The Wisconsin Department of Financial Institutions has told the owner of ‘Lucy Taco’ to stop seeking new investors after an investigation by a local news station found he misled them.
Lucky Taco was created in 2007 and the founder told investors that the company would make fortune cookies shaped like tacos.
The investigation, led by Fox6, found that by 2015 the business had made very few cookies, despite taking millions from investors who were waiting for substantial interest payments, according to the owner.
One couple, in their 70s, took out a mortgage on their 1850s-era farmstead that they owned outright in order to invest in the company back in 2009. The couple was promised 12 percent interest on their loan, according to the promissory note they still have.
The state of Wisconsin launched an investigation into the owner of Lucky Taco and found that he misled investors by failing to tell them he was already in debt to others.
When Fox6 began their investigation, the owner was $2.6 million in debt to 18 investors. The state said the owner also failed to disclose that he has $193,000 in delinquent taxes.
As of December 2016, the owner has more than $4 million in debt due to this business venture and delinquent taxes.
The WDFI, after its own investigation, ordered the owner of Lucky Taco to cease and desist offering sales of securities in the business. This means that the owner can no longer seek to raise money for the company.
The owner was forced to file for Chapter 13 bankruptcy in October. It has been recommended by the U.S. trustee assigned to the case that it be tossed because too much money is owed.
Chapter 13 sets limits as to how much debt can be reorganized and the owner of Lucky Taco surpasses those limits. The next hearing is scheduled for Jan. 7, 2017. This is when a decision will be made to either toss the case or convert it to Chapter 7 bankruptcy.
Debt is a common issue for thousands of Wisconsin residents. An experienced business bankruptcy attorney can help you understand your rights in Milwaukee.
Source: Fox6Now, “That’s how the cookie crumbles! State orders ‘Lucky Taco’ founder to stop seeking money from residents,” BRYAN POLCYN, Dec. 14, 2016