WASHINGTON, DC — Ronco chief financial officer Ronald Craig Stone faces allegations from Jill Kelly for misappropriating funds and driving her adult movie company, Jill Kelly Productions, into bankruptcy. Stone was fired after the company filed for bankruptcy in August 2005. He joined Ronco shortly afterward. John Reiland, Ronco’s chief executive and chief restructuring officer, said the allegations against Stone are “untrue.” Stone has not publicly commented on Kelly’s statements.
Ronco, a Simi Valley, CA gadgetmaker, recently sought protection from its creditors in the U.S. Bankruptcy Court in Woodland Hills, CA. The company, which owes its creditors about $32.7 million, has said it intends to sell its assets.
Richard F. Allen, a former Ronco CEO and 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 Stone 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.
Allen’s position as CEO began in June 2005 and was terminated in August 2006 “for cause,” said Reiland, the current CEO, to the Associated Press. He said Allen is currently suing the company, and Ronco is seeking damages against him for alleged breaches of his fiduciary responsibilities 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.
“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 of the fraud, according to court documents filed by Allen.
