Pukke accused of hiding assets

Receiver assails AmeriDebt figure's legal fees

September 27, 2005|By Eileen Ambrose | Eileen Ambrose,Sun reporter

AmeriDebt founder Andris Pukke continues to hide assets from a court-appointed receiver and his hefty legal fees are reducing the amount of restitution that could eventually be available to the credit counselor's customers, lawyers told a U.S. District Court judge yesterday.

Pukke is accused of not fully disclosing holdings that include interests in a development company and a shrimp farm, both in Belize. He also appears to have purchased a $6.4 million home in Laguna Beach, Calif., with the help of his girlfriend and a high school friend, weeks after his assets were frozen, said Gary Owen Caris, an attorney for the receiver.

Pukke has misled investigators who are trying to track down his assets, even while he is under oath, Caris told the court in Greenbelt yesterday. "He just doesn't care," Caris said.

Pukke did not attend the hearing and could not be reached for comment. His lawyer, John Williams, said he isn't authorized to comment on the allegations that Pukke was hiding assets, and doesn't know yet whether his firm will continue to represent Pukke because of legal costs.

Pukke is being sued by the Federal Trade Commission, which is trying to recoup $172 million in fees that consumers paid over the years to the discredited credit counseling agency that once was based in Germantown. As part of that lawsuit, Pukke's assets were frozen in April and he was ordered to make an accounting of his assets and return money from offshore accounts. A receiver was appointed to preserve the assets.

Pukke is facing other lawsuits, including a class action on behalf of consumers. The Internal Revenue Service also has filed a claim of nearly $317 million against him.

Pukke filed for personal bankruptcy under Chapter 11 in California in July. That case recently was transferred to Maryland. Judge Peter J. Messitte suspended Pukke's bankruptcy case yesterday until the end of the FTC trial. That trial is to begin in early January and expected to last six weeks.

The FTC settled its case earlier this year against AmeriDebt, which was accused of charging consumers high, hidden fees and funneling money to a for-profit company owned by Pukke. AmeriDebt is being liquidated in bankruptcy court.

Caris told the judge yesterday that the receiver is attempting to piece together Pukke's dealings. Besides the holdings in Central America, Pukke purchased insurance policies from companies in the West Indies and Cook Islands that charged huge premiums, which may be an arrangement to hide income, Caris said.

Pukke's legal fees generated the most impassioned discussion yesterday. Those bills with various law firms have surpassed $4 million since March 2003.

FTC lawyers argued that the legal fees are too high.

"Every dollar spent on attorney fees is $1 less for consumers," said FTC lawyer Lucy Morris, adding that Pukke was not entitled to a "Cadillac defense."

Williams charges $575 an hour, and the hourly rate for Pukke's bankruptcy lawyer is $695.

Messitte ordered a review of Pukke's legal fees and said no new legal bills will be paid until then.

The judge estimated that Pukke's lawyers could expect to earn $25,000 in fees for preparing for Pukke's trial in January.

eileen.ambrose@baltsun.com

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