Victims of an alleged $3 million-plus fake franchise scam are preparing for a "massive legal battle" as the Serious Fraud Office agrees to launch its own probe.
Home maintenance company Green Acres believes its former Auckland master licensee Keith Lapham sold more than 160 bogus, unauthorised ironing businesses.
The company has spent the past two days interviewing Lapham's franchisees and has hired forensic accountants to comb records. The Serious Fraud Office on Monday agreed to investigate the case.
Meanwhile, victims have formed a group called Franchise Watch, which represents 130 franchise holders who each paid upwards of $20,000 for an area-based ironing business.
Yesterday, spokesman Ketan Trivedi told the Herald on Sunday the group had taken advice from three lawyers. "We are preparing for our battle, because it's going to be a massive litigation."
He indicated that Green Acres was likely to be targeted in the legal action over its auditing of Lapham, who had been allegedly missing payments to franchisees for up to a year. Some families wanted a full refund and others the genuine business they believed they had paid for.
Green Acres chief executive Andrew Chisholm called Lapham's operation "an elaborate, multi-layered deception" involving fake documents, fictitious customers, workloads made up of clothing bought from op shops, a shifting sea of bank accounts and a courier system designed to keep all parts of the operation separate.
He said the company's first priority was to get the legitimate businesses back on track.
The alleged scam was brought to Green Acres' attention by 20 unauthorised franchisees two weeks ago. When confronted, Lapham allegedly confessed only about 50 sub-franchises were legitimate.
He hasn't been heard from since leaving Green Acres' Parnell head office 10 days ago.
