Franchise scam under investigation by SFO

The Serious Fraud Office is promising a through investigation of the Green Acres franchise scam but says it could take time because a large number of people claim to have been defrauded.

About 200 people bought the bogus franchises for ironing services from Keith Lapham, former master licensee for the Green Acres home maintenance company.

They paid between $20,000 and $25,000 each for the non-existent franchises and Mr Lapham – now reported to be in hiding – collected about $3 million.

The fleeced franchisees have formed a group called Franchise Watch and today they met Commerce Minister Lianne Dalziel to ask for help.

She told them the Serious Fraud Office (SFO) would treat their case as a priority.

SFO director Grant Liddell confirmed the inquiry was already under way.

"It will probably be quite lengthy, as a large number of people claim to have been defrauded," he said in a statement.

"It will be comprehensive and conducted in a thorough and professional manner. It is far too soon to say what will be the result of the investigation."

Mr Liddell said he would decide at the end of it whether any criminal charges would be laid, and would make no further comment until then.

He said he was willing to meet the members of Franchise Watch to explain the process for the investigation.

Green Acres says it knew nothing of Mr Lapham's activities, and in December its chief executive, Andrew Chisholm, asked the SFO to investigate the allegations.

Franchise Watch said after today's meeting with Ms Dalziel that most of the people who bought the franchises were from the Indian and Chinese communities.

They felt they had been targeted through adverts in ethnic community newspapers.

"Many people borrowed money to purchase the franchises and are now experiencing pressure from their lenders – banks and finance companies – as a result of their non-existent incomes," said Franchise Watch spokesman Ketan Trevidi-Meeraket.

"Many are naive at the complexities of the situation as they simply feel the money should be returned now."

NZPA