Known for his mini-mansion, fast cars, and millionaire lifestyle, Joe Barbat, founder of the 200 unit Wireless Toyz franchise chain, was named to the Crain’s 40 under 40 list in 2005. In 2007, Barbat was named as Entrepreneur of the Year by Detroit-based firm Ernst & Young.
More recently, however, he’s named as a defendant in multiple lawsuits by Wireless Toyz franchise owners. Joe Barbat, and his associates, are being accused of violating Michigan franchise laws and falsifying information about profitability to franchisees.
From Millionaire’s Fraud Trial Begins:
…a number of investors said they were defrauded out of massive amounts of money and a number have sued Barbat for violating Michigan’s franchise investment laws.
“Outright lies, deceit and illegal methods to dupe my clients into investing hundreds of thousands of dollars,” [attorney Norman]Yatooma said.
Rod Kello is one of the investors claiming to be a victim. He talked with Local 4 Defenders about his plight.
“I’ve lost just about my life savings that I had, pretty much put all my money into this company. I’m pretty close to foreclosure on my home, kids’ tuitions, I mean you name it,” Kello said…
“They feed you all these numbers and all these lies and you find out a year later that they are all lies,” Kello said.
Sumil Rupani of Texas was another investor. He testified in court on Friday and later said his experience has cost him personally.
“Financially it’s been the worst thing I’ve ever gone through. I’ve lost friends, made enemies along the way. Family members don’t speak to me like they used to,” Rupani said.
Wireless Toyz and Joe Barbat claim there was no fraud.
Attorneys for Wireless Toyz and Joe Barbat deny the allegations. Steven Cohen, Joe Barbat’s attorney in the Kello lawsuit, stated “My clients are neither cheats nor liars nor did they defraud anyone.”
According to a Crain’s Detroit story, Wireless Toyz attorney Bradley Schram also believes the fraud charges are unfounded:
“There was no fraud involved in any of the franchises,” Schram said. “The market has just changed, just like many industries are dealing with a market that changes.”
Also read: WIRELESS TOYZ: Joe Barbat Claims Lazy Franchisees Have Selves to Blame
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