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Scores of families are facing a bleak Christmas after discovering they were the victims of an alleged fake franchise scam.
Home maintenance company Green Acres said at least 150 bogus ironing businesses worth $3 million had been sold by a master licensee.
But more than 100 victims, mostly
migrants, called to a meeting at the company's Parnell headquarters yesterday morning put the number at closer to 200.
All had bought what they believed to be a genuine business from Keith Lapham, who was licensed to sell area-based franchises in Auckland.
But the franchises were allegedly fake, unauthorised by Green Acres and arranged with false documentation.
Green Acres chief executive Andrew Chisholm said management first became aware of the problem when 20 unauthorised franchisees contacted them last weekend.
There had been "isolated cases" of people querying missing payments over the past six to eight weeks, but Lapham always had a plausible explanation, he said.
Confronted by management last Wednesday, Lapham confessed only about 50 of more than 200 franchises on his books were authentic, Chisholm said.
"It's come as a great shock to us. Naturally we're concerned at the plight of these people, and we need to gather as much information from them as we can so we can assess our next move."
Green Acres said it appeared Lapham had been selling allegedly fake franchises for up to a year, with sales increasing in the past six weeks.
Chisholm said Lapham went to "relatively extraordinary lengths" to provide people with fake customers. "It appears he's gone out to Salvation Army and op shops and bought (clothes) so these people actually perceive they've got something to do."
Company director Logan Sears said the scam was "incredibly elaborate".
"The fact that it hasn't surfaced to date, something of this scale, is absolutely mind-boggling."
Lapham, who comes from Fiji, started as an ironing franchisee. He bought the master franchise licence for Auckland several years ago and was recently recognised as one of Green Acres' most successful operators.
Lapham left the company's head office on Thursday morning and hasn't been heard from since.
When the Herald on Sunday visited Lapham's Mt Albert home yesterday, no one answered the door, and his mobile phone voicemail was full.
A handwritten sign on the house's front and back windows referred Green Acres enquiries to head office, and a broken front window was boarded over.
Green Acres has taken control of Lapham's franchises and is trying to ascertain the number of people and amounts of money involved.
Forensic accountants and lawyers are working on the case.
Chinese immigrant Daniel Wu paid $22,000 for a "franchise" in September. "We have to pay interest on that. It's very painful as most (of us) have young children and that's why we chose ironing from home, so we don't have to pay childcare.
"This has killed us. It's so very, very painful."
Hiren Bhagat and his wife, who have a toddler and new baby, said they were owed $14,000 in missed payments.
They paid Lapham $21,000 for their ironing franchise in March 2006 and said it ran smoothly until cheques began bouncing in January.
Weekly guaranteed payments dried up six months ago, and when Lapham failed to return the Bhagats' calls and emails, they wrote to Green Acres operational manager John Cowlishaw in October.
They received no reply and after ringing Green Acres were referred back to Lapham.
Bhagat was angry Green Acres had not done more. "It's not just about my family. There are so many families we've met [in the same situation]."
Management gave out questionnaires at the meeting and want anyone else who suspects they have a fake ironing franchise to get in touch.
Six victims have a meeting with the Serious Fraud Office tomorrow.
Sears said he complained to police on Wednesday but said he was told it was a "contractual issue". Green Acres has since made a written complaint.
"We as an organisation believe we've been defrauded by Keith Lapham as well," said Chisholm.
"None of the funds from the fraudulent activity have come to us."
