WIRELESS TOYZ: Joe Barbat Boasts Victory in Franchise Lawsuit

(Unhappy Franchisee) Franchise company Wireless Toyz Inc. will not have to pay a Colorado franchisee the $200,000+ award he won in a 2010 lawsuit, according to a story in Crain’s Detroit business.

[Related reading:  WIRELESS TOYZ Fraud Case: Franchise Company, Simtob Must Pay; Barbat Cleared, 

WIRELESS TOYZ: Joe Barbat Claims Lazy Franchisees Have Selves to Blame, 

WIRELESS TOYZ: Joe Barbat Fraud Trials]

In February, 2010, a jury verdict against Wireless Toyz and its finance director and VP of franchise development Richard Simtob, awarded franchisee David Abbo and Colorado Toyz Inc. $180,600 in damages against Wireless Toyz and $20,000 against Simtob on a single count of silent fraud.  “Silent fraud” occurs when one person defrauds another by “failure to disclose material facts or creating a false impression, rather than through overtly false statements.”

Earlier this month, Oakland County Circuit Judge Shalina Kumar threw out the prior verdict and ruled in favor of Wireless Toyz.  Kumar found that jurors in the trial weren’t instructed that Abbo must have relied on a false impression from Wireless Toyz to prove silent fraud. She also found that a disclaimer in the franchise agreement appears to contradict any alleged ‘extracontractual statements’ that may have been misleading.”

Other lawsuit claims, which included fraud, negligent misrepresentation and violations of franchise law either, were dismissed or resulted in no damages.

Wireless Toyz issued a celebratory press release that called the lawsuit “frivolous,” and seemingly attempted to position the judge’s ruling as an endorsement of the high ethical and moral fortitude of the embattled Wireless Toyz franchise organization.  However, it seems that the dismissal was more a result of inadequate jury instruction in the original trial as well as disclaimers in the franchise agreement known as merger or integration clauses,  rather than the integrity of the Wireless Toyz sales process.

Here is the Wireless Toyz franchise lawsuit press release in its entirety:

___________________________________________________________________

Wireless Toyz and CEO Joe Barbat Prevail in Franchise Law Suit

SOUTHFIELD, Mich.–(BUSINESS WIRE)–Wireless Toyz, Joe Barbat its founder and CEO, Richard Simtob and Jack Barbat have prevailed in a frivolous lawsuit filed by a disgruntled franchisee. After a four week trial last year before the Oakland County Circuit Court, the jury found no cause of action on eight of the nine counts alleged. Earlier this week, the honorable Judge Shalina D. Kumar granted judgment in favor of Wireless Toyz and its aforementioned executives, vindicating them from all charges. Judge Kumar held that plaintiffs’ claims were barred as a matter of law, and further ruled that:

“This ruling speaks to the true ethics and moral principles of how Wireless Toyz operates and was founded”

Defendants correctly argue that the evidence adduced at trial established that Plaintiffs were not defrauded or mislead regarding the extent of their franchise.

The Court finds that the evidence shows that Defendants did not conceal the existence, nature, uncertainties or financial effects of the franchise opportunity.

The Court finds that under Michigan law, the merger/integration clauses and signed acknowledgements are valid, binding and enforceable, and bar Plaintiffs’ claim, which is based upon alleged extra-contractual and oral misrepresentations and omissions, as a matter of law.

“This ruling speaks to the true ethics and moral principles of how Wireless Toyz operates and was founded,” states, Barbat. “My objective was to see justice prevail, although it was a long and costly road, I was confidant that in the end justice would indeed prevail,”

Brian Witus of the law firm, Cohen, Lerner, Rabinovitz & Witus, P.C., states, “The jury verdict and Judge Kumar’s ruling constitute a complete vindication of Wireless Toyz. Wireless Toyz, Joe Barbat, Richard Simtob and Jack Barbat have vigorously defended this lawsuit in order to protect the name, integrity and reputation of Wireless Toyz, its exceptional franchisees and its valued customers.”

In October of 2009, Barbat re-acquired the company he founded. Since then, the company has experienced positive momentum with increased same store sales in 2010. Barbat is focusing his time and effort on enhancing Wireless Toyz’s business model. “We have hired a new operations manager, an accountant and will be opening new stores in 2011 and 2012. I am glad to put this chapter behind us and am committed to focusing on building the business by creating jobs and strengthening our already proven concept in the wireless industry.” said Barbat. This only goes to show that with Barbat back at the helm, Wireless Toyz is looking forward to continued success in the future.

About Wireless Toyz

Wireless Toyz is the largest independently owned chain of cellular superstores. Each Wireless Toyz outlet brings together cellular phones, accessories and service plans from multiple carriers, including Sprint, T-Mobile, Verizon, AT&T, Metro PCS, Cricket, Boost, as well as satellite TV offerings from industry-leading DirecTV. This broad selection simplifies shopping for consumers by eliminating visits to multiple stores. The company is headquartered in Southfield, Michigan, opened in 1996, and began franchising in 2001. The company had only nine locations that year, and today, 11 years later, it operates 95 stores in 12 states.

Founder Joe Barbat took a hiatus from the business in December 2007, selling off some of his shares and retaining his position as chairman of the board. In October 2009, Barbat returned as major shareholder and put together a new team to enhance the success of Wireless Toyz.

WIRELESS TOYZ Fraud Case: Franchise Company, Simtob Must Pay; Barbat Cleared

One of several franchisee lawsuits charging Wireless Toyz, and executives Richard Simtob, Joe Barbat, and Jack Barbat with fraud has ended with mixed results.

According to Crain’s Detroit:  “An Oakland County jury awarded $180,600 damages last week against Wireless Toyz and another $20,000 against Richard Simtob, its finance director and vice president of franchise development, in favor of Colorado franchisee David Abbo of Colorado Toyz Inc.

“Jurors awarded no damages against founder and President Joe Barbat, his company JSB Enterprizes Inc. or against co-founder and Vice President Jack Barbat.”

The single count awarded is for silent fraud. The other allegations of pure fraud, negligent misrepresentation and the franchise law violations were dismissed or resulted in no damage awards from the jury.

The plaintiffs in the case were represented by Birmingham-based Norman Yatooma & Associates P.C.  They were seeking $7.2 million in damages.

According to ClickOn Detroit:

Attorney Norman Yatooma also represents Abbo and other investors, who claim they were defrauded out of their investments by Barbat and the company.

"They didn’t much care what the franchisees were ultimately going to earn. What they cared about was getting their $100,000, their $150,000, their $200,000 down payment to open up that store or to reserve that territory. After that, what happened to the franchisee was their problem," Yatooma said.

He said the investors were lied to when they were told they would make huge profits with their franchises.

"[Joe Barbat’s] made obscene millions off this Wireless Toyz scandal. He’s made millions upon millions upon millions," Yatooma said.

ARE YOU FAMILIAR WITH JOE BARBAT, RICHARD SIMTOB & THE WIRELESS TOYZ FRANCHISE?  WAS THE JURY VERDICT FAIR?  SHARE A COMMENT BELOW.

WIRELESS TOYZ: Joe Barbat Claims Lazy Franchisees Have Selves to Blame

Joe Barbat claims that Wireless Toyz franchise investors have themselves to blame for their failures.

According to a  Local 4 Defenders video report posted on Click On Detroit, the Wireless Toyz founder accused of fraud said that if the franchisees suing him had worked as hard as he had, they’d be rich, too.  Barbat’s allegedly banked $13 Million on the Wireless toyz franchise chain he founded.

Check out the Local 4 Defenders video:  Wireless Toyz Founder Goes On Trial.

Read and discuss the Joe Barbat, Wireless Toyz lawsuits here:  WIRELESS TOYZ: Joe Barbat Boasts Victory in Franchise Lawsuit

  WIRELESS TOYZ: Joe Barbat Fraud Trials

Here’s an earlier video from the Local 4 Defenders that gives an overview of the charges and allegations against Joe Barbat & Wireless Toyz:

Are Wireless Toyz franchisees victims of deception or lazy entrepreneurs looking for someone to blame for their lack of initiative?

That’s what the courts are trying to decide.  Share your opinion… and stay tuned.

ARE YOU FAMILIAR WITH JOE BARBAT & WIRELESS TOYZ?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

WIRELESS TOYZ: Joe Barbat Fraud Trials

Known for his mini-mansion, fast cars, and millionaire lifestyle, Joe Barbat, founder of the 200 unit Wireless Toyz franchise chain, was named to the Crain’s 40 under 40 list in 2005.  In 2007, Barbat was named as Entrepreneur of the Year by Detroit-based firm Ernst & Young.

More recently, however, he’s named as a defendant in multiple lawsuits by Wireless Toyz franchise owners.  Joe Barbat, and his associates, are being accused of violating Michigan franchise laws and falsifying information about profitability to franchisees.

From Millionaire’s Fraud Trial Begins:

…a number of investors said they were defrauded out of massive amounts of money and a number have sued Barbat for violating Michigan’s franchise investment laws.

“Outright lies, deceit and illegal methods to dupe my clients into investing hundreds of thousands of dollars,” [attorney Norman]Yatooma said.

Rod Kello is one of the investors claiming to be a victim. He talked with Local 4 Defenders about his plight.

“I’ve lost just about my life savings that I had, pretty much put all my money into this company. I’m pretty close to foreclosure on my home, kids’ tuitions, I mean you name it,” Kello said…

“They feed you all these numbers and all these lies and you find out a year later that they are all lies,” Kello said.

Sumil Rupani of Texas was another investor. He testified in court on Friday and later said his experience has cost him personally.

“Financially it’s been the worst thing I’ve ever gone through. I’ve lost friends, made enemies along the way. Family members don’t speak to me like they used to,” Rupani said.

Wireless Toyz and Joe Barbat claim there was no fraud.

Attorneys for Wireless Toyz and Joe Barbat deny the allegations.  Steven Cohen, Joe Barbat’s attorney in the Kello lawsuit, stated  “My clients are neither cheats nor liars nor did they defraud anyone.”

According to a Crain’s Detroit story, Wireless Toyz attorney Bradley Schram also believes the fraud charges are unfounded:

“There was no fraud involved in any of the franchises,” Schram said. “The market has just changed, just like many industries are dealing with a market that changes.”

Also read: WIRELESS TOYZ: Joe Barbat Claims Lazy Franchisees Have Selves to Blame

ARE YOU FAMILIAR WITH JOE BARBAT & WIRELESS TOYZ?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.