New Complaint – Aarus Enterprises LLC v. Burgerim Group USA, Inc. | McGuireWoods LLP
Aarus Enterprises LLC v Burgerim Group USA, Inc. was filed in California Superior Court for Los Angeles County on February 15, 2022, seeking civil damages for a fraudulent investment scheme involving the purchase and sale of fast food hamburger franchises. Specifically, the complaint alleges promise of fraud, intentional misrepresentation and concealment.
The plaintiffs include more than fifteen individuals and entities who have invested in the hamburger franchises. The defendants are hamburger franchise Burgerim Group USA, Inc. (“Burgerim”) and unnamed individuals who participated in the scheme.
The plaintiffs claim they were given the opportunity to invest in Burgerim, which billed itself as the fastest growing fast food franchise. Burgerim told investors they could buy a franchise for $50,000, some of which could be financed or paid for later. Burgerim has also offered to help with real estate transactions when franchise restaurants open. But Burgerim did not keep its promises. Instead, it gave investors unrealistic financing options and impractical estimates for construction times and costs. Burgerim also hid from investors that it used fees from new franchisees to pay off existing franchisees and took kickbacks from salespeople, real estate agents and other representatives.
On February 16, 2021, the California Department of Financial Protection and Innovation issued a forbearance and forbearance order against Burgerim, ordering it to refrain from violating the Franchise Investment Act, Cal. Company Code §§ 31000, and following., and pay an administrative penalty of more than $3 million for existing violations. He further ordered Burgerim to reimburse all franchisees. According to the plaintiffs, Burgerim did not respect them or reimburse them.
In the four-count suit, the plaintiffs are suing for pledge fraud, intentional misrepresentation and concealment based on the defendants’ intentional misrepresentations and omissions that caused the plaintiffs to invest in the Burgerim Scheme.