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SUNDAY, OCTOBER 24, 2010 Gifford’s ice cream shops close amid legal battle ice cream from A1
the end of the storied chain. Even competitors are stunned.
“Gifford’s is the name you could never reallycompete with around here,” said Susan Soorenko, own- er of Moorenko’s Ice Cream Cafe in Silver Spring. “It’s what every- body around here grew up with. It’samazingto seewhat’s happen- ing now.” The nasty legal battle has
played out in a Baltimore County courtroom through the summer and fall as customers encoun- tered increasingly odd scenes at Gifford’s outlets — stores open only a few hours a day, power outages, weekend closures, spoon shortages and empty cases of ice cream. In September, on
Yelp.com, one disappointed pa- tron of the Bethesda store wrote, “They had four flavors when we showed up and two by the time we got to the counter.” Wednesday night, the store
next to Bethesda’s Landmark Theatres was dark, the chairs stacked up in a back corner, the tip bucket empty on the counter. A sign on the door said, “Closed for the weekend. Sorry for the inconvenience.” The writing on the sign seemed to be fading. Exactly who is to blame for the
Gifford’s collapse may ultimately beworked out in a courtroomby a jury or judge with tubs of pa- tience, but this much is certain: The troubles are the latest in a series of bizarre chapters for a Washington institution whose storied history has been matched by periods of bitter heartache.
Messy history The chain was founded in Sil-
ver Spring in 1938 by John Gif- ford, who initially ran the busi- ness with his family but later quarreled with his brother and cut him out of the operation, according to family members.
BILL O'LEARY/THE WASHINGTON POST
Legal documents were left taped to the door of Gifford’s Bethesda shopWednesday, alongside a sign informing customers that the store was closed. For more photos, visit
PostLocal.com.
Thesplitwasso severe that gener- ations later, some Giffords didn’t even know John had had a broth- er. When John Gifford died in 1976, his son Bob took over. That did not go well. Business de- clined, and one evening, Bob Gif- ford emptied the cash registers and bank accounts and disap- peared, reemerging 15 years later. In the meantime, the stores
went into a steep decline and the company went into bankruptcy. As the sheriff closed in to take control of Gifford’s Silver Spring property, family members re- placed the original recipes with fakes to protect their family jewel. To this day, familymembersinsist that the Gifford’s wholesale oper-
ation is not using the real recipes, even though company executives say they are. “I’ve got the originals sitting in
a storage box,” said Andrew Gif- ford, Bob’s son, who has steered clear of the ice cream business. Andrew Gifford now publishes
books through a small literary press and works at the American PsychologicalAssociation.He has watched with amazement as the Hunt family bought the rights to Gifford’s in 1987 and later sold the chain to investors, who in turn sold the chain to a group that included Lieberman, a former marketing executive at Discovery Communications. Asked about the latest troubles, Gifford said: “I
don’t know what to make of this anymore. How can this happen twice in 20 years? I doubt the ice cream is the problem.” The problem is that ice cream
isn’t just dessert, butaneconomic entree, a $10 billion business that in Gifford’s case has grown nota- bly messy. High-end ice cream has not weathered the recession well. Sales in the high-end seg- ment grewonly 1 percent in 2008, according to Mintel Research, and sales actually declined by more than 10 percent at some notable high-end chains such as Cold Stone Creamery. Lieberman, in interviews, ac- knowledged that some Gifford’s stores were behind on rent even
before he sold the shops. The company closed twounsuccessful stores before the sale. Asked whether the retail side of the business had been profitable, An- drew Quartner, one of Lieber- man’s partners, said, “Depends what you mean by profitable.” At the same time, Gifford’s
faced increasing pressure from a trademark battle with an unrelat- ed Maine ice cream chain also named Gifford’s, which has as- serted in a federal lawsuit that it won rights to the Gifford’s name after the Washington-area Gif- ford’s went into bankruptcy. Ice cream can be a rocky road.
New investor WhenLiebermanandQuartner
decided to focus on the wholesale business, selling ice creamto gro- cery stores, they searched for an investor to take over the stores. They settled on Luke Cooper. Who is he? Legally, he’s actually
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Lueke Cooper, according to court andMaryland bar records.Up un- til about 2004, Cooper was a law- yer practicingmostly inMaryland district courts. But then he had a career transformation, opening DealMetrics, a private equity firm that according to itsWeb site and corporate listings seems to have one employee,Cooper. OnhisWeb site, Cooper says he
“completed graduate work in fi- nance” at Yale University and the University of Chicago, but offi- cials at both schools said their recordsdonot backupthat claim. Asked about the discrepancies,
Cooper said he completed a con- tinuing educationprogramatChi- cago, and he offered a picture of his certificate as evidence.He said he completeda similarprogramat Yale, but a spokeswoman there said the school does not “have a record of a Luke Cooper attending any executive education program here.” She said Cooper signed up for a summer course, but never attended classes. Asked about Yale’s statement,
Cooper replied in an e-mail, “Growing up as a kid from a single-parent household in one of the toughest places in Connecti- cut, I am quite proud of my distinguished academic achieve- ments.” A press release on Cooper’s
Web site says his firm formed an “affiliation” withMDREEquities, a prominent real estate firm. “Deal Metrics is hopeful that the affiliation will give it greater bandwidth to complete buyout opportunities that have a real estate component,” the press re- lease says. Reached by e-mail, Ernest
Moyer, an MDRE partner, said: “There was no affiliation. Mr. Cooper shared office space with our firm. I have no other com- ment.” In 2008, Cooper’s company purchased a significant chunk of Brigham’s, a chain of ice cream stores in the Boston area. Shortly after Cooper took over, business went downhill, according to re- ports in the Boston Globe. The paper reported that before the outlets Cooper controlled col- lapsed, he was allegedly paying employees in cash and had
stopped paying rent. Cooper, who faces lawsuits there, said his trou- bles in Boston resulted from a tough business climate and “in- dustry factors.” Lieberman and Quartner were
aware of Cooper’s Boston prob- lems, but entered into a deal with Cooper in which he took control of the Gifford’s stores and agreed to purchase ice cream from the Gifford’s wholesale business. No money was exchanged upfront in the deal.
Lieberman and Quartner both
said that Cooper started having problems almost immediately, falling behind on rent, not paying suppliers, and letting the stores get run down. They believe Coo- per didn’t have as much money in the bank as he claimed, an allega- tion Cooper strongly denies. On July 4, at 9:58 a.m., accord-
ing to court filings, Lieberman sent Cooper a blistering e-mail telling him he was in default of the purchase agreement and tak- ing him to task for selling Hood’s ice cream in Gifford’s shops. Lie- bermanandhis partners filed suit a few weeks later, and they then sought and received an injunc- tion forbidding Cooper from sell- ing non-Gifford’s ice cream. Lieberman and Quartner both
said that in retrospect, they made a “mistake” selling to Cooper. “We did a deal with the wrong guy,” Quartner said. Asked if he thought they were duped, Lieber- man said, “Yes, I do think so.”
A countersuit
Cooper tells a different story. Representing himself in court, Cooper has countersued Lieber- man’s group for breach of con- tract and fraud, alleging, among other things, that proper paper- work to keep stores open had not been filed for years, that the sell- ers misrepresented how Cooper would purchase the ice cream, and that Lieberman and Quart- ner set up obstacles that made it impossible for him to expand the business through partnerships. In a stream of e-mails to The
Post, Cooper offered several de- fenses of his ownership. In the first e-mail, Cooper blamed the failure of the business on the trademark suit: “The lawsuit and ensuing judgment required us to exit the ice cream business alto- gether, which is why we have stopped paying expenses and shuttered the stores.” However, there has been no judgment in the Maine Gifford’s case, accord- ing to court documents and inter- views with attorneys. Later, Cooper blamed his retail
troublesonthe recession, leftover debt from when Lieberman con- trolled the stores, and the ex- pense of defending lawsuits. “We were always accurate in our fi- nancial ability,” Cooper wrote. “They were not honest about their business” or the quality of the ice cream. “We were forced to field multiple customer com- plaints about the vacillating qual- ity of their ice cream.” Lieberman strongly denied all
of Cooper’s allegations. Asked why he served Hood ice
cream, Cooper replied, “We never sold any ice cream in our shops that wasn’t super premium ice cream.” What happens now? Lieber-
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man and Quartner said they are pressing ahead with their whole- sale business, defending them- selves against the trademark law- suit, and looking for other part- ners to reopen the stores, which they acknowledge will be a diffi- cult chore. “In terms of the brand, look,
this is not great,” Lieberman said. Quartner said: “It’s horrible
what has happened. It’s horrible for the people who love Gifford’s.”
rosenwaldm@washpost.com
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Staff researcher Madonna Lebling contributed to this report.
SUSAN BIDDLE FOR THE WASHINGTON POST
Neal Lieberman, right, and partnerMarcelo Ramagem sampled the offerings at the Chevy Chase branch of Gifford’s in 2006.
“How can this happen twice in20 years? I doubt the ice cream is the problem.” —Andrew Gifford, grandson of the troubled ice cream chain’s founder
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