived.
``The nightclub business at the Oceanfront was then, and is now, today, very, very competitive,'' Anise Ward testified during Kassir's 1994 trial in federal court on charges of tax evasion, money laundering and conspiracy. She had been asked why he wanted her to shred the cash register receipts from his most profitable clubs, Peabody's and Rogue's Gallery.
``There are enemies,'' she said. ``Business enemies.'' His competitors - the Worrell Brothers, Peppermint Beach Club, others - were just down the street. He could be ruined if they got wind of his total receipts, she said.
It was a prescient statement. It was the 1980s: times were flush, competition fierce. Peabody's and Rogue's were in their heyday, packing the house for concerts by the Police, the Ramones, Pat Benatar.
Yet success had a price. Competitors reportedly ratted on each other, calling ABC agents when other clubs grew too crowded and violated fire codes. Insiders still say it was a competitor's call about unreported - or ``off-ticket'' - beer sales that sent ABC agents rooting through the trash bins of Kassir and his partner, Edmund C. Ruffin, in late 1989.
As Kassir feared, those documents proved to be their Achilles' heel. Kassir was charged the next year, after ABC and IRS agents spent eight months taping together and analyzing those shredded records. Prosecutors said Kassir skimmed profits from his businesses, hid proceeds in foreign bank accounts, under-reported income and lied to officials about the volume of his liquor sales. Last year, Ruffin was charged with tax evasion. Both were found guilty.
On Wednesday, the last act played out. Kassir, 53, was sentenced to 21 months in prison and fined $15,000. Ruffin was sentenced to one year and a day and fined $20,000.
Today, Peabody's and Rogue's are history, closed last year after their liquor licenses were revoked. Kassir has forfeited $149,000 and must pay a $100,000 down payment on unpaid back taxes. He has been sued for $100,000 for defaulting on a debt note.
Kassir and Ruffin - former lifeguards who over three decades parlayed modest investments into a real estate and nightclub empire - owned property totaling at least $7 million, records show.
Neither Kassir nor Ruffin would comment for this report; their lawyers said they face civil suits for collection of back taxes. But news reports, court records and interviews show that for three decades the team was an Oceanfront force with which to be reckoned.
On Wednesday, that came to an end.
Theirs was a classic American success story. Once called the Beachfront ``businessmen with the Midas touch,'' Kassir, nicknamed ``The Sheik,'' was an Iraqi immigrant who could not go home due to political conditions.
Ruffin, a teenage runaway, was orphaned at 15. Friends saw them as an odd couple: Kassir, more sociable, ran the nightclubs, contributed to charities. Ruffin, more private, dabbled in politics, was drawn to real estate.
Until about 1985, the two shared the same office and were always seen together. ``It was kind of like a marriage,'' said Ward.
Then something happened, some break, and nobody would say exactly what. In 1986, Kassir removed Ruffin's name from a foreign account without Ruffin's permission, court records say. Ruffin moved out of their Oceanfront office. In October 1989, he formed Prime Real Estate Corp. in Virginia Beach.
Yet still they were tied. Associates say they split the business 50-50.
Both skimmed receipts from the clubs, prosecutors said.
Kassir was born to a family of three sisters and two brothers. His father owned various businesses, including the Baghdad franchise for Coca-Cola syrup, Bayer aspirin and various movie theaters.
But his father's life, like Kassir's, was bound in a cycle of success and destruction. By the time Nabil opened his first business in 1965, most of his father's businesses had been confiscated by the Iraqi government after numerous revolutions.
By then, much of the family had left Iraq, moved their money and purchased real estate in Lebanon and London. His father died in 1976 - the same year Kassir became a U.S. citizen.
In 1956, at the age of 14, Kassir came to the U.S. He was an exchange student at the Norfolk Division of the College of William and Mary, now Old Dominion University, when he met Ruffin, an accounting student. They worked together as waiters and lifeguards and became friends.
In 1965, they pooled their money - $500 apiece - and bought The Tiki on Atlantic Avenue. They worked 16-hour days. Soon, the former Greek restaurant was transformed into a haven for the college crowd.
``You have to understand the era,'' said Jerry Burns, Ruffin's old friend. Burns met Ruffin in the 1960s while teaching him to fly. They formed a partnership - Burns said he was the first flier on the beach to pull advertisements behind his plane. The ads were for The Tiki.
``Everybody was young in those days; we were all 19 or 20, either in college or the military,'' Burns recalled. ``Everybody was interested in having a good time - everybody but Ed and Nabil, who were interested in making money. And they knew instinctively what appealed to that crowd.''
Yet even then, the competition was fierce. There were already business enemies, Burns said.
At that time, the biggest threat was from a city official who owned several clubs and businesses on the beach, Burns said. Trouble started when The Tiki applied for a beer license.
``The police started harassing Ed and Nabil,'' Burns recalled. ``Once, Ed was just standing in front of The Tiki when the police arrested him for loitering. Loitering - in front of your own restaurant. We had to go bail him out. After that, it was obvious The Tiki would not get a liquor license because of . . . the competing nightclub.''
So the two fought back, Burns said. Someone tapped the phone of the official, Burns said. ``I wasn't involved in the placing (of the wiretap), but I was in on the retrieving. It was just a tape recorder chained in the C&P telephone box outside the house.''
Burns said: ``Whatever was on that tape, it worked. Soon afterwards, Ed and Nabil got their liquor license.''
In 1967, the two bought the Peabody building at 21st Street and Pacific. They built the club on the second floor, and on the first floor started a T-shirt factory, which they sold in 1987.
By 1969, Peabody's was on a roll. When the first man landed on the moon in July of that year, ``they threw an all-day party,'' Burns recalled. ``Free beer - they gave it away.''
In 1970, Kassir sold more than 10,000 table soccer games, netting more than $1 million. By 1976, Ruffin and Kassir purchased Rogues and Mary's Kitchen. In time, Rogue's would develop into a club for an older crowd. Peabody's would book bands for the younger set.
Now the two started investing in real estate, court records show. They teamed with Littleton Hudgins of Hudgins Real Estate, who then owned the Dunes Hotel.
``In the 1970s and 1980s, we started buying real estate together - syndicates of six, eight, or 10 people,'' Hudgins recalled. The syndicates bought vacant land in Virginia Beach and Nags Head, then sold it at a profit.
During the 1980s, the success story continued. In 1981, they built the Best Western Hotel at 11th and Oceanfront. The decade saw more restaurants, more strip shops. Kassir used his gains to help his family: his brother Farouk co-owned Chicho's, his wife ran Aldo's. He sent money to relatives overseas, helped them escape the apocalypse in Beirut and Baghdad.
Then, in 1989, the ABC probe started. The good times were over.
They were victims of their own success, prosecutor Chuck Rosenberg told jurors during Kassir's 1994 trial. More specifically, they ran afoul of the state's ``45/55 law.''
In 1989, state law mandated that when a nightclub held a mixed beverage alcohol license, 45 percent of its total sales had to be in food sales. The problem was that people came to Rogue's and Peabody's to drink, not eat.
``The popularity of Rogue's and Peabody's gave Mr. Kassir a problem,'' Rosenberg said. ``The alcohol flowed, but the food didn't move very fast.
``Mr. Kassir had three choices,'' Rosenberg said. ``One, he could sell less alcohol and more food. Two, he could admit to the ABC he was not in compliance and submit phony reports to the agency to show he was in compliance, when in truth he was not. Mr. Kassir went for choice number three.''
There were two ways to doctor ABC reports: overstate food sales or understate true alcohol sales. Kassir chose the latter, buying ``off-ticket'' kegs of beer from his distributor and failing to report these sales.
According to evidence, Kassir bought off-ticket beer from Hoffman Beverage Co., dealing directly with the drivers since 1979.
Stephen Patterson, a Hoffman driver, testified that Kassir firmed the deals by handshake. Kassir approached him on his first day. ``He asked would I sell him kegs of beer to Peabody's without a ticket and that he would give me 50 cents a keg,'' Patterson said.
Patterson estimated that Rogue's bought one keg of beer a week. Peabody's bought 15 kegs on-ticket and 30-to-40 kegs off-ticket each week, Patterson said. The drivers then spread phony invoices around other Beach businesses to cover for the missing kegs.
That in itself was criminal, but Kassir and Ruffin didn't stop there, prosecutors said. Kassir skimmed receipts from his businesses, then paid off the clubs' legitimate expenses. He then took half of what remained for himself. The rest was left in a safe at the office of Kassir Investment Associates.
Each week, Ruffin opened the safe and removed his portion of the skimmed cash, as well as the documents showing true sales receipts, which were then shredded, court records said.
Prosecutors said that in 1989 alone the two skimmed $500,000 from the clubs. The total amount skimmed was either never known or never revealed.
In January 1994, Kassir was convicted of 25 counts and faced 190 years in prison. The packed courtroom was stunned. Business associates tried to comfort Kassir. Family members cried.
But federal prosecutors like closure. Ruffin was still unpunished.
So prosecutors made Kassir a deal, records show. If he cooperated in the investigation of Ruffin, his time would be cut considerably.
``Nabil took all the blame until the end,'' said his attorney, Richard Doummar. ``But he had an 8-year-old son and an 11-year-old daughter. He'd be in prison until well into his 60s.''
In December, Kassir called Ruffin and told him of the deal. Ruffin told his family to be ready for an indictment early in 1995.
On Wednesday, the two sat quietly with their families in federal court. Each watched as his old partner stood before the judge and apologized. Neither blamed the other. Each blamed himself.
``I've asked myself, `Why did I do this?' '' Ruffin told the judge. ``When you come down to it, it's a character flaw based on greed.''
Peabody's and Rogue's stand empty now. Oceanfront oldtimers wistfully remember the spots - the cruising, the pickups, the music.
On a recent evening, a young couple passed the closed Peabody's entrance. The day was pleasant. Both were well-tanned.
``This used to be something, huh?'' the woman said. Her eye was caught by a blue neon sign advertising ``Pro Piercing,'' suspended over a window display of T-shirts. She shrugged. ``Can't tell it now.''
Virginia Beach mounted police rode slowly past. Cars were backed up on Pacific Avenue. A concert played a few blocks away. Things had changed considerably since Peabody's opened, nearly three decades earlier.
The boyfriend laughed. ``Easy come,'' he said. ``Easy go.'' MEMO: Staff writer Marc Davis contributed to this report.
ILLUSTRATION: Nabil Kassir
Edmund Ruffin
THE RISE AND FALL OF KASSIR AND RUFFIN
In 1994, the letterhead of Kassir Management Group listed six
properties: Aldo's Ristorante, Hot Tuna Bar & Grill, Rogue's,
Peabody's at the Beach, Chicho's Hot & Spicy Pizza and Mary's
Kitchen. The partners also owned the Crosswinds Resort Hotel.
Together they owned restaurants and commercial property totaling at
least $7 million, court records and news accounts showed. This is a
synopsis of their rise and descent:
1956: Nabil D. Kassir comes to the U.S. from Iraq.
Early 1960s: Edmund C. Ruffin and Kassir meet.
1965: The two open their first business - The Tiki on Atlantic
Avenue.
1967: The two buy the Peabody building at 21st Street and
Pacific. They sell the club to an independent operator, then buy it
back in 1972 and run Peabody's themselves. The building also houses
a T-shirt factory that ultimately employs 200.
1970: Kassir sells more than 10,000 table soccer games, netting
more than $1 million over the next few years.
1981: Kassir and Ruffin build the Best Western Hotel at 11th and
Oceanfront.
1986: Kassir takes Ruffin's name off a foreign bank account.
Although still partners, the two go different ways. Kassir runs the
clubs. Ruffin runs the real estate ventures.
1989: ABC agents begin their investigation, rooting through trash
bins to piece together shredded cash register records.
1990: Kassir and his accountant, Marshall Eng, are charged with
tax evasion, money laundering, mail fraud and conspiracy.
January 1994: Kassir is found guilty of 25 charges in federal
court. Eng is found guilty of 12 counts.
August 1994: Kassir's brother, Farouk, who co-owned Chicho's,
pleads guilty to tax evasion.
Late 1994: Peabody's and Rogue's Gallery close after their liquor
licenses are revoked. Kassir agrees to provide information leading
to charges against Ruffin.
January 1995: Ruffin pleads guilty to tax evasion.
May 31, 1995: Kassir and Ruffin are sentenced to prison.
KEYWORDS: PROFILE by CNB