The Federal Trade Commission (FTC) is pushing back against Benson K. Boreyko, accusing him of systematically draining assets that could otherwise be used for consumer redress. This comes after a September 18, 2015 preliminary injunction initially barred Boreyko from moving or selling any real estate under his control.
The FTC’s February 12th filing details a pattern of alleged violations. Boreyko reportedly liquidated his stake in Arizona Production & Packaging, a business described as profitable and growing. He also unwound his interest in AZLAB under terms the FTC deems questionable. Furthermore, Boreyko allegedly cashed out his entire retirement account and attempted to sell his stake in AZPACK Properties LLC, a move the court blocked last month.
The commission points to ongoing short-selling of residential properties and the attempted sale of valuable real estate that was quietly placed in escrow in October 2014, unbeknownst to the FTC until February 2, 2016. Adding to the FTC’s concerns, Boreyko loaned $1.2 million to Vemma, a company that continues to operate at a financial loss.
An examination of the Arizona Production & Packaging liquidation reveals a stark discrepancy. Before the FTC filed its lawsuit against Vemma, Boreyko sold 18.58% of his stake for five times the amount he later received for his remaining 10.17% interest. This second sale occurred just nine months after the first, and after the FTC had already initiated legal action.
To counter Boreyko’s alleged attempts to hide assets, the FTC is seeking stronger asset preservation requirements within the existing injunction. The commission argues that the declining value of Boreyko’s assets and his actions since the initial order suggest a deliberate effort to make those assets inaccessible for consumer compensation. Such actions, the FTC states, undermine the purpose of the court’s order and must be stopped.
If the FTC’s request is approved, Boreyko would be required to maintain the value of his real estate holdings and avoid any wasteful actions. He would also need to inform the court and the FTC about any proposed sales or transfers of significant assets. If the FTC objects to a proposed transaction, Boreyko would be prevented from proceeding without court permission. Additionally, he must notify the FTC if the value of any assets on his financial disclosure form changes materially from previously reported figures. Under the proposed changes, any asset transfer or dissipation exceeding $3,000 would require FTC notification, granting the regulator an opportunity to object if the action appears to violate the preliminary injunction.