Securities and Exchange Commission v. Secure Investement Services, Inc., et al

Filing 998

ORDER signed by District Judge Garland E. Burrell, Jr. on 5/8/2017 GRANTING 995 Motion to pay unclaimed funds. The scheduled 5/15/2017 hearing on the motion is VACATED. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

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ORDER

v.

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No. 2:07-cv-01724-GEB-CMK

SECURE INVESTMENT SERVICES,
INC.; AMERICAN FINANCIAL
SERVICES, INC.; LYNDON GROUP,
INC.; DONALD F. NEUHAUS; and
KIMBERLY A. SNOWDEN,
Defendants.

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Court appointed Receiver Michael J. Quilling filed a

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motion

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authority

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States Treasury.

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seven

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checks sent to them, and consistent with the court approved Final

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Report

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stated on its face that it would be void if not cashed within 90

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days.

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in

of

this
to

the

and

action

pay

on

unclaimed

April

4,

2017,

receivership

in

funds

which
to

he

the

seeks
United

The Receiver explains in the motion that fifty-

investors

Distribution

never

Plan,

cashed

each

or

otherwise

mailed

negotiated

distribution

check

That time period has expired.
The Receiver provides the following explanation for his

request in the motion:
The
total
of
the
unclaimed
funds
is
$26,668.22. There are 695 investors who did
cash their checks.
Their claims total
$25,370,801.18. The cost of postage to mail
695 new checks would total $319.0 ([$0].46 x
695)[,] which would leave a balance of
426,348.52 to distribute against the claims
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of
$25,370,801.18
for
a
distribution
percentage of 0.00104%[.]
Accordingly, most
of the distribution checks would be for only
a couple of dollars.
Moreover, such a
procedure would require the case to remain
open for several more months.

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Receiver’s Mot. 2:23–3:2, ECF No. 995.

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The Receiver further explains:

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[T]he only practical way to close out this
receivership is for the Court to authorize
the receiver to send the residual balance to
the [United States Securities and Exchange]
Commission, which will then transfer those
funds to the United States Treasury.
The
Receiver
therefore
requests
an
order
directing the issuance of a check or money
order for the residual balance, along with
any funds received in the future by the
Receiver, made payable to the “Securities and
Exchange Commission” and mailed to Enterprise
Services Center, Accounts Receivable Branch,
6500 South MacArthur Boulevard, Oklahoma
City, OK 73169.
The check or money order
will be accompanied by an appropriate cover
letter identifying the receiver, the case
name, the civil action number and the court
authorizing the transfer.

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Id. at 3:13–22 (citation omitted).

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The

Receiver

also

states

he

conferred

with

the

Securities and Exchange Commission and that it does not oppose
the

motion.

Id.

at

5.

This

lawsuit

was

initiated

by

the

Securities and Exchange Commission and it asked the court to
appoint the Receiver.
“Where distribution to identifiable injured parties is
not feasible or appropriate, the money disgorged by the defendant
is paid to the Treasury.”
(S.D.N.Y. 1997).

S.E.C. v. Drexel Burnham Lambert, Inc.

Since the Receiver has shown that distribution

of the remaining funds to the investors is impracticable, the
motion is GRANTED.

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The Receiver is authorized to pay the residual balance

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of funds totaling $28,668.22, as well as any funds received in

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the future by the Receiver in connection with the receivership

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estate, to the Securities and Exchange Commission for remission

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to the United States Treasury.

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The check or money order shall be made payable to the

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“Securities and Exchange Commission” and mailed to Enterprise

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Services Center, Accounts Receivable Branch, 6500 South MacArthur

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Boulevard, Oklahoma City, OK 73169.

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The check or money order shall be accompanied by an

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appropriate cover letter identifying the receiver, the case name,

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the civil action number and the court authorizing the transfer.

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The

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received pursuant to this Order to the United States Treasury.

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Securities

and

Exchange

Commission

shall

send

the

funds

In light of this order, the scheduled May 15, 2017
hearing on the motion is vacated.

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IT IS SO ORDERED.

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Dated:

May 8, 2017

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