LOS ANGELES (CNS) - The Federal Trade Commission has filed suit against failed fast-food enterprise BurgerIM in Los Angeles, accusing the company and its founder in federal court of enticing more than 1,500 investors to purchase franchises using false promises while refusing to pay refunds.
In a complaint filed Monday on the FTC's behalf by the U.S. Department of Justice, prosecutors allege that BurgerIM and owner Oren Loni recruited potential franchise operators by pitching the opportunity as ``a business in a box'' that required little to no business experience, downplaying the complexity of owning and operating a restaurant.
According to the complaint, the U.S. business office of BurgerIM -- an Israeli fast-food chain that apparently has no restaurants currently open in Los Angeles -- is located in Calabasas. A number listed for the company is answered by a recording.
Regulators allege that BurgerIM was paid between $50,000 and $70,000 in franchise fees, and the company targeted veterans with discount programs to lure them into the business. The complaint also alleges that although BurgerIM pocketed tens of millions of dollars in such fees, the majority of the people who paid them were never able to open restaurants.
Loni's whereabouts are not mentioned in the complaint, but some reports say he has returned to Israel.
``BurgerIM promised consumers, including veterans, the American dream, only to leave them in a nightmare of debt and deceit,'' Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a statement.
The complaint alleges that BurgerIM, in addition to making false promises about refunds, failed to make legally required disclosures to potential buyers as required by federal regulators.
Last year, the state of California ordered BurgerIM to pay nearly $4 million in fines and refund franchise fees paid by more than 1,500 people after finding that the company violated numerous regulations.