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- Vital Express: The Aftermath
Tuesday, 08 August 2006
Two weeks ago, Dan and Lisa Boaz, owners of Santa Clarita based, Vital Express moved to North Carolina. In the wake of their departure, money is still owed to many Santa Clarita businesses and a group of investors and franchise owners are exploring their legal options, trying to determine if any assets remain to go after.
The Boaz’s sold their Sand Canyon home and moved on July 22nd to a million dollar plus home on Lake Norman, in Mooresville, North Carolina, a wealthy suburb of Charlotte.
KHTS broke the original story about the Vital Express scandal on July 21st. Since then, we’ve received a tremendous amount of feedback.
Click here to read that story.
KHTS began investigating the Vital Express story last winter, when several individuals connected with Vital Express communicated with us. As word among insiders spread, a number of Vital Express employees, former employees, franchise owners and investors contacted us to share their concerns. KHTS chose not to break the story as investors tried to figure out their options. The radio station broke the story, only after it learned investors were not going to be able to place a lien on any proceeds from the sale of the Boaz’s Sand Canyon home.
Since then, a number of other franchise owners and investors spoke with us. However while they were willing to describe what happened in detail, and KHTS was able to secure documentation supporting their claims, they have requested they remain anonymous because of pending lawsuits. A few are fearful of retribution.
We apologize ahead of time, as we protect our sources, that we do not disclose names of a number of individuals or more specific details. But as we relay the facts, KHTS has been careful to make certain we either have written documentation to back up statements, or have separate confirmation from more than one source.
One thing is clear, as of this writing many high profile companies in Santa Clarita have been impacted by Vital Express. Money is owed all over town. One banker told KHTS, “It’s become a game to figure out who’s owed money.”
But it’s more than the money that’s the tragedy. People’s lives have been disrupted. It’s the stories of these individuals that really bring home the impact of what happened, as they attempt to pick up the pieces of what’s left of Vital Express.
Many of the investors were first introduced to Dan and Lisa Boaz through their involvement in the community. One investor told us he was impressed with what the young couple had accomplished. They had built an up and coming company in a very short period of time.
Vital Express, the Santa Clarita based Shipping and Logistics Company had everything going for it; top-notch equipment, a young, bright and energetic staff and charismatic owners. As the company grew, it maintained its “Mom and Pop” feel. Owners, Dan and Lisa Boaz became very active in the community. They were nominated as Santa Clarita Valley Man and Woman of the Year in 2005.
But, as the owner of one franchise told us things began to unravel as the company’s cash flow wasn’t able to sustain the Boaz’s lifestyle.
Jonathan Kraut is a name familiar to many Santa Clarita residents. The owner of a local private investigation company, Net Check Investigations, Jonathan ran for College of the Canyons Trustee in November 2005. He lost that election, but the race became a real eye opener.
During the election Jonathan used his detective skills to conduct due diligence on Vital Express. He saw the lack of payments for the performing arts center as a huge campaign issue. He shared with KHTS, “Everything happened backwards. Here was this $2 million dollar pledge the Boaz’s made to the College, COC scrambled to change the name on all of their promotional material, yet there was no contract, no pre-screening. The College had already given Vital Express the naming rights for perpetuity yet no one had done a background check to see if they had the financial resources to back it up. As it turned out, after only an hour of research last September, my staff determined that they didn’t have the resources to honor their $2 million commitment.”
By this time, KHTS had received a number of communications from individuals concerned about the Vital Express naming. There were a lot of allegations flying around and a lot of finger pointing.
Kraut also shared his concerns with KHTS. “When I ran a background check on the Boaz’s, I discovered a whole history of transferring assets, constantly moving of resources, spending lots of money, and even judgments against them.”
Jonathan Kraut spoke with a number of the franchise owners and investors. “It was the same story. The Boaz’s had made all these promises that weren’t happening. They were making transactions under five or six different company names at a time. I could see them planning to get ready to get a fresh start in North Carolina.”
As the Boaz’s were preparing for their move, many outstanding bills to local vendors had not been paid.
“It covered a wide range of people, many businesses in Santa Clarita,” Jonathan commented. “Records indicate well over half a million dollars in outstanding bills as of March.”
“The list covers other shipping companies, attorneys, cellular, computers, florists, printers, even a local pizza franchise that had delivered hundreds of dollars of pizza to Vital Express. And this figure doesn’t include $500,000.00 paid to the Corporation by investors, nor the money paid by the franchisees.” Will they take care of these Santa Clarita businesses?
KHTS called a number of these businesses in preparation for this story. Most of the money is still owed and in some cases the amount owed has increased. Several of the vendors had been paid, a few since the Boaz’s sold their Sand Canyon home. Most of the vendors who are still owed money told us the same thing. No one is returning calls.
Kraut’s gone public with his findings because he wants to prevent other institutions and businesses from making the same mistakes. “Whether it’s pre-employment screenings or checking into the financial stability of a company who just promised you two million dollars, you need to have due diligence.”
And remember the COC performing arts center story that broke last February when Lisa Boaz sent a letter to the College after COC had informed them they had defaulted on their payments for the naming of the Performing Arts Center? Lisa Boaz requested that they unilaterally terminate the agreement as of February 28, 2006, due to a slow-down of the economy, rising interest rates, increased cost of construction and the significant increase in fuel costs. Boaz promised in that same letter to pay the college the fee installments still owed for January and February 2006, totaling $25,641. As of this writing, College of the Canyons Public Information Officer, Sue Bozman told KHTS, “Those payments have not been made to the college.”
The college complied with Lisa Boaz’s request to terminate, having only received $74,359 of the $2 million dollars the Boaz’s had agreed to pay.
As for the percentage of money promised to the Henry Mayo Hospital Foundation for local companies who use Vital Express services, as reported in our last story, Vital Express still has the 5% offer posted on the home page of their website www.vitalexpress.com, along with a logo of the Vital Express Performing Arts Center. A few payments were made when the offer was first launched. The Hospital Foundation would not divulge specifics in respect for donor confidentiality.
Since the first Vital Express story broke last week, another key Santa Clarita investor decided to share his story. He told us he was attracted to Vital Express because, for a small investment, only a $35,000.00 franchise fee, investors could have an exclusive Vital Express franchise.
The Boaz’s had done it right; heavy marketing in franchise publications, the naming of the Performing Arts Center at College of the Canyons and the community involvement Dan and Lisa had coveted during their years in the Santa Clarita Valley. As they rolled out the marketing of the franchises the leads just poured in. In April 2005, Vital Express hosted a VIP luncheon during the Valley Industrial Association’s (VIA) Business-to-Business Expo. It was an elaborate presentation, with community leaders driven in limos from the Expo to lunch at the lavish Vital Express headquarters a short distance away. But very few of the Valley’s leaders made the investment.
“I should have realized something was up,” one employee reflected. “I mean here were Dan and Lisa’s friends and acquaintances, the power elite of the community. The ones who were sitting on the same Boards as they were. They should have believed in what the Boaz’s were doing, and except for a couple of them, they weren’t biting.”
The trouble started a few months later. All those leads didn’t really pan out. A lot of people had the $35,000.00 to get them in the door, the problem was most of them couldn’t come up with the $350,000.00 in Capital needed to successfully launch a franchise. In the end, only five franchises were sold, Phoenix, the San Gabriel Valley, Milwaukee, Seattle and Chicago. The Boaz’s held onto company stores in Valencia, Indianapolis, Charlotte and Houston, although Houston never became fully operational. Along with the franchise fees another $500,000.00 was raised from investors who bought shares in the Corporate Franchise Group. All these investors were from Santa Clarita or the Ventura area, where Dan and Lisa were renting an expensive beach house. One investor lives in Pasadena, but is related to a Santa Clarita resident and business owner.
By early summer 2005, things began slowing down with the franchise rollout. Cash flow became a problem.
“I remember one meeting in early August. I couldn’t believe it,” another employee told us. “Dan and Lisa came in and instead of rallying the troops they started threatening. Dan began putting heavy pressure on us, threatening our jobs. He actually said we have to bring in this kind of money to support their lifestyle. This is while they are driving new luxury cars and renting a home on the beach in Ventura. The staff walked away from that meeting, flabbergasted. That was the first of many similar meetings. And what’s funny is Lisa was worse than Dan. She’d get up there and talk about how we needed to support their lifestyle. She kept pushing and pushing. It was like they would sit home over the weekend and look at the cash flow and realize it wasn’t covering the bills, so they’d come in on Monday morning in a rage. What a great motivator for their staff. They had no understanding of the negative impact it was having.”
In better times bonuses were given to employees.
- Website:
- http://venturaexpress.com
Dan Boaz's Blog
Dan Boaz
Vital Express: The Aftermath
Tuesday, 08 August 2006
Two weeks ago, Dan and Lisa Boaz, owners of Santa Clarita based, Vital Express moved to North Carolina. In the wake of their departure, money is still owed to many Santa Clarita businesses and a group of investors and franchise owners are exploring their legal options, trying to determine if any assets remain to go after.
The Boaz’s sold their Sand Canyon home and moved on July 22nd to a million dollar plus home on Lake Norman, in Mooresville… Continue
Tuesday, 08 August 2006
Two weeks ago, Dan and Lisa Boaz, owners of Santa Clarita based, Vital Express moved to North Carolina. In the wake of their departure, money is still owed to many Santa Clarita businesses and a group of investors and franchise owners are exploring their legal options, trying to determine if any assets remain to go after.
The Boaz’s sold their Sand Canyon home and moved on July 22nd to a million dollar plus home on Lake Norman, in Mooresville… Continue
Posted on April 6, 2009 at 5:03am —
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