A Mexican restaurant caught up in a narcotics investigation will be sold as part of a stipulation approved by the city’s liquor board Friday. The agreement mandated that the owners of Las Palmitas restaurant in north Colorado Springs must transfer their liquor license to a new owner within 60 days.

Las Palmitas owner Martin Arceo pleaded guilty to five counts of possession and unlawful distribution of narcotics, including methamphetamine and cocaine, said city prosecutor Kyle Sauer.  

The restaurant was in danger of having its license suspended or revoked, but the city proposed allowing the sale and liquor license transfer from Las Palmitas 2, LLC,.

“In transferring ownership without suspension (of the license) we are trying to get the one bad actor in the business out of the situation while allowing a small business to move in and continue to grow,” Sauer said.  

Yañez Family LLC will take over ownership of the restaurant Aug. 1,said Colorado Springs attorney John Sabo, who represents the Yañez family and represented Las Palmitas 2, LLC, when it applied for a liquor license. He said the restaurant will continue to operate as Las Palmitas as far as he knows.  

Before approving the agreement, members of the liquor board expressed concern that the punishment wasn’t severe enough.

“It sounds like a slap on the hand for one of the more outrageous things I’ve seen,” said board member Richard Wright. “It’s like we’re condoning the actions.”  

After discussion, four board members agreed that the city’s argreement would likely facilitate a criminal investigation of Arceo and Las Palmitas.   

“They’re not going for revocation and there’s a reason for that, that maybe we need to trust,” said board member Mike Nemeth, who voted in favor of the agreement.

The city crafted the agreement with input from the Colorado Springs Police Department, state investigators, and the City Clerk’s Office, Sauer said.  

—Contact the writer at 636-0187.

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