A federal judge yesterday froze the assets of AmeriDebt Inc. founder Andris Pukke and appointed a receiver to manage and control his funds pending a court decision in a Federal Trade Commission lawsuit against him.
Judge Peter J. Messitte of the U.S. District Court of Maryland's Southern Division in Greenbelt issued a preliminary injunction approving the freeze, saying the commission "has shown it is likely to succeed on the merits of its claims." Without a freeze, he added, "there is a possibility" that Pukke would "transfer, conceal, dissipate, or otherwise divert" assets. The judge also ordered Pukke to return to the United States any funds he has transferred to offshore accounts.
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In November 2003, the commission sued Pukke, alleging he misused funds collected from financially struggling consumers who sought debt-management help from the nonprofit Germantown credit-counseling firm by funneling customers' funds to DebtWorks, a for-profit, private company set up by Pukke to process AmeriDebt's accounts.
The FTC, which is seeking $170 million in refunds to consumers, has said that Pukke received $70 million from DebtWorks between 1999 and 2003 and spent large sums on himself, his wife and girlfriend. The agency said he also transferred $18.3 million to domestic and foreign trusts run by his brother or a close friend and sent an additional $2 million to an account in Latvia for his father.
Joel Winston, the FTC's associate director for financial practices, said his agency often seeks receivers for corporations accused of deceptive business practices but rarely for individuals. "We believed it was appropriate in this case because of the amount of money involved and because of the great danger of further dissipation of the money." Plaintiffs' attorneys in a class-action lawsuit against Pukke sided with the commission.
Pukke's lawyer, John B. Williams, called the order an "unwarranted examination that will demonstrate that the government and the small army of plaintiffs' lawyers are fighting over very limited resources."
"Bear in mind, there has been no finding of liability, and we will demonstrate that Andris Pukke saved consumers millions of dollars," Williams said.
Williams said Pukke's assets currently are about $10 million, some of which may be encumbered by IRS liens for back taxes.