Interesting times over at Blue MauMau for franchisor Dale Nabors of Cuppy’s Coffee and More as he responds to allegations of running a Ponzi fraud (see Cuppy’s Speaks Out on Accusations, SBT, AAFD and More).
Janet Sparks is one of the most experienced and knowledgable franchise journalists there is. Period. She is a real professional that is not afraid of many of the things that go bump-in-the franchise night.
I think it is the best if Mr. Nabors speaks for himself and I would encourage everyone to read this whole story:
“I’m putting money into the company, and the company is putting money into the projects. In a roundabout way I guess it’s fair to say yes, I am putting money into the company to cover some of these projects. But these are very few projects.”
- When Nabors says “he was having to put capital into the businesses to keep them moving forward, and some of those monies in turn are used for construction and build out. He said there had been projects that monies were paid on and those monies went into a general operating account and were not used specific for a project.” this is an admission of fraud.
Webster goes on:
You cannot take money borrowed by A to pay off building out B, although you can certainly count on the support of B when that happens or is promised to happen.
This is not a construction company pretending to be a franchise company.
This is a construction ponzi scheme, taking funds from later investors, paying off earlier investors, pretending to be a franchise company.
These related entities are insolvent and the creditors need to shut this mess down immediately, appoint a receiver and come to an equitable solution.
Nabors call for more time is the typical whine of a ponzi operator. [my emphasis and format]
His allegations are numerous, serious and very interesting. Take a close look. I have worked with Michael Webster for several years. He is a very careful person, a skilled litigator and fraud investigator. The last guy I’d want to oppose in a biz op or franchise swindle, if I were so inclined.