Securities and Exchange Commission v. Nadel et al

Filing 1368

Unopposed MOTION for miscellaneous relief, specifically Approval of Private Sale of Six Parcels Of Undeveloped Land Located in Buncombe County, North Carolina Verified by Burton W. Wiand. (Attachments: # 1 Exhibit Proposed Order, # 2 Exhibit Property Maps, # 3 Exhibit PSA, # 4 Exhibit Bell Opinion, # 5 Exhibit Receiver's Deed)(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’S UNOPPOSED, VERIFIED MOTION FOR APPROVAL OF PRIVATE
SALE OF SIX PARCELS 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 six parcels
of undeveloped land located in Buncombe County, North Carolina (the “Properties”), free
and clear of all claims, liens, and encumbrances and (b) relieving him from complying with
certain provisions of 28 U.S.C. § 2001(b) (“Section 2001(b)”).

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 Burton W. 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 PROPERTIES
The Properties are six separate parcels of approximately 17 acres of undeveloped land
located in the Black Mountain vicinity of Buncombe County, North Carolina within the
Laurel Mountain Property 1 and are more commonly referred to as follows:

1

The Laurel Mountain Property is defined in the Receiver’s Interim Reports as the 420+/acres near Asheville, North Carolina intended for development as home-sites. (See, e.g.,
Doc. 1289).

2

•

Lot B, Bird Creek Estates located in Buncombe County, North Carolina / 20 Laurel
Cottage Lane (Parcel Identification Number: 0637-90-0133-00000) – Titled in the name
of The Guy-Nadel Foundation, Inc.; 2.05 acres.

•

Lot C, Bird Creek Estates located in Buncombe County, North Carolina / 26 Laurel
Cottage Lane (Parcel Identification Number: 0637-90-1306-00000) – Titled in the name
of The Guy-Nadel Foundation, Inc.; 1.43 acres.

•

Lot D, Bird Creek Estates located in Buncombe County, North Carolina / 30 Laurel
Cottage Lane (Parcel Identification Number: 0637-90-3386-00000) – Titled in the
name of The Guy-Nadel Foundation, Inc.; 1.13 acres

•

Lot E, Bird Creek Estates located in Buncombe County, North Carolina / 15 Laurel
Cottage Lane (Parcel Identification Number: 0637-90-3019-00000) – Titled in the
name of The Guy-Nadel Foundation, Inc.; 2.06 acres

•

Lot F/G, Bird Creek Estates located in Buncombe County, North Carolina / 9 Laurel
Cottage Lane (Parcel Identification Number: 0636-99-2659-00000) – Titled in the name
of Laurel Preserve, LLC.; 5.18 acres

•

HOA Lot, Bird Creek Estates located in Buncombe County, North Carolina / 94
Laurel Cottage Lane (Parcel Identification Number: 0637-90-0585-00000) – Titled in
the name of Laurel Preserve Homeowners Association, Inc.; 5.44 acres. 2

See Composite Exhibit 2.
The Properties were purchased by Nadel through one of his various entities before
2006 and subsequently titled in the name of Laurel Preserve, LLC; Laurel Preserve
Homeowners Association, Inc.; and/or The Guy-Nadel Foundation, Inc. The scope of the
Receivership was expanded to include Laurel Preserve, LLC and Laurel Preserve
Homeowners Association, Inc. on February 11, 2009 (see Doc. 44) and The Guy-Nadel
Foundation, Inc. on March 9, 2009 (see Doc. 68). There are no structures on the Properties,
and there are no known encumbrances.

2

This parcel is undevelopable greenspace with an assessed value of zero according to the
County of Buncombe, North Carolina.

3

The Receiver listed the Properties for sale along with the other Laurel Mountain
properties through various real estate brokers during the past eight years. He recently
received a fair and reasonable offer to purchase all six parcels (17+/- acres) collectively for
$212,500. At that offer price, each acre has a value of approximately $12,500. The County
of Buncombe, North Carolina assessed the value of the individual parcels between $23,500
and $50,900 (not including the 5.44 acre HOA parcel, which has a zero taxable value). At
those assessed values, each acre (including the 5.44 acre HOA parcel) has a value of
approximately $13,900 (or $236,300 for all 17 acres).
In light of the current state of the real estate market in Buncombe County, North
Carolina and the fact that the Properties have 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 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.
The Receiver’s Marketing Efforts and the Offer to Purchase the Properties
The Receiver began marketing the Properties along with the other Laurel Mountain
properties soon after they were included in the Receivership estate by listing the Properties
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 Properties.

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The Properties are not currently listed for sale with a real estate broker. While the Receiver
has received several insufficient offers to purchase all of the acreage within the Laurel
Mountain Property (420+/- acres), he has not previously received an independent offer to
purchase the Properties that are the subject of this motion.
The Receiver has entered into the Purchase and Sale Agreement attached as Exhibit 3
with Spanish Oaks Properties LLC (the “Purchaser”). The Purchaser recently purchased the
twenty-three, 10-acre undeveloped residential lots located within the Laurel Mountain Property
that were encumbered by Wells Fargo Bank, N.A. Those twenty-three, 10-acre undeveloped
residential lots were subsequently transferred to Wells Fargo Bank, N.A. through a state-court
foreclosure sale. Those twenty-three lots, totaling approximately 235 acres, we sold in August
2018 for approximately $3,800 per acre. Don Bell, a licensed commercial associate and land
sales specialist with Beverly-Hanks & Associates in Asheville, North Carolina, brokered that
sale for Wells Fargo Bank, N.A. Mr. Bell has opined that the per acre value of the instant sale is
fair and reasonable based upon recent sales in the area. See Exhibit 4. Mr. Bel1 is also
assisting the Receiver in selling the remaining 168 acre conservancy parcel and several other
lots located within the Laurel Mountain Property that will remain in the Receiver’s control
following this sale.
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 5 (allowing
for changes necessary to allow the Purchasers to obtain title insurance). The Receiver
believes the Purchaser’s offer is reasonable in light of the assessed value of the Properties,
recent sales of similar acreage in the vicinity, the current real estate market conditions in the

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area, and the length of time the Properties have been listed for sale. The Receivership estate
will net approximately $210,000 from the sale after paying standard closing costs.
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).

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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
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 Properties 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, 1301.) This is particularly appropriate here because there are no
known liens or encumbrances on the Properties.
III.

THE COURT HAS THE POWER TO DEVIATE FROM 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

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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
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 has obtained an opinion of value letter from Don Bell, a
licensed commercial associate and land sales specialist with Beverly-Hanks & Associates in
Ashville, North Carolina. Mr. Bell has opined that a per acre price of $4,900 or better is a

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good value for the Receiver in light of the current state of the real estate market and recent
sales in Buncombe County, North Carolina. Furthermore, the sale price of $212,500 (based
upon a per acre value of $12,500) is significantly more that the per acre value ($3,800) of the
recently sold Wells Fargo Bank, N.A. lots and is very close to the per acre assessed value
($13,900) of the County of Buncombe, North Carolina. As such, the Receiver believes that
obtaining formal 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 Properties. 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
Properties for sale by the Receiver for more than 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 Properties 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.

9

CONCLUSION
The Receiver moves the Court for entry of an order in substantially the form of the
proposed Order attached as Exhibit 1 to (a) sell the Properties by private sale in accordance
with the terms and conditions set forth in the Purchase and Sale Agreement attached hereto
as Exhibit 3, such sale being free and clear of all claims, liens, and encumbrances and
(b) relieve him from complying with the provisions of 28 U.S.C. § 2001.
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.
s/ Burton W. Wiand____________________
Burton W. Wiand, Court-Appointed Receiver

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on October 2, 2018, I electronically filed the foregoing
with the Clerk of the Court by using the CM/ECF system.

s/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]
Attorney for the Receiver

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