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ORLANDO – As the International Franchise Association kicked off its 2012 Annual Convention and Exhibition on Saturday, it should have given attendees a stern warning about one of its exhibitors, mUrgent Corporation. Instead, franchising’s largest and oldest trade association is giving the vendor a thumbs up.
After settling with the Securities & Exchange Commission on charges of securities fraud, mUrgent is now awaiting its fate, to be determined by the SEC on February 27. Meanwhile, the Santa Ana, California email marketing firm will be attempting to sell its services to unsuspecting restaurant chains and other franchisors at the IFA's biggest event of the year.
Sources tell us that the IFA has acknowledged that it is aware of the SEC investigation and litigation.
The IFA has a history with mUrgent, a registered supplier of the franchise association. It announced in 2010, that for the fourth consecutive year it had renewed and recognized mUrgent Corporation as its Preferred Email Marketing Vendor Partnership. Its website lists a slew of franchise companies “that have trusted mUrgent” in using their marketing services: Golden Corral, Maaco, Great Clips, Denny’s, Marriott, KFC, T Mobile, Landry’s and even IFA.
That same year, Sysco Foods signed an agreement with mUrgent to be the nationwide provider of email marketing for its Sysco iCare, a program set up to help customers succeed in the very competitive restaurant industry.
The SEC lawsuit, filed April 21, 2011, charges the email marketing firm and its executives, Boris Bugarski and his twin sons Vladimir Boris Bugarski and Aleksander Negovan Bugarski of defrauding investors.
As part of the alleged scheme, the principals set up a boiler room operation where employees made cold-calls using high pressure sales tactics. They misrepresented to prospects that mUrgent had a prospering business and would imminently conduct an initial public offering (IPO). The SEC also accuses the Bugarskis of falsely telling investors that stock sales proceeds would not be used to pay cash salaries to the family members.
SEC is charging mUrgent and its officers with conducting two unregistered securities offerings beginning in 2008 that raised nearly $10 million from at least 130 investors nationwide. They then misused investor money to fund more than $1.3 million in cash salary and bonuses for themselves.
Their spending did not end there. The Bugarski clan also established a separate “slush fund” of more than $500,00, and used investor money to pay for luxury cars and other personal expenses.
U.S. District Judge David O. Carter entered his judgment on June 27, 2011. The SEC seeks permanent injunctions against mUrgent and the Bugarskis for violations of the antifraud, offering registration, and broker registration provisions of the federal securities laws, disgorgement, financial penalties, and an order prohibiting the Bugarskis from serving as officers or directors of any public company.
|mUrgent SEC Judgment.14.0.pdf||38.59 KB|
|mUrgent Consent to SEC Judgment.13.0.pdf||490.6 KB|