Roseville karate instructor accused of scamming customers in Florida

A Roseville karate instructor accused of scamming at least 60 people in Florida was arrested Feb. 10, and charged with grand theft and organized fraud.Hillsborough County Sheriff Deputies in Florida say Doyle Ray McMahan, 45, ran Dragon Star Dojo. The sheriff's office started getting complaints in 2008 from dozens of customers who signed up for martial arts packages who may have been scammed.After being taken into custody in Roseville, McMahan was taken to Tampa, Fla. where he faces charges of grand theft of $100,000 or more, organized fraud of more than $50,000 and fraudulent use of personal information.He was released Thursday after posting a $22,500 bond.McMahan lives in Roseville and until his arrest, he worked as master instructor at Dragon Star Karate on Foothills Boulevard. The karate dojo remained open as of Thursday, but an employee who answered the phone refused to comment.Although McMahan is seen as the head of the local karate school — his name appears on much of the dojo's literature — Johnny Pancucci is listed as the business owner, according to the City of Roseville's business licensing department. Roseville Police Department spokeswoman Dee Dee Gunther said the department has not received any complaints regarding McMahan or Dragon Star Karate. In Florida, members of McMahan's karate dojo said the balances on their contracts were sometimes thousands of dollars higher than the prices they agreed to, said sheriff's spokeswoman Debbie Carter.McMahan ran a karate school in the small suburb of Brandon, Fla. The business operated like a gym — a customer paid a membership fee to take lessons, which might cost $3,000, for example, Carter said.Because many people can't pay this cost upfront, McMahan worked with Performance Equity Partners to finance the cost. McMahan would allegedly tell customers the membership fee cost $3,000 and then submit a bill to the lending company for $10,000, Carter said."The customer would start making payments and realize their balance isn't $3,000," she said. "It's $10,000."In an e-mail message McMahan sent to Dragon Star Karate customers Friday and obtained by the Press Tribune, he said the lending company was to blame."After moving back to California, I found out the billing company I was using at the time was trying to still charge some of the families for lessons that they couldn't take," McMahan said. "Of course, they refused to pay so the billing company then filed a civil suit against me."But, according to Hillsborough County sheriff's department, Performance Equity Partners is also a victim in the crime.Florida resident Diane Allen told the Press Tribune that her two sons went to Dragon Star Dojo and considered McMahan a friend until hearing of the alleged scam. She said McMahan had customers sign contracts for packages that included multiple classes needed to earn a black belt. "It didn't sound right to me at the time," she said.Although, she said she wasn't a victim of the scam, she knew several other customers who were. Carter said McMahan told customers in 2008 that he was going to move the business to a strip mall down the street because the current facility was too small."He packs up and instead of moving down the street, he leaves town," Carter said.But in his e-mail, McMahan characterizes this move as, "we went out of business and gave the few students we did have the choice to move to a friend's dojo about 20 miles way or just quit."The Hillsborough County sheriff's office had a warrant out for McMahan since 2008 but his whereabouts were unknown until authorities found him in Roseville. McMahan had also lived in the Roseville area prior to moving to Florida. At that time, he ran another incarnation of Dragon Star Karate, which was acquired by Kovars, Inc. on Jan. 1, 2005. As part of the deal, McMahan became part owner and an executive of the Carmichael-based martial arts chain. Chief Executive Officer Dave Chamberlain told the Press Tribune that McMahan has not been associated with Kovar's since 2005.Sena Christian can be reached at senac@goldcountrymedia.com.