The owner of The Original Chubby’s Burger Drive Inn in Sunnyside is accused of stealing hundreds of thousands of dollars from the business for personal use.
A lawsuit, filed on March 31 in Denver District Court, says the alleged theft has eaten into the family-owned restaurant’s bottom line and left minority shareholders in the dark. Chubby’s has been a north Denver institution for decades and the subject of many legal battles throughout its history.
Stella Cordova, a former cook, took over the failing business from its original owner in 1967. She added Mexican staples, such as burritos and green chile, to the menu, which turned it into a neighborhood fixture.
Cordova failed to trademark the name Chubby’s until 2004, though, which opened the door for knock offs looking to cash in on her success. Family members, mostly without permission from Cordova, opened nearly two dozen restaurants in the metro area with similar names, according to Westword. Several remain open.
Cordova left the Sunnyside business to her grandson, Daniel Cordova, before her death in 2009. He currently owns 62 percent of the business’ shares.
Two minority shareholders, Anita Cordova and David Dickinson, are behind the new lawsuit. They claim Cordova took out over $500,000 dollars in shareholder loans from the company and made $323,864 in purchases that “appear non-related” to the restaurant.
Questions surround a $1,245 charge from Ameristar Casino Blackhawk and 116 separate transactions from Wish.com, an online retailer. Cordova also used business funds to complete construction projects at his home, according to the suit.
As head of the company, he hasn’t held any shareholder meetings since 2016, the suit states. During that time, Cordova has increased his own salary from $95,000 to at least $204,720 a year.
Meanwhile, the financial health of the restaurant has suffered. Taxable income for Chubby’s dropped from $481,910 in 2016 to -$165,202 in 2021. Shareholder distributions also fell significantly, the lawsuit states.
“No care was shown for the financial health of the business or the interest of the other shareholders,” the lawsuit says. “Cordova’s actions are consistently injuring Chubby’s.”
Attorneys for Cordova and Chubby’s did not return a request for comment.
The plaintiffs allege Cordova violated Colorado law by not acting in the best interest of other shareholders. Their suit states he violated his fiduciary duty as the company’s sole corporate officer.
As a part of their suit, they requested a trial and repayment of all shareholder loans. They also asked for Cordova’s removal as sole corporate officer of the restaurant.
