INDIANAPOLIS, Ind. – Two major investors in the Scotty’s Brewhouse chain are filing a lawsuit this morning claiming founder Scott Wise defrauded them out of more than $1 million.
Scotty’s was sold to an Arizona investment firm, which put the company into bankruptcy and closed four restaurants in December.
The lawsuit claims Wise needed fast cash during the great recession, and he oversold his company’s value and potential to investors and pocketed millions while others lost money.
The Scotty’s brand was known throughout Indiana to downtown Indianapolis, the Butler campus, and even Waco, Texas.
Two investors claim Wise convinced them to pour $1 million into the franchise as it sought to expand its footprint over the last decade.
Mark Bosler and Michael Murray argue Wise told each of them they owned more than five percent of the company, and Scotty’s would sell out to an Arizona-based hedge fund for $20 million with $5 million in debt.
The sale price to Due North, an investment firm, was more like $10 million with $8 million in debt, wiping out Bosler and Murray’s promised profits and investments.
They claim the sale of the franchise was done illegally, and they want their money back with interest and other costs.
Bosler and Murray claim Wise made $2 million on the deal, and they made nothing.
Their attorney said there may be as many as ten other Scotty’s Brewhouse investors with similar concerns.
Wise issued this statement in response to the lawsuit:
I am disappointed to learn of the lawsuit filed by Mark Bosler and Mike Murray today. Mr. Bosler invested in Scotty’s Brewhouse in 2009. Nine years later, in 2018, was the first time he ever suggested, through his lawyer, that I had somehow misled him in connection with his investment. The same can be said for Mr. Murray, who invested in 2015.
Mr. Bosler and Mr. Murray each voluntarily invested in Scotty’s Brewhouse. When they invested, each of them acknowledged that he was offered access to all company information prior to investing and that the investment came with risk. When the investors sold their ownership interest in Scotty’s Holdings, LLC in 2016, I owned 71% of the company. Unfortunately, the Scotty’s Brewhouse chain experienced financial difficulties that adversely impacted the return to all investors, including me. With respect to my ownership interest, I have been treated no differently than the other investors.
I did not mislead Mr. Bosler, Mr. Murray, or any other Scotty’s Brewhouse investor in any way in connection with their decisions to invest in Scotty’s Brewhouse. I intend to defend myself against Mr. Bosler’s and Mr. Murray’s false allegations and show that at all times I acted in the best interests of the investors.