Securities and Exchange Commission v. Nadel et al

Filing 1374

Unopposed MOTION for miscellaneous relief, specifically to Approve the Sale of a Sunlake Living Systems Trailer by Burton W. Wiand. (Attachments: # 1 Exhibit 1 - Proposed Order, # 2 Exhibit 2 - Orders)(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 TO
APPROVE THE SALE OF A SUNLAKE LIVING SYSTEMS TRAILER
Burton W. Wiand, as Receiver (the “Receiver”), moves the Court for an order, in
substantially the form attached as Exhibit 1, authorizing him to sell a single wide trailer made
by SunLake Living Systems and relieving him from compliance with the provisions of
28 U.S.C. §§ 2001 and 2004.

BACKGROUND
On January 21, 2009, the Securities and Exchange Commission (“Commission”)
initiated this action to prevent the defendants from further defrauding investors of 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 (the “Order Appointing Receiver”). (See
generally Order Appointing Receiver (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”). (See generally Docs. 17, 44, 68, 81, 153, 172, 454, 911, 916,
1024). All of the entities in receivership are hereinafter collectively referred to as the
“Receivership Entities.”
Pursuant to the Order Appointing Receiver, the Receiver has the duty and authority to:
“administer and manage the business affairs, funds, assets, choses in action and any other
property of the Defendants and Relief Defendants; marshal and safeguard all of the assets of
the Defendants and Relief Defendants; and take whatever actions are necessary for the
protection of the investors.” (Order Appointing Receiver at 1-2.) In particular, the Receiver
was directed to:
[t]ake immediate possession of all property, assets and estates of every kind of
the [Receivership Entities], whatsoever and wheresoever located belonging to
or in the possession of the [Receivership Entities], including but not limited to
all offices maintained by the [Receivership Entities], rights of action, books,
papers, data processing records, evidences of debt, bank accounts, savings
accounts, certificates of deposit, stocks, bonds, debentures and other securities,

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mortgages, furniture, fixtures, office supplies and equipment, and all real
property of the [Receivership Entities] wherever situated, and to administer
such assets as is required in order to comply with the directions contained in
this Order, and to hold all other assets pending further order of this Court . . . .
(Id. at 2.)
The Receiver discovered that Nadel and his wife, Peg Nadel, owned a single wide
trailer made by SunLake Living Systems (the “Trailer”) located in North Carolina. The
Trailer was purchased by Peg Nadel on or about July 18, 2007 for $28,340.00 to use as an
office for the Laurel Mountain Property. 1 The Trailer is currently located on Lot A of the
Laurel Mountain Property. The Laurel Mountain Property was purchased by Nadel in 2003
through Laurel Mountain Preserve, LLC, and portions of it were subsequently transferred to
Laurel Preserve, LLC; Laurel Preserve Homeowners Association, Inc.; and/or The Guy-Nadel
Foundation, Inc. in 2006. Branch Banking & Trust (“BB&T”) is in the process of foreclosing
on Lot A. See Doc. 1364. The Trailer is not involved in the foreclosure proceeding. As a
result, the Receiver needs to either move the Trailer from Lot A and store it or sell it. Moving
and storing the Trailer will incur costs to the Receivership. The Receiver has an offer from
Cody and Gabriela Clark to pay $10,000.00 for the Trailer and to remove it from Lot A within
14 days of the Court’s order granting this motion. The purchasers have no known connection
to Nadel or his associates.

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The Laurel Mountain Property is defined in the Receiver’s Interim Reports as the 420+/acres near Asheville, North Carolina intended for development as homesites. (See, e.g., Doc.
1289).
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VALUE OF THE TRAILER AND RECEIVER’S MARKETING EFFORTS
To determine the market price of the Trailer, the Receiver requested quotes from three
local RV sales businesses. None of the businesses provided an offer to buy the Trailer nor
were they able to provide a quote because the manufacturer of the Trailer, SunLake Living
Systems, LLC, is out of business, and this particular Trailer is not frequently sold in the aftermarket. The Receiver obtained a quote on the Trailer’s value from NADA – an internet website
routinely used as a benchmark in the valuation of automobiles, motorcycles, trailers, etc.
NADA estimated the value of the Trailer at $6,427.84. Based on the valuation, the Receiver
believes that accepting the offer of $10,000.00 is in the best interest of the Receivership Estate,
as the offer is well above the only quote the Receiver could obtain, and it will eliminate the
Receiver’s obligation to insure, maintain, transfer, and store the Trailer. Accordingly, the
Receiver has entered into an agreement to sell the Trailer for $10,000.00, contingent upon this
Court’s approval. The Receiver respectfully requests that this Court enter an order approving
the transaction.
MEMORANDUM OF LAW
I.

THE COURT HAS BROAD POWERS OVER THIS RECEIVERSHIP’S
ADMINISTRATION, AND THE SALE OF THE TRAILER IS IN THE
RECEIVERSHIP ESTATE’S BEST INTERESTS
The Court’s power to supervise an equity receivership and to determine the appropriate

actions to be taken in the administration of the receivership 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,

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372 (5th Cir. 1982). The relief sought by the Receiver falls squarely within those powers. The
Receiver believes that the proposed sale of the Trailer is in the best interests of and represents
the best possible realistic recovery for the Receivership Estate. The relief sought is in
furtherance of the duties and authorities bestowed upon the Receiver by the Order Appointing
Receiver.
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 his 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 proceeds received by the estate. See e.g. Four B.
Corp. v. Food Barn Stores, Inc., 107 F.3d 558, 564-65 (8th Cir. 1997).
The relief sought by the Receiver falls squarely within those powers. In light of the
considerations discussed above, sale of the Trailer is in the best interest of the Receivership
Estate because it would result in the recovery of $10,000.00 and avoid other significant
liabilities. As a result, the Receiver respectfully requests that the Court grant the relief
requested in this motion and enter the proposed order attached as Exhibit 1.

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II.

TO THE EXTENT 28 U.S.C. §§ 2001 AND 2004 GOVERN, THE COURT HAS
THE AUTHORITY TO WAIVE THOSE REQUIREMENTS, AND THE
CIRCUMSTANCES HERE WARRANT SUCH WAIVER
28 U.S.C. §§ 2001 and 2004 govern the sale of property. However, these statutory

requirements can be and are often waived by courts. 28 U.S.C. § 2004 (“Section 2004”)
governs the sale of personal property (the Trailer constitutes personal property, not real estate)
and provides as follows:
Any personalty sold under any order or decree of any court of the United
States shall be sold in accordance with Section 2001 of this Title, unless the
court orders otherwise.
28 U.S.C. § 2004 (emphasis added). 28 U.S.C. § 2001(b) (“Section 2001(b)”) addresses
private sales and provides as follows:
(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
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).
Thus, “unless the Court orders otherwise” pursuant to Section 2004, Section 2001(b)
requires a court to appoint three disinterested persons as appraisers and to direct in which
newspaper a notice of proposed sale be published prior to confirmation of a sale. Here, using

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the discretion afforded by Section 2004, the Court should “order otherwise” with regard to
(i) the need for three appraisals and (ii) the publication in newspapers of notice of any sale.
The Court’s authority to deviate from the requirements of Section 2004 is supported by caselaw
and is in the best interests of the Receivership Estate.
The Receiver believes he is in a position to adequately evaluate the value of the Trailer,
and that full compliance with Section 2004 and Section 2001(b) would result in the
unwarranted expenditure of funds and resources of the Receivership Estate.

Indeed,

compliance with the statutory requirements would likely entirely offset the expected net sale
proceeds. Thus, the Receiver requests that the Court authorize deviation from the statutory
appraisal and notice provisions associated with the proposed sale of the Trailer, which the
Court has previously authorized under similar circumstances during this Receivership. See,
e.g., Docs. 1043, 1044, 1075, 1110, 1151, 1177, 1301, 1356, 1370.
Other courts have also recognized the discretion afforded to them by Section 2004 in
approving a deviation from the requirements of Section 2001. See, e.g., Tanzer United States
v. Stonehill, 83 F.3d 1156, 1160 (9th Cir. 1996) (emphasizing statutory language, “unless the
court orders otherwise,” and concluding that “it is at the district court’s discretion whether to
obtain appraisals [in sales of] personal property”); see also SEC v. Kirkland, 2008 WL
4264532, *2 (M.D. Fla. 2008) (approving sale of personalty without appraisals or publication
where costs of compliance would significantly offset the purchase offer); United States v.
Kerner, 2003 WL 22905202, *2 (E.D. Mich. 2003) (“Under…28 U.S.C. § 2004, which states
that the requirements of section 2001 must be followed ‘unless the court orders otherwise,’ the

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Court clearly has the discretionary authority to confirm the private sale [made without strict
adherence to the requirements in Section 2001].”).
Further, courts have specifically exercised their authority to deviate from the
requirements of Section 2001 when faced with the proposed sale of personal property by a
receiver under Section 2004. See Wells Fargo Capital Finance, Inc. v. North Pacific Group,
No. CV10-65-KI, Order on Receiver’s Motion for Order Authorizing Sale of Accounts
Receivable (D. Ore. Jan. 24, 2012) (excusing receiver from “compliance with 28 U.S.C. § 2004
concerning sales of personal property through federal court proceedings”); SEC v. Billion
Coupons, Inc., 2009 WL 2143531, *4 (D. Hawaii 2009) (finding good cause to exercise
discretion and permit receiver to sell personal and real property in manner other than as
provided by federal statute, including 28 U.S.C. §§ 2001, 2004); Federal Trade Commission
v. Jeremy Johnson et. al., No. 2:10-cv-02203-RLH-GWF, Order (D. Nev. August 25, 2011)
(allowing receiver to liquidate private limited liability membership interest and authorizing
deviation from sale and publication procedures of 28 U.S.C. §§ 2001 and 2004); SEC v. Lydia
Capital, LLC, et al., No. 1:07-cv-10712-RGS, Order Granting Receiver’s Motion for
Authorization to Sell Asset of the Receivership Estate (D. Mass. March 16, 2011) (“Given the
Receiver’s efforts in marketing the portfolio of policies, including the Sale Policy, the thirdparty 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”) (emphasis added). Copies of these orders are
attached hereto as Exhibit 2.

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III.

THERE EXIST NO OTHER KNOWN CLAIMS OR INTERESTS IN THE
TRAILER
Deviation from the requirements of Section 2001(b) is not only warranted by the

circumstances, but also by the absence of any known outstanding claims, liens, or
encumbrances relating to the Trailer. While the Receiver is not aware of any other claims,
liens, or encumbrances relating to the Trailer, nevertheless to eliminate any risk whatsoever,
the Receiver seeks an order allowing him to transfer the Trailer free and clear of any and all
liens, encumbrances, and claims. This Court’s broad authority over the Receivership Estate
includes the equitable power to “sell property free of liens, transferring the liens to the
proceeds.” Seaboard Nat’l Bank v. Rogers Milk Products Co., 21 F.2d 414, 416 (2d Cir. 1927);
see also Quilling v. Trade Partners, Inc., 2007 WL 296211 (W.D. Mich. 2007) (approving
receiver’s sale of property free and clear of all liens and en cumbrances and ordering that any
liens or claims associated with the property would attach to the proceeds of the sale); Docs.
1043, 1044, 1075, 1110, 1151, 1177, 1301, 1356, 1370.
CONCLUSION
WHEREFORE, the Receiver moves the Court for entry of an order in substantially
the form of the proposed order attached as Exhibit 1, approving the sale of the Trailer and, to
the extent 28 U.S.C. §§ 2001 and 2004 govern the sale of the Trailer, waiving any appraisal
and publication requirements and allowing the Receiver to transfer the Trailer free and clear
of any and all claims, liens, and encumbrances.
CERTIFICATE UNDER LOCAL RULE 3.01(g)
Undersigned counsel has conferred with counsel for the SEC and is authorized to
represent to the Court that this motion is unopposed.

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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

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on December 7, 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]
Jordan D. Maglich, FBN 0086106
[e-mail]
WIAND GUERRA KING P.A.
5505 W. Gray Street
Tampa, FL 33609
Tel: [phone]
Fax: [phone]
Attorneys for the Receiver, Burton W. Wiand

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