Yet another group of owners of a Mugshots franchise have sued fellow Mugshots owner Chris McDonald and several companies he owns, in federal court for alleged fraud and Rico violations. Chad Eron, Jim Walsh, Patrick Johnson, Stephen Arant, and Alex Pitt accused McDonald of borrowing nearly $1 million against their three Mugshots restaurants in Alabama without their knowledge and paying bogus invoices to Mr. McDonald-owned companies. The owner of the Ridgeland Mugshots filed a similar lawsuit in April. Earlier post.
The plaintiffs formed several companies to operate three Mugshots franchises. Mr. McDonald formed Vestavia Hills, LLC to operate a Mugshots franchise in Vestavia Hills, Alabama in 2011. The plaintiffs joined the LLC as members in 2013. They also formed Mugshots BJCC, LLC with Mr. McDonald in 2013 to operate a Mugshots in Birmingham. They also formed another LLC, Mugshots Inverness, to operate a franchise in Inverness, Alabama.
The complaint accuses Mr. McDonald of obtaining a loan from Priority One Bank in Hattiesburg in December 2015. The loan was secured by the Mugshots franchises in the Birmingham area. The loan amount is not known. Mr. McDonald's partners state they never saw any loan documents, never agreed to borrowing money against the franchises, nor even knew about the loan. They also don't know if the loan proceeds were used for the benefit of Mugshots or Mr. McDonald.
However, the complaint alleges that Chris McDonald was not finished borrowing money. Mr. McDonald allegedly obtained a second loan from the same bank in March 2017 by refinancing the 2015 loan. The partners again claim they had no knowledge of the refinance nor gave approval for it. They accuse Mr. McDonald of lying to the bank by stating he was the sole owner of the Mugshots franchises. They apparently discovered the loans when they learned the Ridgeland franchise owner was suing Mr. McDonald for the same activities.
There is also a problem with the taxman. The partners state that the Birmingham-area Mugshots became delinquent on over $200,000 in taxes. Over $118,000 was spent on marketing with a McDonald-owned company yet the partners claim that there is no record showing what constituted advertising or promotion of Mugshots. Mr. McDonald also allegedly paid $27,000 to his Montgomery franchise for "used computer equipment." The word "embezzled" is used. The lawsuit literally moves to the home front as it accuses Mr. McDonald of paying $4,757 in company funds to a contractor for interior design services provided to his home. However, the lawsuit accuses Mr. McDonald of embezzling more money:
*$100,000 was paid to another McDonald entity for "development fees"
*$39,000 was paid to a McDonald-owned non-profit entity in Louisiana between 2013 and 2015
*$170,000 was paid to Chris McDonald to manage the three restaurants. The partners accuse him of failing to pay taxes, incurring penalties for the taxes, and loading them up with debt as well as incurring OSHA violations.
*Mr. McDonald convinced the partners to pay $100,000 to open three more franchises in October 2015 yet no more development has taken place.
The partners ask the court the kick Chris McDonald out of all three Mugshots franchises. They accuse him of piling $900,000 of debt upon the franchises. They charged Mr. McDonald with RICO violations, negligence, unjust enrichment, and tortious breach of contract. The complaint asks for actual and punitive damages.
The complaint is similar to what was charged in the Ridgeland Mugshots lawsuit. JJ reported last month:
Mr. Walker accused Mr. McDonald of borrowing $50,225 against the business from Citizens Bank of Philadelphia without his knowledge, much less his consent. The loan was a "revolving line of credit." Mr. McDonald didn't tell the bank that he had a partner as well. However, the borrowing didn't end with one loan. Mr. McDonald apparently had borrowed against his Mugshots in Montgomery. He refinanced and consolidated the two loans into one loan for $98,704 that used Mugshots Ridgeland as the sole collateral. The two men apparently owned another Mugshots in Covington, Louisiana. Mr. Walker accused his partner of using that franchise to yet again fraudulently obtain another loan. However, the lawsuit claims the shenanigans didn't stop with just borrowing money.
Mugshots Ridgeland fell behind on paying taxes and royalties to its parent company that just happened to be owned by Chris McDonald. Money was spent on advertising. Mr. Walker claims that his partner spent money for "advertising" with a company Mr. McDonald owned without any record of such advertising.
The defendants weren't served with the lawsuit until earlier this month. They have yet to respond to the complaint. Don't forget the rent. The landlord didn't charge rent to Mugshots Ridgeland for the first three months after it opened. Mr. McDonald owned a company that subleased the property to Mugshots Ridgeland. The complaint charges that Mr. McDonald paid $30,000 in rent to his company even though the landlord didn't charge rent and Mugshots was supposed to pay the rent directly to the landlord.
The Birmingham Mugshots case was assigned to U.S. District Judge Halil S. Ozerden. Attorney Lawrence Coco represents the plaintiffs in both lawsuits.
21 comments:
This reads like a sequel to "The Founder"...which is based on Ray Kroc screwing the original McDonald owners.
I got a takeout from the reservoir location on Labor Day because it was the only place open. The food used to be good. Now it tastes like typical frozen crap. Those restaurants aren't going to last much longer.
There obviously was some negligence on the part of the other owners, whether they knew it or not. The real problem is with the lending banks that apparently did not do any due diligence on the owners of the separate franchises. It would not take 10 minutes to visit each states secretary of state web site to verify who the owners are. Unless he had written, notarized permission from his partners, these banks are facing problems.
Mr. McDonald is a mess. If he doesn't spend time in an orange jumpsuit there is no justice in the world.
The Ridgeland location is one of the worst run businesses I have ever witnessed. The Flowood location is run well, always busy, good food, etc. Ridgeland is a mess. Its almost unbelievable they are the same place.
Reminds me of the developer that stole $750,000 from one group of investors from his Sunday school class at First Prez. This same developer forfeited $500,000 to a buyer of one property because the buyers found that the developer had been cooking the books. You would think you were hearing Billy Graham praying when this guy prays out loud.
"AS THE WORLD TURNS" !!!!!!!!!!!!!!!!!!
Perhaps he learned from a guy named ...Frazier?
11:22 you are right on the money! Chris McDonald was recently featured during a sermon at Broadmoor on positive life changes he has made personally and in the world. This was right after the first JJ post on his lawsuit with the Ridgeland franchise. Sat there shaking my head.
12:29,
I shake my head every Sunday when I look around at my church. I see scoundrel after scoundrel with their wife and children that they have cheated on (some are Deacons)and they pray and act like they have done nothing to offend anyone.
I'm not perfect but I have never intentionally hurt anyone financially or otherwise. It is very hard to go to church anymore.
It's very sad when you can't even trust your preacher. What a sad time this is !!!!!
Hey 3:02- Jesus spent a lot of time around scoundrels. Maybe you should stay put.
3:02, I used to have the tendency to feel the same way. I'd look at folks in the church and think, man how is it you do what you do every day and then come to church and put on the good face. Then it occurred to me that my problem was with which direction I was looking: I was looking at PEOPLE, people who are ALL flawed and all too likely to do the wrong thing in someone else's eyes. I had to start looking at GOD and thanking him for the forgiveness that NONE of us deserve.
@9:45 think again. Laws are SO pro bank. I had a case a couple years ago in which the bank screwed up horrendously. I couldn't recover from the bank, but luckily I recovered from the non bank defendants
5:53, AMEN my brother/sister.... people are strange creatures.Just look ahead and throw the rear view away...and the pineapples.
We have lunch at the Flowood location several times a month and the food and service is great. In fact, we had lunch there today. I hope that everything gets worked out and the restaurants remain open.
Mugshots is one of our family's favorite places to eat. It never hurts to be positive!!!
9:23 - I resent your parting shot. Nobody should be positive unless there's a reason to be. If the posts about poor service at the Ridgeland location are true, what the hell reason is there to hide the fact by 'being positive'?
1:49 you sound like a sad miserable person. Glass half empty kinda guy. Cheer up there, buddy.
Buddy licks his nuts and chases squirrels. The media loves bad news, it travels much faster. Unfortunately when all this bs is cleared up none of you "holy men" will acknoledge slandering Mcdonalds name. You call yourself "Christians" yet so fast to cast a stone before a ruling. "Justice for Tyrion" wow, you obviously cant spell justice.. Chris Mcdonald is one ofthe finest people I've ever met, if not the finest. As for the greedy investors who are upset bc the checks aren't as big as they once were, "the industries in a slump", DON'T BITE THE HAND THAT FEEDS YOU http://www.businessinsider.com/restaurant-sales-slowdown-reasons-2017-7 BTW, We all no who's behind the negative mugs comments directed at the Chris vs Ron saga, its no mystery, if you want a REAL SHITTY MEAL, try PATIO 44, the leftovers made my dog sick....
And if Jesus came back tomorrow you'd crucify Him all over again.... hypocrites. Bash a mans name and talk about going to church in the same sentence. All of your life savings combined who'd never amass to half of what this man has donated to charities at home and abroad. How many visits to Oschners and Batsons Cildrens Hospitals, how many mission trips to third world countries building homes and churches for the less fortunate. But you wouldnt know anything about that because all you know is one side of a one sided accusation. You should be ashamed to call yourselfs Christians.
We have eaten at the Flowood location several times and has always been good. The Ridgeland location service is terrible. My wife and I went and were seated. Several waitresses walked by our table and no one greeted us or took drink orders. We sat for around 10 min and finally got up and left. They were not busy at all and it wasn't at closing time. Lots of empty tables. Most of the staff was just hanging around the bar area chatting.
8:39 and 12:11 have had a tough year.
First the cult of Hugh came to a crash. Now the cult of Mcdonald.
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