Call it the Krispy Kreme Kon.
Greater Vancouver and Calgary residents went nuts with their dough when William (Bill) Francis Myles blew into town and offered them what they thought was a piece of the action in North Carolina’s storied Krispy Kreme Doughnut Corp.
But all they got was the hole.
For, you see, Myles, 55, was actually Arthur Bovio, an American grifter who had no connection with Krispy Kreme. He had no more right to peddle investments in Krispy Kreme shares than you or I have to sell shares in the Lions Gate Bridge.
Bovio allegedly told 13 investors who put up close to $1 million that he had the rights to 10 franchises in Mexico and four in Greater Vancouver, according to Surrey RCMP. He claimed he was trying to raise capital for up to 49-per-cent ownership.
The grease eventually hit the fan and the investors hired a private eye. The investigator called the RCMP after discovering that “Myles” in fact was Bovio, wanted in Illinois for fraud.
When Immigration Canada collared him in mid-April, Bovio agreed to deportation and was returned to the United States the next day.
Bovio’s victims included West Vancouver restaurateur Kamal Mroka and retired Calgary residents Jerry and Janice Joynt. Most of the investors have retained a Vancouver lawyer to recover their investments – an average of $125,000 per person.
The investors aren’t saying how Bovio managed to part them from their money.
However, Surrey RCMP say that the fast-talking stranger convinced them to sign confidentiality agreements that prohibited them from contacting Krispy Kreme’s headquarters in Winston-Salem, N.C.
It also is likely that the investors were drawn by the cachet of the Krispy Kreme name. The news coverage of the doughnut-maker’s entry into any new frontier rivals that which one would expect of a visit by the Pope.
“The hallmark of an investment scam is the confidentiality part of it,” says Valerie MacLean, vice- president of the Better Business Bureau of Mainland B.C. “It’s a huge red flag.
“I’ll bet not one of those people bothered to phone the headquarters of Krispy Kreme,” she adds. “One phone call would have saved these people all that money.”
MacLean notes that the Council of Better Business Bureaus’ www.bbb.org website clearly shows that Krispy Kreme’s headquarters is in North Carolina and that the company is a member of the BBB of Northwest North Carolina.
“It’s pretty bloody discouraging,” she says of investors’ penchant for leaping before they look.
The tricks that Bovio used are nothing new. A couple of years ago, I wrote a magazine article about a bogus preacher from Idaho who found diverse ways to separate the sheep of his Smithers-area flock from their wool.
One day, Richard Minard aka Pastor Bryan Richards happened by a wilderness lodge at Babine Lake. “What a lovely resort,” he thought. “I think I’ll sell shares in it.” And he did, fleecing investors in Canada and the U.S. who failed to do their homework.
Like Minard, Bovio went for the big score. However, the tactics he used to get people to hand over their $125,000 remain unknown because a Vancouver lawyer has told his clients not to discuss the matter publicly.
MacLean says businesses and individuals can avoid getting burned by watching out for the following red flags:
* Confidentiality clauses, i.e. you can’t ever testify in court, or you can’t ever discuss this with the police.
* Consumer-protection waivers: Run from any promoter who asks you to sign a clause that attempts to deny you any recourse to consumer protection laws.
* Any clause that says if you should decide to sue, you agree beforehand that the venue will be some obscure overseas country.
Make sure you check with your provincial securities commission and consult with your own lawyer before you sign any investment contract. “The public is warned to perform due diligence when considering investment opportunities,” the RCMP says.
Last month, I reported how the U.S. Federal Trade Commission (FTC) commenced legal action to put a stop to the sales tactics of Ambus Registry, Inc., a Calgary-based business directory company that victimized hundreds of companies from New York to Hawaii.
The U.S. District Court now has permanently barred Ambus and directors Sukhraj Singh Chana and Garther Cheung from selling directories and listings to U.S. residents, thus resolving a complaint that the defendants falsely claimed businesses had authorized purchases.
A District Court judge in Tacoma, Wash., signed the order May 11 after Ambus and the FTC settled the complaint.
During its three-year existence, Ambus Registry maintained a business address in Calgary and mail-drop relay points in Carson City, Nev., and Salt Lake City, Utah. Early in 2001, the local BBBs began receiving complaints about Ambus’s tactics.
I sent an alert to all 130 U.S. BBBs notifying them that Ambus was a Calgary company and suggesting that they forward all complaints to me. This way, the complaints would carry more weight with any police or regulatory agency that might take an interest.
About the same time, two courageous young telemarketers called me at my BBB office and told me about how they were being trained. One of the employees fed me sales-script documents that proved Ambus’s eventual undoing.
He got fired as a result, but had no regrets.
The stipulated judgment and court order require Ambus to cease any collection efforts and return uncashed cheques. The lesson: If you’re going to run an enterprise that’s likely to get you in trouble with the law, don’t make the mistake of hiring honest employees.
(Brock Ketcham is the director of trade practices for the Better Business Bureau of Southern Alberta.)
