At 11 a.m. Monday, Front Sight Firearms Training Institute and its president, Ignatius Piazza, went into receivership.
All financial transactions involving the firearms training facility -- from accepting payment for classes to paying staff and vendors -- must take place through a court-appointed administrator.
The facility and all assets have been seized by the court, down to the hundreds of firearms included as part of new members' benefits.
However, despite the ruling, this weekend at Front Sight everything was "business as usual," according to Operations Manager Rick Morello.
He said he knew nothing about the legal proceedings. "We have a big weekend coming up with a full schedule of classes," Morello said. "Business is booming."
The ruling, handed down by U.S. District Judge James Ware in San Jose, Calif., had its beginning in November 2005 when Stacy James, Bill Haag and Michael Schriber filed a class action suit against Piazza on behalf of themselves and other qualified Front Sight members.
The suit mentions "violations of RICO, unfair advertising and competition, Nevada Sale of Subdivided Land Act, fraudulent conveyances, Consumer Legal Remedies Act, Interstate Land Sales Full Disclosure Act, breach of contract and fraud," all based on Piazza's sale of lifetime memberships.
RICO is the acronym for the federal Racketeer Influenced and Corrupt Organizations Act, originally used to target the Mafia and similar organizations.
The three men allege the price of the memberships they and the members of the class purchased were artificially inflated as a result of misrepresentations and non-disclosures.
On October 15, 2007, a settlement was reached and Ware dismissed the suit with the stipulation Front Sight live up to the negotiated terms. A settlement fund of $8,050,000 secured by a lien on Front Sight's assets would let the class foreclose if the fund was not fully funded by October 15, 2008.
Piazza was ordered to put 10 percent of Front Sight's monthly gross revenues into the settlement fund and provide financial documentation showing he was meeting his obligation. He complied, although according to the plaintiff's court filings, the payments were not timely, which comes as no surprise to former employees and suppliers in Pahrump.
The settlement also said Piazza had to allow members who were part of the suit to use their Front Sight memberships until the settlement fund was fully paid. Further, he was ordered by the court not to retaliate or make derogatory remarks against James, Haag and Schriber.
According to C. Keith Greer, attorney for the class, Piazza violated all the agreed upon terms.
At the end of the prescribed year, the fund was short by more than $5.4 million.
The day after the fund came up short, Piazza send a letter to everyone involved in the suit, saying Front Sight was no longer obligated to make additional monthly payments because the class action had forced the first mortgage holder on the property to foreclose.
"This is a lie as no one foreclosed on the property on that day or any day since," said Greer.
Piazza's letter also said Front Sight offered to increase its monthly contribution to the settlement fund from 10 to 20 percent.
Greer said bluntly, "That was also a lie."
But Piazza didn't stop there. He told class members they were "forever banned from Front Sight," which was another violation of the terms.
The same day Piazza sent a letter to non-class members, declaring:
"After they attended over 200 Front Sight Courses and pocketed $830,000 out of the first million dollars I paid timely into the Class Action Settlement Fund, the three malcontents and their ambulance-chasing attorney tried to kill Front Sight and terminate your membership by forcing us into foreclosure. So I cut them (and their followers) off at the knees!
"In this letter I reveal all the gory details and show you how the new Front Sight turned the tables on these back-stabbing saboteurs."
According to Greer, "Defendant Piazza also boasts that, in violation of the court order against encumbering the property, he created Front Sight Management II and signed a 99-year lease with the old Front Sight entity, leasing the land, water rights, entitlements, equipment, weapons, licenses, trademarks, copyrights, intellectual property, Internet sites, accounts, etc. Every asset the old Front Sight had is now leased by the new Front Sight entity."
Greer said it is clear Front Sight "violated every aspect of the court order and settlement agreement."
He added that Piazza did so "notoriously" and "in a manner that flaunts disrespect for the law and the judicial system."
Piazza's gorilla marketing technique of sending frequent e-mails with special price offers to prospective members give Greer and his clients easy access to information. They used Piazza's own words as evidence to show the court Piazza and Front Sight have the money to satisfy the settlement obligation.
On December 30, 2008, Piazza e-mailed members saying Front Sight had doubled in students, members and net worth each year for 12 years. He said, "While others are laying off people, we are hiring." He also said Front Sight had been offered a $25 million letter of credit.
Taking Piazza at his printed word, in March, the class asked to have Piazza appear in court with financial documentation Piazza agreed to supply in the settlement agreement.
In fact, Greer asked Piazza to live up to all the stipulations in the settlement, including paying the claims administrator and stopping interference with the membership rights of class members.
Greer also asked the court to order Piazza to stop publishing disparaging remarks about class members.
Ware granted the request, setting the hearing date for date for March 23.
Piazza did not appear, nor did he send any representative to appear on Front Sight's behalf. He did, however, fire his attorney at the last minute, which the judge called an "eleventh-hour dismissal" when he issued an order for Piazza to show cause why he should not be held in contempt of court and subject to sanctions for failing to appear.
That hearing to show cause was held Monday, resulting in Ware's decision that Front Sight had defaulted on its agreement with the class. All assets belonging to Front Sight and Piazza were seized by the court.
An administrator was appointed to run the organization.
