Sneaky Franchisee Swiped Cash, 7/11 Claims

     LOS ANGELES (CN) – A franchisee swiped hundreds of thousands of dollars from 7-Eleven through a “secret cash business” inside his Southern California stores, the company claims in a RICO complaint.
     7-Eleven and TSC Lending Group sued Balraj Chopra, his wife Neelam Chopra and Chopra Holdings Inc. alleging RICO fraud, breach of contract, unfair competition, trademark infringement and other claims, in Federal Court.
     The Chopras, of Granada Hills, ran three 7-Eleven stores, in Sepulveda, Van Nuys, and San Fernando, the complaint states.
     “The essence of the schemes was to utilize various devices to effect unreported merchandise sales, the proceeds of which were used to pay for merchandise in cash, for purchases which were not reported to 7-Eleven, with the significant balance going into the pockets of defendants and their co-conspirators,” 7-Eleven states in the complaint.
     It claims the Chopras ran a “cash business” by making false entries in the cash register when customers bought merchandise with cash. The false entries, which included using non-sale cash register keys, masked the actual sales transactions, allowing defendants to keep the cash for themselves, the complaint states.
     The excessive use of these register keys in the stores’ electronic journals helped confirm the Chopras’ scheme, the complaint states.
     While all of the keys used by the Chopras have a function and legitimate purpose, such as the PLU key for a price look up, “the volume of use of these keys and/or functions – multiple times the average in the markets – is not subject to benign explanation. The only reasonable explanation is that the register keys and/or functions were used to mask legitimate customer sales,” 7-Eleven states in the complaint.
     The Chopras used the unreported cash they got from customers to buy more inventory, which they failed to report to 7-Eleven, the complaint states.
     “By way of example only, a review of the stores’ transactions during the 10-month period May 1, 2011 through February 28, 2012, show that reported purchases exceeded reported sales in multiple categories, such as non-carbonated beverages, candy, health and beauty care (HABC), and tobacco, by more than $28,000. Inasmuch as merchandise does not multiply by itself on the shelves, the explanation for this significant discrepancy cannot be benign,” the complaint states.
     “During the same time period, defendants’ reported sales in certain categories of merchandise at the stores have been significantly less (by more than $100,000) than reported purchases, and the magnitude of these shortages cannot be explained by employee or customer theft,” 7-Eleven claims.
     Analytical and video evidence also show that the Chopras failed to report thousands of dollars of merchandise sales at their stores, the complaint states.
     7-Eleven terminated the Chopras’ franchise agreements and demanded that they return the stores and all of the property in them, but the Chopras refused to comply, 7-Eleven claims.
     “The former franchisees have refused to vacate and surrender the formerly franchised 7-Eleven stores. Defendants also continue to use 7-Eleven’s trade names, trademarks, service marks and trade dress,” the complaint states.
     7-Eleven seeks $500,000 in damages and an order compelling defendants to quit and deliver possession of their stores to 7-Eleven.
     They are represented by Patricia Hollenbeck with Duane Morris in San Diego.

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