The Buffalo comptroller called it irresponsible.
"The $160,000 in government loans and grants made to One Sunset should never have been approved," said Andrew SanFilippo.
The mayor is not pleased.
"We are very disappointed and disturbed that this process has gone in the direction that it has gone in," Byron Brown said.
Despite the displeasure and warning signs, taxpayers are still out $160,000 that was dumped into a dying business. One Sunset, a posh restaurant on Delaware Avenue, opened in Dec., 2007.
SanFilippo said it was given loans despite red flags that the money would not be paid back.
"What we have here with government loans and grants to One Sunset is a doomsday scenario that went from bad to worse," SanFilippo said, releasing a report on an ongoing audit into the matter.
The report was obtained by Eyewitness News and revealed exclusively on Wednesday evening.
Former professional basketball player Leonard Stokes opened One Sunset.
He went to city hall and asked the Buffalo Economic Renaissance Corporation, BERC, the city's economic development engine, for a $120,000 loan. Stokes was denied.
The reason: the report says Stokes lacked restaurant experience and had a poor credit history.
But Stokes went back to BERC and asked for a smaller $40,000.
BERC's vice president Michelle Barron helped to push it through, according the report, despite staff recommendations that the loan be denied. It was approved.
Then came another $30,000, this time a grant at the request of Buffalo Common Councilmember Brian Davis. The grant was supposed to be matched with another $30,000 from Stokes. The report said it was not. The grant came from Davis' district fund, even though the restaurant is not in the lawmaker's district, which the report says is not illegal.
In February, 2008, Stokes needed more cash. His business was $38,000 in debt. BERC approved another $40,000 loan, despite what the report called obvious signs of mismanagement and poor financial practices at the restaurant.
Seven months later, One Sunset went out of business.
In all, taxpayers lost $160,000 on a restaurant, which includes another $50,000 in loans provided by the Erie County Industrial Development Agency.
The comptroller's report says it cannot account for how all of the $160,000 was spent.