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Washington: Two Indian restaurants in Colorado have duped investors to the tune of $380,000, state regulators have alleged and are now seeking to recover the amount from them.
In a lawsuit, the Colorado Division of Securities has alleged that the owners of Indian restaurants Bombay Clay Oven and Saucy Bombay used 'half-truths and lies' to sell investors on their grandiose plans for a nationwide expansion before spending the $380,000 that shareholders invested on rent, operating costs and Ponzi-like payments, local newspaper BusinessDen reported on Wednesday.
The two restaurants were owned by The Bombay Group (TBG), which entered into an agreement with securities broker Michael Bissonnette. Both defendants declined offers to discuss the allegations with BusinessDen, the daily reported.
Like many in the restaurant industry, TBG had grand plans to expand its business into a nationwide conglomerate, with hundreds or even thousands of locations. In 2014, TBG owned and operated two restaurants: Bombay Clay Oven, a restaurant that had operated for more than two decades, and Saucy Bombay, a new endeavour with a single location in a food court.
TBG's plan was to franchise Saucy Bombay in order to capitalise on the fast-casual restaurant trend, the lawsuit said.
"The investors in this case really believed in The Bombay Group and their restaurant, Saucy Bombay," Tung Chan, the state's securities commissioner told the newspaper. "But as we allege, the investors were not told the truth about the investments and they have not been paid back. If you have invested with The Bombay Group, please contact the Securities Division right away," he said.