FundAmerica Founder’s Lawyer Buys Its Assets at Court Auction
Most of FundAmerica’s remaining assets were sold at auction for $1 million Friday to a lawyer representing company founder Robert T. Edwards despite a last-minute effort by a major creditor to block the sale.
For $500,000 in cash and a $500,000 promissory note, Vancouver attorney George C. Davis acquired the Irvine network marketing company’s copyrights, trademarks, patents, computer programs and membership lists--and rights to the FundAmerica name. Davis was the only bidder at the auction held in federal bankruptcy court in Santa Ana.
Davis said he intends to create a new company called FundAmerica and re-establish Edwards’ self-described vision of a consumer buying club that offered members discounts on services such as long-distance phone calls and travel.
The existing FundAmerica will be liquidated in the next few weeks, according to an attorney representing the bankruptcy trustee.
Edwards and FundAmerica will go to trial June 10 in Florida to face criminal charges that FundAmerica was really a massive pyramid scheme, enriching its top officials at the expense of new members.
The purchase lays the groundwork for Edwards’ possible return should he be acquitted in the Florida case. Because of FundAmerica’s pending liquidation, Florida officials are likely to drop the charges against the company, leaving only Edwards to stand trial.
Friday’s sale was described by some observers as a coup for Edwards, who purchased the company’s key assets for $1 million while shielding himself from future litigation. The sales agreement includes a clause prohibiting FundAmerica or the trustee from suing Edwards and related entities.
“In the guise of a purchase agreement, Mr. Edwards and the other parties are being released for a mere pittance,” said Alan H. Martin, an attorney for MCI Communications. “MCI is vehemently opposed to a sale today,” he added.
MCI, which is owed $1.4 million for long-distance telephone service provided to FundAmerica members, is disturbed by claims made by Florida prosecutors that Edwards transferred more than $11 million of FundAmerica’s money to entities around the world before his July resignation. Some of the money has come back to the United States to pay off creditors.
Bankruptcy trustee Theodor C. Albert said Friday’s sale was in the best interests of all creditors--including MCI--because FundAmerica doesn’t have enough money to pursue legal claims against Edwards or engage in a worldwide search for company assets.
“I don’t see MCI saying they will underwrite chasing Mr. Edwards (and the money). . . .” Albert said. But MCI’s Martin said the company would gladly assist in such a search.
Representatives for Davis grew impatient with MCI’s attempt to delay the sale and told U.S. Bankruptcy Judge James N. Barr that the bid would be withdrawn if it wasn’t accepted Friday.
FundAmerica’s marketing representatives were ecstatic over the sale and the prospect of starting anew.
