Witnesses: Gladys Knight’s son spent on sex, pot as waffle chain sank

Gladys Knight’s Chicken and Waffles, operated by Knight’s son, Shanga Hankerson, was shut down after the Georgia Department of Revenue has raided it for unpaid taxes but has since reopened under state receivership. Gladys Knight is not involved in the investigation. BOB ANDRES / BANDRES@AJC.COM

Credit: Bob Andres

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Gladys Knight’s Chicken and Waffles, operated by Knight’s son, Shanga Hankerson, was shut down after the Georgia Department of Revenue has raided it for unpaid taxes but has since reopened under state receivership. Gladys Knight is not involved in the investigation. BOB ANDRES / BANDRES@AJC.COM

Credit: Bob Andres

Credit: Bob Andres

UPDATE: Gladys Knight accused her son of trying to “extort” and “blackmail” her by threatening to make false claims that she has dementia and Alzheimer’s Disease, according to a filing in U.S. District Court in Atlanta. Knight filed suit against her son Shanga Hankerson in August to get her name removed from his Gladys Knight’s Chicken and Waffles restaurants because she thinks their recent troubles are hurting her reputation.

The story that soul music legend Gladys Knight told about her namesake restaurant began with a little lost boy, devastated when she divorced his father.

He cried every night and ate so much that by age 11 he ballooned to 320 pounds, according to Knight’s autobiography. But his family rallied around him, the story goes, and Shanga Hankerson grew up to found Atlanta’s Gladys Knight’s Chicken and Waffles, famous for feeding Southern comfort food to the stars.

Fans now wait in hourlong lines at its spot on Peachtree Street in downtown Atlanta for a taste of the Midnight Train: Four jumbo chicken wings on a golden waffle.

But the outward success of a famous family business unraveled when state revenue agents raided and closed the restaurant chain last month, arrested Hankerson on theft counts, and filed civil racketeering charges against him, alleging more than $1 million in unpaid taxes, interest and penalties. All three locations have since reopened under state receivership.

Now, The Atlanta Journal-Constitution has learned damaging new details about how Hankerson spent the company’s money and treated his employees.

Hankerson siphoned money from his business’s three locations to finance a voracious marijuana habit and sex parties, witnesses have told investigators.

The spending exacted a heavy toll on employees who were shorted on their pay after working under grueling and sometimes unsafe conditions. Managers dug into their own pockets just to keep the restaurant’s doors open for the day, public records and interviews with a dozen former employees and business associates confirmed.

In one case, a general manager — one of Hankerson’s childhood friends — put some $12,000 on his credit card to keep the company’s employee health insurance coverage from lapsing, former employees said.

By the time Hankerson, 38, was booked into Clayton County Jail June 22 on felony theft charges, he had pocketed some $52,000 in state taxes during March and April alone, according to his arrest warrant.

On paper, the company was making $8 million in annual sales, but years of chaos at the Atlanta institution had pushed it to the brink of collapse. Funds were so scarce that managers rushed to cash employees’ bounced paychecks with money from the downtown restaurant’s safe before Hankerson’s representatives arrived to retrieve it, they said.

“I think he was just in it for the money in the end,” said Charles Preston, 63, who worked as a manager at the downtown location for eight years until he quit in April.

Hankerson declined comment through Steve Sadow, one of his attorneys. Gladys Knight did not respond to requests for comment placed through a representative.

Tax woes date 16 years

Hankerson’s show business kin have a penchant for turning business into family affairs, and Gladys Knight’s Chicken and Waffles was no different. His record producer father Barry Hankerson loaned him money for the 1997 launch. His mother gave him her name — a precious gift in a hometown that has adored Knight since she was a schoolgirl singing in talent shows.

Within three years, Hankerson and his business partners steered their company into financial trouble. In June of 2000, state Department of Revenue officials placed the restaurant on its first of 15 payment plans for back taxes. Over the next 16 years, federal and state authorities filed dozens of liens for millions in unpaid taxes against Hankerson and his businesses.

“He was just stealing money and converting it to his own use,” said Josh Waites, the director of special investigations for the state Department of Revenue.

But if Hankerson was stealing tax money, he didn’t spend it on typical trappings of wealth. His home in Atlanta’s Cascade neighborhood is valued by the property assessor at $135,000. The corporate headquarters for Gladys Knight’s Chicken and Waffles is a split-level house in Jonesboro with burglar bars and a chain-link fence.

Hankerson’s car was a beater. When it broke down, Hankerson drove the chicken and waffles company van for months.

“Even the dishwasher drove a better car than Shanga did,” said manager Preston. “People would tease him.”

Ventures seemed primed for failure

What Hankerson did have was a knack for spending on ventures that failed or never launched. A Washington, D.C.-area location opened in 2005 to long lines and good reviews, but shuttered a few years later, leaving a trail of unpaid taxes, according to Maryland court records. A Johns Creek store closed within months, and a food truck disappeared within weeks, employees said. Hankerson paid rent on a storefront next door to his Peachtree Street restaurant, they said, but never built it out.

Some of these efforts seemed primed for failure. Hankerson’s now-defunct Union City location opened inside a working bowling alley on a stretch of aging shopping centers and auto parts stores. Its dishes included a mac and cheese burger — literally macaroni and cheese on a hamburger.

Other ventures were meant to deceive tax officials, according to affidavits filed by investigators in Fulton and Clayton county Superior Courts. Hankerson transferred cash from his restaurants to two shell companies: Various Holdings and Awesome Foods, the second of which shares its name with the restaurateur’s son, whose name he legally changed to Awesome in 2011. Neither entity was registered with the state Department of Revenue.

These company funds went far afield from typical restaurant industry spending. During two months in 2012, more than $1,300 went to Toys R Us, Pottery Barn Kids and video game stores, according to bank statements obtained by the AJC. Hankerson used the money to fly in women from out of town for sex, or have cash taken from the safe to buy marijuana, former employees told investigators. The yo-yo dieter’s corporate funds went to fast food runs to Wendy’s and a meal at a cut-price sushi buffet.

By 2013, Hankerson was giving the impression that he had lost touch with his business. In sworn testimony, he gave a bankruptcy trustee incorrect years for the closure of two of his companies and said his Peachtree Street location had shut down even as its booths remained packed, according to a recording of the session.

When Hankerson claimed that he owned the Gladys Knight’s Chicken and Waffles name, an advisor whispered to correct him:

“You got the license from your mama,” she said.

Bounced checks to employees

The restaurant’s front-line workers bore the brunt of this mismanagement. Paychecks routinely bounced, leaving staff with big bank fees and unpaid bills, according to a half dozen former employees. Courtney Thomas, 24, complained repeatedly after her weekly check shrank from $600 to $300, even though the hours she worked as a hostess remained the same.

“It got to the point that I showed up to the job every day — even after I quit — and asked, ‘Where’s my check?’” Thomas said.

And in at least one case, the restaurant deducted child support from a worker’s paycheck but failed to send it to the state division of child services so that it could be distributed on behalf of his child. The 6-year-old son of longtime busser Rodney Miller went for months without the money, he said.

“They still owe me $450 in back pay,” Miller said.

An attempted overhaul only made things worse. Shortly after James Boyd, a former Popeyes Louisiana Kitchen executive, took over as the restaurants’ CEO in the fall of 2015, the predominantly Latino kitchen staff quit, complaining that Boyd threatened to have them deported, former employees said. When Boyd fired the janitorial staff, other workers were required to remain hours after their shifts to scrub the downtown location.

Former manager Preston said he had to stay at work until the sun came up the next day. Boyd did not respond to messages left at his home and voice mail for comment.

“I just knew that I was going to pass out and fall dead,” said Preston, who left the company in April. Now the federal Department of Labor is investigating for potential abuses, according to Waites, the state investigator.

‘We barely had hot water’

After the cleaning staff left, Thomas, the former hostess, said she spotted tiny roaches no bigger than a pea scurrying across the restaurant floor. February health inspection records show that a broken cooler door was not replaced, leaving the chicken inside at 67 degrees. A malfunctioning exhaust vent sent Tarnisha Neves, 38, then a server, to the emergency room with dry heaves and difficulty breathing. She was pregnant at the time.

“They were cheap,” said Neves of the restaurant, which she said still owes her unpaid wages. “We barely had hot water to wash our hands.”

Staff arrived in the morning to find that the chicken and waffle restaurant was clean out of chicken, and last minute runs to Restaurant Depot, Costco or Publix to stock the fryers became routine. Major suppliers refused to sell to the restaurant because it failed to pay its bills.

Workers said they felt humiliated. Passers-by laughed at Thomas as she stood by a sign displaying the restaurant's failing health score of 56, she said. Angry customers failed to tip Neves because it took an hour for them to receive their orders, Neves said. In such moments, Preston had to give them food for free just to calm them down, he said.

Thomas left her job in February with a word of warning to Boyd:

“I told him he needed to find God,” she said. “I did let him know that karma is real.”

State investigators raided Gladys Knight’s Chicken and Waffles restaurants and corporate headquarters June 21, and Hankerson was arrested the next day. Hankerson is free on a $20,000 bond, and the restaurant remains in disrepair. On a recent evening, booths sat unused because the seats were broken, and a host handed out dog-eared menus.

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