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U.S. Bankruptcy Judge Finds Joe Francis in Contempt

U.S. Bankruptcy Judge Finds Joe Francis in Contempt
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XBIZ 360 - Jan. 13-16, Los Angeles
Friday, Jul 18, 2014    Text size: 

LOS ANGELES — A federal bankruptcy judge on Thursday found former Girls Gone Wild mogul Joe Francis in civil contempt, imposing reimbursement of more than $40,000 in attorneys fees to a trustee and ordering $5,000-per-day sanctions for not returning two company vehicles.

U.S. Bankruptcy Judge Sandra Klein, in her 31-page ruling, said that Francis had violated a consent order and preliminary injunction that barred him from communicating with or harassing Girls Gone Wild employees, coming within 100 feet of its offices and interfering with the trustee's control of assets.

Klein awarded $40,000 in attorneys fees to the trustee and likely will grant another $20,000 later this month.

"The court need not and will not make a credibility determination regarding what occurred because the trustee based the contempt motion on the fact that Francis [and his girlfriend's] entering the premises violated the preliminary injunction," Klein wrote.

In previous court documents, Francis told the court that he traveled over to the offices because he was concerned that the new owners — GGW Acquisition LLC  — would remove some of his property. 

GGW Acquisition bought the company for $1.825 million and took over its office lease earlier this year at bankruptcy auction.

Francis alleged in a declaration that his girlfriend, five months pregnant with twins, was "pushed and physically assaulted and battered" by a security guard hired by GGW Acquisition.

Later, a GGW Acquisition executive made a citizen's arrest and police were called. Francis was arrested on misdemeanor assault charges and spent that night in jail. He was released the following morning on $20,000 bail.

Last month, Klein warned of $5,000-per-day sanctions, without limitation, against Francis until two Girls Gone Wild company vehicles — a 2012 Bentley Flying Spur, which is valued at about $200,000, and a 2007 Cadillac Escalade — were handed over to the trustee involved in the bankruptcy.

On Thursday, she imposed those daily sanctions until the cars are returned.

Francis last month told the court that the cars were seized by a creditor in Guadalajara, Mexico.

In a declaration, Francis said that the seizure of the vehicles took place one year before debtors for Girls Gone Wild filed bankruptcy.

He declared to the court that because Girls Gone Wild failed to fulfill obligations under a promotional agreement several years ago with a local strip club, that the owner of the club — called "DGL ITSMO SA DE CV" — had a right to possession of the cars.

"Under Mexico law, I am powerless to retrieve the vehicles and the [strip club owner] refuses to return them," Francis said in the declaration.

But Klein poked holes through Francis' declaration Thursday.

"Francis' assertion that the vehicles were taken and that he cannot get them back is both difficult to believe and sufficient to demonstrate impossibility," she wrote.

Klein also noted that Francis' declaration was "self-serving" and that a declaration by a representative of DGL ITSMO SA DE CV was inadmissible because the testimony didn't follow conventional standards.

She further said that Francis never explained why the vehicles were in Mexico in the first place, and that she was skeptical over the timing of his declaration and why he never reported the seizures to authorities.

"[T]he timing of the alleged taking of the vehicles is suspect, given that Francis claims it occurred just a few days before the date Francis was required to turn the vehicles over to the trustee," Klein said.

Klein said she would continue the civil contempt hearing against Francis to July 31.

Klein said that if Francis hasn't complied with her ruling by that time, the court will consider other sanctions, including the issuance of an arrest warrant for him.

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