The man at the centre of fraud allegations involving home maintenance company Green Acres and up to 200 holders of bogus ironing franchises appeared in Auckland District Court today.
Former franchise master Keith Lapham appeared on two charges of obtaining by deception and one charge of fraud.
The Serious Fraud Office alleges that Mr Lapham obtained $3,591,900 from approximately 172 people to whom he granted sub-franchises in the period from March to December 2007.
The SFO alleges that Mr Lapham obtained this money by telling the sub-franchisees that he would pay them a guaranteed income of $650 per week when he knew he would be unable to pay that money.
He used the payments he got from new sub-franchisees to pay guaranteed income to other sub-franchisees.
The SFO also alleges that Mr Lapham obtained $96,000 of the $3.5m by telling 4 franchisees there were many fewer sub-franchises in the Auckland area than in fact there actually were.
These representations were important to the sub-franchisees in deciding to enter into agreement with Mr Lapham.
The third charge alleges that Mr Lapham obtained $244,800 by making false representations to Green Acres about how many sub-franchises he had granted.
That sum represented money that he was obliged to pay to Green Acres based on the number of new sub-franchisees that he had.
Lapham entered no plea and was remanded on bail until February 2, 2009.