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'Girls Gone Wild' company to bare all in bankruptcy

by Aviva Gat  |  Published March 1, 2013 at 10:18 AM
Months after its creator was found guilty of slander, the company behind the "Girls Gone Wild" adult video series has filed for bankruptcy to strip itself of unwanted debt.

GGW Brands LLC and three affiliates on Wednesday filed for Chapter 11 in the U.S. Bankruptcy Court for the Central District of California in Los Angeles.

GGW did not reveal any other information along with its filing, but the petition for the Santa Monica, Calif.-based company comes months after founder Joe Francis was found guilty of slandering casino mogul Stephen Wynn. The case stemmed from threats Wynn allegedly made to kill Francis and bury him in the desert.

Wynn's Wynn Resorts Ltd. owns the Wynn Las Vegas and Encore casinos in the Nevada city as well as Wynn Macau. Wynn developed the Bellagio, Mirage, Treasure Island and Golden Nugget in Las Vegas while chairman, president and CEO of Mirage Resorts Inc. and its predecessor.

On Sept. 10, a California jury awarded Wynn a $40 million judgment. Judge Joanne O'Donnell of the Los Angeles Superior Court, however, reduced the judgment to $19 million on Nov. 12.

According to a statement the same day from Francis, a portion of the reduction came because the judgment was tied to inadmissible evidence from Francis' appearance on "Good Morning America." In the statement, Francis said that while the reduced judgment was a victory, he intended to appeal the ruling in its entirety.

"Judge O'Donnell committed a judicial error by allowing this case to even proceed to a trial and she knows it. This is only the first step of her backpedaling and unwinding her illegal actions in order to try to keep her job as a judge," Francis said in the statement.

Bankruptcy documents show Wynn Las Vegas LLC has a $10.3 million disputed alter ego claim for the judgment.

In an earlier Sept. 11 statement, Francis said the entire alleged defamation was a result of his request in a courtroom for a restraining order against Wynn. Francis said he was actually afraid for his life because Wynn had threatened him.

"One day the public will see that I am the real victim here and not Steve Wynn," Francis said in a statement. "I am strengthened by the support of my friends and will stay committed to telling the truth."

The rancor between Francis and Wynn goes back to 2007, when Francis failed to pay a $2 million gambling debt to Wynn Las Vegas. Wynn agreed to delay collection of the debt, but in June 2008, Wynn sued Francis for breach of contract. The court ordered Francis to pay the money to Wynn.

Wynn Las Vegas senior vice president of marketing Michael Weaver said the bankruptcies would have no effect on its collection efforts for Francis.

"Our judgments (approximately $30 million in the aggregate) are not against Joe Francis' companies, but rather against Mr. Francis personally," Weaver said in a statement.

Francis' problems don't end with Wynn, however. The Clark County, Nev., District Attorney's office initiated a criminal proceeding in September 2008, alleging theft and intent to defraud related to the gambling debt. Francis had alleged he could not repay the debt in 2007 because he was incarcerated for an unrelated matter.

In addition, in 2003 officials in Panama City Beach, Fla., tried to stop Francis from filming "Girls Gone Wild." In response, he sued the officials for violating his First Amendment rights. The officials then arrested Francis for racketeering. A court dismissed most of the evidence in the suit Francis filed. Francis pleaded guilty to record-keeping violations and for having contraband in his cell. He was fined $1.6 million and sentenced to community service for the record-keeping violations and served 339 days in jail and paid $60,000 in fines for the contraband.

Francis again confronted the law in April 2007 when he was indicted by a grand jury for two counts of tax evasion. The Department of Justice alleged that he claimed more than $20 million in false deductions on his 2002 and 2003 tax returns.

Francis pleaded not guilty in July 2008 but then pleaded guilty in September 2009 to a misdemeanor of filing false returns and bribery. He received credit for 301 days served in jail and was fined $250,000.

In GGW Brands' bankruptcy, the debtor listed assets totaling less than $50,000 and liabilities between $10 million and $50 million. Judge Sandra R. Klein will preside over the bankruptcy case.

Debtor counsel Robert M. Yaspan of the Law Offices of Robert M. Yaspan could not be reached for comment Thursday.

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Tags: Chapter 11 | GGW Brands LLC | Girls Gone Wild | Joe Francis | Judge Joanne O'Donnell | Law Offices of Robert M. Yaspan | Michael Weaver | Mirage Resorts Inc. | Stephen Wynn | Wynn Resorts Ltd.

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Aviva Gat

Senior Reporter: Bankruptcy



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