FundAmerica Fires Ruff After Just One Week

FundAmerica Inc. has fired Howard Ruff as president and chief executive just a week after he joined the troubled firm, and a company source said Monday that it may seek protection from its creditors with a Chapter 11 bankruptcy filing as early as today.

Ruff, the nationally known investment guru who last week heralded his appointment as the “rebirth and resurrection” of the company, said he was fired late Sunday at the behest of shareholders who are friends of FundAmerica founder Robert T. Edwards.

On July 30, Ruff replaced Edwards after the founder was arrested by Florida authorities on charges of running FundAmerica as a pyramid scheme. Ruff, 59, had said he thought that the company was run as an “honest business” when he took over--but a closer look at the books changed his mind.

He raised questions about the former president last Friday when he revealed that Edwards has paid himself $5.4 million in salary this year and had another $11.3 million wired to two entities in the Netherlands and Hong Kong for unknown reasons, all before his arrest July 19.

“I was sacked because I revealed true but damaging information about Bob Edwards,” Ruff said in a statement Monday.

He said he was fired Sunday night at a shareholders meeting of FundAmerica’s Canadian parent company. He didn’t specifically identify anyone who demanded his ouster but said they were “Edwards’ friends.” Houston developer Mitchell Blumberg was named to replace Ruff.

In announcing the management changes, FundAmerica also said in a statement late Monday that “a plan for reorganization is being worked on.” A company insider said a Chapter 11 filing, which would allow the company to continue operating while its debt is restructured, could be made today.

On Monday, California Attorney General John Van de Kamp said his office had discovered that while FundAmerica had about 100,000 members, it had sold as many as 1 million memberships.