A former restaurant owner in Jefferson Park has been accused by his one-time landlord of defrauding the federal government out of $243,000 in pandemic aid.
Sarto’s was a highly regarded Italian restaurant at 2900 W. 25th Ave. from 2014 until its closure in October 2020. It was founded by Taylor Swallow, who had been a real estate consultant and lender before leaving the corporate world and opening the restaurant.
Federal records show that in March 2021, five months after it closed, Sarto’s received a $243,297 loan through the Paycheck Protection Program — money that was supposed to be used to keep workers employed. The loan has not been repaid. The address that Sarto’s listed on its PPP loan application, 1766 W. 46th Ave., is a post office in Sunnyside.
Jefferson Park LLC, which owns 2900 W. 25th Ave. and whose operating manager is businessman Ken Wolf, is still owed $98,000 in back rent from Sarto’s. The landlord says the PPP loan is just one example of Swallow’s schemes to enrich himself.
“Between March 2020 through its voluntary dissolution in February 2023, Swallow kept Sarto’s alive for the sole purpose of defrauding creditors, by creating the appearance that (its) funds were being used for a business purpose but (they) were being used to pay personal expenses,” the landlord alleged in a Denver District Court lawsuit on June 8.
Paul Grant, an attorney for Swallow, says Sarto’s still had employees in March 2021.
“It was, I would say, pivoting to see if there was something else it could do other than operate a brick-and-mortar restaurant. They were exploring all kinds of options related to the food industry and the wine industry as well. That’s why they still had payroll,” the lawyer said.
Sarto’s told the government that it was paying 27 employees during that pivot, according to its PPP loan application. When asked what sort of business Sarto’s ultimately chose to pivot towards, Grant said, “Nothing. None of it worked out, none of it was viable.
“Just because the restaurant was closed does not mean that the business was not operating. “They were also defending against a lawsuit by the landlord at the time, so they had to continue in existence, if for no other purpose than to defend against the lawsuit.”
Jefferson Park LLC first sued Sarto’s in October 2020. Sarto’s countersued, accusing the landlord of changing locks before it could remove its equipment.
A two-day trial was held in May 2022 before Denver District Court Judge Bruce Jones, who sided with the landlord and ordered Sarto’s to pay Jefferson Park LLC $98,018. It has not.
In his latest lawsuit, Jefferson Park LLC accuses Swallow of running Sarto’s as “a phantom business” after it closed in 2020. The landlord, who claims to have access to years of Sarto’s ledgers, said Swallow paid himself $18,000 in November 2020, wrote himself a $42,000 check after receiving the PPP money in March 2021, and charged $7,335 worth of wine, $3,000 in meals, another $2,992 in telephone charges and $560 for coffee to Sarto’s after closing.
The landlord is unhappy that Sarto’s had money in the bank but never paid its rent. He wants Denver District Court Judge Christopher Baumann to make Swallow hand over the $98,018 in back rent that he owes, plus a penalty of $49,009 for fraudulently transferring assets.
Wolf also owns the Denver Central Market food hall in RiNo, where he recently resolved a dispute with his landlord. He is represented by attorney Max Stich with the Tiemeier & Stich law firm in Denver.
Editor’s note: This story has been updated to clarify the role of Ken Wolf.