The story behind the sudden collapse of Sam Auen's Tacopocalypse and Krunkwich restaurants
Sam Auen opened his Tacopocalypse and Krunkwich restaurants to fanfare. Now, his restaurants are closed and he owes thousands in taxes. Wochit
From the outside, Sam Auen was on top of the Des Moines restaurant world.
Foodies buzzed about his eccentric fusion dishes at Krunkwich and Tacopocalypse.
He rubbed elbows with the Food Network's Guy Fieri.
His queso-smothered bulgogi masa fries earned an "Out of bounds!" from the host of "Diners, Drive-Ins and Dives."
But within months of one another, both restaurants were closed, and former employees began complaining about bounced checks, missing tax documents and overdue payments.
Several of those employees reached out to the Des Moines Register, asking for help in recovering money they said they were owed for the weeks leading up to Krunkwich's sudden closure in June.
In an interview with the Register in June, Auen admitted he didn’t give his Krunkwich employees their last checks and said he’s trying to make enough money now to pay them by auctioning off his restaurant equipment and personal belongings.
“There is no money,” he said.
A Register investigation after the closings has found that Auen has been mired in tax debt for years. He owes nearly $300,000 in various sales, individual income and withholding taxes to the state, according to the Iowa Department of Revenue.
He also has failed to file sales tax six times and was late or failed to file his individual income tax at least twice, records show.
Ultimately, state warnings about Auen's taxes led to the revocation of his sales tax permit for Krunkwich, which meant he was no longer allowed to operate the restaurant.
“That guy had the world. Food Network, everything. It’s a shame,” said Eli Trapp, a former Tacopcalypse employee.
The rise of Sam Auen
Auen, a burly, 45-year-old metalhead, is known in the local restaurant world for his big personality, big beard and colorful vocabulary.
He made a name for himself selling Korean-inspired tacos from his bike at the Downtown Farmers' Market and bike-friendly spots across the metro. Inspired by an Asian restaurant he worked at as a teenager, he fused together Korean cooking with tacos to create concoctions like bacon chorizo and wasabi brisket.
Tacopocalypse first opened its doors at 621 Des Moines St. to fanfare from local residents. It became the eventual home of Krunkwich in 2015 after Auen moved the taco restaurant into 407 East 5th St. in 2014. Krunkwich later moved in 2016 to a bigger space at 2721 Ingersoll Ave. after a broken grease trap shut down the restaurant.
Both of his restaurants were staffed with young, tattooed employees with a passion for serving customers and cooking food. Pictures with Fieri were hung on the walls in Tacopocalypse, while at Krunkwich, a colorful mural featured chubby, smiling cats surrounded by steamed buns and vegetables.
In his signature cycling cap and plastic-frame glasses, Auen made frequent appearances in the media, including three episodes of Food Network’s “Guy’s Grocery Games.” Local news organizations sang praises for his unusual restaurant concepts, vegan offerings and punk-rock style.
By all accounts, publicly it appeared Auen's career was on an upward swing, with the Register even describing him as “a force of nature” when he was named one of the news organization's People to Watch for 2015.
He announced plans to expand Tacopocalypse to Coralville and Ankeny. He talked about opening Crust Punk Pizza in Des Moines. There were even announcements for a vegan restaurant.
None came to fruition.
Accumulation of debts, lawsuits
Auen said his financial issues began in 2015, when Disability Rights Iowa filed a federal lawsuit alleging that Auen had neglected for more than a year to make Tacopocalypse's front doors accessible for wheelchairs at the East 5th Street location.
The group filed the lawsuit on behalf of Emmanuel Smith, a West Des Moines resident who was using a motorized wheelchair. Smith was unable to get inside the restaurant because of the inclines at each door.
Court costs, ramp construction and loss of business because of negative publicity and public sentiment put Auen “tens of thousands of dollars” behind, he said.
A broken grease trap at Krunkwich and the costs of opening the Ingersoll Avenue location compounded the issues, he said.
He got behind on his tax payments, he said. The state started taking thousands of dollars from his bank account. Employee checks bounced. He struggled to pay debts for food vendors and other utilities.
“It wiped me out,” Auen said. “It made me live paycheck-to-paycheck like everyone else.”
Tax problems date to 2013, years before lawsuit
But Auen had a history of failing to pay and file his tax returns dating back to at least 2013, according to records from the Iowa Department of Revenue.
He owes more than $100,000 for individual income tax and sales tax each.
He also failed to pay nearly $30,000 in withholding tax — a tax that employers take from their workers' paychecks to pay on their behalf to the government, according to the Iowa Department of Revenue.
In total, he owes the state $287,677.55, according to records. The IRS declined to provide details about whether Auen has a federal tax balance.
Because of the unpaid sales tax debt, the Iowa Department of Revenue revoked Krunkwich LLC’s sales tax permit. Auen appealed the decision on March 27, according to court documents.
A continuance was ordered, delaying the revocation as long as Auen was able to do three things: establish a $5,000 monthly payment plan to the Iowa Department of Revenue, make a one-time payment with proceeds from an auction and keep current with all future tax obligations, according to court documents.
But by May 31, the Iowa Department of Revenue reported that Auen failed to pay his first-quarter taxes in 2019, despite earning $6,780 in sales tax. He failed to complete any of the other orders, according to court documents.
The department — it revoked 84 sales tax permits in fiscal year 2018 — also noted that Auen routinely failed to make payments despite multiple notices, and he wrote bad checks, making “no doubt” that his lack of payment was intentional, court records show.
Auen had few choices: Absent paying the debt, he would have to halt the restaurant's operations or be charged with an aggravated misdemeanor.
He closed Krunkwich on June 1. Iowa Department of Revenue Director Kraig Pauslen revoked Auen's sales tax permit four days later.
“It was basically quit or be fired," Auen said. "I shut the restaurant down before they actually revoked me."
Employees describe businesses in financial chaos
For his former employees, Auen's financial struggles were no shock. Some said bounced checks, repossessed kitchen equipment and visits from people threatening to cut off services at the restaurants were just a part of daily life at his businesses.
Aaron Pfaffe, a 39-year-old former sous chef at Tacopocalypse, knows this first hand.
Pfaffe liked the idea of Korean and Latin fusion food. As a culinary school graduate, he was excited to start working at Tacopocalypse in May 2017.
He respected that everything was made from scratch, and he went from a part-time line cook to a sous chef in less than a year.
But when he was managing costs, he said, things weren't making sense.
Pfaffe knew the food and labor costs. And he knew what profits the restaurant was making. Everything seemed like it was in the black, particularly with the extra $1,200 a week that Tacopocalypse earned in the summertime from selling tacos at Cumming Tap.
Still, he had to alternate which food vendors he ordered from because Auen was behind on paying them, he said. Des Moines Water Works came out to the restaurant multiple times and threatened to turn off services, he said.
Repo men came into the kitchen one day and took equipment, Pfaffe said.
Pfaffe, a salaried employee making $30,000 annually, was given no explanation when his own paycheck bounced. After the third one bounced in October 2018, he quit. He was passionate about the job, but he couldn't work for free.
“I’ll work for you like no other, but if you can’t pay me that’s disrespectful, and I couldn’t go down that path,” Pfaffe said.
The financial issues became more apparent after Pfaffe left the restaurant.
He contacted Iowa Workforce Development to see if he could qualify for unemployment. He was told there were no records of wages from Tacopocalypse.
He looked at his Social Security account and saw there were no earnings.
“With so many employees at both restaurants, this is huge,” Pfaffe said.
Katie Woodward-Young faced the same issues when she sought unemployment for her time at Krunkwich in 2016.
Woodward-Young worked for Auen at his first Krunkwich location when the grease trap suddenly broke. Out of work, she too sought financial help through Iowa Workforce Development. Again, they said there were no records.
Iowa Workforce Development wouldn't release any details about Auen or his businesses.
Ayla Stout, 33, worked at both restaurants for a combined two years. She received no pay stubs documenting her wages, taxes or Social Security.
Emails provided to the Register showed that Auen emailed an employee's 2016-17 W-2 information in October 2018, saying the official documents “refused to boot up.”
The Register reviewed several bounced checks to employees from Auen. Paychecks provided to the Register do not show pay stub details such as wages or taxes.
The lack of transparency about finances created issues for employees, who wondered whether they received the correct pay and if their hours were properly documented. Applying for credit, housing or other income-dependent items became difficult.
Chelsea Byers, the last front-of-house manager for Krunkwich, said she never received her final paycheck and worked about 94 hours over two weeks.
A previous paycheck from Auen for a 115-hour work period also bounced, she said.
She estimates Auen owes her around $5,000.
“Now, most of us are screwed,” Byers said.
The working conditions
Employees described tension with Auen in the workplace, even though he was frequently absent from his businesses.
Over the summer of 2017, the air conditioner at Krunkwich was broken for three months, said Cole Gruis, a sous chef at Krunkwich and Los Banditos, the restaurant’s late-night hot dog speakeasy.
At one point, the temperature was 105 degrees inside the restaurant, but closer to 120 degrees next to the fryers, Gruis said. Cooks would put icy towels on the back of their necks and take breaks when the lunch hour was over to try and cool down.
“We would all just get away from there to try and breathe,” Gruis said.
A hood vent also broke down at Krunkwich in 2017, leaving the kitchen smoky and employees with blood-shot eyes and nausea, Gruis said.
Despite such working conditions, Gruis said he and his colleagues felt passionate about the success of the restaurant and wanted to make sure the business stayed afloat so people could keep their jobs.
“I like all the people I worked with, even through the horrible conditions,” Gruis said. “Everyone was staying there for each other because they couldn’t afford to leave.”
Gruis quit a month before Krunkwich closed.
“Sam was lucky and hired a really good group of people and didn’t support them, and they weren’t in the position for the luxury of finding a new job,” Gruis said. “He took advantage of that.”
Stout stayed at Tacopocalypse until two weeks before it closed. She and two other managers quit on the same day, she said.
Two weeks later, the restaurant went under and a vague Instagram post announcing the closure went up.
Debts, new restaurant snowballed
Auen said once he had opened Krunkwich along Ingersoll Avenue, it cannibalized customers from Tacopocalypse. He kept it open longer than he should have, feeling sentimental about the early beginnings of the taco restaurant.
“It was a pretty bad decision on my part,” he said.
As for Krunkwich, he said he could never get himself out of the tax debt and struggled with organizing his finances, particularly without an accountant.
He said the lack of pay stubs for employees was an organizational issue on his part. When checks bounced, he said he tried to write replacement checks for employees.
Auen said he provided hours and information when employees asked, though some of them said they had to repeatedly ask him for tax information.
Ultimately, Auen's yearslong financial struggles starting closing in on him at Krunkwich. He wasn't able to meet the state's payment plans for his tax debt. The restaurant needed a new hood vent. New restaurants were opening, drawing customers away.
"All of that snowballed into just — boom," Auen said.
For the future, he doesn’t see any restaurants happening. He’s just trying to get himself out of his current financial debt. He’s three months late on his personal bills, he said.
“I’m definitely better at food than bookkeeping,” Auen said. “We all know that now.”
Register reporters Brian Taylor Carlson and Aaron Calvin contributed to this story.
Linh Ta covers retail for the Register. She can be reached at firstname.lastname@example.org or by phone at 515-284-8198.