FundAmerica Salaries: What Promised to Go Up Is Coming Down
Some FundAmerica Inc. watchers have wondered why Mitchell Blumberg--successful Texas developer and Harvard Business School graduate--agreed to run the financially troubled company starting late this summer.
Documents filed in federal bankruptcy court here this week contain a clue--money.
Blumberg signed an employment contract in August with the Irvine company to earn $20,833 a month--about $250,000 a year. Should FundAmerica emerge from bankruptcy, Blumberg gets a $500,000 bonus and begins earning a 1% commission on gross sales.
He may even get an 8% stake in FundAmerica if everything goes according to plan.
“Is the compensation consistent with the challenge of this company? It’s not nearly enough,” Blumberg said Wednesday.
FundAmerica has been charged in Florida with criminal offenses related to running a pyramid scheme and its founder, Robert T. Edwards, was arrested. The company and Edwards deny the charges. Blumberg joined the company a few weeks after Edwards’ arrest.
FundAmerica, which maintains it is a legitimate multilevel marketing company, is currently prohibited from recruiting members. The company filed for Chapter 11 bankruptcy protection from creditors two months ago.
Blumberg isn’t the only new FundAmerica executive promised good pay and a possible bonus.
FundAmerica Chairman Peter Bradshaw is supposed to earn $16,667 a month and receive a $400,000 bonus if the company gets back on its feet, according to his employment contract. He could receive as much as a 5% stake in the company as well.
Both men have contracts to serve on the company’s board, which entitles them to an additional $25,000 a year.
But so far, the employment contracts are worth about as much as the paper they’re written on.
The U.S. Trustee’s office--which must approve executive salaries for companies in bankruptcy--reduced the monthly take home pay to $11,000 for Blumberg and $9,000 for Bradshaw. Worse yet, those salaries were only approved for a five-week period that ended Sept. 21.
Neither Blumberg nor Bradshaw--who refused to discuss his salary--has received a penny since.
“We certainly deserve every bit of compensation,” Blumberg said.
