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).

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)

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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.

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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, www.nadelreceivership.com, 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.

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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

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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

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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

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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, www.nadelreceivership.com, 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.

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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

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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
[e-mail]
Jared J. Perez, FBN 0085192
[e-mail]
WIAND GUERRA KING P.A.
5505 W. Gray Street
Tampa, FL 33609
Tel: [phone]
Fax: [phone]
Attorneys for the Receiver

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