Lawyers, Burritos & Money

Jimmy MagahernNovember 1, 2018
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How Filiberto’s became Arizona’s most ubiquitous and endlessly copied restaurant chain – while building its true success south of the border.

The town of Santo Domingo sits off a winding two-lane mountain highway in the state of San Luis Potosí in central Mexico, on roughly the same latitude as the coastal resort city of Mazatlán but about a nine-hour drive inland.

It’s a small municipality of maybe 700 or so people, with little to see from the highway but a modest school and a few roadside refresquerías selling Coca-Cola. Head into town, and the mix of adobe and stone grocery stores, barbershops and churches give the impression of an old-world Mexican borough frozen in time – except, that is, for a few conspicuous modern touches.

Cellphone towers, satellite dishes and overhead power lines dominate the sky views. The roads are all neatly paved. And in the town’s main plaza, an elevated, canopied bandstand worthy of New Orleans draws the townspeople to spirited seasonal celebrations. Nearby, a clean, modern centro de salud (medical clinic) treats the health needs of the community while a mix of generations surfs the Internet at the town’s sole cyber café. Down the street, a pair of late model black-and-silver Nissan police trucks are parked at the ready in front of the two-story mayor’s office building.

This is the town that Filiberto’s built. Arizonans know the name from the omnipresent chain of 24-hour Mexican fast-food restaurants that blanket the state – 79 locations to date, from the forested mountain town of Flagstaff all the way down to Yuma, and from Lake Havasu City on the Arizona strip to the southeastern city of Sierra Vista. On the few Valley street corners where you don’t see a Filiberto’s, you’ll often find a copycat: dozens of look-alike Mexican takeout spots that co-opted the chain’s menus, bright yellow and red color schemes and, most bewilderingly, name – with close-but-no-cigar variants like Julioberto’s, Eriberto’s, Roliberto’s, Rigoberto’s and Humberto’s, each etched in the same flowing cursive typefaces on their signs.

The connection between the various restaurants remains an enduring mystery to Arizonans; to most, Filiberto’s is simply the biggest of the “-berto’s.”

But in Santo Domingo, people know Filiberto as a local boxing promoter and one of the four elder Tenorio-Quintero brothers, along with Flavio, Aurelio and Francisco, responsible for keeping their town alive.

“The Tenorios are very well-known in the community,” says a 28-year-old resident named Juan, speaking in Spanish, when approached on the street by a PHOENIX magazine photographer. “And of course, we all know they are successful businessmen in the U.S.A. Even some of our friends have worked for them.”

Ironically, while the Tenorios started their business in America, opening their first Arizona restaurant in 1993, it was their habit of hiring workers from their hometown that ultimately landed the brothers back in Santo Domingo. For the past 20 years, the Tenorios have been running their empire from this tiny burg, the result of a tangled legal drama involving the U.S. Immigration and Naturalization Service and some unscrupulous California lawyers that ended in the deportation of three out of the four brothers – with the fourth joining his siblings on his own.

Despite that blow, the restaurant itself has continued to thrive, helmed by the naturalized sons, daughters and grandchildren of the founders. In 2011, with reported sales for the year totaling $29.5 million, Filiberto’s even earned a coveted spot on Restaurant Business’ annual Future 50 ranking, coming in at 23rd, just behind such powerhouse chains as Shake Shack, Zoës Kitchen and Eddie V’s.

“They should be an American success story, relaxing in Arizona and living the American dream,” says Mark Weiss, a Scottsdale trademark and patent attorney who helped the family regain its trademark. “Instead, they’ve got the kids who were born and raised here running the business, and those kids have to make a 20-hour drive into Central Mexico just to visit them.”

Each summer, that’s precisely what happens. Beginning in July, it becomes hard to reach anyone within the company with the name Tenorio – which includes a great deal of the Filiberto’s staff, from office personnel and restaurant managers to cooks and cashiers. “July and August is when they’re usually out of town,” says Gabriela Tenorio Montoya, the young general manager of Filimex, LLC, the restaurant’s business office on Third Avenue south of Thomas Road, and herself a member of the large extended family. “There’s an annual festival down in Santo Domingo that a lot of the family goes to.”

Around that time, the Tenorio family Facebook pages fill up with photos of the younger kin hanging with the patriarchs at rodeos, boxing matches and other events around the village. Come fall, most of the brood is back in the Valley, tending to the business.

It may not be exactly the American dream, but it’s the one Filiberto, Flavio, Aurelio and Francisco were dealt, and they appear to have made it work. Reached on the phone through his son, Filiberto Jr., who runs a location in Mesa, the elder Filiberto exhibits no bitterness toward the country that seems to embrace Mexico’s food with less reservation than its people.

“Si vas a los Estados Unidos, todavía hay muchas oportunidades allí,” Filiberto says.

“He wants people to know that if you go to the U.S., there are still a lot of opportunities there,” his son says, translating his father’s Spanish. “Yes, the hardships have been many. But we know hardships come along hand in hand with success.”

Photos by José Luis Lizardo Mendez

In the classic 1988 Eddie Murphy comedy Coming to America, John Amos’ character, Cleo McDowell, builds a copycat version of McDonald’s called McDowell’s, tweaking only the smallest details to deflect trouble from the fast-food giant’s lawyers. “They got the Golden Arches, mine is the Golden Arcs,” a defensive McDowell counters when his new hires call out the similarities. “They got the Big Mac, I got the Big Mick!”

It’s inconceivable that the real McDonald’s would ever allow a brazen knockoff like McDowell’s to exist (no matter how good its princely employee-of-the-month was with a mop). But the movie’s comic subplot is basically the origin story of all of the “-berto’s” restaurants in Arizona – including Filiberto’s.

The -berto’s story started with a string of taco shops that opened around San Diego in the late 1960s. Roberto Robledo, a native of San Juan de Salado in San Luis Potosí, about 14 miles west of the Tenorios’ home village, had immigrated to Texas at age 14 to pick cotton, under the U.S. government’s Bracero Program (an early temporary guest-worker program), and eventually wound up making tortillas in San Ysidro, California. Seeing the growing demand for authentic Mexican food in San Diego, where he frequently made deliveries, Robledo began opening his own fast-food restaurants, which his wife, Dolores, suggested he name after himself. Selling no-frills bean burritos for a dime, Roberto’s Taco Shops were an instant hit, prompting Robledo to bring over relatives and friends from Mexico (some legally, and some not) to help him expand the growing franchise.

Two of those relatives, cousins Álvaro and Juan Rodriguez, went a bit rogue, cooking the beans and rice their own way instead of following Robledo’s strict standards, and Robledo insisted they stop using his name on their shop.

photo courtesy Harper Speagle-Price“They wanted to do things their way, but they also wanted to keep their association with Roberto’s, because the chain was already popular,” says Gustavo Arellano, the Orange County, California-based writer of the nationally syndicated newspaper column “¡Ask a Mexican!,” who detailed the Roberto’s story in his 2012 book, Taco USA: How Mexican Food Conquered America. “So they bought a can of paint and changed the R and O in Roberto’s to an A and L in honor of Álvaro, changing the name, in effect, to Alberto’s.”

Among the Mexican friends the Rodriguezes brought to the U.S. to work were the Tenorio brothers from Santo Domingo, who also immigrated via the Bracero migrant worker program and eventually decided to open their own spinoffs as well. Since one of the brothers already had the suffix “berto” in his name, they decided to call their chain Filiberto’s, and set their sights on the untapped market of Arizona, opening their first store in Mesa in 1993 after opening three around the San Diego area (which are still in operation).

Keeping with tradition, the Tenorios brought over friends and relatives from their hometown (many undocumented), who in turn ended up opening their own variations on the formula, tacking a “-berto’s” on to the first syllables of their names.

“The reason there are so many -berto’s,” Filiberto says on the phone from Mexico, vacillating between English and Spanish, “is because those people worked for us and they saw Filiberto’s was a success, so they started opening their own chains. They wanted to do their own thing, be their own boss.”

Phoenix lawyers who’ve represented the family in their legal issues have suggested they could sue some of the more blatant copycats. A landmark Supreme Court case in 1992 involving two Mexican-style fast-food restaurants in Texas, Two Pesos and Taco Cabana, ruled that the “trade dress,” or visual appearance and design, of a business fell into a form of protected intellectual property. Weiss, the patent attorney, says Valley chain Julioberto’s comes particularly close to crossing that line at their nine locations throughout the Valley. “I’ve driven past some Julioberto’s myself and thought they were Filiberto’s,” he says.

But Weiss says he’s heard stories that Julioberto’s founder, Julio Mancillas, once helped the Tenorio family out of a serious jam in Mexico. (He keeps the details off-record, allowing only, “Mexico’s a little bit dangerous, you know.”) Because of that, the family agreed to look the other way on the possible trademark infringements, he believes. “There’s a connection with all these -berto’s restaurants. A lot of friends and cousins.”

Arellano notes that Robledo, who died in 1999 at age 70, also never sought to thwart the rip-offs. Like the Tenorios, Robledo used remittances to rebuild his birthplace of San Juan del Salado, and was apparently content with that. In Arellano’s book, he quotes Robledo’s son Rodolfo saying, “He wanted to better the village. No resentment. I never heard that from my dad or mom. ‘There’s plenty of customers for everybody,’ he’d say.”

The Tenorios appear to have adopted the same view toward their copycats. “They’re all from the same town, and we all see each other a lot,” says Filiberto, before slipping back into Spanish. “Todos seguimos siendo amigos.”

His son translates: “We’re all still friends.”

Filiberto Jr. admits he has no idea how many relatives are employed by Filiberto’s. “Could be 100,” he says, before quickly adding, with a laugh, “maybe 200!”

All employees are legal citizens now, the watchful eye of the INS has ensured, but that wasn’t the case in the beginning. Only one of the brothers, Flavio, ever bothered to apply for U.S. citizenship, according to Weiss, with the rest working in the country on green cards. (Ironically, Flavio chose to move back to Santo Domingo on his own.) They were correspondingly lax about demanding that the friends and relatives they brought over from their hometown go through the process.

“As I recall, at least one of the managers would go down and recruit relatives and friends from the local villages and bring them in,” says Hank Woodrum, the former assistant director for the INS in Phoenix who was assigned to the Filiberto’s case in 1997. “During the investigation, we discovered that in some of the locations, the managers were even supplying apartments for the workers.”

Following the sting, the four Tenorio brothers pleaded guilty in federal district court to one count of conspiracy to engage in a “pattern and practice of hiring unauthorized aliens” and one count of “deceiving and defrauding the Internal Revenue Service in the assessment of taxes,” as they had ignored paying taxes on the licensing fees they accepted from individual store operators to use the Filiberto’s name. As part of a plea agreement, the brothers, along with the managers at 17 Filiberto’s restaurants, agreed to pay all back taxes to the IRS in addition to a $1.9 million fine, which Wood-rum at the time called “the biggest fine for a worksite enforcement case in U.S. history.” He adds, “We’ve not had a case that approached the numbers of employees of this one.”

On top of that, each of the Tenorio brothers was sentenced to 13 months in prison. But first, in an unusual ruling by senior U.S. District Judge Stephen McNamee (who, according to The Arizona Republic’s court reporter at the time, took an obvious liking to the brothers, joking with them in court), they were allowed to go back to Mexico to get their affairs in order.

“I think the government never expected them to come back to serve their time,” Weiss says. “But they did. And that was basically because they had gotten involved with a lawyer in L.A. named Mansfield Collins, who wasn’t even an immigration lawyer, but he told them, ‘I’m going to win this case and you’ll be able to stay in the country.’ But they really had no chance of winning, and after they got released from jail, they got deported.”

By then, the brothers had racked up around $250,000 in attorney fees along with the criminal fine and tax debt. Before they left the U.S., Collins introduced the brothers to Ivania Piskulich, a tax preparer in Los Angeles, who said she had formed a company named LEASCO Inc. that would pay their attorney fees, criminal fines and IRS debt if the Tenorios agreed to sell their restaurants’ trademark and trade name to her. In desperation, they agreed to the arrangement, and from 1998 to 2002, anyone who wanted to open a Filiberto’s franchise had to pay a licensing fee to the L.A.-based entity, which also took over management of some key properties.

“Collins and Piskulich never paid the brothers anything on those licensing fees, and Collins basically told them all the money they were collecting was going to pay their legal fees,” Weiss says. In the meantime, he says, Collins (who declined to be interviewed for this story) and Piskulich were living large. “He was running around with a Rolex watch, partying at the Fiesta Bowl – I mean, it was a gold mine for both of them.”

Neither knew how to run restaurants, however – purportedly, a Tucson location in their charge went from grossing $200,000 a month to less than half of that – and by 2003, LEASCO applied for Chapter 11 bankruptcy in Arizona. “Eventually, in the bankruptcy court, we got the company back to the family, which by then had included a lot of their kids,” Weiss says. “And since then, they’ve really expanded.”

Filiberto Tenorio Once a fast-food king, now a boxing promoter and patron in Santo Domingo.; Illustration by Domonic Patrick
Filiberto Tenorio – Once a fast-food king, now a boxing promoter and patron in Santo Domingo.; Illustration by Domonic Patrick

Today, Filiberto’s is one of the more successful fast-food chains in Arizona, even though it’s not accredited by the Better Business Bureau and goes virtually ignored by the Phoenix Business Journal. The chain’s average unit volume (a restaurant industry metric that divides total company sales by the total company-operated units, or stores) runs in the $500,000 to $1 million range. For comparison, El Pollo Loco, with more than 400 stores across six states, has an AUV of about $1.8 million.

“My understanding is that they still do quite well here, compared to even the more well-known fast-food restaurants like Jack in the Box,” Weiss says. “I mean, they’re run well and they do a very successful business. It’s pretty amazing, considering all they’ve gone through.”

Perhaps no one is more amazed than Woodrum, the ex-INS agent who still counts Filiberto’s as the biggest takedown of his career.

“I live in Mesa, and there’s one just a couple blocks down the street from me,” he says, with just a touch of wonder in his voice. “It still seems like you see them everywhere.”

Filiberto’s success is easily gauged around the Valley simply by counting the locations. But it’s down in Santo Domingo that the true achievements of the chain can best be viewed.

Booker T. Evans Jr., a prominent Phoenix white-collar crime attorney who represented some of the brothers in their legal matters, recalls traveling down there with a video camera to document the living conditions circa 1999, in an effort to illustrate to the court the dire circumstances from which the brothers were rescuing the desperate friends and cousins they employed.

“At that point in time, that area was in an extreme drought,” Evans says. “So there was nothing there. I mean, you couldn’t farm the land. We’d drive through the area, and there were literally skeletons of cattle that had just died because there was no water to grow grass, and the fields were just littered with their bones.”

Today, Santo Domingo is still small, and there are still many families living in poverty. But living standards have improved: Most households are connected to the public water supply and have access to electricity; most have basic appliances and a few have Internet access. Much of this is thanks to the Tenorio patriarchs steadily investing remittances from their business into rebuilding their birthplace. “We went through the same troubles growing up here, and we can see what needs to be done,” Filiberto says. “We try to help the people who are the most in need.”

But their contributions have gone beyond the monetary – two of the brothers, Flavio and Aurelio, served terms as mayor. While their effectiveness at governing was disputable (Flavio’s successor charged he left the municipality without a police force and failed to file financial statements), the family remains well-respected in the area for rescuing Santo Domingo from nearly becoming a ghost town.

“Yes, they did a good job – I mean, just look at the main plaza garden,” says local resident Juan, pointing to the elaborate bandstand. “One of them completely ordered to make a full restoration project, and we all liked it, it’s a very important place for us. I remember one of them building a new community health center when he was mayor, and also, some of the main streets downtown were concrete paved.”

“Yes, of course they did some roads,” says a 35-year-old villager named Laura, “and thanks to that, many people come safely to shop or to work here on an everyday basis.”

You won’t catch Filiberto and the other Tenorio brothers hobnobbing with fellow Arizona business magnates at swank Phoenix luncheons – even though the success of their chain bests many more high-profile local businesses. But at Santo Domingo’s annual fair and religious celebrations, the banished burrito brothers, whom Weiss estimates are all now in their 50s and 60s, are royalty.

“We don’t know for certain if those improvements were made from their own investments or public funds, but they ultimately managed to make them,” Juan adds. “And they let us know, this is all for our benefit.”