Midwest Baby Group woes continue
By Lisa Casinger -- Kids Today, 4/1/2007
Ohio's Attorney General, Marc Dann, has received default judgments against some of the former and current owners of two of the three Ohio USA Baby stores owned by Midwest Baby Group. Default judgments are those granted in favor of the plaintiff when the defendant doesn't respond to a summons or does not appear in court.
The lawsuit, filed by former Attorney General Jim Petro, charged the stores with failure to deliver merchandise to customers, failure to provide refunds for undelivered items and providing substandard customer service, all violations of the Ohio Consumer Sales Practices Act.
Midwest Baby Group principles include Scott Wallis, Ron Eriksen and Jim Gullett. MBG stores in Albuquerque, N.M. and Tampa, Fla., also are under scrutiny.
Gullett resigned from the company in September and has defended his role, saying he "regrets ever getting connected with Scott Wallis and Ron Eriksen."
"It was the worst mistake of my life," Gullett said. "While I was at MBG, I worked hard to do all things the right way but was over ruled on many issues by Wallis and Eriksen and was not allowed to control the checkbook. That is why I left and why Midwest Baby Group is in the situation it is today."
Two separate motions for default judgments were granted. A judgment on Feb. 26 was against Wallis and Midwest Baby Group. Another judgment granted Feb. 13 was against Gullett, Eriksen and Baby Bucks, the store previously owned by Lankey. The Attorney General's office now will seek a damages hearing.
Lankey, who already has a judgment against him from a previous lawsuit by the Attorney General's office with his now defunct USA Baby franchises, has not yet been served with the December lawsuit because he is not accepting his certified mail, according to Bob Hart, assistant attorney general.
The initial suit asked the court to order the defendant, Midwest Baby Group, to make restitution to consumers who have been damaged by the stores' alleged violation of consumer laws. It also asked for civil penalties of $25,000 per violation.
New Mexico Attorney General Gary King has contacted the attorneys for USA Baby in response to consumer complaints about the company's business practices at its MBG-owned Albuquerque store.
"The consumers who filed complaints with our office have paid amounts from $352 up to almost $1,400 and have still not received the merchandise they bought from the Albuquerque USA Baby store," King said.
King's Consumer Protection Division sent a letter to attorneys representing the owners of USA Baby and Midwest Baby Group; the letter informs the Chicago-based law firm of Mauck & Baker that their client appears to be in violation of New Mexico's Unfair Practices Act. The Act prohibits offering goods for sale and not supplying them in the quantity requested to the extent of stock available.
An Albuquerque television station also conducted an investigation of the Albuquerque store, driven by calls from irate consumers to the news station. The story featured a taped phone call with Ken Russell, who was identified as the acting president of USA Baby. When the KOAT reporter asked if the corporation was in financial trouble, Russell said "Absolutely. I've made it very clear to the customer service department that when we speak to customers we have to tell them, look, it's not business as usual. We are going through a cash flow crisis right now."
Sheffield Square, LLC. repossessed the Albuquerque location with a notice posted on Feb. 12.
King's letter also says "the local Albuquerque office is offering goods without the intent to reasonably meet expected public demand or to provide the goods or both. In addition, your client's landlord has recently closed your client's business store."
The Florida Attorney General's office also is investigating the MBG-owned USA Baby store in Tampa. The allegation being investigated is Florida Chapter 501, Unfair and Deceptive Trade practices; obtaining money from Florida consumers, failing to deliver special order furniture and provide consumer refunds.
According to Illinois Attorney General's Franchise Bureau, USA Baby's registration to sell franchises expired in September 2006 and has not been renewed.
Several manufacturers contacted have stopped shipping to MBG-owned stores because of unpaid bills. Ron Eriksen resigned his seat on the ABC board of directors and the USA Baby corporate seat has been suspended. Kimberly Thomas was named president of USA Baby in November.
USA Baby has more than 50 franchise stores across the country that are not affiliated with Midwest Baby Group and are not involved in any way with the legal suits or the pending investigations.
