I was a previous owner of Dunkin Donuts/Baskin Robbins in Myrtle Beach, SC. We entered into a contract to sale the stores; during the process we discovered an equipment lien filed by Beach First National Bank on behalf of the landlord for our 501 location. The lien was filed on 12-16-04, 6 months prior to the store opening and prior to the execution of the lease. Our opening date was June of 2005.

The landlord, Derek Cox, applied for and was approved by BFNB for a construction loan to build the 501 location (construction loan 1st mtg date of 8-11-04 for $1M). During construction he applied for a working capital line of credit and a SREM was filed in the amount of $250K. Funds were advanced without any restrictions and the money was used for a host of things. At maturity the working capital line of credit for TMM was renewed by the lender and a UCC lien was filed on the equipment that had not been ordered, nor was the building complete.

Dunkin requires you to order the equipment at least 6 months in advance. On January 25, 2005 I secured a loan in the amount of $250K from the same bank, Beach First National Bank and the same loan officer to purchase the equipment for our 501 location. I was told that the bank could not use the equipment as collateral and I’d need to supply some other form of security. I used a piece of commercial property I owned free and clear in Conway as security. I had no idea at that time that a UCC lien existed on the “future equipment” secured by the same bank. The equipment was paid for by a bank check clearly specifying purchase of equipment for 501 location. The invoice from Paramount clearly shows my name as the owner and the store number which corresponds with the check issued for the full purchase price.

For two years we made payments on the equipment. During that time we decided to sell the stores at which time our legal counsel discovered the UCC lien. We continued with closing because the buyers threatened to sue us if we did not. The sales price only covered the outstanding obligations. I was left with a $250K debt I struggle to pay.

I’ve spoken with the loan officer on numerous occasions and she said she had the right to file that lien since the landlord told her he owned the equipment. The invoices are in my name, I have a copy of the check that was made payable to the equipment company signed by that same loan officer and a letter from the equipment company stating that it has never sold equipment to TMM or Derek Cox. At one point she did say she may have used the wrong location on the UCC. Her wrong address has cost me tremendously. I’ve spoken with the President of the bank who is non-committal as well.

During the discovery phase of the sale of the franchise I found a fraudulant lease he had given another bank for $10,000.00 a month on Blessings Bakery. I presented a copy to the Chief Credit Officer as proof of Derek Cox’s dishonesty. Her only comment was that he wouldn’t do anything like that. She made him several more loans after learning of the fraudulent lease which have gone into foreclosure therefore investors lost more money because she failed to adher to her own guidelines and policies she had written for the bank.