There was hardly a worse time for Las Gemelas to make its grand opening. The taqueria officially debuted in the Latin American food hall La Cosecha in March 2021. It was the height of the pandemic, and indoor dining was basically nonexistent.

But in May of that year, things started looking up. President Joe Biden made an impromptu visit to pick up some tacos for lunch and to promote his administration’s $28.6 billion Restaurant Revitalization Fund. Las Gemelas would receive the fund’s inaugural loan of nearly $680,000, intended to help the business supplement losses from the pandemic-induced dining restrictions.

“I want my staff to hear: These are my tacos,” the president said as he examined the carry-out bag.

But those early glimpses of optimism were relatively short-lived. On Jan. 5 of this year, co-owner Josh Phillips notified employees and investors that he and his wife and business partner, Kelly, had decided to close Las Gemelas and its sister restaurant next door, Destino.

“As you know, we’ve been struggling at Las Gemelas and Destino since pretty much the first day we opened,” Phillips wrote, according to a copy of the email announcement shared with City Paper. Phillips cited a slower-than-expected pace of development in the Union Market neighborhood and lack of foot traffic as reasons for the failed ventures.

“In reality, we likely should have closed these restaurants months ago,” he added.

In the six months since the closures, investors behind the two restaurants say Phillips has largely ignored their requests for documentation regarding the closures.

In email chains shared with City Paper, these investors—who put up at least $50,000 each, and in some cases more—express disappointment in the restaurants’ failure and offer sympathy to Phillips. They also ask him to provide details about how he plans to officially close the business and for documentation of the loss of their investment for tax filing purposes.

So far, investors who have spoken with City Paper say they’ve received sparse and vague responses from Phillips, leading some to threaten legal action. Compounding their frustration is that while they continue to wait for answers, Phillips appears to have shifted his focus to his other venture, Ghostburger. The burger shop began as a pop-up inside Las Gemelas, but expanded to its own brick-and-mortar in Shaw.

One investor, Hailey Snow, was incensed when she saw images posted to social media of Ghostburger’s employees using Las Gemelas’ old soft-serve ice cream machine. Phillips was supposed to sell the businesses’ assets (including, Snow says, the soft-serve machine) and use the money to repay investors, according to their agreement with Phillips.

“They were supposed to sell everything at [a] fair market price … recoup as much money as they can, and divide whatever that amount [among] the investors before doing anything,” Snow says. “They’re not doing that.”

The operating agreement for Las Gemelas and Destino says investors would be repaid via quarterly payments “if available” at an interest rate of 5 to 6 percent. It also required the company to pay investors 35 percent of the business’ profits.

Snow says she received only two payments in the nearly three years Las Gemelas was open, totaling about 11 percent of her initial stake in the business.

Garen Oskanian and another investor say they also received only two of the quarterly payments they were expecting while the restaurants were in operation.

“The last time I received an interest payment on my notes was for the period through June 1 2022,” Oskanian wrote to Phillips in an email in November. “That was 544 days ago and I’m a bit irritated about not having heard anything since – that is certainly not the spirit in which I entered into business with you. As a reminder interest on the notes is due and payable quarterly and without demand.”

Snow echoes Oskanian’s frustration, saying the lack of communication from Phillips after he announced the closure is in keeping with his engagement while the restaurants were open.

“There were supposed to be investor meetings, and we were supposed to receive quarterly updates and quarterly financials,” Snow says of the meetings that never happened. “We heard about the [federal] loan on Instagram.”

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Josh and Kelly Phillips are the founders of Destination Unknown Restaurants, the group behind Las Gemelas, Destino, and Ghostburger, which replaced their shuttered Mexican restaurant, Espita. The couple’s struggles to keep their restaurants afloat aren’t surprising to anyone familiar with rising labor and food costs.

In an interview, Phillips acknowledges that he could have been more communicative with his investors. He says he understands their complaints, adding that if he were in their shoes, he would be mad at him, too. 

“I should have been more communicative,” he says. “The message at all points over the last year was, ‘I don’t know if I’m ever going to be able to pay you back.’ Instead, I morphed that message into, ‘I’m trying to find ways to pay you back.’”

According to Phillips, production delays and pandemic-era price hikes forced Las Gemelas and Destino to open later than expected. They operated in a deficit from day one, he says.

Ever-shifting development plans in the Union Market area and construction on 4th Street NE outside the restaurants drove away customers they counted on. Those factors cost the business about $2 million per year, he says.

In a December 2023 email to one investor, sent less than a month before he officially closed Las Gemelas, Phillips acknowledged that the business had struggled, but ultimately projected optimism. 

He explained in the email that they reduced labor costs, including cutting his own position, brought in a new executive chef with Michelin Star credentials, Vincent Badiee, and were banking on a Washington Post review to reverse the restaurants’ fortunes.

“We’re expecting a review from the Post fairly soon, as Tom Sietsema is a big fan of Vincent’s work at other restaurants,” Phillips wrote in the email to an investor. “He was apparently planning on ranking Vincent’s last restaurant in the top 3 of the dining guide, but found out days after he made that decision that Vincent was leaving there. If we get the review we expect from Tom based on the quality of Vincent’s food, we should be in a position to get current before we get the tax credit in late spring.”

The review never came, and adding to the downward spiral, Phillips tells City Paper, was that the firm that handled the restaurants’ accounting imploded around the same time, leaving the restaurateurs without a clear picture of their finances. All he knew was that Las Gemelas and Destino kept losing money.

It wasn’t until Phillips examined the company’s finances himself in February 2024 that he realized the businesses only had enough money to pay either its employees or its rent. Continuing service was not an option.

“While we put out a product that we were very proud of, unfortunately it wasn’t enough,” Phillips says.

He promised to send investors updates about the closing process, but again those messages never came. Phillips missed notification deadlines required by the business’ operating agreements, investors say, and failed to reply to most of their emails asking him about missing paperwork.

Without these records, including required K-1 tax documents meant to illustrate the financial health of a business, the investors are unable to report their losses and have no real picture of how much money they actually lost.

“We don’t expect to get any money back from this, but I should be able to write it off on my taxes,” Snow says.

Phillips acknowledges that Ghostburger is in fact using Las Gemelas’ old soft-serve ice cream machine. He says when the taqueria was still operating, the machine broke, but Las Gemelas couldn’t afford to repair it. So he moved it to Ghostburger, which did have the funds for the repair. He ended up replacing it with a churro machine at Las Gemelas before it closed. Still, it’s unclear if Phillip could have sold off the machine. He says his contract with La Cosecha entitles the landlords to the restaurants’ equipment in the event that he breaks the lease.

“If our investors really want me to sell that ice cream machine, I’m sure I can get like two grand for it,” says Phillips.

Phillips was the largest shareholder in the business, and says he took the biggest financial hit. He and his wife had to move in with his parents from their apartment in NoMa in order to pay off unforgiven government loans and back rent, he says.

“I don’t feel bad for myself that I owe a bunch of money,” Phillips says. “You know, I took on that risk … I’m going to have to live with that for a long time.”

Meanwhile, his investors are still waiting for answers and financial paperwork they say they’re owed under the investment agreements.

“We have not ruled out legal action,” Snow says. “That would be an additional cost to us that we would have to dump into this, but if we can’t get answers for literally anything, that might be our only avenue to receive the information that we are required.”