Securities and Exchange Commission v. Nadel et al

Filing 1302

Unopposed MOTION for APPROVAL OF THE SALE OF (1) CERTAIN ASSETS OF QUEST ENERGY MANAGEMENT, INC. AND (2) DISPOSITION OF OTHER ASSETS OF QUEST ENERGY MANAGEMENT, INC. WITHOUT FURTHER ORDER FROM THE COURT by Burton W. Wiand. (Attachments: # 1 Exhibit Ex 1 - Order, # 2 Exhibit Ex 2 - Hatchett Equipment Inventory, # 3 Exhibit Ex 3 - Copies of Orders)(Perez, Jared) Modified relief and text on 8/15/2017 (KMM).

EXHIBIT 3

Jeffrey C. MIsley, OSB No.850674
Martin P. Meyers, OSB No. 990829
SUSSMAN SHANK LLP
1000 SW Broadway, Suite 1400
Portland, OR 97205-3089
Telephone:[phone]
Facsimile;[phone]
Attorneys for Receiver Edward Hostmann, Inc,

UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
WELLS FARGO CAPITAL FINANCE,
INC., formerly known as Wells Fargo
Case No. CV 10.66-KI
Foothill, Inc., a California operation, as
Administrative Lender and Agent on
behalf of itself, Bank of America, N.A. and
The CIT Group/Business Credit, Inc„
ORDER ON RECEIVER'S MOTION
Plaintiff,
FOR ORDER AUTHORIZING SALE OF
ACCOUNTS RECEIVABLE TO
v.
UNIVERSITY MANAGEMENT
ASSOCIATES AND CONSULTANTS
CORP. FREE AND CLEAR OF LIENS
NORTH PACIFIC GROUP, INC„ an
Oregon corporation; NOR PAC
ENTERPRISES, INC., an Oregon
corporation; RTH LUMBER CO., an
Oregon corporation; and.BURNS
HOLDINGS, INC„ a dissolved Oregon
corporation,
Defendants.

This matter comes before the Court upon the Receiver's Motion For Order
Authorizing Sale of Accounts Receivable to University Management Associates and
Consultants Corp. Free and Clear of Liens flied December 16, 2011 (the "Motion")[Dkt.

Page 1 of 5- ORDER ON RECEIVER'S MOTION FOR ORDER AUTHORIZING SALE
OF ACCOUNTS RECEIVABLE TO UNIVERSITY MANAGEMENT ASSOCIATES AND
CONSULTANTS CORP. FREE AND CLEAR OF LIENS
SUSSMAN SHANK LLP,ATTORNEYS AT LAW
1000 SW BROADWAY,SUITS 1400, PORTLAND,OREGON 07200-3014
TELEPHONE[phone] FACSIMILE(603)240-0130

657]. in the Motion the Receiver requests approval of a proposed sale of certain
.
accounts receivable identified in Exhibit A to the Motion (the "Receivables").
NOW, THEREFORE, based upon the declaration of Edward Hostmann filed in
support of the Motion and the Court being advised that the Motion was served upon all
parties receiving ECF notice, including all parties known to assert a lien against the
Receivables, and that no objections to the Motion were filed within the time period
specified in the Motion, and good cause appearing therefore and the Court being
otherwise fully advised in the premises now, therefor;
IT IS HEREBY FOUND AND DETERMINED THAT
1.

The findings and conclusions set forth herein constitute the Court's findings of

fact and conclusions of law pursuant to FRCP 52. To the extent any of the following
findings of fact constitute conclusions of law, they are adopted as such, To the extent any
of the following conclusions of law constitute findings of fact, they are adopted as such.
2.

This Court has federal diversity jurisdiction over this case and ancillary

subject matter jurisdiction to hear and determine the Motion and enter this sale order.
This Court is empowered to hear, determine, and provide the relief requested in the
Motion.
3,

Adequate and sufficient notice has been provided of the Motion, such notice

was good and sufficient, reasonable, and appropriate under the particular circumstances
in this matter, and reasonably calculated to reach and apprise all holders of liens, claims,
encumbrances, and other interests, about the sale of the Receivables; and no other or
further notice of the Motion, or the entry of this sale order is required.

Page 2 of 6- ORDER ON RECEIVER'S MOTION FOR ORDER AUTHORIZING SALE
OF ACCOUNTS RECEIVABLE TO UNIVERSITY MANAGEMENTASSOCIATES AND
CONSULTANTS CORP. FREE AND CLEAR OF LIENS
SUSSMAN SHANK LLP,ATTORNEYS AT LAW
1000 SW BROADWAY,SUITE 1400,PORTLAND,OREGON 972053000
TELEPHONE[phone]( PACsIMILE(003)20-0130

4,

No responses or objections have been filed in response to the Motion, timely

or otherwise,
5.

Approval at this time of the Motion and sale of the Receivables is in the best

Interests of creditors, and other parties In interest and consistent with the provisions of
the Second Modified Distribution Plan of Receiver (the "Plan"),
6.

The Receiver has demonstrated both (I) good, sufficient, and sound business

purpose and justification, and (ii) compelling circumstances for consummating the sale of
the Receivables in that, among other things, a sale of the Receivables will maximize its
.
value for the estate.
7.

The terms of the sale of the Receivables are fair and reasonable. The

purchase price payable thereunder is fair and reasonable and constitutes reasonably
equivalent value and fair consideration under the laws of the United States. Net
proceeds received from the sale will be distributed pursuant to the provisions of the Plan.
8.

The sale of the Receivables was negotiated, proposed, and entered into by

the parties without collusion, in good faith and from arm's-length bargaining positions,
The purchaser of the Receivables is not an affiliate of, or otherwise related to, any of the
North Pacific entities, the Receiver, or North Pacific's secured lenders that are identified
as the Plaintiffs in this action. There Is no common identity among the purchaser of the
Receivables and North Pacific's officers, directors, or equity owners.
0.

The Receiver has full corporate power and authority to transfer title to the

Receivables, and to execute and deliver a bill of sale for the Receivables, and to execute
and deliver any and all other documents required for their transfer to the purchaser.

Page 3 of 5- ORDER ON RECEIVER'S MOTION FOR ORDER AUTHORIZING SALE
OF ACCOUNTS RECEIVABLE TO UNIVERSITY MANAGEMENT ASSOCIATES AND
CONSULTANTS CORP. FREE AND CLEAR OF LIENS
SUSSMAN SHANE LLP, ATTORNEYS AT LAW
1000 SW BROADWAY,SUITE 1400, PORTLAND,OREGON 97200-300e
TELEPHONE(BM 227-11111 FACSIMILE(603)248-0130

NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED
THAT:
A.

The Motion is granted.

B.

The Receiver is authorized to complete the sale of the Receivables

Identified in Exhibit A to this Order to University Management Associates and
Consultants Corp. for the sales price of $100,000. The Receiver Is authorized to
execute such documents and take such other actions as may be reasonably necessary
to complete the sale and transfer of the Receivables.
C.

Except as set forth in this paragraph, upon closing, the Receivables shall

be transferred to Purchaser free and clear of all mortgages, security Interests, pledges,
liens, judgments, encumbrances, restrictions or charges of any kind or nature, if any.
The sale and transfer of the Receivable from Curt Bean Lumber Co. shall remain
Subject to the terms of the Order Approving Settlement With the Law Firm of Dover
Dixon Horne, PLLC [Dkt.617]entered by the Court.
D.

The Receiver is excused from compliance with 28 U.S.C. § 2004

concerning sales of personal property through federal court proceedings.
E.

The Receiver is directed to serve a copy of this Order on all account

debtors identified .in Exhibit A at their currently known address; such service shall be
sufficient notice of the transfer of the Receivables. Thereafter, all future payments on
the Receivables shall be made to:
University Management Associates and Consultants Corp.
cto Paul Rome
223 BW Stiger Street, Suite 12
Hackettstown, NJ 07840
Page 4 of 5- ORDER ON RECEIVER'S MOTION FOR ORDER AUTHORIZING SALE
OF ACCOUNTS RECEIVABLE TO UNIVERSITY MANAGEMENT ASSOCIATES AND
CONSULTANTS CORP. FREE AND CLEAR OF LIENS
SUSSMAN SHANK LLP, A7TORNsYsAT LAW
1000 SW BROADWAY,SUITE 1400,PORTLAND,OREGON 012063009
TELEPHONE(603)22T•1111 FACSIMILE(603)240-0130

or at such other location and to such other party as University Managemeht Associates
and Consultants Corp. may In Its discretion direct.
F.

This Court retains jurisdiction (I) to enforce and implement the terms and

provisions of the sale of the Receivables, all amendments thereto, any waivers and
consents thereunder, and of each of the agreements executed in connection therewith,
(ii) to resolve any disputes, controversies or claims arising out of or relating to the sale
of the Receivables, and (III) to interpret, implement and enforce the proVIsions of this
Order.

DATED:

, 2012

Unite.d States DiStrict Judge
PRESENTED BY:
SUSSMAN SHANK LLP
/s/ Jeffrey C. Misley
By:
Jeffrey C. Misley, OSB No. 850674
Martin P. Meyers, OSB No. 990820
Portland, OR 97205
[phone]
Attorneys for Edward Hostmann, Inc., as Receiver

PACLIENTSL200921002lP-ORDER APPROVING SALE OP RECEIVABLES 11413M.D00

Page 5 of 5- ORDER ON RECEIVER'S MOTION FOR ORDER AUTHORIZING SALE
OF ACCOUNTS RECEIVABLE TO UNIVERSITY MANAGEMENT ASSOCIATES AND
CONSULTANTS CORP. FREE AND CLEAR OF LIENS
SUSSMAN SHANK LLP,ATTORNEYS AT LAW
1000 SW BROADWAY,SUITE 1400,PORTLAND,OREGON 012064069
TELEPHONE[phone] I FACSIMILE(603)3484130

X10000012.xls

NORTH PACIFIC GROUP
ACCOUNTS RECEIVABLE BALANCE AS OF 11/11111
Account Name

Balance

Kenneth Andy Davis
Brown Lumber
Heartwood Inc
California Designer Cabinets
Loysville Structures
Grand Lumber Co Inc
Cut Right Wood Products LLC
Holley Moulding Inc.
New England Floor Supply
Robinson & Robinson Inc
A R Kramer Company
Buffalo River Hardwoods Inc.
Gamboa & Co Ina
Empyrean International LC
Dodd Woodworking
Closetteo
Atlantic Timber LLC
Connecticut Solid Surface LLC
Caribbean Wood Products
Heartwood !no
Arts Custom Cabinets Inc
Davco Supply Inc
Atlantic Plle lno,
Marshall Building Corp
Kiosko
Plnecreek Structures do Bells Springs Structures
Gemllne Frame Co
Hamilton Fixture Company
Plnecreek Structures
Bakersfield Woodworks Ins
Saha Inc
Archltechural Casework
The Closet Factory
Paul Brews dbs California Drawers
Bingham Lumber Inc
Ontario Wood Products
Apple Valley Woodworks LLC
New World Panels LLC
Fireplace Fronts LLC
AHJ Marketing Inc,

680,043.00
207,089.30
161,007,43
141,176.13
132,525,72
128,321.06
110,039.46
74,008.33
63,430.96
62,582.60
46,107.09
44,162.90
43,694,85
34,864,66
34,692.85
34,376.93
33 800.00
31,588.36
28,631.813
27,637,81
27,693,43
21,263.02
20,877,28
19,952.16
17,987,73
17,900,32
17,220.52
14,676,38
13,899,43
1.3,445.40
12,749,02
11,985,82
11,737.01
11,550,39
10,256.76
9,202,96
8,060,28
8,639.04
8,106,38
7,996,26
Page 1 of 2

Exhibit A
Page 1 of 2

X10000012,xls

NORTH PACIFIC GROUP
ACCOUNTS RECEIVABLE BALANCE AS OF 11/11/11
Account NameBalance
Southwest Moulding Inc
7,952,60
Trio Lumber Company
7,919,13
Brown Street Furniture
7,064.78
Havel Floorcovering Inc
6492.54
New England Cabinet
8,362.36
Barry FIsheiberg Co Inc
6,161.39
Barrington Hardware Inc
6,108.78
Imperial Valley Lumber Co
4,647.90
Pops Barns
4,599.33
Bay Woodworking LLC
4,139.50
West Hartford Stair Cab Inc
3,965.72
Tri State Window & Door
'
!no3,021,95
Wood Pro Inc
.
2,948,82
Northend Hardwoods
2,619.25
Lincoln Store Fixtures
2,615.82
Ulrich Lumber & Builders Supply
2,409.61
JDS Flooring Assoc) LLC
1,177,60
Nashua Woodcraft
1,045,73
Storage Systems Inc
771,28
D & G Enterprises
617.92
.
Tkalcao Lumber Inc
613.66
508.00
Archwood Inc
E C Croy & Sons
140.00
SUB-TOTAL AR BEFORE CURT BEAN LUMBER
2,379,29t.31
Curt Bean Lumber Co.
968,091.36
TOTAL - ALL AR
3,347,382.67

Page 2 of2

Exhibit A
Page 2 of 2

S,E.C. v. Billion Coupons, Inc., Not Reported In F,Supp.2d (2009)

2009 WL 2143531
Only the Westlaw citation is currently available.
United States District Court, D, Hawafi,

SECURTTIES AND EXCHANGE COMMISSION,
Plaintiff,
v,
BILLION COUPONS,INC,, et al., Defendants.
U.S. Commodity Futures Trading Commission,
Plaintiff,
v,
Billion Coupons, Inc,, Etc,, et al,, Defendants,
Civil Nos. 09-00068 JMS—LEK,09-00069
JMS—LEK, July 13, 2009,
Attorneys and Law Firms
Dohoang T. Duong, John B. Bulgozdy, Victoria A, Levin,
U.S. Securites and Exchange Commission, Los Angeles,
CA, Victoria A, Levin, Kenneth W, McCracken, U.S,
Commodity Futures Trading Commission, Washington,
DC,for Plaintiff,
Kurt S. Fritz, Paul Alston, Alston Hunt Floyd & Ing,
Michael A. Glenn, Honolulu, HI, Peter A. Davidson,
Erwin Cohan & Jessup LLP, Beverly Hills, CA, for
Defendants,
13any A. Fisher, Fleishman & Fisher, Los Angeles, CA,
pro se,
Opinion

FINDINGS AND RECOMMENDATION TO GRANT
RECEIVER'S MOTION TO ESTABLISH
PROCEDURE FOR THESALE OFPERSONAL AND
REAL PROPERTYIN THE RECEIVERSHIP ESTATE
LESLIE E, KOBAYASHI, United States Magistrate
Judge,
*1 Before the Court is Receiver Barry A, Fisher's
("Receiver") Motion to Establish Procedure for the Sale
ofPersonal and Real Property in the Receivership Estate,
filed on April 3, 2009 ("Motion"), No opposition to the
Motion has been filed. After careful consideration of the
Motion, supporting memorandum and declaration, this
Court HEREBY FINDS AND RECOMMENDS that the

district judge GRANT the Motion for the reasons set forth
below.

13ACKGROUND
On February 18, 2009, Plaintiff Securities and Exchange
Commission ("SEC") filed its complaint in Civil Number
09-00068 IMS—LEK alleging that Defendants Marvin R.
Cooper("Cooper") and Billion Coupons, Inc., also known
as Billion Coupons Investment, ("BCI") (collectively
"Defendants") were involved in the fraudulent offer and
sale of more than $4 million of securities, On February
18, 2009, Plaintiff United States Commodity Futures
Trading Commission ("CFTC") filed its complaint in
Civil Number 09-00069 JMS—LEK alleging that
Defendants were involved in the fraudulent offer and sale
of more than $4 of foreign cuiTency futures contracts.
Also on February 18, 2009, the district judge granted a
temporary restraining orders in both cases which, among
other things, appointed Mr. Fisher as the temporary
receiver. SEC and CFTC both moved for consolidation of
the two cases, The district judge granted the motions to
consolidate on March 2,2009,
On March 3, 2009, the district judge issued an order
granting preliminary injunction which, among other
things, appointed Mr. Fisher as the permanent receiver
and granted to him several powers, rights, duties and
responsibilities, Including "to make such payments and
disbursements from the funds and assets taken into
custody, control, and possession or thereafter received by
him „„ and to incur, or authorize the making of, such
agreements as may be necessary and advisable in
discharging his
duties as Permanent Receiver[.]"
[Preliminary Injunction and Orders: (1) Freezing Assets,
(2) Appointing a Permanent Receiver,(3) Prohibiting the
Destruction of Documents, (4) and Requiring
Accountings, filed 3/3/09 (dkt. no, 36)("3/3/09 Order"),
at 10,]
On April 9, 2009, Receiver filed his Motion for Approval
of Receiver, on Behalf of Billion Coupons, Inc,,
Consenting to a Consent Order of Permanent Injunction
and Other Relief with Securities and Exchange
Commission ("Motion for SEC Permanent Injunction"),
and Motion for Approval of Receiver, on Behalf of
Billion Coupons, Inc., Consenting to a Consent Order of
Permanent Injunction and Other Equitable Relief with
U,S, Commodity Futures Trading Commission ("Motion
for CFTC Permanent Injunction"). The parties filed a
Stipulation regarding Motion for SEC Permanent

WestlowNext' C) 21)12 Thomson Reuters, No claim to original U,S, Government Works,

S.E.C. v. Billion Coupons, Inc., Not Reported in F.Supp.2d (2009)

Injunction on May 7, 2009. The district judge issued his
Orders as to Liability, Permanent Injunction and Other
Relief Against Defendant Billion Coupons, Inc. (aka
Billion Coupons Investment) regarding SEC's complaint
on May 18, 2009 and May 20, 2009. On April 22, 2009,
the Consent of Defendant Marvin R, Cooper to Judgment
of Permanent Injunction and Other Relief as to the SEC
complaint was filed. The Consent Order of Permanent
Injunction and Other Equitable Relief Against Defendant
Billion Coupon, Inc. as the CFTC complaint was filed on
May 22,2009,
*2 On April 3, 2009, Receiver filed the following: (1)
Motion to Establish Procedure for the Sale of Personal
and Real Property in the Receivership Estate,(2) Motion
to Establish Claims Procedure and Bar Date, (3) Motion
for Authority to Commence Litigation to Recover
Fraudulent Transfers and Other Claims, for Authority to
Make Settlement Offers, and for Subsequent Settlement
Authority (collectively "Motions"). SEC and CFTC filed
a statement of no opposition to the Motions on April 21,
2009, On April 29, 2009, this Court directed Receiver to
prepare proposed Findings and Recommendations
granting the Motions.
On June 12, 2009,Receiver filed the Ex Parte Application
to File Under Seal Proposed Findings of Fact and
Recommendation for Disposition of Receiver's Motion
for Authority to Commence Litigation to Recover
Fraudulent Transfers and Other Claims and for Authority
to Make Settlement Offer, which was granted by this
Court on June 23, 2009, Receiver was permitted to file the
proposed findings and recommendation under seal,
Receiver also filed on June 10, 2009 the following:(1)(1)
Proposed Findings of Fact (sic) and Recommendation for
Disposition of Receiver's Motion to Establish Procedure
for the Sale of Personal and Real Property in the
Receivership Estate; (2) Proposed Findings of Fact (sic)
and Recommendation for Disposition of Receiver's
Motion to Establish Claims Procedure and Bar Date for
Filing Claims; and(3)Propbsed Findings of Fact(sic) and
Recommendation for Disposition of Receiver's Motion
for Authority to Commence Litigation to Recover
Fraudulent Transfers and Other Claims and for Authority
to Make Settlement Offer,

DISCUSSION
In the instant Motion, Receiver seeks to have the court
"establish procedures for the sale of the personal and real
property under the Receiver's custody and control so that

the property can be quickly liquidated...."[Mem, in Stapp.
of Motion at 21 Receiver acknowledges that 28 U.S.C, §
2004 provides that any personalty sold under any court
order shall be sold in accordance with 28 U.S.C. § 2001,
See 28 U.S.C. § 2004, However, Receiver submits that the
requirements of28 U.S.C. § 2001 are too cumbersome, 28
U.S.C. § 2001(a) provides:
Any realty or interest therein sold under any order or
decree of any court of the United States shall be sold as
a whole or in separate parcels at public sale at the
courthouse of the county, parish, or city in which the
greater part of the property is located, or upon the
premises or some parcel thereof located therein, as the
court directs. Such sale shall be upon such terms and
conditions as the court directs.
Property in the possession of a receiver or receivers
appointed by one or more district courts shall be sold at
public sale in the district wherein any such receiver was
first appointed, at the courthouse of the county, parish,
or city situated therein in which the greater part of the
property in such district is located, or on the premises
or some parcel thereof located in such county, parish,
or city, as such court directs, unless the court orders the
sale of the property or ono or more parcels thereof in
one or more ancillary districts,
*3 28 U,S.C. § 2001(a). Receiver is thus required to sell
the personal property at a public auction, Alternatively, §
2001 provides that a private sale may be ordered but,
before confirmation of such a 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," 28 U.S.C. § 2001(b). Publication of
the sale is also required. See Id Receiver argues that the
time and cost of such requirements are onerous and
expensive.
I. Sale ofPersonalProperly
Receiver proposes an alternative procedure wherein the
personal property can be sold quickly to maximize the
sale proceeds, and to minimize storage fees and other
costs; (1) as to automobiles and motorbilces, Receiver
should be given discretion to sell these items for the best
price that can be obtained (such as possibly assigning
them for sale by private buyers or using Craigslist or
similar databases) without court confirmation of these
sales; and (2) as to aircraft, Receiver represents that there
Is a Piper Aztec with an approximate value of $75,000.00
and a Kolb Twinstar MK II with an approximate value of
$7,5000,00, and that the accrued storage and repair fees

WestlawN01" © 2012 Thomson Reuters. No claim to original U.S. Government Works.

2

S.E.C. v. Billion Coupons,Inc., Not Reported in F.Supp.2d (2009)

for the aircraft are $20,397.08 and $600,00, respectively.
[Mem, in Supp. of Motion at 5 n, 1.] Both aircraft are
located outside of Hawaii.[Id at 5.] Receiver asks to be
authorized to: sell the aircraft for the best price that can be
obtained at the aircrafts' current locations; to pay up to
ten percent of the sales price hi brokers' commission; and
to pay outstanding bills for the repair and storage of the
aircraft from the proceeds of any sale of the aircraft. As to
other personal property, Receiver represents that there are
several items in storage which include computers,
furniture and equipment, and that the best method for the
sale of these items is public auction. Receiver requests
authorization to sell these items hi a public auction and to
retain the services of a local auctioneer to conduct the
auction, In addition, Receiver states that he may obtain
other personal property purchased with BCI funds as he
has demanded the return of high-end camera equipment
and may obtain a portable GPS for airplanes. In the event
that these items are recovered, Receiver requests authority
to sell these and any other items recovered by
consignment or offer for sale in Ebayi or other similar
Internet sites,
II,Sale ofRealProperty
For the sale of real property, Receiver proposes that the
court: 1) authorize Receiver to retain the services of a
licensed real estate broker to sell the real property; and 2)
require the broker to list the real property in the
appropriate multiple listing service and to advertise it,
Thereafter, Receiver should be authorized to sell the real
property for the highest and best price that can be
obtained.
Receiver has already been given full powers over BCI's
assets, See 3/3/09 Order at 10-11; see also S.E.C. v. Am,
Capital Invs., Inc., 98 F.3d 1133, 1144(9th Cir.1996). For
the real property, the district court has discretion in setting
the terms and conditions of the sale. See United States 1),
Branch Coal Corp., 390 F.2d 7, 10 (3d Cir.1968).
Receiver's proposed plans for the sale of personal and
real property have sufficient safeguards in order to solicit
the highest price that a willing buyer in an arms-length
negotiation will offer while conducting the sales in a
timely and cost-efficient manner that will maximize the
net sales proceeds.

CONCLUSION
*4 On the basis of the foregoing, this Court HEREBY
FINDS that there is good cause for the district court to
exercise its discretion and permit Receiver to sell personal
and real property that he has recovered in the instant
action in a manner other than as provided by federal
statute, including 28 U.S.C. §§ 2001, 2004. This Court
FURTHER FINDS that the proposed plans for the sale of
personal and real property have sufficient safeguards for
maximizing sale prices but also provide an efficient
process to minimize carrying costs and other expenses
that will need to be deducted from the gross sale
proceeds.
The Court therefore RECOMMENDS that the district
judge GRANT Receiver's Motion to Establish Procedure
for the Sale of Personal and Real Property in the
Receivership Estate, filed on April 3, 2009. This Court
FURTHER RECOMMENDS that Receiver be given the
following powers and directives: (1) as to automobiles
and motorbikes, Receiver is given the discretion to sell
these items for the best price that can be obtained
(including assigning them for sale by private buyers or
listing the items for sale on Internet databases) without
court confirmation of these sales; (2) as to aircraft,
Receiver is authorized to sell the aircraft for the best price
that can be obtained, to pay up to ten percent of the sales
price in brokers' commission, and to pay outstanding bills
for the repair and storage of the aircraft from the proceeds
of any sale of the aircraft without court confirmation; (3)
as to any other personal property, Receiver is authorized
to place these items for sale by public auction, including
by consignment or offer for sale on an Internet website for
an on-line auction or on-line sale; and (4) as to real
property, Receiver is authorized to retain a licensed real
estate broker to list and advertise the property, and
Receiver is authorized to sell the real property for the
highest price that can be obtained.
IT IS SO FOUND AND RECOMMENDED,

Footnotes
1
Ebay is an Internet website for on-line auctioning and shopping for goods and services.

IAlostiwiNeXts 02012 Thonitior► Reuters. No claim to original U.S. Government Works.

3

S,E.C. v. Billion Coupons, Inc., Not Reported In F.Supp.2d (2009)

End of Document

CD 2012 Thomson Reuters, No claim to original U.S, Government Works,

WestlawNoxr © 2012 Thornson Reuters. No claim 10 original U.S. Government Works.

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UNITED STATES DISTRICT COURT
7

DISTRICT OF NEVADA

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**

9
10

FEDERAL TRADE COMMISSION,

11
12
13
14
15
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Plaintiff,
vs.

Case No.: 2:10-cv-02203-RLH-GWF
ORDER
(Motion for Order—#227)

JEREMY JOHNSON,individually, as officer
of Defendants I Works,Inc., Cloud Nine, Inc.,
CPA Upsell, Inc,, Elite Debit, Inc., Internet
Economy,Inc., Market Funding, Inc., and
Success Marketing,Inc,; as a member of
Defendant Network Agenda LLC; and as the
defacto principal of numerous Defendant Sliell
Companies; I WORKS,INC., et al,,

17
Defendants.
18
19

Before the Court is Receiver Robb Evans of Robb Evans & Associates LLC's

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("Receiver") Motion for Order;(1) Authorizing and Confirming Sale of Personal Property

21

by Public Auction;(2) Authorizing and Confirming Sale and Redemption of Investment

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Interest;(3)Authorizing Receiver to List and Offer for Sale Houseboats, Aircraft, and

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Multiple Real Properties; and (4) Granting Relief From Local Rule 66-5 Pertaining to Notice

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to Creditors ("Sale Motion")(##227,228, filed May 27,2011). The Court has also considered

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Defendants Duane Fielding, Network Agenda,LLC,and Anthon Holdings Corp.'s (collectively,

26

the "Fielding Defendants") Opposition (##239, 240, filed June 13, 2011),Defendants Jeremy D.

AO 72
(Rev, 8/82)

1

Johnson; I Works, Inc.; Cloud Nine Marketing„Inc,; CPA Upsell, Inc.; Elite Debit, Inc.; Internet

2

Economy,Inc.;.Market Funding Solutions, Inc.; Success Marketing,Inc.; Pitiless for Life,Inc.'s

3

(collectively, the "Johnson Defendants") Opposition (#245,filed June 20, 2011), the Receiver's

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Reply to the Fielding Defendants' Opposition(#250, filed June 23, 2011), Plaintiff Federal Trade

5

Commission's("FTC")Reply (#253,filed June 27, 2011), and the Receiver's Reply to the

6

Jolmson Defendants' Opposition (#256, filed June 29,2011).

7

BACKGROUND
As the parties are familiar with the facts of this case, the Court will not recount

8
9

them further except as necessary for the disposition ofthe Sale Motion, This dispute arises from

10

the FTC's investigation of Johnson and numerous affiliated individuals and corporations who

11

allegedly defrauded the public via internet scams, On December 21, 2010, the.t.1 C filed its

12

complaint pursuant to the Federal Trade Commission Act, and the Electronic Fund Transfer Act,

13

to obtain permanent injunctive relief, restitution, disgorgement, and other equitable relief. On

14

February 10, 2011, the Court issued a Preliminary Injunction. Order(#130)("Preliminary

15

Injunction")that among other things appointed the Receiver to administer assets frozen by the

16

Preliminary Injunction. The Receiver now moves the Court to allow the sale of certain assets. For

17

the reasons discussed below, the Court grants the Sale Motion.

18
19
20

DISCUSSION
I.

The Receiver's Sale Motion
Pursuant to 28 U,S,C, §§ 2001 and 2004, a district court has the authority to direct

21

an appointed receiver to arrange a public sale of any real property or personal property under the

22

receivership, § 2001(a). After all interested parties receive notice and a hearing,"the court may

23

order the sale ofsuch realty or interest or any part thereof at private sale for cash or other

24

consideration and upon such terins and conditions as the court approves, if it finds that the best

25

interests of the estate will be conserved thereby" and a price is set at no less than two-thirds of the

26

appraised value, § 2001(b).

AO 72
(Rev, 8/82)

2

1

Johnson Defendants' Opposition

2

In the Sale Motion, the Receiver asks the Court to authorize the sale or listing for

3

sale of various real property and personal property which are under the Receiver's control. The

4

Johnson Defendants oppose these proposed actions for several reasons. They argue that the office

5

equipment would obtain greater value through means other than a local auction in southern Utah.

6

They further argue that the vehicles identified for public auction are collector's items which will

7

not realize their full value by auction in Hurricane, Utah, but will appreciate in value over time

8

while in storage. In short, the Johnson Defendants oppose the Sale Motion because none of the

9

items are perishable, the current depressed state of the economy favors waiting to sell any assets

10

until a later time, and the assets should remain in place until a final determination is made.
The Court concludes that the Johnson Defendants' objections are without merit.

11
12

The Receiver is charged with the duty to preserve the value of the assets of the receivership, which

13

in this case must be accomplished by preventing the value of these assets and the estate as a whole

14

from decreasing through ongoing expenses to maintain, insure, store, and protect those assets. The

15

Court is satisfied that the Receiver has identified sound business reasons thatjustify the sale of

16

these assets. Furthermore, nothing in the oppositions filed suggest that the parties with alleged

17

interests in those assets to be sold now would be injured if their interests are converted to cash to

18

be held by the Receiver.

19
20

B.

Fielding Defendants' Opposition
The Fielding Defendants also oppose these proposed actions based on their

21

purported ownership interest in one parcel of real property, one helicopter, and several additional

22

motor vehicles that the Receiver identified for sale. They argue that the sale of these assets would

23

be premature and would lead to an improper declaration of their value. Further, they contend that

24

the proposed sale would violate the Receiv
.er's duty to preserve the value of the assets pending

25

final adjudicatiOn on the merits. In addition, they assert that the Receiver is not authorized to sell

26

the individual Defendant Duane Fielding's assets because he is not specifically covered by the

AO 72
(Rev. 8/82)

3

1

Preliminary,Injunction Order(#130, issued Feb. 10, 2011), In sum,the Fielding Defendants make

2

the same objections to the Receiver's Sale Motion as the Johnson Defendants, and as a result,

3

warrant the same conclusion.

4

In addition, the Court notes that the Fielding Defendants' purported ownership

5

interest in these assets seems incredibly aspirational given the evidence set forth by the Receiver,

6

Nevertheless, even if Mr,Fielding were to show a legitimate ownership interest in these assets, he

7

could seek appropriate compensation after the FTC's claims are fully adjudicated. The opposing

8

patties have failed to show that the Receiver's proposed actions would violate the Receiver's duty

9

to preserve assets, rather the Receiver has adequately shown the Court that liquidating these assets

10

will limit expenses and avoid further deterioration or loss of value. Therefore, the Court grants the

11

Receiver's Sale Motion.

12

CONCLUSION

13

Accordingly, and for good cause appearing,

14

IT IS HEREBY ORDERED that the Receiver's Motion for• Order:(1) Authorizing

15

and Confirming Sale of Personal Property by Public Auction;(2) Authorizing and Confirming Sale

16

and Redemption ofInvestment Interest;(3) Authorizing Receiver to List and Offer for Sale

17

Houseboats, Aircraft, and Multiple Real Properties; and(4)Granting Relief From Local Rule 66-5

18

Pertaining to Notice to Creditors (#227)is GRANTED.

19
20
21
22

IT IS FURTHER ORDERED that:
• A,

• The Receiver is authorized to sell the following personal property of the

Receivership Defendants:(a) office furniture(suCh as desks, chairs, sofas, cabinets, tables, etc,),
telephones, comPuters, office artwork and other similar personal property(collectively

23

the "Tabernacle Office Equipment")from the I Works offices formerly located at 249 East

24

Tabernacle Street, St, George, Utah known as the "Tabernacle Towers" currently being stored by

25

Statewide Auction Co,, located at 5099 Wheeler Way, Hurricane, Utah;(b) the following vehicles:

26

1957 Chevrolet Belair Convertible(VIN #VC57L 188500), 1972 Chevrolet Nova SS Clone(VIN

AO 72
(Rev. 8/82)

4

#1X27F2L160461,License #FGM 994 — Oregon), 1952 Ford O Matic(VIN #B2L13102645,
2

License #JTL 488 UT), 1968 Oldsinobile(442 VW #344778N1446554,License #785 NZP UT),

3

1972 Chevrolet Chevelle SS*454(VIN #1D37W2L585777),Honda Pilot Dune Buggy(ATV

4

License Yr, 2008 #08126055)(collectively, the "Vehicles") and a custom made snow plane

5

(Engine No,6008678)("Snow Plane")by public auction pursuant to the following terms,

6

conditions and procedures ("St. George Personal Property Sale Procedures"), and the sale and

7

publication procedures of 28 U.S.C, § § 2001 and 2004 are hereby modified accordingly:

8

1.

The Receiver is authorized to employ Statewide Auction Company of Salt

9

Lake City, Utah ("Auctioneer")to sell the St. George Personal Property at public auction to be

10

conducted at the business premises of the Auctioneer located at 5099 Wheeler Way,Hurricane,

11

Utah, pursuant to the Statewide Auction Company Contract dated as of May 4, 2011 ("St, George

12

Auction Contract") attached as Exhibit 1 to the Declaration of Kenton Johnson("Johnson

13

Declaration")filed in support of the Sale Motion, and is authorized to compensate the Auctioneer

14

in accordance with the St. George Auction Contract by paying the Auctioneer an auction
commission of 15% of the gross sales price paid by the purchasers at the public auction for the St.

16
17

George Personal Property;
2.

The Receiver is authorized to sell the St. George Personal Property

18

individually, in lots or in bulk at the discretion of the Receiver and the Auctioneer, with such

19

property to be sold "as is, where is, with all faults," and without representation or warranty of any

20

kind or nature, express or implied, to the highest bidder at the sale for payment in cash, certified

21

funds or check with the approval of the Auctioneer;

22

3,

The Auctioneer shall provide notice of the auction of the St. George

23

Personal Property by publishing a written notice of the date, time and place of the auction sale, the

24

terms of the sale and a suinmary of the property to be sold at the auction sale at least one time not

25

less than one weelc prior to the auction sale in the following newspapers: Salt Lake Tribune, the

26

Deseret News and The Spectrum in St. George;

AO 72
(Rev, 8/82)

5

1

4.

The sales of the St. George Personal Property in accordance with the St.

2

George Personal Property Sale Procedures are hereby confirmed withotit further notice, hearing or

3

order, and the notice of the hearing on the Sale Motion and publication of notice of the sale as set

4

forth in such procedures is deemed sufficient pursuant to 28 U.S.C. §§ 2001 and 2004;

5

5.

To the extent that any of the Vehicles is registered to or deemed to be

6

owned by Jeremy Johnson, the Preliminary Injunction Order, including Section XV.0 thereof, is

7

hereby modified to allow the Receiver to sell the Vehicles in accordance with this Order;

8

B.

Tho Receiver is authorized to sell the office furniture and equipment, such as office

9

cubicles, office chairs, telephone system with servers and telephone units, computer servers and

10

towers, keyboards, monitors, executive office furniture including desks, chairs and wood cabinets

11

(collectively,"Ephraim Office Equipment")found in the offices previously occupied by Zibby,

12

LLC ("Zibby"), an entity owned 50% by Jeremy Jolmson and 50% by his wife, Charlo Jolmson,

13

located at 11 West 700 South, Ephraim,Utah ("Ephraim Office)by public auction to be

14

conducted on the premises at 11 West 700 South, Ephraim, Utah pursuant to the following

15

proposed terms, conditions and procedures ("Ephraim Office Equipment Sale Procedures"), and

16

the sale and publication procedures of28 U.S.C, §§ 2001 and 2004 are hereby modified

17

accordingly:
1.

18

The Receiver is authorized to employ Statewide Auction Company of Salt

19

Lake City, Utah ("Auctioneer") to sell the Ephraim Office Equipment at the Ephraim Office

20

pursuant to the Statewide Auction Company Contract(Ephraim) dated as of May 4, 2011

21

("Ephraim AuctiOn Contract") attached as Exhibit 2 to the Johnson. Declaration filed in support of

22

the Sale Motion, and is authorized to compensate the Auctioneer in accordance with the Ephraim

23

Auction Contract by paying the Auctioneer an auction commission of 15% of the gross sales price

24

paid by the purchasers at the public auction for the Ephraim Office Equipment;

25

///

26

///

AO 72
(Rev. 8/82)

6

1

2,

The Receiver is authorized to sell the Ephraim Office Equipment

2

individually, in lots or in bulk in the discretion of the Receiver and the Auctioneer, with such

3

property to be sold "as is, where is, with all faults," and without representation or warranty of any

4

kind or nature, express or implied, to the highest bidder at the sale for payment in cash, certified

5

funds or check with the approval of the Auctioneer;
3.

6

The Auctioneer shall provide notice of the auction ofthe Ephraim Office

7

Equipment by publishing a written notice of the date, time and place ofthe auction sale, the terms

8

of the sale and a summary of the property to be sold at the auction sale at least one time not less

9

than one week prior to the auction sale in the following newspapers: Salt Lctke Thibtte, the

10

Deseret News and a local newspaper of general circulation in Eplaraim, Utah;

11

4.

The sales of the Epliraim Office Equipment in accordance with the Ephraim

12

Office Equipment Sale Procedures are hereby confmned without further notice, hearing or order,

13

and the notice ofthe hearing on the Sale Motion and publication of notice ofthe sale as set forth in

14

such procedures is deemed sufficient pursuant to 28 U.S,O, §§ 2001 and 2004;

15

C.

The Receiver is authorized to liquidate and redeem the private limited liability

16

membership interest held by Orange Cat Investments, LLC Global Wealth Long/Short Commodity

17

Putuies Fund,LLC ("Global Wealth LLC") managed by Marathon Investments,Inc.("Marathon"),

18

by making a written request to Marathon for redemption ofsuch investment in accordance with the

19

terms and provisions of the Amended and Restated Operating Agreement pertaining to Global

20

Wealth LLC("Operating Agreement'), and the sale and publication prodedures of28 U,S,C.§§

21

2001 and.
2004 are hereby modified accordingly to allow the Receiver.to redeem and liquidate such

22

investment in accordanCe with the Operating Agreement,

23

D,

The Receiver is authorized to list for sale two SldPperliner houseboats consisting of

24

a custom 3208 Marine model 1999 Slcipperliner 75 foot houseboat named PEPS I and a 1994

25

Skipperliner 74 foot houseboat named Animal House (collectively,"Houseboats") owned by

26

Orange Cat Investments LLC with Ammark Sports and Entertainment Services, Inc. d/b/a Lake

AO 72
(Rev, 8/82)

7

1

Powell Resorts and Marinas ("Marine Broker") at prices to be determined in the Receiver's

2

discretion and judgment and to enter into a written exclusive listing agreement with the Marine

3

Broker in connection therewith providing for ordinary and customary terms and conditions for the

4

listing of similar watercraft including ordinary and customary sales commissions not to exceed 6%

5

of the gross sales price for the Houseboats, and further providing that acceptance of offers and

6

completion of any sales ofthe Houseboats is subject to entry of an order of this Court approving

7

such sale after notice and an opportunity for hearing;

8

E.

The Receiver is authorized to (1) engage one or more companies specializing in the

9

sale of helicopters and fixed wing aircraft to list for sale at prices to be determined in the

10

Receiver's discretion and judgment the following aircraft:(a) 1978 Cessna P210N, Tail No,

11

N4827P,(b)2008 Robinson R44 Raven II helicopter, Tail No, N41286 owned by Trigger, LLC,

12

(c) 1968 Piper Navajo, Tail No.N300WA;(d)2005 Robinson R44 Raven II helicopter, Tail No.

13

N321WT,(e)2009 Piper Malibu Mirage, Tail No. N32ED,and (f) a 1978 Beech C24R, Tail No.

14

N20135 (collectively "Aircraft"), and (2) enter into written exclusive listing agreements with one

15

or more companies specializing in the listing and sale of the particular type and model of the

16

Aircraft ("Aircraft Brokers") providing for ordinary and customary terms and conditions for the

17

listing of similar Aircraft including ordinary and customary sales corrunissions in a range of6% to

18

8% of the gross sales price for each of the Aircraft with a minimum commission amount of

19

$10,000, providing for ordinary and customary advertising expenses, and further providing that

20

acceptance of offers and completion of any sales of the Aircraft is subject to entry of an order of

21

this Court approving each such sale after notice and an opportunity for hearing;

22

F.

The Receiver is authorized to (1) engage local, regional or international real estate

23

brokers experienced in the sale of the types of real properties, including experience in residential

24

and commercial real estate and sales ofraw land in the local market("Sales Agents"),(2) list for

25

sale at prices to be determined in the Receiver's discretion and judgment the following residential

26

and commercial. real property assets of the Receivership Defendants:(a)82 West 700 South, St,

AO 72
(Rev, 8/82)

8

1

George, Utah("82 West Property");(b)575 East 30 North, Ephraim, Utah ("575 East Property"),

2

(c) 11 West 700 South,Ephraim, Utah ("11 West Property");(d)302 West Hilton Drive, St.

3

George, Utah ("Hilton Drive Property));(e) 147 North 100 West, Mendon,Utah ("147 North

4

Property) (f) 392 West 400 South, Manti, Utah ("392 West Property");(g) 575 S. Main,
);

5

Richfield, Utah ("Richfield Property);(h) 127 Hollister Avenue, Santa Monica, California

6

("Hollister Property");(i)No.91 North Front Street, Belize City, Belize ("Belize Property")(j)

7

the five parcels of adjacent and/or related parcels ofraw land identified as Parcel #4200-B-HV,

8

St, George, Utah,Parcel #4201-A-HV & Parcel #4201-B-HV, St. George, Utah and Parcel #4203-

9

HV & Parcel #4150-B-HV, St, George, Utah("Washington County Lae);(k)Part Sec 25, T33S,

10

R16W,SLBM,Beryl, Utali("Beryl Land"); and (1)750 South Main,Highway 89, Ephraim, Utah

11

("South Main Land"), and (3)enter into written exclusive listing agreements with such Sales

12

Agents providing for ordinary and customary terms and conditions for the listing of similar real

13

property assets including ordinary and customary sales commissions not to exceed 6% of the gross

14

sales price for each ofthe real properties, except for the Belize Property as to which the sales

15

comthission should be in an amount not to exceed 10% ofthe gross sales proceeds, providing for

16

ordinary and customary advertising expenses, and further providing that acceptance of offers and

17

completion of any sales of the real properties is subject to entry of an order of this Court approving

18

each such sale after notice and an opportunity for hearing; and

19

G,

Notice ofthe Sale Motion is hereby deemed sufficient under Local Rule 66-5 based

20

on the service of a notice of the Sale Motion's filing and the Sale Motion itself on all parties and

21

service of a notice of the Sale Motion's filing on all known non-consumer creditors ofthe estate

22

concurrent with the filing of the Sale Motion with the Court,

23

Dated: August 25,2011,

24

4,,,,tar- 4,

25

RO
6
HUNT
Uni ed ates District Judge

26
AO 72
(Rev, 8/82)

9

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
LYDIA CAPITAL, LLC;
GLENN MANTERFIELD; and
EVAN ANDERSEN,.
Defendants.

)
)
)
)
)
)
)
)
)
)
)

Case No,07.cv-I 0712-RGS

ORDER GRANTING RECEIVER'S MOTION FOR AUTHORIZATION
TO SELL ASSET OF THE RECEIVERSHIP ESTATE
NOW before the Court is Receiver's Motion for Authorization to Sell Asset
Receivership Estate, and Brief in Support [Doc. No.

or the

](the "Sale Motion"), by H. Thomas

Moran, II, Court-Appointed Receiver ("Receive') For Defendant Lydia Capital, LLC ("Lydia"),
Having reviewed the Sale Motion and exhibits thereto, finding that no objections to the same
have been received, and it appearing that the relief requested in the Sale Motion is in the best
interest of the Receivership estate, after due deliberation thereon, and for good cause appearing
therefore,
THE COURT HEREBY FINDS AND DETERMINES THAT:
This Court has jurisdiction over the subject matter of the Sale Motion.
2.

Pursuant to the Courts Order of June I, 2007, Fl. Thomas Moran, II was

appointed the Receiver for the assets of Lydia ("Order of Appointment"), [Doc. No, 28].
3,

Pursuant to the Order of Appointment, the Receiver was directed to take and

retain immediate possession, custody and control of the (Ends and assets

of Lydia, and of all

other entities which Lydia owned, controlled, or benefited from, including the Lydia Capital

Alternative Investment Fund, LP (the "Fund"), and to take all steps the Receiver deems
necessary to conduct an inventory of the assets and liabilities of Lydia.and the Fund. Further, the
Order of Appointment directed the Receiver to undertake the liquidation of any, or all, of the
assets of Lydia or the Fund in connection with the exercise of his powers granted by the Order of
Appointment, with due regard for the best long-term interests of the investors in the Fund. Id,
4,

Notice oldie Sale Motion and the proposed Order thereto was provided to: (I)all

parties to this action,(2) the investors in Lydia and/or the Fund, and (3) those creditors of Lydin
and/or the Fund of which the Receiver is aware, Additionally, the Receiver provided notice by
posting a copy of the Receiver's Sale Motion and the proposed Order thereto on the Receiver's
website; httn://www.lvdiacapititl,com.
5.

The Court finds that this notice, as carried out by the Receiver, is sufficient and

reasonable in light of the circumstances and nature of the relief requested in the Sale Motion.
6.

The Court finds that the Receiver has negotiated an Asset Purchase Agreement

("Purchase Agreement") with Seaport Group Life Assets, LLC ("Buyer") for the sale of a life
insurance policy within the portfolio on the teens and conditions set forth in the Purchase
Agreement between the Receiver and Buyer (the "Sale"), The policy being sold is described in
the Purchase Agreement by policy code LYD 3351-01, with an adjusted face value amount of
$7,500,000 (the "Sale Policy"), A copy of the Purchase Agreement is attached as Exhibit "A" to
the Sale Motion.
7.

The Court finds that (1) the purchase price and other consideration contained in

the Purchase Agreement provides fair and reasonable consideration for the Sale Policy;(2) the
sale will provide a greater recovery for the Receivership's investors and creditors than would be
provided by any other practical available alternative; (3) no other party has offered to purchase

2

the Sale Policy for greater economic value to the Receivership; and (5) the p,urpase price and
other consideration constitute fair consideration under the laws of the United States, any state,
territory, possession or the District of Columbia.
8.

The Court finds that the sale of the Sale Policy proposed by the Sale Motion, as

described in the Purchase Agreement is reasonable and in the best interests of the Receivership
estate, the creditors and the investors in Lydia and/or the Fund,
9,

The Court finds that good cause exists for, granting the Sale Motion, and

accordingly, it is hereby ORDERED, ADJUDGED AND DECREED as follows:
(a)

The Purchase Agreement attached as Exhibit '1A" to the Sale Motion is

hereby approved.
(b)

The Receiver has demonstrated good, sufficient and sound business

purpose and Justification for the sale to Buyer and that compelling circumstances for the sale
exist as the value or the Sale Policy could be harmed by any delay. Therefore, time is of the
essence in consummating the sale.
(e)

The sale

or the Sale Policy is in the best interests of the Receiver, the

creditors and the Receivership estate;
(d)

Buyer has acted in good faith and is a good faith purchaser of the Sale

Policy and has entered into the Purchase Agreement, without collusion and no party has engaged
in conduct that would cause or permit the Purchase Agreement to be avoided;
(e)

the Receiver has full power and authority to execute and deliver the

Purchase.Agreement and the other instruments and agreements to be executed and delivered by
the Receiver to consummate the transactions contemplated In the Purchase Agreement, including
without limitation, the right to assign to Buyer all of the Receiver's right, title, and interest in and

3

to the Sale Policy (including without limitation the death benefits associated with the Sale
Policy) and certain medical information and records applicable to the insured of the respective
Sale Policy, consisting of all rights which the Receiver has to: (i) obtain medical and health
records in respect of the insured under the Sale Policy; (ii) contact from time-to-dine at least one
(l) designated representative of such insured to monitor their respective health status and life
status; and (iii) obtain death certificates, as applicable with respect to any such deceased insured
under the Sale Policy (collectively, the "Medical Information Rights");
(I)

the Purchase Agreement constitutes, and such other instruments and

agreements when duly executed will constitute, the binding obligation of the Receiver;
(g)

the Receiver is the sole owner and sole beneficiary of all options,

privileges, rights, title and interest in and to the Sale Policy and any and all proceeds thereof
(including without limitation the death benefits associated with the Sale Policy);
(h)

the sale of the Sale Policy in accordance with the terms of the Purchase

Agreement is approved and as of the date of the Sale Order, the Receiver shall be directed to
perform his obligations hereunder;
(I)

the sale of the Sale Policy shall be free anti clear of all liens, claims,

encumbrances and other interests, other than Assumed Liabilities (as defined in Section 7 of the
Purchase Agreement)(collectively, the "Liens"). The Liens shall mean, without limitation, any
and all liens (statutory or otherwise), encumbrances, claims, rights, interests (including any
interests of the investors in the Pund), charges, security interests, rights of first refusal, or options
to purchase, including any of the foregoing which may arise under any order entered by the U.S.
District Court in the Receivership Proceeding, together with any and all debts, losses, claims
(including successor liability claims), damages, costs, expenses, demands, fines, judgments,

4

penalties, liabilities, commitments, sales commissions, contracts, responsibilities, and obligations
of any kind or nature whatsoever, direct or indirect, absolute or contingent, other than the
Assumed Liabilities, as defined in Section 7 of the Purchase Agreement;
(j)

the Receiver shall deliver and Buyer shall receive the Policy Files, as

defined in Section 2,2 or the Purchase Agreement, which delivery and receipt will be
accomplished within fifteen (15) days eller Closing, as defined in Section 5

of the Purchase

Agreement;
(k)

upon Closing, as defined in the Purchase Agreement, Buyer shall

indemnify and hold Receiver harmless from any claims or demands resulting from or arising out
ol'(he Assumed Liabilities, as defined in Section 7 of the Purchase Agreement;

(1)

the sale of the Sale Polley and the Purchase Agreement arc not precluded

by or contrary to any prior Order issued by the U,S, District Court, or any stay or any allegations
challenging the bidding procedures and any modifications thereto, filed in the Receivership
Proceeding and no further consents by any party are required to convey all of the Receiver's
right, title and interest in the Sale Policy, the Medical Information Rights and the Policy Files to
Buyer in accordance with the Purchase Agreement;
(m)

the Buyer will wire transfer the sum of $61,369,61 to the insurance

company that issued the Sale Policy (the "Issuer") to pay_ the premium obligation due by Mvha•ch
14, 2011, and Buyer will promptly provide to the Receiver a copy of the bank confirmation
showing such funds have been wired to the Issuer on or before March 14, 2011, Upon Closing,
Buyer shall pay directly to the applicable issuing insurance companies all other premiums due
under the Sale Policy, whether arising before or after the Closing Date as set forth in Section 9,9
of the Purchase Agreement (the "Additional Premiums"), and Buyer will accept the Sale Policy

in its "AS 1S" condition and there shall be no ,right of rescission or other remedy, and the
Purchase Price, as defined in the Purchase Agreement, shall be paid to the Receiver, free, and
clear or nny claims of Buyer; and
(n)

Given the Receiver's efforts in marketing the portfolio of policies,

including the Sale Policy, the third-party offers the Receiver obtained from disinterested bidders
in the marketplace, and the notices provided to all interested parties, neither an independent
appraisal or publication is necessary under 28 U.S,C. §§ 2001 and 2004.
(o)

The sale or the Sale Policy in accordance with the terms of the Purchase

Agreement, attached as Exhibit "A" to the Sale Motion, is approved and the Receiver is directed
to execute the Purchase Agreement and perform all obligations thereunder.
(p)

The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.
(q)

The requirement that any motion or other request for relief be

accompanied by a memorandum

of law is hereby deemed satisfied by the contents of the Sale

Motion, or otherwise waived.
(r)

The ten-day stay or effectiveness of this Order pursuant to Fed, R. Civ. P.

62(a) is waived. Due to the fluctuations in value in the market and the cost of future premium
payments clue on the Sale Policy, the Receiver and Buyer need to consummate the sale as soon as
possible.
(s)

To the extent this Order is inconsistent with any prior order or pleading

with respect to the Sale Motion in this case, the terms of this Order shall govern. In the event
that this Order is inconsistent ‘vith the Purchase Agreement, however, the Purchase Agreement
shall govern,

1:4

(t)

The Court shall retain jurisdiction to resolve any disputes relating to the

interpretation of the terms or conditions of this Order. Further, the Court shall retain jurisdiction
to interpret, construe and enforce the Purchase Agreement attached as Exhibit "A" to the Sale
Motion,
WHEREFORE, Receiver's Motion for Authorization to Sell Asset of the Receivership
Estate is hereby granted,
DATED this

/74, day of

, 20I I.

'CHARD G,
A7tNS,
UNITED STATES DISTRICT JUDGE

00$44641,DOC