HUSTISFORD - The Wisconsin Department of Financial Institutions has ordered a Dodge County businessman to stop seeking new investments for his cookie-making business after a FOX6 Investigation found he'd misled investors.
Timonty McQuiston of Hustisford launched Lucky Taco in 2007 and told local investors he was in the business of making taco-shaped fortune cookies. By 2015, the FOX6 Investigators found he'd produced few cookies, despite taking millions of dollars from local investors, some elderly and heavily dependent on his promises of substantial interest payments.
When Jim Frank and his wife, Carol met McQuiston, they say they were vulnerable. The stock market crash of 2008 had slashed their retirement savings, and they had little prospect for making it back. Jim Frank was already in his mid 70s.
"We're too old to go back to work again," Carol Frank said.
So they thought it was meant to be when they were introduced to McQuiston, who offered to pay them 12 percent interest for a one year loan. They still have the promissory note to prove it. Seven years later, however, they have nothing to show for their investment beyond crushing debt. They're in danger of losing their 1850s era farmstead near Allenton, about 35 miles northwest of Milwaukee.
"It's kind of, like, tearing my heart out," Jim Frank said, turning away from the camera to mask the emotion that had overcome him.
The Franks first shared their story with FOX6 Investigators last year. Now, the state of Wisconsin is taking action against a man the Franks once considered a trusted friend.
"They found that he definitely had committed fraud," Carol Frank said.
Jim and Carol Frank owned their home free and clear in 2009, but McQuiston convinced them to take out a mortgage and give him the money.
"He was able to get money from anyone," Carol Frank said.
McQuiston was president, treasurer and sole director of "Lucky Taco," a now-defunct Hustisford business that was supposed to produce taco-shaped fortune cookies.
"It was a very clever thing, wrapped in plastic," Carol Frank said.
The Franks initially loaned McQuiston $30,000 to help launch the business. Soon, he was back asking for more. They mortgaged the house and gave him another $100,000. A few weeks later, they kicked in a third installment of $35,000.
"He was wanting to buy a larger machine to fulfill a large order," Carol Frank recalled.
As the months and years went by, they say McQuiston repeatedly complained of equipment problems and health problems. The business never got off the ground.
When the FOX6 Investigators first approached McQuiston in the fall of 2015, he locked himself inside Lucky Taco's supposed production facility, inside a Hustisford warehouse. A short while later, he called FOX6 News and requested an interview.
"I have a great product," McQuiston said, insisting Lucky Taco was a good idea that just didn't pan out.
"That happens. Businesses fail all the time," FOX6 Investigator Bryan Polcyn said.
"That's right. They do," McQuiston followed.
But operating a failed business is not what got him in trouble with the state of Wisconsin.
From 2009 through 2014, McQuiston sold a series of "promissory notes" to Wisconsin residents investing in his Lucky Taco business. According to state securities investigators, McQuiston failed to disclose to those investors that he was already in debt to other investors. By the time the FOX6 Investigators got involved in 2015, McQuiston owed 18 people more that $2,600,000.
"Nobody knew about each other," said Bob Bieser, one of McQuiston's initial investors. "Everybody thought they were the only person doing this."
"Why didn't you tell the investors about each other?" FOX6 Investigator Bryan Polcyn asked.
"Well," McQuiston replied, pausing before adding, "it wasn't asked. That wasn't pertinent at the time. I just didn't think it was necessary."
Not only did McQuiston fail to disclose his debts to other investors, the state says he failed to disclose his history of delinquent taxes, which is now more than $193,000. He also failed to disclose a series of court judgments he had yet to pay, a number that now tops $1.6 million.
"They didn't ask, you didn't tell." Polcyn said.
"Right," McQuiston responded.
All told, McQuiston now appears to be more than $4 million dollars in debt.
He told FOX6 in 2015 that the money had largely gone to pay for rent, utilities and trade shows.
The Franks wonder if some of it may have ended up on the vintage car racing circuit. The very same month that the Franks first loaned money to McQuistion, October 2009, a Lucky Taco-sponsored race car crashed in a road race in Mexico -- La Carrera Panamericana. A week after the race, McQuiston asked the Franks for another loan, and they obliged.
"The more you learn, the deeper it seems to go," Carol Frank said.
Neither Hustisford police nor the Dodge County district attorney found evidence that McQuiston had committed a crime. After FOX6's investigation, however, the Wisconsin Department of Financial Institutions (WDFI) launched its own investigation.
In September, WDFI ordered McQuiston to cease and desist all offers of sales of securities.
"Too many people have been defrauded by him," Carol Frank said.
That means he can't raise money anymore. Now, he's trying to avoid the debts he already owes. In October, he filed for Chapter 13 bankruptcy.
"We're gonna fight it," the Franks said.
The retired couple cannot afford their own lawyer, but they don't think a fraudulent debt should be excused in bankruptcy court. So they've vowed to do whatever they can to ensure McQuiston's debt to them is not wiped away.
The US Trustee assigned to McQuiston's bankruptcy case has recommended that the case be thrown out, because he owes too much money to qualify. Under Chapter 13, there are limits to how much debt you can reorganize, and McQuiston's debt goes well beyond that limit. He told the court he will decide whether to accept the dismissal or to convert the case to a Chapter 7 by the time of the next hearing, scheduled for January 10th, 2017.
The FOX6 Investigators spoke with McQuiston in 2015. We tried to reach him for comment on this story, but he did not return a phone call. His attorney did not respond either.
McQuiston did not challenge WDFI's finding that he violated the state's securities fraud statute, so the Cease and Desist Order is now a final order.