Frack Burger owner faces charges
A Canby man and former Newberg business owner has been arrested on multiple charges, including securities fraud.
In the aftermath of a Clackamas County Sheriff's Office investigation, James Robert Frackowiak, 43, of Canby, was arrested April 2 on eight counts of aggravated theft and three counts of securities fraud. His bail was set at $150,000.
Frackowiak is accused of a scheme involving the sale of allegedly fraudulent investments in a "Frack Income Fund" that cost an elderly Clackamas County couple hundreds of thousands of dollars.
Newberg residents will remember that Frackowiak opened a Frack Burger in 2015 at a location on Portland Road that now houses Momiji Sushi Bar. The restaurant began failing soon after opening, with unhappy customers flooding social media with complaints about service and quality. The Newberg location of the restaurant closed in 2016 and was followed by other locations.
The CCSO's case against Frackowiak began in April when the elderly couple's granddaughter approached the sheriff's office concerned that her grandparents were being defrauded by Frackowiak through personal loans and life-insurance policy purchases and sales.
After an extensive review of documents, the CCSO learned that Frackowiak had befriended the victim couple in 2007 when, in addition to founding Frack Burger, he was a local insurance agent operating under the business names Plan It Financial and Frack Insurance.
Frackowiak allegedly began selling the victims a series of insurance policies, which the couple would buy and then surrender. The couple, according to the CCSO investigation, would lose money when surrendering these policies while Frackowiak would gain a large commission. In 2013, Frackowiak created the Frack Income Fund, LLC.
The Income Fund promised up to an 8 percent rate of return over a five-year span. The victim couple surrendered an insurance policy to invest in the fund and also made several additional loans to Frackowiak. Detectives believe Frackowiak used this money inappropriately on his businesses, including Plan It Financial and Frack Burger, among other uses.
As a result, in March the Oregon Department of Consumer and Business Services (DCBS) Division of Financial Regulations fined Frackowiak $14,000 and ordered him to return $4,275 in premium payments to customers he defrauded within 30 days of the March 7 order.
The division found that on 12 occasions, Frackowiak and Plan-It Financial deposited premium funds into business accounts, instead of in a trust account, as required by state law. Also, after not providing insurance, he did not refund customers' premium payments within 30 days, another violation of state law.
"This is an exceptionally important issue because insurance agents have a responsibility to serve their customers' needs and act ethically," Insurance Commissioner Laura Cali Robison said. "When consumers pay their premiums, they need to trust that they will actually be insured."
Frackowiak made news across the Portland area in 2016 when Frack Burger closed six of its seven locations for nonpayment of rent at several locations, not paying suppliers and not paying wages to his employees.
Frackowiak also faced numerous Bureau of Industry and Labor claims for unpaid wages and lawsuits, including one from a former employee alleging sexual harassment, as well as a $59,846 federal tax lien.