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American HomeHealth: From cleaning up to financial ruin

The St. Petersburg company seemed on the cusp of success with a Super Bowl ad and a Target contract.

By James Thorner, Times Staff Writer
Published September 30, 2007

The Super Bowl XL halftime show had ended. Ruly Lora was focused less on the big game than on the big commercial that would launch his health care products to a national audience of more than 100-million.

Surrounded by co-workers and investors of St. Petersburg's American HomeHealth Inc. on Feb. 5, 2006, Lora gazed at the big screen at his Super Bowl party at the St. Pete Times Forum in Tampa.

There, in the glow of the $3-million, 30-second TV spot, were his hopes for PS: The New Clean. Timed to the Super Bowl, AHH was placing its sprays, soaps and cleansers in more than 1,000 Target stores across the United States. The goal: at least $100-million in sales within a year.

Amid the handshaking, backslapping and congratulatory speeches, colleagues noticed something unusual on Lora's face. They were tears of joy.

The crash soon followed the launch. Within six weeks, PS: The New Clean had lost the flagship Target account and Lora's products were relegated to discount bins.

Within six months, AHH struggled to make payroll and by the first anniversary of the Super Bowl ad, the company was effectively out of business and vacating its offices in the First Central Tower in the heart of downtown St. Petersburg at Fourth Street and Central Avenue.

About 150 private investors lost more than $9-million and await a full accounting of where the money went. Among the financially scorched were top names among the St. Petersburg business elite.

Lawsuits swirl around Lora to collect some of the millions the company owes suppliers and subcontractors. He resorted to a polygraph exam this summer to deny accusations of theft.

"Let's not forget it's our own greed that got us into this. It was like going up to the poker table," said investor Bob Bolline, president of Nautical Structures, an 80-employee crane manufacturer in Largo. "The only solace is that I wasn't the only one."

Said Tampa's Dave Medich, another AHH investor and a company consultant: "It's nothing short of amazing. And not in a good way."

Raul Leonides "Ruly" Lora formally introduced the idea for PS: The New Clean in early 2004. In his early 50s, the Cuban-born Miamian had spent his career in a number of marketing jobs.

He moved to St. Petersburg in 1998 and set up a business called Transactional Finance Services. One business connection was Metrex Research Corp., a maker of disinfectants and antiseptic soaps used by dentists.

Lora's plan was to reformulate Metrex's active ingredient with consumer-friendly fragrances. He'd retail the PS brand to moms fearful of germs in the age of SARS and anthrax. As a premium brand, PS would charge about a dollar more per bottle than leading competitors Clorox and Lysol.

Portrayed as a super salesman by all who know him, Lora found powerful allies for his start-up. David Meehan, his neighbor in St. Petersburg's Waterway Estates, is chief executive of Bankers Insurance Co. Bankers is one of city's best-known privately held companies and was based in the same downtown office tower as Lora. Meehan became an adviser and was rewarded with a place on the board and 50,000 shares of company stock.

Meehan said Lora presented himself as a semi-retired millionaire bored with boating and looking for a new business venture.

With the planned Super Bowl ad as its ace in the hole, the company began sales calls to grocery stores, drug store chains and discount retailers nationwide. Investors were sold on the prospect of $176-million in sales and $49-million in profits in 2006.

Georgia electronics entrepreneur Dan Ellsworth put in nearly $1-million. Darryl A. LeClair of Echelon Development in St. Petersburg invested $75,000. Bankers insurance founder and owner Robert Menke put in $100,000.

"It was great idea a lot of people embraced. The product was a product everyone was using," Meehan said. "We thought he had a winner."

But before the consumer launch in 2006, tongues began to wag that Lora, who demanded self-denial from subordinates, had a taste for expensive "toys."A pattern emerged: A large haul of investment dollars coincided with large purchases.

It happened in December 2004, when the company collected close to $250,000 from an early stock offering. Lora leased an $80,000 Jaguar. The office got a $14,000 stereo system. During Super Bowl month, when interest in the company peaked, he took out a mortgage on a $454,000 waterfront condominium in Miami and bought his wife a diamond ring.

Since the money boundaries between AHH and Transactional Finance Services were fluid, investors and employees weren't always sure which company covered the bills.

Lora kept a personal assistant, whose duties included weekly washings of his car and fetching lunches from the Renaissance Vinoy Resort. Looking every inch the tycoon, he ruled the roost with Saks Fifth Avenue suits, monogrammed shirts, pearl cuff links and a Rolex watch.

In the offices on the 12th floor of First Central Tower, also known as the BB&T building, staff swelled to 26, including Lora's wife, Catherine, and his brother Arol. AHH bought or leased nine company cars, including a $75,000 Range Rover for Lora's wife.

"Everybody had a company car. The bum who slept on the bench outside, he had a company car," said Steven Ivester,a Miami entrepreneur and founder of telecom VoIP Inc., who invested $900,000 and persuaded friends and colleagues to do likewise.

The lively spending hid a fatal flaw: By the time AHH lined up the Target deal in November 2005 and bought the Super Bowl time slot, it was buckling financially.

In January 2006, three weeks before the Super Bowl, Bankers Insurance arranged a $1.5-million emergency loan. Lora didn't have the money to buy the TV spot. He offered up company stock as private collateral.

The Super Bowl did wonders for drawing more investors. Ivester dropped in his first check, for $200,000. Alfa Life Insurance, an Alabama public company, put in almost $700,000.

But in early March, with no money forthcoming for AHH to run follow-up ads, Target laid down the law: Slash prices or pull the product. The soaps and cleansers lingered in the bargain bins a couple more months, but AHH had lost its premier account.

"Target won't pay until the product goes through the register. It was sitting on the store shelves. American HomeHealth pushed it in but they couldn't pull it through," said AHH public relations adviser Jack Glasure.

The company continued to expand into chains like Publix and Albertsons, eventually reaching 9,600 stores. But it could never sell enough to make money, sabotaged by its ad budget. By the summer of 2006, the company struggled to meet payroll and suffered the first of many lawsuits. It defaulted on a seven-figure deal with the Tampa Bay Lightning to display the brand on the St. Pete Times Forum ice-cleaning Zamboni, trash cans and soap dispensers.

"It was flying on hunches, promises and hope-to-be's," said Bolline of Largo's Nautical Structures.

Miami's Ivester threw another $400,000 into the company in August 2006 to cover overdue bills from Metrex, the maker of PS's key ingredient. He complains that Lora withheld the full extent of AHH's indebtedness and legal troubles, an accusation backed up by other investors and employees. By October, Lora had defaulted on the Bankers Insurance loan. Worried an ex-employee was spilling bad blood among investors, he hired a private eye to find the culprit.

As the company shed retail accounts, Lora pushed his next big deal. In November 2006, he signed an agreement with Universal Studios. The 3-year, $3-million sponsorship deal would place PS logos and banners throughout the California and Florida theme parks. Two weeks later, the deal crumbled when Lora defaulted on the first $250,000 payment.

Ivester turned up in January to find the company effectively shuttered. He dashed off personal checks to cover some employees' wages and keep the phones turned on.

"I showed up after repeated requests for financials," Ivester said. "The employees are gone. There's no receptionist. There's no financial personnel. The Internet is turned off. They're down to one phone line. Several lawsuits are filed. They're $48,000 behind in rent."

Facing a massive loss of confidence, including from previous allies like Meehan and Bolline, Lora stepped down. Ivester formally voted him out in March by rustling up 75 percent of shareholders. Bankers Insurance, holding Lora's own stock in collateral, voted with Ivester.

This spring, Lora signed up for unemployment and, lashed by accusations he benefitted personally from the ruined company, had his attorney arrange a polygraph to deny theft rumors.

Though admitting lapses in judgment, Lora casts much of the blame for his downfall on Ivester. Lora said Ivester appointed himself the company's financial savior in August 2006 and persuaded Lora to scuttle alternative financing deals.

Lora's version is contradicted by his own top executive, Stephen Lewis. Lewis said he and Lora spent the months after Ivestor's pitch traveling to New York to lobby investment bankers.

Lora vows to resurrect the brand, selling products via direct-marketing outfits like the Home Shopping Network. He claims a majority of shareholders, including Banker's Insurance, back his second coming. Bankers is considering the deal.

"I won't make the same mistake twice of walking away from my business," Lora said.

Former employees expressed disbelief anyone would leave finances in Lora's hands again. They include Justine Burke, AHH's former head of communications and investor relations.

"It's almost like he forgot he was the steward of other people's money," Burke said.

Still, some investors are willing to give Lora a last shot, if only because the alternative is writing off millions of dollars.

"I'm not a happy camper. I'm not pleased with Ruly's management decisions," Bolline said. "The company's a twitching corpse. That's all that's left."

James Thorner can be reached at thorner@sptimes.com or 813-226-3313.

Key dates in American HomeHealth's history

March 2004: Ruly Lora establishes American HomeHealth to market antiseptic soaps and cleansers. The company isn't registered in Florida.

August 2004: Lora issues millions of shares of "founders stock" to himself and close business associates at one-tenth of 1 cent per share.

November 2004: Lora gets new investors who are told they could multiply their investment seven times over. Company projects sales of $175-million.

December. 2004: After raising an initial $300,000, Lora leases an $80,000 Jaguar. The company pays for his wife's $75,000 Range Rover.

December 2005: After inking a deal for a 30-second, $3-million Super Bowl ad, the company can't meet expenses.

January 2006: In anticipation of the Super Bowl launch, Target starts accepting shipments of AHH products. Lora takes an emergency $1.5-million loan from Banker's Insurance Co. to cover the Super Bowl ad.

February 2006: The Super Bowl a success, Lora closes on a $465,000 waterfront condominium in Miami.

March 2006: Target kills the deal. It blames AHH for failing to market properly. In a letter to investors in April 7, Lora suggests it was his decision, not Target's, to remove the product.

July 2006: The company fails to make payroll. Employees wait a couple weeks to get checks.

November 2006: His company in debt, Lora agrees to pay Universal Studios $3-million to be the official hand sanitizer of its theme parks.

December 2006: Lora blows the Universal deal: He defaults on the first installment of $250,000.

January 2007: Miami investor Steve Ivester visits AHH's offices. Staff has been laid off, utilities disconnected and rent unpaid.

March 2007: Ivester engineers most stockholders to vote Lora off the board.

June 2007: Lora takes a polygraph exam and says the results exonerate him from claims he stole from AHH. Written results available by subpoena.

August 2007: Lora vows to restart the brand. In a note to investors, says AHH's downfall was "orchestrated by a conspiracy of individuals" under "threats of financial asphyxiation."

[Last modified September 28, 2007, 21:01:18]