Securities and Exchange Commission v. Nadel et al

Filing 1364

Unopposed MOTION for miscellaneous relief, specifically from Injunction Joint Motion with BB&T by Burton W. Wiand. (Attachments: # 1 Exhibit Proposed Order)(Perez, Jared)

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 AND BRANCH BANKING & TRUST’S
UNOPPOSED, JOINT MOTION FOR RELIEF FROM INJUNCTION
Burton W. Wiand, as Receiver (the “Receiver”), and Branch Banking & Trust
(“BB&T”) respectfully move the Court for an order, in substantially the form attached as
Exhibit 1, permitting relief from the injunction imposed in this matter pursuant to the
Court’s Order Appointing Receiver (Doc. 8) and the Orders Reappointing Receiver (Docs.
140, 316, 493, 935, and 984), which orders enjoin all persons from prosecuting any action
that disturbs the assets or affects the property of the Receivership, so that BB&T can enforce

its secured interest through a state court foreclosure action on the real property titled in the
name of Laurel Preserve, LLC located in Buncombe County, North Carolina. The relief
requested in this motion is unopposed by the Securities and Exchange Commission (the
“Commission”).
BACKGROUND
On January 21, 2009, 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 Court subsequently granted several motions to expand the scope of the
Receivership to include other entities owned or controlled by Arthur Nadel (“Nadel”),
including Laurel Preserve, LLC. (See generally Docs. 17, 44, 68, 81, 153, 172, 454, 911,
916, 1024.) The Court subsequently entered several Orders Reappointing Receiver (Docs.
140, 316, 493, 935, and 984), reaffirming the Receiver’s authority over various entities and
assets.
The orders appointing and reappointing the Receiver clearly enjoin creditors and
others “from in any way disturbing the assets or proceeds of the receivership or from
prosecuting any actions or proceedings which involve the Receiver or which affect the
property” of the Receivership entities.

See, e.g., Doc. 8 ¶ 15.

However, after careful

consideration, the Receiver has determined that there is no benefit to continuing to hold the

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real property located in Buncombe County, North Carolina because the encumbrance and
secured claim of BB&T on such real property greatly outweighs its fair market value.
THE PROPERTY AND BB&T’S SECURED CLAIM
The encumbered real property that is the subject of this joint motion is a 2.38-acre lot
located in Buncombe County, North Carolina, which is part of the Laurel Mountain
Property 1 and is more commonly referred to as Lot A of Bird Creek Estates, 10 Laurel
Cottage Lane (Parcel Number 063689982100000) (hereinafter the “Property”).

The

Property was purchased by Nadel in 2003 through Laurel Mountain Preserve, LLC and was
subsequently transferred to Laurel Preserve, LLC in 2006. A 1,705 square foot cabin home
was built on the Property. In 2007, Laurel Preserve, LLC obtained a $395,000 loan secured
by a Deed of Trust and Security Agreement in favor of BB&T, recorded in Book 4400 at
Page 1534 of the Buncombe County Registry. The Property secures a purchase money
obligation in the amount of $2,900,000 secured by a Purchase Money Deed of Trust in favor
of Laurel Mountain Preserve, LLC, recorded in Book 4263 at Page 1447 of the Buncombe
County Registry. The Purchase Money Deed of Trust was subordinated to BB&T’s Deed of
Trust by a Deed of Subordination, dated May 1, 2007, and recorded in Book 4400 at Page
1543 of the Buncombe County Registry.
The scope of the Receivership was expanded to include Laurel Preserve, LLC and
Laurel Mountain Preserve, LLC, pursuant to an order of this Court, dated February 11, 2009.
(See Doc. 44.)

By virtue of this order, title to all property of Laurel Preserve, LLC

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The Laurel Mountain Property is defined in Receiver’s Interim Reports as the 420+/acres near Asheville, North Carolina, intended for development as home-sites. (See, e.g.,
Doc. 1361.)

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immediately vested by operation of law in the Receiver, and as such, the Receiver is the
record owner of the Property. In addition, all rights and interests under the Purchase Money
Deed of Trust in favor of Laurel Mountain Preserve, LLC immediately vested by operation
of law in the Receiver.
The Receiver has listed the Property for sale along with other Laurel Mountain
properties through various real estate brokers during the past eight years but has been
unsuccessful in securing a sale price that exceeds BB&T’s encumbrance.
BB&T filed a timely proof of claim form in the claims process here, and its claim was
approved in the amount of $360,157.37, which was the principal amount outstanding on the
loan at the time of the Receiver’s appointment. (See Docs. 675, 76).
In 2012, an appraisal completed by Charles D. Howell of Skyline Properties, Inc.
valued the Property at $312,300. In 2015, an appraisal completed by Richard J. Jacobs, MAI
of Duckworth, Jacobs, Naeger, Swicegood & Thrash, LLC valued the Property at $340,000.
Furthermore, the County of Buncombe, North Carolina has currently assessed the Property’s
value at $325,200.
The Receiver does not believe that the value of the Property exceeds the amount of
BB&T’s encumbrance and approved claim. 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 best course is to
allow BB&T relief from the injunction to proceed with a state court foreclosure action.
BB&T will not seek a deficiency judgment against the Receiver or the Receivership estate in

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the foreclosure action. Upon completion of the foreclosure action, BB&T’s claim in the
Receivership will be withdrawn and extinguished.
The Receiver, on behalf of himself, Laurel Preserve, LLC, and Laurel Mountain
Preserve, LLC, agrees to accept service of process of the necessary pleadings and notices in
BB&T’s state court foreclosure action. All pleadings and notices intended for the Receiver
shall be mailed to him at the following address: Wiand Guerra King P.A., 5505 W. Gray
Street, Tampa, FL 33609.
MEMORANDUM OF LAW
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 relief sought in this motion falls squarely within the Court’s powers and is in the
best interests of the Receivership estate. Allowing BB&T to foreclose on the Property will
satisfy its claim, thus eliminating a liability of the Receivership estate. It will also conserve
Receivership assets because the Receiver will not be required to expend any additional funds

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maintaining and marketing a property that ultimately will not return surplus value to the
Receivership estate.
CONCLUSION
The Receiver and BB&T jointly request the entry of an order in substantially the form
of the proposed order attached as Exhibit 1 allowing BB&T relief from the injunction
imposed by the orders appointing and reappointing the Receiver to enforce its secured
interest through a state court foreclosure action on the real property titled in the name of
Laurel Preserve, LLC located in Buncombe County, North Carolina, as described above.
CERTIFICATE UNDER LOCAL RULE 3.01(g)
Undersigned counsel for the Receiver has conferred with counsel for the Commission
and is authorized to represent to the Court that the Commission does not oppose the relief
requested in this motion.
Furthermore, Counsel for the Receiver and BB&T have communicated in an effort to
determine the best course of action to allow BB&T to take control of the Property and
resolve its claim. The parties have determined that the relief sought by this motion is the best
means to accomplish this.

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on October 1, 2018, I electronically filed the foregoing
with the Clerk of the Court by using the CM/ECF system.

Jared J. Perez
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

James S. Livermon, III
James S. Livermon, III, Esq.
[e-mail]
WOMBLE BOND DICKINSON LLP
555 Fayetteville Street, Suite 1100
Raleigh, NC 27601
Tel: [phone]
Attorneys for BB&T

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