The Villanos v. Matco Tools, TD Bank

Marks alleges Matco fraudulently provided such information to TD Bank with a note asking lenders not to let the prospective franchisees know it had provided sales figures. The elder Villanos, a Matco Tools distributor and long-time franchisee, was the guarantor of his son’s $103,000 loan, and paid it off when his son began missing payments in 2006, the claim states. He remains a franchisee, while his son has since left the system.

Status: Marks filed the suit in mid-November seeking immediate discovery. He estimates a class action suit involving “between 150-to-200 plaintiffs.”

Franchise Times
January 20, 2012

The Villanos v. Matco Tools, TD Bank

Jurisdiction: Filed in U.S. District Court – Newark, New Jersey.

Background: In what a franchisee attorney is deeming a conspiracy, Matco Tools franchisees David Villano and his son, David, have filed suit against the franchisor – and its lender, TD Bank – alleging the parties schemed against Matco franchisees, despite their knowledge of fraudulent earnings representations, and a high failure rate for newer Matco franchisees using SBA loans.

Marks & Klein Partner Jerry Marks claims his clients, the Villanos’, were induced into landing an SBA loan – which are guaranteed up to 90 percent by the Federal Deposit Insurance Corporation (FDIC) – without the opportunity to review documents supplied by Marco to TD Bank. These documents, the claim states, were provided to the bank containgn income projections over a three-year span, thus violating the franchise’s policy not to disclose sales projections in Item 19 of its Uniform Franchise Offering Disclosure, which was in effect when the loan was approved in 2004.

Marks alleges Matco fraudulently provided such information to TD Bank with a note asking lenders not to let the prospective franchisees know it had provided sales figures. The elder Villanos, a Matco Tools distributor and long-time franchisee, was the guarantor of his son’s $103,000 loan, and paid it off when his son began missing payments in 2006, the claim states. He remains a franchisee, while his son has since left the system.

Status: Marks filed the suit in mid-November seeking immediate discovery. He estimates a class action suit involving “between 150-to-200 plaintiffs.”

Calls to Matco were not returned by press time.


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Risks: Able to finance and sell negative cash flow franchise on crooked appraisals, Fraudulently inflated franchisee revenue figures, Liar Loans, Class action lawsuits benefit lawyers, not franchisees, Class action only as good as the lawyers involved, Class-action lawsuits: lawyers take majority of risks & spoils, Conspiracy, Conspiracy to commit fraud, Conspiracy to market and sell a doomed to failure franchise, Deceit, Fraud, Fraudster banker, Fraudster franchisor, Fraudulent misrepresentation, Government guaranteed loan program very attractive to fraud, Government guaranteed loans, Government guaranteed loans, massive loan defaults, Government guaranteed loans: program loses $1, franchisee families lose $10, Loan pushing, Moral Hazard: a party insulated from risk behaves differently than if the full risk were present, Overstatement of sales and profits, Predatory franchise lending, Symbiotic relationships (industry, banks, lawyers), TD Canada Trust, The game is rigged, Unsophisticated buyers, U.S. Small Business Administration, SBA, Why should we care? It's not our money., United States, 20120120 The villanos

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