Tony Demasi: Living Large, Falling Hard in Chicago

To Live and Die in the Chicago Way

A fascinating story of investment banking, the Chicago Machine, politics, the club scene, pay-for-play, revenge, love, hubris and the Chicago Way. The moral might be “Those who rise by political favoritism, fall by it also.” By Michael Volpe.

Tony Demasi, on the far left, above.

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Tony Demasi and the Chicago Way
Michael Volpe
Originally published: June 2, 2010
The Provocateur

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It was a beautiful summer evening in 2005 and Chicago’s social scene was gathered at Japonais, the posh sushi restaurant along the Chicago River, for a fundraiser for Tsunami Foundation. The party was organized by promoter to the charities Jennifer Schwab, who became legendary in the scene by convincing macho men to don high heels and race around the United Center all in the name of charity. Tsunami Foundation offered youth mentoring programs in some of Chicago’s roughest neighborhoods as well as college scholarships to deserving high school seniors.

The guest of honor Rudy Fratto Jr, the recipient of Tsunami’s latest scholarship, was a relatively impressive young man. He maintained a B average, starred on his high school’s hockey team and kept up an impressive list of other extracurricular activities. Nevertheless, the choice of Fratto for a scholarship was peculiar for a couple reasons.

First, his father is Rudy Fratto Sr., a reputed lieutenant in the Chicago Outfit, who would plead guilty to tax evasion in 2009 and subsequently also be charged with mail fraud in the spring of 2010.

Second, at 14 years old, Rudy was still several years away from needing a scholarship. The crowd was also a curious mix. Celebrities like Jerry Azumah and Ozzie Guillen Jr. were at the shindig. Sarah Preston and Ted Widen covered the event for Chicago Magazine and Chicago Scene respectively. The socialite community was represented with guests like Austin Manzure, Anderson Bell, and Amanda Puck. Also in attendance was John “No Nose” DiFronzo, reputed boss of The Outfit. Even the advisory board of Tsunami Foundation was an eclectic mix of Chicago’s movers and shakers.

It included the proprietor of Tsunami Foundation, Tony Demasi. Also on the board was AT&T executive and future Alderman Brendan Reilly. Another member of the board was “restaurateur” Joe Farina. It’s alleged that the restaurateur Farina is also connected to the Outfit. For Tony Demasi, the then-30-year-old Tsunami Foundation founder, it was a day in a life equal parts Entourage, Sopranos and Wall Street. Fundraisers like this put Demasi in direct proximity to his natural market for his new nightclub, Reserve, which he owns along with Tsunami Capital, an investment firm.

In the spring of 2010,Tsunami is out of business, Reserve is under new ownership, and Demasi keeps a low profile, waiting for his sentence on a number of fraud related charges on July 2nd, 2010. Whereas he
was once received VIP treatment at everything from the ESPY’s, the MTV Movie Awards, and the Grammys, he now enjoys Cubs games, concerts and dinner at Chicago restaurants as one of the crowd. His unlikely rise and catastrophic fall is part gothic novel and part Greek tragedy, all filtered through the wholly real mesh of modern-day Chicago’s political and cultural stew.

Anthony A. Demasi came to Chicago in 2001, fresh out of Georgetown Law School, and took a job working on the legal end of collateralized debt obligations at Bear Stearns, the financial instrument that, ironically, would later bring the legendary Wall Street firm crashing down at about the same time Demasi was facing his own reckoning. Through a mutual friend he met the daughter of Marty Gutilla and through her, he met Gutilla himself. Gutilla is the main proprietor of Tavern on Rush, a cornerstone of Chicago’s infamous Viagra Triangle, where wealthy older men go to find attractive young women. Everyone from politicians, to business folks, to members of the Outfit frequent Tavern on Rush. Before long, Demasi counted himself among the regulars.

By 2002, Demasi started the Tsunami Foundation and over the next five years, the foundation would send nearly sixty kids to college while widening his circle of in-the-know event promoters and well-heeled partygoers.

By 2003, Demasi started thinking about opening a nightclub. In doing so, he would be an unconventional entrant into a world where nightclub owners usually fall into one of three categories: those who worked their way up in the business, from bartender or bouncers to manager and then struck out on their own; those who were independently wealthy and then started clubs as playpens for them and their wealthy friends, like RiNo, owned by Jim Kaulentis, who’d made his millions trading in the pits of the Chicago Mercantile Exchange. Also, there was the more recent phenomenon, the multi-venue corporate operators, like Ala Carte Entertainment.

Demasi was a lawyer working for an investment bank. He was from the Detroit area and had only been in Chicago about two years. To the outside world at least, he had no connection to the club world, a world especially inhospitable to outsiders, given its culture cloaked in a certain manufactured mystique, as well as myriad and notoriously difficult licensing requirements. In fact, he’d already made all the necessary connections into the hospitality business thanks to his Tavern on Rush “apprenticeship” with Gutilla.

Gutilla’s other friends included Joe King, part-owner of the posh nightclub Le Passage, commodities trader Jim Kaulentis, Lakeside Bank owner Joe Cacciatore, Assistant Majority leader in the State Senate Jim Deleo, insurance magnet Dickie Parrillo, and restaurateur Phil Stefani.. And, through Tsunami Foundation, he had an avenue to many of the future club’s patrons.

But as helpful as a seasoned group of nightlife operators can be to a boot-strapping young entrepreneur, Tavern on Rush had another set of regular clientele even more important to the entrepreneur interested in opening a nightclub. For owning a club introduces the proprietor to the seedy world of Chicago politics unlike any other business.

In order to own a club one would need as many as six different licenses: a liquor license, a tobacco license (smoking was still legal in bars at the time), a valet license, sidewalk license, and the Public Place of Amusement license, which allows a venue the ability to charge a cover for live music or a DJ. In order to get these licenses successfully, building inspectors, plumbing inspectors and electrical inspectors from various city zoning and buildings departments, along with the local Alderman and Police commander would all have to approve parts of any and all of these licenses. With his connection to Gutilla’s circle of friends, Demasi had just the right influence to navigate this process.

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We’re just getting started. What happens?

READ THE REST: Tony Demasi and the Chicago Way

by Michael Volpe
images: The Provocateur; mumbai

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