Ruff May Launch a FundAmerica Rival

Rough times don’t ruffle Howard Ruff.

Fired as president of beleaguered FundAmerica Inc. of Irvine on Monday, Ruff said Tuesday that he is seriously thinking about starting a similar company.

“I’m getting a lot of pressure to start a FundAmerica equivalent,” he said in an interview. He said there was a “50-50” chance he would actually found a new multilevel marketing company.

“At this point, it’s a tossup,” said Ruff, a one-time doomsayer who authored the 1978 bestseller “How to Prosper During the Coming Bad Years” and now writes the investment newsletter “The Ruff Times.”

Ruff took the FundAmerica spotlight last week when he replaced company founder Robert T. Edwards, who was arrested by Florida authorities July 19 on charges that he was running the company as a pyramid scheme.

Ruff was ousted a week later by the company’s shareholders after he disclosed that Edwards had paid himself $5.4 million in salary this year and mysteriously wired $11.3 million to two overseas entities prior to his arrest.

Ruff said he was fired because he tried to wrest control of the company’s stock away from some of Edwards’ friends.

“On Thursday, we received information that the (Florida) statewide prosecutor’s office was moving ahead of schedule to indict the company,” he said. “The ostensible reason (for the Florida action) was that I was raising investor money to buy the company, and they were afraid some of it would go to Edwards and his friends, Ruff said.

To fend off a criminal indictment of the company, Ruff said, he tried to persuade longtime Edwards associates such as Vancouver businessman Peter Bradshaw to relinquish their stock. Bradshaw and FundAmerica President Mitchell Blumberg could not be reached for comment Tuesday.

Officials in several states, including Florida, California, Texas and Colorado, contend that FundAmerica derives almost all its income from memberships rather than the sale of a product or service, thereby making it an illegal pyramid scheme.

The company has maintained that it is a legitimate, multilevel marketing company, providing cash rebates to its members for services such as travel. Ruff said the principle behind FundAmerica is valid.

“It’s a wonderful concept, and it’s an honest concept, and I have never seen anything that would indicate this membership was an out-and-out fraud. It was not,” he said.

Ruff, 59, joined the company after his son became a FundAmerica sales representative earlier this year.

“It was an incredible roller coaster of an experience that turned very rotten at the end. I regret having gotten into it in the first place,” he said.

Ruff said he would require a good percentage of FundAmerica’s members to pledge their support to a new company before he would agree to start it.

“I would have to have such demand from the FundAmerica people who are proven performers so I would start out with a substantial organization,” he said. “I do have people trying to throw money at me.”