Legal troubles pile up for local food entrepreneur Jonny Hunter

Lawsuits and back taxes haunt Underground ventures

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The September closing of Forequarter, Underground Food Collective’s flagship restaurant, appears to be the tip of the iceberg.

This week, Underground Butcher, the collective’s deli and butcher shop on Williamson Street, announced on Instagram that it would be closing permanently on Dec. 15.

Additionally, Jonny Hunter, co-founder and public face of Underground Food Collective, is mired in a number of legal battles with investors, state regulators and suppliers.

Hunter is currently a defendant in several lawsuits involving the Underground Food Collective — a vernacular, umbrella name that encompasses several LLCs, including Underground Catering LLC, Badger Meats LLC, Middlewest Restaurant LLC and Underground Kitchen and Delicatessen LLC.

When Forequarter, 708 E. Johnson St., closed after seven years, Hunter cited several reasons, including staffing problems, disruption due to nearby construction, and the extra effort of launching Garver Events, Underground’s new venture at Garver Feed Mill.

However, other signs of distress in the organization are numerous. Isthmus has learned that Hunter owes thousands of dollars in back taxes and vendor payments, and is being sued by investors in his other projects. Hunter’s legal troubles include:

  • In October, the Wisconsin Department of Workforce Development filed claims in Dane County Circuit Court against Hunter for unpaid unemployment taxes totaling $10,718.
  • The Department of Revenue has filed warrants for unpaid taxes, also in circuit court, amounting to $59,795 against Underground Catering LLC dating back to August 2018.
  • Brothers Ben and Matt Feifarek, investors in Hunter’s never-launched restaurant Middlewest, 809 Williamson St., and Underground Meats, filed a lawsuit in September in Dane County Circuit Court against Hunter, Underground Meats LLC and Middlewest Restaurant LLC, over their $175,000 investment, alleging financial mismanagement and misrepresentation.
  • Premier Proteins, a supplier of high-end beef and pork in Kearney, Missouri, is suing Hunter and Underground Catering over unpaid bills for product amounting to $43,650.
  • Working Draft Beer Company, 1129 E. Wilson St., is suing Hunter in Dane County Circuit Court for breach of contract in a dispute over the lease for Working Draft. Hunter, who himself leases the building from S-K Investment Co., sublets part of the space to Working Draft. According to the lawsuit complaint, the dispute centers on access to shared utilities, intent to build a patio, use of parking spaces, and an increase in rent, among other items. Working Draft also alleges that Hunter is keeping kitchen equipment paid for by, and intended for, Working Draft. Hunter, in turn, is trying to evict Working Draft from its space.

When asked for comment on these entanglements, Hunter declines to provide information on the lawsuits on grounds of pending litigation. He also says that claims he owes back taxes are due to a misunderstanding.

Hunter has been one of the key players in the eat local movement in Madison since he and his brother, Ben, began operating The Catacombs, a coffeehouse in the basement of the Pres House, in 2002. They soon started getting press for sourcing ingredients from local purveyors, then a novelty, especially at a low-cost campus eatery. The brothers gained prominence with pop-up dinners held in Madison, Chicago and Brooklyn, New York, that highlighted nose-to-tail eating and use of locally raised heritage breeds. They opened a restaurant, Underground Kitchen, held DIY butchering classes, started a catering arm and launched Underground Meats, which makes artisanal, old-world-style sausages.

Hunter has received five nominations for a James Beard Award in the “Best Chef: Midwest” category, and Forequarter gained a nomination for “best new restaurant” after it opened in 2012. In addition to Forequarter, Underground Meats, Underground Butcher and Garver Events, the Underground Food Collective operates The Heights, 11 N. Allen St.

But Hunter has been a controversial figure in the local restaurant industry. Patrick DePula, of Salvatore’s Tomato Pies, along with Tory Miller and other prominent Madison chefs, was involved with Hunter during the launch of the Madison Area Chefs Network and the first years of Yum Yum Fest. DePula says that the chefs network and Hunter mutually decided to part ways; the group later discovered that Hunter had failed to follow through on a promise to file the group’s taxes. Hunter declined to comment on the record about DePula’s assertion.

“There was a lot of internal accounting that just didn’t happen,” says DePula of the first Yum Yum Fest. “In years of working with Jonny, when he has fiduciary responsibility, it’s always difficult to figure out where the money is going and how he is accounting for it.”

The launch of Underground’s latest venture, providing the catering in the event space at the Garver Feed Mill, aroused concern as Hunter applied to transfer the liquor license from the Middlewest site to the Garver site.

Middlewest investor Matt Feifarek says he thought long and hard before testifying before the Alcohol License Review Committee against the transfer. “I’d been keeping this hidden out of respect for [Hunter and Underground] for a long time,” says Feifarek in an interview. “As I saw things starting to go badly at the [Working Draft] brewery, I thought, ‘Oh, we’re not the only ones here. I’m not the only one here.’” In addition to being an investor in Middlewest, Feifarek is also a partner in Working Draft Beer Company.

As Feifarek started sharing his story, he heard more stories that raised further concerns about Hunter. He began to feel that Hunter was “someone who was hurting my community, and there was a chance that I could stand up and say, hold on, this person doesn’t deserve the benefit of the doubt.”

When the ALRC deliberated the license transfer in June, Ald. Mike Verveer, a member of the panel, alluded to emails he received from four alders expressing concern that one of Hunter’s businesses, Badger Meats LLC, had unpaid debt. But Hunter told the committee that Underground had “reorganized” its staffing and closed one of its businesses, and that the Department of Workforce Development thought that business was still functioning — hence the misunderstanding. Hunter said the businesses were now “all under one LLC” and that he “took care of all those fees.”

It is not clear from his testimony what business Hunter had closed, or which LLC was now the umbrella business.

At the June ALRC meeting, Feifarek told committee members that Underground was not the kind of “socially constructive, responsible business” they should be awarding licenses to.

“I’m here to speak for a long line of people who have been hurt by Underground businesses and in particular Mr. Hunter,” he said. “It gives me no pleasure to say this. I believed in these businesses — obviously, I invested in them,” said Feifarek, who noted he had been involved in four different Hunter-led “initiatives.” “And all have gone south,” he added.

The license Hunter was asking to transfer to Garver was first awarded to Underground Kitchen, the restaurant at 127 E. Mifflin St., that closed due to a fire in June 2011.

Hunter transferred that license to the proposed Middlewest on Williamson Street, and paid yearly fees to keep the license active while the restaurant never opened.

In June, Hunter applied to transfer the license to the Garver site. Feifarek objected to the license going to a new venture when he had been helping to pay for the license for Middlewest for years: “I’m here to say that this license is not in the free and clear, and I don’t think it should be transferred for the benefit of a different LLC than the one that I was told paid for it.” The license transfer, however, was ultimately approved.

In September, Matt and Ben Feifarek filed suit against Hunter over their investment in Middlewest and Underground Meats. The suit alleges “the failure of Middlewest and Underground Meats to provide financial and corporate documents;” it also charges that the “limited financial information” that was provided was “inaccurate.” At one point, according to the lawsuit, Hunter asked the Feifareks to sign a non-disclosure agreement before they could view such information.

The complaint says “statements made to the Plaintiffs by Hunter indicated Hunter had and continues to use Middlewest and Underground Meats funds to pay for obligations incurred by other unrelated corporate entities owned by Hunter.” The suit also alleges that Hunter used funds meant for equipment for Middlewest to buy equipment for his other businesses.

Looking back, Feifarek says he and his brother accepted Hunter’s local foods evangelism without properly vetting his business record. “He finds someone like me and my brother who believed in what he was doing and didn’t check around with the proper people,” says Feifarek. “He told us what we wanted to hear.”

Former Madison Ald. Scott Resnick also invested in Middlewest. He tells Isthmus he was unaware of the Feifarek lawsuit or any of the other issues surrounding Hunter. When he invests, Resnick says, he knows “there’s a high level of risk.”

Resnick’s continued enthusiasm for Hunter echoes that of his many supporters over the years. Hunter’s Underground Food projects are “a part of what makes Madison a great place,” Resnick says. “I still root for Jonny as an entrepreneur and a good guy and hope he can figure out the business model.”

In early plans for Working Draft Beer Company, which opened in March 2018, Hunter and Underground were going to provide the food at the brewery. But that plan changed shortly before the brewery opened.

Hunter sublets the East Wilson Street space to the brewery, and was originally a shareholder in the business.

Hunter voluntarily relinquished his stake in Working Draft before the brewery opened, after the Wisconsin Department of Revenue initially denied Working Draft’s brewing permit, in part due to back taxes owed by Hunter from his other LLCs, according to Working Draft co-owner Ryan Browne.

When the brewery opened, food was provided in pop-up fashion by Dan Fox of Heritage Tavern. Working Draft now operates its own kitchen.

Browne, in an interview, says he and the other brewery owners were taken aback by Hunter’s demand, in January 2019, that Working Draft stop using shared utilities in the building and set up its own access to utilities, instead of the current arrangement of submetering their part of the utilities and paying Hunter.

The suit filed by Working Draft against Hunter states that “At no time prior to the lease being signed did Underground advise Working Draft that the shared utilities would have to be removed, altered or re-arranged at some point in the future” or that “its electrical service would have to be separately metered.”

Hunter, the complaint says, also required Working Draft to stop sharing internet access and set up its own internet connection. To do so requires access to a locked shared utility room on the property, but Hunter refused to grant access to the cable installation contractor, according to the suit. Internet access is necessary to Working Draft’s point of sale system.

Browne tells Isthmus that Working Draft “tried its best to investigate the options” that would satisfy Hunter’s demand to establish separately-metered utilities, but it was “cost-prohibitive, especially when our stance was, who is providing those utilities is not in question, according to the lease.”

Working Draft and Hunter also disagree about whether the lease allowed Working Draft to build a patio and whether the new bathroom the brewery built is in the footage covered by the lease.

In October, the parties entered into mediation, which failed to resolve the dispute. On Nov. 15, Underground Meats LLC filed an eviction notice for Working Draft Beer Company. The eviction case will be heard in Dane County small claims court Dec. 20, unless motions to roll the eviction into the larger lawsuit are granted in the meantime.

“We’re not sure why he’s taken this position, because we have honored the lease since the first day,” says Browne. “We want to get this resolved so we can move on and get back to focusing on being a brewery and making beer and food for everyone who comes in.”

While generally declining to comment on both the Feifarek and Working Draft lawsuits, Hunter did say in an interview that the brewery is “occupying space that is outside of their leased premises.” He also says that his request to have Working Draft install separate utilities “is really complicated and something I don’t want to put on record because of pending litigation.”

Hunter explains the back taxes as a mix-up with the Department of Workforce Development that stems from Underground Catering, which he says was dissolved as a company in the summer of 2017. “What happened was we closed Underground Catering in 2017, so we have not been generating revenue for unemployment taxes since then. The claims are based on assumptions that the Department of Workforce Development made about our operation,” Hunter says. “Underground Catering does not owe that money.”

Hunter says he has been discussing the issue with the agency. “The reality is, [Underground Catering] doesn’t exist as an entity and I have gone back and forth with them as to what I have to send in and file to show that to them.” The only catering that Underground is doing now, Hunter says, is through Garver Events.

The Wisconsin Department of Financial Institutions website indicates that Underground Catering is delinquent in filing its annual reports and shows no record of it having filed an article of dissolution.

Hunter thinks the debt to Premier Proteins also has to do with the dissolution of Underground Catering, and says that he is negotiating down the amount owed. It is not clear why Hunter was ordering meats under the name Underground Catering in 2018 when he says the company was dissolved in 2017.

Of the closing of Underground Butcher, Hunter says it was “pretty obviously time to simplify and focus on other things. It didn’t make sense to continue to keep running it in light of the other businesses.” When asked if the landlord had offered to forgive unpaid rent if Underground Butcher vacated the premises, Hunter says that “It made sense to get out of the lease if we could, if that was an offer.”

Hunter says he is looking forward to the resolution of these issues. “I want to see this wrapped up. It’s been a very difficult couple of years.”