Wednesday, May 16, 2007

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Attorney General Abbott Halts Fraudulent Expo Operators Who Scammed Exhibitors

DALLAS – Attorney General Greg Abbott has frozen assets belonging to two Round Rock residents who unlawfully operated business exposition companies in Texas. The defendants were also charged with fraudulently marketing their businesses in violation of the law.

The district court issued a temporary restraining order requiring Farah and Adma Rabadi, both officers with Delaware-based American Design & Builders Inc. and Milliard Group Inc., to cease operating unless they obtain a certificate of authority from the state. The business had scheduled upcoming Building and Design Expos in Maryland, Missouri, New York and California. In addition to unlawfully marketing their expos, the defendants failed to obtain a certificate of authority from the Texas Secretary of State, which is required of companies that operate the expos in the state of Texas.

Media links
Attorney General's lawsuit against American Design & Builders Inc. and Millard Group Inc.
Temporary restraining order and asset freeze against the defendants

“Vendors who benefit from doing business in Texas must comply with Texas laws,” said Attorney General Abbott. “Businesses will not tolerate vendors who disregard the law and falsely market their services. The Office of Attorney General will continue to crack down on scams that target Texas businesses.”

According to documents filed with the court, the Rabadis routinely solicited home builders, general contractors, architects and other professionals, who they encouraged to become exhibitors at their business expositions. Exhibitors frequently paid between $1,800 and $5,000 for booth space at the events, which the defendants falsely claimed would attract at least 3,000 attendees. Additionally, some exhibitors complained that their credit cards were double-charged.

At a Dallas expo organized by the Rabadis last December, fewer than 50 people attended during the two-day event. When disappointed exhibitors dismantled their booths early, the defendants assessed a $1,000 fine assessed against them.

Businesses that exposed the defendants’ practices complained about their misleading Web sites, which solicited their attendance but advertised the event inadequately. Thus, few members of the public actually attended. Other complainants noted that the “free seminars” they were promised with “continuing education credit” never materialized.

The Rabadis are liable for Texas franchise taxes and state fees that were not collected because they failed to obtain a required certificate from the Secretary of State.

The Texas Attorney General seeks restitution for harmed consumers, as well as up to $20,000 in penalties for each violation of the Texas Deceptive Trade Practices Act. The Ramadis are also accused of violating the Business Corporation Act, which regulates out-of-state businesses operating in Texas. Penalties for violating this law can range from $100 to $5,000 for each month the Rabadis operated without the proper state-issued certificate.