updated 3/14/2007 8:59:31 PM ET 2007-03-15T00:59:31

A federal judge ruled Wednesday that the founder of a debt management firm accused of cheating thousands of debtors is in contempt of court for trying to shield assets from a fund set up to repay the former customers of his company.

U.S. District Judge Peter Messitte ordered Andris Pukke to turn over roughly $40 million worth of disputed holdings that include proceeds from an Internet gambling venture, a Belize housing development and a California mansion.

Messitte said Pukke had not been forthcoming with a receiver the judge appointed to find Pukke’s assets. He said Pukke’s credibility was “zero” and that he continued to obscure his holdings even during lengthy testimony during the 10-day contempt hearing.

“I cannot let pass the duplicity I found in this case,” Messitte said.

Pukke had agreed to pay a restitution fund of up to $35 million to settle a lawsuit filed by the Federal Trade Commission, which claimed he and his firm, AmeriDebt, used hidden upfront fees to unfairly collect $172 million from about 300,000 cash strapped debtors. Pukke allegedly used much of that money to fund a lavish lifestyle.

But only about $10 million has been transferred to the restitution fund, and after fees and attorney expenses, only about $4 million remains to pay back debtors. The FTC said last month that likely wasn’t enough for any significant repayment program.

FTC lawyer Jeanne Crouse said Wednesday’s ruling was good news for consumers. “Every day Mr. Pukke hides assets is a day that distribution to victimized consumers is denied,” Crouse said.

Messitte froze Pukke’s assets in 2005 while the FTC case was still pending, and appointed the receiver, Robb Evans & Associates to track down his holdings. In the fall, the receiver asked Messitte to hold Pukke in contempt, saying he was using family and friends to hide substantial sums.

“These are all things that were done with a wink and a nod, a wink and a handshake for the benefit of Mr. Pukke,” Messitte said Wednesday of transactions involving people close to Pukke.

Pukke did not comment after the ruling. Messitte said he would consider possible jail time if Pukke continues to shield his funds.

The receiver claimed the hidden funds included a $10 million stake in a project to build multimillion dollar homes near a Belize game preserve, a purported interest in an online gambling venture worth $20 million, Latvian bank accounts and a $6.45 million Laguna Beach, Calif., mansion that was bought in the name of a friend.

The receiver also wanted the friend, Peter Baker, held in contempt for his role in allegedly helping Pukke. Messitte agreed, ordering him to turn over the mansion to the receiver.

In his testimony, Pukke denied the charges that he was not forthcoming about his holdings.

He said he invested $3 million in the Belize game preserve but lost much of his stake after declaring personal bankruptcy in 2005. He said the Latvian bank accounts were controlled by his father, who used the money to help pay his son’s hefty legal fees. And his attorney said he only advised Baker on the house deal.

The now-defunct AmeriDebt, once headquartered in Germantown, was among the largest companies set up to help customers struggling under heavy debt. The credit counselor was supposed to help them consolidate their debts, lower their payments and give them advice.

But the FTC claimed AmeriDebt charged sometimes sizable upfront fees that customers mistakenly thought were their first payments toward their debts. In his settlement with the FTC, Pukke admitted no wrongdoing, but agreed to help set up the restitution fund.

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