‘Infomercial King’ Kevin Trudeau in Contempt for Not Paying $37.6 Million
(CHICAGO) -- A federal judge has sided with the Federal Trade Commission (FTC) in granting a court-appointed receiver broad authority to marshal assets and take over businesses reportedly controlled by controversial TV pitchman Kevin Trudeau.
Last month, he was found in contempt for failing to pay a $37.6 million sanction against him for deceptive marketing.
If Trudeau fails to cooperate with the receiver's efforts, U.S. District Court Judge Robert Gettleman has threatened to force Trudeau's compliance by sending the erstwhile infomercial king to jail, which is exactly where the FTC has been arguing he belongs until he pays.
"I want to be 100 percent cooperative," a polite but agitated Trudeau told an FTC attorney after a hearing here earlier this month. "I want to wash my hands of this. I want to put this behind me."
The government, however, remains deeply skeptical of Trudeau's promises. After all, for the better part of the last 14 months, Trudeau has been locked in an acrimonious dispute with the FTC over the agency's allegations that he was concealing assets that should have been used to pay the sanction.
The contempt finding was the third of Trudeau's checkered career, which is also dotted with $2.5 million in prior settlements with the FTC over allegedly misleading claims for a host of products he pitched in infomercials. The 50-year-old Massachusetts native's record also includes two felony fraud convictions from the early 1990's, for which he spent nearly two years in federal prison.
The receiver, Los Angeles-based consulting firm Robb Evans and Associates, has been given substantial judicially-backed power to seek out and seize assets, both domestically and abroad. Still, the FTC has indicated in court filings that it anticipates Trudeau may attempt to frustrate the process with further litigation or by simply dragging his feet. "Because the Court did not incarcerate Trudeau, he has no incentive to put forth genuine cooperation," the government attorneys wrote in a motion last week.
Trudeau's defense team had argued unsuccessfully for a more limited role for the receiver, maintaining -- as they had throughout -- that the FTC was unjustly focused on punishing Trudeau and restricting his freedom to earn money to pay the sanction.
"The FTC has over-reached by submitting a[n] …order that attempts a worldwide freeze of not only Mr. Trudeau's assets (past, present and future)," wrote defense attorney Kimball Anderson, "but also those of many innocent persons and entities around the globe who are not before this court."
The $37 million penalty at the root of this dispute was formally entered in 2010 when Judge Gettleman ruled Trudeau had made misleading claims in infomercials for his best-selling book, The Weight Loss Cure 'They' Don't Want You to Know About.
The FTC's complaint in that case alleged Trudeau had bamboozled hundreds of thousands of consumers with claims that the diet -- which calls for prolonged periods of extreme calorie restriction, off-label injections and high-colonic enemas -- was "easy." The judge ordered Trudeau to compensate any consumer who bought the book after viewing one of the ads.
But Trudeau didn't pay. So last summer, the FTC petitioned the court to jail Trudeau, arguing that was the only hope of getting him to pony up. Trudeau countered that he would pay if he could, but it was impossible because he had no assets.
Over the course of the next several months, the FTC subpoenaed the records of dozens of banks, corporations, individuals and law firms to bolster its allegations that Trudeau was masking his control of multiple lucrative business ventures that funded a lavish lifestyle, replete with luxury automobiles and stately homes.
The FTC presented evidence that alleged Trudeau, who moved to Switzerland last fall, had embarked on a sophisticated asset-protection scheme that revolved around the creation of several vaguely-connected companies, trusts and overseas bank accounts nominally owned or directed by Trudeau's young Ukrainian wife, Nataliya Babenko.
Trudeau and Babenko were married in 2008. She was 22 and Trudeau was about to get hit with the $37 million judgment. The FTC argued that Babenko was a key figure in Trudeau's attempts to dodge the penalty.
Trudeau's attorneys consistently claimed that Babenko, who recently completed a year of graduate film studies at New York University, was a, "successful businesswoman in her own right" and that the assets of companies she owned or directed could not be used to satisfy the judgment against Trudeau. The judge didn't buy that -- and placed those companies and about a dozen others under the control of the receiver.
Babenko's assets, which could include overseas trust accounts and tens of thousands of dollars in designer clothing, jewelry and furniture, may also be subject to forfeiture, to the extent that they were acquired with proceeds from those corporate coffers.
Trudeau, who declined to answer questions about the latest contempt finding or the appointment of the receiver, has been ordered to surrender his U.S. and Italian passports. He will have to get by on whatever amount of money the receiver determines is sufficient for him to have ordinary and necessary living expenses. For the time being, he will be permitted to continue living in an expansive rental home in suburban Chicago.
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