News

Web Booth, McDonald's named in fraud lawsuit

May 5, 2002

LOS ANGELES -- A group of investors, primarily based in North Carolina, have filed suit against fast-food conglomerate McDonald's (NYSE:MCD) and kiosk companies Web Booth and Waterstones, alleging that an Internet kiosk scam concocted by Web Booth and Waterstones bilked the investors out of $8.1 million.

The suit, filed on May 1 in Los Angeles Superior Court, seeks to recoup the money lost in the investment scheme, which involved putting Internet kiosks inside McDonald's nationally. Web Booth and Waterstones are accused of fraud; McDonald's is named in the suit for allowing its logo and brand name to be used in promotional material sent out to potential investors.

In the scheme, investors would have recouped their investment through advertising revenue. Instead, the suit alleges, Web Booth official John Perry disappeared in December after cleaning out the company's bank account. FBI officials in Los Angeles are looking into the allegation.

Of the 179 plaintiffs listed in the suit, 160 of them reside in North Carolina, according to the Charlotte Observer. The investors lost anywhere from $14,250 to nearly $150,000 in what attorneys are saying was an elaborate Ponzi scheme.

"McDonald's is one of the most successful franchises, I guess, in the history of the world," Rod Garner, whose mother-in-law invested about $141,000 in the scheme, told the Charlotte Observer. "If you can't trust McDonald's, who can you trust?"

According to the suit, investors paid Web Booth between $14,250 and $24,950 to buy Internet kiosks. The kiosks were then to be leased to Waterstones, which would install and maintain them at McDonald's. Investors would then earn monthly revenue through advertising revenue with a guaranteed annual return of up to 17 percent.

Under the plan, the kiosk deployment would begin with more than 150 kiosks at McDonald's in southern California, with thousands more scheduled to go nationally. But only about 40 kiosks were ever deployed, attorney B. Daniel Lynch, who is representing the investors, told the Charlotte Observer.

Kevin Mirecki, an attorney who has represented Web Booth and Waterstones in the past, said he does not know Perry's current whereabouts.