USA v. North America Investment Corporation

Filing 1

Consent ORDER by Jay A. Garcia-Gregory, U.S. District Court Judge on 11/4/2014. (Attachments: # 1 Complaint, # 2 Civil Cover Sheet) (dbera, )

Case 3:14-cv-01637-JAG Document 10 Filed 11/04/14 Page 1 of 5

IN THE UNITED STATES DISTRICT COURT
FOR THE OF PUERTO RICO
UNITED STATES OF AMERICA

:
:
Plaintiff,
: Civil No. 14-1637
:
v.
:
:
NORTH AMERICA INVESTMENT
:
CORPORATION
:
:
Defendant.
:
____________________________________:
CONSENT ORDER
Before this Court is the Complaint by the United States of America, on behalf of the

United States Small Business Administration (“SBA”), for a permanent injunction and the
appointment of the SBA as Permanent Receiver for North America Investment Corporation.
(“NAIC”). The Court, being fully advised as to the merits, orders that the following relief is
granted.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1.

Pursuant to the provisions of 15 U.S.C. § 687c, this Court shall take exclusive

jurisdiction of NAIC and all of its assets, wherever located, and the United States Small Business
Administration ("SBA"), is hereby appointed receiver (“the Receiver”) of NAIC to serve without
bond until further order of this Court.

The Receiver is appointed for the purpose of

administering, marshalling and, if necessary, liquidating all of NAIC’s assets to satisfy the
claims of creditors therefrom in the order of priority as determined by this Court.
2.

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

possessed by the officers and directors of NAIC under applicable state and federal law and by the
Articles of Incorporation and By-Laws of said corporation, in addition to all powers and authority

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Case 3:14-cv-01637-JAG Document 10 Filed 11/04/14 Page 2 of 5

conferred upon the Receiver by the provisions of 15 U.S.C. § 687c and 28 U.S.C. § 754. The
directors, officers, employees, and agents of NAIC are hereby dismissed. Such persons shall have
no authority with respect to NAIC’s operations or assets, except as may hereafter be expressly
granted by the Receiver. The Receiver shall assume and control the operation of NAIC and shall
pursue and preserve all of its claims.
3.

The past and/or present officers, directors, agents, managers, general partners,

accountants, attorneys and employees of NAIC, as well as all those acting in their place, are hereby
ordered and directed to turn over to the Receiver forthwith all books, records, documents, accounts
and all other instruments and papers of said partnership and all other assets and property of the
partnership, whether real or personal. NAIC shall furnish a written statement within five (5) days
after the entry of this Order, listing the identity, location and estimated value of all assets of NAIC
as well as the names, addresses and amounts of claims of all known creditors of NAIC. All
persons having control, custody or possession of any assets or property of NAIC, including its
officers and directors, are hereby directed to turn such property over to the Receiver.
4.

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

directors, employees, creditors, debtors and agents of NAIC. All persons and entities owing any
obligations or debts to NAIC shall, until further order of 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 NAIC had received such payments.
5.

The Receiver is hereby authorized to open such Receiver's bank accounts, at

banking or other financial institutions, to extend credit on behalf of NAIC, to utilize SBA
personnel, and to employ such other personnel as necessary to effectuate the operation of the
receivership including, but not limited to, attorneys and accountants, and is further authorized to

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expend receivership funds to compensate such personnel in such amounts and upon such terms as
the Receiver shall deem reasonable in light of the usual fees and billing practices and procedures of
such personnel. The Receiver is not required to obtain Court approval prior to the disbursement of
receivership funds for payments to personnel employed by the Receiver or payments for expenses
incidental to administration of the Receivership.

In addition, the Receiver is authorized to

reimburse the SBA or its employees for travel expenses incurred by SBA personnel in the
establishment and administration of the receivership. The Receiver may, without further order of
this Court, transfer, compromise, or otherwise dispose of any claim or asset, other than real estate,
which would result in net proceeds to the Receiver and the receivership estate.
6.

NAIC’s past and/or present officers, directors, agents, employees, and other

appropriate persons (including, without limitation, the defendant's portfolio of small business
concerns and banks or other financial institutions doing business with defendant and/or defendant's
portfolio of small business concerns) shall answer under oath, pursuant to a Receiver’s Notice or
Subpoena, to the Receiver, all questions which it may put to them regarding the business of said
partnership, or any other matter relevant to the operation or administration of the receivership or
the collection of funds due to NAIC. In the event that the Receiver deems it necessary to require
the appearance of the aforementioned persons, the production of documents, information, or any
other form of discovery concerning the assets, property or business assets of NAIC or any other
matter relevant to the operation or administration of the Receivership or the collection of funds due
to NAIC, the Receiver shall direct notice for any such appearance by certified mail, and said
persons shall appear and give answer to the Receiver, produce documents or submit to any other
form of discovery in accordance with the Federal Rules of Civil Procedure.
7.

The parties or prospective parties to any and all civil legal proceedings wherever

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located, including, but not limited to arbitration proceedings, bankruptcy or foreclosure actions,
default proceedings, or any other proceedings involving (1) NAIC and/or or (2) any assets of
NAIC, and/or (3) NAIC or its present or past officers, directors, or the Receiver, sued for, or in
connection with, any action taken by NAIC's officers and, directors acting in such capacity
whether as plaintiff, defendant, third-party plaintiff, third-party defendant, or otherwise, or with
respect to any assets of NAIC, are hereby stayed from taking any action, including discovery,
commencing or continuing any legal proceeding of any nature in connection with any proceeding.
8.

All civil legal proceedings wherever located, including arbitration proceedings,

foreclosure activities, bankruptcy actions, or default proceedings, but excluding the instant
proceeding, involving (1) NAIC and/or or (2) any assets of NAIC, and/or (3) NAIC or its present
or past officers, directors, or the Receiver, sued for, or in connection with, any action taken by
NAIC's officers and, directors acting in such capacity whether as plaintiff, defendant, third-party
plaintiff, third-party defendant, or otherwise, or with respect to any assets of NAIC, are hereby
enjoined from taking any action, including discovery, commencing or continuing any legal
proceeding of any nature in connection with any proceeding.
9.

Further, as to a cause of action accrued or accruing in favor of NAIC against a

third person or party, any applicable statute of limitation is tolled to the extent allowed by
applicable law during the period in which this injunction against commencement of legal
proceedings is in effect as to that cause of action.
10.

NAIC and its past and/or present directors, officers, agents, employees and other

persons acting in concert or participation therewith be, and they hereby are, enjoined from either
directly or indirectly taking any actions or causing any such action to be taken which would
dissipate the assets and property of NAIC to the detriment of the Receiver appointed in this cause,

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including but not limited to destruction of corporate records, or which would violate the Small
Business Investment Act of 1958, as amended, (the "SBIA"), 15 U.S.C. Section 661 et seq., or the
regulations promulgated thereunder, (the "Regulations"), 13 C.F.R. § 107.1 et seq.
11.

The Receiver is authorized to borrow on behalf of NAIC, from the SBA, up to

$1,000,000, and is authorized to cause NAIC to issue Receiver's Certificates of Indebtedness in the
principal amounts of the sums borrowed, which certificates will bear interest at or about 10 percent
per annum and will have a maturity date no later than 18 months after the date of issue. Said
Receiver's Certificates of Indebtedness shall have priority over all other debts and obligations of
NAIC, excluding administrative expenses of the Receivership, whether presently existing or
hereinafter incurred, including without limitation any claims of shareholders of NAIC.
12.

This Court determines and adjudicates that NAIC has violated 13 C.F.R. §

107.1830(b) and 13 C.F.R. § 107.507(a) of the Regulations as alleged in the Complaint filed in this
matter. After completing its activities in accordance with this Order, the Receiver may recommend
that NAIC’s license as an SBIC be revoked.
13.

Judgment is hereby entered in favor of SBA and against NAIC in the amount of

$1,250,000 plus earned dividends, at the post judgment interest rate which shall accrue from the
date of judgment.

IT IS SO ORDERED.
Dated this 4th day of November, 2014.

/s Jay A. Garcia-Gregory
________________________________
UNITED STATES DISTRICT JUDGE

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