Attorney general says failing company used customer money to stay afloat
Schneiderman: Unscrupulous businesses will be held accountable for attacking our economy and ripping off consumers
On Monday, New York Attorney General Eric Schneiderman sued the owners of FWS, a Buffalo-based furniture retailer, on behalf of Western New York consumers who stand to lose hundreds of thousands of dollars in advance payments they made to the company. In mid-October, FWS went out of business, leaving consumers who made advanced payments for merchandise without either their furniture or refunds. Consumer losses are estimated to be between $160,000 and $250,000.
"This company and its owners operated with a complete disregard for their customers' hard-earned money," Schneiderman said. "Many people save for years to make such large purchases, and FWS's careless practices have left customers out in the cold - with thousands of dollars lost and few options to recover those funds. These unscrupulous business practices ripped off Western New York consumers, and we will hold the perpetrators accountable for this misconduct."
In May of 2010, John Grimaldi and John Wanat, through a company called Dynasty Companies of WNY Inc., purchased FWS and continued to operate it under the same name. FWS continually lost money under the new ownership and, in 2012 alone, FWS lost more than $400,000, causing its creditor to shut it down.
Upon investigating the closing of FWS, the Office of the Attorney General learned that, when FWS placed an order on behalf of consumers, it required that they make advance payments on the merchandise. FWS, however, did not segregate those payments into a separate account, but spent them. At the time it closed, the attorney general's office estimated that FWS had about 700 open orders on which consumers made advance payments of more than $420,000. Since then, some consumers were able to obtain the merchandise for which they paid, and others were able to stop payments made by credit cards. Schneiderman took legal action on behalf of those consumers who stand to lose their advance payments.
The attorney general also seeks to prevent Grimaldi and Wanat from operating another business in New York unless they first post a $500,000 performance bond. Schneiderman has requested a temporary restraining order preventing FWS and its owners from transferring any funds, or destroying any business records. The respondents were charged with violation of executive law, § 63(12) and general business law, § 349.
The investigation was conducted by assistant attorneys general James Morrissey and senior consumer fraud representative Karen Davis.