Equinox Loses Emergency Motion

TRO remains in effect, assets stay frozen and receiver retains control of the business

State of Nevada, Office of the Attorney General, August 16, 1999

The Nevada Attorney General's Bureau of Consumer Protection announced today that Las Vegas-based Equinox International Corporation; Advanced Marketing Seminars, Inc.; BG Enterprises, Inc.; and William Gouldd, their principal owner (collectively "Equinox"), have lost their Emergency Motion to Dissolve or Stay the Temporary Restraining Order and to Remove the Receiver. U.S. District Court Judge Johnnie Rawlinson denied their motion and, as a result, the Temporary Restraining Order (TRO) remains in effect, all assets remain frozen, and the receiver retains complete control of the business.

On Tuesday, August 3, Attorney General Frankie Sue Del Papa's office, the Federal Trade Commission (FTC) and officials from five other states filed suit under seal in Federal Court alleging that Equinox was a pyramid scheme. They asked U.S. District Court Judge Johnnie Rawlinson to halt the alleged unfair and deceptive trade violations of Equinox, its related entities and Gouldd. Judge Rawlinson issued a TRO that effectively froze the defendants' assets, and she appointed a receiver. The receiver served the TRO and took control of Equinox on Friday, August 6.

On Monday, August 9, Equinox filed an Emergency Stay of the TRO. Unable to obtain a hearing in U.S. District Court prior to Monday, August 16, Equinox then filed a Motion for an Emergency Stay of the TRO with the U.S. 9th Circuit Court of Appeals. The next day, Equinox filed a Writ of Mandamus with the 9th Circuit. Plaintiffs vigorously opposed both motions. On Wednesday, August 11, Equinox approached the Plaintiffs asking for an agreement that would allow the receiver to perform certain tasks. Plaintiffs agreed that the following terms could be effective until the hearing on Monday, August 16: 1) that the receiver could retain certain employees at full compensation; 2) that the receiver could fill orders (limited to $1000 for first-time sales representatives); 3) that the receiver could fill any items on the wholesale price list; 4) that the receiver could pay rebates; and 5) that the receiver could issue refunds. As a condition of this agreement, Equinox dropped both of its appeals to the 9th Circuit.

On Monday, August 16, at 4:00 p.m., Judge Rawlinson entertained Equinox's Emergency Motion to Dissolve or Stay the Temporary Restraining Order and to Remove the Receiver. After hearing argument from both parties, the Judge ruled that the TRO would remain in effect and thus, that all assets would remain frozen and that the receiver would retain control over the company until the Preliminary Injunction hearing. The parties agreed, and the Judge ordered, that the above five terms could remain in effect as well. Plaintiffs further agreed that limited funds could be made available for Defendant Gouldd to pay his reasonable living expenses. Judge Rawlinson ordered Gouldd to submit an accounting of all funds used to pay reasonable living expenses to the Plaintiffs on a weekly basis. The Preliminary Injunction Hearing is set for September 1st and 2nd at 8:30 a.m.

Persons with complaints against Equinox are urged to call the Attorney General's Bureau of Consumer Protection in Las Vegas at 702-486-3221. Updates on the status of the case against Equinox, as well as other consumer protection information, can be found on the Nevada Attorney General's website at: www.state.nv.us/ag/. Copies of the complaint are available on the FTC's web site at: www.ftc.gov.

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