Thursday, April 20, 2000 | 4:55 a.m.
Controversial multilevel marketing company Equinox International Corp. agreed to permanently close Thursday afternoon, as a federal judge approved a settlement that will begin the liquidation of the company.
Under terms of the settlement, a consumer restitution fund of $30 million to $40 million will be established to repay all current and former Equinox distributors who earned less than $150,000 during their time with the company. Funds will be distributed based on claimed losses.
The settlement also spelled the end of the multilevel marketing career of Equinox founder Bill Gouldd, who is banned for life from participating in any multilevel marketing company anywhere in the United States.
"We are extremely pleased with this settlement," said Tracey Brierly, Nevada assistant attorney general. "There's a ton of money for consumers, plus a permanent ban on Bill Gouldd and permanent dissolution of the company.
"We couldn't be more pleased."
David Fix, lead counsel for the FTC during the case, said he could not immediately comment on the settlement, "other than to say we're very pleased."
Equinox attorneys declined comment after a closed-court hearing by federal Judge Johnnie Rawlinson in Las Vegas approving the settlement. Reporters seeking comment were ordered to leave Equinox's headquarters at Covington Circle Drive in Summerlin.
In early August, the FTC and seven states, including Nevada, began a civil lawsuit against Equinox in federal court in Las Vegas. This lawsuit, among other things, branded Equinox an illegal pyramid scheme and asked for the liquidation of the company.
In Thursday's settlement, Equinox did not admit wrongdoing of any kind. Nor does the ban on multilevel marketing extend beyond Gouldd.
Court-appointed receiver Robb Evans was scheduled to seize control of Equinox Thursday afternoon, Brierly said, and will immediately begin liquidating all of its assets to fund the restitution pool. Also to be liquidated are most of Gouldd's personal assets, Brierly said.
All Equinox employees will be allowed to remain on the job for another two weeks, Brierly said.
Equinox is one of the nation's largest multi-level marketing companies and had 40,000 distributors nationwide prior to being sued by the FTC and the states.
Trial on the lawsuit, which started April 3, was halted this week while the parties negotiated a settlement.
A Sept. 8 hearing is set to finalize the agreement. Equinox distributors will be able to file claims for restitution when the court determines a fair amount of restitution.
Equinox sells beauty and health products and a line of water filtration products through its independent distributors.
The government claimed Equinox attracted new recruits through deceptive advertising and false claims of income. Most distributors ultimately lost money, the government alleged.
One distributor, Douglas Johnson of Oxnard, Calif., testified he lost more than $18,000 during two years with the company and that the experience forced him into bankruptcy.
Johnson initially purchased $6,000 worth of Equinox products, but said he was only able to sell $2,000 of his products in two months. He later recruited six people to become Equinox distributors, but noted his recruits included his mother and two of his sisters. His mother bought $2,000 in products herself.
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