FTC backing ban on lawsuits against Equinox

Wednesday, July 5, 2000 | 10:55 a.m.

The Federal Trade Commission says it supports a request by the court-appointed receiver for Las Vegas-based Equinox International Corp. to shield the company from lawsuits to prevent its assets from being depleted and to grow the Equinox consumer restitution fund.

And Howard Hughes Corp., which sought on June 16 to recover $525,519 in past-due rents and other charges on two properties it leased to Equinox, has withdrawn a motion opposing receiver Robb Evans' request for a shield against suits after the parties reached an agreement.

The big Las Vegas developer said it will pursue damages against Equinox if it determines after 90 days from June 30 that it has suffered damages as a result of the receiver's rejection of the two commercial leases.

In a motion filed June 29 in U.S. District Court, the FTC said a temporary ban on claims against Equinox will prevent creditors like Howard Hughes from leapfrogging over other beneficiaries of the estate.

The FTC also supports the receiver's request for an order to prohibit former Equinox distributors from further obtaining refunds from the receivership estate through credit-card chargebacks. Since Equinox's closure, more than $102,000 in chargebacks have been recorded by Equinox, with an additional $4,300 in bank fees as a result.

A consumer restitution pool of more than $25 million will be formed with proceeds from the liquidated assets of Equinox and its founder Bill Gouldd. The multilevel marketing company agreed to shut down this spring to settle a lawsuit filed by the FTC and several states alleging it operated as an illegal pyramid sales scheme.