Update: We have members who have eaten here and said the food wasn't bad. However we also have a member who visited the funds raising arm. Reportedly, the sales manager drives a brand new Testarossa and the whole sales office is in very expensive, marble quarters. The rumor is that the front load might exceed 50%.)

SECOND REVIEW: 1/97. We were asked by one of our members to re-review this. Since our initial review in 1995, the company has raised money for 6 restaurants and has built or is building 4 of them. They hold a golf tournament and are starting some kind of children’s charity fund. However, apparently the restaurants are still losing money. The load factors, openly 50% or more in the first offering we reviewed, have dropped to a lot less. The stock split seems to be 80% for the owners in a holding company, and 20% for the investors. The company is now raising money by selling the 80%stock in the holding company. If they sell it all it looks like they would be raising a total of $40 million for the restaurant chain, for an average of $6.6 million per restaurant. The operating reserve figures (emergency money) seem to be up to five times what a normal operating reserve would be. In the paper work they say there are NO broker commissions paid, but we talked to a broker who worked there and informed us he was getting a 25% commission. When we directly asked the company for an allocation of investor funds they refused to supply us with the information. While it’s true the restaurants are being built, there are enough inconsistencies to make us pass on this.

ADDITIONAL INFO: We have talked to someone who used to work at Ponzu. Keep in mind that this has to be classified strictly as a rumor. There is always the possibility that it could be sour grapes from a disgruntled ex-employee. According to this employee, the investors are making not making money from the restaurant chain. He also alleges that the same people are also behind other investments, such as U.S. Teletricity (another start-up company IDE has analyzed) and a 900 number investment he didn’t know the name of. What we have noticed ourselves is that Ponzu seems to be spinning off a number of other investments by people who worked at Ponzu, like Topz Restaurants and Asset Lending of America, that are also highly front loaded.

PAPSHON UPDATE: MARCH 99. PAPASHON HAS NOT BEEN ANSWERING THEIR PHONES FOR ABOUT A MONTH NOW. IF YOU HAVE ANY INFORMATION ABOUT THIS PLEASE CALL US.

UPDATE: April 99. The phone numbers given us have been disconnected. An IDE member called the attorney for the company and was told they could give out no information. We called and confirmed the Beverly Hills restaurant had closed. Any info anyone?

UPDATE: In May 1999 the SEC filed a complaint against Johnathan C. Papa, Papa Holdings Inc., Ponzu V Inc, Ponzu VI Inc, Express 1 Inc, and Papa Express 2, Inc. The SEC alleges the defendants fraudulently offered and sold stock in Papa Holding and the four subsidiaries, raising $21.6 million from 1,300 investors. The complaint alleges that they represented in the offerings of the four subsidiaries that investor funds would pay for new restaurants, when in fact the money went to pay for operating losses, equipment and property for Papa Holdings and four of it’s existing Papashon Restaurants. The defendants allegedly failed to disclose front loads of up to 48% for sales commissions to officers, employees and sales agents.