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Sex shop chain in arrears

Wire and staff reports

KENNEWICK, Wash. -- A sexual paraphernalia supermarket chain owes nearly $250,000 in back taxes and court judgments in Washington state, but the owner says the stores are still profitable.

Taylor Coleman, president of Castle Superstores of Phoenix, said a former employee who failed to get his work done resulted in the company falling behind on bills.

The Castle store in Medford does not pay property taxes directly because the company leases the space it occupies in a former grocery store on Progress Drive. A search of the state court computer system turned up no outstanding judgments against the company in Oregon.

Sales of store merchandise, which reportedly includes 270 kinds of condoms and 600 different types of lotions, remain strong, he said.

Every one of my stores is profitable, Coleman said.

So far this year the company owes $139,851 in taxes, fines and interest. The company is delinquent on property taxes for at least three stores, including about $20,000 for the one in Kennewick and $42,000 in Silverdale, in Western Washington.

Coleman said company accountants are working on the books, a payment plan has been negotiated with the Washington state Revenue Department and delinquent property taxes should be covered soon.

He also said he would try to get a reversal of a $46,000 default judgment obtained against Castle by two Kennewick brothers who claim they were locked out of the nightclub they once ran after he bought the building last June.

Because of the former employee, Coleman said he never heard about the case until after the company missed a number of court dates and the judgment was issued.

The same ex-employee also was to blame for a $61,000 default judgment against Castle by a real estate company in Spokane, Coleman said.

Castle Superstores include four outlets in and around Phoenix, one in New Mexico and six in the Pacific Northwest.

Coleman said the company is preparing a $15 million private placement, to be followed by two public stock offerings -- one for Castle's Internet business and one for the retail business to finance additional expansion.