Dream Nite Club loses liquor license as Michigan denies renewal

The decision affecting Dream Nite Club was made Monday during a hearing of the Michigan Liquor Control Commission, said Stephen Postema, city attorney.

The move followed a city decision in March, when officials decided to ask the state not to renew the liquor license during the MLCC's annual renewal process.

That vote by City Council came after a 4.5 hour hearing in March at City Hall led by the Liquor License Review Committee and its chair, council member Tony Derezinski.

At that hearing, city officials objected to renewal of the liquor license for what they described as repeated violations of the state liquor law, including allowing fights and the improper use of weapons at the bar, which was previously known as Studio 4. It's located at 314 S. Fourth Ave.

According to a previous report: Derezinski released his statement of findings following (the March 19) hearing, referencing "a pattern of patron conduct in the neighborhood of the licensed premises which is in violation of the law and/or disturbs the peace, order and tranquility of the neighborhood" and "numerous police contact with licensed premises or the patrons of the premises."

That police contact includes an incident described in a filing by the city in another lawsuit, which described an Ann Arbor police report indicating that officers arrived at the bar just as co-owner Jeff Mangray was being attacked at the door of the bar by an unruly man who was carrying - and reaching for - a gun.

According to Postema, police received more than 200 calls at the business since September 2007. Incidents include liquor violations, disorderly conduct cases and assaults. In separate incidents last May, three people were stabbed in the club and fighting broke out inside and outside that resulted in a man being shot in a neighboring parking lot.

Owners Jeff Mangray and his son, Vickash Mangray, of Ypsilanti - who operate the club under the entity VR Entertainment Inc. - also filed a $3 million federal lawsuit against the city of Ann Arbor in January. The owners say officials have made false allegations of illegal activity at the business, subjected it to heightened scrutiny by police and harassed it because its owners and customers are racially diverse.

The pair also were in court recently as their former attorney, David Shand, sought payment of his $6,500 bill and a release from liability as the Mangrays pursued litigation under Detroit attorney Roger Farinha. He did not respond to requests seeking comment on Monday.

Meanwhile, additional litigation surrounds a claim by Shafiq Kasham that he's an investor in the club's liquor license and wasn't properly notified by the city of the March hearing.

The club's Chapter 11 bankruptcy filing was made March 27 in federal court, showing a net liability of $212,500. That figure includes debt of $398,500, and assets that include the $130,000 value of the liquor license.

The bankruptcy seeks to allow the company to reorganize. One recent filing indicated that VR Entertainment was in "serious default" of its lease to landlord Dean Zahn Properties LLC, and the parties approved a payment plan.

According to the bankruptcy petition, VR Entertainment Inc.'s gross earnings from the club was $350,000 in 2011 and $120,000 year-to-date at the time of the filing.

Postema said the state's ruling on Monday is the result of "the city properly following all procedures in having the hearing. ... They had an opportunity to state their case and put out no rebuttal testimony."