He was known as a partier; a Corvette-driving wild man who loved to show off for friends and ingratiate himself with celebrities at King St. E. hot spot Kultura.

When Frank Nyilas’ ride ended, workers and suppliers at Kultura were left with no choice but to fight for their pay. His former employees say Nyilas, 47, seemed more concerned with the vanity of owning a restaurant than the responsibilities of owning a business.

One former chef was given two chandeliers in lieu of money. One went to small claims court.

And 14 more former workers complained to the Ministry of Labour, alleging they were owed wages, vacation pay or were fired without cause. In 12 of those cases, the ministry ordered Nyilas’s restaurant to pay up. It has not.

A Star investigation has found Nyilas is not the only restaurateur who has escaped his financial obligations with seeming impunity. Restaurateurs get away without paying employees what they are owed because enforcement by the provincial government is inadequate, victims say.

Ministry of Labour statistics obtained by the Star show that more than 9,300 claims from fast food and restaurant workers were filed in the last five years. Of those, the ministry made 2,592 orders to pay against employers, but could not tell the Star how many of those orders resulted in employees getting their money.

The remaining claims were withdrawn, denied, settled between the parties or resolved when employers paid up voluntarily.

The Ministry of Finance, which acts as the collection agency for the Labour Ministry, was unable to break its collection statistics down by industry. Overall, it has been able to collect on only 29 per cent of orders across all industries in Ontario since 2014.

In 24 cases the Star looked at, including Kultura, employees and suppliers went unpaid for a variety of reasons. Corporations went broke, shut down and disappeared. Or, those owing simply ignored their obligations.

In an interview with the Star, Nyilas blames two “stealing” former employees for the restaurant’s demise, and said he feels no obligation to obey orders from the Ministry of Labour.

“Now I know the ‘labour board’ are crooked and snakes, too, and they’re not even listening to a proper claim. But everybody knows that. Doesn’t matter what happens,” Nyilas said.

“You try to run a restaurant and you are being robbed blind, and thieved from every different angle . . . and then employees are supposed to get their wages when they are robbing straight from you for months and months and months and you catch them red-handed and you prove all these facts and they’re still supposed to get their pay?”

In 2013, two of Kultura’s former employees, Bernadette Calpito and Emily Holmes, made a complaint about Nyilas to the Ministry of Labour and were awarded a collective $10,000 for unpaid wages, vacation pay and termination pay.

They still haven’t been paid.

Calpito, Kultura’s former executive chef, and Holmes, the restaurant’s then-general manager, told the Star Nyilas put them through “hell,” accusing them of stealing money, giving themselves unapproved raises, napping on the job, and even having sex with each other in the restaurant.

Nyilas also made those allegations to the Ministry of Labour, government documents show.

The women say the allegations are “ludicrous” and that they kept the restaurant running as best they could — no easy task when their boss would take money out of the till and replace it with IOUs. On several occasions, Calpito and Holmes say, people claiming to be Nyilas’s friends would party at the restaurant, racking up huge drink tabs, only to say that “Frank had them covered” when it came time to pay the bill.

The women say they took it upon themselves to act as buffers between Nyilas and angry suppliers waiting on overdue accounts. Every time they paid a supplier, the women say Nyilas would get angry and accuse them of stealing.

On June 7, 2013, the women noticed their paycheques for the previous two weeks didn’t show up in their bank accounts. When they confronted Nyilas, he told Calpito she was “fired for stealing,” she said. Holmes said Nyilas told her she was fired because she was in a relationship with Calpito and “must know about the stealing.”

After making their complaint to the Ministry of Labour, there was a two-year adjudication process. The ministry extended the deadlines for Nyilas to produce evidence of his accusations.

Later, the ministry would deem Nyilas’s evidence “not credible.”

Calpito and Holmes say they were forced to move into a smaller apartment when they didn’t get paid. Calpito had to borrow money from family and friends, she said.

“It was a hard time,” Calpito told the Star. “Why is no one telling Frank, ‘You need to sell your car, your house, your underwear and anything else you have or else you’re going to jail.’ ”

While the women waited for a resolution to their case, Kultura, which once hosted parties for UFC fighters and Hollywood celebrities, such as Entourage’s Adrian Grenier, foundered.

For a while, it operated as a Spanish-themed establishment called Ole Ole Restaurant & Tequila Wine Bar before a bailiff locked out Nyilas in early 2014 and the landlord terminated his lease for rent in arrears, the landlord says.

Nyilas then filed for personal bankruptcy, effectively absolving him of responsibility to pay his former employees.

Among his more than $1.5 million in liabilities, bankruptcy filings show, he owes $20,000 to the Ministry of Labour.

Nyilas said he does not feel any responsibility to pay the orders against him even though he was listed as the only director of Kultura on incorporation documents.

He told the Star he didn’t know his name was listed on official business documents and therefore he shouldn’t be on the hook for anything.

“It’s so unfair,” Nyilas said.

Nyilas still lives in the same large suburban home he purchased in 2004. He added his wife’s name, Katrina Sikorski-Nyilas, to the ownership two years ago.

A black BMW 5 Series luxury sedan in their driveway is listed to a numbered company of which Nyilas is the sole director and president, according to incorporation documents.

Among others who had trouble getting paid by Nyilas was a PR consultant named Jennifer Williams.

She took Nyilas to small claims court for $10,000 after he failed to pay her for some of her public relations contract to promote Kultura.

Nyilas failed to show up to several settlement conferences, but when he did on one occasion, Williams settled with him immediately.

She told the Star she believes “the system is designed to protect the person doing the wrong. It makes it easier for people like Nyilas to avoid their debt.”

“At the end of the day you take what you can get,” she said. “You start to see you’re not their first debt and you’re not going to be their last

Why is it easy for restaurateurs to avoid paying workers?

Ontario’s labour laws make it easy for some employers to ignore their obligations to pay workers after they’ve been ordered by the province to fork over the money.

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Employers are expected to pay the orders voluntarily. To get around their obligations, they can disappear, shut down their companies, put their assets in someone else’s name or file for bankruptcy.

And they can open up another company without having to pay debts on the old one.

Since Feb. 2014, when the Ministry of Finance became responsible for collecting on Ministry of Labour orders to pay, only about 2,000 out of 7,000 orders have been collected on.

That’s across all industries, not just the food sector.

With sky-high rents, rising food costs and changing consumer tastes, restaurants go out of business almost as often they spring up.

Federal bankruptcy statistics reveal that the food sector has the highest rates of insolvency in Canada.

In Ontario, since 2013, a total of 385 food businesses — including 267 full service restaurants — have either filed for bankruptcy or didn’t have enough cash to pay their debts.

Canadian restaurants file for bankruptcy more often than any other industry except construction.

It is often those who work for minimum wage, such as dishwashers, servers, cooks, who end up fighting for the money they are owed.

“Collections is a huge problem,” Mary Gellatly, community legal worker in the Workers’ Rights Division at Parkdale Legal Clinic, told the Star. “These types of employers are very good at shielding themselves.”

In New York state, failure to pay restaurant employees what they are owed is a criminal offence that comes with “harsh penalties,” says Jay Holland, government affairs co-ordinator for the New York state Restaurant Association.

Last year, the owner of nine Papa John’s pizzerias in New York state was sentenced to two months in jail for wage theft totalling $230,000. He was ordered to pay it back in addition to damages of $230,000 and a $50,000 penalty.

According to the New York City Restaurant Owner Manual, first-time offenders face maximum penalties of up to $20,000 and a year in prison and second-time offences are punishable as felonies.

As well, New York authorities can investigate and sue employers, the manual says. Those found liable could be on the hook for 200 per cent of what the employee is owed. And the state will not only go after those individuals listed on official documents, but also corporate shareholders and managers, in addition to owners.

That is not the case in Ontario.

When the Ministry of Labour receives a complaint from an employee, officials try to figure out who the employer is in a number of ways, including scrutinizing the structure of the business and checking incorporation documents.

Often, employers are not technically flesh and blood but numbered companies. Directors of these companies — the actual people — have “limited personal liability,” according to ministry spokesperson Janet Deline.

They are not on the hook for everything, such as termination pay.

If the employer doesn’t pay up within a month or two after the ministry makes an order, it becomes a matter for Ministry of Finance, which can attempt to seize funds and garnish bank accounts — if any exist — or put a lien on property if the company or director owns any.

Far down the road, a court could bring a motion for contempt and a deadbeat employer could be threatened with jail — but that would be an “extraordinary and exceptional result,” according to Toby Young, legal director at The Human Rights Legal Support Centre, which helps victims collect money awarded by the Human Rights Tribunal of Ontario.

“(Employers) should be paying voluntarily but a lot of people don’t,” he said. “It happens quite frequently. It is the system.”

Michele Henry can be reached at 416-312-5605 or mhenry@thestar.ca . Kenyon Wallace can be reached at 416-869-4734 or kwallace@thestar.ca .

Data analysis by Andy Bailey

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