The Future Of The Rialto Theater Turns Decidedly Minor Key. By Mari Wadsworth IT'S BEEN NEARLY two years since an unlikely pair of businessmen went public with their plan to renovate downtown's ailing Rialto Theater. Full of optimism and grand intentions, partners Paul Bear and Jeb Schoonover envisioned not only a fully restored, 1920s-style multi-use arts venue, but also a thriving blues nightclub across the parking lot in the old Trailways bus depot. The latter, the Rialto Cabaret, was a limited liability corporation (LLC) intended as a boon to the local music scene, bringing big-name blues acts into town while simultaneously speeding the theater's restoration by raising money for the non-profit Rialto Foundation. It was an ambitious plan, riddled with risks and uncertainty from the beginning, and certainly a variety of factors--limited capital, fickle audiences, bureaucratic red tape--could have triggered its demise. What one would not predict, least of all the partners themselves, is the range and variety of obstacles they would have to overcome just to keep their project afloat. In the midst of working with the City of Tucson and the Fire Department to bring the old Rialto building up to code (an expensive and tedious process in an historic structure), Bear, who managed the business, unexpectedly found himself facing charges of fraud filed in May of 1996 by none other than the principle investors in the Cabaret venture, Erich and Crystal Avedisian. In a phone interview last September, Erich Avedisian told The Weekly that Bear and Schoonover were "crooks," that they had "stolen" $200,000 from the couple, who claimed their investment had never been spent on opening the Cabaret nightclub. The couple's suspicions of fraud led to a Tucson Police Department raid on the place, the seizing of all the company's records (both the non-profit Rialto Foundation and the LLC), and months of questioning and lawyering, resulting in an out-of-court settlement last September. There was even talk of indictment, with the State Attorney General's Office initiating its own investigation. Though Bear received a letter from the AG's office just last week declaring the case closed, the threat alone caused irreparable damage to both the partners' credibility, and to their ability to do business: They've been operating without their files for the past eight months, they've been forced to shut down a couple of times, and they've even been denied the reissue of their special events liquor license, with the vague accusation that they've exhibited a "pattern of deception" in demonstrating their non-profit status. The whole saga just sounds like a blues song: These guys save the theater, these guys lose the theater, they work out of the parking lot until they scrape together the cash to open the nightclub, they lose the nightclub, they win the nightclub back, they win a $218,000 Heritage Fund grant, there's a threat of indictment, the grant money is withheld, they lose their liquor license, and with no means of raising revenue remaining, Bear is forced to file for personal bankruptcy. The Chapter 11 reorganization went into effect February 21, buying a brief margin to recover their losses and acquire the theater, which would otherwise have entered into foreclosure on February 25. "We'd hoped to raise the money to fix up the theater on our own--we were looking for $30,000. We felt we'd be able to acquire the (theater) building through the loans and the grant," says Schoonover. With the grant award still up in the air, no liquor license for their upcoming shows and no other prospects, they're left with a business with no way to make money. Even if the Heritage grant--on hold since last November--comes through, the Foundation still needs to raise an additional $75,000 to buy the theater. But just like their blues heroes, they still haven't lost all hope. "At this point, we have to appeal to the Friends of the Rialto, to the people of Tucson, who know what we've been doing because we've been doing it for two years now," he continues. "Now's the time to save the Rialto. We don't have to listen to bogus allegations, we don't have the threat of indictment on our backs as we have for the past eight months. Now we can move forward." Avedisian, however, has another view. He claims he and his "investment group" have been negotiating the purchase of not only the Rialto parcel, but the entire Congress Street block, from Fifth Avenue to the Greyhound station, with landlord Rich Rogers. Says Avedisian, "We'll be buying the block with cash, so there's none of this maybe we can do it, maybe we can't. We plan to renovate the theater and use it--basically what Paul said he was going to do. But we're going to do it, not just talk about it." It's important to note the non-profit Rialto Foundation has never been under investigation, nor--in spite of Avedisian's accusations--was Bear ever charged with any wrongdoing by any law enforcement agency. But battling the misinformation and unfavorable perceptions have taken their toll, leaving the Rialto's future in the dark...and its stalwart visionaries searching for a beacon.

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