Regulators in the US state of Colorado are suing a restaurant group and a broker, alleging they misled investors and duped them of $3,80,000 after floating a nationwide expansion plan for a fast-casual Indian restaurant chain.
The Colorado Division of Securities filed lawsuits on April 16 against The Bombay Group, its owner Marshall Miranda, and broker Michael Bissonnette, US news portal BusinessDen reported.
The lawsuit alleges that Bissonnette, acting on behalf of The Bombay Group, pitched investors on a plan to franchise a fast-casual Indian restaurant called Saucy Bombay.
According to the Division of Securities, The Bombay Group, which operated Bombay Clay Oven and Saucy Bombay restaurants, used “half-truths and lies” to convince investors to buy into a plan for a vast Saucy Bombay franchise network. The plan allegedly promised returns as high as 2,900 per cent and guaranteed quarterly dividends of 8 per cent.
The lawsuit alleges that after the sole Saucy Bombay location closed in 2015, Bissonnette and Miranda continued seeking investments without disclosing the closure. None of the 17 investors — 16 from Colorado and one from another state — received any dividends, the lawsuit says.
The state alleges that The Bombay Group never intended to franchise the restaurant and instead used investor money for operating costs and other expenses.
“The Bombay Group could not pay a dividend because The Bombay Group was not profitable. The plan to franchise Saucy Bombay simply never materialised,” the lawsuits allege.
It further accuses the defendants of violating state securities laws by misleading investors, selling unregistered securities, and, in Bissonnette’s case, selling securities without a licence.
“Investors believed in The Bombay Group and Saucy Bombay,” said Tung Chan, Colorado’s Securities Commissioner. “We allege they weren’t told the truth and haven’t been repaid.”
The Division of Securities is urging anyone who invested in The Bombay Group to contact them.
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