Invest Maryland investors express concerns Ailing restaurant chain is accruing large debts, generating little revenue

December 05, 1997|By Justin Oppelaar | Justin Oppelaar,CAPITAL NEWS SERVICE

On the advice of a trusted associate, Renato E. Ventura bought stock in Invest Maryland Corp., an Annapolis-based holding company formed in 1990 with the idea of starting a chain of restaurants serving buffalo meat.

Since then, he says, "I've had nothing but a string of bad news as far as the way things developed."

With Invest Maryland approaching its eighth year, Ventura, vice president of Frederick-based Miscellaneous Metals Inc., is among several investors whose faith in the company has been shaken as it accrues large debts and generates little revenue to service them.

Invest Maryland representatives say that they are doing the best they can with the bad hand they have been dealt and that they must issue more stock and assume more debt to get the struggling chain up and running.

Company founder Denis K. McLaughlin stepped down as chief executive early last year, after the Maryland attorney general took him to court on securities fraud charges alleging he had misrepresented his professional history and his own stake in the company.

In settling the case, McLaughlin agreed not to sell securities in Maryland and to give up his financial stake in the company.

L The company also was told to elect a new board of directors.

McLaughlin promoted the company as a combination insurance agency, stock brokerage and buffalo-meat chain,

Invest Maryland's new board has focused on generating revenue to cover operating expenses and launch the restaurant chain.

Invest Maryland had solicited at least $441,500 as of June 16, according to the records of the Maryland Department of Assessment and Taxation. The values of promissory notes held by 138 investors vary from $500 to $35,000, department records show, with most ranging from $1,000 to $5,000.

The first restaurant in the proposed chain, to be called "Buffalo Bill's Wild West Show," is nearing completion after two years of construction, said Invest Maryland attorney John Gordon.

"I would expect it will be open January or February, depending upon the weather" and its effect on construction, he said.

From the street, the Buffalo Bill's restaurant at 7352 Ritchie Highway in Glen Burnie appears to be almost completed. The structure apparently needs only cosmetic touches and kitchen equipment.

Even so, Edward W. Isaacs, a former Invest Maryland director who holds a $35,000 promissory note, said Invest Maryland Chairman Kenneth R. Ransdell is too optimistic about revenue from the notes covering the restaurant's operating costs.

"We made that statement in 1996 when we started issuing promissory notes -- and here a year later, Mr. Ransdell is still saying this," said Isaacs, a Riva resident who resigned his director's position in August.

Records in Isaacs' possession indicate that the company's debt had risen to $520,500 as of September.

Invest Maryland also has issued stock valued "in excess of $3 million," to about 900 Maryland investors, said Isaacs and his wife, outgoing Invest Maryland secretary Alice Isaacs.

Ransdell and Gordon declined in interviews to provide specific information about the company's finances.

Ransdell, of Clinton, insists that the Glen Burnie restaurant will open shortly, but he acknowledged that things were moving slowly for Buffalo Bill's.

He emphasized, however, that the current board has been charged with a double duty: undoing past damage and building a business back up from scratch. Such an effort would take some time, he added.

Stakeholder David B. Bishop of Easton is confident that Ransdell and the new board will be able to reinvigorate Invest Maryland. The venture's prospects are a great deal rosier than they were two years ago, he said.

"I know that the people in charge now are working very diligently to get the first restaurant open," he said. "There was a time when we thought there was no hope, and now we feel as though there's great hope."

Isaacs has less faith that the board will be able to do more than cover its expenses by issuing more debt.

"The problem here is the long drag," Isaacs said. "By the time the funds come into the company, they have been eaten up" by expenses other than restaurant construction, he said.

Lloyd J. Welch, of Cobb Island, holds $2,000 in Invest Maryland stock. He said he invested another $500 in the form of a promissory note after company officials said they needed more money to open the Glen Burnie restaurant.

At this point, Welch said, he is skeptical whether he will soon see a return on his principal -- or regain the principal itself.

"They are paying me back some interest on" the $500 note, he said, but "I have been worried about it. As far as I'm concerned, they've got me for $2,000," so he might as well try to help the company, he said.

Gordon maintained that Invest Maryland's long-term vision remains intact: building restaurants over the next few years and adding insurance services.

Pub Date: 12/05/97

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