Ruff, Fired From FundAmerica, Will Form Clone

If you can’t beat ‘em, join ‘em.

That’s what economist and one-time doomsayer Howard Ruff is doing--with a slight twist.

Fired this summer as president of FundAmerica Inc., Ruff disclosed Tuesday that he is forming a clone--a multilevel marketing company that offers the same services as FundAmerica but is structured to avoid the legal problems that have plagued the Irvine firm.

Ruff--in the Oct. 22 edition of his newsletter, the Ruff Times--said he is selling nearly all of his business interests, including a training facility known as the Jefferson Institute, so that he can focus on the new company Main$treet Alliance.

“This is truly the crown jewel of my business career,� Ruff said.

Main$treet Alliance on the surface seems like a sequel to FundAmerica--members get rebates on things such as telephone calls, cruises, hotel accommodations and can participate in an accelerated mortgage payment plan.

FundAmerica offered similar services. But regulators in several states alleged the company was an elaborate pyramid scheme. The company would sell memberships wholesale in packages to existing members, who would sell single memberships retail to an ever widening pool of participants. Many package buyers lost money when they could not find new members.

Ruff said Main$treet Alliance will not sell memberships on a wholesale basis.

FundAmerica, which is now in Chapter 11 bankruptcy and is currently barred from selling memberships, has pleaded not guilty to criminal charges against it in Florida as has the company’s founder and former president, Robert T. Edwards.

Ruff became FundAmerica’s president after Edwards stepped down because of his legal problems. Ruff was fired after just one week by FundAmerica’s parent corporation after he made critical comments about the company’s former management.

He said then that he was thinking about starting a similar company.

“The Main$treet Alliance can help you create a recession-resistant business with fantastic opportunity, no risk and no required capital,� Ruff said in his newsletter. “If you catch this vision, you may look back on this day as the first day of the rest of your life.�

Ruff is charging $190 as a membership fee for everyone except current subscribers to his newsletter, though he has offered to let anyone who bought a FundAmerica membership from him join Main$treet for only $20. FundAmerica charged $140.

Main$treet Alliance members can earn bonuses and commissions for bringing in new blood. And they can work their way up to different positions including what Ruff calls “an executive.� He said there were three additional positions above the rank of executive. FundAmerica had a multitiered sales force, labeling some of its representatives “presidential directors.�

“At the end of a year of consistent effort, you might be making several thousand dollars a month, enough to consider making this a full-time business,� Ruff said.

FundAmerica President Mitchell Blumberg--facing the prospect of having a trustee appointed to run his firm during a bankruptcy hearing today--said he wasn’t surprised by Ruff’s announcement.

“It’s flattering to know Howard Ruff and others who have had some connection with FundAmerica in the past are so impressed with the underlying concept, values and business opportunities represented by FundAmerica that they have attempted to imitate us,� Blumberg said.

The California attorney general’s office, which declared that FundAmerica was a pyramid scheme, said it had not seen a copy of Ruff’s plans but said he doesn’t need advanced approval to run a multilevel marketing company here.

A spokesperson, however, said that what got FundAmerica into trouble was the sale of memberships on a wholesale basis, creating an underground trading market for blocks of unused memberships. Ruff said this wouldn’t happen with Main$treet Alliance.

“Could a huge legal fiasco happen with us as it has with other networks?� he asked. “I don’t think so. I’m a fast learner.�