News

Pizza World owner recoups trademark, former partner is investigated

November 11, 2003

ST. LOUIS—Eric Wortham, who sold half of his St. Louis-based Pizza World Restaurant to ex-Domino's Pizza executive Tom Burnham in 1997, now questions whether he should have become involved with Burnham.

According to a report in the St. Louis Post-Dispatch, Burnham, a lawyer and former business professor who has been involved in chicken, Chinese food and Web site development franchises, is under FBI investigation for complaints filed against him by other investors in some of his businesses.

Last week, the FBI executed a search warrant and seized records from Burnham's Sarasota, Fla., and Ann Arbor, Mich., homes. FBI officials would only call the case a fraud investigation. They are asking people who were investors in Burnham's businesses—such as South Beach Concepts LLC, later known as Global Franchise Concepts Inc.—who may have been victims of investment fraud to contact their Sarasota office. Some St. Louisans have invested with Burnham.

Wortham, 37, got out of his dealings with Burnham, but claims he lost $1.8 million in a stock offering, two years of salary, royalties from franchisees, $100,000 in legal fees and two years worth of travel expenses accrued while commuting from St. Louis to Sarasota. Wortham worked for Burnham as president and chief executive of 15-store Pizza World International during that time.

Worst of all, said Wortham, is the loss of his good name among his friends, who also lost money invested with Burnham.

"Every one of them invested not because of Tom Burnham, but because of me," he told the Post-Dispatch.

In published reports, Burnham denied all wrongdoing. To date, he hasn't been charged with any crime and has no criminal record.

Wortham met Burnham a year before they made the deal for Pizza World through a company that develops computer systems for restaurants. Wortham had installed the computers in his Pizza World units, and Burnham was considering them for his South Beach Cafes.

The deal between Wortham and Burnham created South Beach Concepts, which combined the South Beach Cafe coffee and bagel shops and the Pizza World restaurants into one corporation. Several St. Louisans invested with South Beach Concepts because they were believers in Pizza World, Wortham said.

Burnham in 1997 arranged for a public offering of South Beach Concepts stock on London's OFEX—somewhat equivalent to the American NASDAQ—raising between $4 million and $5 million. He then opened six South Beach Cafes in London. In 1998, the cafes closed and Wortham found his $1.8 million investment in that business was worthless.

Wortham said his confidence in Burnham began deteriorating in 1998.

"I was president and CEO and I couldn't control anything," he said. "I didn't see any of the money that came in. He wasn't supporting the franchisees like he had promised. He told me if I didn't like it to leave. But I couldn't leave because these franchisees believed in me."

Wortham stayed with Burnham for two years and then came back to St. Louis. He worked with attorney Steve Smith at Husch & Eppenberger to get Burnham to assign the Pizza World trademark back to him 18 months ago. "He basically abandoned the company so we took it back."

Wortham now owns three Pizza World stores and has 12 franchisees in the St. Louis area. He's expanding, with a franchise opening next week in Springfield, Mo., and plans for five more stores there. His stores average $35,000 to $40,000 in monthly sales.