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Investor suit accuses owners of San Antonio-based Chacho’s chain of 'massive fraud'

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San Antonio-based Tex-Mex chain Chacho's has been sued by a Mexico-based investor that accuses company ownership of committing “massive fraud” as it raised money to fuel a promised expansion.

The suit, filed in Bexar County District Court, alleges that Chacho’s owner John Burke and two other affiliated partnerships made false promises and provided bogus financial data to convince investors to pump millions into the eateries. The story was first reported by the San Antonio Express-News.

Rhea Capital — a family-owned Mexican investment company — accuses Burke of fraud, civil conspiracy and breach of fiduciary duty.

Burke has not yet filed a response to the suit.

Roberto Segovia, the claimant in the suit and Rhea Capital's principal investor, originally flowed some $200,000 into a Chacho’s restaurant partnership called Chacho’s 6006 Westerheimer Ltd, according to the suit. Eventually, Rhea’s investment in the chain grew to more than $2 million, the petition maintains.

According to the suit, Burke and associates "engaged in a wide ranging conspiracy to raise millions of dollars from Mexican investors (totaling some $11 million) for the purported expansion of the Chacho’s NA restaurant chain, which rather than expand, has actually shrunk.”

Chacho’s has three locations in San Antonio and three locations in Houston, according to the chain’s website.

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