Despite Pleas for Mercy, Infomercial King Kevin Trudeau to Remain Behind Bars
Disgraced TV infomercial pitchman Kevin Trudeau jokingly offered today to undergo enhanced interrogation techniques if it would help convince a judge to end his imprisonment for civil contempt.
"I will do anything to get this over with," Trudeau said at a hearing in federal court in Chicago.
"I don't want to spend another day in prison more than I have to. I would even submit myself to water-boarding," he quipped.
It didn't work.
Citing Trudeau's long history of violating court orders, U.S. District Judge Robert Gettleman decided to extend Trudeau's stay at the Metropolitan Correctional Center for at least another six weeks. He has been behind bars since late November 2013.
"I haven't received the type of assurances I need that Mr. Trudeau is sincere and honest," Gettleman said. "I just don't believe it."
Gettleman found the 51-year-old Trudeau in contempt last summer after a protracted legal battle with the Federal Trade Commission, which accused the erstwhile infomercial king of engaging in an elaborate asset protection scheme designed to avoid paying a $37.6 million sanction against him in 2010 for misleading infomercials.
The FTC submitted evidence that Trudeau had created a host of vaguely connected companies that allowed him to skirt the judgment, while living a lavish lifestyle - replete with luxury automobiles, first-class travel and a lakeside apartment in Zurich, Switzerland.
Trudeau had claimed that those were all business expenses and maintained throughout this ordeal that he has no hidden assets. "I am at your mercy," he told the judge today. "I will do anything. But the one thing I cannot do is manufacture assets that do not exist."
In August, Gettleman appointed a receiver, Los Angeles-based Robb Evans and Associates, to hunt down and recover assets. To date, the receivership estate has assets of approximately $2.5 million, according to court filings, and another $3.5 million has been located and identified for eventual recovery.
Funds that are recovered by the receiver will eventually be returned to consumers who bought Trudeau's weight-loss book. The ultimate tally, however, will be reduced by the fees and expenses of the receivership, which so far amount to more than $680,000.
Thomas Kirsch, an attorney for Trudeau, argued today that it was "patently unfair" to continue holding his client for contempt, contending that Trudeau has been 100% cooperative and "never one time refused to answer a question from the receiver."
But Blair Zanzig, an attorney for the receiver, countered that Trudeau was still disavowing knowledge of transactions that evidence shows he had a direct hand in, including the purchase of $100,000 in gold bars that haven't been located.
"To say that he has answered all our questions is irrelevant," Zanzig argued, "if the answers don't allow the receiver to find assets."
The receiver was also placed in charge last summer of a handful of companies the judge determined were under Trudeau's control. Several of those companies were created in the name of Trudeau's 29-year old Ukrainian wife, Nataliya Babenko, a former film student at New York University who has since returned to her home country.
One of those businesses is a private club called the Global Information Network (known by the acronym GIN), which Trudeau claimed had been conceived by the "GIN Council," described by Trudeau as a secret cabal of the ultra-wealthy who held secrets to abundant wealth and happiness.
"The Global Information Network is a club that has been developed by thirty people who are on the GIN Council," Trudeau claimed in an Internet video pitching the club. "They're all billionaires from around the world."
The club was formed in the island nation of Nevis and had revenues in excess of $60 million over three years, according to accounting records filed in the case. Babenko had signatory authority on the club's U.S. bank accounts, the records show.
Since assuming management of the club, the receiver has laid off dozens of employees, cancelled a scheduled cruise ship convention and eliminated an "affiliate program" that rewarded members for bringing in new recruits.
Trudeau had touted that program in another Internet video as one of the "greatest money-making opportunities of all time."
But the FTC argued it was an illegal pyramid scheme, and that GIN was simply another of Trudeau's crafty attempts to keep assets away from the government.
In court today, the judge denied a motion to intervene in the case brought by two-dozen members of GIN who had accused the receiver of "draining and diverting" the organization's resources to finance the receiver's quest for Trudeau's assets to pay off his debts.
"It's too late," Gettleman said, before abruptly cutting off the group's attorney.
Membership in GIN, which peaked at about 20,000, has fallen precipitously since the receiver took control and now stands at 3,908, according to documents filed by the receiver this week. All references to Trudeau have been scrubbed from the group's website, and the affiliate program has been discontinued. The receiver also informed the membership that the fabled "GIN Council" wasn't real.
"The entity referred to as the GIN Council does not exist," reads a new disclaimer on the GIN website, "and therefore any reference or endorsement of this entity by any of the … previous trainers/hosts should not be interpreted as an endorsement, benefit or part of the training curriculum of the GIN organization."
The receiver is now in negotiations to sell GIN to one of three interested buyers and the sale could be completed within the next few weeks, Zanzig said. The club's assets could include memberships lists, thousands of dues-paying customers, and a collection of self-help material produced by Trudeau and others.
Trudeau is due back in court March 17, when he is scheduled to be sentenced by another federal judge on a criminal contempt conviction for those same misleading infomercials. Whatever sentence he receives, the clock won't start ticking on it until Gettleman ends the civil confinement.
"I may never be convinced," Gettleman said today. "Maybe when this is all over he'll go to Ukraine or St. Kitts … to enjoy his treasure."
Gettleman indicated he might, some day, finally be satisfied that Trudeau is telling the truth, but, he said, "I'm not there yet."