Securities and Exchange Commission v. Bivona et al

Filing 190

STIPULATION AND ORDER re 185 Granting the receiver's Request to Approve a Settlement of a Sister Receiver's Demand for Control of Assets filed by Michael Maidy. Signed by Judge Edward M. Chen on 6/6/17. (bpfS, COURT STAFF) (Filed on 6/6/2017)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
)
)
)
)
Plaintiff,
)
)
v.
)
JOHN B. BIVONA; SADDLE RIVER )
)
ADVISERS, LLC; SRA
MANAGEMENT ASSOCIATES, LLC;)
)
FRANK GREGORY MAZZOLA
)
)
Defendants.
)
)
SECURITIES AND EXCHANGE
COMMISSION,

Case No. 3:16-cv-1386
[PROPOSED] ORDER AND
STIPULATION GRANTING
THE RECEIVER’S REQUEST
TO APPROVE A
SETTLEMENT OF A SISTER
RECEIVER’S DEMAND FOR
CONTROL OF ASSETS
Date: No Date
Time: No Time
Judge: Edward M. Chen

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[Proposed] Stipulated Order Granting Receiver’s Request to Settle An Asset Demand of a Sister Receiver

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The parties, U.S. Securities & Exchange Commission (“SEC”), counsel

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for defendants John Bivona and Saddle River Advisers, LLC (“Saddle River”),

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Frank G. Mazzola individually (Mazzola”), appearing in pro per, and counsel

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for the Receiver, hereby stipulate and agree to the entry of an order as follows:

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1.) The Receiver in this matter, Sherwood Partners Inc. (“Sherwood”),

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received notice of an investor demand for 1,250 shares of Square Inc. (“the

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Demand ”) on December 8, 2016, from Kevin Duff Esq., the court-appointed

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receiver in a sister SEC action in the Northern District of Illinois styled SEC v.

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Neal V. Goyal, Civ. No. 14- CV-3900. A copy of the notice of the Demand, and

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its attachments setting forth its basis, are appended to this proposed stipulated

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Order as Exhibit A.

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2.) Prior to this Court’s Order Appointing Sherwood as Receiver (“the

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Order”), Mr. Duff had given notice to defendant Bivona of his appointment in

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the SEC sister action in the Northern District of Illinois and made demand on

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Bivona that upon the happening of a liquidity event in the shares of Square,

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that the 1,250 shares belonging to the Goyal Receivership estate be distributed

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to him. That process was underway prior to the Order, but had not been

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completed with the transmission of those 1,250 shares to Mr. Duff by

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defendant SRA Advisers.

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3.) In his Demand, made on behalf of his Receivership Estate in the

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Goyal action, Mr. Duff raised the legal issue of whether that action took

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substantive precedence over the present action insofar as it seeks to recover the

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exact amount of Square shares to which it holds in an SRA fund, due to the

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filing of a notice in this District pursuant to 28 U.S.C. 754 on June 12, 2014,

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prior to the filing of the instant action by the SEC on March 22, 2016. In effect,

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Mr. Duff’s Demand raises the issue of whether the filing of a notice pursuant to

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28 U.S.C. 754 pre-emptively removed the 1,250 shares of Square held by the

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[Proposed] Stipulated Order Granting Receiver’s Request to Settle An Asset Demand of a Sister Receiver

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defendants in this action from this Court’s jurisdiction and in turn, from

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Sherwood’s control.
4.) Sherwood, through counsel, has responded to the Demand and raised

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issue with its jurisdictional underpinning, that is, whether a pre-existing and

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properly-noticed receivership in one federal district court, such as the Goyal

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receivership, can essentially pre-empt jurisdiction over a specific asset subject

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to a later imposed receivership in a different federal district court, such as this

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one.

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5.) The receivers in both SEC actions agree that at the liquidation value

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of $17 a share, which was received by Sherwood on March 2017 for the sale of

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all the remaining Square shares held by Sherwood for the SRA funds, the total

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amount of the Demand is $21,250. The receivers in both SEC actions agree

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that to litigate the novel legal issue raised by the Demand before either or both

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federal district courts for the Northern Districts of California and Illinois,

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would likely cost in excess of the amount at issue, or at least erode its value in

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a material amount, rendering the very point of the adjudication a wasteful

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exercise.

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6.) As a result of the agreement of the two receivers referred to in

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Paragraph 5, they have agreed to settle the Demand for the amount of $20,000

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in order to avoid the wasteful and time-consuming litigation that would be

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necessary to have either, or both federal courts’ consider the legal issue of pre-

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emption. All parties to the Stipulation agree that such litigation would likely be

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wasteful of estate assets. As a result the plaintiff SEC in this action, as well as

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in the Goyal action have no objection to the proposed Order settling the

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Demand. Counsel for defendants Bivona and SRA Advisers in this action, and

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defendant Mazzola acting in pro per, likewise, have no objection to the

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proposed Order.

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[Proposed] Stipulated Order Granting Receiver’s Request to Settle An Asset Demand of a Sister Receiver

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7.) The settlement amount of $20,000, which is $1,250 less than the

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amount of the Claim, takes into consideration the 4 % “set aside fund” amount

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($860) and a remainder amount ($390) to satisfy a possible share shortfall in

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any as yet undistributed Square shares going to SRA investors.

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8.) On May 17, 2017, the Honorable Rebecca R Pallmeyer of the U.S.

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District Court for the Northern District of Illinois approved the settlement

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amount that will be received in the Goyal matter. A copy of Judge Pallmeyer’s

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order approving the settlement is appended to this proposed stipulated Order as

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Exhibit B.

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THEREFORE, based on the agreement of the two receivers set forth

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above, and the statement of non-objection by the Plaintiff SEC and the

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defendants herein, the Court hereby approves the settlement amount of $20,000

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for the settlement of the jurisdictional dispute over the 1,250 shares of Square

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as being the most practical and efficient manner of resolving the Demand

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without resort to costly and time-consuming litigation.

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SO STIPULATED.

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Dated: May 30, 2017

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GARTENBERG GELFAND HAYTON
LLP

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By:

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/s/ John W. Cotton
JOHN W. COTTON
Counsel to the Receiver

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DATED: May 30, 2017

SECURITIES & EXCHANGE
COMMISSION
By://s// By Permission (Civ. L.R. 5-1 (i)
JOHN YUN
Attorneys for Plaintiff

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[Proposed] Stipulated Order Granting Receiver’s Request to Settle An Asset Demand of a Sister Receiver

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DATED: May 30, 2017

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DEFENDANTS BIVONA AND SADDLE
RIVER ADVISERS
By://s// By Permission (Civ. L.R. 5-1 (i)
JAHAN P. RAISSI
SHARTSIS FRIESE LLP

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Attorneys for Defendants John Bivona and
Saddle River Advisers

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DATED: May 30, 2017

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DEFENDANT FRANK MAZZOLA, In Pro
Per
By://s// By Permission (Civ. L.R. 5-1 (i)

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FRANK MAZZOLA

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Judge Edward M. Chen

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June 6, 2017

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IT IS SO ORDERED.

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[Proposed] Stipulated Order Granting Receiver’s Request to Settle An Asset Demand of a Sister Receiver

Exhibit A 

Caldera Advisors, LLC
Caldera Equity Fund, LP

&
Blue Horizon Asset Management, LLC
Blue Horizon Partners Fund, LP
Blue Horizon Bio-Energy Fund, LP
Blue Horizon Global Equity Fund, LP
c/o Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, Illinois 60605
[phone] Phone
[phone] Fax
[e-mail]

In Receivership
Kevin B. Duff, Receiver

December 8, 2016
Via U.S. Mail and E-Mail
Michael A. Maidy, Receiver
([e-mail])
Sherwood Partners, Inc.
1100 La Avenida Street
Building A
Mountain View, CA 94043
Re:

United States Securities Exchange Commission v. Neal V. Goyal, Caldera
Advisors, LLC, and Blue Horizon Asset Management, LLC, and Caldera
Investment Group, Inc. (“Receivership Defendants”)

Dear Mr. Maidy:
This is to advise you that I have been appointed Receiver for the Receivership
Defendants (as described above), pursuant to an order entered by the Honorable Rebecca R.
Pallmeyer in the case captioned United States Securities Exchange Commission v. Neal V. Goyal,
Caldera Advisors, LLC, and Blue Horizon Asset Management, LLC, and Caldera Investment
Group, Inc., No. 14-cv-3900, pending in the United States District Court for the Northern
District of Illinois, Eastern Division.
Enclosed is a copy of the Court’s order, titled “Order Appointing Receiver,” which
appoints me as Receiver for all assets of whatever kind and wherever situated, of Receivership
Defendants Neal V. Goyal, Caldera Advisors, LLC, and Blue Horizon Asset Managements,
LLC, and Caldera Investment Group, Inc. (the “Receivership Assets”). On July 10, 2014, notice
of the Receivership and this Order was sent to Felix Investments. On July 29, 2014, notice of the
Receivership and this Order was sent to John Bivona at SRA Fund, LLC. Copies of these letters

Michael A. Maidy, Receiver
December 8, 2016
Page 2 of 3
are enclosed. I also have had numerous communications with Saddle River Advisors, LLC,
which similarly has notice of my role as Receiver.
During the course of Neal Goyal’s fraud, he made a private equity investment on behalf
of Caldera Venture Partners, LLC in Square, Inc. All assets of Caldera Venture Partners – which
includes the equity investment in Square, Inc. – were conveyed by an assignment to the
Receivership Estate. A copy of the assignment agreement is enclosed.
On February 24, 2014, Goyal sent a check made out to SRA I LLC in the amount of
$25,000 from Caldera Venture Partners for a Series membership and 125 shares of Square, Inc.
stock. On April 23, 2014, John Bivona of SRA Management Associates LLC sent Neal Goyal a
letter with an accepted subscription agreement for the investment in Series CC-3 (SA) of SRA
Fund I, LLC. A copy of the check written and letter are enclosed.
I previously contacted John Bivona, of SRA Management Associates, LLC, and Susan
Diamond, of Saddle River Advisors, LLC, to determine the value of the investment and options
for liquidation, and had numerous communications in 2015 and 2016.
I was told that the Receivership Estate’s stock underwent a 10-1 split and Caldera
Venture Partners held 1,250 shares with a stock price of $20 per share and that these shares were
subject to a 180-day lockup period that expired in mid-May 2016.
On June 7, 2016, I filed a Motion for Court Approval of the Sale and Liquidation of
Private Equity Investments, which included the liquidation of the 1,250 Square shares of stock.
June 15, 2016, the Honorable Rebecca Pallmeyer granted this Motion. A copy of the Motion and
Order are enclosed.
On June 15, 2016, I sent an email to Susan Diamond to liquidate the 1,250 shares. On
August 30, 2016, Ms. Diamond informed me that in order to receive the Square shares, I would
need to set up a brokerage account. To set up this account, I asked Ms. Diamond for a statement
showing the number of shares and how they are being held.
To date, I have not received a statement showing the number of shares held and the name
of the entity holding the shares. Accordingly, please send any information and a statement or
certificate showing the number of shares held for me as Receiver for Neal V. Goyal, et al., and/or
in the name of Caldera Venture Partners, LLC and/or Neal Goyal to the address below:
Kevin B. Duff, Receiver
Caldera Advisors, LLC
c/o Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, IL 60605
Additionally, it bears noting that the Honorable Rebecca Pallmeyer, a United States
District Court Judge in the Northern District of Illinois, has exclusive jurisdiction over the
Receivership Assets for which I am Receiver, including all such assets located in the Northern

Michael A. Maidy, Receiver
December 8, 2016
Page 3 of 3
District of California. A copy of the Order appointing me as Receiver was filed with the Clerk
of the United States District Court for the Northern District of California on June 12, 2014, and
assigned N.D. Cal. Case No. CV 14 80 182 MISC. A copy is enclosed for your reference.
Thank you for your prompt attention to this matter.
Very truly yours,

Kevin B. Duff, Receiver
Enclosures (13)
cc:

John W. Cotton ([e-mail])
Special Counsel to the Receiver
Gartenberg Gelfand & Hayton LLP
15260 Ventura Blvd., Suite 1920
Sherman Oaks, CA 91403

Case: 1:14-cv-03900 Document #: 17 Filed: 06/06/14 Page 1 of 24 PageID #:101

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
______________________________________
)
UNITED STATES SECURITIES
)
AND EXCHANGE COMMISSION,
)
)
Civil Action No. 1:14-cv-03900
Plaintiff,
)
v.
)
)
Hon. Judge Rebecca R. Pallmeyer
NEAL V. GOYAL, CALDERA
)
ADVISORS, LLC, and BLUE HORIZON )
ASSET MANAGEMENT, LLC
)
)
Defendants,
)
and
)
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CALDERA INVESTMENT GROUP, INC. )
)
Relief Defendant._____)
ORDER APPOINTING RECEIVER
WHEREAS this matter has come before this Court upon motion of the Plaintiff U.S.
Securities and Exchange Commission (“SEC”, “Commission” or “Plaintiff”) to appoint a
receiver in the above-captioned action; and,
WHEREAS the Court finds that, based on the record in these proceedings, the
appointment of a receiver in this action is necessary and appropriate for the purposes of
marshaling and preserving all assets of the Defendants and those assets of the Relief Defendant
that: (a) are attributable to funds derived from investors or clients of the Defendants; (b) are held
in constructive trust for the Defendants; (c) were fraudulently transferred by the Defendants;
and/or (d) may otherwise be includable as assets of the estates of the Defendants (collectively,
the “Recoverable Assets”); and,
WHEREAS this Court has subject matter jurisdiction over this action and personal

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Enclosure 1

Case: 1:14-cv-03900 Document #: 17 Filed: 06/06/14 Page 2 of 24 PageID #:102

jurisdiction over the Defendants, and venue properly lies in this district.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED
THAT:
1.

This Court hereby takes exclusive jurisdiction and possession of the assets, of

whatever kind and wherever situated, of the following Defendants and Relief Defendant: Neal V.
Goyal, Caldera Advisors, LLC, Blue Horizon Asset Management, LLC and Relief Defendant
Caldera Investment Group, LLC (collectively, the “Receivership Defendants”).
2.

Until further Order of this Court, Kevin B. Duff, of the firm Rachlis Duff Adler

Peel & Kaplan, LLC Duff is hereby appointed to serve without bond as the federal equity
receiver (the “Receiver”) for the estates of the Receivership Defendants.
I. Asset Freeze
3.

Except as otherwise specified herein, all assets of the Defendants and Relief

Defendants (collectively, “Receivership Assets”) are frozen until further order of this Court.
Accordingly, all persons, institutions and entities with direct or indirect control over any
Receivership Assets other than the Receiver, are hereby restrained and enjoined from directly or
indirectly transferring, setting off, receiving, changing, selling, pledging, assigning, liquidating
or otherwise disposing of or withdrawing such Receivership Assets. This freeze shall include,
but not be limited to, Receivership Assets that are on deposit with any financial institutions or
other entities, including, but not limited to, banks, brokerage firms and mutual funds. In
particular, the Court enjoins any disbursement of proceeds by the Defendants, their agents,
representatives, employees and officers and all persons acting in concert or participation with
them, whatever business name they may operate under, derived from the sales of interests in
Receivership Defendants, or any of them.

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Case: 1:14-cv-03900 Document #: 17 Filed: 06/06/14 Page 3 of 24 PageID #:103

II. General Powers and Duties of Receiver
4.

The Receiver shall have all powers, authorities, rights and privileges heretofore

possessed by the officers, directors, managers, members, and general and limited partners of the
Receivership Defendants under applicable state and federal law, by the governing charters, bylaws, articles and/or agreements in addition to all powers and authority of a federal equity
receiver, including but not limited to those powers conferred upon a receiver by the provisions of
28 U.S.C. §§ 754, 959 and 1692, Fed. R. Civ. P. 66, and this Order.
5.

The trustees, directors, officers, managers, employees, investment advisors,

accountants, attorneys and other agents of the Receivership Defendants are hereby dismissed and
the powers of any general partners, directors and/or managers are hereby suspended. Such
persons and entities shall have no authority with respect to the Receivership Defendants’
operations or assets, except to the extent as may hereafter be expressly granted in writing by the
Receiver. This order, however, does not dismiss Defendant Goyal’s personal attorneys.
6.

The Receiver may assume and control the operation of any of the Receivership

Defendants and may pursue and preserve all of their claims or interests. The Receiver may
continue and conduct the business, if any, of the Receivership Defendants in such manner, to
such extent and for such duration as the Receiver may deem to be necessary or appropriate, if at
all.
7.

No person holding or claiming any position of any sort with any of the

Receivership Defendants shall possess any authority to act for or on behalf of any of those
Receivership Defendants, unless expressly authorized, in writing, by the Receiver.
8.

Subject to the specific provisions in Sections III through XIV, below, the

Receiver shall have the following general powers and duties:

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Case: 1:14-cv-03900 Document #: 17 Filed: 06/06/14 Page 4 of 24 PageID #:104

A.

To use reasonable efforts to determine the nature, location and value of all
property interests of the Receivership Defendants, including, but not
limited to, monies, funds, securities, credits, effects, goods, chattels, lands,
premises, leases, claims, rights and other assets, together with all rents,
profits, dividends, interest or other income attributable thereto, of
whatever kind, which the Receivership Defendants own, possess, have a
beneficial interest in, or control directly or indirectly (the foregoing
collectively may be referred to as “Receivership Assets” or the
“Receivership Estates”);

B.

To take exclusive custody, control and possession of all Receivership
Assets and records relevant thereto from the Receivership Defendants; to
sue for and collect, recover, receive and take into possession from third
parties all Receivership Assets and records relevant thereto;

C.

To manage, control, operate and maintain the Receivership Estates and
hold in his possession, custody and control all Receivership Assets,
pending further Order of this Court;

D.

To take possession of all bank and investment accounts or securities
accounts owned by or associated with the Receivership Estates or
Receivership Defendants, whether in the name of the Receivership
Defendants or their subsidiaries or affiliates, wherever located
(collectively, the “Accounts”). The Receiver shall have the authority to
open, close, transfer and change all bank, investment and securities
Accounts.

E.

To sign checks on, otherwise withdraw or transfer, trade or otherwise
control the funds and/or securities contained in any Accounts owned or
controlled by, or in the name of, the Receivership Defendants and
Receivership Estate. The Receiver shall also be authorized to add or
delete signers, including those currently authorized on the Account(s).
The representatives of the Receiver initially designated with authority over
these accounts shall be Kevin B. Duff.

F.

To open and maintain new bank accounts in the name of the Receiver for
the use in administering and preservation of the Receivership Estate, using
the Federal Employer Identification Number of the Receivership Estate, at
the Receiver’s discretion.

G.

To take control of, conserve, and liquidate any and all securities or
commodities, owned by or for the benefit of the Receivership Estate, as
the Receiver deems advisable or necessary.

H.

To use Receivership Assets for the benefit of the Receivership Estates,
making payments and disbursements and incurring expenses as may be
necessary or advisable in the ordinary course of business in discharging
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his duties as Receiver;
I.

To take any action which, prior to the entry of this Order, could have been
taken by the officers, directors, partners, managers, members, trustees, and
agents of the Receivership Defendants;

J.

To engage and employ persons in his discretion to assist him in carrying
out his duties and responsibilities hereunder, including, but not limited to,
accountants, attorneys, securities traders, registered representatives,
financial or business advisers, liquidating agents, real estate agents,
forensic experts, brokers, traders or auctioneers;

K.

To take such action as necessary and appropriate for the preservation of
Receivership Assets or to prevent the dissipation or concealment of
Receivership Assets;

L.

To issue subpoenas to compel testimony of persons or production of
records consistent with the Federal Rules of Civil Procedure and
applicable Local Rules, except for the provision of Fed. R. Civ. P.
26(d)(1), concerning any subject matter within the powers and duties
granted by this Order;

M.

To bring such legal actions based on law or equity in any state, federal, or
foreign court as the Receiver deems necessary or appropriate in
discharging his duties as Receiver;

N.

To pursue, resist and defend all suits, actions, claims and demands which
may now be pending or which may be brought by or asserted against the
Receivership Estates;

O.

To prepare a full accounting with regard to the activities of the
Receivership Defendants for the period January 1, 2006 through the date
of this Order;

P.

To take such other action as may be approved by this Court.
III. Defendants’ Duties to Receiver

9.

The individual Receivership Defendants and the past and/or present officers,

directors, agents, managers, members, general and limited partners, trustees, attorneys,
accountants and employees of the entity Receivership Defendants, as well as those acting in their
place, are hereby ordered and directed to preserve, provide immediate access, and turn over to

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the Receiver forthwith all paper and electronic information of, and/or relating to, the
Receivership Defendants and/or all Receivership Assets; such information shall include but not
be limited to books, records, documents, accounts, access codes, security codes, passwords, safe
deposit keys, combinations, and all other instruments, papers, and electronic data. This does not,
however, include documents and files of Defendant Goyal’s personal attorneys that are protected
by the work-product doctrine and attorney-client privilege.
10.

Within ten (10) days of the entry of this Order, the Receivership Defendants shall

file with the Court and serve upon the Receiver and the Commission a sworn statement, listing:
(a) the identity, location and estimated value of all Receivership Property; (b) all employees (and
job titles thereof), other personnel, attorneys, accountants and any other agents or contractors of
the Receivership Defendants; and, (c) the names, addresses and amounts of claims of all known
creditors of the Receivership Defendants. Defendant Goyal shall retain responsibility, and the
Receiver shall assume no responsibility, for preparing and filing Goyal’s personal income tax
returns.
11.

Within thirty (30) days of the entry of this Order, the Receivership Defendants

shall file with the Court and serve upon the Receiver and the Commission a sworn statement and
accounting, with complete documentation, covering the period from January 1, 2006 to the
present:
A.

Of all Receivership Property, wherever located, held by or in the name of
the Receivership Defendants, or in which any of them, directly or
indirectly, has or had any beneficial interest, or over which any of them
maintained or maintains and/or exercised or exercises control, including,
but not limited to: (a) all securities, investments, funds, real estate,
automobiles, jewelry and other assets, stating the location of each; and (b)
any and all accounts, including all funds held in such accounts, with any
bank, brokerage or other financial institution held by, in the name of, or
for the benefit of any of them, directly or indirectly, or over which any of
them maintained or maintains and/or exercised or exercises any direct or
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Case: 1:14-cv-03900 Document #: 17 Filed: 06/06/14 Page 7 of 24 PageID #:107

indirect control, or in which any of them had or has a direct or indirect
beneficial interest, including the account statements from each bank,
brokerage or other financial institution;
B.

C.

Identifying all credit, bank, charge, debit or other deferred payment card
issued to or used by each Receivership Defendant, including but not
limited to the issuing institution, the card or account number(s), all
persons or entities to which a card was issued and/or with authority to use
a card, the balance of each account and/or card as of the most recent
billing statement, and all statements for the last twelve months;

D.

Of all assets received by any of them from any person or entity, including
the value, location, and disposition of any assets so received;

E.

Of all funds received by the Receivership Defendants, and each of them,
in any way related, directly or indirectly, to the conduct alleged in the
Commission’s Complaint. The submission must clearly identify, among
other things, all investors, the securities they purchased, the date and
amount of their investments, and the current location of such funds;

G.

Of all expenditures exceeding $1,000 made by any of them, including
those made on their behalf by any person or entity; and

H.
12.

Identifying every account at every bank, brokerage or other financial
institution: (a) over which Receivership Defendants have signatory
authority; and (b) opened by, in the name of, or for the benefit of, or used
by, the Receivership Defendants;

Of all transfers of assets made by any of them.

Within ten (10) days of the entry of this Order, the Receivership Defendants shall

provide to the Receiver and the Commission copies of the Receivership Defendants’ federal
income tax returns for 2006 through 2013 with all relevant and necessary underlying
documentation. The Receivership Defendants shall also deliver all state licenses, tax
identification numbers, and all other relevant tax information.
13.

The individual Receivership Defendants named in the Complaint and the

Receivership Defendants’ past and/or present officers, directors, agents, attorneys, managers,
members, shareholders, employees, accountants, debtors, creditors, managers and general and

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Case: 1:14-cv-03900 Document #: 17 Filed: 06/06/14 Page 8 of 24 PageID #:108

limited partners, and other appropriate persons or entities shall answer under oath to the Receiver
all questions which the Receiver may put to them and produce all documents as required by the
Receiver regarding the business of the Receivership Defendants, or any other matter relevant to
the operation or administration of the receivership or the collection of funds due to the
Receivership Defendants. In the event that the Receiver deems it necessary to require the
appearance of the aforementioned persons or entities, the Receiver shall make his discovery
requests in accordance with the Federal Rules of Civil Procedure. Nothing in this Order shall
operate as or effectuate a waiver of the attorney-client privilege regarding communications
between Defendant Goyal and his personal attorneys, and Goyal’s personal attorneys shall not be
compelled by this Order to divulge information that would otherwise be protected by the
attorney-client privilege.
14.

The Receivership Defendants are required to fully cooperate with and assist the

Receiver in all respects in fulfilling his duties and obligations. As such, the Receivership
Defendants must respond promptly and truthfully to all requests for information and documents
from the Receiver.
IV. Access to Books, Records and Accounts
15.

The Receiver is authorized to take immediate possession of all assets, bank

accounts or other financial accounts, books and records and all other documents or instruments
relating to the Receivership Defendants. All persons and entities receiving notice of this Order
by personal service, facsimile or other electronic transmission, or otherwise, having control,
custody or possession of any Receivership Assets are hereby directed to turn such property,
including but not limited to all Accounts, over to the Receiver.
16.

The Receivership Defendants, as well as their agents, servants, employees,

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attorneys, any persons acting for or on behalf of the Receivership Defendants, and any persons
receiving notice of this Order by personal service, facsimile transmission or otherwise, having
possession of the property, business, books, records, accounts or assets of the Receivership
Defendants are hereby directed to deliver the same to the Receiver, his agents and/or employees.
17.

All banks, brokerage and securities firms, financial institutions, and other persons

or entities which have possession, custody or control of any assets or funds held by, in the name
of, or for the benefit of, directly or indirectly, the Receivership Defendants that receive actual
notice of this Order by personal service, email, facsimile transmission, or otherwise shall:
A.

Not liquidate, transfer, sell, convey or otherwise transfer any assets,
securities, funds, or accounts in the name of or for the benefit of the
Receivership Defendants except upon instructions from the Receiver;

B.

Not exercise any form of set-off, alleged set-off, lien, or any form of selfhelp whatsoever, or refuse to transfer any funds or assets to the Receiver’s
control without the permission of this Court;

C.

Within five (5) business days of receipt of that notice, file with the Court
and serve on the Receiver and counsel for the Commission a certified
statement setting forth, with respect to each such account or other asset,
the balance in the account or description of the assets as of the close of
business on the date of receipt of the notice; and,

D.

Cooperate expeditiously in providing access to accounts, assets and funds,
as well as information as well as transferring funds, assets and accounts to
the Receiver or at the direction of the Receiver.
V. Access to Real and Personal Property

18.

The Receiver is authorized to take immediate possession of all personal property

of the Receivership Defendants, wherever located, including but not limited to electronically
stored information, computers, laptops, hard drives, external storage drives, and any other such
memory, media or electronic storage devices, books, papers, data processing records, evidence of
indebtedness, bank records and accounts, savings records and accounts, brokerage records and

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accounts, certificates of deposit, stocks, bonds, debentures, and other securities and investments,
contracts, mortgages, furniture, office supplies, automobiles, and equipment.
19.

The Receiver is authorized to take immediate possession of all real property of the

Receivership Defendants, wherever located, including but not limited to all ownership and
leasehold interests and fixtures. Upon receiving actual notice of this Order by personal service,
facsimile transmission, or otherwise, all persons other than law enforcement officials acting
within the course and scope of their official duties, are (without the express written permission of
the Receiver) prohibited from: (a) entering such premises; (b) removing anything from such
premises; or, (c) destroying, concealing, or erasing anything on such premises.
20.

In order to execute the express and implied terms of this Order, the Receiver is

authorized to change door locks to the real property and premises described above. The Receiver
shall have exclusive control of the keys. The Receivership Defendants, or any other person
acting or purporting to act on their behalf, are ordered not to change the locks in any manner, nor
to have duplicate keys made, nor shall they have keys in their possession during the term of the
receivership.
21.

The Receiver is authorized to open all mail, other than mail addressed to

Defendant Goyal’s spouse, directed to or received by or at the offices or post office boxes of the
Receivership Defendants, and to inspect all mail opened prior to the entry of this Order, to
determine whether items or information therein fall within the mandates of this Order.
22.

Upon the request of the Receiver, the U.S. Marshals Service, in any judicial

district, is hereby ordered to assist the Receiver in carrying out his duties to take possession,
custody and control of, or identify the location of, any assets, records, or other materials
belonging to the Receivership Estates. In addition, the Receiver is authorized to request similar

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assistance from any other federal, state, county, or civil law enforcement officer(s) or
constable(s) of any jurisdiction.
VI. Notice to Third Parties
23.

The Receiver shall promptly give notice of his appointment to all known officers,

directors, agents, employees, shareholders, creditors, debtors, managers, members, and general
and limited partners of the Receivership Defendants, as the Receiver deems necessary or
advisable to effectuate the operation of the receivership.
24.

All persons and entities owing any obligation, debt, or distribution with respect to

an ownership interest to any Receivership Defendant shall, until further ordered by this Court,
pay all such obligations in accordance with the terms thereof to the Receiver, and its receipt for
such payments shall have the same force and effect as if the Receivership Defendant had
received such payment.
25.

In furtherance of his responsibilities in this matter, the Receiver is authorized to

communicate with, and/or serve this Order upon, any person, entity, or government office that he
deems appropriate to inform them of the status of this matter and/or the financial condition of the
Receivership Estates. All government offices which maintain public files of security interests in
real and personal property shall, consistent with such office’s applicable procedures, record this
Order upon the request of the Receiver or the Commission.
26.

The Receiver is authorized to instruct the United States Postmaster to hold and/or

reroute mail which is related, directly or indirectly, to the business, operations or activities of any
of the Receivership Defendants (the “Receiver’s Mail”), including all mail addressed to, or for
the benefit of, the Receivership Defendants. The Postmaster shall not comply with, and shall
immediately report to the Receiver, any change of address or other instruction given by anyone

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other than the Receiver concerning the Receiver’s Mail. The Receivership Defendants shall not
open any of the Receiver’s Mail and shall immediately turn over such mail, regardless of when
received, to the Receiver. All personal mail of any individual Receivership Defendants, mail
addressed to Defendant Goyal’s spouse, and/or any mail appearing to contain privileged
information, and/or any mail not falling within the mandate of the Receiver, shall be released to
the named addressee or addressee’s attorney by the Receiver. The foregoing instructions shall
apply to any proprietor, whether individual or entity, of any private mail box, depository,
business or service, or mail courier or delivery service, hired, rented, or used by the Receivership
Defendants. The Receivership Defendants shall not open a new mailbox or take any steps or
make any arrangements to receive mail in contravention of this Order, whether through the U.S.
mail, a private mail depository or courier service.
27.

Subject to payment for services provided, any entity or utility furnishing water,

electric, telephone, sewage, garbage, or trash removal services to the Receivership Defendants
shall maintain such service and transfer any such accounts to the Receiver unless instructed to
the contrary by the Receiver.
28.

The Receiver is authorized to assert, prosecute and/or negotiate any claim under

any insurance policy held by or issued on behalf of the Receivership Defendants, or their
officers, directors, agents, employees, or trustees, and to take any and all appropriate steps in
connection with such policies.
VII. Injunction Against Interference with Receiver
29.

The Receivership Defendants and all persons receiving notice of this Order by

personal service, facsimile transmission, or otherwise, are hereby restrained and enjoined from
directly or indirectly taking any action or causing any action to be taken, without the express

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written agreement of the Receiver, which would:
A.

B.

Hinder, obstruct or otherwise interfere with the Receiver in the
performance of his duties; such prohibited actions include but are not
limited to, concealing, destroying or altering records or information;

C.

Dissipate or otherwise diminish the value of any Receivership Assets;
such prohibited actions include but are not limited to, releasing claims or
disposing, transferring, exchanging, assigning or in any way conveying
any Receivership Assets, enforcing judgments, assessments or claims
against any Receivership Assets or any Receivership Defendant,
attempting to modify, cancel, terminate, call, extinguish, revoke or
accelerate (the due date), of any lease, loan, mortgage, indebtedness,
security agreement or other agreement executed by any Receivership
Defendant or which otherwise affects any Receivership Assets; or,

D.

30.

Interfere with the Receiver’s efforts to take control, possession, or
management of any Receivership Assets; such prohibited actions include
but are not limited to, using self-help or executing or issuing or causing
the execution or issuance of any court attachment, subpoena, replevin,
execution, or other process for the purpose of impounding or taking
possession of or interfering with or creating or enforcing a lien upon any
Receivership Assets;

Interfere with or harass the Receiver, or interfere in any manner with the
exclusive jurisdiction of this Court over the Receivership Estates.

The Receivership Defendants shall cooperate with and assist the Receiver in the

performance of his duties.
31.

The Receiver shall promptly notify the Court and Commission counsel of any

failure or apparent failure of any person or entity to comply in any way with the terms of this
Order.
VIII. Stay of Litigation
32.

As set forth in detail below, the following proceedings, excluding the instant

proceeding and all police or regulatory actions and actions of the Commission related to the
above-captioned enforcement action, are stayed until further Order of this Court:
All civil legal proceedings of any nature, including, but not limited to, bankruptcy
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proceedings, arbitration proceedings, foreclosure actions, default proceedings, or other
actions of any nature filed against or seeking relief from: (a) the Receiver, in his capacity
as Receiver; (b) any Receivership Assets, wherever located; (c) any of the Receivership
Defendants, including subsidiaries and partnerships; or, (d) any of the Receivership
Defendants’ past or present officers, directors, managers, members, agents, or general or
limited partners sued for, or in connection with, any action taken by them while acting in
such capacity of any nature, whether as plaintiff, defendant, third-party plaintiff, thirdparty defendant, or otherwise (such proceedings are hereinafter referred to as “Ancillary
Proceedings”).
33.

The parties to any and all Ancillary Proceedings are enjoined from commencing

or continuing any such legal proceeding, or from taking any action, in connection with any such
proceeding, including, but not limited to, the issuance or employment of process.
34.

All Ancillary Proceedings are stayed in their entirety, and all Courts having any

jurisdiction thereof are enjoined from taking or permitting any action until further Order of this
Court. Further, as to any cause of action accrued or accruing in favor of one or more of the
Receivership Defendants against a third person or party, any applicable statute of limitation is
tolled until the earlier of two years following entry of this Order or such time as the Receiver has
filed his accounting with this Court.
IX. Managing Assets
35.

For each of the Receivership Estates, the Receiver shall establish one or more

accounts at a federally insured bank to receive and hold all cash and cash equivalent
Receivership Assets (the “Receivership Funds”).
36.

The Receiver’s deposit account shall be entitled “Receiver's Account, Estate of

[Name of Receivership Defendant]” together with the name of the action, or a title to that
effect.
37.

The Receiver may, without further Order of this Court, transfer, compromise, or

otherwise dispose of any Receivership Assets, other than real estate, in the ordinary course of

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business, on terms and in the manner the Receiver deems most beneficial to the Receivership
Estate, and with due regard to the realization of the true and proper value of such Receivership
Property.
38.

Subject to Paragraph 39, immediately below, the Receiver is authorized to locate,

list for sale or lease, engage a broker for sale or lease, cause the sale or lease, and take all
necessary and reasonable actions to cause the sale or lease of all real property in the Receivership
Estates, either at public or private sale, on terms and in the manner the Receiver deems most
beneficial to the Receivership Estates, and with due regard to the realization of the true and
proper value of such real property.
39.

The Receiver is authorized to sell, and transfer clear title to, all real property in

the Receivership Estates after first obtaining Court authorization.
40.

The Receiver is authorized to take all actions to manage, maintain, and/or wind-

down business operations of the Receivership Estates, including making legally required
payments to creditors, employees, and agents of the Receivership Estates and communicating
with vendors, investors, governmental and regulatory authorities, and others, as appropriate.
41.

The Receiver shall take all necessary steps to enable the Receivership Funds to

obtain and maintain the status of a taxable “Settlement Fund,” within the meaning of Section
468B of the Internal Revenue Code and of the regulations, when applicable, whether proposed,
temporary or final, or pronouncements thereunder, including the filing of the elections and
statements contemplated by those provisions. The Receiver shall be designated the administrator
of the Settlement Fund, pursuant to Treas. Reg. § 1.468B-2(k)(3)(i), and shall satisfy the
administrative requirements imposed by Treas. Reg. § 1.468B-2, including but not limited to (a)
obtaining a taxpayer identification number, (b) timely filing applicable federal, state, and local

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tax returns and paying taxes reported thereon, and (c) satisfying any information, reporting or
withholding requirements imposed on distributions from the Settlement Fund. The Receiver
shall cause the Settlement Fund to pay taxes in a manner consistent with treatment of the
Settlement Fund as a “Qualified Settlement Fund.” The Receivership Defendants shall cooperate
with the Receiver in fulfilling the Settlement Funds’ obligations under Treas. Reg. § 1.468B-2].
X. Investigate and Prosecute Claims
42.

Subject to the requirement, in Section VII above, that leave of this Court is

required to resume or commence certain litigation, the Receiver is authorized, empowered and
directed to investigate, prosecute, defend, intervene in or otherwise participate in, compromise,
and/or adjust actions in any state, federal or foreign court or proceeding of any kind as may in his
discretion, and in consultation with Commission counsel, be advisable or proper to recover
and/or conserve Receivership Assets.
43.

Subject to his obligation to expend receivership funds in a reasonable and cost-

effective manner, the Receiver is authorized, empowered, and directed to investigate the manner
in which the financial and business affairs of the Receivership Defendants were conducted and
(after obtaining leave of this Court) to institute such actions and legal proceedings, for the benefit
and on behalf of the Receivership Estates, as the Receiver deems necessary and appropriate. As
part of his duty to investigate and report to this Court pursuant to Section XV, the Receiver is
authorized to conduct a full accounting with regard to the activities of the Receivership
Defendants. The Receiver shall advise the Court as to the anticipated scope and nature of the
accounting in his initial report to this Court. The Receiver also may seek, among other legal and
equitable relief, the imposition of constructive trusts, disgorgement of profits, asset turnover,
avoidance of fraudulent transfers, rescission and restitution, collection of debts, and such other

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relief from this Court as may be necessary to enforce this Order. Where appropriate, the
Receiver should provide prior notice to counsel for the Commission before commencing
investigations and/or actions.
44.

The Receiver hereby holds, and is therefore empowered to waive, all privileges,

including the attorney-client privilege, held by all entity Receivership Defendants.
45.

The Receiver has a continuing duty to ensure that there are no conflicts of interest

between the Receiver, his Retained Personnel (as that term is defined below), and the
Receivership Estate.
XI. Repatriation of Foreign Assets and Documents
46.

The Receiver shall take such steps as are necessary to repatriate to the territory of

the United States of America all Receivership Assets that are located in a country other than the
United States and are held by or for Defendants or are under Defendants' direct or indirect
control, jointly, severally, or individually.
47.

To the extent he has not already done so, within three (3) business days following

entry of this Order, Neal V. Goyal shall provide the Receiver and the Commission with a full
accounting of all assets, including Receivership Assets, that are located outside of the United
States that have been transferred to the United States and are held by or for any Defendant or are
under any Defendants’ direct or indirect control, jointly, severally, or individually, including the
addresses and names of any foreign or domestic financial institution or other entity holding the
assets, along with the account numbers and balances.
48.

Neal V. Goyal shall take all steps necessary and appropriate to prevent any

transfer, disposition, or dissipation whatsoever of any assets, including Receivership Assets,
located outside the United States.

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49.

To the extent he has not already done so, within three (3) business days following

entry of this Order, Neal V. Goyal shall provide the Receiver and the Commission access to
Defendants’ records and documents held by financial institutions or other entities outside the
United States, by signing and delivering to the Receiver and Commission’s counsel a Consent to
Release of Financial Records.
XII. Interference with Repatriation
50.

IT IS FURTHER ORDERED that Defendants are hereby temporarily restrained

and enjoined from taking any action, directly or indirectly, that may result in the encumbrance or
dissipation of foreign assets, including Receivership Assets, or in the hindrance of the.
repatriation required by the preceding Section XI of this Order, including but not limited to:
A.

Sending any statement, letter, facsimile, email or wire transmission, or

telephoning, or engaging in any other act, directly or indirectly, that results in a
determination by a foreign trustee or other entity that a "duress" event has occurred under
the terms of a foreign trust agreement, until such time that the assets have been fully
repatriated pursuant to the preceding Section XI of this Order; and
B.

Notifying any trustee, protector, or other agent of any foreign trust or other related

entities of either the existence of this Order or the fact that repatriation is required
pursuant to a Court Order, until such time as assets, including Receivership Assets, have
been fully repatriated pursuant the preceding Section XI of this Order.
XIII. Bankruptcy Filing
51.

The Receiver may seek authorization of this Court to file voluntary petitions for

relief under Title 11 of the United States Code (the “Bankruptcy Code”) for the Receivership
Defendants, or any of them. If a Receivership Defendant is placed in Chapter 11 bankruptcy
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proceedings, the Receiver may become, and may be empowered to operate each of the
Receivership Estates as, a debtor-in-possession. In such a situation, the Receiver shall have all
of the powers and duties as provided a debtor-in-possession under the Bankruptcy Code to the
exclusion of any other person or entity.
52.

The provisions of Section VII above bar any person or entity, other than the

Receiver, from placing any of the Receivership Defendants in bankruptcy proceedings.
XIV. Liability of Receiver
53.

The Receiver shall not be required to post bond or give an undertaking of any

type in connection with his fiduciary obligations in this matter.
54.

The Receiver and his attorneys and agents, acting within the scope of such agency

(collectively, “Retained Personnel”) are entitled to rely on all outstanding rules of law and
Orders of this Court and shall not be liable to anyone for their own good faith compliance with
any order, rule, law, judgment, or decree. In no event shall the Receiver or Retained Personnel
be liable to anyone for their actions or omissions except upon an express finding by this Court
that they acted as a result of malfeasance, bad faith, gross negligence, or in reckless disregard of
their duties.
55.

No action shall be filed or proceeding commenced against the Receiver or the

Retained Personnel arising out of or in any way related to this receivership or their duties or
work performed in connection with the receivership without obtaining an order from the Court
based upon a showing of good cause.
56.

This Court shall retain jurisdiction over any action filed against the Receiver or

Retained Personnel based upon acts or omissions committed in their representative capacities.
57.

In the event the Receiver decides to resign, the Receiver shall first give written

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notice to the Commission’s counsel of record and the Court of its intention, and the resignation
shall not be effective until the Court appoints a successor receiver. The Receiver shall then
follow such instructions as the Court may provide.
XV. Insurance
58.

Given the urgency to appoint a Receiver, the Court recognizes that the Receiver

accepts this appointment without time for independent verification that appropriate insurance is
in place on the property or that appropriate liability or other insurance is in place to protect the
Receivership Assets and the Receivership Estate. Accordingly, the Court acknowledges that the
Receiver has no responsibility or liability until such time as he can confirm that such insurance is
in place or acquire the appropriate insurance. The Receiver shall make it a priority to verify or
obtain insurance coverage immediately upon this Order Appointing Receiver being entered;
however, the Plaintiff, Receivership Defendants, and Court acknowledge there may be a gap of
time before such insurance may be in place to properly protect the assets of the estate and any
employees of the estate, and that the Receiver has no responsibility or liability until such time as
he/it has notified the Court by filing a notice that insurance is in place.
59.

Neal V. Goyal is ordered to immediately provide the Receiver with all available

insurance information for both existing and prior insurance policies. This includes all
applications, policies, riders, correspondence, endorsements, claims and other information. Neal
V. Goyal is ordered: (1) to advise the insurance agent(s) of this Order in writing, (2) designate
all authority over the policies to the Receiver, and (3) take no action with regard to terminating
or modifying existing insurance policies.
60.

Any insurance broker, agent, carrier, or underwriter is specifically ordered by the

Court to cooperate with the Receiver by timely furnishing the following: (1) copies of all
insurance policies including any riders, endorsements and applications with respect to policies
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related to the Receivership Estates, (2) loss history for five consecutive years or for as long as
insurance has been in force if less than five years, (3) premium payment history including current
status, and (4) any correspondence with insurance agents, brokers and companies. Policies shall
be endorsed by the Defendants naming the Receiver as Named Insured and Loss Payee effective
the date of this Order as appropriate to the type of coverage, and evidence of this policy
endorsement shall be promptly supplied to the Receiver.
61.

The Receiver is hereby authorized to engage insurance brokers and consultants as

necessary to properly insure the Receivership Assets.
XVI. Recommendations and Reports
62.

The Receiver is authorized and empowered, in the Receiver’s sole discretion, to

develop a plan for the fair, reasonable, and efficient recovery and liquidation of all remaining,
recovered, and recoverable Receivership Assets (the “Liquidation Plan”).
63.

Within ninety (90) days of the entry date of this Order, the Receiver shall file the

Liquidation Plan in the above-captioned action, with service copies to counsel of record.
64.

Within thirty (30) days after the end of each calendar quarter, the Receiver shall

file and serve a full report and accounting of each Receivership Estate (the “Quarterly Status
Report”), reflecting (to the best of the Receiver’s knowledge as of the period covered by the
report) the existence, value (if known), and location of all Receivership Assets, and of the extent
of liabilities, both those claimed to exist by others and those the Receiver believes to be legal
obligations of the Receivership Estates.
65.

The Quarterly Status Report shall contain the following:
A.

A summary of the operations of the Receiver;

B.

The amount of cash on hand, the amount and nature of accrued
administrative expenses, and the amount of unencumbered funds in the
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estate;
C.

D.

A description of all known Receivership Assets, including approximate or
actual valuations, anticipated or proposed dispositions, and reasons for
retaining assets where no disposition is intended;

E.

A description of liquidated and unliquidated claims held by each
Receivership Estate, including the need for forensic and/or investigatory
resources; approximate valuations of claims; and anticipated or proposed
methods of enforcing such claims (including likelihood of success in: (i)
reducing the claims to judgment; and, (ii) collecting such judgments);

F.

A list of all known creditors with their addresses and the amounts of their
claims;

G.

The status of Creditor Claims Proceedings, after such proceedings have
been commenced; and,

H.

66.

A schedule of all the Receiver’s receipts and disbursements (attached as
Exhibit A to the Quarterly Status Report), with one column for the
quarterly period covered and a second column for the entire duration of
the receivership;

The Receiver's recommendations for a continuation or discontinuation of
the receivership and the reasons for the recommendations.

On the request of the Commission, the Receiver shall provide the Commission

with any documentation that the Commission deems necessary to meet its reporting
requirements, that is mandated by statute or Congress, or that is otherwise necessary to further
the Commission’s mission.
XVII. Fees, Expenses and Accountings
67.

Subject to Paragraphs 68 – 74 immediately below, the Receiver need not obtain

Court approval prior to the disbursement of Receivership Funds for expenses in the ordinary
course of the administration and operation of the receivership. Further, prior Court approval is
not required for payments of applicable federal, state or local taxes.
68.

As provided in Section II above, and subject to Paragraph 59 below, the Receiver

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is authorized to engage persons and entities (“Retained Personnel”) to assist him in carrying out
the duties and responsibilities described in this Order.
69.

The Receiver and Retained Personnel are entitled to reasonable compensation and

expense reimbursement from the Receivership Estates as described in the “Billing Instructions
for Receivers in Civil Actions Commenced by the U.S. Securities and Exchange Commission”
(the “Billing Instructions”) agreed to by the Receiver. Such compensation shall require the prior
approval of the Court.
70.

Within forty-five (45) days after the end of each calendar quarter, the Receiver

and Retained Personnel shall apply to the Court for compensation and expense reimbursement
from the Receivership Estates (the “Quarterly Fee Applications”). At least thirty (30) days prior to
filing each Quarterly Fee Application with the Court, the Receiver will serve upon counsel for the
Commission a complete copy of the proposed Application, together with all exhibits and relevant
billing information in a format to be provided by Commission staff.
71.

All Quarterly Fee Applications will be interim and will be subject to cost benefit

and final reviews at the close of the receivership. At the close of the receivership, the Receiver
will file a final fee application, describing in detail the costs and benefits associated with all
litigation and other actions pursued by the Receiver during the course of the receivership.
72.

Quarterly Fee Applications may be subject to a holdback in the amount of 20% of

the amount of fees and expenses for each application filed with the Court. The total amounts
held back during the course of the receivership will be paid out at the discretion of the Court as
part of the final fee application submitted at the close of the receivership.
73.

Each Quarterly Fee Application shall:
A.

Comply with the terms of the Billing Instructions agreed to by the
Receiver; and,
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B.

74.

Contain representations (in addition to the Certification required by the
Billing Instructions) that: (i) the fees and expenses included therein were
incurred in the best interests of the Receivership Estate; and, (ii) with the
exception of the Billing Instructions, the Receiver has not entered into any
agreement, written or oral, express or implied, with any person or entity
concerning the amount of compensation paid or to be paid from the
Receivership Estate, or any sharing thereof.

At the close of the Receivership, the Receiver shall submit a Final Accounting, in

a format to be provided by Commission staff, as well as the Receiver’s final application for
compensation and expense reimbursement.

IT IS SO ORDERED, this 6th day of June, 2014, at Chicago, Illinois

___________________________________
Rebecca R. Pallmeyer
UNITED STATES DISTRICT JUDGE

24

Caldera Advisors, LLC
Caldera Equity Fund, LP

&
Blue Horizon Asset Management, LLC
Blue Horizon Partners Fund, LP
Blue Horizon Bio-Energy Fund, LP
Blue Horizon Global Equity Fund, LP
c/o Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, Illinois 60605
[phone] Phone
[phone] Fax
[e-mail]

In Receivership
Kevin B. Duff, Receiver

July 10, 2014
Via U.S. Mail
Felix Investments
17 State Street
New York, NY 10004

Re:

United States Securities Exchange Commission v. Neal V. Goyal, Caldera
Advisors, LLC, and Blue Horizon Asset Management, LLC, and Caldera
Investment Group, Inc. (“Receivership Defendants”)

Dear Sir or Madam:
This is to advise you that I have been appointed Receiver for the Receivership Defendants (as
described above), pursuant to an order entered by the Honorable Rebecca R. Pallmeyer in the case
captioned United States Securities Exchange Commission v. Neal V. Goyal, Caldera Advisors, LLC,
and Blue Horizon Asset Management, LLC, and Caldera Investment Group, Inc., No. 14-cv-3900,
pending in the United States District Court for the Northern District of Illinois, Eastern Division.
Attached is a copy of the Court’s order, titled “Order Appointing Receiver,” which appoints
me as Receiver for all assets of whatever kind and wherever situated, of Receivership Defendants
Neal V. Goyal, Caldera Advisors, LLC, and Blue Horizon Asset Managements, LLC, and Caldera
Investment Group, Inc. (the “Receivership Assets”). Accordingly, all persons and entities with
direct or indirect control over any Receivership Assets, other than the Receiver, are restrained and
enjoined from directly or indirectly transferring, setting off, receiving, changing, selling, pledging,
assigning, liquidating or otherwise disposing of or withdrawing such assets.

Enclosure 2

Accordingly, please direct all communications with respect to any accounts and/or assets
associated with Receivership Defendants and/or the Receivership Assets to me.
In addition, please provide all information relating to any accounts held or assets associated
with the Receivership Defendants and/or the Receivership Assets, including but not limited to
information reflecting the nature, cost and value of the asset(s).

Very truly yours,

Kevin B. Duff, Receiver
Enclosure

Caldera Advisors, LLC
Caldera Equity Fund, LP

&
Blue Horizon Asset Management, LLC
Blue Horizon Partners Fund, LP
Blue Horizon Bio-Energy Fund, LP
Blue Horizon Global Equity Fund, LP
c/o Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, Illinois 60605
[phone] Phone
[phone] Fax
[e-mail]

In Receivership
Kevin B. Duff, Receiver

July 29, 2014
Via U.S. Mail
Mr. John Bivona
SRA Fund, LLC
40 Wall Street
17th Floor
New York, NY 10005
Re:

United States Securities Exchange Commission v. Neal V. Goyal, Caldera
Advisors, LLC, and Blue Horizon Asset Management, LLC, and Caldera
Investment Group, Inc. (“Receivership Defendants”)

Dear Mr. Bivona:
This is to advise you that I have been appointed Receiver for the Receivership Defendants (as
described above), pursuant to an order entered by the Honorable Rebecca R. Pallmeyer in the case
captioned United States Securities Exchange Commission v. Neal V. Goyal, Caldera Advisors, LLC,
and Blue Horizon Asset Management, LLC, and Caldera Investment Group, Inc., No. 14-cv-3900,
pending in the United States District Court for the Northern District of Illinois, Eastern Division.
Attached is a copy of the Court’s order, titled “Order Appointing Receiver,” which appoints
me as Receiver for all assets of whatever kind and wherever situated, of Receivership Defendants
Neal V. Goyal, Caldera Advisors, LLC, and Blue Horizon Asset Managements, LLC, and Caldera
Investment Group, Inc. (the “Receivership Assets”). Accordingly, all persons and entities with
direct or indirect control over any Receivership Assets, other than the Receiver, are restrained and
enjoined from directly or indirectly transferring, setting off, receiving, changing, selling, pledging,
assigning, liquidating or otherwise disposing of or withdrawing such assets.

Enclosure 3

Accordingly, please direct all communications with respect to any accounts and/or assets
associated with Receivership Defendants and/or the Receivership Assets to me.
In addition, please provide all information relating to any accounts held or assets associated
with the Receivership Defendants and/or the Receivership Assets, including but not limited to
information reflecting the nature, cost and value of the asset(s).
Please be advised that at this time no monies may be paid out of any Receivership Assets or
accounts without express written permission from me.

Very truly yours,

Kevin B. Duff, Receiver
Enclosure

Enclosure 4

Enclosure 5

SRA FUND I LLC
40 Wall Street, 17th Floor
New York, NY 10005
April 23, 2014
Caldera Venture Partners
401 N. Michigan Avenue, Ste. 1800
Chicago, IL 60611
Re: SRA FUND I LLC - SERIES CC-3(SA)
Dear Mr. Goyal:
Enclosed please find a copy of your accepted subscription agreement pertaining to your recent
investment in membership interests in Series CC-3(SA) of SRA Fund I LLC (the “Company”).
At this time the Company will not be preparing formal certificates reflecting your Series CC3(SA) membership interests. We advise you to retain a copy of this letter, along with the
enclosed accepted subscription agreement, as evidence of your admission as a member in Series
CC-3(SA) of the Company.
Your total capital contribution of $25,000.00, received on February 25, 2014, constitutes a 100%
membership interest in Series CC-3(SA) of the Company. Series CC-3(SA) currently owns 125*
shares of Square, Inc. through an affiliate of the company. Your entire capital contribution of
$25,000.00 has been applied to an investment in approximately 125 underlying shares of Square,
Inc. at a purchase price equivalent to $200.00 per share.
If you have any questions regarding the Company or your investment therein, please contact John
V. Bivona at [phone].
Sincerely,
SRA FUND I LLC
By:

________________________________
John Bivona, Manager of
SRA Management Associates LLC
Manager

*

The number of shares (and/or proceeds thereof) to be distributed to Series CC-3(SA) investors upon
liquidation is subject to adjustment for allocation of organizational and operating expenses of the Company.

Enclosure 6

Caldera Advisors, LLC
Caldera Equity Fund, LP

&
Blue Horizon Asset Management, LLC
Blue Horizon Partners Fund, LP
Blue Horizon Bio-Energy Fund, LP
Blue Horizon Global Equity Fund, LP

In Receivership
Kevin B. Duff, Receiver

c/o Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, Illinois 60605
[phone] Phone
[phone] Fax
[e-mail]

December 2, 2015
Via FedEx
John Bivona
SRA Management Associates, LLC
40 Wall Street, 17th Floor
New York, NY 10005

Susan Diamond
Saddle River Advisors, LLC
40 Wall Street, 17th Floor
New York, NY 10005

Ross Nadel
Square, Inc.
1455 Market Street
San Francisco, CA 94103
Re:

United States Securities Exchange Commission v. Neal V. Goyal, Caldera
Advisors, LLC, and Blue Horizon Asset Management, LLC, and Caldera
Investment Group, Inc. (“Receivership Defendants”)

Dear Sirs/Madam,
As you know, I have been appointed Receiver for the Receivership Defendants (as
described above), pursuant to an order entered by the Honorable Rebecca R. Pallmeyer in the
case captioned United States Securities Exchange Commission v. Neal V. Goyal, Caldera
Advisors, LLC, and Blue Horizon Asset Management, LLC, and Caldera Investment Group, Inc.,
No. 14-cv-3900, pending in the United States District Court for the Northern District of Illinois,
Eastern Division.
Enclosed is a copy of the Court’s order, titled “Order Appointing Receiver,” which
appoints me as Receiver for all assets of whatever kind and wherever situated, of Receivership
Defendants Neal V. Goyal, Caldera Advisors, LLC, and Blue Horizon Asset Managements,
LLC, and Caldera Investment Group, Inc. (the “Receivership Assets”). Accordingly, all persons
and entities with direct or indirect control over any Receivership Assets, other than the Receiver,

Enclosure 7

Square, Inc.
December 2, 2015
Page 2 of 2
are restrained and enjoined from directly or indirectly transferring, setting off, receiving,
changing, selling, pledging, assigning, liquidating or otherwise disposing of or withdrawing such
assets.
My responsibility as Receiver includes recovery of money that Goyal paid to entities
using funds generated through the perpetration of this Ponzi-like scheme. With respect to
Square, Inc., Goyal made a $25,000 investment through an entity he created called Caldera
Venture Partners, LLC (“CVP”).
As manager of the SRA Fund I, LLC John Bivona sent CVP a letter confirming CVP’s
interest in the SRA Fund I, LLC Series CC-3 (SA) on or about February 18, 2014. CVP sent a
$25,000 check made payable to SRA I LLC on or about February 24, 2014. CVP, as the
investor, received 125 shares of Square, Inc., showing Goyal as the managing partner and
authorized signatory of CVP. CVP had two members: Goyal and Christopher Ziobehr. To
dispel any question that the assets of CVP belong to the Receivership Estate, the members of
CVP executed Assignment of Membership Interests in Caldera Venture Partners, LLC by which
the members of CVP transferred their interests to the Estate of Caldera Advisors, LLC. A copy
of this Assignment is attached hereto for your reference.
We are aware that on or about November 19, 2015 Square, Inc. issued an Initial Public
Offering (“IPO”). Please send to the address below, any documents or communications relating
to CVP’s investment and ownership interest of all shares of Square, Inc. Specifically, please
send us any information relating to the status of CVP’s investment and all shares of Square, Inc.
as effected by the recent IPO, to the address below:
Kevin B. Duff, Receiver
Caldera Advisors, LLC
c/o Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, IL 60605
Thank you for your prompt attention to this matter.
Very truly yours,

Kevin B. Duff, Receiver
Enclosures

Enclosure 8

Case: 1:14-cv-03900 Document #: 99 Filed: 06/07/16 Page 1 of 5 PageID #:1081

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,
Plaintiff,
v.
NEAL V. GOYAL, CALDERA
ADVISORS, LLC, and BLUE HORIZON
ASSET MANAGEMENT, LLC
Defendants,
and
CALDERA INVESTMENT GROUP, INC.
Relief Defendant.

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Civil Action No. 1:14-cv-03900
Hon. Rebecca R. Pallmeyer
Magistrate Judge Jeffery Cole

RECEIVER’S MOTION FOR COURT APPROVAL OF THE SALE AND
LIQUIDATION OF PRIVATE EQUITY INVESTMENTS
Kevin B. Duff, as the receiver (“Receiver”) for Defendants Neal V. Goyal, Caldera
Advisors, LLC, Blue Horizon Asset Management, LLC, and the recoverable assets of Relief
Defendant Caldera Investment Group, Inc. (collectively “Receivership Defendants”), and
pursuant to the powers vested in him by the Order of this Court entered on June 6, 2014,
respectfully moves this Court to issue an order approving the sale and liquidation of private
equity investments (proposed order attached hereto as Exhibit A.) In Support of his Motion, the
Receiver states as follows:
1.

This case arises from a long-running fraud perpetrated by Defendant Neal V.

Goyal who, since 2006, raised more than $11.4 million from at least 35 persons who believed
they were investing in one of four investment funds under Goyal’s control.

Enclosure 9

Case: 1:14-cv-03900 Document #: 99 Filed: 06/07/16 Page 2 of 5 PageID #:1082

2.

During this time, Goyal made four private equity investments on behalf of

Caldera Venture Partners, LLC. These included a $50,000 investment in Dryv, LLC and a
$25,000 investment in Square, Inc.
3.

Caldera Venture Partners is not a named defendant in this action. On December

2, 2015, pursuant to an agreement reached with its members, all assets of Caldera Venture
Partners – which includes the equity investments that are the subject of this Motion – were
conveyed by an assignment to the Receivership Estate.
Investment in Dryv, LLC
4.

On April 1, 2014, Dryv and Caldera Venture Partners entered into a Convertible

Note Purchase Agreement. Neal Goyal signed the agreement as a “Co-Managing Partner.”
5.

On May 7, 2014, a Convertible Promissory Note was executed in the amount of

$50,000 payable to Caldera Venture Partners, and originally due on April 15, 2016.
6.

Earlier in the Receivership, the Receiver contacted the managers of Dryv to

determine the status of the Promissory Note and liquidity of the investment.
7.

At the request of the managers of Dryv, the Receiver approved an extension of the

maturity date to July 15, 2016 to enable the company to pursue additional financing. The
company secured additional financing and on June 2, 2016, the Promissory Note converted to
shares of preferred stock.
8.

The Receiver was contacted by an existing investor in Dryv who expressed an

interest to purchase the Receivership Estate’s investment.

As a result, following

communications with counsel for the SEC, the Receiver negotiated an arms-length purchase
price of $12,500 for the Receivership Estate’s investment in Dryv. The parties then negotiated

2

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written terms and are prepared to execute an Assignment and Assumption Agreement subject to
the Court’s approval of the Receivership Estate’s investment in Dryv.
Investment in Square, Inc.
9.

On February 24, 2014, Caldera Venture Partners invested $25,000 in Square, Inc.

and received a Series membership and 125 shares of Square, Inc. stock at a price of $200 per
share.
10.

Earlier in the Receivership, the Receiver contacted Square to determine the value

of the investment and options for liquidation.
11.

Thereafter, Square issued an initial public offering and the Receivership Estate’s

stock underwent a 10-1 split. Accordingly, Caldera Venture Partners now holds 1,250 shares,
with a stock price of $20 per share. These shares were subject to a 180-day lockup period that
expired in mid-May 2016.
12.

As of close of business on May 27, 2016, Square’s stock price was $9.63.
Basis for Relief

13.

On June 6, 2014, this Court appointed Kevin B. Duff as Receiver.

(Order

Appointing Receiver attached hereto as Exhibit B.)
14.

Under the Order Appointing Receiver, the Receiver has the authority in equity, as

well as under 28 U.S.C. §§ 754, 959, and 1692 and Fed. R. Civ. Pro. 66, and was given broad
powers to investigate and safeguard the assets of the Receivership Defendants.
15.

Specifically, Paragraph 8 (G) of the Order Appointing Receiver authorizes the

Receiver to “take control of, conserve, and liquidate any and all securities or commodities,
owned by or for the benefit of the Receivership Estate, as the Receiver deems advisable or
necessary.” (Id. at Para. 8 (G).)

3

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16.

The Receiver seeks Court approval on the sale and liquidation of the Receivership

Estate’s investment in Dryv. This sale will eliminate the risk of the investment losing value or
becoming difficult to liquidate and therefore, the Receiver believes selling at this time is
reasonable and appropriate.
17.

The Receiver also seeks Court approval to liquidate the 1,250 shares of Square,

Inc. stock as soon as practicable. Liquidating at this time reduces risk associated with liquidity
and loss of value that is inherent in the venture capital marketplace. It would not be appropriate
to speculate on this investment and therefore, it is reasonable and appropriate to liquidate at this
time.
18.

The Receiver further believes selling the Receivership Estate’s investment in

Dryv and liquidating the Square shares of stock are both in the best interests of the efficient and
economical administration of this Receivership.

4

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WHEREFORE, the Receiver respectfully respects that this Court grant this Motion and
enter an Order Approving the Sale of the Receivership Estate’s investment in Dryv, LLC to the
identified buyer for a price of $12,500 and the Liquidation of the Square, Inc. Stock at the
highest price that can be achieved by the Receiver as soon as reasonably practical.
Dated: June 7, 2016

Respectfully submitted,
Kevin B. Duff, Receiver
By:

/s/ Nicole Mirjanich
Daniel S. Kaplan
Nicole Mirjanich
Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, IL 60605
Phone [phone]
Fax
[phone]
[e-mail]
[e-mail]

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Exhibit A

Case: 1:14-cv-03900 Document #: 99-1 Filed: 06/07/16 Page 2 of 2 PageID #:1087

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,
Plaintiff,
v.
NEAL V. GOYAL, CALDERA
ADVISORS, LLC, and BLUE HORIZON
ASSET MANAGEMENT, LLC
Defendants,
and
CALDERA INVESTMENT GROUP,
INC.
Relief Defendant.

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Civil Action No. 1:14-cv-03900
Hon. Rebecca R. Pallmeyer
Magistrate Judge Jeffery Cole

ORDER APPROVING RECEIVER’S MOTION FOR COURT APPROVAL
OF THE SALE AND LIQUIDATION OF PRIVATE EQUITY INVESTMENTS
The Court, after due notice has been given, and having conducted a hearing on the
Receiver’s Motion for Court Approval of the Sale and Liquidation of Private Equity Investments,
being fully advised of the premises and for good cause shown, HEREBY ORDERS:
1. The Receiver’s Motion is granted.
2. The Court approves the sale of the Receivership Estate’s investment in Dryv, LLC to
the identified buyer for a price of $12,500.
3. The Court approves the liquidation of the Square, Inc. shares of stock by the
Receiver at the market price as soon as reasonably practical.
Entered:
_________________________________
Honorable Rebecca R. Pallmeyer
Date: _________________________________

Case: 1:14-cv-03900 Document #: 99-2 Filed: 06/07/16 Page 1 of 25 PageID #:1088

Exhibit B

Case: 1:14-cv-03900 Document #:#: 17 Filed: 06/06/14 Page 1 of 24 PageID #:101
Case: 1:14-cv-03900 Document 99-2 Filed: 06/07/16 Page 2 of 25 PageID #:1089

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
______________________________________
)
UNITED STATES SECURITIES
)
AND EXCHANGE COMMISSION,
)
)
Civil Action No. 1:14-cv-03900
Plaintiff,
)
v.
)
)
Hon. Judge Rebecca R. Pallmeyer
NEAL V. GOYAL, CALDERA
)
ADVISORS, LLC, and BLUE HORIZON )
ASSET MANAGEMENT, LLC
)
)
Defendants,
)
and
)
)
CALDERA INVESTMENT GROUP, INC. )
)
Relief Defendant._____)
ORDER APPOINTING RECEIVER
WHEREAS this matter has come before this Court upon motion of the Plaintiff U.S.
Securities and Exchange Commission (“SEC”, “Commission” or “Plaintiff”) to appoint a
receiver in the above-captioned action; and,
WHEREAS the Court finds that, based on the record in these proceedings, the
appointment of a receiver in this action is necessary and appropriate for the purposes of
marshaling and preserving all assets of the Defendants and those assets of the Relief Defendant
that: (a) are attributable to funds derived from investors or clients of the Defendants; (b) are held
in constructive trust for the Defendants; (c) were fraudulently transferred by the Defendants;
and/or (d) may otherwise be includable as assets of the estates of the Defendants (collectively,
the “Recoverable Assets”); and,
WHEREAS this Court has subject matter jurisdiction over this action and personal

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jurisdiction over the Defendants, and venue properly lies in this district.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED
THAT:
1.

This Court hereby takes exclusive jurisdiction and possession of the assets, of

whatever kind and wherever situated, of the following Defendants and Relief Defendant: Neal V.
Goyal, Caldera Advisors, LLC, Blue Horizon Asset Management, LLC and Relief Defendant
Caldera Investment Group, LLC (collectively, the “Receivership Defendants”).
2.

Until further Order of this Court, Kevin B. Duff, of the firm Rachlis Duff Adler

Peel & Kaplan, LLC Duff is hereby appointed to serve without bond as the federal equity
receiver (the “Receiver”) for the estates of the Receivership Defendants.
I. Asset Freeze
3.

Except as otherwise specified herein, all assets of the Defendants and Relief

Defendants (collectively, “Receivership Assets”) are frozen until further order of this Court.
Accordingly, all persons, institutions and entities with direct or indirect control over any
Receivership Assets other than the Receiver, are hereby restrained and enjoined from directly or
indirectly transferring, setting off, receiving, changing, selling, pledging, assigning, liquidating
or otherwise disposing of or withdrawing such Receivership Assets. This freeze shall include,
but not be limited to, Receivership Assets that are on deposit with any financial institutions or
other entities, including, but not limited to, banks, brokerage firms and mutual funds. In
particular, the Court enjoins any disbursement of proceeds by the Defendants, their agents,
representatives, employees and officers and all persons acting in concert or participation with
them, whatever business name they may operate under, derived from the sales of interests in
Receivership Defendants, or any of them.

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II. General Powers and Duties of Receiver
4.

The Receiver shall have all powers, authorities, rights and privileges heretofore

possessed by the officers, directors, managers, members, and general and limited partners of the
Receivership Defendants under applicable state and federal law, by the governing charters, bylaws, articles and/or agreements in addition to all powers and authority of a federal equity
receiver, including but not limited to those powers conferred upon a receiver by the provisions of
28 U.S.C. §§ 754, 959 and 1692, Fed. R. Civ. P. 66, and this Order.
5.

The trustees, directors, officers, managers, employees, investment advisors,

accountants, attorneys and other agents of the Receivership Defendants are hereby dismissed and
the powers of any general partners, directors and/or managers are hereby suspended. Such
persons and entities shall have no authority with respect to the Receivership Defendants’
operations or assets, except to the extent as may hereafter be expressly granted in writing by the
Receiver. This order, however, does not dismiss Defendant Goyal’s personal attorneys.
6.

The Receiver may assume and control the operation of any of the Receivership

Defendants and may pursue and preserve all of their claims or interests. The Receiver may
continue and conduct the business, if any, of the Receivership Defendants in such manner, to
such extent and for such duration as the Receiver may deem to be necessary or appropriate, if at
all.
7.

No person holding or claiming any position of any sort with any of the

Receivership Defendants shall possess any authority to act for or on behalf of any of those
Receivership Defendants, unless expressly authorized, in writing, by the Receiver.
8.

Subject to the specific provisions in Sections III through XIV, below, the

Receiver shall have the following general powers and duties:

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A.

To use reasonable efforts to determine the nature, location and value of all
property interests of the Receivership Defendants, including, but not
limited to, monies, funds, securities, credits, effects, goods, chattels, lands,
premises, leases, claims, rights and other assets, together with all rents,
profits, dividends, interest or other income attributable thereto, of
whatever kind, which the Receivership Defendants own, possess, have a
beneficial interest in, or control directly or indirectly (the foregoing
collectively may be referred to as “Receivership Assets” or the
“Receivership Estates”);

B.

To take exclusive custody, control and possession of all Receivership
Assets and records relevant thereto from the Receivership Defendants; to
sue for and collect, recover, receive and take into possession from third
parties all Receivership Assets and records relevant thereto;

C.

To manage, control, operate and maintain the Receivership Estates and
hold in his possession, custody and control all Receivership Assets,
pending further Order of this Court;

D.

To take possession of all bank and investment accounts or securities
accounts owned by or associated with the Receivership Estates or
Receivership Defendants, whether in the name of the Receivership
Defendants or their subsidiaries or affiliates, wherever located
(collectively, the “Accounts”). The Receiver shall have the authority to
open, close, transfer and change all bank, investment and securities
Accounts.

E.

To sign checks on, otherwise withdraw or transfer, trade or otherwise
control the funds and/or securities contained in any Accounts owned or
controlled by, or in the name of, the Receivership Defendants and
Receivership Estate. The Receiver shall also be authorized to add or
delete signers, including those currently authorized on the Account(s).
The representatives of the Receiver initially designated with authority over
these accounts shall be Kevin B. Duff.

F.

To open and maintain new bank accounts in the name of the Receiver for
the use in administering and preservation of the Receivership Estate, using
the Federal Employer Identification Number of the Receivership Estate, at
the Receiver’s discretion.

G.

To take control of, conserve, and liquidate any and all securities or
commodities, owned by or for the benefit of the Receivership Estate, as
the Receiver deems advisable or necessary.

H.

To use Receivership Assets for the benefit of the Receivership Estates,
making payments and disbursements and incurring expenses as may be
necessary or advisable in the ordinary course of business in discharging
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his duties as Receiver;
I.

To take any action which, prior to the entry of this Order, could have been
taken by the officers, directors, partners, managers, members, trustees, and
agents of the Receivership Defendants;

J.

To engage and employ persons in his discretion to assist him in carrying
out his duties and responsibilities hereunder, including, but not limited to,
accountants, attorneys, securities traders, registered representatives,
financial or business advisers, liquidating agents, real estate agents,
forensic experts, brokers, traders or auctioneers;

K.

To take such action as necessary and appropriate for the preservation of
Receivership Assets or to prevent the dissipation or concealment of
Receivership Assets;

L.

To issue subpoenas to compel testimony of persons or production of
records consistent with the Federal Rules of Civil Procedure and
applicable Local Rules, except for the provision of Fed. R. Civ. P.
26(d)(1), concerning any subject matter within the powers and duties
granted by this Order;

M.

To bring such legal actions based on law or equity in any state, federal, or
foreign court as the Receiver deems necessary or appropriate in
discharging his duties as Receiver;

N.

To pursue, resist and defend all suits, actions, claims and demands which
may now be pending or which may be brought by or asserted against the
Receivership Estates;

O.

To prepare a full accounting with regard to the activities of the
Receivership Defendants for the period January 1, 2006 through the date
of this Order;

P.

To take such other action as may be approved by this Court.
III. Defendants’ Duties to Receiver

9.

The individual Receivership Defendants and the past and/or present officers,

directors, agents, managers, members, general and limited partners, trustees, attorneys,
accountants and employees of the entity Receivership Defendants, as well as those acting in their
place, are hereby ordered and directed to preserve, provide immediate access, and turn over to

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the Receiver forthwith all paper and electronic information of, and/or relating to, the
Receivership Defendants and/or all Receivership Assets; such information shall include but not
be limited to books, records, documents, accounts, access codes, security codes, passwords, safe
deposit keys, combinations, and all other instruments, papers, and electronic data. This does not,
however, include documents and files of Defendant Goyal’s personal attorneys that are protected
by the work-product doctrine and attorney-client privilege.
10.

Within ten (10) days of the entry of this Order, the Receivership Defendants shall

file with the Court and serve upon the Receiver and the Commission a sworn statement, listing:
(a) the identity, location and estimated value of all Receivership Property; (b) all employees (and
job titles thereof), other personnel, attorneys, accountants and any other agents or contractors of
the Receivership Defendants; and, (c) the names, addresses and amounts of claims of all known
creditors of the Receivership Defendants. Defendant Goyal shall retain responsibility, and the
Receiver shall assume no responsibility, for preparing and filing Goyal’s personal income tax
returns.
11.

Within thirty (30) days of the entry of this Order, the Receivership Defendants

shall file with the Court and serve upon the Receiver and the Commission a sworn statement and
accounting, with complete documentation, covering the period from January 1, 2006 to the
present:
A.

Of all Receivership Property, wherever located, held by or in the name of
the Receivership Defendants, or in which any of them, directly or
indirectly, has or had any beneficial interest, or over which any of them
maintained or maintains and/or exercised or exercises control, including,
but not limited to: (a) all securities, investments, funds, real estate,
automobiles, jewelry and other assets, stating the location of each; and (b)
any and all accounts, including all funds held in such accounts, with any
bank, brokerage or other financial institution held by, in the name of, or
for the benefit of any of them, directly or indirectly, or over which any of
them maintained or maintains and/or exercised or exercises any direct or
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indirect control, or in which any of them had or has a direct or indirect
beneficial interest, including the account statements from each bank,
brokerage or other financial institution;
B.

C.

Identifying all credit, bank, charge, debit or other deferred payment card
issued to or used by each Receivership Defendant, including but not
limited to the issuing institution, the card or account number(s), all
persons or entities to which a card was issued and/or with authority to use
a card, the balance of each account and/or card as of the most recent
billing statement, and all statements for the last twelve months;

D.

Of all assets received by any of them from any person or entity, including
the value, location, and disposition of any assets so received;

E.

Of all funds received by the Receivership Defendants, and each of them,
in any way related, directly or indirectly, to the conduct alleged in the
Commission’s Complaint. The submission must clearly identify, among
other things, all investors, the securities they purchased, the date and
amount of their investments, and the current location of such funds;

G.

Of all expenditures exceeding $1,000 made by any of them, including
those made on their behalf by any person or entity; and

H.
12.

Identifying every account at every bank, brokerage or other financial
institution: (a) over which Receivership Defendants have signatory
authority; and (b) opened by, in the name of, or for the benefit of, or used
by, the Receivership Defendants;

Of all transfers of assets made by any of them.

Within ten (10) days of the entry of this Order, the Receivership Defendants shall

provide to the Receiver and the Commission copies of the Receivership Defendants’ federal
income tax returns for 2006 through 2013 with all relevant and necessary underlying
documentation. The Receivership Defendants shall also deliver all state licenses, tax
identification numbers, and all other relevant tax information.
13.

The individual Receivership Defendants named in the Complaint and the

Receivership Defendants’ past and/or present officers, directors, agents, attorneys, managers,
members, shareholders, employees, accountants, debtors, creditors, managers and general and

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limited partners, and other appropriate persons or entities shall answer under oath to the Receiver
all questions which the Receiver may put to them and produce all documents as required by the
Receiver regarding the business of the Receivership Defendants, or any other matter relevant to
the operation or administration of the receivership or the collection of funds due to the
Receivership Defendants. In the event that the Receiver deems it necessary to require the
appearance of the aforementioned persons or entities, the Receiver shall make his discovery
requests in accordance with the Federal Rules of Civil Procedure. Nothing in this Order shall
operate as or effectuate a waiver of the attorney-client privilege regarding communications
between Defendant Goyal and his personal attorneys, and Goyal’s personal attorneys shall not be
compelled by this Order to divulge information that would otherwise be protected by the
attorney-client privilege.
14.

The Receivership Defendants are required to fully cooperate with and assist the

Receiver in all respects in fulfilling his duties and obligations. As such, the Receivership
Defendants must respond promptly and truthfully to all requests for information and documents
from the Receiver.
IV. Access to Books, Records and Accounts
15.

The Receiver is authorized to take immediate possession of all assets, bank

accounts or other financial accounts, books and records and all other documents or instruments
relating to the Receivership Defendants. All persons and entities receiving notice of this Order
by personal service, facsimile or other electronic transmission, or otherwise, having control,
custody or possession of any Receivership Assets are hereby directed to turn such property,
including but not limited to all Accounts, over to the Receiver.
16.

The Receivership Defendants, as well as their agents, servants, employees,

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attorneys, any persons acting for or on behalf of the Receivership Defendants, and any persons
receiving notice of this Order by personal service, facsimile transmission or otherwise, having
possession of the property, business, books, records, accounts or assets of the Receivership
Defendants are hereby directed to deliver the same to the Receiver, his agents and/or employees.
17.

All banks, brokerage and securities firms, financial institutions, and other persons

or entities which have possession, custody or control of any assets or funds held by, in the name
of, or for the benefit of, directly or indirectly, the Receivership Defendants that receive actual
notice of this Order by personal service, email, facsimile transmission, or otherwise shall:
A.

Not liquidate, transfer, sell, convey or otherwise transfer any assets,
securities, funds, or accounts in the name of or for the benefit of the
Receivership Defendants except upon instructions from the Receiver;

B.

Not exercise any form of set-off, alleged set-off, lien, or any form of selfhelp whatsoever, or refuse to transfer any funds or assets to the Receiver’s
control without the permission of this Court;

C.

Within five (5) business days of receipt of that notice, file with the Court
and serve on the Receiver and counsel for the Commission a certified
statement setting forth, with respect to each such account or other asset,
the balance in the account or description of the assets as of the close of
business on the date of receipt of the notice; and,

D.

Cooperate expeditiously in providing access to accounts, assets and funds,
as well as information as well as transferring funds, assets and accounts to
the Receiver or at the direction of the Receiver.
V. Access to Real and Personal Property

18.

The Receiver is authorized to take immediate possession of all personal property

of the Receivership Defendants, wherever located, including but not limited to electronically
stored information, computers, laptops, hard drives, external storage drives, and any other such
memory, media or electronic storage devices, books, papers, data processing records, evidence of
indebtedness, bank records and accounts, savings records and accounts, brokerage records and

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accounts, certificates of deposit, stocks, bonds, debentures, and other securities and investments,
contracts, mortgages, furniture, office supplies, automobiles, and equipment.
19.

The Receiver is authorized to take immediate possession of all real property of the

Receivership Defendants, wherever located, including but not limited to all ownership and
leasehold interests and fixtures. Upon receiving actual notice of this Order by personal service,
facsimile transmission, or otherwise, all persons other than law enforcement officials acting
within the course and scope of their official duties, are (without the express written permission of
the Receiver) prohibited from: (a) entering such premises; (b) removing anything from such
premises; or, (c) destroying, concealing, or erasing anything on such premises.
20.

In order to execute the express and implied terms of this Order, the Receiver is

authorized to change door locks to the real property and premises described above. The Receiver
shall have exclusive control of the keys. The Receivership Defendants, or any other person
acting or purporting to act on their behalf, are ordered not to change the locks in any manner, nor
to have duplicate keys made, nor shall they have keys in their possession during the term of the
receivership.
21.

The Receiver is authorized to open all mail, other than mail addressed to

Defendant Goyal’s spouse, directed to or received by or at the offices or post office boxes of the
Receivership Defendants, and to inspect all mail opened prior to the entry of this Order, to
determine whether items or information therein fall within the mandates of this Order.
22.

Upon the request of the Receiver, the U.S. Marshals Service, in any judicial

district, is hereby ordered to assist the Receiver in carrying out his duties to take possession,
custody and control of, or identify the location of, any assets, records, or other materials
belonging to the Receivership Estates. In addition, the Receiver is authorized to request similar

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assistance from any other federal, state, county, or civil law enforcement officer(s) or
constable(s) of any jurisdiction.
VI. Notice to Third Parties
23.

The Receiver shall promptly give notice of his appointment to all known officers,

directors, agents, employees, shareholders, creditors, debtors, managers, members, and general
and limited partners of the Receivership Defendants, as the Receiver deems necessary or
advisable to effectuate the operation of the receivership.
24.

All persons and entities owing any obligation, debt, or distribution with respect to

an ownership interest to any Receivership Defendant shall, until further ordered by this Court,
pay all such obligations in accordance with the terms thereof to the Receiver, and its receipt for
such payments shall have the same force and effect as if the Receivership Defendant had
received such payment.
25.

In furtherance of his responsibilities in this matter, the Receiver is authorized to

communicate with, and/or serve this Order upon, any person, entity, or government office that he
deems appropriate to inform them of the status of this matter and/or the financial condition of the
Receivership Estates. All government offices which maintain public files of security interests in
real and personal property shall, consistent with such office’s applicable procedures, record this
Order upon the request of the Receiver or the Commission.
26.

The Receiver is authorized to instruct the United States Postmaster to hold and/or

reroute mail which is related, directly or indirectly, to the business, operations or activities of any
of the Receivership Defendants (the “Receiver’s Mail”), including all mail addressed to, or for
the benefit of, the Receivership Defendants. The Postmaster shall not comply with, and shall
immediately report to the Receiver, any change of address or other instruction given by anyone

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other than the Receiver concerning the Receiver’s Mail. The Receivership Defendants shall not
open any of the Receiver’s Mail and shall immediately turn over such mail, regardless of when
received, to the Receiver. All personal mail of any individual Receivership Defendants, mail
addressed to Defendant Goyal’s spouse, and/or any mail appearing to contain privileged
information, and/or any mail not falling within the mandate of the Receiver, shall be released to
the named addressee or addressee’s attorney by the Receiver. The foregoing instructions shall
apply to any proprietor, whether individual or entity, of any private mail box, depository,
business or service, or mail courier or delivery service, hired, rented, or used by the Receivership
Defendants. The Receivership Defendants shall not open a new mailbox or take any steps or
make any arrangements to receive mail in contravention of this Order, whether through the U.S.
mail, a private mail depository or courier service.
27.

Subject to payment for services provided, any entity or utility furnishing water,

electric, telephone, sewage, garbage, or trash removal services to the Receivership Defendants
shall maintain such service and transfer any such accounts to the Receiver unless instructed to
the contrary by the Receiver.
28.

The Receiver is authorized to assert, prosecute and/or negotiate any claim under

any insurance policy held by or issued on behalf of the Receivership Defendants, or their
officers, directors, agents, employees, or trustees, and to take any and all appropriate steps in
connection with such policies.
VII. Injunction Against Interference with Receiver
29.

The Receivership Defendants and all persons receiving notice of this Order by

personal service, facsimile transmission, or otherwise, are hereby restrained and enjoined from
directly or indirectly taking any action or causing any action to be taken, without the express

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written agreement of the Receiver, which would:
A.

B.

Hinder, obstruct or otherwise interfere with the Receiver in the
performance of his duties; such prohibited actions include but are not
limited to, concealing, destroying or altering records or information;

C.

Dissipate or otherwise diminish the value of any Receivership Assets;
such prohibited actions include but are not limited to, releasing claims or
disposing, transferring, exchanging, assigning or in any way conveying
any Receivership Assets, enforcing judgments, assessments or claims
against any Receivership Assets or any Receivership Defendant,
attempting to modify, cancel, terminate, call, extinguish, revoke or
accelerate (the due date), of any lease, loan, mortgage, indebtedness,
security agreement or other agreement executed by any Receivership
Defendant or which otherwise affects any Receivership Assets; or,

D.

30.

Interfere with the Receiver’s efforts to take control, possession, or
management of any Receivership Assets; such prohibited actions include
but are not limited to, using self-help or executing or issuing or causing
the execution or issuance of any court attachment, subpoena, replevin,
execution, or other process for the purpose of impounding or taking
possession of or interfering with or creating or enforcing a lien upon any
Receivership Assets;

Interfere with or harass the Receiver, or interfere in any manner with the
exclusive jurisdiction of this Court over the Receivership Estates.

The Receivership Defendants shall cooperate with and assist the Receiver in the

performance of his duties.
31.

The Receiver shall promptly notify the Court and Commission counsel of any

failure or apparent failure of any person or entity to comply in any way with the terms of this
Order.
VIII. Stay of Litigation
32.

As set forth in detail below, the following proceedings, excluding the instant

proceeding and all police or regulatory actions and actions of the Commission related to the
above-captioned enforcement action, are stayed until further Order of this Court:
All civil legal proceedings of any nature, including, but not limited to, bankruptcy
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proceedings, arbitration proceedings, foreclosure actions, default proceedings, or other
actions of any nature filed against or seeking relief from: (a) the Receiver, in his capacity
as Receiver; (b) any Receivership Assets, wherever located; (c) any of the Receivership
Defendants, including subsidiaries and partnerships; or, (d) any of the Receivership
Defendants’ past or present officers, directors, managers, members, agents, or general or
limited partners sued for, or in connection with, any action taken by them while acting in
such capacity of any nature, whether as plaintiff, defendant, third-party plaintiff, thirdparty defendant, or otherwise (such proceedings are hereinafter referred to as “Ancillary
Proceedings”).
33.

The parties to any and all Ancillary Proceedings are enjoined from commencing

or continuing any such legal proceeding, or from taking any action, in connection with any such
proceeding, including, but not limited to, the issuance or employment of process.
34.

All Ancillary Proceedings are stayed in their entirety, and all Courts having any

jurisdiction thereof are enjoined from taking or permitting any action until further Order of this
Court. Further, as to any cause of action accrued or accruing in favor of one or more of the
Receivership Defendants against a third person or party, any applicable statute of limitation is
tolled until the earlier of two years following entry of this Order or such time as the Receiver has
filed his accounting with this Court.
IX. Managing Assets
35.

For each of the Receivership Estates, the Receiver shall establish one or more

accounts at a federally insured bank to receive and hold all cash and cash equivalent
Receivership Assets (the “Receivership Funds”).
36.

The Receiver’s deposit account shall be entitled “Receiver's Account, Estate of

[Name of Receivership Defendant]” together with the name of the action, or a title to that
effect.
37.

The Receiver may, without further Order of this Court, transfer, compromise, or

otherwise dispose of any Receivership Assets, other than real estate, in the ordinary course of

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business, on terms and in the manner the Receiver deems most beneficial to the Receivership
Estate, and with due regard to the realization of the true and proper value of such Receivership
Property.
38.

Subject to Paragraph 39, immediately below, the Receiver is authorized to locate,

list for sale or lease, engage a broker for sale or lease, cause the sale or lease, and take all
necessary and reasonable actions to cause the sale or lease of all real property in the Receivership
Estates, either at public or private sale, on terms and in the manner the Receiver deems most
beneficial to the Receivership Estates, and with due regard to the realization of the true and
proper value of such real property.
39.

The Receiver is authorized to sell, and transfer clear title to, all real property in

the Receivership Estates after first obtaining Court authorization.
40.

The Receiver is authorized to take all actions to manage, maintain, and/or wind-

down business operations of the Receivership Estates, including making legally required
payments to creditors, employees, and agents of the Receivership Estates and communicating
with vendors, investors, governmental and regulatory authorities, and others, as appropriate.
41.

The Receiver shall take all necessary steps to enable the Receivership Funds to

obtain and maintain the status of a taxable “Settlement Fund,” within the meaning of Section
468B of the Internal Revenue Code and of the regulations, when applicable, whether proposed,
temporary or final, or pronouncements thereunder, including the filing of the elections and
statements contemplated by those provisions. The Receiver shall be designated the administrator
of the Settlement Fund, pursuant to Treas. Reg. § 1.468B-2(k)(3)(i), and shall satisfy the
administrative requirements imposed by Treas. Reg. § 1.468B-2, including but not limited to (a)
obtaining a taxpayer identification number, (b) timely filing applicable federal, state, and local

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tax returns and paying taxes reported thereon, and (c) satisfying any information, reporting or
withholding requirements imposed on distributions from the Settlement Fund. The Receiver
shall cause the Settlement Fund to pay taxes in a manner consistent with treatment of the
Settlement Fund as a “Qualified Settlement Fund.” The Receivership Defendants shall cooperate
with the Receiver in fulfilling the Settlement Funds’ obligations under Treas. Reg. § 1.468B-2].
X. Investigate and Prosecute Claims
42.

Subject to the requirement, in Section VII above, that leave of this Court is

required to resume or commence certain litigation, the Receiver is authorized, empowered and
directed to investigate, prosecute, defend, intervene in or otherwise participate in, compromise,
and/or adjust actions in any state, federal or foreign court or proceeding of any kind as may in his
discretion, and in consultation with Commission counsel, be advisable or proper to recover
and/or conserve Receivership Assets.
43.

Subject to his obligation to expend receivership funds in a reasonable and cost-

effective manner, the Receiver is authorized, empowered, and directed to investigate the manner
in which the financial and business affairs of the Receivership Defendants were conducted and
(after obtaining leave of this Court) to institute such actions and legal proceedings, for the benefit
and on behalf of the Receivership Estates, as the Receiver deems necessary and appropriate. As
part of his duty to investigate and report to this Court pursuant to Section XV, the Receiver is
authorized to conduct a full accounting with regard to the activities of the Receivership
Defendants. The Receiver shall advise the Court as to the anticipated scope and nature of the
accounting in his initial report to this Court. The Receiver also may seek, among other legal and
equitable relief, the imposition of constructive trusts, disgorgement of profits, asset turnover,
avoidance of fraudulent transfers, rescission and restitution, collection of debts, and such other

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relief from this Court as may be necessary to enforce this Order. Where appropriate, the
Receiver should provide prior notice to counsel for the Commission before commencing
investigations and/or actions.
44.

The Receiver hereby holds, and is therefore empowered to waive, all privileges,

including the attorney-client privilege, held by all entity Receivership Defendants.
45.

The Receiver has a continuing duty to ensure that there are no conflicts of interest

between the Receiver, his Retained Personnel (as that term is defined below), and the
Receivership Estate.
XI. Repatriation of Foreign Assets and Documents
46.

The Receiver shall take such steps as are necessary to repatriate to the territory of

the United States of America all Receivership Assets that are located in a country other than the
United States and are held by or for Defendants or are under Defendants' direct or indirect
control, jointly, severally, or individually.
47.

To the extent he has not already done so, within three (3) business days following

entry of this Order, Neal V. Goyal shall provide the Receiver and the Commission with a full
accounting of all assets, including Receivership Assets, that are located outside of the United
States that have been transferred to the United States and are held by or for any Defendant or are
under any Defendants’ direct or indirect control, jointly, severally, or individually, including the
addresses and names of any foreign or domestic financial institution or other entity holding the
assets, along with the account numbers and balances.
48.

Neal V. Goyal shall take all steps necessary and appropriate to prevent any

transfer, disposition, or dissipation whatsoever of any assets, including Receivership Assets,
located outside the United States.

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49.

To the extent he has not already done so, within three (3) business days following

entry of this Order, Neal V. Goyal shall provide the Receiver and the Commission access to
Defendants’ records and documents held by financial institutions or other entities outside the
United States, by signing and delivering to the Receiver and Commission’s counsel a Consent to
Release of Financial Records.
XII. Interference with Repatriation
50.

IT IS FURTHER ORDERED that Defendants are hereby temporarily restrained

and enjoined from taking any action, directly or indirectly, that may result in the encumbrance or
dissipation of foreign assets, including Receivership Assets, or in the hindrance of the.
repatriation required by the preceding Section XI of this Order, including but not limited to:
A.

Sending any statement, letter, facsimile, email or wire transmission, or

telephoning, or engaging in any other act, directly or indirectly, that results in a
determination by a foreign trustee or other entity that a "duress" event has occurred under
the terms of a foreign trust agreement, until such time that the assets have been fully
repatriated pursuant to the preceding Section XI of this Order; and
B.

Notifying any trustee, protector, or other agent of any foreign trust or other related

entities of either the existence of this Order or the fact that repatriation is required
pursuant to a Court Order, until such time as assets, including Receivership Assets, have
been fully repatriated pursuant the preceding Section XI of this Order.
XIII. Bankruptcy Filing
51.

The Receiver may seek authorization of this Court to file voluntary petitions for

relief under Title 11 of the United States Code (the “Bankruptcy Code”) for the Receivership
Defendants, or any of them. If a Receivership Defendant is placed in Chapter 11 bankruptcy
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proceedings, the Receiver may become, and may be empowered to operate each of the
Receivership Estates as, a debtor-in-possession. In such a situation, the Receiver shall have all
of the powers and duties as provided a debtor-in-possession under the Bankruptcy Code to the
exclusion of any other person or entity.
52.

The provisions of Section VII above bar any person or entity, other than the

Receiver, from placing any of the Receivership Defendants in bankruptcy proceedings.
XIV. Liability of Receiver
53.

The Receiver shall not be required to post bond or give an undertaking of any

type in connection with his fiduciary obligations in this matter.
54.

The Receiver and his attorneys and agents, acting within the scope of such agency

(collectively, “Retained Personnel”) are entitled to rely on all outstanding rules of law and
Orders of this Court and shall not be liable to anyone for their own good faith compliance with
any order, rule, law, judgment, or decree. In no event shall the Receiver or Retained Personnel
be liable to anyone for their actions or omissions except upon an express finding by this Court
that they acted as a result of malfeasance, bad faith, gross negligence, or in reckless disregard of
their duties.
55.

No action shall be filed or proceeding commenced against the Receiver or the

Retained Personnel arising out of or in any way related to this receivership or their duties or
work performed in connection with the receivership without obtaining an order from the Court
based upon a showing of good cause.
56.

This Court shall retain jurisdiction over any action filed against the Receiver or

Retained Personnel based upon acts or omissions committed in their representative capacities.
57.

In the event the Receiver decides to resign, the Receiver shall first give written

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notice to the Commission’s counsel of record and the Court of its intention, and the resignation
shall not be effective until the Court appoints a successor receiver. The Receiver shall then
follow such instructions as the Court may provide.
XV. Insurance
58.

Given the urgency to appoint a Receiver, the Court recognizes that the Receiver

accepts this appointment without time for independent verification that appropriate insurance is
in place on the property or that appropriate liability or other insurance is in place to protect the
Receivership Assets and the Receivership Estate. Accordingly, the Court acknowledges that the
Receiver has no responsibility or liability until such time as he can confirm that such insurance is
in place or acquire the appropriate insurance. The Receiver shall make it a priority to verify or
obtain insurance coverage immediately upon this Order Appointing Receiver being entered;
however, the Plaintiff, Receivership Defendants, and Court acknowledge there may be a gap of
time before such insurance may be in place to properly protect the assets of the estate and any
employees of the estate, and that the Receiver has no responsibility or liability until such time as
he/it has notified the Court by filing a notice that insurance is in place.
59.

Neal V. Goyal is ordered to immediately provide the Receiver with all available

insurance information for both existing and prior insurance policies. This includes all
applications, policies, riders, correspondence, endorsements, claims and other information. Neal
V. Goyal is ordered: (1) to advise the insurance agent(s) of this Order in writing, (2) designate
all authority over the policies to the Receiver, and (3) take no action with regard to terminating
or modifying existing insurance policies.
60.

Any insurance broker, agent, carrier, or underwriter is specifically ordered by the

Court to cooperate with the Receiver by timely furnishing the following: (1) copies of all
insurance policies including any riders, endorsements and applications with respect to policies
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related to the Receivership Estates, (2) loss history for five consecutive years or for as long as
insurance has been in force if less than five years, (3) premium payment history including current
status, and (4) any correspondence with insurance agents, brokers and companies. Policies shall
be endorsed by the Defendants naming the Receiver as Named Insured and Loss Payee effective
the date of this Order as appropriate to the type of coverage, and evidence of this policy
endorsement shall be promptly supplied to the Receiver.
61.

The Receiver is hereby authorized to engage insurance brokers and consultants as

necessary to properly insure the Receivership Assets.
XVI. Recommendations and Reports
62.

The Receiver is authorized and empowered, in the Receiver’s sole discretion, to

develop a plan for the fair, reasonable, and efficient recovery and liquidation of all remaining,
recovered, and recoverable Receivership Assets (the “Liquidation Plan”).
63.

Within ninety (90) days of the entry date of this Order, the Receiver shall file the

Liquidation Plan in the above-captioned action, with service copies to counsel of record.
64.

Within thirty (30) days after the end of each calendar quarter, the Receiver shall

file and serve a full report and accounting of each Receivership Estate (the “Quarterly Status
Report”), reflecting (to the best of the Receiver’s knowledge as of the period covered by the
report) the existence, value (if known), and location of all Receivership Assets, and of the extent
of liabilities, both those claimed to exist by others and those the Receiver believes to be legal
obligations of the Receivership Estates.
65.

The Quarterly Status Report shall contain the following:
A.

A summary of the operations of the Receiver;

B.

The amount of cash on hand, the amount and nature of accrued
administrative expenses, and the amount of unencumbered funds in the
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estate;
C.

D.

A description of all known Receivership Assets, including approximate or
actual valuations, anticipated or proposed dispositions, and reasons for
retaining assets where no disposition is intended;

E.

A description of liquidated and unliquidated claims held by each
Receivership Estate, including the need for forensic and/or investigatory
resources; approximate valuations of claims; and anticipated or proposed
methods of enforcing such claims (including likelihood of success in: (i)
reducing the claims to judgment; and, (ii) collecting such judgments);

F.

A list of all known creditors with their addresses and the amounts of their
claims;

G.

The status of Creditor Claims Proceedings, after such proceedings have
been commenced; and,

H.

66.

A schedule of all the Receiver’s receipts and disbursements (attached as
Exhibit A to the Quarterly Status Report), with one column for the
quarterly period covered and a second column for the entire duration of
the receivership;

The Receiver's recommendations for a continuation or discontinuation of
the receivership and the reasons for the recommendations.

On the request of the Commission, the Receiver shall provide the Commission

with any documentation that the Commission deems necessary to meet its reporting
requirements, that is mandated by statute or Congress, or that is otherwise necessary to further
the Commission’s mission.
XVII. Fees, Expenses and Accountings
67.

Subject to Paragraphs 68 – 74 immediately below, the Receiver need not obtain

Court approval prior to the disbursement of Receivership Funds for expenses in the ordinary
course of the administration and operation of the receivership. Further, prior Court approval is
not required for payments of applicable federal, state or local taxes.
68.

As provided in Section II above, and subject to Paragraph 59 below, the Receiver

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is authorized to engage persons and entities (“Retained Personnel”) to assist him in carrying out
the duties and responsibilities described in this Order.
69.

The Receiver and Retained Personnel are entitled to reasonable compensation and

expense reimbursement from the Receivership Estates as described in the “Billing Instructions
for Receivers in Civil Actions Commenced by the U.S. Securities and Exchange Commission”
(the “Billing Instructions”) agreed to by the Receiver. Such compensation shall require the prior
approval of the Court.
70.

Within forty-five (45) days after the end of each calendar quarter, the Receiver

and Retained Personnel shall apply to the Court for compensation and expense reimbursement
from the Receivership Estates (the “Quarterly Fee Applications”). At least thirty (30) days prior to
filing each Quarterly Fee Application with the Court, the Receiver will serve upon counsel for the
Commission a complete copy of the proposed Application, together with all exhibits and relevant
billing information in a format to be provided by Commission staff.
71.

All Quarterly Fee Applications will be interim and will be subject to cost benefit

and final reviews at the close of the receivership. At the close of the receivership, the Receiver
will file a final fee application, describing in detail the costs and benefits associated with all
litigation and other actions pursued by the Receiver during the course of the receivership.
72.

Quarterly Fee Applications may be subject to a holdback in the amount of 20% of

the amount of fees and expenses for each application filed with the Court. The total amounts
held back during the course of the receivership will be paid out at the discretion of the Court as
part of the final fee application submitted at the close of the receivership.
73.

Each Quarterly Fee Application shall:
A.

Comply with the terms of the Billing Instructions agreed to by the
Receiver; and,
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B.

74.

Contain representations (in addition to the Certification required by the
Billing Instructions) that: (i) the fees and expenses included therein were
incurred in the best interests of the Receivership Estate; and, (ii) with the
exception of the Billing Instructions, the Receiver has not entered into any
agreement, written or oral, express or implied, with any person or entity
concerning the amount of compensation paid or to be paid from the
Receivership Estate, or any sharing thereof.

At the close of the Receivership, the Receiver shall submit a Final Accounting, in

a format to be provided by Commission staff, as well as the Receiver’s final application for
compensation and expense reimbursement.

IT IS SO ORDERED, this 6th day of June, 2014, at Chicago, Illinois

___________________________________
Rebecca R. Pallmeyer
UNITED STATES DISTRICT JUDGE

24

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
______________________________________
)
UNITED STATES SECURITIES
)
AND EXCHANGE COMMISSION,
)
)
Civil Action No. 1:14-cv-03900
Plaintiff,
)
v.
)
)
Hon. Rebecca R. Pallmeyer
NEAL V. GOYAL, CALDERA
)
ADVISORS, LLC, and BLUE HORIZON )
Magistrate Judge Jeffery Cole
ASSET MANAGEMENT, LLC
)
)
Defendants,
)
and
)
)
CALDERA INVESTMENT GROUP, INC. )
)
Relief Defendant.
)
)
NOTICE OF MOTION and CERTIFICATE OF SERVICE
U

TO:

See attached Service List
Please take notice that on Wednesday, June 15, 2016, at 8:45 a.m., the undersigned will

appear before the Honorable Rebecca R. Pallmeyer, or any judge sitting in her stead, in
Courtroom 2144, and present Receiver’s Motion for Court Approval of the Sale and
Liquidation of Private Equity Investments.

Case: 1:14-cv-03900 Document #: 100 Filed: 06/07/16 Page 2 of 4 PageID #:1114

Dated: June 7, 2016

Kevin B. Duff, Receiver
By:

/s/ Nicole Mirjanich
Daniel S. Kaplan
Nicole Mirjanich
Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, IL 60605
Phone [phone]
Fax
[phone]
[e-mail]
[e-mail]

Case: 1:14-cv-03900 Document #: 100 Filed: 06/07/16 Page 3 of 4 PageID #:1115

CERTIFICATE OF SERVICE
U

I hereby certify that on June 7, 2016, I electronically filed the foregoing Notice and
Receiver’s Motion for Court Approval of the Sale and Liquidation of Private Equity
Investments with the Clerk of the United States District Court for the Northern District of
Illinois, using the CM/ECF system. A copy of the Notice and the Motion were served via the
CM/ECF system upon counsel for the parties as identified on the attached Service List.

/s/ Nicole Mirjanich
U

Daniel S. Kaplan
Nicole Mirjanich
Rachlis Duff Adler Peel & Kaplan, LLC
542 South Dearborn Street, Suite 900
Chicago, IL 60605
Phone [phone]
Fax
[phone]
[e-mail]
[e-mail]

Case: 1:14-cv-03900 Document #: 100 Filed: 06/07/16 Page 4 of 4 PageID #:1116

SEC v. NEAL V. GOYAL, et al.
Case No. 14-cv-3900
SERVICE LIST
U

Benjamin J. Hanauer
Richard Gregory Stoltz
Securities and Exchange Commission
175 W. Jackson Blvd., Suite 900
Chicago, IL 60604
312-353-8642
312-353-7398 (fax)
[e-mail]
[e-mail]
Attorneys for Plaintiff Securities and Exchange Commission

Howard J. Rosenburg
James L. Kopecky
Kopecky, Schumacher & Bleakley, P.C.
203 North LaSalle Street
Suite 1620
Chicago, IL 60601
312-527-3966
312-268-5031 (fax)
[e-mail]
[e-mail]
Attorneys for Defendants Neal V. Goyal, Caldera Advisors, LLC,
Blue Horizon Asset Management, LLC, and
Relief Defendant Caldera Investment Group, Inc.

Case: 1:14-cv-03900 Document #: 102 Filed: 06/15/16 Page 1 of 1 PageID #:1118

Enclosure 10

Enclosure 11

Enclosure 12

Enclosure 13

Exhibit B 

Case: 1:14-cv-03900 Document #: 119 Filed: 05/18/17 Page 1 of 1 PageID #:1208

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
NEAL V. GOYAL, CALDERA
ADVISORS, LLC, and BLUE HORIZON
ASSET MANAGEMENT, LLC
Defendants,
and
CALDERA INVESTMENT GROUP, INC.
Relief Defendant.

Civil Action No. 1:14-cv-03900
Hon. Rebecca R. Pallmeyer
Magistrate Judge Jeffrey Cole

ORDER APPROVING RECEIVER’S
MOTION FOR COURT APPROVAL OF SETTLEMENT
This Court, after due notice having been given, and having conducted a hearing on the
Receiver’s Motion For Court Approval Of Settlement, being full advised in the premises and for
good cause shown: HEREBY ORDERS:
1.

The Receiver’s Motion is granted.

2.

The Court approves the settlement with Sherwood Partners Inc., the Court

appointed Receiver in the matter titled SEC v. John B. Bivona, et al., Case No. 3:16-cv-1386
(N.D. Cal. 2016), relating to the Receivership’s interest corresponding to Square, Inc. pursuant to
which Sherwood will distribute or otherwise pay $20,000 to the Receivership Estate.
Entered:
_________________________________
Honorable Rebecca R. Pallmeyer
Date:

May 18, 2017