Securities and Exchange Commission v. Nadel et al

Filing 1124

Unopposed MOTION for Attorney Fees Receiver's Sixteenth Interim Motion for Order Awarding Fees, Costs, and Reimbursement of Costs to Receiver and His Professionals (September 1, 2013 through January 31, 2014) by Burton W. Wiand. (Attachments: # 1 Exhibit 1 - Standardized Fund Accounting Report, # 2 Exhibit 2 - Part 1 - The Receiver's Fifteenth Interim Report, # 3 Exhibit 2 - Part 2 - The Receiver's Fifteenth Interim Report, # 4 Exhibit 3 - Prior Interim Motions for Orders Awarding Fees, # 5 Exhibit 4 - Scoop Receivership - Representation of Scoop Receivership, # 6 Exhibit 5 - Scoop Receivership - Recovery from Investors, # 7 Exhibit 6 - Scoop Receivership - Recovery of Assets from N. and C. Moody, # 8 Exhibit 7 - Scoop Receivership - Recovery of Commissions, # 9 Exhibit 8 - Scoop Receivership - Quest Energy Management Group, Inc., # 10 Exhibit 9 - Categorization and Summary of Costs Incurred by WGK, # 11 Exhibit 10 - Attorney Fee Schedule, # 12 Exhibit 11 - Scoop Legal Team - Scoop Capital, LLC Receivership, # 13 Exhibit 12 - Scoop Legal Team - Recovery from Investors, # 14 Exhibit 13 - Scoop Legal Team - Recovery of Assets from N. and C. Moody, # 15 Exhibit 14 - Scoop Legal Team - Recovery of Commissions, # 16 Exhibit 15 - Scoop Legal Team - Quest Energy Management Group, Inc., # 17 Exhibit 16 - PDR Certified Public Accountants, # 18 Exhibit 17 - E-Hounds, Inc., # 19 Exhibit 18 - The RWJ Group, LLC, # 20 Exhibit 19 - Yip Associates, # 21 Exhibit 20 - Kirby Noonan Lance and Hoge, # 22 Exhibit 21 - Reminger Co., L.P.A., # 23 Exhibit 22 - Schiff Hardin LLP, # 24 Exhibit 23 - Brock and Brock, # 25 Exhibit 24 - Rifkin Weiner Livingston Levitan and Silver, LLC, # 26 Exhibit 25 - Maples, # 27 Exhibit 26 - Scott Douglass and McConnico LLP, # 28 Exhibit 27 - Proposed Order)(Morello, Gianluca)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.

Case No. 8:09-cv-87-T-26TBM

ARTHUR NADEL;
SCOOP CAPITAL, LLC;
SCOOP MANAGEMENT, INC.
Defendants,
SCOOP REAL ESTATE, L.P.;
VALHALLA INVESTMENT PARTNERS, L.P.;
VALHALLA MANAGEMENT, INC.;
VICTORY IRA FUND, LTD;
VICTORY FUND, LTD;
VIKING IRA FUND, LLC;
VIKING FUND, LLC; AND
VIKING MANAGEMENT, LLC
Relief Defendants.
____________________________________/
RECEIVER’S SIXTEENTH INTERIM MOTION FOR ORDER
AWARDING FEES, COSTS, AND REIMBURSEMENT OF COSTS
TO RECEIVER AND HIS PROFESSIONALS
Burton W. Wiand, as Receiver, by and through his undersigned counsel and pursuant
to Rule 66 of the Federal Rules of Civil Procedure and the Court’s Order Appointing
Receiver dated January 21, 2009 (the “Order Appointing Receiver”; Doc. 8), respectfully
moves this Court for the entry of an order awarding fees, costs, and reimbursement of costs
to the Receiver and his professionals. This motion covers all fees and costs incurred for the
five month period from September 1, 2013 through January 31, 2014. The Standardized

Fund Accounting Report (“SFAR”) for this period is attached hereto as Exhibit 1.1 For the
time covered by this Motion, the Receiver and Wiand Guerra King P.L. (“WGK”) seek
approval to pay total fees and costs of $698,574.80 for their services (of which $83,056.71
will be paid exclusively from Quest’s revenues and assets as detailed in the pertinent
Sections below).

During this same time, the Receiver collected the net amount of

$3,800,264.35 in cash from settlements, business income, interest/dividend income, and other
miscellaneous income which is less fees, expenses, and tax payments paid during this time.
From the inception of the Receivership through January 31, 2014, the Receiver has collected
the net amount of $62,547,639.15 in cash from these same sources, as well as business asset
liquidation and securities and personal asset liquidation which is less fees, expenses, and tax
payments paid during that time. To date, the Receiver has made four distributions totaling
approximately $58 million. As of June 13, 2014, the total funds in all Receivership accounts
are approximately $9,816,104.75, which includes $2,549,852.75 being held in reserves for
objections in the claims process and $2,229,463.15 being held in escrow until a claim to
these funds is resolved.
Since the appointment of the Receiver, he and those he has retained to assist him have
engaged in substantial and continuing efforts for the benefit of the Receivership. As of the
date of this Motion, among other things, the Receiver and his professionals have done the
following:

1

The Securities and Exchange Commission (the “Commission”) provided the
Receiver with detailed Billing Instructions for Receivers in Civil Actions Commenced by the
Commission (the “Billing Instructions”). The SFAR is one of the requirements contained in
the Billing Instructions.

2



Pursued and/or continue to pursue litigation or post-judgment efforts for (1) the
recovery of false profits or other transfers from investors (i.e., from “Profiteers”);
(2) the recovery of transfers from Receivership Entities to Donald and Joyce
Rowe, and certain of their affiliated entities; (3) the recovery of other transfers,
such as commissions, from other individuals and/or entities; and (4) the recovery
of certain charitable contributions made with scheme proceeds;



Prevailed on six summary judgment motions in the District Court for the Middle
District of Florida resulting in the entry of judgments against Profiteers for a total
amount of $2,869,015.43;



Reached agreements to settle with 158 Profiteers and non-profit organizations and
obtained 17 judgments against Profiteers and non-profit organizations for a total
combined amount of $32,000,525.69 (plus additional non-cash assets) as of June
17, 2014;2



Obtained two arbitration awards in favor of the Receiver in the total combined
amount of $2,417,979.83, which is included in the total amount of settlements and
judgments above;



Reached an agreement to settle, provided notice of the settlement to all potentially
interested parties, and obtained an order approving a settlement with Holland &
Knight LLP (“H&K”) pursuant to which H&K paid $25,000,000 to the Receiver;



Reached an agreement to settle, provided notice of the settlement to all potentially
interested parties, and obtained an order approving the settlement between the
Receiver and Goldman Sachs Execution & Clearing, L.P. (“GSEC”), pursuant to
which GSEC paid $9,850,000 to the Receiver;



Reached an agreement to settle, provided notice of the settlement to all potentially
interested parties, and obtained an order approving a settlement with Shoreline
Trading Group, LLC (“Shoreline”) pursuant to which Shoreline paid $2,500,000
to the Receiver;



After extensive negotiations, reached a settlement agreement with Donald and
Joyce Rowe and related entities (collectively the “Rowe Defendants”) pursuant
to which (1) the Rowes consented to entry of a joint and several judgment against
the Rowe Defendants in favor of the Receiver in the amount of $4,028,385 on all
claims; (2) the Rowe Defendants paid the Receiver $250,000; and (3) the

2

This amount does not include a judgment in the amount of $4,028,385.00 the
Receiver obtained against Don and Joyce Rowe and certain of their affiliated entities (the
“Rowe Judgment”).

3

Receiver used his best efforts to enjoin two proceedings against the Rowe
Defendants brought by investors in Nadel’s scheme;



Engaged in significant collection efforts to collect on the Rowe Judgment, which
as of June 17, 2014, has resulted in the recovery of $2,694,972.96 on this
judgment.



Entered into an agreement with Bonds.com to retire all Bonds.com’s indebtedness
to the Receivership in exchange for payment of $2,250,000 (which has been
received) and, allow Bonds.com to repurchase all approximately 7.5 million
shares of stock in exchange for a payment of $5,000 (which has also been
received);



Sold or reached agreements in principle to sell Receivership assets that should
result in approximately $8,341,536.69 for the Receivership and the waiver or
resolution of more than $9.5 million in debt obligations of Receivership Entities
(this includes $2,229,463.15 received from the sale of the “Rite-Aid Property”
which is being held pending resolution of disputes with Wells Fargo Bank, N.A.
(“Wells Fargo”));



Filed the appropriate federal tax forms on behalf of Art Nadel, Chris Moody, Neil
Moody, Marguerite Nadel, and Sharon Moody and successfully recovered the
total amount of approximately $5,038,702.93 in federal tax refunds issued for Peg
and Art Nadel, Sharon Moody, Neil Moody, and Chris Moody;



Expanded the Receivership to include 15 additional business entities and one
trust, including Quest Energy Management Group, Inc.;



Obtained possession of additional property in Georgia, North Carolina,
Mississippi, Ohio, Colorado, Tennessee, and Florida bringing the Receivership’s
current real and personal property holdings to more than 426 acres; three
residential properties; and other miscellaneous items, including artwork and
furniture;



Assisted the Commission with obtaining the entry of judgments enjoining Neil V.
Moody and Christopher D. Moody (at times collectively referred to as the
“Moodys”) from further violations of the anti-fraud provisions of the federal
securities laws and allowing the Commission to seek disgorgement and/or civil
penalties from the Moodys by motion to the Court;



Finalized and obtained Court approval of a settlement agreement with Neil
Moody to settle claims brought by the Receiver against him individually and in
his capacity as Trustee of the Neil Moody Revocable Trust and the Neil Moody

4

Charitable Foundation, which provides in pertinent part, that all of the Receiver’s
claims are dismissed without prejudice and with an express waiver of any time
bar defenses by Neil Moody in exchange for (1) the transfer of all of Neil
Moody’s meaningful assets identified in the settlement agreement, along with a
sworn affidavit by Neil Moody verifying the extent of his assets; (2) transfer to
the Receiver of his tax refunds, which included a check for $365,284.99 received
March 12, 2012; and (3) cooperation with and assistance to the Receivership in
the Receiver’s ongoing efforts to recover monies on behalf of investors subject to
Neil Moody’s Fifth Amendment rights;


Worked on recovering assets in the possession of Neil Moody and Chris Moody; 



Instituted and continue to pursue an action against Wells Fargo to recover
damages and fraudulent transfers relating to the bank’s activities in connection
with the Ponzi scheme underlying this case;



Successfully opposed Wells Fargo’s efforts to disqualify the Receiver and his
counsel from all Receivership matters;



Instituted the claims process and published notice of the same by (1) direct mail
of more than 1250 packages to known investors and their attorneys, if any, and
other known potential creditors of the Receivership estate; (2) global publication
on one day in The Wall Street Journal and publication on one day in the SarasotaHerald Tribune on June 15, 2010; and (3) web access to all pertinent claims
process documents on the Receiver’s website, www.nadelreceivership.com;



Reviewed and analyzed more than 500 Proof of Claim Forms, identified
deficiencies in numerous Proof of Claim Forms and sent more than 130 letters to
claimants notifying them of deficiencies in their respective Proof of Claim Forms
and allowing them an opportunity to timely return an amended Proof of Claim
Form to preserve their claims;



Filed the Receiver’s Motion to (1) approve determination and priority of claims,
(2) pool Receivership assets and liabilities, (3) approve plan of distribution, and
(4) establish objection procedure and included the Receiver’s recommended
determination and priority of each of the 504 claims submitted, which was
granted in all respects except for one claim submitted by Wells Fargo for which
the Court reserved ruling;



Sought and obtained approval of a first interim distribution of approximately $26
million which provided a 20% recovery of the Allowed Amounts of Claimants
entitled to participate in the first interim distribution; 343 checks were mailed to
these Claimants in the beginning of May 2012;

5



Sought and obtained approval of a second interim distribution of approximately
$22 million which provided a 16.75% recovery of the Allowed Amounts of
Claimants entitled to participate in the second interim distribution, bringing these
Claimants’ total recovery to 36.75% of their Allowed Amounts; 346 checks were
mailed to these Claimants in November 2012;



Sought and obtained approval of a third interim distribution of approximately $5
million which provided a 3.81% recovery of the Allowed Amounts of Claimants
entitled to participate in the third interim distribution, bringing these Claimants’
total recovery to 40.56% of their Allowed Amounts; 346 checks were mailed to
these Claimants in November 2013;



Sought and obtained approval of a fourth interim distribution of approximately $5
million which provided a 3.81% recovery of the Allowed Amounts of Claimants
entitled to participate in the fourth interim distribution, bringing these Claimants’
total recovery to 44.37% of their Allowed Amounts; 346 checks were mailed to
these Claimants in or about April 2014; and



Continued to operate ongoing businesses, and where possible, enhance the value
of those businesses resulting in the generation of more than $5,869,185.55 in
gross business income since the appointment of the Receiver.  

Case Background and Status
As of the date of filing this Motion, the Court has appointed Burton W. Wiand as
Receiver over the following entities and trust:
a)

Defendants Scoop Capital, LLC; and Scoop Management, Inc.;

b)

Relief Defendants Scoop Real Estate, L.P.; Valhalla Investment Partners,
L.P.; Victory IRA Fund, Ltd.; Victory Fund, Ltd.; Viking IRA Fund, LLC;
and Viking Fund LLC; Valhalla Management, Inc.; and Viking Management,
LLC; and

c)

Venice Jet Center, LLC; Tradewind, LLC; Laurel Mountain Preserve, LLC;
Laurel Preserve, LLC; Laurel Mountain Preserve Homeowners Association,
Inc.; Marguerite J. Nadel Revocable Trust UAD 8/2/07; Guy-Nadel
Foundation, Inc.; Lime Avenue Enterprises, LLC; A Victorian Garden Florist,
LLC; Viking Oil & Gas, LLC; Home Front Homes, LLC; Traders Investment
Club; Summer Place Development Corporation; Respiro, Inc.; and Quest
Energy Management Group, Inc.

6

(See Docs. 8, 17, 44, 68, 81, 153, 172, 454, 911, 916, 1024.) The foregoing entities and trust
are collectively referred to as the “Receivership Entities.”
On March 7, 2014, the Receiver filed the Fifteenth Interim Report (Doc. 1106). This
Interim Report contains comprehensive and detailed information regarding the case
background and status; the recovery and disposition of assets; financial information on
Receivership Entities; the proposed course of action to be taken regarding assets in the
Receivership estate; the claims process; and related litigation involving Receivership
Entities. The Receiver incorporates the Fifteenth Interim Report into this Motion for Fees
and has attached a true and correct copy of the Fifteenth Interim Report as Exhibit 2 for the
Court’s convenience. This Interim Report reports on all of the activity which resulted in the
fees and costs sought in this Motion. Throughout this Motion, the Fifteenth Interim Report
will be referred to as “Interim Report.”3
Professional Services Rendered and Costs Incurred
Paragraph 4 of the Order Appointing Receiver authorizes the Receiver to
[a]ppoint one or more special agents, employ legal counsel, actuaries,
accountants, clerks, consultants and assistants as the Receiver deems
necessary and to fix and pay their reasonable compensation and reasonable
expenses, as well as all reasonable expenses of taking possession of the assets
and business of the Defendants and Relief Defendants, and exercising the
power granted by this Order, subject to approval by this Court at the time the
Receiver accounts to the Court for such expenditures and compensation.

3

More information regarding activities relating to Quest may also be found in the
Receiver’s First and Second Interim Reports on Quest (Docs. 1054 and 1117).

7

Pursuant to this paragraph, the Receiver retained, among others,4 (1) PDR Certified Public
Accountants (“PDR”) to provide accounting services; (2) Riverside Financial Group
(“Riverside”) to provide financial analyses; (3) E-Hounds, Inc. (“E-Hounds”) to provide
computer forensic services; (4) Fowler White Boggs P.A. (“Fowler White”), and
subsequently WGK to provide legal services; and (5) RWJ Group, LLC (“RWJ”) to provide
asset management services (collectively, the “Professionals”).5 For a listing of prior Interim
Motions for Fees and Costs, including the amounts sought and awarded by the Court, please
refer to Exhibit 3, attached hereto.
As described above and more fully in the Interim Report, the Professionals have
provided services and incurred expenses to investigate the affairs of the Receivership
Entities, preserve and sell Receivership assets, attempt to locate and recover additional
assets, administer the claims process, and institute and pursue litigation and post-judgment
collection efforts. These services are for the benefit of aggrieved investors, creditors, and
other interested parties of the Receivership Entities.

4

The others retained in more limited capacities, which are pertinent to this motion,
include: (1) Yip Associates to provide expert assistance in connection with clawback
litigation; (2) Brock & Brock, PLLC to assist with property located in Vermont; (3) Rifkin
Weiner Livingston Levitan & Silver LLC to assist with recording a judgment and collection
efforts in Maryland; (4) Reminger Co. L.P.A. to assist with collection efforts in Ohio; (5)
Kirby Noonan Lance & Hoge, LLP to assist with recording judgments in California; (6)
Schiff Hardin LLP to assist with recording a judgment in Illinois; (7) Maples and Calder to
assist with collection efforts in the British Virgin Islands; and (8) Scott Douglass &
McConnico, L.L.P to assist with regulatory matters involving Quest.
5

As noted in the Fourth Interim Report (Doc. 240 at n.2), the Receiver and certain of
his counsel of record in this case moved from Fowler White Boggs P.A. to Wiand Guerra
King P.L.

8

I.

The Receiver.
The Receiver requests the Court award him fees for the professional services rendered

for the six months from September 1, 2013, through January 31, 2014, in the amount of
$43,575.00. The standard hourly rate which the Receiver charges clients is $450. However,
the Receiver agreed that for purposes of his appointment as the Receiver, his hourly rate
would be reduced to $350 per hour, representing a little more than a twenty-two percent
(22%) discount off the standard hourly rate which he charges clients in comparable matters.
This rate was set forth in the Commission’s Emergency Motion for Appointment of Receiver
and Memorandum of Law (Doc. 6), which the Court granted on January 21, 2009 (Doc. 8).
The Receiver commenced services immediately upon his appointment. The Receiver
has billed his time for these activities in accordance with the Billing Instructions. The Billing
Instructions request that this Motion contain a narrative of each “business enterprise or
litigation matter” for which outside professionals have been employed.

The Billing

Instructions identify each such business enterprise or litigation matter as a separate “project.”
Further, the Billing Instructions request that time billed for each project be allocated to one of
several Activity Categories.6

6

The Activity Categories set forth by the Commission in the Billing Instructions are
as follows: (1) Asset Analysis and Recovery, which is defined as identification and review
of potential assets including causes of action and non-litigation recoveries; (2) Asset
Disposition, which is defined as sales, leases, abandonment and related transaction work
(where extended series of sales or other disposition of assets is contemplated, the Billing
Instructions provide that a separate category should be established for each major
transaction); (3) Business Operations, which is defined as issues related to operation of an
ongoing business; (4) Case Administration, which is defined as coordination and compliance
activities, including preparation of reports to the court, investor inquiries, etc.; (5) Claims
Administration and Objections, which is defined as expenses in formulating, gaining
approval of and administering any claims procedure; and (6) Employee Benefits/Pensions,

9

A.

The Receivership.

During the relevant period of this Receivership, the work of the Receiver and WGK
focused on investigating the fraud and related activities underlying this matter; locating and
taking control of Receivership assets; investigating, pursuing, and recovering additional
assets for the Receivership; selling or otherwise disposing of assets in a manner that is in the
best interests of the Receivership; administering the claims process and addressing
objections; and pursuing litigation and post-judgment efforts to recover false profits and
other improper transfers and damages. These activities of the Receiver are set forth in detail
in the Interim Report. (Ex. 2.) A copy of the statement summarizing the Receiver’s services
rendered and costs incurred for the Receivership is attached hereto as Exhibit 4. The
Receiver’s time and fees for services rendered for each Activity Category for the five months
from September 1, 2013, through January 31, 2014, are as follows:
Receivership
Receiver’s Time and Fees for Services Rendered
Hours
Expended
8.90
28.20
12.40
3.30
5.10
57.90

Activity Category
Asset Disposition
Asset Analysis and Recovery
Business Operations
Case Administration
Claims Administration
TOTAL

Fee Amount
$3,115.00
$9,870.00
$4,340.00
$1,155.00
$1,785.00
$20,265.00

which is defined as reviewing issues such as severance, retention, 401k coverage and
continuance of pension plan. The Billing Instructions provide that time spent preparing
motions for fees may not be charged to the Receivership Estate. In accordance with these
instructions, the Receiver created an additional Activity Category for work on fees motions
and has accounted for time spent on such work but has not charged any amount for this work.

10

B.

Discrete Litigation Matters and Projects.

In conjunction with the Receivership, the following seven discrete litigation matters
or projects have been formally commenced by the Receiver.
1.

Home Front Homes Litigation.

This was a lawsuit against Brian C. Bishop, a former employee who also had an
ownership interest in Home Front Homes, LLC (“Home Front Homes”) an operating
business. This matter has been resolved. The Receiver did not charge any fees or incur any
costs for this matter for the time covered by this Motion.
2.

Carolina Mountain Land Conservancy Easement.

This was a project involving the recovery of a conservancy easement that Laurel
Mountain Preserve, LLC, had granted to the Carolina Mountain Land Conservancy. This
matter has been resolved. The Receiver did not charge any fees or incur any costs for this
matter for the time covered by this Motion.
3.

Recovery from Investors and Others Including False Profits.

This is a project involving the Receiver’s efforts to primarily recover profits from
investors whose purported accounts received monies in an amount that exceeded their
investments. (See also Ex. 2 § IV.E.1.) These purported profits were false because they
were not based on any trading or investment gain, but rather were proceeds of a Ponzi
scheme that consisted of funds of new and existing investors. This project also included the
Receiver’s efforts to recover charitable contributions made with scheme proceeds. (See also
Ex. 2 § IV.E.) A copy of the statement summarizing the services rendered and costs incurred
by the Receiver for the five months from September 1, 2013, through January 31, 2014, for

11

this project is attached hereto as Exhibit 5. The Receiver’s time and fees for services
rendered for each Activity Category are as follows:
Recovery from Investors and Others Including False Profits
Receiver’s Time and Fees for Services Rendered
Hours
Expended
22.10
22.10

Activity Category
Asset Analysis and Recovery
TOTAL
4.

Fee Amount
$7,735.00
$7,735.00

Recovery of Assets from the Moodys.

This is a project involving the Receiver’s efforts to recover money and other assets
from the Moodys. (See also Ex. 2 §§ IV.D.) A copy of the statement summarizing the
services rendered and costs incurred by the Receiver for the five months from September 1,
2013, through January 31, 2014, for this project is attached hereto as Exhibit 6. The
Receiver’s time and fees for services rendered for each Activity Category are as follows:
Recovery from Chris and Neil Moody
Receiver’s Time and Fees for Services Rendered
Hours
Expended
.20
.50
.30
1.00

Activity Category
Asset Disposition
Asset Analysis and Recovery
Business Operations
TOTAL
5.

Fee Amount
$70.00
$175.00
$105.00
$350.00

Recovery from Recipients of Commissions and Other Related
Transfers.

This is a project involving the Receiver’s efforts to recover commissions and/or other
related transfers from individuals and/or entities who received commissions or other
improper transfers from the Receivership Entities. (See Ex. 2 § IV.E.) A copy of the
statement summarizing the Receiver’s services rendered and costs incurred for the five

12

months from September 1, 2013, through January 31, 2014, for this project is attached hereto
as Exhibit 7. The Receiver’s time and fees for services rendered on this matter for each
Activity Category are as follows:
Recovery of Commissions and Other Related Transfers
Receiver’s Time and Fees for Services Rendered
Hours
Expended
23.00
23.00

Activity Category
Asset Analysis and Recovery
TOTAL
6.

Fee Amount
$8,050.00
$8,050.00

Litigation Against Holland & Knight LLP.

This was a project involving the Receiver’s pursuit of malpractice and other claims
by the Hedge Funds against H&K which sought to recover the Hedge Funds’ losses that
occurred after January 1, 2003. The Receiver settled this action for payment of $25,000,000
by H&K to the Receiver. This matter has been resolved. The Receiver did not charge any
fees or incur any costs for this matter for the time covered by this Motion.
7.

Quest Energy Management Group, Inc.

This is a project involving the Receiver’s investigation, operation, and marketing of
Quest Energy Management Group, Inc. (“Quest”). (See Ex. 2 § IV.A.7; Docs. 1054 and
1117.) Quest is an oil and gas exploration and production company based in Texas. The
Receivership was expanded to include Quest on May 24, 2013 (Doc. 1024). A copy of the
statement summarizing the Receiver’s services rendered and costs incurred for this project
for the five months from September 1, 2013, through January 31, 2014, is attached hereto as
Exhibit 8. The Receiver will pay these fees exclusively from Quest’s assets and funds

13

generated by its operations.7 The Receiver’s time and fees for services rendered on this
matter for each Activity Category are as follows:
Quest Energy Management Group, Inc.
Receiver’s Time and Fees for Services Rendered
Hours
Expended
Fee Amount
10.00
$3,500.00
2.70
$945.00
7.10
$2,485.00
.70
$245.00
20.50
$7,175.00

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
Case Administration
TOTAL
II.

Wiand Guerra King P.L. And Other Counsel.
The Receiver requests the Court award WGK fees for professional services rendered

and costs incurred for the five months from September 1, 2013, through January 31, 2014, in
the amounts of $612,056.72 and $42,943.08, respectively. A categorization and summary of
all costs for which WGK seeks reimbursement is attached hereto as Exhibit 9.
As an accommodation to the Receiver, WGK agreed to reduce the hourly rates of the
Receiver’s counsel in accordance with the discounted fee structure that was in place at
Fowler White as provided in the Fee Schedule attached hereto as Exhibit 10.8 WGK began
providing services on November 8, 2009. The activities of WGK for the time covered by this
7

Since the expansion of the Receivership to include Quest, the Receiver has and will
continue to maintain a separate accounting of revenues and expenses for Quest. The
Receiver has been able to grow Quest’s revenues since that time and believes Quest will
likely generate sufficient revenues to cover its expenses.
8

Some of the attorneys listed in Exhibit 10 remained at Fowler White, and thus no
longer work on Receivership matters. Similarly, WGK attorneys not listed in Exhibit 10 now
work on such matters. WGK attorneys who work on Receivership matters but are not listed
in Exhibit 10 are billed at hourly rates that are consistent with the discounted fee structure
detailed in that exhibit based on their respective level of seniority.

14

Motion are set forth in the Interim Report. (See Ex. 2.) WGK has billed time for these
activities in accordance with the Billing Instructions.
A.

The Receivership.

As discussed above, during the relevant period of this Receivership, the work of the
Receiver and WGK focused on investigating the fraud and related activities underlying this
matter; locating and taking control of Receivership assets; investigating, pursuing, and
recovering additional assets for the Receivership; administering the claims process and
addressing objections; and pursuing litigation and post-judgment collection efforts as detailed
in the Interim Report. (Ex. 2.) A copy of the statement summarizing the services rendered
and costs incurred by WGK for the foregoing for the five months from September 1, 2013,
through January 31, 2014, is attached hereto as Exhibit 11. WGK’s time and fees for
services rendered on this matter for each Activity Category are as follows:
Receivership
WGK’s Time and Fees for Services Rendered
Hours
Expended
Fee Amount
144.70 $34,529.65
21.40
$3,153.50
27.90
$3,906.00
79.20 $21,663.90
249.60 $53,794.75
522.80 $117,047.80

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
Case Administration
Claims Administration
TOTAL

15

B.

Discrete Litigation Matters and Projects.

WGK professionals also provided services in connection with litigation matters
and/or projects discussed above.
1.

Home Front Homes Litigation.

This was a lawsuit against Brian C. Bishop, a former employee who also had an
ownership interest in Home Front Homes, LLC (“Home Front Homes”) an operating
business. This matter has been resolved. WGK did not charge any fees or incur any costs for
this matter for the time covered by this Motion.
2.

Carolina Mountain Land Conservancy.

This was a project involving the recovery of a conservancy easement that Laurel
Mountain Preserve, LLC, granted to the Carolina Mountain Land Conservancy. This matter
has been resolved. WGK did not charge any fees or incur any costs for this matter for the
time covered by this Motion.
3.

Recovery from Investors and Others Including False Profits.

This is a project involving the Receiver’s efforts to primarily recover profits from
investors whose purported accounts received monies in an amount that exceeded their
investments. (See also Ex. 2 § IV.E.1.) These purported profits were false because they
were not based on any trading or investment gain, but rather were fruits of a Ponzi scheme
that consisted of funds of new and existing investors.

This project also included the

Receiver’s efforts to recover charitable contributions made with scheme proceeds. (See also
Ex. 2 § IV.E.) A copy of the statement summarizing WGK’s services rendered and costs
incurred for the five months from September 1, 2013, through January 31, 2014, for this

16

project is attached hereto as Exhibit 12. WGK’s time and fees for services rendered on this
matter for each Activity Category are as follows:
Recovery from Investors and Others Including False Profits
WGK’s Time and Fees for Services Rendered
Hours
Expended
1,040.90
1,040.90

Activity Category
Asset Analysis and Recovery
TOTAL
4.

Fee Amount
$254,617.47
$254,617.47

Recovery of Assets from the Moodys.

This is a project involving the Receiver’s efforts to recover money and other assets
from the Moodys. (See also Ex. 2 §§ IV.D.) A copy of the statement summarizing WGK’s
services rendered and costs incurred for the five months from September 1, 2013, through
January 31, 2014, for this project is attached hereto as Exhibit 13. WGK’s time and fees for
services rendered on this matter for each Activity Category are as follows:
Recovery of Assets from Chris and Neil Moody
WGK’s Time and Fees for Services Rendered
Hours
Expended
28.30
16.40
3.40
48.10

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
TOTAL
5.

Fee Amount
$6,233.80
$3,648.15
$476.00
$10,357.95

Recovery of Commissions and Other Related Transfers.

This is a project involving the Receiver’s efforts to recover commissions and/or other
related transfers from individuals and/or entities who received commissions or other
improper transfers from the Receivership Entities. (See Ex. 2 § IV.E.) A copy of the
statement summarizing WGK’s services rendered and costs incurred for the five months from

17

September 1, 2013, through January 31, 2014, for this project is attached hereto as Exhibit
14. WGK’s time and fees for services rendered on this matter for each Activity Category are
as follows:
Recovery of Commissions and Other Related Transfers
WGK’s Time and Fees for Services Rendered
Hours
Expended
3.80
663.70
667.50

Activity Category
Asset Disposition
Asset Analysis and Recovery
TOTAL
6.

Fee Amount
$532.00
$162,448.15
$162,980.15

Litigation Against Holland & Knight LLP.

This was a project involving the Receiver’s pursuit of malpractice and other claims
by the Hedge Funds against H&K which sought to recover the Hedge Funds’ losses that
occurred after January 1, 2003. The Receiver settled this action for payment of $25,000,000
by H&K to the Receiver. This matter has been resolved. WGK did not charge any fees or
incur any costs for this matter for the time covered by this Motion.
7.

Litigation Involving Wells Fargo.

The Receiver determined that it was prudent and necessary to retain separate counsel
to represent him in connection with all Receivership matters involving Wells Fargo. (See
Doc. 730.) The Receiver retained James, Hoyer, Newcomer & Smiljanich, P.A. (“James
Hoyer”) to represent him in connection with matters involving Wells Fargo. These matters
include (1) responding to Wells Fargo’s objections and various other motions relating to the
claims process; (2) Wells Fargo’s asserted interests in real property held by the Receivership;
and (3) Wells Fargo’s attempts to disqualify the Receiver. (See Ex. 2 § V.) In an April 25,
2012, Order, the Court concluded that WGK could not represent the Receiver in “matters

18

specifically involving Wells Fargo Bank or its affiliates.” (Doc. 822.) James Hoyer did not
charge any fees for this matter for the time covered by this Motion.
8.

Quest Energy Management Group, Inc.

This is a project involving the Receiver’s investigation, operation, and marketing of
Quest. (See Ex. 2 § IV.A.7; Docs. 1054 and 1117.) Quest is an oil and gas exploration and
production company based in Texas. The Receivership was expanded to include Quest on
May 24, 2013 (Doc. 1024). A copy of the statement summarizing WGK’s services rendered
and costs incurred for the five months from September 1, 2013, through January 31, 2014, is
attached hereto as Exhibit 15. The Receiver will pay these fees exclusively from Quest’s
assets and funds generated by its operations. WGK’s time and fees for services rendered on
this matter for each Activity Category are as follows:
Quest Energy Management Group, Inc.
WGK’s Time and Fees for Services Rendered
Hours
Expended
155.30
10.90
135.20
4.50
4.70
310.60

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
Case Administration
Claims Administration
TOTAL
III.

Fee Amount
$39,570.85
$1,526.00
$24,108.00
$1,155.50
$693.00
$67,053.35

PDR Certified Public Accountants.
The Receiver requests the Court award PDR fees for professional services rendered

and costs incurred for the five months from September 1, 2013, through January 31, 2014 in
the amount of $55,466.50. Of this amount, $14,377.75 was incurred in connection with work
related to Quest. The Receiver will pay fees approved by the Court which relate to Quest

19

from Quest’s assets and revenues. PDR started providing services for the Receivership on
January 22, 2009. PDR has billed time for these services in accordance with the Billing
Instructions. Because PDR’s work for the period covered by this motion could be allocated
to specific Receivership Entities and/or related entities, PDR has billed its time separately for
each entity and indicated the appropriate Activity Category for each time entry.9 Copies of
the statements summarizing the services rendered and costs incurred for the pertinent period
are attached as composite Exhibit 16. The total hours billed by each PDR professional and
their respective total amount of billing are set forth on composite Exhibit 16.

PDR’s

statements also include a summary of the total time spent on each relevant Activity Category
in connection with each Receivership Entity (or “project” as identified in the Billing
Instructions).

For a discussion of entities delineated in the statements, please refer to

Sections IV.A and IV.B of the Interim Report.

9

The Activity Categories that apply to PDR and Riverside as set forth in the Billing
Instructions for Financial Activities are as follows: (1) Accounting/Auditing, which is
defined as activities related to maintaining and auditing books of account, preparation of
financial statements and account analysis; (2) Business Analysis, which is defined as
preparation and review of company business plan; development and review of strategies;
preparation and review of cash flow forecasts and feasibility studies; (3) Corporate Finance,
which is defined as review financial aspects of potential mergers, acquisitions and disposition
of company or subsidiaries; (4) Data Analysis, which is defined as management information
systems review, installation and analysis, construction, maintenance and reporting of
significant case financial data, lease rejection, claims, etc.; (5) Status Reports, which is
defined as preparation and review of periodic reports as may be required by the Court;
(6) Litigation Consulting, which is defined as providing consulting and expert witness
services relating to forensic accounting, etc.; (7) Forensic Accounting, which is defined as
reconstructing books and records from past transactions and bringing accounting current,
tracing and sourcing assets; (8) Tax Issues, which is defined as analysis of tax issues and
preparation of state and federal tax returns; and (9) Valuation, which is defined as appraising
or reviewing appraisals of assets.

20

IV.

E-Hounds, Inc.
The Receiver requests the Court award E-Hounds fees for professional services

rendered and costs incurred for the five months from September 1, 2013, through January 31,
2014, in the amount of $1,108.13. All of these fees were incurred in connection with work
related to Quest. As noted above, the Receiver will pay fees approved by the Court which
relate to Quest from Quest’s assets and revenues. E-Hounds is a computer forensics firm
which assists the Receiver in securing and analyzing electronic data. E-Hounds started
providing services for the Receivership on January 22, 2009.

Copies of the statement

summarizing the services rendered and costs incurred for the pertinent period are attached as
composite Exhibit 17.
V.

The RWJ Group, LLC.
The Receiver requests the Court award RWJ fees for professional services rendered

and costs incurred for the five months from September 1, 2013, through January 31, 2014, in
the amount of $29,417.39. RWJ, which is owned and operated by Roger Jernigan, is an asset
manager for the Receivership Entities. Mr. Jernigan assists the Receiver with overseeing
ongoing business operations and property recovered by the Receiver, including aiding with
efforts to sell such businesses and property. His efforts are designed to ensure that
Receivership assets are maintained and/or enhanced to allow for maximum recovery for the
Receivership estate. RWJ started providing services for the Receivership on February 1,
2010. Copies of the statements summarizing the services rendered and costs incurred for the
pertinent period are attached as composite Exhibit 18.

21

VI.

Litigation Experts.
To assist with clawback litigation, the Receiver determined to retain the services of

certain experts. Accordingly, the Receiver requests the Court award Yip Associates fees for
professional services rendered for the five months from September 1, 2013 through January
31, 2014, in the amount of $450.00. A copy of the statement summarizing the services
rendered and costs incurred for the pertinent period is attached as Exhibit 19.
VII.

Miscellaneous Others.
To assist with real property and collection matters in various states other than Florida

and in the British Virgin Islands, the Receiver determined that it would be cost-effective and
beneficial to retain the services of local attorneys. Accordingly, the Receiver requests the
Court award the following for professional services rendered and costs incurred for the five
months from September 1, 2013, through January 31, 2014: (1) Kirby Noonan Lance &
Hoge, LLP, in connection with collection efforts in California, the amount of $1,078.80;10 (2)
Reminger Co., L.P.A., in connection with collection efforts in Ohio, the amount of
$3,639.00;11 (3) Schiff Hardin LLP, in connection with recording a judgment in Illinois, the
amount of $1,995.29; (4) Brock & Brock, PLLC, in connection with real property in
Vermont, the amount of $855.00; (5) Rifkin Weiner Livingston Levitan & Silver LLC, in
10

The amount sought is for fees and costs incurred in August 2013 which Kirby
Noonan inadvertently failed to submit to the Receiver. Given the diminutive amount, the
Receiver requests the Court allow payment of these fees and costs.
11

The amount sought includes fees incurred in March 2013 in the amount of
$2,285.00 which due to clerical error was not included in the Receiver’s last motion for fees
and costs. Given the diminutive amount, the Receiver requests the Court allow payment of
these fees and costs.

22

connection with recording a judgment and collection efforts in Maryland, the amount of
$3,687.30; and (6) Maples and Calder, in connection with collection efforts in the British
Virgin Islands, the amount of $3,761.00. Copies of the statements summarizing the services
rendered and costs incurred for the pertinent period are attached as Exhibit 20 through
Exhibit 25, respectively.
To assist with regulatory matters involving Quest and the Texas Railroad
Commission, the Receiver determined that it would be helpful and more cost-effective to
retain the services of Texas counsel specializing in oil and gas regulation. Accordingly, the
Receiver requests the Court award Scott Douglass & McConnico, L.L.P. (“Scott Douglass”)
fees and costs for professional services rendered and costs incurred for the five months from
September 1, 2013, through January 31, 2014, in the amount of $4,732.75 to be paid by
Quest. A copy of the statement summarizing the services rendered and costs incurred for the
pertinent period is attached as Exhibit 26.
MEMORANDUM OF LAW
It is well settled that this Court has the power to appoint a receiver and to award the
receiver and those appointed by him fees and costs for their services. See, e.g., SEC v. Elliott,
953 F.2d 1560 (11th Cir. 1992) (receiver is entitled to compensation for faithful performance
of his duties); Donovan v. Robbins, 588 F. Supp. 1268, 1272 (N.D. Ill. 1984) (“[T]he
receiver diligently and successfully discharged the responsibilities placed upon him by the
Court and is entitled to reasonable compensation for his efforts.”); SEC v. Custable, No. 94C-3755, 1995 WL 117935 (N.D. Ill. Mar. 15, 1995) (receiver is entitled to fees where work
was of high quality and fees were reasonable); SEC v. Mobley, No. 00-CV-1316, 1317RCC,

23

2000 WL 1702024 (S.D.N.Y. Nov. 13, 2000) (court awarded reasonable fees for the receiver
and his professionals); see also (Doc. 8, Order Appointing Receiver, at p. 14).

The

determination of fees to be awarded is largely within the discretion of the trial court. See
Monaghan v. Hill, 140 F.2d 31, 34 (9th Cir. 1944). In determining reasonable compensation
for the services rendered by the Receiver and his Professionals, the Court should consider the
circumstances surrounding the receivership. See Elliot, 953 F.2d at 1577.
Here, because of the nature of this case, it was necessary for the Receiver to employ
attorneys and accountants experienced and familiar with financial frauds, federal
receiverships, securities laws, banking, finance, and trusts and estates. Further, in order to
perform the services required and achieve the results obtained to date, the skills and
experience of the Receiver and the Professionals in the areas of fraud, securities, computer
and accounting forensics, and financial transactions were indispensable.
As discussed above, the Receiver and WGK have discounted their normal and
customary rates as an accomodation to the Receivership and to conserve Receivership assets.
The rates charged by the attorneys and paralegals are at or below those charged by attorneys
and paralegals of comparable skill from other law firms in the Middle District of Florida.
This case has been time-intensive for the Receiver and his Professionals because of
the need to resolve many issues rapidly and efficiently. The attached Exhibits detail the time,
nature and extent of the professional services rendered by the Receiver and his Professionals
for the benefit of investors, creditors, and other interested parties. The Receiver anticipates
that additional funds will be obtained through the Receiver’s negotiations or litigation with
third parties.

24

Although the Commission investigated and filed the initial pleadings in this case, the
Receiver has assumed the primary responsibility for the investigation and forensic analysis of
the events leading to the commencement of the pending lawsuits, the efforts to locate and
gather investors’ money, the determination of investor and creditor claims and any ultimate
payment of these claims.

While the Receiver is sensitive to the need to conserve the

Receivership Entities’ assets, he feels that the fees and costs expended to date were
reasonable, necessary, and benefited the Receivership. Notably, the Commission has no
objection to the relief sought in this motion. Custable, 1995 WL 117935, *7 (“In securities
law receiverships, the position of the SEC in regard to the awarding of fees will be given
great weight.”).
CONCLUSION
Under the terms and conditions of the Order Appointing Receiver, the Receiver,
among other things, is authorized, empowered, and directed to engage professionals to assist
him in carrying out his duties and obligations. The Order further provides that he apply to
the Court for authority to pay himself and his Professionals for services rendered and costs
incurred. In exercising his duties, the Receiver has determined that the services rendered and
their attendant fees and costs were reasonable, necessary, advisable, and in the best interest
of the Receivership.
WHEREFORE, Burton W. Wiand, the Court-appointed Receiver, respectfully
requests that this Court (1) award the following sums and direct that payment be made from
the Receivership assets:
Burton W. Wiand, Receiver
Wiand Guerra King P.L.

$36,400.00
$579,118.09

25

PDR Certified Public Accountants
RWJ Group, LLC
Yip Associates
Schiff Hardin LLP
Kirby Noonan Lance & Hoge LLP
Rifkin Weiner Livingston Levitan & Silver LLC
Reminger Co. L.P.A.
Brock & Brock, PLLC
Maples & Calder

$41,088.75
$29,417.39
$450.00
$1,995.29
$1,078.80
$3,687.30
$3,639.00
$855.00
$3,761.00

and (2) further awards the following sums and direct that payment be made from Quest’s
assets and revenues:12
Burton W. Wiand, Receiver
Wiand Guerra King P.L.
PDR Certified Public Accountants
E-Hounds, Inc.
Scott Douglass & McConnico, L.L.P.

$7,175.00
$75,881.71
$14,377.75
$1,108.13
$4,732.75

LOCAL RULE 3.01(g) CERTIFICATION OF COUNSEL
The undersigned counsel for the Receiver is authorized to represent to the Court that
the SEC has no objection to the Court’s granting this motion.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on June 25, 2014, I electronically filed the foregoing
with the Clerk of the Court by using the CM/ECF system.
s/Gianluca Morello
Gianluca Morello, FBN 034997
Email: [e-mail]
Michael S. Lamont, FBN 0527122
Email: [e-mail]
WIAND GUERRA KING P.L.
5505 West Gray Street
Tampa, FL 33609
Tel.: [phone]/ Fax: [phone]
Attorney for the Receiver Burton W. Wiand
12

A proposed order is attached as Exhibit 27.

26

RECEIVER’S CERTIFICATION
The Receiver has reviewed this Sixteenth Interim Motion for Order Awarding Fees,
Costs, and Reimbursement of Costs to Receiver and His Professionals (the “Motion”).
To the best of the Receiver’s knowledge, information, and belief formed after
reasonable inquiry, the Motion and all fees and expenses herein are true and accurate and
comply with the Billing Instructions provided to the Receiver by the Securities and Exchange
Commission.
All fees contained in the Motion are based on the rates listed in the Fee Schedule,
attached as Exhibit 10. Such fees are reasonable, necessary, and commensurate with (if not
below the hourly rate that is commensurate with) the skill and experience required for the
activity performed.
The Receiver has not included in the amount for which reimbursement is sought the
amortization of the cost of any investment, equipment, or capital outlay (except to the extent
that any such amortization is included within the permitted allowable amounts set forth in the
Billing Instructions for photocopies and facsimile transmission).
To the extent the Receiver seeks reimbursement for any service which the Receiver
justifiably purchased or contracted for from a third party (such as copying, imaging, bulk
mail, messenger service, overnight courier, computerized research, or title and lien searches),
the Receiver has requested reimbursement only for the amount billed to the Receiver by the
third-party vendor and/or paid by the Receiver to such vendor. The Receiver is not making a
profit on such reimbursable service.
s/Burton W. Wiand
Burton W. Wiand, as Receiver