STRATUS BUILDING SOLUTIONS Racketeering (RICO) Complaint Document
December 23, 2012
(UnhappyFranchisee.Com) Stratus Building Solutions unit franchise owners have filed suit against the embattled franchisor, its Master franchisees and executives alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).
See the press release here: STRATUS BUILDING SOLUTIONS Sued by Franchisees for RICO Violations
Read the RICO petition here: RICO complaint against Stratus Building Solutions (PDF)Petition
See all our related posts here: Stratus Building Solutions
See the list of Defendants and an excerpt from the complaint below.
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
JOSE TORRES, GUADALUPE CLEMENTE, LUZ WALKER, CHRISTINA BEITER, and ANTONIO CARMONA,
Individually and on behalf of all others similarly situated others
Plaintiffs,
VS.
Defendants:
| SIMPATICO, INC,STRATUS FRANCHISING, LLC
PETER FRESE, JR. DENNIS JARRETT CARMEN GARCIA DAVID FARRELL MARISA LATHER ALEN SULJANOVIC BOB STAPLETON PHSCCH SBS, LLC CHANNEN SMITH LUPITA GALLEGO ED NUNEZ JASON DOWLING GONZALO MORENO PETAR VAVAN MARK BASHFORTH JAYSON BASHFORTH AFSHIN CANGARLU STEVAN R. BUTCHER JIM PARELL SAM VALDEZ MARVIN ASHTON CHRISTIAN SMITH TABITHA GOODWIN EVERT DURAN JAMES VAN DYKE JOSHUA FLETCHER DEBORAH ELGAS MERT SMITH JITENDRA KAPUR J. BECK, ERIC BROTZ JEFFREY B. AIBEL DAVE BOUTWELL KAREN AIBEL SCOTT BROWN ANNIE GONZALEZ LLOYD STOREY AARON KAHALOA MALLY PORCH ANGEL PASCUAL LEONARD FAZIO |
MICHAEL FAZIOAMY LUNDSTRUM
DEVANG KOTHARI BILL BLAIR KEVIN SPELLACY ROBERT PERRY KNUTSON/GOLDSMITH ENTERPRISES, LLC GATOR GREENWILL PAUL L. KNUTSON LUIS MORALES DENISE GUTIERREZ PAMELLA MARTINS JEREMY WHETSTINE TAYLOR STINNETTE JOSUE RANGEL STEPHANIE MCDANIEL SHAUN STECKLER RINEA BLANCHARD MIKE NAPOLITANO ANTHONY NAPOLITANO JOHN MCDONALD LORENA ARISTIZABAL TODD KNIGHT JASON POTTS BILL HOLDEN TONY SMITS MARIAM HERNANDEZ BRANDON SMITS CRAIG BALLARD CHELLEY BAACK JIM MORRISON SHAWN VICK ARISS ROGEL D’ANDRE SALTER SUNSHINE INVESTMENT GROUP, INC. JEROME WILIAMS DON GARTNER ROB SALAZAR DENNIS SNYDER RICHARD M. BARAN KEN CASSERI CRAIG DONOVAN |
MARK LINDAMANVINCE DUNSTON
ZEV BERGLAS JOEL CRADDOCK STEPHEN REED GEORGE SHOAT ADAM CASSERI DEWAN BACHAI MARRS, LLC MARK STOCKER, TERRY BEHRLE TOM GRASSI TIM TILTON JON WHITE JAY ZYTNICK, KIMBERLY ZYTNICK TOM WEISS JOHN COLEMAN BONNIE COLEMAN RISA ANGELO WILLIAM KING KEVIN GASS RALPH SIZEMORE ANGELA CARMAN DANNY GILLESPIE DAVID SMITH ED LEASE GREG FISHMAN TOM BAKER DAWN CAUDILL STEPHEN SHERIFF TJM ASSOCIATES, INC JACQUELYN MOSLEY THOMAS MOSLEY ELEAZAR QUINTANA WILLIAM RAGSDALE LORI SEALY SYDDAR, Inc. SHAUNA SHARPSTEEN LUCERO FLORES EMILY THOMAS SHEA SEALY CORDELL DEAN |
Here is an excerpt/overview of the lawsuit against Stratus Building Solutions, its Master Franchisees and employees:
This is a class action brought by unit franchisees of the Stratus Building Solutions franchise system (“SBS”) arising from the illegal business scheme of SBS and its web of affiliated entities and individuals who control and operate the SBS franchise system (collectively, all the “Defendants”). Through this scheme, Defendants fraudulently induced Plaintiffs and the Class to purchase a cleaning franchise and thereafter exploited their control and economic power in order to extract exorbitant and unjustifiable payments and expenditures from their franchisees. As a result, Defendants reap grossly inflated sales and profits, creating an illusion of corporate growth and business prosperity while causing substantial, permanent, irreparable financial harm to the franchisees.
SBS’s illegal scheme consists of two primary components. First, SBS engages in a policy of fraudulently and deceptively inducing franchisees to purchase SBS franchises by intentionally misrepresenting the true nature of the contractual relationship as well as the financial prospects for the franchisee and their likelihood of success.Second, SBS further takes advantage of its franchisees through other illegal, deceptive and fraudulent means, including but not limited to its willful practice of: (a) saturating geographic areas with more franchise than the area could reasonably support, (b) through grossly underpricing the service work to be provided by the franchisees, (c) through the deceptively churning the service accounts between the franchisees, and (d) charging illegal, undisclosed, inflated fees/charges to the franchisees in order to reduce the franchisees‟ income.
The fraudulent intent underlying SBS’s scheme of deceptively luring franchisees to participate in its system and therefore extracting payments, franchise fees, and cleaning contract income is demonstrated by its pattern of behavior when the inevitable franchise failures come to pass. In this manner, SBS suffers no loss. SBS executes the same scheme against the new franchisees to continue the illegal scheme of increasing revenues of the backs of those with no control.
Plaintiffs bring this action alleging violations of: (a) the Racketeer Influenced and Corrupt Organization (“RICO”) Act, 18 U.S.C. § 1962(c). Plaintiffs seek damages to remedy Defendants‟ unconscionable, fraudulent, and unlawful practices in connection with the operation of its franchise scheme.
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Tags: Stratus Building Solutions, Stratus Building Solutions franchise, Stratus Building Solutions RICO, Stratus Building Solutions lawsuits, Jon Fortman, Jonathan Fortman, Dennis Frese, Dennis Jarrett, janitorial franchise, commercial cleaning franchise, franchise fraud, franchise scams
STRATUS BUILDING SOLUTIONS Sued by Franchisees for RICO Violations
December 22, 2012
STRATUS BUILDING SOLUTIONS Sued by Franchisees for RICO Violations.
(UnhappyFranchisee.com) St. Louis-based attorney Jonathan Fortman continued his relentless fight for the unit franchisees victimized by Stratus Building Solutions today by filing suit against the janitorial franchisor for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).
Readers of UnhappyFranchisee.com are familiar with Fortman’s ongoing campaign against Stratus Building Solutions, a company that allegedly preys upon hardworking Hispanics and other ethnic minorities who are seeking to own a piece of the American Dream. Both directly and through a tier of “Master Franchisees,” Stratus allegedly collects thousands of dollars from individuals, promising them predetermined “guaranteed” commercial cleaning jobs. Franchisees allege they either never receive the promised work, they receive work that is underbid to the point that it is unprofitable, or, in some cases, are assigned work that is then taken from them due to phony or exaggerated “complaints” supposedly originating from customers.
These are all common unethical practices in the janitorial franchise industry, in which the principals of Stratus and many of the Masters have years of experience.
Here is the press release from The Law Office of Jonathan E. Fortman:
FOR IMMEDIATE RELEASE
STRATUS BUILDING SOLUTIONS SUED BY UNIT FRANCHISEES FOR RICO VIOLATIONS
The Law Office of Jonathan E. Fortman announced today that it has filed suit against Stratus Franchising, LLC, the franchisor of Stratus Building Solutions, and each of its Master Franchisees.
The suit seeks certification of a class consisting of every Unit Franchisee and seeks damages under the Racketeer Influenced and Corrupt Organizations Act (RICO). “Stratus Building Solutions is a franchise system built on fraud,” according to Jonathan E. Fortman, lead attorney for plaintiffs. “We have uncovered numerous instances of blatant fraud as set forth in our federal complaint. The franchisor defrauded the Master Franchisors who, in turn, perpetuated the fraud at the expense of those who invested their life savings into a system destined to fail,” Fortman stated.
“What I find particularly troublesome is the manner in which Stratus manipulated its ranking in the annual Franchise 500© list of Entrepreneur magazine. To many of our clients, that list legitimized this franchise system. However, we now know that the information used to rank this franchise was not based in any fact and was, in fact, fraudulent,” Fortman continued.
“The Master Franchisees had a chance to put a stop to the fraud and protect the franchisees. Instead, the masters chose to look out for their own best interests even after being made aware of this fraud. They have blatantly ignored the devastation experienced by their Unit Franchisees. They made their bed, now they have to lie in it. We look forward to presenting the overwhelming evidence in federal court and are confident that our clients will prevail,” Fortman concluded.
The Law Office of Jonathan E. Fortman, LLC, was established in St. Louis, Missouri, in 1995. It concentrates its practice in the representation of individuals harmed by fraudulent franchise systems. Jonathan E. Fortman is the lead attorney in the case of Handing v. Contours Express, LLC in which he obtained verdicts in excess of $1.3 million for 8 franchisees of the second-largest women’s only fitness chain and has over 60 additional claims pending.
# # #
If you would like more information about this topic, please call Jonathan Fortman at (314)522-2312 or email Jon at jef@fortmanlaw.com.
WE CAN HELP.
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Tags: Stratus Building Solutions, Stratus Building Solutions franchise, Stratus Building Solutions RICO, Stratus Building Solutions lawsuits, Jon Fortman, Jonathan Fortman, Dennis Frese, Dennis Jarrett, janitorial franchise, commercial cleaning franchise, franchise fraud, franchise scams
STRATUS BUILDING SOLUTIONS Dropped From Entrepreneur’s Franchise 500
December 18, 2012
Stratus Building Solutions has been the darling of franchise hype-machine Entrepreneur magazine in recent years.
In the 2012 33rd Annual Franchise 500 list, Entrepreneur ranked the janitorial franchise #12 among ALL franchises.
(UnhappyFranchisee.Com) Yes, Entrepreneur ranked (what some have called) a thinly veiled Ponzi scheme out of St. Louis right up there with McDonald’s, Hampton Hotels, Pizza Hut and Subway.
It ranked the little-known Stratus higher such household names as KFC, Dairy Queen, Hardee’s, and Papa John’s to name a few.
In fact, in 2012, Entrepreneur positioned Stratus Building Solutions as the only top franchise that most people could afford.
Less than a year later, Stratus Building Solutions no longer appears on Entrepreneur’s Franchise 500.
What happened?
Entrepreneur Has Unashamedly Promoted the Stratus Franchise Scheme
Bad franchise companies like Stratus Building Solutions rely on seemingly legitimate publications like Entrepreneur to provide them with the phony credibility they need to sell lots of franchises.
Here’s the list of accolades Entrepreneur has heaped on Stratus Building Solutions since 2009 [source: Entrepreneur.Com]:
Franchise Ranking History [Stratus Building Solutions]
Franchise 500®: #12 (2012), #20 (2011), #13 (2010), #38 (2009),
Fastest-Growing: #1 (2012), #1 (2011), #3 (2010), #4 (2009),
Low-Cost: #2 (2012), #5 (2011), #5 (2010), #7 (2009),
Top New: #1 (2010), #3 (2009),
Top Home-Based: #2 (2012), #6 (2011), #4 (2010), #6 (2009),
America’s Top Global: #11 (2012), #18 (2011), #11 (2010), #33 (2009),
In addition, Entrepreneur has published the unsubstantiated and highly unlikely claim that Stratus Building Solutions had 5,131 franchises in 2011.
In court documents, Stratus execs didn’t claim anywhere near that number. Where did Entrepreneur get its inflated numbers?
UnhappyFranchisee.Com Protested Stratus’s Franchise 500 Ranking
Since May, 2012, UnhappyFranchisee.com has been urging Entrepreneur to stop promoting the Stratus Building Solutions franchise in their widely publicized rankings.
We sent them a detailed letter documenting the damage Entrepreneur was doing by promoting this troubled and troubling franchise:
STRATUS BUILDING SOLUTIONS: Should Entrepreneur De-List Stratus From the Franchise 500?
We sent them links to the myriad horror stories and lawsuits caused by Stratus Building Solutions:
STRATUS BUILDING SOLUTIONS Franchise Complaints
STRATUS BUILDING SOLUTIONS: Goldeneye Holdings v. Stratus Franchising Lawsuit May 30, 2012
STRATUS BUILDING SOLUTIONS: Franchisees v.Goldeneye Holdings Lawsuit May 29, 2012
STRATUS BUILDING SOLUTIONS: Open Letter From Unit Franchisees May 23, 2012
STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship? May 18, 2012
STRATUS Franchise Called “Pyramid Scheme” on FOX News May 10, 2012
STRATUS BUILDING SOLUTIONS Franchise is a Scam, Attorney Claims March 6, 2012
LA FRANQUICIA DE STRATUS es una Estafa, Acuerdoa Abogado March 6, 2012
STRATUS BUILDING SOLUTIONS Franchise Class Action Lawsuit Filed August 13, 2011
STRATUS BUILDING SOLUTIONS Franchise: Are Stratus Franchisees Successful? November 9, 2011
STRATUS BUILDING SOLUTIONS Franchise Lawsuits Ahead? February 1, 2012
STRATUS BUILDING SOLUTIONS: Markeeta Rivera’s Franchise Horror Story February 1, 2012
STRATUS BUILDING SOLUTIONS Franchise: Guadalupe Clemente’s Horror Story February 2, 2012
We tried to appeal to Editor-in-Chief Amy C. Cosper and President Ryan Shea by sharing comments like this one:
Zurab Kvantrishvili Submitted on 2012/06/07 at 9:39 pm
Before I bought this franchise I researched information everywhere, and one of the reason we paid $17 000 for it was that Entrepreneur ranking. If Stratus didn’t had such a high ranking I would never trusted them with all my life savings. When I spoke to John Coleman (one of the master Franchisor in Philadelphia Stratus Building Solution) and asked him to return my money back or I would take him to the court, he laughed at my face and this is his exact words: ”Please, who’s going to believe you? we are ranked as number #1 cleaning franchise by entrepreneur nationwide. You will waste more money on the lawyer” . I really want to believe that Entrepreneur will take Stratus Building Solution out of their ranking. Please, don’t let them scam more hard working people!
None of that swayed Editor Amy Cosper or President Ryan Shea from continuing to promote this toxic franchise opportunity for another 7 months.
Amy Cosper responded:
We have looked into this and until Stratus Building Solutions is found guilty in a court of law, we will not be de-listing them. Also, please note disclaimers throughout the listing.
Thank you for your feedback.
Amy Cosper VP/Editor in chief
Entrepreneur President Ryan Shea wrote:
We publish the franchise 500 Rankings every year in January so we will take the lawsuits against them into account when we calculate and create our 2013 Franchise 500 rankings.
So the collapsing Stratus Building Solutions got to enjoy another 7 months as Entrepreneur’s 12th highest ranked franchise, even as its Master Franchisees fled the system and shed the Stratus name like a snake sheds its skin.
Stratus Building Solutions is MIA From the 2013 Franchise 500.
So did Entrepreneur finally do the responsible thing and remove Stratus Building Solutions from its Franchise 500 rankings?
Or was Stratus Building Solutions too exhausted from fighting lawsuits and waving goodbye to its Master Franchisees to submit the necessary paperwork?
We asked Entrepreneur President Ryan Shea, who replied:
We are not going to comment either way.
Ryan Shea , President, Entrepreneur Media, Inc.
Actually, we don’t blame Ryan for not answering.
If word ever got around that Entrepreneur was starting to penalize franchisors simply because their franchisees were failing, that lawsuits were flying, and their Master Franchisees were de-branding and walking away from their investments in disgust, Mr. Shea might risk offending a very lucrative and highly valued segment of Entrepreneur advertisers.
Without them, he might have to rename his big moneymaker the Entrepreneur Franchise 75.
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Tags: Entrepreneur magazine, Entrepreneur 500, Franchise 500, Amy Cosper, Ryan Shea, Stratus Building Solutions, Stratus franchise, janitorial franchise, franchise scam, franchise lawsuits, unhappy franchisee
STRATUS Lawsuit Alleges Janitorial Franchise Fraud
July 29, 2012
Stratus Building Solutions franchisees in Indiana have filed a Class Action Complaint and Jury Demand against Stratus master franchisee Shamrock Building Services, Inc., Kevin Spellacy, Jerry Wenger, and Pamella Martins,and Stratus Building Solutions franchisor Stratus Franchising, L.L.C..
The case was filed June 8, 2012 in Marion Superior Court on behalf of the defendants by Paul B. Overhauser, attorney, and Kathrine Jack, of Counsel, of the law firm of Overhauser Law Offices:
Read the full complaint here:
Nidia Martinez, et. al. v. Shamrock Building Services, Inc., Stratus Franchising, L.L.C., Kevin Spellacy, Jerry Wenger, and Pamella Martins
Nidia Martinez, Maria Manriquez, Elsa De La Cruz, Eni Cruz Rodriquez, Victor Garcia, Laura Andolon, Ronny Funes, Theresa Escobedo, Lorenzo Rodriguez, Faustina Negrete, Yolanda Alvarez, Jose Leon, on behalf of themselves and others similarly situated,
Plaintiffs,
vs.
Shamrock Building Services, Inc., Stratus Franchising, L.L.C., Kevin Spellacy, Jerry Wenger, and Pamella Martins,
Defendants.
Indiana Franchisees Allege Stratus Master Franchise Scam
According to the franchise complaint:
“This case involves unscrupulous Defendants who ignore these laws, and instead oppress hundreds of American workers just to make themselves richer.
“Their unscrupulous strategy is to label their workers ‘franchisees,’ and have them sign a ‘franchise agreement.’
“Using the misguided and illegal strategy, they have evaded the consumer and worker protection laws that form the foundation of American society. Instead, they pay their workers a fraction of the minimum wage, make illegal deductions from payments to their workers, and evade taxes owed to the Indiana and Federal governments.”
The complaint alleges that the franchise system used by Stratus Building Solutions and its master franchisee Kevin Spellacy is essentially a scam that promotes an oppressive and illegal scam that defrauds would-be business owners out of their life savings. The lawsuit contends:
“Defendant Stratus is a janitorial services company that contracts with owners of commercial buildings to clean offices, schools and medical clinics. Because janitorial work is often an unattractive occupation, Stratus needs to offer incentives to prospective workers.
“Unlike legitimate businesses, who would simply offer a higher wage to attract workers for an undesirable job, Stratus uses a different scheme. It offers prospective workers a ‘guaranteed business’ and ‘guaranteed financing’ and the prospect of making thousands of dollars.
“To make matters worse, when hiring cleaning workers, Stratus makes them first pay a ‘franchise fee’ to purchase a ‘franchise.’ These ‘franchise fees’ often represent a worker’s entire life savings; yet they get nothing in return, other than the right to be subjected to further exploitation by Defendant’s illegal scheme.”
Read more here: Janitorial / Commercial Cleaning Franchise Issues
ARE YOU FAMILIAR WITH STRATUS BUILDING SOLUTIONS AND ITS MASTER FRANCHISEES? PLEASE SHARE A COMMENT BELOW.
LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 2)
July 8, 2012
Dear Lathrop and Gage: Lighten up & enjoy your lucre before you make yourself look any sillier. Regards, Unhappy Franchisee
In the post, LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 1), we stated how the silly it is that Lathrop and Gage (a law firm with 280 attorneys and $138M in yearly revenue) is claiming that their adversary Fortman Law (a law firm with 1 attorney and 1 paralegal) is unfairly tipping the scales of legal justice in favor of Fortman’s clients (lower-income individuals who paid for janitorial cleaning contracts they never received).
Lathrop and Gage has filed a Defendant Motion for Sanctions and a Defendants Motion for Protective Order (on behalf of their clients) against Fortman, their opposing counsel in the case of Markeeta Rivera, et al., Plaintiffs, vs. (alleged sleazedog scammers) Simpatico, Inc., Stratus Franchising, LLC, et al., Defendants.
Reason #2 Lathrop & Gage Should Lighten Up & Enjoy the Lucre: They Look Silly
White, upper-class attorneys of a mega-law firm who bill at $500 (or so) an hour claiming that their millionaire clients aren’t getting a fair shake in the American legal system?
That’s the stuff of Saturday Night Live parody.
In their motions, Lathrop & Gage seems to be claiming that they are being put at a legal disadvantage because Jonathan Fortman, many of whose clients in the suit are Hispanic, Bosnian or African-American janitorial workers, publicly expressed his opinion that Lathrop & Gage attorneys are using stall and delay tactics on behalf of their greedy, con-men clients.
In our opinion, Lathrop & Gage attorneys should just lighten up and enjoy their lucre, since nothing sounds sillier than overpaid white guys claiming they’re not getting a fair shake.
Reason #3 Lathrop & Gage Should Lighten Up & Enjoy the Lucre: They Look Sloppy & Inept
Lathrop and Gage attorneys expressed outrage that Fortman publicly described their advocacy as “ridiculous,” “lame,” “ill-advised,” and “all about the delay.”
Yet, in their motions for sanctions and a protective order, Lathrop and Gage attorneys seem dead-set on demonstrating that they are ridiculous, lame, ill-advised and all about the delay.
Example #1: Counting to six.
In the Defendant Motion for Sanctions, Lathrop and Gage attorneys wrote:
5. Although Plaintiffs’ counsel makes reference to six different subpoenas being served (Counsel represents subpoenas were served on Dennis Jarrett, Bob Stapleton, Marisa Lather, Farrell and Blair), Plaintiff’s counsel did not serve a single notice, either informal or formal, of these subpoenas being served.
I’m not a highly paid attorney, nor a mathematician, but I’m pretty sure that adds up to five, not six, different subpoenas (Jarret – 1, Stapleton – 2, Lather – 3, Farrell – 4, Blair – 5). Or does Lathrop and Gage have their own creative math system?
Granted, such creative accounting could come in handy when creating client invoices.
Example #2: Major factual error
Four Lathrop and Gage attorneys (Scott J. Dickenson, Mathew A. Jacober, John D. Ryan, Emily E. Kiser – referred to collectively as the “poodles” in the discussion at STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?) are listed on the Defendant Motion for Sanctions.
The motion asserts that Jon Fortman publicly posting information and opinion on “his” blog, UnhappyFranchisee.com [emphasis ours]:
“8. …Mr. Fortman States in his blog…”
“12. What makes Mr. Fortman’s conduct more abhorring is his willingness to post his actions on his self-serving blog…”
With 280 attorneys and an army of paralegals and secretaries, could no one at Lathrop and Gage alert them to the fact that UnhappyFranchisee.com is NOT Jon Fortman’s blog?
Jon Fortman has no ownership nor editorial control over this website whatsoever.
The poodles, it seems, had an accident.
Example #3: Lame attempt at turning the judge against Fortman
In the poodles’ Motion for Protective Order, the crack Lathrop and Gage legal team assert that the most egregious professional sin of Jon Fortman is that he voiced “his opinion of the Judge presiding over this litigation.”
Uh-oh! What terrible, disparaging statement did Fortman make about the Judge?
Here’s Fortman’s shocking statement: “…I have appeared before the judge assigned to this case many times. She is not going to tolerate any tactics used for the sole purpose of delay…”
That’s it? The statement that the poodle’s characterize as “most shocking” is, in fact, a compliment by Jonathan Fortman that she’s a no-nonsense judge who will not tolerate delay tactics and other nonsense?
Seriously, such frivolous poodlery and shoddy legal work almost make me feel sorry for Defendants Dennis Jarrett and Pete Frese.
If I were them, I would check the hours billed for the Motion for Sanctions and Motion for Protective Order very carefully.
I would also assign someone to check the math on every Lathrop and Gage invoice.
Judging from the Motion for Sanctions, this is a law firm that believes 1+1+1+1+1 = 6.
And Stratus Franchising, LLC and their gang should keep their legal costs under control so they’ll be able to pay out the inevitable settlements that will (hopefully) be due to the victims whose savings they took.
Read more here: Janitorial / Commercial Cleaning Franchise Issues
ARE YOU FAMILIAR WITH LATHROP AND GAGE? OR THE STRATUS BUILDING SOLUTIONS FRANCHISE? SHARE A COMMENT BELOW.
Disclaimer: The assertions and personal characterizations in this post are personal opinions and should be interpreted as such. They are opinions – Witty, bold & insightful opinions – not statements of fact. In fact, we could be wrong about everything ;)
LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 1)
July 8, 2012
Dear Lathrop and Gage: lighten up and enjoy your lucre. Regards, Unhappy Franchisee
Lathrop & Gage, the powerhouse law firm, is tattling to mommy that Jonny Fortman said bad things about them on UnhappyFranchisee.com.
Lathrop and Gage has filed a Defendant Motion for Sanctions and a Defendants Motion for Protective Order (on behalf of their clients) against Fortman, their opposing counsel in the case of Markeeta Rivera, et al., Plaintiffs, vs. Simpatico, Inc., Stratus Franchising, LLC, et al., Defendants.
Lathrop & Gage is defending the alleged sleazedog scam artists (note that I said alleged, counselors) known as Stratus Franchising, LLC and Simpatico, Inc., headed by Dennis Jarrett and Pete Frese.
Attorney Jonathan Fortman is representing more than 100 alleged victims, many of whom turned over their life savings to the defendants and their master franchisees for “guaranteed” janitorial jobs, and received little to nothing in return.
Lathrop & Gage is being paid huge sums for their team of lawyers (Scott J. Dickenson, Mathew A. Jacober, John D. Ryan, Emily E. Kiser - referred to collectively as the “poodles”** on UnhappyFranchisee.com), presumably from the life savings of many of the plaintiffs.
Attorney Jonathan Fortman is working on contingency, since what little savings his clients amassed was seemingly stolen from them in the Stratus Building Solutions franchise scam.
Lathrop & Gage has 281 attorneys and is the 150th largest firm in the United States*.
Jonathan Fortman has Jonathan Fortman… and a single paralegal (the formidable Kelly Spann).
Lathrop & Gage has gross revenues of $138,000,000, revenue per lawyer of $475,000, and profits per partner of $465,000*.
When Jonathan Fortman wins a big settlement, as he did on behalf of the defrauded franchisees of Contours Express, he uses his portion to finance representation of those who can’t afford representation, like the janitorial franchisees of Stratus Building Solutions.
Lathrop & Gage is Mr. Potter chiding George Bailey for “playing nursemaid to a lot of garlic-eaters.”
Attorney Jonathan Fortman is George Bailey, sticking up for clients others take advantage of, then discard.
Lathrop & Gage is like the redcoats, insisting on lining up in the open and firing from proper formation… using $1000 dollar bullets paid for by their clients.
Jon Fortman is like the minutemen, firing musket loads of grapeshot from behind trees, rocks and bushes.
Lathrop & Gage brags it was founded in 1873 “on the heartland principles of honor, service, trust and value.”
Jonathan Fortman personifies honor, service, trust and value in the present day.
Jonathan Fortman was described as being like a “junkyard dog”** on a conference call conducted by Lathrop and Gage attorneys.
Lathrop and Gage attorneys Scott J. Dickenson and Mathew A. Jacober were described as “poodles” by the Stratus insider on the same call**.
Now the poodles have their fluffy coats in a bunch because the junkyard dog has expressed opinions in a public, unpaid forum (ee-gad)… and that, yap the poodles, is unacceptable and just not FAIR!
Reason #1 Lathrop & Gage Should Lighten up & Enjoy the Lucre: Partner Profits
Lathrop and Gage should put aside its hurt feelings and remember the ultimate goal: to get that profit-per-partner up to $500,000.
Without a bogeyman, kids’ nightlight manufacturers would be out of business.
In the movie Hook, remember how miserable Captain Hook was without Peter Pan to battle?
Predatorial franchisors have gotten snug and secure, hiding behind their well-constructed corporate entities, behind their clever structures where they can use individual master franchisees as scapegoats, and mountains of one-sided agreements that favor them.
But we all know the big, big partner profits are not in creating corporate entities and master franchise agreements. The BIG, big partner profits come when enraged corporate con-men and thieves come running to a law firm like Lathrop and Gage, waving their checkbooks, because somebody has the audacity to publicly call them con-men and thieves.
Corporate con-men and thieves have invested in a system they believe will protect them from being outed as con-men and thieves. When that protective veil of polite discourse and “professional conduct” is broken, money is no object – they will pay whatever it takes to defend their fictional honor.
So, Lathrop and Gage should not work so hard to silence the voices that enrage the con-men and thieves.
After all, it is that outrage and indignation that transforms con-men and thieves from really good clients into GREAT clients.
Continue reading LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 2)
Read more here: Janitorial / Commercial Cleaning Franchise Issues
ARE YOU FAMILIAR WITH LATHROP AND GAGE? SCOTT DICKENSON AND MATHEW JACOBER? STRATUS BUILDING SOLUTIONS? SHARE A COMMENT BELOW.
* Source: The American Lawyer
** The actual nicknames “junkyard dog” and “poodles” were coined by UnhappyFranchisee commenter and Stratus insider Reasoned Source.
Disclaimer: The assertions and personal characterizations in this post are personal opinions and should be interpreted as such. They are opinions – Smart, well-reasoned and clever opinions – not statements of fact.
STRATUS BUILDING SOLUTIONS Amended Petition Adds Master Franchisees to Lawsuit
July 2, 2012
Attorney Jonathan Fortman, on behalf of Stratus Building Solutions unit franchisees, has filed an Amended Class Action Petition for Declaratory Judgement to the Circuit Court of St. Louis County, State of Missouri.
The amended petition claims that the Stratus franchisor and it master franchisees deceptively sold janitorial franchises to individuals nationwide, that the defendants knew that they could not deliver the janitorial contracts promised to the franchisees, and that they engaged in “churning” of accounts in order to callously cheat the plaintiffs out of their life savings.
The amended petition names the specific regional Stratus Master franchisees for the first time, and asks the court recognize the class and to declare (among other things) that Stratus Franchising, LLC and Simpatico, Inc. “may be jointly liable to Plaintiffs and members of the putative class for conspiring to utilize Master Franchisees to commit fraud against Plaintiffs and the putative class.”
Are you familiar with the Stratus Building Solutions? Please share a your perspective below.
Scroll down for the full list of Stratus Plaintiffs, an excerpt from the petition, and a link to the full legal document.
Case Number: 12SL-CC00339
MARKEETA RIVERA, And GUADALUPE CLEMENTE,
Both for themselves and as representatives
Of a class of similarly situated others.
Plaintiffs,
-vs-
SIMPATICO, INC, Division: 13
And
STRATUS FRANCHISING, LLC,
And
PHSCCH SBS, LLC, (Serve: Agent: Channen Smith 9531 E Nora Circle
Mesa, AZ 85207) )
And
Stratus Building Solutions of Arizona, Inc.,
Goldeneye Holdings, Inc., d/b/a Stratus of Orange County [CA],
Mark Bashforth d/b/a Stratus Building Solutions of San Diego[CA],
Jayson Bashforth d/b/a Stratus Building Solutions of San Diego[CA],
Afshin Cangarlu, d/b/a Stratus of Los Angeles [CA],
Stratus Building Solutions of Northern California, LLC, d/b/a Stratus of Sacramento [CA],
Jim Parell d/b/a Stratus of Ventura County [CA],
Colorado Cleaning Partners, Inc, d/b/a Stratus Building Solutions of Southern Colorado [CO],
Channen Smith, d/b/a Stratus of Denver [CO],
Jitendra Kapur, d/b/a Stratus of Stamford and Westchester [CT],
Raynal Enterprises, Inc., d/b/a Stratus of Miami [FL],
Stratus Building Solutions of Tampa St. Pete, LLC, [FL],
Paladin Building Services, LLC, d/b/a Stratus of Jacksonville, [FL] [Jeffrey B. Aibel],
Paladin Building Services, LLC d/b/a Stratus of Atlanta [GA] (Serve: Agent: Jeffrey Aibel )
Kukamaehu, Inc., d/b/a Stratus of Honolulu, [HI],
Iowa Building Solutions, LLC, d/b/a Stratus of Iowa (Serve: Agent: Leonard R. Fazio ),
DPK Investments, Inc., d/b/a Stratus of Chicago [IL] )(Serve: Agent: Devang Kothari ),
Shamrock Building Services, Inc., d/b/a Stratus of Indianapolis [IN] (Serve: Agent: Kevin G. Spellacy )
Stratus Building Solutions of Kansas, LLC (Serve: Agent: Peter Frese )
Shamrock Building Services, LLC, d/b/a Stratus of Louisville, [MO],
Stratus Building Solutions of Lafayette, LLC [LA](Serve: Agent: S.D. Steckler )
Stratus Building Solutions of Minnesota (Serve: Agent: Kevin Spellacy or Lorena Aristizabal),
TTK Investments, Inc., d/b/a Stratus of Concord, [NC] (Serve: Agent: Ernest Kraft ),
TTK Investments, Inc., d/b/a Stratus of the Triad [NC] (Serve: Agent: Ernest Kraft ),
TTK Investments, Inc., d/b/a Stratus of Charlotte [NC] (Serve: Agent: Ernest Kraft ),
Stratus Building Solutions of Omaha [NE],
Stratus Building Solutions of Nebraska (Serve: Agent: Channen Smith ),
Joy Community Development Corporation d/b/a Stratus Building Solutions of Central New Jersey, (Serve: c/o D’Andre Salter ),
Stratus Building Solutions of Long Island, Inc [NY] (Serve: Agent: Richard M. Baran ),
Impressive Cleaning Solutions, Inc., d/b/a Stratus of Buffalo [NY] (Serve: Agent: Kenneth A. Casseri),
MARRS, LLC d/b/a Stratus Building Solutions of Cincinnati [OH] (Serve: Agent: Mark Stocker )
Stratus Building Solutions of Oregon, Inc., (Serve: Agent: Jon A. White ),
Z3 Enterprises, LLC, d/b/a Stratus Building Solutions of Pittsburgh [PA],
HolBon Holdings, LLC, d/b/a Stratus Building Solutions of Philadelphia [PA],
TTK Investments, Inc., d/b/a Stratus of Columbia [SC] (Serve: Agent: Ernest Kraft ),
Kevin Gass, d/b/a Stratus of Columbia, [SC],
Ralph Sizemore d/b/a Stratus of Upstate Carolina, [SC],
D&E Holdings, LLC d/b/a Stratus Building Solutions of Nashville [TN],
Stratus Building Solutions of Northern Utah (Serve: Agent: Lori Sealy),
SYDDAR, Inc. d/b/a Stratus Building Solutions of Salt Lake [UT] (Serve: Agent: Shauna Sharpsteen ),
Afshin Cangarlu, d/b/a Stratus of Inland Empire, [CA],
J. Beck, d/b/a Stratus Building Solutions of Wilmington [DE],
Jason Potts, d/b/a Stratus of Raleigh [NC],
Don Gartner, d/b/a Stratus of Northern New Jersey,
Rob Salazar, d/b/a Stratus of Albuquerque [NM],
Quail Run Enterprises, Inc., d/b/a Stratus Building Solutions of Las Vegas [NV] (Serve: Agent: Tamara Kyllo ),
Craig Donovan, d/b/a Stratus Building Solutions of WNY, [NY],
Mark Bashforth, d/b/a Stratus Building Solutions of Houston [TX],
Jayson Bashforth, d/b/a Stratus Building Solutions of Houston [TX],
Jacquelyn Mosley d/b/a Stratus of Northern Texas,
Thomas Mosley, d/b/a Stratus of Northern Texas,
Greg Fishman, d/b/a Stratus of Austin [TX],
Cordell Dean, d/b/a Stratus of Richmond [VA],
Defendants.
HERE IS AN EXCERPT FROM THE STRATUS PETITION:
DECLARATORY JUDGMENT
1. This class action seeks declaration of liability on behalf of all persons who purchased franchises through Master Franchisees of Defendants in the United States of America.
2. This action arises from Defendants utilizing Master Franchisees as their agents to:
(a) fraudulently induce Plaintiffs to enter into franchise agreements by failing to disclose all costs associated with the franchise;
(b) fraudulently withhold the identities of all franchisees who had there franchises terminated;
(c) violate the disclosure requirements of the Federal Trade Commission;
(d) provide fraudulent earnings claims to the class without proper documentation; and
(e) prevent potential franchisees from learning the turnover rate of its franchises.
3. Plaintiffs allege that Defendants, through the Master Franchisees, engaged in “churning” in which the franchisor cancels the franchise agreement or accounts of the Unit Franchisee without just cause, making the conditions for accepting accounts or servicing accounts so untenable that the Unit Franchisee will decline or abandon an account. These actions are taken by Defendants for the sole purpose of providing accounts to new Unit Franchisees thus obtaining more initial franchise fees.
4. Plaintiffs allege that Defendants were aware that the Stratus system first implemented by Defendant Simpatico was fatally flawed in that the limited number of available accounts and the competition in the market required the franchisor to continue selling Unit Franchises even though there were not enough accounts to permit the Franchisor to comply with its obligations under the various Franchise Agreements.
5. As a direct and proximate result of the actions of Defendants, both directly and through its Master Franchisees, many of the Unit Franchisees lost their life savings.
6. Plaintiffs further allege that Defendants have improperly misclassified the Plaintiffs as independent contractors, and thereby denied them various benefits to which they are entitled to as employees under the wage laws, including minimum wage, overtime pay, other wage protections, and other benefits of employment, such as eligibility for unemployment and workers compensation.
7. Plaintiffs’ right to declaratory relief stems from Missouri Revised Statute Section 527.010, et al., and Rule 87 of the Missouri Rule of Civil Procedure.
8. Plaintiffs and the putative class are in a position of uncertainty as to the enforceability of the Master Franchise Agreement and whether the Master Franchisees are independent contractors or agents of Defendants for purposes of vicarious liability.
9. Plaintiffs and the putative class have an immediate personal interest in having this adjudicated in such manner because the Master Franchise Agreements require application of Missouri law and this Court is best suited to determine the nature of the relationship between Defendants and the Master Franchisees.
10. As a matter of judicial economy, and in the interest of uniform application of Missouri law, this Court should determine the status of the relationship to avoid having other state and federal courts apply Missouri law. Otherwise, there is a potential for conflicting decisions of foreign state and federal courts applying Missouri law.
11. Plaintiffs and the putative class members lack an adequate remedy at law.
12. Plaintiffs are entitled to an attorney’s fees for under the Missouri Declaratory Judgment Act, as the circumstances surrounding the filing and prosecuting of such Petition constitute “unusual circumstances” justifying an award of attorney’s fees.
13. The questions posed by Plaintiffs are ripe for judicial resolution, as all Plaintiffs, Defendants and interested third parties are represented in this action.
WHEREFORE, Plaintiffs pray this Court enter an Order and Declaratory Judgment, ordering:
a. Certification of a class of individuals who are identified as those who have purchased a franchise from the Defendants through Master Franchisees.
b. That an Order/Judgment issue declaring that Defendant Stratus is the principal of the Master Franchisee for purposes of vicarious liability under the laws of the State of Missouri and/or that Defendants may be jointly liable to Plaintiffs and members of the putative class for conspiring to utilize Master Franchisees to commit fraud against Plaintiffs and the putative class.
c. Order that Notice be disseminated to individual class members pursuant to Missouri law
d. any and all other relief as the Court deems just and proper.
Respectfully submitted,
LAW OFFICE OF JONATHAN E. FORTMAN, LLC
READ THE FULL PETITION:
Rivera v Simpatico – Amended Petition – Declaratory Judgment final
Related reading:
STRATUS BUILDING SOLUTIONS Franchise Complaints
STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?
STRATUS BUILDING SOLUTIONS Franchise Class Action Lawsuit Filed
STRATUS BUILDING SOLUTIONS: Markeeta Rivera’s Franchise Horror Story
STRATUS BUILDING SOLUTIONS Franchise: Guadalupe Clemente’s Horror Story
ARE YOU FAMILIAR WITH STRATUS BUILDING SOLUTIONS AND ITS MASTER FRANCHISEES? PLEASE SHARE A COMMENT BELOW.
Shazer Fernando Limas: The “Killer” Franchise Salesman of Stratus Building Solutions
July 2, 2012
Shazer Fernando Limas was a killer franchise salesman for Goldeneye Holdings, Inc., a regional master franchisee the Stratus Building Solutions commercial cleaning chain.
Fernando’s aggressive sales tactics resulted in praise and sales awards from the parent company, and made him the “golden boy” of Stratus in Southern California.
Yet within a couple of short years, Fernando Limas would leave his former boss’s Stratus franchise mired in controversy, lawsuits and scandal.
And Shazer Fernando Limas himself would be facing a possible death penalty, charged with the brutal murder of his girlfriend and their two young children.
Shazer Fernando Limas: Stratus’ killer franchise salesman
Peter Vavan’s Goldeneye Holding’s, Inc. entered a master franchise agreement in April, 2009, that granted him the right to sell and service Stratus Building Solutions unit franchises in Orange County, CA.
According to the company’s Franchise Disclosure Document, Vavan hired Shazer Fernando Limas as an independent contractor sales agent to assist him in the sale and marketing of franchises.
According to “Reasoned Source,” a Stratus insider and commenter on UnhappyFranchisee.com:
In the Beginning, Fernando [Limas] and [Stratus master franchisee] Pete Vavan were the “Golden Children” of Stratus Corp. They scored tons of franchise cash, they won awards, they had their respective pictures taken with [Stratus Franchising, LLC President Pete Frese and CEO Dennis Jarrett], they were held in the highest esteem and used as the “how to build your business, the STRATUS way”. After at least two month’s of bringing in 100k plus in franchise cash, Pete/DJ were so proud of them that they were asked “how did you do such a great job of bringing in the cash?”
Well, even after they found out, they were still happy, they were still promoting and pushing EVERYONE in the System as to HOW to SELL a Franchise! They were talked about in the Stratus Newsletter, they were on conference calls, they were brought up in front of Everyone at the Los Angeles area Regional Meeting…
It turns out that the “great job bringing in the cash” by Fernando Limas was the result of an alleged franchise scam that he perpetuated on his fellow Latinos.
According to a lawsuit filed on behalf of 52 Stratus unit franchise owners (see STRATUS BUILDING SOLUTIONS: Franchisees v.Goldeneye Holdings Lawsuit), Goldeneye Holdings, Inc. would advertise its janitorial franchise opportunity in Spanish-language publications. Once individuals inquired, Fernando would allegedly conduct the hard-sell presentations in Spanish, promising guaranteed cleaning accounts for their investments of thousands of dollars. Fernando had the Spanish-speaking opportunity seekers sign onerous legal documents that they could not read (as they were in English), took their money, and never delivered the promised cleaning accounts.
Later, many of Fernando’s angry victims would picket the Goldeneye offices in Orange County, and grant interviews that would be broadcast on Spanish language channel Telemundo. 52 victims would join together in a lawsuit alleging fraud against Goldeneye Holdings, Inc.
By that time, Shazer Fernando Limas had fled for greener pastures, having accepted a better offer from nearby master franchisee Stratus Building Solutions of San Diego. Peter Vavan and Goldeneye Holdings would later sue the Stratus franchisor for allowing, and perhaps engineering, the poaching of their star salesman by the San Diego Stratus franchisee. (See STRATUS BUILDING SOLUTIONS: Goldeneye Holdings v. Stratus Franchising Lawsuit)
Shazer Fernando Limas leaves more devastation in his wake
Up until Spring of 2012, Fernando’s alleged actions had prompted two lawsuits, had resulted in dozens of individuals and families losing their life savings, and had caused a riff between his former boss’s company, its franchisor and a neighboring franchisee. But the devastation to that point was nothing compared to what was to come.
During his time at Goldeneye Holdings, Inc., Limas began dating an attractive Latina named Arlet Hernandez Contreras whose family had moved to the U.S. from Mexico City ten years ago. The couple moved in together and had a tumultuous relationship. During that time, Arlet gave birth to two baby boys, Fernando and Emanuel.
According to a story in the OC Register, prosecutors believe that Shazer Fernando Limas murdered Arlet Contreras and their two sons by stabbing them in their apartment on April 14, 2012.
On April 15, Limas visited a hospital to have surgery on a cut on his hand.
In the days that followed Limas visited a Home Depot and bought a tarp.
10 days later, on April 25, workers in La Puente found a female body in the gutter, covered by a tarp, in an area known for trash dumping. The body would later be identified as Arlet Contreras.
Police began looking for Fernando Lima when cleaning crews discovered blood beneath the carpet and on the walls of Limas and Contreras’ recently emptied apartment.
Limas was arrested May 3 near the San Clemente Border Patrol checkpoint after leading police on a high-speed chase.
Police have not recovered the murder weapon nor the bodies of the two children. Fernando was 1 year old, and Emanuel was just 3 months old.
Prosecutors have charged Limas with three counts of special circumstances murder, which they say make him eligible for the death penalty. Limas is currently being held without bail.
Stratus salesman Limas had a tarnished past
According to the OC Register, Fernando Limas had a history of bad relationships, infidelity and domestic violence:
Court records from Los Angeles and Orange counties show Limas has been married at least twice and was accused of abuse by one of his former wives. His most recent marriage ended in July 2011 – when his son with girlfriend Contreras was 7 months old.
Another wife claimed in a 2007 court filing that Limas grabbed her and wrestled her to the door when she visited one morning as their marriage disintegrated. Moments later, she wrote in her request for a restraining order, “a girl came out of the bedroom who claimed to be his fiancée of two years.”
The wife had been married to Limas for nearly four years, court records show. She accused him in court filings of “spending his money on other women, gambling, and drugs.” Once, she wrote, he pointed an air gun at her and pulled the trigger, but it was empty.
Aggressiveness. Dishonesty. Narcissism. Lack of empathy. These qualities all contributed to Shazer Fernando Limas’ short stint as the killer franchise salesman of what was ultimately a franchise scam.
These qualities, it appears, ultimately led him to be charged with the murder of a young mother and her two beautiful children.
Our thoughts and prayers go out to the victims and their families.
Related Reading: STRATUS BUILDING SOLUTIONS Franchise Complaints
STRATUS BUILDING SOLUTIONS: Goldeneye Holdings v. Stratus Franchising Lawsuit
STRATUS BUILDING SOLUTIONS: Franchisees v.Goldeneye Holdings Lawsuit
STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
FRANCHISE THREAT ADVISORY: Stratus Building Solutions
June 1, 2012
UnhappyFranchisee.com has issued a franchise threat advisory for Stratus Building Solutions unit-level and master franchise opportunities.
Franchise Threat Advisories are issued by UnhappyFranchisee.com when a given franchise opportunity is still being promoted in advertising and editorial media, in franchise rankings, by trade groups, PR firms, sales organizations and franchise brokers as a viable and safe franchise investment, despite strong and disturbing evidence to the contrary.
Overview of the Stratus Building Solutions franchise: According to Entrepreneur magazine, Stratus has 5,148 master and unit franchises in the U.S.. Stratus master franchisees sell unit franchises and generate commercial cleaning contracts in a designated territory; unit franchisees pay for a “guaranteed” volume of commercial cleaning contracts, and perform the janitorial duties.
Beware of the Stratus Building Solutions franchise opportunity:
Widespread allegations of fraud by Stratus unit franchisees: A class action lawsuit has been filed against Stratus Franchising on behalf of more than 100 unit franchisees and another lawsuit of 52 Hispanic franchisees has been filed against a Stratus master franchisee alleging that Stratus franchises are sold using deceptive and fraudulent methods, and that unit franchisees never receive the contracts they pay for. In a Fox News report, the Stratus franchise opportunity is called a “pyramid scheme.”
Widespread allegations of fraud by Stratus master franchisees: Master franchisees are claiming that they were defrauded into buying the Stratus franchise through illegal and fraudulent earnings claims, inaccurate and incomplete disclosure documents, and were not provided promised services and support. At least one master franchise is suing Stratus Franchising and Stratus executives for fraud, while others are refusing to pay royalties and are de-branding from the Stratus system.
Internal instability and franchisee revolt: Discussions among franchisees, attorneys and other parties on UnhappyFranchisee.com paint a picture of internal strife and instability throughout the Stratus system. The largest master franchisees are reportedly going independent and forcing their unit franchisees to cease operating under the Stratus brand. Stratus executives Dennis Jarrett and Pete Frese are battling lawsuits and open hostility from their franchisees. Increasing press and Internet coverage of the allegations and lawsuits threaten irreparable damage to the brand. Some think that Stratus could be on the verge of implosion.
A questionable and much-maligned business model: Stratus Building Solutions shares a master/unit franchisee janitorial franchise business model with competitors Coverall, Jan-Pro, Jani-King and others that has been widely criticized and litigated. Recently, a Massachusetts federal judge ruled that janitorial franchisees had so little control over their destinies that they are technically employees, not franchise owners.
A franchise industry smokescreen hides and protects bad franchises and bad franchisors
Despite strong evidence that Stratus Building Solutions is a troubled and high-risk franchise, Stratus Franchising continues to promote its franchise with to an unsuspecting public with the the help of a smokescreen of awards by for-profit advertising providers. Stratus boasts that it has been awarded the 2012 Entrepreneur Franchise 500 ranking of #12 overall franchise, #1 Commercial Cleaning franchise, #1 Fastest Growing franchise, #2 Low Cost franchise, #2 Home-based franchise, #11 Global franchise; Inc. 500|5000 Fastest Growing Companies 2010 & 2011, Franchise Times Fast 55, Black Enterprise Top 40 Best Franchises for African Americans, Poder 360′s Top 26 Franchises for Hispanics and the 50 Top Franchises for Minorities by the World Franchising Network.
Note to prospective franchisees: You are urged to use extreme caution and seek the advice of professional advisors prior to signing any agreement with Stratus Building Solutions or similar janitorial franchise. Visit UnhappyFranchisee.com for more information.
Note to Stratus franchisees: If you have invested in a Stratus Building Solutions franchise, please share your experiences at UnhappyFranchisee.com, or contact us at UnhappyFranchisee[at]gmail.com. Help is available.
Note to industry professionals: Franchise writers, editors, franchise list compilers, brokers, advisors, lenders and bestowers of industry awards are asked to refrain from promoting the Stratus Building Solutions franchise, and are asked to help spread this warning regarding Stratus Building Solutions.
For more information, see the full threat advisory at UnhappyFranchisee.com, or email us at UnhappyFranchisee[at]gmail.com.
Read more about Stratus Building Solutions:
ARE YOU FAMILIAR WITH THE STRATUS BUILDING SOLUTIONS FRANCHISE OPPORTUNITY? SHARE A COMMENT BELOW.
STRATUS BUILDING SOLUTIONS: Goldeneye Holdings v. Stratus Franchising Lawsuit
May 30, 2012
The Orange County, CA master franchisee of Stratus Building Solutions, Goldeneye Holdings, Inc., is accused of perpetrating a franchise scam to defraud non-English-speaking immigrants out of their hard-earned savings (See STRATUS BUILDING SOLUTIONS: Goldeneye Holdings Franchise Lawsuit).
However, in this lawsuit, Petar Vavan’s Goldeneye Holdings, Inc. claims that IT is the victim of franchise fraud at the hands of Stratus Building Solutions and Stratus Executives.
Are you familiar with Goldeneye Holdings or the Stratus franchise opportunity? Please share a comment below.
Case Id: 30-2011-00531707-CU-FR-CJC
Case Title: GOLDENEYE HOLDINGS, INC. VS. STRATUS FRANCHISING, LLC
Case Type: FRAUD
Category: CIVIL – UNLIMITED
Original Filing Date: 12/21/2011
1st Amended Complaint (posted below) Electronically Filed 2/27/12
Superior Court of California,
County of Orange, Central Justice Center
Goldeneye Holdings, Inc. d/b/a Stratus Building Solutions of Orange County, a California corporation,
Plaintiff,
v.
Stratus Franchising, LLC a/k/a Stratus Building Solutions, a Missouri limited liability company; Dennis Jarrett, an individual; Pete Frese, an individual; David Farrell, an individual; Bill Blair, an individual; Marvin Ashton, an individual; Carmen Garcia, an individual; and DOES 1-20 inclusive,
Defendants.
First Amended Complaint for: (1) Fraud; (2) Negligent misrepresentation and omission; (3) Violation of California Franchise Investment Act; (4) Specific performance; (5) Declaratory Relief; (6) Injunctive relief; (7) Breach of contract and breach of the implied covenant of good faith and fair dealing; (8) Intentional interference with contractual relations (employment relationship); (9) Intentional interference with contractual relations (client relationships); (10) Interference with prospective economic advantage (employment relationship); (11) Interference with prospective economic advantage (client relationships); (12) Unfair business practices (bus. & prof. code section 17200); and (13) Rescission).
READ THE ENTIRE COMPLAINT (.pdf): GOLDENEYE HOLDINGS, INC. VS. STRATUS FRANCHISING, LLC
Overview of the Allegations
In this suit, the Goldeneye master franchisee alleges that Stratus Franchising, with the knowledge and control of its CEO Dennis Jarrett, President Pete Frese, Executive VP David Farrell, VP Franchising Bill Blair, Director of Master Development Bill Blair, Director of Master Development Marvin Ashton, and Director of Master Development Carmen Garcia participated in wrongful, unlawful and fraudulent conduct including “the deceptive and fraudulent manner of sale, breaches of contractual obligations, interference with Plaintiff’s employee and client business relationships, and unlawful and unfair business practices.
Fraudulent Earnings Claims
One of the major contentions of the Goldeneye lawsuit is that Stratus Franchising execs provided illegal and grossly overstated earnings claims based on fraudulent data. According to the complaint, Stratus execs told the Goldeneye franchise prospects that based on Stratus financial history they “projected new business generation of up to $15,588 a month by each salesperson Plaintiff would train and employ.”
In one meeting, Plaintiff was allegedly provided financial calculations “that showed anticipated new monthly billings of $9100. Also, Defendant Frese informed a representative of Plaintiff that Plaintiff’s Orange County territory was a $30 million territory on two occasions prior to Plaintiff paying its initial franchise fee…”
In an email, CEO Dennis Jarrett allegedly stated the probable amount of new monthly billings for each Regional Director in Orange County would be $10,000.
Once Goldeneye had signed up as a Stratus master franchisee, the suit alleges, they learned that “the best-performing master franchisee was performing at less than half of the projected financial metrics the Fraud Defendants had provided to Plaintiff.”
Interference with an Employee Relationship
Other major contentions of the Goldeneye master franchise lawsuit against Stratus Franchising and its execs include allegations that Stratus interfered with both its employee and client (unit franchisee) relationships.
Goldeneye Holdings claims that Stratus Franchising, through its “Anti-Recruitment Provisions” of its franchise agreement, is contractually obligated to take action if another master franchisee hires away employees from another master franchisee. Goldeneye alleges that “Defendants Stratus Franchising, Jarrett, Frese, Farrell, and Ashton… participated in, approved of, and knew of and did not stop the solicitation, recruitment and hiring of a productive employee of Plaintiff who was then serving as Plaintiff’s office manager and sales agent…”
Interference with Unit Franchisee Relationships
Goldeneye alleges that “contrary to providing strong support and resources,” Stratus “interfered with Plaintiff’s customers (unit franchisees working cleaning and service jobs in Orange County) in a detrimental manner.
Perhaps in retaliation for the Goldeneye complaints about their stolen office manager, the master franchisee contends the franchisor launched a “nontransparent and retaliatory ‘audit’ of such customers [Goldeneye’s unit franchisees] which asked questions, made suggestions, provided potential-litigation information, and opened discussions with the intention of damaging Plaintiff’s realtionship with such customers.”
Why Would Stratus Undermine Its Own Master Franchisee?
Why would Stratus undermine its own master franchisee? One commenter close to the situation believes Stratus Franchising conspired to kill two birds with one stone: to enrich a favored and cooperative master franchisee, and simultaneously silence a critic & whistleblower (Goldeneye Holdings). He/she states:
Stratus wanted to sell the San Diego territory to another master they had a business partnership with. Staff from Goldeneye were approached and hired away in violation of the franchise agreement. When Stratus was questioned about their involvement in this process, Jarrett and Frese instructed Carmen Garcia (Stratus employee based in southern California – web currently shows her as Director of Master Development) to start an ‘audit’ on Goldeneye’s franchisees.
Carmen Garcia has access to all franchisee records for masters and contacted the Goldeneye franchisees directing them to a group meeting by an attorney. Supposedly if they signed a document they would receive large sums of money from a lawsuit settlement.
The intent was to put Goldeneye out of business and stop it from questioning Stratus deceptive business practices and the involvement in the hiring of their staff.
Is Stratus Master Franchisee Goldeneye Holdings a Victim, Predator or Both?
Stratus master franchisee Petar Vavan and his Goldeneye Holdings contend that they are the victims of a deceptive franchise scheme perpetrated by Stratus Franchising LLC and its executives.
More than 50 unit-level franchisees accuse Petar Vavan and Goldeneye of running their own scam targeting Spanish-speaking immigrants, and preying on their desire to achieve the American Dream.
What do you think? Share a comment below.
