Securities and Exchange Commission v. Total Wealth Management, Inc. et al
Filing
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ORDER granting 107 Second Interim Motion for Payment of Fees and Reimbursement of Expenses. Court approves Receiver's second interim application for fees in the amount of $90,695.00. Court authorizes payment to Kristen A. Janulewicz of 90 % of the approved fees ($81,625.50), on an interim basis from the assets of the Receivership Entities. Court approves Allen Matkins' application for fees in the amount of $159,492.75. Court authorizes and directs the Successor Rec eiver to pay Allen Matkins 80% of approved fees ($127,594.20) on an interim basis from the assets of the Receivership Entities. Court approves Allen Matkins' request for reimbursement of expenses in the amount of $3,892.33, and authorizes and directs the Successor Receiver to reimburse Allen Matkins for such costs in full. Signed by Judge Cynthia Bashant on 12/15/2016. (jah)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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SECURITIES AND EXCHANGE
COMMISSION,
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Plaintiff,
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v.
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TOTAL WEALTH
MANAGEMENT, INC. and JACOB
KEITH COOPER,
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Case No. 15-cv-226-BAS-DHB
ORDER GRANTING SECOND
INTERIM APPLICATIONS FOR
PAYMENT OF FEES AND
REIMBURSEMENT OF
EXPENSES
Defendants.
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Presently before the Court in this Securities and Exchange Commission
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(“SEC”) enforcement action are the second interim applications for payment of fees
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by Kristen A. Janulewicz1 (the “Receiver”), the Court-appointed permanent receiver
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for Defendant Total Wealth Management Inc. and its subsidiaries and affiliates (the
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“Receivership Entities”), and Receiver’s counsel, Allen Matkins Leck Gamble
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Mallory & Natsis LLP (“Allen Matkins”). (ECF No. 107.) The applications cover the
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period July 1, 2015 through December 31, 2015 (the “Application Period”) and seek
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On June 7, 2016, the Court substituted Thomas A. Seaman for Kristen A. Janulewicz as
Permanent Receiver. (ECF No. 102.) Seaman, as the Successor Receiver, brings this application
on Janulewicz’s behalf.
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interim payment of $90,695.00 in fees incurred by the Receiver and $159,492.75 in
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fees and $3,892.33 in expenses incurred by Allen Matkins. Id. The SEC has reviewed
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the fee applications and supports the requests for interim payment in the amounts
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requested. (ECF No. 113.)
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I.
DISCUSSION
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A. Legal Standard
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“A receiver appointed by a court who reasonably and diligently discharges his
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duties is entitled to be fairly compensated for services rendered and expenses
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incurred.” SEC v. Byers, 590 F. Supp. 2d 637, 644 (S.D.N.Y. 2008). The entitlement
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to reasonable compensation extends to the professionals employed by the receiver.
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See Drilling & Exploration Corp. v. Webster, 69 F.2d 416, 418 (9th Cir. 1934). The
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amount of compensation to be awarded is firmly within the discretion of the district
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court, and generally is a charge upon the property or funds in receivership. Gaskill v.
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Gordon, 27 F.3d 248, 251, 253 (7th Cir. 1994). In determining the reasonableness of
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fees and costs requested, the court considers the time records presented, the quality
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of the work performed, the complexity of the problems faced, and the benefits to the
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receivership estate. SEC v. Fifth Ave. Coach Lines, Inc., 364 F.Supp. 1220, 1222
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(S.D.N.Y. 1973). The receiver bears the burden of demonstrating entitlement to
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payment of fees and costs in the amount requested. See 65 Am. Jur. 2d, Receivers §
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228 (2d ed. Feb. 2016 update). Finally, in a securities receivership, “[o]pposition or
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acquiescence by the SEC to the fee application will be given great weight.” Fifth Ave.
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Coach Lines, 364 F. Supp. at 1222.
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B. Receiver’s Request for Fees
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The Receiver’s request for $90,695.00 in fees incurred during the Application
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Period includes the fees of associated professionals who worked with her on behalf
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of the Receivership Entities. During the Application Period, the Receiver and
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associated professionals worked a total of 411.3 hours on behalf of the Receivership
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Entities, including tasks such as document review, financial analysis and forensic
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accounting, investor relations, debt collection, and asset management. (ECF No. 107,
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Attach. 3.) The average hourly rate ranged from $65 for administrative tasks to $375
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for project management, with a weighted average rate of $221 per hour. (ECF No.
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51, Attach. 7.) The Receiver herself worked at an hourly rate of $270 (ECF No. 51,
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Attach. 2) and did not bill for travel time or for the cost of preparing the instant
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application for payment.
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The Court finds the Receiver’s request for $90,695.00 in fees to be reasonable.
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All fees incurred during the Application Period are meticulously documented and
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presented in such a way that the Court can clearly evaluate the tasks performed, hours
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expended, hourly rates, and the total fees incurred for each task category. (ECF No.
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107, Attach. 1, 2.) The Receiver’s hourly rate of $270, and the weighted average rate
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of $221 per hour, are eminently reasonable. The Receiver has made substantial
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progress in identifying and recovering receivership assets, including the recovery of
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$348,894.71 in assets during the Application Period, and more than $3.8 million
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overall. (Seaman Decl. ¶¶ 3, 4.) In light of the complexity of the matter, the degree
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of responsibility involved, and the business ability required, the number of hours
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expended during the Application Period is reasonable. In addition, the SEC’s stated
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support for the Receiver’s request weighs in favor of finding the fee application
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reasonable. Accordingly, the Court approves, on an interim basis, the Receiver’s
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request for $90,695.00 in fees incurred during the Application Period, and authorizes
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the payment, on an interim basis, of 90% of the fees incurred, in the amount of
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$81,625.50.
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C. Allen Matkins’ Request for Fees and Expenses
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During the Application Period, Allen Matkins spent a total of 378.5 hours
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working on behalf of the Receivership Entities, at a cumulative, weighted average
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rate of $421.38 per hour, for fees totaling $159,492.75. (ECF No. 107, Attach. 5,
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2:13–20.) In addition, Allen Matkins incurred $3,892.33 in expenses. (Id.) The firm
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performed a wide range of tasks assisting the Receiver during the relevant period,
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including helping with an extensive investigation relating to attorneys and law firms
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that had represented the Receivership Entities in the pre-receivership period;
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recovering hundreds of thousands in additional receivership assets; performing
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extensive work to prepare tax returns and related materials; issuing and enforcing
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subpoenas; and performing the extensive work needed to prepare a lawsuit for filing
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against Private Placement Capital Notes II, LLC and its principal, Anthony Hartman.
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(Id. Attach. 6.) These efforts have substantially benefited the Receivership Entities.
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The Court finds that Allen Matkins’ request for fees and costs is reasonable.
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Allen Matkins is a well-known firm with extensive experience in federal
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receiverships, and the firm’s billing rates are comparable to the usual fees for
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similarly complex services in the community. The detailed time records submitted
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indicate that the firm staffed the tasks performed appropriately and efficiently based
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on the expertise required. (See Attach. 6) The amount requested in fees also reflects
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Allen Matkins’ agreement to discount its ordinary billing rates by 10%, and to delay
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upward adjustments of billing rates for attorneys staffed on this matter. (ECF No.
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107, Attach. 5, 4:21–23.) And finally, as in the case of the Receiver’s fee application,
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the Court ascribes great weight to the SEC’s support for Allen Matkins’ request for
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fees and reimbursement of expenses. (ECF No. 113.) Accordingly, the Court
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approves, on an interim basis, Allen Matkins’ request for $159,492.75 in fees
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incurred during the Application Period, and authorizes the payment, on an interim
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basis, of 80% of the fees incurred, in the amount of $127,594.20. In addition, the
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firm’s request for reimbursement of expenses in the amount of $3,892.33 is approved
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as reasonable.
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II.
CONCLUSION & ORDER
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For the reasons set forth above, the Court GRANTS the interim applications
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for fees and reimbursement of expenses for the period July 1, 2015 through December
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31, 2015 as follows:
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1. The Court APPROVES the Receiver’s second interim application for fees
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in the amount of $90,695.00;
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2. The Court AUTHORIZES payment to Kristen A. Janulewicz of 90% of
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approved fees (that is, $81,625.50), on an interim basis, from the assets of
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the Receivership Entities;
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3. The Court APPROVES Allen Matkins’ application for fees in the amount
of $159,492.75;
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4. The Court AUTHORIZES and DIRECTS the Successor Receiver to pay
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Allen Matkins 80% of approved fees (that is, $127,594.20), on an interim
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basis, from the assets of the Receivership Entities;
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5. The Court APPROVES Allen Matkins’ request for reimbursement of
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expenses, in the amount of $3,892.33, and AUTHORIZES and DIRECTS
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the Successor Receiver to reimburse Allen Matkins for such costs in full.
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IT IS SO ORDERED.
DATED: December 15, 2016
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