San Diego couple held in contempt in federal court case

Friday, June 5, 1998 | 10:20 a.m.

Senior U.S. District Judge Lloyd George implied that Michael and Denyse Anderson could face jail time if they failed to provide financial data at Tuesday's hearing.

The Federal Trade Commission claims the Andersons, who are husband and wife, failed to provide an accounting of their funds and refused to return money from a trust account in the South Pacific.

The Andersons are named in an FTC lawsuit alleging the sale of fraudulent investments for the Sterling Group of Las Vegas. The Sterling Group promised investors profits from sales of gadgets advertised on late night television, such as barbells filled with water and pet tags that talked.

Many investors said they lost their money. The FTC said the Andersons raised $6.3 million by selling the fraudulent investments for Sterling Group.

Eric Stein, the managing partner of the Sterling Group, remains a fugitive. Charges against him allege state securities law violations.

The Andersons aren't charged with criminal offenses but were named as civil defendants in the FTC's lawsuit.

George froze the assets of the Andersons, other marketers and people associated with the Sterling Group. He also ordered the Andersons to provide the FTC with an accounting of their funds and a foreign account in the Cook Islands in the South Pacific.

Gregg Shapiro, an attorney for the FTC, told the judge Thursday the Andersons have refused to provide financial information or return funds from the Cook Islands account to the United States.

In response to an FTC motion, George found the Andersons in contempt of court. He suggested the Andersons "bring a toothbrush" to a hearing Tuesday.

The judge said the Andersons will be given an opportunity to provide information about their finances in court.

Michael McCloskey, the couple's defense attorney from San Diego, said his clients didn't have financial statements on their funds. George said they would have to testify based on memory. The judge doubted they would forget how many millions they sent to an overseas account.

"Not all of us have just fallen off a pumpkin truck," George said.

McCloskey also argued that the Andersons no longer had control of the funds because of a provision that gives a trustee control in event of duress.

Shapiro, however, said it appeared the Anderson themselves determined that the FTC lawsuit constituted duress and relinquished control to the trustee.

"It appears to me that what I'm dealing with is a shell game of sorts," George said.