GGW Trustee Says Francis Made Fraudulent IP Transfers

May 9, 2013 4:45 PM PST

LOS ANGELES — A U.S. bankruptcy court this evening approved an emergency motion by the trustee overseeing the Chapter 11 filing of several Girls Gone Wild companies to review emails stored on computers and servers in its offices.

Trustee Todd Neilson told the court that he needed to review the emails immediately because Girls Gone Wild founder Joe Francis fraudulently transferred company trademarks, including Girls Gone Wild and Guys Gone Wild brands, to an offshore St. Kitts and Nevis company he owns.

The intellectual property, core to GGW's enterprises, expire May 31, Neilson told the court.

"Path Media contends, through its representative, that on Feb. 25, 2013 (two days before the debtors filed for bankruptcy), it terminated the debtors’ license to use the trademarks and entered into a short-term license agreement that expires on May 31, 2013," Matthew Heyn, an attorney for Neilson, told the court in a declaration.

"The trustee seeks to revoke the cancellation of GGW Marketing and file a voluntary Chapter 11 petition for GGW Marketing, in part, so that GGW Marketing may recover the fraudulent transfer of the trademarks to Path Media," the declaration said.

"Expedited relief is necessary so that the trustee may revoke the cancellation of GGW Marketing, file a voluntary petition for GGW  Marketing and commence a fraudulent transfer action prior to the May 31, 2013, expiration of the short term license agreement."

U.S. Bankruptcy Judge Sandra Klein granted the trustee's motion in its entirety, allowing him to review email files that were sent to or from the email accounts ending in @girlsgonewild.com and @ggwbrands.com of “four high-level managers and key executive of the debtors” that are currently stored on computer equipment in company office space and in cloud storage.

"This court shall retain jurisdiction to resolve any disputes arising or related to this order including any discovery disputes that may arise between or among the parties and to interpret, implement and enforce the provisions of this order," Klein ordered this evening.

Francis’ Girls Gone Wild empire filed for Chapter 11 bankruptcy protection in February.

Among the four largest creditors that were listed in the filing, the largest was $10.3 million in disputed debt with Wynn Las Vegas. The dispute stems from a $2 million gambling debt Francis incurred during a trip to the resort in Feb. 2007.

A judgment last year of $7.5 million was given to the hotel for defamation “stemming from Francis’s public attack falsely accusing Wynn of deceiving customers,” according to the suit. In September, a jury awarded Wynn another $20 million in punitives for slander.

Wynn’s attorneys recently targeted Francis’ GGW assets held in affiliates called GGW Direct LLC, GGW Brands LLC, GGW Events LLC and GGW Magazine LLC.

Last month, Klein made a ruling on appointing Neilson as trustee after creditors, including Wynn Las Vegas, accused Francis of using the business to dodge his debts.

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