Monday, June 12, 2000 | 10:59 a.m.
The court-appointed receiver for Las Vegas-based Equinox International Corp. has asked a federal judge to approve a $2 million loan and shield it from lawsuits against the company, which was shut down as an illegal pyramid scheme.
In seperate motions filed last week in U.S. District Court, receiver Robb Evans said the loan is needed to pay overhead expenses and salaries for Equinox employees working toward the liquidation of the company's assets.
Evans is also asking for a 180-day temporary stay against pending and anticipated lawsuits against the Equinox estate. Claims filed in several state and federal courts alleging product liability and breach of contract threaten to "deplete estate assets and may impede the receiver's ability to formulate a plan for distribution of estate assets."
Equinox, founded by Bill Gouldd with its headquarters in Summerlin, was ordered into receivership by U.S. District Court Judge Johnnie Rawlinson on April 20. The move followed a settlement between the company and the Federal Trade Commission midway through a trial to determine whether the business constituted an illegal pyramid scheme.
Equinox did not admit wrongdoing in the settlement, but was forced into closure and liquidation.
At its height, Equinox employed 144 people at its Summerlin headquarters and 40,000 distributors nationwide. In 1996, the company topped Inc. magazine's list of the nation's fastest-growing businesses with a growth of 35,000 percent from 1991 to 1996. The company had reported annual sales of its health, beauty and water filtration products near $200 million.
But the FTC and six states, including Nevada, sued the company last year alleging its sales were based on an illegal pyramid scheme.
After the settlement, Rawlinson ordered the establishment of a restitution fund to repay thousands of Equinox distributors by liquidating company assets and most of Gouldd's personal wealth.
Evans estimated two weeks ago the restitution fund would exceed $25 million.
But building that fund is in jeopardy from lawsuits and threatened litigation against the company estate, Evans said in court documents filed this week. Litigation could freeze some company assets and deplete the estate's worth through legal fees, Evans said.
Evans also asked Rawlinson to put a halt on "chargebacks" filed with credit card companies by former distributors eligible for restitution. Chargebacks occur when the credit card company applies credit to an account then bills the estate. Through May 18, chargebacks totalling $97,851 have been made against the estate, Evans said.
Evans said it is unclear how much many will be raised by liquidating Eqinox assets, and those who have not already filed for restitution through chargebacks may be treated unequally.
Meanwhile, Evans also asked Rawlinson to approve a $2 million loan from a California bank "to provide temporary operating expenses incurred in connection with the liquidation."
Expenses include salaries for former Equinox employes working with the reciever to liquidate the company assets, rent and maintenance at Equinox buildings and payments to Gouldd.
Other expenses include construction work to complete a 23,000 square-foot home in Florida that will eventually be sold, roof repairs at the company's plant in Texas and scheduled maintenance for a jet plane.
The loan would "provide flexibility...and not force (the receiver) to accept unnecessarily low offers for valuable items."
According to court records, some of the property Evans is attempting to sell include a 240-acre ranch in Colorado, a home on seven acres at Lake Las Vegas and three homes in Boca Raton, Florida. Evans is also trying to sell a $5 million yacht and the jet plane with estimated value of $5 million.
The estate also includes about 35 small watercraft and an equal number of cars trucks and motorcycles, according to court records.
Evans said he anticipates the estate value will exceed the previous estimate of $25 million. Gouldd controls many of these assets to be liquidated.
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