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A Hollywood, Fla. company that sold Internet kiosks to investors is the target of several Florida circuit court lawsuits alleging fraud and racketeering, and has been ordered to repay investors in at least three arbitration cases. In June, Fort Lauderdale, Fla. tennis coach David McBrayer filed suit in Broward Circuit Court against Nationwide Cyber Systems Inc., its president and chief executive officer Farris L. Pemberton, executive vice president Paul S. Pemberton and four other employees. The suit alleges the company used false and misleading promises to lure him into paying $26,870 for two Internet terminals. Earlier this month, an arbitration judgment was entered against the company for $32,296 in a case brought by Margate, Fla. attorney Margaret Hesford on behalf of David Davies. Last month, an arbitrator awarded George and Michelle Norton of North Carolina $52,041.64, which was triple their investment plus interest and costs, under a provision of North Carolina law that prohibits deceptive and unfair business practices. In May, a Nationwide Cyber Systems bank account was garnisheed to pay a $19,766 arbitration judgment to Ihteshamur Rahman. The company did not participate in the arbitration proceedings in the Rahman, Norton or Davies cases, court records show. Nationwide, which is represented by Miami, Fla. lawyer Ross Rosenberg, is defending itself in four other Broward lawsuits filed by investors. Rosenberg could not be reached for comment. He has filed motions to dismiss the lawsuits, mostly on technical grounds. One motion provides a glimpse at the company’s possible defense strategy in the cases. The “contract expressly provides that plaintiff does not rely upon representations not set forth in the purchase order,” Rosenberg writes in his motion to dismiss the lawsuit on behalf of McBrayer. Nationwide Cyber Systems executive vice president Paul S. Pemberton did not respond to telephone messages left on the company’s toll-free phone line. In an interview last year, he insisted that the company — which he said was owned by his brother Farris Pemberton, a resident of Tennessee — would prove itself in time. The company had “a lot of happy customers,” he said. According to numerous accounts by unhappy customers related in interviews, posted in Internet forums and described in complaints to the Florida Division of Consumer Affairs, Nationwide pitched its terminals for use in public Internet access kiosks at 25 cents per minute. Its representatives led customers to believe that investors who purchased the machines would pocket revenues of at least $1,000 a month per machine, according to numerous accounts, including more than 100 complaints filed with the state Division of Consumer Services. The company sold the terminals to investors for prices that began at about $15,000. It promised company support in finding profitable locations for the machines, which allowed users to surf the Internet, send e-mail or make Internet telephone calls for 25 cents a minute. Representatives of the computer kiosk industry say Nationwide Cyber Systems’ marketing campaign lured hundreds of people around the country to invest in its terminals. But in many cases investors found that the terminals didn’t work as promised, the revenues were barely enough to cover overhead, and company support was little or nonexistent, according to the lawsuits and consumer complaints. Francie Mendelsohn, president of Rockville, Md.-based Summit Research Associates, a consulting firm focused on kiosk businesses, said in an interview that she tried to steer potential investors away from Nationwide Cyber Systems. The company’s terminals were overpriced and its promises overblown, she said. But at the height of the company’s advertising blitz, Mendelsohn said, it was almost impossible to convince people they were taking a huge risk. In his lawsuit, McBrayer said he was assured that as a Nationwide Cyber Systems “route operator,” he would receive assistance from company representatives in locating the terminals in a “prime location.” In addition, the complaint said, he was promised that the Nationwide staff would “actively assist in the success of the route operator” and “would continue providing support because it had a financial stake in a district of its route operators.” Instead, the company’s representatives pushed “shabby and dingy locations,” and McBrayer’s terminals were “continually … inoperable and defective,” according to McBrayer’s complaint. Last week, McBrayer was preparing to remove his terminal from the lobby of a Pompano Beach hotel at the hotel’s request. The other terminal has been in storage for more than a year. McBrayer is seeking damages for alleged unjust enrichment, fraudulent inducement, civil theft, negligent misrepresentation and deceptive and unfair trade practices. His attorney, Michael D. Leader, an associate at McIntosh, Sawran, Peltz, Cartaya, & Petruccelli in Fort Lauderdale, Fla. declined to comment. Miami, Fla. solo practitioner Frank Hollander represents three groups of Nationwide Cyber Systems investors who have sued the company and its principals in Broward Circuit Court. They allege deceptive business practices, fraud, unjust enrichment, violation of the state’s fraudulent practices act and violation of the state Racketeer Influenced and Corrupt Organizations Act. A second corporation, Transnet Wireless, also is named as a defendant in the suits filed by Hollander. The suits describe Transnet as a subsidiary of Nationwide Cyber Systems incorporated to hold its “ill-gotten gains.”

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