King Nothing

Judges appoint Mark Dottore to stabilize troubled companies. Critics say he's cleaning them out.

A bank needed to repossess a plane from a Columbus health-care company, which owned a pair of jets worth more than $20 million. Shortly before, the company had sold one off. The bank had to move before the other disappeared as well.

So Mark Dottore hired three pilots and boarded a small plane. They flew to the airstrip, commandeered the jet, and took off. The bank was later able to sell it, recovering more than $8 million.

"It was one of the ballsiest things I ever heard," says Robert Glickman, a former common pleas judge. "It's stories like that that made me think that if I have a company in trouble, this seems like a good guy to entrust it to."

Many judges do trust Dottore. He works as a receiver, a rough equivalent to a bankruptcy trustee. When a company runs afoul of its creditors, and management is deemed too corrupt or incompetent to right the course, Dottore is called on to restore fiscal sanity and look after the creditors' interests.

Merely by swearing an oath and putting up a minimal bond, receivers are handed the keys to multimillion-dollar businesses. No money moves without their say. The company is at their mercy. "It's like a hostile takeover by the court, in a way," says Judge Nancy Margaret Russo.

Dottore is among a select group of receivers tapped to handle the biggest and messiest of cases. He claims expertise in fields as diverse as banking, polymer coatings, and day care. "Basically, I go in and sift through ashes, and out of that, I have to create value," he says.

It's work that naturally creates enemies.

"If I took all the money out of your pocket and did it every day for a year, how happy would you be with me?" he asks. "A receiver's gotta have the negotiating skills of King Solomon, the mind of a forensic accountant, and definitely the skin of a rhinoceros. Nobody likes you."

But in this profession, Dottore has earned a special enmity. Business owners, employees, and lawyers all complain to the same tune. They say that Dottore uses his political connections to get appointed. That he exploits his position to enrich himself, his brothers, and a hand-picked supporting cast. And that he operates in secrecy, padding fees and siphoning money from companies with nothing to spare.

"He just gets in there and it's feeding time at the company trough," says one lawyer, who requested anonymity. "It's a story about access and greed and poor judicial oversight. They've handed him the cookie jar."

The Dottore family has been in the receivership business for 50 years. It was started by Mark's father, Nunzio, who owned Ivanhoe Furniture in South Euclid. But it flourished under Mark, 46, and his two brothers, Thomas, 45, and Charles, 38, who operate out of an airy warehouse in the Flats just large enough to hold their outsized personalities.

Mark's most prominent feature is his highly cultivated self-regard. He's a natural storyteller with a booming, authoritative voice who boasts readily of being featured on Dateline NBC and appearing in The Washington Post and Crain's Cleveland Business.

"If you died, you'd want to come back as me," he says at one point. "I've got great friends."

Many of them are politicians, and the Dottores have never been shy about currying their favor.

The family was one of the top financial backers of Domestic Relations Court Judge James Celebrezze. When he took office in 1991, the court promptly purchased several thousand dollars' worth of mahogany desks, sofas, and executive chairs from Ivanhoe Furniture. In 2001, Celebrezze appointed Mark Dottore as a receiver for a 10-building apartment complex. Two years later, Mark served as Celebrezze's campaign treasurer.

Mark also has a friend in Governor Bob Taft. He donated $2,000 to Taft's reelection campaign in 2002, and the governor has twice appointed him to the State Lottery Commission.

The Dottores are also involved with a political action committee called Millennium Leadership. Mark is its treasurer and largest contributor. He characterizes the PAC as having all the importance of a dinner party. But since 2001, it's spent $13,900, most of it donated to various candidates, including judges Bridget McCafferty, David Matia, and Nancy Russo.

Though Mark Dottore downplays his political influence in interviews -- "Most of the judges that appoint me to stuff, I've never given a dime to" -- he's less shy on a résumé advertising his credentials, where he brags up his "political judgment" by noting that he's been a "consultant and fund-raiser for many political campaigns at city, county and state levels."

"The Dottores made it clear that their business is politics," says Scott Forster, vice president of General Environmental Management, a company Mark Dottore was appointed to run.

Adds Robert Ranallo, who inherited a receivership from Dottore: "He pretty much said that he was the king of this in Cuyahoga County."

In 1999, Cleveland entrepreneur C. David Snyder spent $2 million to buy a controlling stake of Frederick Brewing Company in Maryland. A year earlier, he had acquired Crooked River Brewing, dreaming of building Snyder International Brewing Group into a microbrew empire. He hired pricey executives from Rolling Rock and Corona, employing as many as six vice-presidents in a company that counted only 50 employees.

But the enterprise soon collapsed under its own weight. It expanded too fast, acquired too much debt, and the microbrew craze was on the wane. An extravagant new plant was operating at less than 50 percent of capacity. The company owed $1.1 million in utility bills and property taxes alone.

Scenting blood in the water, creditors moved in. In August 2002, two of them won a judgment against the brewery worth more than $100,000. Four months later, one petitioned Cuyahoga County Judge Nancy Russo to protect its financial interests. Russo turned to Mark Dottore. (She would later recuse herself when her husband, Michael Cheselka, was introduced to Snyder by the Dottores. Months later, Cheselka became Snyder's attorney.)

Brewery manager John Niziolek's chief concern was the company's survival. A former nuclear engineer with the Navy, he had been with the company almost from the start. But Dottore assured Niziolek he was there to help. Snyder told him it was all for the best.

"We could have fought it from the beginning, but he elected not to," Niziolek says of Snyder. "Quite honestly, I think it was probably one of the worst mistakes he ever made." (Snyder did not respond to interview requests.)

If the company had run aground under the weight of too many expensive execs, that wasn't about to change under Dottore. In fact, it would only get worse.

Mark promptly added his brothers, Thomas and Charles, to the payroll -- at $175 and $125 per hour, respectively. Charles was the point man, though his experience was as a former funeral director, not a brewery manager.

"Charlie used to always tell me what judges they have and what judges they didn't have," Niziolek recalls. "He used to walk in with a big fat cigar. He looked like Groucho Marx."

Mark Dottore's patronage didn't stop with family. Kevin Kelley, president of the Parma School Board and a former beer salesman and liquor-store owner, was hired on as a $30,000 consultant. With Kelley, the Dottores, and lawyer Mary Whitmer all routinely flying in from Cleveland, the brewery's costs soared.

"The whole barrage would come in and drive up in their chauffeured limo, stay here for an hour and a half, then get up and leave," Niziolek says. "And I'm getting billed out the fucking kazoo!"

It wasn't like the business could handle it. Payroll checks were bouncing. Once, Kelley gave Niziolek a stack of checks to hand out, he says. A half-hour later, the Dottores sent a fax saying there was no money to cover them.

"Just imagine yourself having to go in front of your employees and say, 'I have your paychecks, but there's no money in the account,'" Niziolek says. "I'm a man, and we're not supposed to admit these things, but the second time it happened, I went into my office and cried. Personally, this has really hurt me. I was writing personal checks to help some of my employees make it until things were good."

At one point, the Dottores canceled the employees' health insurance, Niziolek says. It took three weeks for them to find out. In the meantime, one worker's wife had undergone major surgery. Only after the bill arrived did they learn they were no longer covered.

"He actually is filing for bankruptcy because he can't pay the $30,000 in medical bills," Niziolek says.

But if workers were going broke, the Dottores were living the high life. In December 2003, Mark entertained business associates and friends in Snyder's loge at Browns Stadium. The cost: $10,500. The Browns came to Snyder when Mark's check bounced, according to a deposition from Snyder. Dottore ultimately paid the bill.

The final straw came when the Dottores tried to close the brewery after Snyder refused to supply more money. Snyder asked the courts to remove Mark, citing outrageous fees and failure to run the business properly. In a deposition, he testified that the Dottores neglected to file federal withholding-tax reports, make 401K deposits, and pay water bills and suppliers.

Mark denied the allegations, but agreed to turn over the keys. Still, it was a generous payday. He applied for $280,000 in fees and expenses. His hired guns also hit the jackpot. Whitmer's law firm clocked out with more than $406,000 in bills. The accounting firm of Ciuni & Panichi earned $132,000. All told, Dottore's crew asked for more than $800,000.

"I don't typically see receivership bills that high," says Robert Ranallo, the receiver appointed to replace Dottore. "There was a lot of fence-mending to do with many of the people who had stakes in the receivership."

Other bills practically begged for closer scrutiny. Another company for which Mark acted as a receiver billed $80,000 to the brewery for printing services. Mark paid himself $31,235, saying that he had lent the money to the brewery so it could pay its water bill and avoid a shutoff.

The brewery is still cleaning up the mess. It recently had to pony up $110,000 for 10 months of back taxes that the Dottores didn't pay, Niziolek says. The feds waived the penalties for late payment, but demanded the interest.

"We're still paying off bills that they created," Niziolek says. "You have a financially strapped company who got associated with receivers, and we have more bills than what we started with."

Scott Forster and Eric Lofquist are exactly what Cleveland needs: young, ambitious entrepreneurs. Their company, General Environmental Management, treats industrial waste at a facility on Transport Road and counts 54 jobs on its payroll.

They formed GEM in 2001 to provide marketing services to a waste-treatment company called Pure Tech. But that company's owner, Robert Kattula, wanted out. Facing the loss of their only customer, Lofquist and Forster partnered with him and assumed responsibility for running the company.

Their contract, however, had more holes than the Browns secondary. Before the deal, Kattula had signed a consent agreement to clean up pollution on Pure Tech's property. Lofquist and Forster argued that it was Kattula's responsibility; Kattula said it was theirs. A lender had also filed suit against Pure Tech and Kattula to seize company assets.

To resolve the dispute, Kattula asked Judge Robert Glickman to appoint Mark Dottore as a receiver. Glickman, who would later become Mark's lawyer, granted Dottore the job.

"I gave him a receivership because he's recommended by judges or law firms in town," Glickman says. "I wanted someone who had a business background."

The day after the appointment, Mark and his brothers showed up unannounced to seize control of GEM, Forster says. "The whole clan walks in and says, 'We're now running your company, taking over your checking account.'"

If their arrival was abrupt, the Dottores didn't set off any warning bells. They assured Forster and Lofquist that they were there to help. "You gotta give credibility to the system, right?" Forster says. "Court-appointed -- how bad can this be?"

He would soon find out. "There were numerous times when they threatened me and my partner with being terminated," Forster says.

Over the next several months, the Dottores seemed to run GEM the way a college kid manages his credit card. They overdrew the company's bank account more than 100 times, running up penalty fees just shy of $3,000, according to court documents. They neglected to pay the gas bill, and the gas was shut off. Adding insult to injury, Charles Dottore billed GEM more than $400 for three and a half hours of work to get the gas turned back on.

"The receiver should not be entitled to collect fees for time spent remedying his own negligence," a GEM lawyer noted dryly.

Yet the Dottores kept a tight grip on the company's purse strings when it came to Forster and Lofquist. "I got yelled at for ordering file cabinets," Forster says. "I spend half a million dollars with these guys, and I can't buy an $80 file cabinet?"

That's an exaggeration, but not by much. For nine months of work, Mark Dottore applied for $112,000 in fees. Lawyer Mary Whitmer's firm submitted a $143,000 bill for the same period.

They also billed for work unrelated to the company. Mark spent $2,500 to appraise a property that GEM neither owned nor had interest in purchasing, according to court documents filed by the company's lawyer. Whitmer billed $375 for work on a case to which GEM was not a party.

Whitmer ultimately retracted her request, saying that it was inadvertently submitted, but GEM had little luck with other complaints. By then, Judge Eileen A. Gallagher had taken over the case.

Lofquist and Forster say they couldn't get her ear. The motions they submitted were summarily ignored, they say.

"The biggest issue to me was, we could never get in front of the judge," Lofquist says. "We never got our day in court."

Adds Forster: "It almost seemed like Dottore could steer the judge anywhere he wanted to go." (Gallagher did not respond to interview requests.)

Mark Dottore denies exerting any undo influence. "If I'd charged them seven cents, they'd have been pissed," he says. "They had a judgment against them. It should have been closed. I kept that company alive."

Indeed, the Dottores ultimately proved successful in resolving the dispute between the owners, but only by giving them a common enemy: the Dottores. Kattula, Lofquist, and Forster all believed that the Dottores were screwing them, so they settled their differences before the family took all they had left.

In the end, the Dottores' stewardship cost them more than $300,000.

Kattula, a native of Iraq who immigrated to America 28 years ago, was surprised that the Dottores could take over the business. "I thought these things happen in Afghanistan or Baghdad," he says. "They happen in Cleveland also."

At one time, Judge Nancy Russo trusted Mark Dottore. In 1999, she appointed him as a receiver in a case involving a $100 million shopping-center development in Mayfield Heights. Three years later, she used him as a receiver for Fortran, a commercial printing company.

The Dottores were also supportive of her. In 2002, the family contributed $1,000 to her campaign.

But now Russo is singing a new song. "I would never appoint him again," she says. The Fortran case changed her mind.

At one time, the Grant Avenue company employed about 100 people. But when the economy went sour, the printing industry was hit hard. Fortran found itself drowning in debt.

In May 2002, one of Fortran's major creditors, FirstMerit Corp. of Akron, won a judgment against the company for $1.7 million. A few weeks later, FirstMerit requested a receiver to protect its assets. Judge Russo appointed Mark Dottore, on the advice of fellow judges.

"I took it on a recommendation of someone taking it on a recommendation," Russo says. (She later recused herself from the case.)

Dottore served as Fortran's receiver for several years, during which he was chronically late submitting his bills. Although receivers are supposed to file reports every three months, Dottore sat on one for more than a year.

When he finally did file it, the bill hardly illuminated what work he had been doing. Of 146 entries, 122 were vaguely described as "General operations."

There was reason for creditors to be suspicious. For example, Fortran paid $4,000 to Canal Street Properties -- a company the Dottores own. They later explained that the payment was for the rental of trucks, and that Canal leased them to Fortran at below market price.

Campaign-finance reports listed Fortran as a $2,000 contributor to the Millennium Leadership PAC. Mark explained that a secretary had inadvertently included Fortran as a donor. He says a review of the company's checks backed his case.

The brothers also billed Fortran for labor on the same days they claimed to be working for other companies they were appointed to run. Thomas charged eight hours to Fortran on a day he claimed to have spent seven hours seizing the assets of another printer in Akron. Mark charged six hours to Fortran on the same day he claimed to have spent seven hours in court for another receivership. And he charged five hours to Fortran on a day when he charged two hours to Frederick Brewing for "meeting with lawyers in Washington."

It all added up to a sizable tab. For the first 11 months of the receivership, Mark Dottore asked for more than $600,000 for himself and his lawyers.

At the same time, the company was falling further behind. In the first six months of the receivership, Fortran lost more than $250,000 on receipts of $4.2 million, according to a complaint from creditors.

"It appears that Dottore is using the Fortran receivership to pad his pockets and the pockets of his family members and his favorite professionals, all while carefully avoiding an opportunity for anyone to question his activities or delve too deeply into how he operates as a receiver," one lawyer wrote.

Dottore denies wrongdoing. He points out that there were 200 creditors in the case and only three objected to his fees. His bills were reviewed by another receiver, who for the most part found them justified. Ultimately, the courts ruled in Dottore's favor.

Still, Russo was surprised when she learned of Dottore's bills. "From what I saw, I'm surprised by the amount he was asking for, because I don't think I've ever gotten a fee bill from any receiver for more than $4,000 a quarter," she says.

Russo came away from the Fortran and Snyder cases convinced that receivers need more scrutiny. She suggests a cap on fees to keep receivers from dragging out the process to enrich themselves and says that judges shouldn't rely on word of mouth to make million-dollar decisions. She plans to push state lawmakers for more rules.

"He's one of the reasons that I think the legislature ought to consider it," she says of Dottore. "This whole receivership business is a void. With no list and no regulation, it's a free-for-all."

In the meantime, Dottore continues to cultivate new business. He recently gave a seminar on receiverships as part of a continuing-education class for attorneys, thereby advertising his services to a whole new crop of potential customers.

Robert Glickman spoke at the same event. Although Dottore caught only the last few minutes of his speech, he's no doubt familiar with the sentiment expressed by its title: "Everybody Hates the Receiver."