From the Chicago Tribune
A fight between a female porn star and the former chief financial officer of her adult video company is the latest twist in the made-for-television bankruptcy case of Veg-O-Matic maker Ronco Corp.
Ronco’s CFO Ronald Craig Stone faces allegations from porn star Jill Kelly of misappropriating funds and driving her adult movie company, Jill Kelly Productions, into bankruptcy. Stone was fired after the company filed for bankruptcy in Aug. 2005. He joined Ronco — founded by Ron Popeil who honed his informercial skills selling gadgets on Maxwell Street in Chicago — shortly afterward.
Stone couldn’t be reached for comment Thursday. But John Reiland, Ronco’s chief executive and chief restructuring officer, said the allegations against Stone are “untrue.”
Ronco, a Simi Valley, Calif., gadget maker, last month sought protection from its creditors in the U.S. Bankruptcy Court in Woodland Hills, Calif. The company, which owes its creditors about $32.7 million, has said it intends to sell its assets.
Richard F. Allen, a former Ronco chief executive who also is a shareholder, now is arguing in court papers that Stone’s $400,000 salary should not be paid until a “full investigation” is completed of the misappropriation claims and other allegations of misconduct by Stone, including insider trading at Ronco.
Allen said in court documents that the CFO’s bad behavior followed him to Ronco, where Allen alleges he failed to inform company executives that he’d been accused of mishandling funds and that he’d been stripped of his certified public accounting title last September, according to court documents.
Allen’s position as CEO began in June 2005 and was terminated in Aug. 2006 “for cause,” said Reiland, the current CEO. He said Allen is currently suing the company, and Ronco is currently seeking damages against Allen for alleged breaches of his fiduciary duties while working there.
“The company does not owe him any money. His claim as a creditor has no basis,” Reiland said. Reiland would not elaborate on why Allen was fired.
“Mr. Allen plainly has an axe to grind,” the company said in its initial court response to Allen’s claims on July 10. “Mr. Allen has not offered any admissible evidence to prove that the debtors actually committed any of the violations of which he accuses them.”
Allen said Ronco has been forced to hire an outside firm to do all its accounting work, which has cost nearly $250,000.
“Ronco is unable to complete the bankruptcy requirements without incurring additional accounting costs of $250,000 because insider Ron Stone is unable to do his job,” Allen said. But Reiland said the company has been using extra accountants to compile enormous loads of financial information for the bankruptcy case.
“This is a bankruptcy case,” Reiland said. “The need for reporting is intense. This is a very fast-paced case and we need to augment our resources. It has nothing to do with the ability of Mr. Stone.”
The company said it has no intention of stopping Stone’s salary payments.
During his time at Ronco, Stone has also been accused by Ronco employees of involvement in credit-card fraud and interfering with the subsequent investigation, according to court documents filed by Allen.
Stone allegedly ordered Ronco employee Aaron Guzman, the company’s order motion administrator, to remain silent during the investigation, according to the documents.
Reiland would not comment on those allegations.
Stone has now been in the driver’s seat for two different companies when they crashed into bankruptcy, one of the few things Stone was actually good at, according to former employer Jill Kelly.
“CFO Ron Stone wasn’t doing his job. He wasn’t doing a lot of things,” Kelly said in an Aug. 2005 interview with AVN Magazine, an adult industry publication.
Stone’s problems are only a fraction of the difficulties currently confronting Ronco. Ronco is also suing a group of warehouses that are holding $1 million worth of knives, food dehydrators and kitchen supplies. The warehouses are demanding that Ronco pony up the $250,000 it owes them, according to court documents.
Infomercial icon Ron Popeil, the company’s former owner, is owed $11.7 million. Popeil sold the business in June 2005 for $56 million.
Do y’all know how INSANE this is? First Jill didn’t own JKP Bob Freidland did, yes the same Bob Freidland who disappeared after the company went under. The whole company was suspect from day one. Shady dealings seem to follow Ms Kelly wherever she goes (remember personalporn.com?) Good Lord….
