Dr Jefe Answers His Critics On the Closing of Rock Paper Scissors

by on February 25, 2009 · 65 comments

in Economy, Media, OB Shop Talk, Ocean Beach, San Diego

(Originally posted on Feb. 19th, now re-posted due to popular demand.)

OCEAN BEACH, CA.  I finally sat down with Dr Jefe inside the hollow chamber once known as Rock Paper Scissors and got his side of the controversies surrounding the closing of the popular arts and crafts store. It had suddenly closed without notice earlier this month.

In an earlier post, I had repeated some heavy charges made by his former vendors, vendors who had corroborated each others tales of woe at the hands of Dr Jefe.  We had claims that Dr Jefe – who is actually Jeff Fagan – had raised December rents knowing full well he was going to close his establishment in the new year; that he had not paid vendors back their Feb. rents or their security deposits, that a number of vendors’ checks from Fagan for December had bounced, and that he, after months of planning, suddenly sprang the closure on the vendors and gave them only a couple of days to get their wares out. ….

Rock Paper Scissors had become one of OB’s favorite stores and all were saddened when the doors were shut. I wanted to give Fagan his due – and soon.  Then in the middle of today’s shopping, he called me and we set up a time to meet at the store.

Jeff Fagan has an import store right across the street under the Rock Paper Scissors name, which he just opened. That’s where I found him. We shook hands and walked across the street, going into the former store for our discussion.  Not a stocky guy, by any account, Fagan definitely strikes you as a big man, the way he carries himself about, with a bald top and black shot of facial hair, his nature being generally an affable if intense one.

Craig Klein, Fagan’s lawyer and friend also accompanied us. Craig is on the OB Planning Board and is active in the community. He is also married to Julie Klein, a prominent businesswoman on Newport, and he surfs I hear.  Once inside, I found a place to sit down – not an easy chore given the state of the store – and then found we were being joined by Faith – Fagan’s store manager, and by Saad, the landlord.

The inside was just about totally bare. A worker was cleaning one of the walls, a few people bustled about. You could see where whoever was doing the sweeping had stopped, and a long line of collected dirt crossed the cavernous room. It was sad. The place we knew as Rock Paper Scissors will never be again. There might be an arts and crafts co-op in its stead under another name but RPS is gone.  Or, given the state of the economy, it might be something totally different – or it might sit vacant like half a dozen other storefronts in Ocean Beach.  But it had been a beautiful place and ya have to give credit to whoever pulled it off and brought it together. And that, of course, was Dr Jefe. I openly admit, it was  one of my favorite stores on Newport.

So, there we were, Dr Jefe, his lawyer, his manager and his landlord. Jeff had a hard copy of my earlier post and he wanted to just go down the list of accusations and answer them, which he preceded to do without hesitation. He seemed frustrated, upset, but did not exhibit any anger, and was very courteous to me.

Over-all, Jeff denied most of the charges leveled against him, making it seem that of all 140 vendors, only a handful had any legitimate gripes against him.

When he opened the store in 2006, he formed an LLC then, not more recently. One charge was that he had just formed it, so it would protect him if sued.  Fagan also said he had not been considering bankruptcy either last Fall.

Jeff was very emphatic that he did not decide to close RPS until February 2nd. There was no prior planning or plotting.  Business had been going down, and he claimed that he tried to do everything in his power to keep the store open.

But the day he had received his financial statements, he knew the store could no longer go on. So he decided on the spot to close the place down. It was February 2nd. He wrote a letter to all the vendors letting them know, giving them until the end of the month – February – to retrieve their goods.

Fagan flatly and categorically denied collecting any rents from vendors for February, so there was no monies to give back for that month.

No, in fact, he had been doing all he could to keep the business running, to provide a place for all the vendors.  Trying to do a third re-fi on his house in order to keep the place going went no where. He had pumped $50 grand of his own money into the business a year ago, he said.  Jeff said he had been “overly optimistic” in thinking he could keep the business going, looking back on it.

Jeff’s landlord got into it. He owns Apple Tree (and other properties). Repeating himself a bit, he made it clear that he had worked with Jeff “to make things happen”and done everything imaginable to keep the doors open. And that he knew Jeff had been doing all he could as well. More than any of the vendors, Saad said, he was the one who had been hurt financially by the downturn at RPS.  Saad, in an aside, said he lost his shirt when Gold’s Gym moved out without making any repairs. But now Jeff was cleaning up the building.

We focused for a few minutes on last December. First, Fagan denied raising vendors’ rents that month, although he said he raised rents on just a couple of vendors in November.  Maybe five vendors had had their rents raised.  Faith, the manager, added that they had been trying to get all the rents at the same rate.  Jeff said no one had anticipated how bad sales were going to be in December, traditionally a retailer’s best month. They had come in way under expectations.  But he denied that he had gone around and told everybody that everything was going well.

Almost all the vendors were paid for December, Jeff claimed. Although he admitted that some had had their checks  bounce, and needed to be paid.  Jeff said he owned  vendors a total of $15,000 for that month.

Understandably, Fagan bristled over the allegation that he owed vendors up to a quarter million dollars. He said it was closer to only $20,000.  3/4’s of that was from the dive in December. The remainder were their deposits and monies from January. On the allegation that vendors had lost January monies, Fagan admitted, that yes, he too, his father, his son – they were all vendors and they all lost. None of them were paid in January.  Fagan said that he didn’t owe a lot of back rents, as he didn’t collect first and last months rents, just the first rent and a security deposit.

I asked him what was his plan to pay the vendors. He said he is liquidating his assets. We all looked around the cavern and didn’t see much.  Then Fagan added that it is costly to clean up the building but he’s paying for it. He and Faith both said they were planning to pay the vendors back on a percentage basis.  “I have no money,” he said, with his hands outstretched.

Fagan did go to Asia this past summer and make purchases of wares to sell. That was his usual routine. He is into retail. The things he bought were for sale here, in his retail store. If he had been planning on closing why would he, Fagan asked, spent so much on retail goods. His current business is only wholesale.

Faith, the manager, assured me that all the employees had been paid.  And, Fagan said his lease with Saad is month-to-month, so no, he did not have another year on it.

What about the plans for a co-op, I asked. Here, both Fagan and Saad, the landlord, made it clear that they’re still in negotiations. Jeff wants to set up a co-operative, where 5 or 6 leaseholders would rent directly from the landlord, and manage their own sales.  He envisions a place where independent businesses could be under one roof. And where he would not be directly involved, but would be the facilitator. Jeff proudly added that both the Town Council and the business association back this idea of the co-op.  But it could not be called Rock Paper Scissors.  That business failed.

Saad said, however, if someone walked into the building at that moment wanting to lease it, that would be the deal.

We ended our interview and shook hands. I stood up and departed the old building, once a straight-laced branch of Bank of America for decades. Once again it had been cleaned out.  The ol’ building certainly has had its share of standing empty. Now its future was in doubt.  Will it be a co-op?  Will it once again bustle with the anticipation that quality goods bring? Will it stand as an empty shell, reminding all who pass by of the economic slide that has hit Newport? Will it join a growing list of vacant storefronts that remind us of the economic turmoil we all face?

One thing is for sure. Rock Paper Scissors put a smile on every one’s face who walked through its doors. Dr Jefe did that. Whether hard times pushed him to take desperate measures that hurt those he says he was helping or whether a handful of hard-to-please vendors with an attitude are stirring things up, we will continue to hunt for the light in the shadows.

We’re a blog. No one here works on this internet thing full time. We don’t get paid. We have meager resources. But when people from our community approach us with genuine and earnest complaints, we listen. Now, Dr Jefe has answered his critics. Whether the community has heard him or not will be reflected in part in whether vendors come forth to set up his design of a cooperative.

In the meantime, what do you think?

{ 14 comments… read them below or add one }

avatar jon February 24, 2009 at 3:53 pm

Just passed Turko & crew interviewing upset vendors outside RPS as cleanup was taking place inside. Should be an interesting segment….”It ain’t RIGHT.”

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avatar Frank Gormlie February 24, 2009 at 4:12 pm

jon or anyone else, if you know the time of the Turko report, will ya let the rest of us know. By 4:10 Turko & Co had left the area and were no where in sight.

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avatar jon February 24, 2009 at 4:18 pm

KUSI news happens at 6-7 and again from 10-11:30. I set my DVR as I will be out at a class tonight.

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avatar Debbie February 25, 2009 at 6:27 pm

After reading all these comments what sticks in my mind is that nobody decides to close a store in just one day. That’s not how to run (or closed) a business or how to treat vendors, employees or your community. If things were bad, RPS should have had a holiday, end of the year, end of the business sale to let vendors get rid of their inventory and ask the community for support during these hard times. If this dude owes people money he should stay out of OB. If this dude has paid all his debts and is on the up and up then it’s all good.

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avatar jettyboy February 26, 2009 at 9:25 am

Isn’t capitalism wonderful! It always brings out the absolute best in everyone.

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avatar Karma Market February 27, 2009 at 9:08 am

Hi all! It’s Rebecca from Karma Market – a fair trade boutique. I am a long time RPS vendor, life long member of the OB community and am very sad to see how this has all turned out. I definitely understand the plight and struggle of small business owners. What I cannot accept is the dishonest business practices and irresponsible financial management of RPS. Jeff – I find it very hard to believe that you made the decision to close RPS’s doors in one day’s time.

My December check of $1500+ bounced and like all the other vendors I did not receive my January check nor my deposit. The thing is, the money that RPS collected for all my product was never his to use. When he sold a purse from my booth, he collected MY money and held onto it for me. He should not have been paying bills or himself with that money. The 13% and my rent was his to use – not the rest. I never signed up to be financially responsible for the well being of RPS.

Jeff – I have a very hard time being OK with the fact that you are opening up another store and going on a buying trip already without even attempting to make right with your vendors. I am owed approximately $2000 – maybe a small sum to you – but money that I was counting on to pay for the inventory purchased on credit for the holidays.

Karma Market exists to help make fair trade products more accessible to our community – not to put big cash in my pockets. This business is just a passion project for me and finding time to purchase, inventory, tag, merchandise at the end of the day – after my “real” fulltime job is over and my daughter has gone to bed – is a bit of a sacrifice. But worth it when I know I am making a difference. This set-back makes this sacrifice that much harder to rationalize.

I just feel the truth needs to be known and ask respectfully that there is an attempt to repay me.

Rebecca – http://www.thekarmamarket.com

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avatar Debbie February 27, 2009 at 5:15 pm

Give Rebecca her money !!!!!!!!!!!!!!! Rebecca, I am not a lawyer but look into taking him to small claims court. A bounced check and you get 3 times what you are owed. If he personally is using your money to fund his next business venture, sue him personally and put a lien on his house. Of course, research these ideas and make sure you can pursue these avenues legally.

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avatar OB Artist March 1, 2009 at 8:39 pm

I was a vendor for only a couple of weeks at Rock, Paper, Scissors before I received a phone call informing me that the business was going bankrupt and I would not be receiving my deposit back or any money from sales. I assumed that I would be receiving partial compensation through Bankruptcy Court, but it doesn’t appear RPS will be filing bankruptcy. Anyone who lost money might want to consider filing a case in Small Claims court. It requires only a small fee to do so. Be advised that although you can not have an attorney speak for you in court, you can seek advice on how to write up a statement to hand to the judge. Present the facts with dates and provide documentation minus the emotional drama. If I had lost a couple of thousand dollars or even a couple of hundred, I certainly would proceed with a lawsuit rather than being burdened with the anger and resentment of victimhood. I hope that Jeff will choose to take action to heal the anger that has been generated by this situation.

For more information on Small Claims Court contact
(619) 236-2700
8950 Clairemont Mesa Blvd, San Diego, CA 92123

http://www.sdcourt.ca.gov/portal/page?_pageid=55,1424399&_dad=portal&_schema=PORTAL

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avatar Robert Burns March 1, 2009 at 10:01 pm

Hi. I’m not up on the specifics despite having an artist girlfriend up in arms over this. But, I will say that there generally are minimal ethics and fidiciary duties in the business world and the presumption (not to be confused with proof) is that–bounced checks aside–there was no fraud nor theft by this outfit. But, the presumption would have been the opposite if a professional (e.g., lawyer, accountant) operated in such a way.

Has Turko panned this dispute?

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avatar jon March 2, 2009 at 9:44 am

I saw Turko filming out there last Tuesday. Not sure if he’ll air it or not. But I keep checking KUSI news.

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avatar jim grant March 3, 2009 at 10:16 am

I had a small ” wall display” at RPS where I displayed and sold photos of OB and the green flash. It appears my security deposit, January rent and payments from sales has been absorbed by someone. I can only assume whom. I am not sure of all the facts,I look forward to BK court so we all can have our say and the facts will come out. If that is not to happen I for one will be filing in small claims court for repayment and all associated damages. Maybe all past unhappy vendors should form a group to take action.
If Mr. Fagan cares for the community like he says he does…his actions say otherwise. Integrity is a word he needs to look up. I saw him and a woman Friday at South Beach Bar n Grille they sat alone at a table by the front door ( the server was concerned he was going to dine and dash).. people were looking and talking about him…word spreads very quickly Mr. Fagan. No more Mr Big around town. Karma strikes. I would be happy to answer any questions from him the media or anyone else on this matter..Jim Grant 619 279-3529

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avatar Jean Vavra March 5, 2009 at 6:58 am

I was a vendor at RPS for about 16 months. Since finding the Co-op model of stores, I’ve since been in 6 different ones. One store, Metropolis in Hillcrest, did close due to financial woes. The owner there was a man of honor and he paid all his vendors their deposits and sales money. Jeff is definitely not a man of honor. It is outrageous that he would pretend to the vendors that he is going bankrupt. I have very little extra time between running my business, my home, and taking care of my children to spend on this matter. But it is important to me that the truth be told and more people are not duped to go in on another venture with this person. I will continue to make calls to the vendors and get the word out that he is not filing bankruptcy. Most of the artists in the store have expressed their desire not to spend more energy on such bad energy. That is how Jeff will get away with this. People need to step up and take a stand.

Turko interviewed me outside the store last week. The two other people that were supposed to be there were spoken to by someone from the store and warned not to not go. If anyone wants to talk to Turko about this matter, please call me and I will get you that information. He needs more people to do the story.

Jean
858-576-9767

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avatar mysto-cliff dweller March 10, 2009 at 10:07 am

For vendors interested in filing Small Claims actions, The correct defendant to sue is: Shelton Fagan Enterprises, LLC, a Caifornia Limited Liability Company, doing business as Rock Paper Scissors.

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avatar risa renee March 15, 2009 at 3:39 pm

What has happened to OB? Very sad.

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