Indictment of Dunkin' Executive Gives New Meaning to 'Obey All Laws'
BOSTON (Blue MauMau) - Last week the former communications director of Dunkin' Brands was indicted on charges of mail fraud and filing false tax returns, according to a report on PatriotLedger.com this morning. Federal prosecutors claim that Carolyn Kravetz, who was with the company from May 2004 to October 2005, had steered Dunkin' contract work to Boris Levitin's graphic design and technical publishing firm in return for a 50 percent kickback. The two had formed a friendship after meeting at Boston University in the 1980s.
In the kickback scheme, Levitin received nearly $400,000 over a 15-month period, which included full payments for many projects that he had not even started, according to prosecutors. Of 15 invoiced projects, Levitin's company, Luminophore, completed one project and performed some work on two others. The indictment states that Kravetz deposited Luminophore checks into her personal account that totaled nearly $200,000.
Jeffrey Lichtman, Levitin's attorney, said his client has already paid Dunkin’ Brands back for all the money that Kravetz accepted, as well as all the money that was paid to him for work he hadn’t completed. The Boston news article quoted him as saying, “Our position is that every drop of work that Levitin billed for, he had either been starting to work on or was expecting to complete, and every last dollar from Dunkin’ Brands has been paid back."
Lichtman alleges that his client is a victim of Carol Kravetz's fraud, and that they look forward to his full vindication at the trial.
Dunkin’ Brands' chief communications officer, Stephen Caldeira, issued a brief statement for the article regarding the indictment, “In regard to Ms. Kravetz’s recent indictment, we have been working with the appropriate authorities. Given that this is a pending legal matter, we will not make any further comment.”
DDIFO Responds to Indictment
Dunkin' Brands, parent company to Dunkin' Donuts and Baskin Robbins, has been the topic of controversy regarding its excessive litigation against franchisees. Attorneys representing several different groups are claiming that in utilizing a nonnegotiable term of its franchise agreement known as the "obey all laws" provision, Dunkin' uses noncompliance to any law in a manner which is unfair and deceptive to coerce unwarranted financial concessions from franchisees.
Mark Dubinsky, president of the DD Independent Franchise Owners, Inc., the largest Dunkin' Donuts franchisee association in the system, stated to Blue MauMau this morning, "Dunkin' Brands acts as Ad Fund fiduciary on behalf of its franchisees, who hold the integrity of their Ad Fund as near-sacrosanct. That such an alleged breach occurred is totally unacceptable. The DDIFO feels that appropriate controls of the Ad Fund, including direct franchisee oversight and CPA audit, must be instituted immediately."
Dubinsky said this case clearly demonstrates that Dunkin' Brands does not always obey all laws. "We find it nothing less than outrageous that certain targeted franchisees are summarily terminated by this franchisor for alleged and unproven violations of the ‘obey all laws’ clause of the franchise agreement, when this news clearly demonstrates direct culpability. And the DDIFO firmly believes the ‘obey all laws’ clause should be eliminated from the franchise agreement as an unworkable standard of perfection.”
Dubinsky said, "While franchisees should endeavor to operate their businesses in a lawful manner, franchisor termination is far too extreme a result for any infraction, regardless of scope."
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Related readings:
- DDIFO Chides Dunkin' for Bad Publicity Surrounding Litigation
- Dunkin's Stalking Scheme Plagues Franchisees in Court
- Dunkin' Says It Must 'Build and Protect' Franchisee Equity
- Beguiling Heresy: Dunkin Donuts Strong Arm Approach of Spying on Franchisees
- Dunkin Donuts Franchisees Angry about Corporate Surveillance and Hardball Tactics
