Securities and Exchange Commission v. Nadel et al

Filing 1300

MOTION for an order approving sale of undeveloped land in Buncombe County, North Carolina by Burton W. Wiand. (Attachments: # 1 Exhibit 1 - Order, # 2 Exhibit 2 - Appraisal - March 2015, # 3 Exhibit 3 - Purchase and Sale Agreement, # 4 Exhibit 4 - Receiver's Deed)(Perez, Jared) Modified relief and text on 7/6/2017 (KMM).

Download PDF
UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. ARTHUR NADEL, SCOOP CAPITAL, LLC, SCOOP MANAGEMENT, INC., Defendants. CASE NO.: 8:09-cv-0087-T-26TBM 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 UNOPPOSED, VERIFIED MOTION FOR APPROVAL OF SALE OF UNDEVLOPED LAND LOCATED IN BUNCOMBE COUNTY, NORTH CAROLINA Burton W. Wiand, as Receiver (the “Receiver”), respectfully moves the Court for an order, in substantially the form attached as Exhibit 1, (a) authorizing him to sell undeveloped land located in Buncombe County, North Carolina (the “Property”), free and clear of all claims, liens, and encumbrances and (b) relieving him from complying with certain provisions of 28 U.S.C. § 2001 (“Section 2001”). BACKGROUND On January 21, 2009, the Securities and Exchange Commission (the “Commission”) filed this case to prevent the defendants from further defrauding investors in hedge funds operated by them. That same day, the Court entered an order appointing Mr. Wiand as Receiver for Defendants Scoop Capital, LLC, and Scoop Management, Inc., and Relief Defendants Scoop Real Estate, L.P.; Valhalla Investment Partners, L.P.; Valhalla Management, Inc.; Victory Fund, Ltd.; Victory IRA Fund, Ltd.; Viking IRA Fund, LLC; Viking Fund, LLC; and Viking Management, LLC (Doc. 8) (the “Order Appointing Receiver”). The Court subsequently granted several motions to expand the scope of the Receivership to include other entities owned or controlled by Arthur Nadel (“Nadel”). (See generally Docs. 17, 44, 68, 81, 153, 172, 454, 911, 916, 1024.) All of the entities in receivership are collectively referred to as the “Receivership Entities.” Pursuant to the Order Appointing Receiver, the Receiver was directed to, inter alia, administer and manage the business affairs, funds, assets, choses in action, and any other property of the Receivership Entities. THE PROPERTY The Property is a 5.95 acre undeveloped and unencumbered lot located in Buncombe County, North Carolina adjacent to the Laurel Mountain Property1 and is more commonly referred to as Lot #110 of Bird Creek Estates (Parcel Number 0636-99-8907-00000). The Property was purchased by Nadel in December 2003 and immediately transferred to The 1 The Laurel Mountain Property is defined in Receiver’s Interim Report as the 420+/acres near Asheville, North Carolina intended for development as home-sites. (See Doc. 1289) 2 Guy-Nadel Foundation, Inc. The scope of the Receivership was expanded to include The Guy-Nadel Foundation, Inc. pursuant to an Order of this Court dated March 9, 2009. (See Doc. 68.) The Receiver listed the Property for sale along with the other the Laurel Mountain properties through various real estate brokers during the past eight years and has received a fair offer to purchase the Property for $57,500. The offer is significantly greater than a March 2015 Appraisal Report prepared by Richard J. Jacobs, MAI of Duckworth, Jacobs, Naeger, Swicegood & Thrash, LLC, which valued the Property at $40,000. The Jacobs Appraisal Report is attached as Exhibit 2.2 Furthermore, the County of Buncombe, North Carolina has assessed the Property’s value at $36,600. There are no structures on the Property, and there are no known encumbrances. In light of the current state of the real estate market in Buncombe County, North Carolina and the fact that the Property has been marketed for sale since 2009 with minimal interest, the Receiver believes the current offer represents a fair and reasonable price and that it is in the Receivership estate’s best interests to proceed with the sale without the expense of obtaining any additional appraisals or advertising the terms of the sale as contemplated by Section 2001(b). Thus, the Receiver requests that the Court waive, or find that the Receiver has substantially complied with, the procedures in Section 2001(b) governing the private sale of real property by a receiver. The Receiver also requests the Court grant this motion and allow him to transfer title free and clear of all claims, liens, and encumbrances. 2 The Jacobs Appraisal Report consists of approximately 200 pages because it analyzed and appraised all of the Receivership properties located in Buncombe and McDowell County, North Carolina, as such, only the pages related to the Property at issue have been attached. 3 The Receiver’s Marketing Efforts and the Offer to Purchase the Property The Receiver began marketing the Property along with the other Laurel Mountain properties soon after it was included in the Receivership estate by listing the Property for sale through his website,, in an “Assets for Sale” section. The Receiver also retained several real estate agents since 2009 to market the Property. The Property is not currently listed for sale with a real estate broker. While the Receiver has received several insufficient offers to purchase all of the lands that comprise the Laurel Mountain properties, he has not received any independent offer to purchase the Property that is the subject of this motion. The Receiver has entered into the Purchase and Sale Agreement attached as Exhibit 3 with Christopher G. Metz and Mary Anne Lovely-Metz (the “Purchasers”). The Purchasers have owned the adjacent Lot #109 of Bird Creek Estates since before Nadel purchased the Laurel Mountain lands. The Receiver seeks to convey title, free and clear of all claims, liens, and encumbrances, by Receiver’s Deed in substantially the form attached as Exhibit 4 (allowing for changes necessary to allow the Purchasers to obtain title insurance). The Receiver believes the Purchasers’ offer is reasonable in light of the appraised value of the property, the current real estate market conditions in the area, and the length of time the Property has been listed for sale. The Receivership estate will net approximately $55,500 from the sale after paying standard closing costs. 4 ARGUMENT I. THE COURT HAS BROAD POWERS OVER THIS RECEIVERSHIP’S ADMINISTRATION, INCLUDING TO CONVEY REAL PROPERTY FREE AND CLEAR OF CLAIMS, LIENS, AND ENCUMBRANCES The Court’s power to supervise an equity receivership and to determine the appropriate actions to be taken in its administration is extremely broad. S.E.C. v. Elliott, 953 F.2d 1560, 1566 (11th Cir. 1992); S.E.C. v. Hardy, 803 F.2d 1034, 1038 (9th Cir. 1986). The Court’s wide discretion derives from the inherent powers of an equity court to fashion relief. Elliott, 953 F.2d at 1566; S.E.C. v. Safety Finance Service, Inc., 674 F.2d 368, 372 (5th Cir. 1982). A court imposing a receivership assumes custody and control of all assets and property of the receivership, and it has broad equitable authority to issue all orders necessary for the proper administration of the receivership estate. See S.E.C. v. Credit Bancorp Ltd., 290 F.3d 80, 82-83 (2d Cir. 2002); S.E.C. v. Wencke, 622 F.2d 1363, 1370 (9th Cir. 1980). The court may enter such orders as may be appropriate and necessary for a receiver to fulfill the duty to preserve and maintain the property and funds within the receivership estate. See, e.g., Official Comm. Of Unsecured Creditors of Worldcom, Inc. v. S.E.C., 467 F.3d 73, 81 (2d Cir. 2006). The goal of a receiver charged with liquidating assets is to obtain the best value available under the circumstances. Fleet Nat’l Bank v. H & D Entertainment, Inc., 926 F. Supp. 226, 239-40 (D. Mass. 1996) (citations omitted). Further, the paramount goal in any proposed sale of property of the estate is to maximize the sale proceeds. See, e.g., Four B. Corp. v. Food Barn Stores, Inc., 107 F.3d 558, 564-65 (8th Cir. 1997). The relief sought in this motion falls squarely within the Court’s powers and is in the best interest of defrauded investors and the Receivership estate. That relief is also consistent 5 with precedent, which establishes that a court of equity – like this one in these proceedings – may authorize the sale of property free and clear of all claims, liens, and encumbrances. See, e.g., Miners’ Bank of Wilkes-Barre v. Acker, 66 F.2d 850, 853 (3d Cir. 1933); People’sPittsburgh Trust Co. v. Hirsch, 65 F.2d 972, 973 (3d Cir. 1933). In part, a court has this authority because when a court of competent jurisdiction takes possession of property through its officers – like this Court has done with the Property through the Receiver – it has jurisdiction and authority to determine all questions about title, possession, and control of the property. Isaacs v. Hobbs Tie & Timber Co., 282 U.S. 734, 737-38 (1931). Indeed, in this Receivership the Court has previously entered at least six Orders approving sales that convey title free and clear of all claims, liens, and encumbrances. (See Docs. 1043, 1044, 1075, 1110, 1151, 1177.) III. THE COURT HAS THE POWER TO DEVIATE FROM THE REQUIREMENTS OF 28 U.S.C. § 2001, AND THAT IS WARRANTED UNDER THE CIRCUMSTANCES HERE Pursuant to Section 2001, property in the possession of a receiver may be sold by private or public sale. Specifically, subsection (b) establishes the following procedures for a private sale of real property: (b) After a hearing, of which notice to all interested parties shall be given by publication or otherwise as the court directs, the court may order the sale of such realty or interest or any part thereof at private sale for cash or other consideration and upon such terms and conditions as the court approves, if it finds that the best interests of the estate will be conserved thereby. Before confirmation of any private sale, the court shall appoint three disinterested persons to appraise such property or different groups of three appraisers each to appraise properties of different classes or situated in different localities. No private sale shall be confirmed at a price less than two-thirds of the appraised value. Before confirmation of any private sale, the terms thereof shall be published in such newspaper or newspapers of general circulation as the court directs at least ten days before confirmation. The private sale shall not be 6 confirmed if a bona fide offer is made, under conditions prescribed by the court, which guarantees at least a 10 per centum increase over the price offered in the private sale. 28 U.S.C. § 2001(b). Notwithstanding the language of Section 2001, district courts are afforded wide discretion in overseeing the sale of real and personal property in equity receiverships. Any action taken by district courts in the exercise of this discretion is subject to great deference by appellate courts. See United States v. Branch Coal, 390 F. 2d 7, 10 (3d Cir. 1969). Such discretion is especially important considering that one of the ultimate purposes of a receiver’s appointment is to provide a method of gathering, preserving, and ultimately liquidating assets to return funds to defrauded investors. See S.E.C. v. Safety Fin. Serv., Inc., 674 F.2d 368, 372 (5th Cir. 1982) (court overseeing equity receivership enjoys “wide discretionary power” related to its “concern for orderly administration”) (citations omitted). A. The Statutory Appraisal Requirements Under Section 2001(b) Pursuant to Section 2001(b), a court may order the sale of real estate after (i) the completion of three appraisals, of which the proposed sale price may not be less than twothirds of the average appraised value, and (ii) the advertisement of the terms of the proposed sale in such newspaper(s) of general circulation as directed by the court. 28 U.S.C. § 2001(b). Here, the Receiver is in possession of a March 2015 appraisal that values the Property at $40,000. The proposed sale price of $57,500 is well in excess of that appraised 7 value.3 As such, the Receiver that obtaining two additional appraisals is unnecessary and would only deplete the funds available to the Receivership Estate. B. Waiver Of The Statutory Notice Provisions Under Section 2001(b) Is Warranted Section 2001(b) also contemplates that the terms of a proposed sale will be advertised in a newspaper of general circulation. However, the Receiver believes that full compliance with the statutory notice procedure set forth in Section 2001(b) would create an unnecessary expense and could derail the sale of the Property. Given the existence of a ready and willing buyer; the lack of any actual or potential claims to the Property; and the listing of the Property for sale by the Receiver for almost eight years, the Receiver requests that the Court either waive Section 2001(b)’s notice provision, or in the alternative, find that the Receiver’s efforts in marketing and listing the Property are in compliance with Section 2001(b). See Billion Coupons, Inc., 2009 WL 2143531 at *3 (relieving receiver of compliance with statutory provisions of 28 U.S.C. § 2001 where sufficient safeguards existed and proposed procedure would maximize net sales proceeds). The Receiver will post a copy of this motion on his website,, immediately after filing, which will be publicly available. CONCLUSION The Receiver moves the Court for entry of an order in substantially the form of the proposed Order attached as Exhibit 1 to (1) sell the Property by private sale in accordance with the terms and conditions set forth in the Purchase and Sale Agreement attached hereto 3 Further, the proposed sale price also is well in excess of the $36,600 assessed value of the Buncombe County Tax Department. 8 as Exhibit 3, such sale being free and clear of all claims, liens, and encumbrances; and, (2) approve the appointment nunc pro tunc of appraiser Richard J. Jacobs, MAI of Duckworth, Jacobs, Naeger, Swicegood & Thrash, LLC under 28 U.S.C. § 2001(b); CERTIFICATE UNDER LOCAL RULE 3.01(g) Undersigned counsel for the Receiver has conferred with counsel for the SEC and is authorized to represent to the Court that the SEC does not oppose the relief requested in this motion. VERIFICATION OF RECEIVER I, Burton W. Wiand, Court-Appointed Receiver in the above-styled matter, hereby certify that the information contained in this Motion is true and correct to the best of my knowledge and belief. _____________________________________ Burton W. Wiand, Court-Appointed Receiver 9 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on July 6, 2017, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system. s/Jared J. Perez Michael S. Lamont, FBN 0527122 Jared J. Perez, FBN 0085192 WIAND GUERRA KING P.A. 5505 W. Gray Street Tampa, FL 33609 Tel: 813-347-5100 Fax: 813-347-5198 Attorneys for the Receiver 10

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?