Attorney general says Ferndale businesses were targets of ‘cloning’ scheme

FERNDALE — Two men have been sued by the Michigan Department of Attorney General for an alleged scheme that targeted Ferndale businesses.

According to a press release, Attorney General Dana Nessel filed a lawsuit in the 3rd Circuit Court in Wayne County against 17 limited liability companies and two individuals, Eric Vander Ley and Daniel Vander Ley. The suit alleges that Eric Vander Ley harassed small business owners in the Ferndale area using the LLCs to coerce payments with the help of his brother, Daniel Vander Ley.    

The press release further states that the Department of Attorney General alleges that Eric Vander Ley exploited lapses in business registration with the Michigan Department of Licensing and Regulatory Affairs to form clone corporations, or new companies using the same names of existing Ferndale businesses. With his brother, Daniel, they used the cloned entities to target and harass the original business owners in an attempt to extract money from them, Nessel alleges.

The businesses listed in the lawsuit include Downtown Ferndale Bike Shop, Urbanrest Brewing Co., The Detroit Bubble Tea Co., Bags & Beads, Beau’s Grillery, Como’s Restaurant, Dessert Oasis Coffee Roasters, Detroit Martial Arts Institute, Found Sound, Got Pho and Tin Can Cocktails. There is also one Bloomfield Hills business, Mex Restaurant.

According to the complaint, Eric Vander Ley worked at the Downtown Ferndale Bike Shop in the summer of 2022, but he wasn’t brought back the following year. This led to the owner of the shop, Jon Hughes, receiving harassment from the brothers.

In November 2023, Hughes found the shop wasn’t in good standing with LARA. Around the same time, he also found that an LLC was using the same name as his bike shop, Downtown Ferndale Bike Shop LLC, with Daniel Vander Ley as a registered agent. This prevented Hughes from bringing his business back into good standing, because LARA wouldn’t accept past-due reports because the business name was being used by Vander Ley, which led to Hughes changing the corporation’s name to “Original Downtown Ferndale Bike Shop Inc.” to get back into good standing.

Last year, Hughes received a cease-and-desist letter from Eric Vander Ley alleging his client is the exclusive owner of trademarks and copyrights of “Downtown Ferndale Bike Shop,” according to the Michigan Department of Attorney General. Eric Vander Ley demanded Hughes sign an agreement that would pay him $2,500 in lieu of litigation, according to the complaint. Vander Ley also contacted the bike shop’s landlord and made allegations of trademark infringement and demanded $5,000, also in lieu of litigation, according to the complaint.

The complaint also alleges that after Hughes refused, Eric Vander Ley would drive by the bike shop while Hughes walked his dog and filmed the shop with his phone.

Eric Vander Ley filed a complaint in September that claimed he was a “sole proprietor doing business as Downtown Ferndale Bike Shop; when in reality, he was a temporary employee at the bike shop and was not (given) any ownership interest in the business.”

Similar problems arose for Urbanrest Brewing Co., where the owner, Zach Typinski, also found his business was not in good standing with LARA and that another LLC had been formed with Eric Vander Ley as the agent, according to the attorney general.

Typinski’s counsel reached out to Eric Vander Ley and asked to “cease and desist” from using the Urbanrest name. Vander Ley responded by stating he would not discuss the matter unless he was paid a “non-negotiable rate” of $500 per hour, according to the complaint. The business also received harassment from both Vander Ley brothers in multiple incidents that led to police involvement, the complaint states.

“These fraudulent LLCs were created to sow confusion, harass, and extract money from hardworking small business owners in Ferndale,” Nessel said in a prepared statement. “Such conduct is not only reprehensible but illegal, and these sham companies must be dissolved. My office remains committed to protecting Michigan businesses.”

Nessel is seeking to dissolve the 17 LLCs listed in the complaint.

The brothers’ methods of capturing the business names were similar in nature, according to the attorney general, as LLCs with similar names were filed in the state.

Several attempts to reach businesses involved in the case for comment were unsuccessful. No attorneys were listed for either Vander Ley in the 3rd Circuit Court online records.

Ferndale Downtown Development Authority Executive Director Jennie Beeker declined to comment on the lawsuit and the local businesses involved, but for small businesses seeking advice or help, she suggested reaching out to Oakland Thrive, a small business solution provider and incubator in Oakland County that can connect small businesses to professional consultations and help with anything from legal guidance to contract review.

Beeker also said the DDA is working with Ferndale to update guides for starting a small business in the city and how to navigate challenges.

“Small businesses are the backbone of our local economy,” she said. “They employ people locally, they support families, they support our communities by having fantastic places that we can go and enjoy. So, we always encourage people to support small and local businesses, and this is an example of just one of the … challenges that a small business can face compared to larger corporations. … It can be really threatening for a small business to have legal challenges like this.”