Securities and Exchange Commission v. Nadel et al

Filing 652

Unopposed MOTION for attorney fees Receiver's Unopposed Ninth Interim Motion for Order Awarding Fees, Costs and Reimbursement of Costs to Receiver and His Professionals by Burton W. Wiand. (Attachments: #1 Exhibit 1-Standardized Fund Accounting Report, #2 Exhibit 2-Receiver's 9th Interim Report, #3 Exhibit 3-Scoop Receivership-Rep of Scoop Receivership, #4 Exhibit 4-Scoop Receivership-Carolina Mtn Land Conservancy, #5 Exhibit 5-Scoop Receivership-Recovery from Investors, #6 Exhibit 6-Scoop Receivership-Recovery of Assets from N. and C. Moody, #7 Exhibit 7-Scoop Receivership-Recovery of Commissions, #8 Exhibit 8-Scoop Receivership-Holland & Knight, #9 Exhibit 9-Categorization and Summary of WGK Costs, #10 Exhibit 10-Attorney Fee Schedule, #11 Exhibit 11-Scoop Legal Team-Scoop Capital, LLC Receivership, #12 Exhibit 12-Fowler White, #13 Exhibit 13-Scoop Legal Team-HFH v. B. Bishop, #14 Exhibit 14-Scoop Legal Team-Carolina Mtn Land Conservancy, #15 Exhibit 15-Scoop Legal Team-Recovery from Investors, #16 Exhibit 16-Johnson, Pope, #17 Exhibit 17-Scoop Legal Team-Recovery of Assets from N. and C. Moody, #18 Exhibit 18-Scoop Legal Team-Recovery of Commissions, #19 Exhibit 19-Scoop Legal Team-Holland & Knight, #20 Exhibit 20-PDR, #21 Exhibit 21-E-Hounds, #22 Exhibit 22-The RWJ Group, LLC, #23 Exhibit 23-Cheney, Brock & Saudek, P.C., #24 Exhibit 24-Goosmann Rose Colvard & Cramer, P.A., #25 Exhibit 25-Proposed Order)(Morello, Gianluca)

EXHIBIT 2

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UNITED STATES D I S T R I C T C O U R T
MIDDLE DISTRICT OF FLORIDA
T A M P A DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.

CaseNo. 8:09-cv-0087-T-26TBM

ARTHURNADEL;
SCOOP CAPITAL, LLC;
SCOOP MANAGEMENT, INC.
Defendants,
SCOOP REAL ESTATE, L.P.;
V A L H A L L A INVESTMENT PARTNERS, L.P.;
V A L H A L L A MANAGEMENT, INC.;
VICTORY IRA FUND, LTD.;
VICTORY FUND, LTD.;
V I K I N G IRA FUND, LLC;
V I K I N G FUND, LLC; AND
V I K I N G MANAGEMENT, LLC,
Relief Defendants.

/
T H E R E C E I V E R ' S NINTH I N T E R I M R E P O R T
Receivership Information and Activity from January 1, 2011 through April 30, 2011.
Gianluca Morello, FBN 034997
Michael S. Lamont, FBN 0527122
Maya M . Lockwood, FBN 0175481
WIAND GUERRA KING P.L.
3000 Bayport Drive
Suite 600
Tampa, FL 33607 ,
T: [phone]
F: [phone]
Attorneys for Receiver, Burton W. Wiand

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T A B L E O F CONTENTS

Introduction
I.

Procedure and Chronology

4

II.

The Receiver's Role and Responsibilities

6

A.

Operating the Business of the Receivership Entities

7

B.

Taking Possession of Receivership Property

7

C.

Investigating Receivership Affairs and Recovering Funds

7

D.

Reporting on Assets and Liabilities and Implementing Claims Process

8

III.

Overview of Findings To Date

8

A.

The Ponzi Scheme

10

B.

Fictitious Trading Results and Insolvency

11

C.

Depletion ofthe Hedge Funds' Assets

15

D.

Investor Losses and "False Profits."

17

E.

Nadel's Trading Activities in the Hedge Funds

18

Actions Taken By The Receiver
IV.

21

A.

Taking Possession of Defendants' Headquarters

21

B.

Securing Receivership Funds

21

C.

Locating Additional Funds

23

1.

Recovery of Tax Refunds

23

D.

Receivership Accounting Report

25

E.
V.

Securing the Receivership Estate

Obtaining Information from Third Parties

26

Asset Analysis and Recovery

27

A.

Expansion of Receivership to Include Additional Entities

27

1.

28

Venice Jet Center, LLC

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T A B L E O F CONTENTS

2.
3.
4.
5.
6.
7.
8.
9.
10.
B.

Tradewind, LLC
Laurel Mountain Preserve, LLC; Laurel Preserve, LLC; and Laurel
Mountain Preserve Homeowners Association, Inc
Marguerite J. Nadel Revocable Trust UAD 8/2/2007
Guy-Nadel Foundation, Inc
Lime Avenue Enterprises, LLC, and A Victorian Garden Florist,
LLC
Viking Oil & Gas, LLC
Home Front Homes, LLC
Summer Place Development Corporation
Traders Investment Club

28
30
32
33
35
36
37
38
39
40

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
C.

Recovery of Real Property

41
41
42
43
43
44
44
45
46
46
47
48
48

Thomasville, Georgia
Grady County, Georgia
Graham, North Carolina
Raleigh, North Carolina
Tupelo, Mississippi
Newnan, Georgia
Fairview, North Carolina
Sarasota, Florida (Fruitville Road)
Oberlin, Ohio
Sarasota, Florida (La Bellasara)
Evergreen, Colorado
Tazewell, Tennessee
Sarasota, Florida (Jefferson Avenue)

Recovery of Vehicles and Other Items

49

1.
2.
3.
4.
5.

49
49
50
53
53

Vehicles
Condominium Note and Mortgage
Bonds.com Assets
Quest EMG Promissory Note
Miscellaneous Items

;

D.

Recovery of Assets from the Moodys

54

E.

Litigation

57

1.
2.

57
61
61
62

Recovery of False Profits from Investors
Litigation against Moodys and Rowe
a.
Moodys
b.
Rowe

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T A B L E OF CONTENTS

3.
4.
5.
6.
7.

Recovery of Fees from Recipients of Commissions or Other
Transfers
Recovery of Charitable Contributions Made with Scheme
Proceeds
Class Action Litigation
Receiver's Litigation Against Holland & Knight LLP
Other Potential Litigation

VI.

Claims Process

VII.

The Next Sixty Days

65
67
67
68

Investigating Receivership Affairs and Tracing Receivership Funds

VIII.

64

68

71

Conclusion

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INTRODUCTION
Burton W. Wiand, the Court-appointed Receiver for the Receivership Entities as
defined herein, hereby files this Ninth Interim Report (the "Report") to inform the Court, the
investors, and others interested in this Receivership, of activities from January 1, 2011
1

through April 30, 2011 as well as the proposed course of action. As of the date of filing this
Report, the Court has appointed Burton W. Wiand as Receiver over the following entities and
trust:
a)

Defendants Scoop Capital, LLC ("Scoop Capital") and Scoop Management,
Inc. ("Scoop Management") (which, along with Arthur Nadel, are
collectively referred to as "Defendants");

b)

Relief Defendants Scoop Real Estate, L.P. ("Scoop Real Estate"); Valhalla
Investment Partners, L.P. ("Valhalla Investment Partners"); Victory IRA
Fund, Ltd. ("Victory I R A Fund"); Victory Fund, Ltd. ("Victory Fund");
Viking IRA Fund, LLC ("Viking I R A Fund"); and Viking Fund LLC
("Viking Fund") (collectively referred to as the "Hedge Funds");

c)

Relief Defendants Valhalla Management, Inc. ("Valhalla Management"),
and Viking Management, LLC ("Vildng Management") (which, along with
Scoop Capital and Scoop Management, are collectively referred to as the
"Investment Managers"); and

d)

Venice Jet Center, LLC; Tradewind, LLC; Laurel Mountain Preserve, LLC;
Laurel Preserve, LLC; Laurel Mountain Preserve Homeowners Association,
Inc.; Marguerite J. Nadel Revocable Trust UAD 8/2/07; Guy-Nadel
Foundation, Inc.; Lime Avenue Enterprises, LLC; A Victorian Garden Florist,
LLC; Viking Oil & Gas, LLC; Home Front Homes, LLC; and Traders
Investment Club.

The foregoing entities and trust are collectively referred to as the "Receivership Entities."

1

Unless otherwise indicated, the information reported herein reflects the information in the
Receiver's possession as of April 30, 2011.

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The Receiver was appointed on January 21, 2009. By January 26, 2009, the Receiver
established an informational website, www.nadelreceivership.com.

The Receiver has

updated this website periodically and continues to update it with the Receiver's most
significant actions to date; important court filings in this proceeding; and other items that
might be of interest to the public.

This Report, as well as all previous and subsequent

reports, will be posted on the Receiver's website.
Overview of Significant Activities During this Reporting Period
During the time covered by this Interim Report, the Receiver and his Professionals
engaged in the following significant activities:
•

Continued to pursue litigation for (1) the recovery of false profits from investors
(i.e., from "Profiteers"); (2) the recovery of distributions from Receivership
Entities to Neil Moody, Donald and Joyce Rowe, and certain of their affiliated
entities; (3) the recovery of other distributions, such as commissions, from other
individuals and/or entities; and (4) the recovery of certain charitable contributions
made with scheme proceeds;

•

Reached 15 settlements for a total sum of $2,568,720.25 and engaged in efforts
that led to the settlement of eight additional cases as of July 20, 2011, for a further
amount of $1,556,910.26. As of April 30, 2011, the Receiver had reached
agreements to settle with 121 Profiteers for a total amount of $17,684,817.77. As
of July 20, 2011, the Receiver has reached agreements to settle with 129
Profiteers for a total amount of $19,241,728.03 (plus additional non-cash assets);

•

Maintained Receivership funds in appropriate accounts and certificates of deposit
("CDs"). As of July 19, 2011 the total funds in all Receivership accounts,
including CDs, are approximately $21,885,060.69;

•

Successfully recovered $875,983.17 in federal tax refunds issued for Chris Moody
and $100,266.95 in federal tax refunds issued for Neil Moody for a total recovery
of $976,250.12;

•

Sold property in Tupelo, Mississippi which was being leased to Starbucks for
$715,000, resulting in net proceeds to the Receivership of approximately
$651,216 after payment of commissions and other expenses associated with the
sale;

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•

Sold approximately 33 acres of undeveloped land in Grady County, Georgia for
$135,000, resulting in net proceeds to the Receivership of approximately
$123,717.84 after payment of commissions and other expenses associated with
the sale.

•

Reached a favorable settlement with the Carolina Mountain Land Conservancy
wherein the Conservancy agreed to an order vacating an easement of
approximately 169 acres of an approximately 420 acre parcel owned by the
Receivership near Asheville, North Carolina and agreed to pay $10,115;

•

Successfully auctioned jewelry from Queen's Wreath Jewels, Inc., Marguerite
Nadel, Sharon Moody, and another Profiteer for a total of approximately
$643,890, which substantially exceeded pre-auction estimates of $300,000 to
$550,000, resulting in net proceeds to the Receivership estate of approximately
$591,663.85 after payment of commission and other expenses;

•

Continued to operate ongoing businesses, and where possible, enhance the value
of those businesses resulting in the generation of more than $228,165.64 in gross
business income;

•

Generated $106,026.96 in interest/dividend income; $706,098.82 in business asset
liquidation income; $2,368,733.76 in third-party litigation income; and
$976,250.12 in other income;

•

Entered into an agreement in principle with Neil Moody wherein he agreed to
cooperate with the Receiver to effect the orderly transfer of all of his assets and to
provide assistance, as necessary, in connection with the Receiver's efforts to
recover monies from third parties;

•

Worked on recovering assets in the possession of Neil Moody;

•

Deposed Joyce Rowe;

•

Continued to pursue the Receiver's malpractice action against Holland & Knight,
LLP; the complaint seeks to recover as much as possible of the approximately
$168 million of out-of-pocket losses suffered by investors; and

•

Continued work on the claims process, including the review and analysis of more
than 500 Proof of Claim Forms and approximately 123 amended Proof of Claim
Forms.

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The above activities are discussed in more detail in the pertinent sections of this
Interim Report.
BACKGROUND
I.

Procedure and Chronology.
Defendant Arthur Nadel ("Nadel") was the Hedge Funds' principal investment

advisor and an officer and director of Scoop Management and sole managing member of
Scoop Capital. On or about January 14, 2009, Nadel fled Sarasota County and disappeared
for nearly two weeks.
On January 21, 2009, the Commission filed a complaint in this Court charging the
Defendants with violations of federal securities laws (the "Commission Proceeding"). In
this Proceeding, the Commission alleged that Nadel used the Investment Managers to
defraud investors in the Hedge Funds from at least January 2008 forward by "massively"
overstating investment returns and the value of fond assets to investors in these funds and
issuing false account statements to investors.

The Commission also asserted that Nadel

misappropriated investor funds by transferring $1.25 million from Viking IRA Fund and
Valhalla Investment Partners to secret bank accounts.

The Court found the Commission

demonstrated a prima facie case that the Defendants committed multiple violations of federal
securities laws.
On April 6, 2009, Nadel filed his answer and affirmative defenses, in which he denied
nearly every allegation in the Complaint and set forth two affirmative defenses. (Doc. 104.)
Nadel also purported to set forth a "Counterclaim," which the Court struck on the Receiver's
motion.

(Docs. I l l , 112.)

On August 17, 2010, the Commission moved the Court to

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approve a consent judgment against Nadel and filed Nadel's consent to the same. (Doc. 457.)
On August 18, 2010, the Court entered a Judgment of Permanent Injunction and Other Relief
against Nadel ("Judgment"). (Doc. 460.) The Judgment permanently enjoins Nadel from
further violations of the antifraud provisions of the federal securities laws and orders Nadel
to pay disgorgement of ill-gotten gains with prejudgment interest and a civil penalty in
amounts to be determined by the Court upon the Commission's motion.
On January 21, 2009, the same day the Commission filed its complaint, the Court
entered an order appointing Burton W. Wiand as Receiver for the Investment Managers and
Hedge Funds (the "Order Appointing Receiver").

(See generally Order Appointing

Receiver (Doc. 8).) Between January 27, 2009, and August 9, 2010, on the Receiver's
motions, the Court entered orders expanding the scope of receivership to include additional
entities as follows:
January 27, 2009 (Doc. 17)

Venice Jet Center, LLC
Tradewind, LLC

February 11, 2009 (Doc. 44)

Laurel Mountain Preserve, LLC
Laurel Preserve, LLC
Marguerite J. Nadel Revocable Trust UAD 8/2/07
Laurel Mountain Preserve Homeowner Association, Inc.

March 9, 2009 (Doc. 68)

Guy-Nadel Foundation, Inc.

March 17, 2009 (Doc. 81)

Lime Avenue Enterprises, LLC
A Victorian Garden Florist, LLC

July 15, 2009 (Doc. 153)

Viking Oil & Gas, LLC

August 10, 2009 (Doc. 172)

Home Front Homes, LLC

August 9, 2010 (Doc. 454)

Traders Investment Club

On June 3, 2009, January 19, 2010, and September 23, 2010, the Court entered orders
Reappointing Receiver. (Docs. 140, 316, 493.) The January 21, 2009, June 3, 2009, January

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19, 2010, and September 23, 2010 Orders will be referred to collectively as the "Orders
Appointing Receiver." Pursuant to the Orders 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." (Orders Appointing Receiver at 12.)
On January 27, 2009, Nadel surrendered to the FBI in Tampa, Florida. Nadel was
arrested and charged with two counts of securities fraud and wire fraud based on the
fraudulent investment scheme discussed herein. Nadel was transferred to the Metropolitan
Correctional Center in New York, New York to await trial in the United States District Court
for the Southern District of New York. U.S. v. Nadel, Case No. 8:09-mj-01039 M.D. Fla.
(Docs. 5, 6).
On April 28, 2009, Nadel was indicted on six counts of securities fraud, one count of
mail fraud, and eight counts of wire fraud. On February 24, 2010, Nadel pled guilty to all
counts in the indictment. On October 21, 2010, Nadel was sentenced to 14 years in prison
and assigned to the Burner Federal Correctional Complex near Raleigh, North Carolina.
II.

The Receiver's Role and Responsibilities.
The Receiver functions as an independent agent of the court. The United States

Supreme Court has explained that:
[a receiver] . . . is an officer of the court; his appointment is
provisional. He is appointed on behalf of all parties, and not of
the complainant or of the defendant only. He is appointed for
the benefit of all parties who may establish rights in the cause.

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The money in his hand is in custodia legis for whoever can
make out a title to i t . . . It is the court itself which has the care
of the property in dispute. The receiver is but the creature of
the court; he has no power except such as are conferred upon
him by the order of his appointment and the course and
practice ofthe court.
Booth v. Clark, 58 U.S. 322, 331 (1854). Generally, the Receiver is charged by the Court
with maximizing investors' and creditors' recoveries.

To this end, the Court directed the

Receiver to engage in the following activities:
A.

Operating the Business of the Receivership Entities.

The Court granted the Receiver the "full and exclusive power, 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 . . . . " (Orders Appointing Receiver at 1.)
B.

Taking Possession of Receivership Property.

The Court directed the Receiver to "[t]ake immediate possession of all property,
assets and estates of every kind of the Defendants and Relief Defendants, whatsoever and
wheresoever, located belonging to or in the possession of the Defendants and Relief
Defendants . . . . " (Orders Appointing Receiver *\ 1.)
C.

Investigating Receivership Affairs and Recovering Funds.

The Court also directed the Receiver to "[investigate the manner in which the affairs
of the Defendants and Relief Defendants were conducted and institute such actions and legal
proceedings, for the benefit and on behalf of the Defendants and Relief Defendants and their
investors and other creditors as the Receiver deems necessary against those individuals,
corporations, partnerships, associations and/or unincorporated organizations, which the
Receiver may claim have wrongfully, illegally or otherwise improperly misappropriated or

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transferred monies or other proceeds directly or indirectly traceable from investors in the
Defendants and Relief Defendants . . . ." (Orders Appointing Receiver f 2.)
D.

Reporting on Assets and Liabilities and Implementing Claims Process.

The Court further directed the Receiver to "[pjresent to this Court a report reflecting
the existence and value of the assets of the Defendants and Relief Defendants and of the
extent of liabilities, both those claimed to exist by others and those the Receiver believes to
be legal obligations of the Defendants and Relief Defendants . . . "

(Orders Appointing

Receiver % 3.) As contemplated by the Orders Appointing Receiver, the Receiver instituted a
claims process primarily for the benefit of the Receivership Entities' investors who have
been defrauded and suffered legitimate and verifiable losses as a result of the activities of
Nadel and others (Doc. 391). The claims process is discussed in more detail in Section V I .
below.
III.

Overview of Findings To Date.
The Receiver has reviewed voluminous records from the Receivership Entities'

offices, as well as records from more than thirty (30) different institutions, including banks
and brokerage firms. In connection with the Receiver's ongoing investigation he is
continuing to seek and obtain documents pertinent to the scheme and further analyze
documents in his possession. The Receiver has formed conclusions based on his review of a
substantial number of the records received. While these conclusions may change as the
receipt and review of pertinent documents is completed, the Receiver does not believe any
changes would be material.

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In the Commission's Emergency Motion and Memorandum of Law in Support of
Temporaiy Restraining Order and Other Emergency Relief (Doc. 2) and supporting papers,
the Commission presented evidence showing Nadel defrauded investors through his control
of the Hedge Funds' advisers and/or managers, Scoop Capital and Scoop Management.
Through the Investment Managers, Nadel, along with the Moodys, was ultimately
responsible for controlling the Hedge Funds' investment activities.
While the Commission's evidence showed that Nadel defrauded investors since at
least January 2008, the Receiver's investigation uncovered evidence showing the fraud began
at the inception of the first Hedge Fund, Valhalla Investment Partners, and likely earlier.
Indeed, Nadel essentially admitted as much in several letters he wrote for family at the time
of his disappearance in January 2009. I n one letter in which he suggested how to calculate
the Hedge Funds' investment losses he wrote, "go back as far as possible, to 1998 i f we can,
to Spear, Leeds & Kellogg from Goldman Sachs, and determine the actual trading losses,"
and added that his "recollection of the more recent losses, say from 2001 on, is about an
average of about $20M per year." In another letter, which was shredded, he wrote (emphasis
added): "For more than ten rvearsl I have truly believed that [I could] trade my way out of
this mess, and in 2008 did it finally penetrate my addled [brain] that this is not to be." In yet
another letter, Nadel wrote, "[a]t first moderate profits were achieved, but by 1999 the
volatile tech bubble created losses. When the bubble burst I began to 'doctor' the trading
results." A l l ofthe above information shows that from 1999 and possibly earlier, Nadel was
perpetrating his scheme.

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A.

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The Ponzi Scheme.

The Receiver has discovered that from 1999 through 2008, approximately $330
million was raised from approximately 687 investors on behalf of one or more of the Hedge
Funds by Nadel and his entities, Scoop Management and Scoop Capital; by the rest of the
Fund Managers; and by the Moodys through the offer and sale of securities in the form of
2

interests in Hedge Funds as part of a single, continuous Ponzi scheme. As discussed below,
Nadel grossly overstated the trading results of the Hedge Funds. Despite significantly lower,
and typically negative yields (i.e., trading losses), Nadel, the Moodys, and the Fund
Managers falsely communicated to investors and potential investors, through monthly
"statements," Hedge Funds' "Executive Summaries," and other methods, that investments
were generating positive returns and yielding between 10.97% and 55.12% per year. For
most years, they falsely represented the investments were generating returns between 20%
and 30%.
To perpetuate and perpetrate this scheme, Nadel caused the Hedge Funds to pay
investors "trading gains" as reflected on their false monthly statements. The funds used to
pay these trading gains were not generated from trading activities; rather they were generated
from new or existing investors.

Nadel further caused the Hedge Funds to pay tens of

2

In past interim reports, the Receiver reported a lower number of total investors. The
number reported above counts each person individually and any entity which may be
associated with that individual as a separate investor. For example, an account in the name
of Jane and John Doe would be counted as two investors. Further, i f Jane and John Doe held
an account in the name of the Jane and John Doe Family Trust, the trust would be counted as
an additional investor for a total of three investors. The previously reported number included
the above two accounts as one investor.

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millions of dollars in fees. Those fees were based on grossly inflated returns, and thus, were
improperly and wrongfully paid. The negative cash flow of the Hedge Funds made the
eventual collapse of Nadel's scheme inevitable.
As mentioned above, on February 24, 2010, Nadel pled guilty to all counts in the
indictment relating to this scheme and on October 21, 2010, was sentenced to 14 years in
prison.
The Receiver also discovered that Nadel involved at least one of his investment clubs,
Traders Investment Club ("Traders"), in his scheme. Nadel formed Traders in 1998 and
purported to buy and sell securities on its behalf in an effort to generate trading profits.
Aside from raising money for Traders from investors, the Receiver's investigation revealed
that Nadel funded Traders with unlawful transfers from the Hedge Funds. Specifically,
Nadel improperly transferred at least $1.9 million from the Hedge Funds to Traders. Further,
representations Nadel made to Traders' investors regarding investment performance were
grossly overstated. Nadel also caused Traders to make distributions to investors that Traders'
investment performance never supported. Through those distributions, Nadel improperly and
wrongfully diverted money from the Hedge Funds. For more information regarding Traders,
see Section V.A.I0 below.
B.

Fictitious Trading Results and Insolvency.

The Receiver's mvestigation has revealed that for each Hedge Fund, the Hedge
Fund's performance as disclosed to investors from 1999 forward was based mainly on
trading results that Nadel purported to have in brokerage transactions cleared through Spear,
Leeds & Kellog, LLC and its successor Goldman Sachs Group, Inc. (in which money was

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purportedly traded to generate the purported returns Nadel was paying). The returns reported
to investors and potential investors were based on fictitious performance results that were
created by Nadel and then included in a database maintained by Scoop Management. These
fictitious performance results formed the basis of gross misrepresentations to investors.
Below are details concerning the Hedge Funds' performance from September 1999
through year end 2008 and misrepresentations concerning that performance. Table 1, below,
shows a comparison of actual trading results in the Hedge Funds' accounts to the values
represented to investors and to distributions paid. Specifically, for each year from 1999
through 2008, the table lists, from left to right, (1) the pertinent year; (2) the amount of gains
the Investment Managers represented that the Hedge Funds had achieved that year; (3) the
actual combined total trading gain or loss experienced that year in the accounts for the Hedge
Funds; (4) the difference between what the Investment Managers represented the Hedge
Funds had achieved in performance versus the actual trading results in the Hedge Funds'
accounts (identified as "Difference"); and (5) the actual distributions paid by the Hedge
Funds for the pertinent year, including distributions to investors and management and
performance incentive fees paid.

3

3

Records currently in the Receiver's possession indicate that no distributions were made in
1999. I n past Interim Reports, the Receiver reported a somewhat higher number for the
amount of Distributions. This previously reported amount included purported "internal
transfers" among "accounts" with different Hedge Funds.
The currently reported
Distributions numbers do not include these purported transfers.

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Table 1; Gains/(Losses

Year
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

Investment Managers'
Represented Gains ($)
959,480
2,636,299
2,560,961
7,130,171
23,716,749
46,950,345
61,169,058
50,003,778
54,665,571
36,334,794

Hedge Funds
Actual Trading
Performance($)
35,647
(2,882,463)
(2,402,728)
(3,012,774)
19,843,624
5,152,400
6,064,172
(18,549,355)
(24,989,307)
(2,493,654)

Total

286,127,206

(23,234,438)

Difference ($)
Distributions ($)
923,833
584,000
5,518,762
1,147,584
4,963,689
10,142,945
3,196,452
3,873,125
7,961,233
25,596,873
41,797,945
70,647,030
55,104,886
75,377,733
68,553,133
79,654,878
50,863,789
38,828,448
72,716,381 i
309,361,644
308,091,075

The evidence in the Receiver's possession also shows that each of the Hedge Funds
was insolvent from the first year each was in operation as each Hedge Fund's liabilities were
greater than its assets. This was the case because, in part, (1) Nadel distributed false profits
to investors far in excess of their principal investment when, as shown above, the Hedge
Funds lost significant sums of money or were allocated trading gains that were well below
the Hedge Funds' returns as represented to investors and upon which the distributed false
profits were based; and (2) "fees" were paid by each Hedge Fund based upon the highly
inflated and misrepresented trading returns (as discussed below in Section III.C).
As Table 1 shows, from their inception, the Hedge Funds' performance as
represented to investors was significantly overstated and thus, false. Specifically, from the
inception of the first Hedge Fund in 1999 through 2008, the Investment Managers
represented that the Hedge Funds' trading activity generated more than $286 million in gains
when, in reality, the Hedge Funds' investment accounts actually lost approximately $23
million. Further, while the Hedge Funds lost approximately $23 million for this same period,

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more than $308 million was paid by the Investment Managers in distributions to investors
and to themselves and others as fees. As this table shows, the Investment Managers were
making distributions and paying fees that the investment performance of the Hedge Funds
never supported.
In furtherance of the scheme Nadel intentionally and wrongfully caused the Hedge
Funds to pay investors purported trading gains. On at least a quarterly basis, Nadel and the
Fund Managers caused the Hedge Funds to pay to investors sums of money that were
equivalent to the trading gains purportedly earned by those investors as reflected in their
"account statements." Similarly, in response to investors' requests for redemptions of their
principal investments, in furtherance of Nadel's scheme he caused the Hedge Funds to pay
the requesting investors sums of money equivalent to all or part of the principal invested by
those investors. These (and all other) distributions which Nadel caused the Hedge Funds to
make to investors were paid from fruits of the scheme. Specifically, money raised from new
and existing investors was used to pay these false trading gains and redemptions.
The Investment Managers also were crediting fictitious profits to accounts where the
accountholders were not taking distributions.

These fictitious profits were likewise

unsupported by the Hedge Funds' investment performance and served only to further
increase the Hedge Funds' insolvency. This negative cash flow made the eventual collapse
of Nadel's scheme inevitable.
In short, the investment returns and performance as represented to investors and
potential investors from the inception of the Hedge Funds (as applicable based on then
existing Hedge Funds) were false and based on grossly overstated performance numbers

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created by Nadel. The true results of the trading activity that actually occurred were never
included in data reported to investors or potential investors. Further, each of the Hedge
Funds was insolvent from its beginning.
C.

Depletion of the Hedge Funds' Assets.

Evidence also shows that the Hedge Funds directly or indirectly paid substantial fees
to Scoop Capital and Scoop Management, to other Receivership Entities, and to other third
parties in the form of management, advisoiy, and/or profit incentive fees and "finder" fees.
As reflected in Table 2, below, according to the Hedge Funds' documents, from 2001
through 2008 they paid approximately $97,726,438 in total fees. Profit incentive fees were
paid to Scoop Management, Viking Management, Valhalla Management, and third parties,
based on a percentage of profits that never occurred. Such payments significantly depleted
the Hedge Funds' assets and diverted those assets to Scoop Capital and Scoop Management,
which were controlled by Nadel, and to Valhalla Management and Viking Management,
which were controlled in name by Neil and Christopher Moody. The payment of these fees
based upon highly inflated and misrepresented trading returns and net asset values is one
reason why each Hedge Fund was insolvent from its beginning.

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Table 2; Fees Paid f r o m Hedge Funds to Investment Managers and Others

Year
2001
2002
2003
2004
2005
2006
2007
2008
Total

Performance
Incentive Fees
124,723
1,061,285
3,440,759
7,214,560
12,869,824
14,938,134
14,238,590
13,660,088

30,178,475

Total Fees
846,451
1,783,191
4,438,726
10,494,311
17,654,252
21,268,788
20,607,662
20,633,057

67,547,963

Management Fees
721,728
721,906
997,967
3,279,751
4,784,428
6,330,654
6,369,072
6,972,969

97,726,438

Significant sums from the proceeds of Nadel's scheme also made their way into other
accounts controlled by Nadel and/or his wife, Marguerite "Peg" Nadel. As of December 31,
2008, according to the balance sheet for Scoop Management, Scoop Management had
transferred approximately $17,177,896.56 to accounts owned either individually or jointly by
the Nadels. These amounts are in addition to the amounts Mrs. Nadel received from Scoop
Management as compensation.

According to its balance sheet, Scoop Management also

transferred approximately $6,433,804.40 to other entities controlled by Nadel. During the
time the Hedge Funds operated, neither Nadel nor his wife had any source of income that
was not in some manner funded with money from that scheme.
Documentation and other information that the Receiver has collected shows that
money derived from the scheme was used by Nadel to purchase and/or fund other businesses.
The Receiver has expanded the Receivership to include additional businesses controlled by
Nadel. (See discussion of expansion in Section V.A, below.)

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D.

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Investor Losses and "False Profits."

As stated above, to date, the Receiver has discovered and identified approximately
4

687 investors who invested approximately $330 million. Based on documentation analyzed
to date, it appears that investors have out-of-pocket losses of approximately $168 million.
The Receiver has also discovered that some investors were paid more than their total
investments. These overpayments were false profits. To date, the Receiver has discovered
approximately $35 million in such false profits. The Receiver has initiated efforts to recover
these false profits, and those efforts are discussed in Section V.E, below.
Further, it appears that, although separate investor accounts were identified in
communications with investors and brokerage accounts were used for each Hedge Fund, in
reality there were not separate funds. Due to the method Nadel used to trade securities and
his handling of money invested in Hedge Funds through "shadow" bank accounts, as
discussed below, distinctions made between the individual Hedge Funds and between
investor "accounts" have little meaning. Nadel treated the Hedge Funds as a single source of
money regardless of the Hedge Fund with which investors purportedly invested, and then
investor funds were commingled in Nadel's and the Receivership Entities' accounts. Nadel
also maintained "shadow" banlc accounts at Wachovia Banlc, N.A. ("Wachovia Bank")
which he used to transfer money among the Hedge Funds to fund distributions. These

4

I n past Interim Reports, the Receiver reported a slightly higher number for the total amount
invested. This previously reported amount included purported "internal transfers" among
"accounts" with different Hedge Funds. The currently reported total investment number does
not include these purported transfers.

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accounts enabled Nadel to move funds into and out of the various trading accounts and made
his scheme possible.
E.

Nadel's Trading Activities in the Hedge Funds.

In the Executive Summaries disseminated to investors, Nadel represented that the
Hedge Funds were generating the annual returns reflected in Table 3, below, primarily
through trading in the quadruple Qs (and also in real property for Scoop Real Estate).

5

Table 3: Fund Performance as Represented i n Executive Summaries
Year
1999*
2000
2001
2002
2003
2004
2005
2006
2007
2008*

Valhalla
36.00%
55.12%
19.78%
21.59%
41.57%
28.96%
30.19%
19.99%
19.24%
10.97%

Victory
N/A
N/A
34.05%*
40.93%
42.52%
30.30%
25.90%
18.94%
19.65%
11.82%

Viking
N/A
N/A
2.97%*
26.98%
46.42%
30.46%
27.40%
19.08%
20.60%
11.43%

Viking IRA
N/A
N/A
2.97*
26.88%
45.23%
29.93%
26.36%
18.93%
20.55%
11.52%

Victory IRA
N/A
N/A
N/A
N/A
30.43%*
32.16%
27.31%
19.50%
20.02%
11.72%

Scoop
Real Estate
N/A
N/A
N/A
: N/A
N/A
48.67%*
32.14%
21.15%
21.75%
12.31%

* Results are for an incomplete year.
While Nadel did trade some money in quadruple-Qs, he did not achieve for the Hedge
Funds the amount of returns he represented to investors. Rather, based on the documents the
Receiver's fmancial expert has analyzed, the Hedge Funds as a whole lost significant sums.
Table 4, below, shows the actual performance in the Hedge Funds' accounts for the indicated
time based on the money actually traded. Importantly, those accounts always had far less
money than was represented to investors. Since the returns below are based on those reduced
5

The term "Quadruple Qs" (ticker symbol: QQQQ) refers to the NASDAQ-100 Tracking
Stock, an exchange-traded fund ("ETF") listed on the NASDAQ intended to track the
NASDAQ index.

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sums, those returns do not correspond to - and actually grossly overstate - the actual
performance of the amounts of assets under management as represented to investors. In
short, Table 4 significantly overstates the "actual returns" which could be compared to the
"represented returns" set forth in Table 3. Nevertheless, the information in Table 4 provides
an indication of the gross misrepresentation of the Hedge Funds' performance.
Table 4: Performance of Reduced Sums Actually Present in Hedge Fund Accounts

Year
1999*
2000
2001
2002
2003
2004
2005
2006
2007
2008*

Valhalla
2.46%
(91.24%)
(98.79%)
(80.82%)
110.84%
9.39%
3.85%
(0.64%)
7.30%
(42.31%)

Victory
N/A
N/A
N/A
(35.43%)*
63.59%
3.96%
1.45%
(22.02%)
(36.51%)
(52.54%)

Viking
N/A
N/A
N/A
(5.83%)*
29.52%
(5.97%)
3.20%
(23.68%)
(56.84%)
(29.93%)

Viking IRA
N/A
N/A
N/A
(4.31%)*
55.07%
5.84%
2.89%
(22.13%)
(55.56%)
(61.28%)

Victory IRA
N/A
N/A
N/A
N/A
40.53%*
11.99%
4.38%
(22.03%)
(69.92%)
(11.97%)

Scoop
Real Estate
N/A
N/A
N/A
N/A;
N/A
60.91%*
24.54%
(20.65%)
(55.96%)
(80.58%)

* Results are for an incomplete year.
Importantly, the performance of each individual Hedge Fund is not significant
because Nadel arbitrarily allocated daily results of trading transactions among the Hedge
Funds. He also transferred money among the Hedge Funds using "shadow" banlc accounts.
This activity resulted in the commingling of the Hedge Funds' assets and makes the
performance results of each individual Hedge Fund immaterial. In short, Nadel was losing
significant sums of money while representing that he was achieving annual returns from
18.93% to 55.12% (for years with full activity).
Nadel traded the money invested in the Hedge Funds in a pooled and commingled
fashion through a single master trading account. Specifically, when trading, Nadel would

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pool all of the available money raised from investors and invested in the different Hedge
Funds, along with money in his personal or other non-Hedge Fund accounts that he
controlled (collectively, "Nadel's Accounts"), in a single account and use it to purchase
securities. Then, before the close of the trading session, Nadel allocated the completed trades
as he wished among the accounts of the Hedge Funds and Nadel's Accounts. Typically,
Nadel allocated profitable trades to Nadel's Accounts, including accounts in his name or in
the name of Scoop Management or Scoop Capital, and unprofitable trades to the Hedge
Funds' accounts. This activity resulted in the commingling of the Hedge Funds' assets and
makes the performance results of each individual Hedge Fund immaterial. He also used
personal and Hedge Funds' accounts at Wachovia Bank to transfer money among the various
Hedge Funds.
While the Hedge Funds' accounts experienced losses, all but one of Nadel's personal
accounts and other accounts maintained essentially for the benefit of Nadel and Nadel's
Accounts experienced significant gains. For instance, from inception through 2008, Scoop
Capital's accounts experienced gains of $11,331,464, representing a 413.17% rate of return.
Nadel's trading practices indicate that he engaged in a fraudulent practice known as "cherry
picking." In cherry picking, the trader allocates profitable trades to himself and unprofitable
trades to clients. See, e.g., S.E.C. v. K.W. Brown and Co., 555 F. Supp. 2d 1275, 1302-07
(S.D. Fla. 2007) (holding that "cherry-picking" day-trading scheme operated by officers
constituted scheme to defraud under Securities Exchange Act).

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ACTIONS T A K E N BY T H E RECEIVER
Since his appointment on January 21, 2009, the Receiver has taken a number of steps
to fulfill his mandates under the Order Appointing Receiver, described in Section I I , above.
For additional efforts of the Receiver, please refer to prior Interim Reports.
IV.

Securing the Receivership Estate.
A.

Taking Possession of Defendants' Headquarters.

On the day of his appointment, the Receiver took possession of the Receivership
Entities' offices at 1618 Main Street, Sarasota, FL 34236 (the "Office"). Nadel used the
Office as the headquarters for administering his control of the Investment Managers, Hedge
Funds, and other Receivership Entities. Among other things, the Receiver ended the Office's
lease and sold the office furniture and other items for $3,500.00.
The Receiver removed documents, several servers, and other computer-related
equipment from the premises that were used by Nadel and the entities he controlled. The
Receiver retained experienced forensic information technology experts with the firm EHounds, Inc. ("E-IIounds"), to assist in securing and analyzing the electronic data on the
computers. E-Hounds personnel have possession of the equipment, have secured the data,
and are well underway in their forensic analysis.
B.

Securing Receivership Funds.

At the outset of the Receivership, approximately $556,758.33 in cash and cash
equivalents in financial accounts titled in the name of the Hedge Funds and Investment
Managers were identified and frozen pursuant to the Nadel TRO and the Preliminary
Injunction, itemized as follows:

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Scoop Capital
Scoop Management
Scoop Real Estate
Valhalla Investment Partners
Valhalla Management
Victory IRA Fund
Victory Fund
Viking IRA Fund
Viking Fund
Viking Management

Page 26 of 78 PagelD 9403

$12,506.98
$30,343.53
$139,554.86
$16,248.68
$7,309.98
$134,101.58
$80,686.75
$70,212.65
$56,896.07
$8,897.25

In addition, cash and cash equivalents in financial accounts titled in the name of other
Receivership Entities at the time those entities were brought into receivership were
approximately $629,750.47, itemized as follows:
1/27/09 (Doc. 17)
1/27/09 (Doc. 17)
2/11/09 (Doc. 44)
2/11/09 (Doc. 44)
2/11/09 (Doc. 44)
2/11/09 (Doc. 44)
3/9/09 (Doc. 68)
3/17/09 (Doc. 81)
3/17/09 (Doc. 81)
7/15/09 (Doc. 153)
8/10/09 (Doc. 172)

Venice Jet Center, LLC
Tradewind, LLC
Laurel Mountain Preserve, LLC
Laurel Preserve, LLC
Marguerite J. Nadel Rev. Trust
Laurel Mtn. Preserve Homeowner Assoc.
Guy-Nadel Foundation, Inc.
Lime Avenue Enterprises, LLC
A Victorian Garden Florist, LLC
Viking Oil & Gas, LLC
Home Front Homes, LLC

$69,761.41
$77,782.72
$5,328.03
$22,640.22
$381,142.34
$0.00
$58,092.49
$1,623.89
$10,456.96
$473.91
$2,448,50

Thus, total cash at the inception of the Receivership and as the Receivership was expanded to
6

include each additional Receivership Entity indicated was approximately $1,186,508.80.

During the time covered by this Interim Report, all Receivership funds were held at
(1) Northern Trust Banlc, N.A. in four CDs with a yield of 1.25%; (2) Bay Cities Banlc in six
CDs, a non-interest bearing operating account, and a variable interest rate money market
account; and (3) Whitney Bank in a money market account with interest of approximately

6

This amount does not include any sum for non-cash or non-cash equivalent assets the
Receiver has recovered. For a discussion of these assets, please refer to Section V, below.

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.75%. As of July 19, 2011, the total funds in all Receivership accounts, including CDs, are
approximately $21,885,060.69. The Receiver continues to review the appropriate action to
take with respect to Receivership funds in light of the current state of the economy and
financial institutions. I f appropriate and in the best interests of the Receivership, he will
move the funds into other interest-bearing accounts and/or revenue-generating investments.
C.

Locating Additional Funds.

One of the Receiver's highest priorities is to locate and recover any additional funds
that were in Nadel or the Receivership Entities custody at the time of the scheme. The
Receiver has retained a forensic accounting firm to assist in tracing funds. As discussed in
Section V below, the Receiver's investigation revealed that significant sums were used to
purchase or fund other entities.
1.

Recovery of Tax Refunds

The Receiver is working on obtaining tax refunds owed to certain insiders based upon
taxes paid in prior years on nonexistent trading profits, periodic taxes paid on anticipated
income that was never earned, and/or overpayment of taxes as a result of loss of investment.
On or about October 13, 2010, the Receiver filed a Form 1045 Application for Tentative
Refund ("Form 1045") for a carryback loss on behalf of the following individuals: (1) Chris
Moody, seeking a refund of approximately $800,000; (2) Neil Moody, seeking a refund of
$120,685; (3) Marguerite Nadel, seeking a refund of $2,398,594; and (4) Sharon Moody,
seeking a refund of $417,964.
Through the date of filing of this Interim Report, the Receiver has recovered a total
sum of $1,394,214.12 in tax refunds from these applications. Specifically, on Januaiy 18,

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2011 and February 25, 2011, the Receiver received three refund checks for Chris Moody in
the total amount of $875,983.17. In November and December of 2010, the Receiver received
four separate refund checks for Sharon Moody for the years 2004 through 2007. The four
checks totaled $417,964.00 which was the amount sought in the Form 1045. On February 4,
2011, the Receiver received a tax refund check in the amount of $100,266.95 for Neil
Moody. The Receiver has not yet received any tax refund for Mrs. Nadel from the filing of
the Form 1045.
The Receiver intends to file a Form 1045 on behalf of Art Nadel seeking the return of
approximately $1,183,525.00.
Also, in or about July 2010, the Receiver learned that Mrs. Nadel, with the assistance
of the Nadels' accountant Michael Zucker, improperly filed documents with the IRS on
behalf of a Receivership Entity and had possession of two tax refund checks in the amounts
of $588,956.17 and $672,403.16. After the Receiver filed a motion to obtain possession of
these refund checks (Doc. 434), Mrs. Nadel delivered the two checks to the Receiver.
Accordingly, the Court entered an order denying the aforementioned motion as moot (Doc.
439).

The Receiver has deposited the total sum of $1,261,359.33 from these refund checks

into the Receivership's accounts. Including these two refund checks, the total amount the
Receiver has recovered from federal tax refunds to insiders is $2,655,573.45.
The Receiver will continue to diligently investigate the existence of any additional
funds and w i l l inform the Court and investors i f any are located.

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D.

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Receivership Accounting Report.

Attached as composite Exhibit A to this Interim Report is a cash accounting report
showing the amount of money on hand as of January 1, 2011 less operating expenses plus
revenue through April 30, 2011. This cash accounting report does not reflect non-cash or
cash-equivalent assets. Thus, the value of all property discussed in Section V below is not
included in the accounting report.

From January 1, 2011, through April 30, 2011, the

Receiver received $228,165.64 in business income from ongoing operations of some
7

Receivership Entities; $106,026.96 in interest/dividend income; $706,098.82 in business
asset liquidation; $2,368,733.76 in third-party litigation income; and $976,250.12 in other
8

income. (Ex. A.).
Since the inception ofthe Receivership through April 30, 2011, the Receiver received
$3,598,066.33 in business income from ongoing operations of some Receivership Entities;
$2,066,501.32

in

cash

and

securities;

$464,967.27

in

interest/dividend

$3,045,310.75

in business asset liquidation; $120,000 in personal asset liquidation;

$14,767,434.91 in third-party litigation income; and $3,126,453.81 in other income.

income;

9

7

As discussed in Section V.A below, much of the entities' business income is derived from
rental payments.
8

The "other income" includes: $875,983.17 recovered from Chris Moody's federal tax
refund and $100,266.95 recovered from Neil Moody's federal tax refund.
9

The income numbers provided in this and the foregoing paragraph are gross figures and do
not include any offset for business operations costs or any other expenses.

25

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E.

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Obtaining Information from Third Parties.

Since obtaining control of the Receivership Entities, the Receiver and his
professionals have had discussions - including continuing discussions - with a significant
number of people associated with Nadel and/or the Receivership Entities. Further, on
September 9, 2010, the Receiver deposed Peg Nadel and on February 4, 2011, the Receiver
deposed Joyce Rowe.
The Receiver and his professionals have also reviewed documents located in the
Office; documents obtained from the accountant for several Receivership Entities;
information stored on the Receivership Entities' computer network; documents obtained
from other businesses controlled by Nadel; documents obtained from financial institutions
and other third parties, including lawyers and others who assisted Nadel's businesses with
their transactions; and information available in the public record.
In connection with the Commission Proceeding, the Receiver has sought documents
from Donald H. Rowe ("Rowe") and from financial institutions where Rowe and his related
entities maintained accounts. Rowe has made repeated efforts to prevent and/or limit the
Receiver's requested productions. These efforts include the filing of two motions to quash
and three motions for protective order in the Commission Proceeding (See Motions to Quash,
Docs. 416 and 541; Motions for Protective Order, Docs. 250, 479, and 544). Rowe also filed
one motion for protective order in the lawsuit against him and others.

(See Motion for

Protective Order, Doc. 16.) (The lawsuit against Rowe is discussed below in Section
V.E.2.b.) A l l of the motions were denied and Rowe and the pertinent financial institutions

26

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have produced documents.

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(See Orders Docs. 267, 424, 481, 542, and 569 in the

Commission Proceeding and Doc. 17 in the lawsuit against Rowe.)

A.

Expansion of Receivership to Include Additional Entities.

> As a result of the review of these records and of the discussions noted above, the
•
Receiver sought and successfully obtained the expansion of the Receivership to include:
Venice Jet Center, LLC; Tradewind, LLC; Laurel Mountain Preserve, LLC; Laurel Preserve,
LLC; Laurel Mountain Preserve Homeowners Association, Inc.; the Marguerite J. Nadel
Revocable Trust UAD 8/2/07; the Guy-Nadel Foundation, Inc.; Lime Avenue Enterprises,
LLC; A Victorian Garden Florist, LLC; Viking Oil & Gas, LLC; Home Front Homes, LLC;
and Traders Investment Club. Along with Summer Place Development Corporation, these
entities w i l l hereinafter be referred to collectively as the "Additional Entities."

10

The

Receiver's investigation revealed that the Additional Entities were purchased and/or funded
with money derived from Nadel's fraudulent investment scheme.
The following discussion of the Additional Entities includes a description of assets
the Receiver has acquired as a result of the businesses' inclusion in the Receivership; known
encumbrances related to those assets; and actions taken by the Receiver with respect to those
assets. Where possible the Receiver has included estimated values of these assets. However,
given the state of the U.S. economy at the time of this Report and the possibility for
additional information not yet uncovered by the Receiver, it is important to note that any
10

The Receiver gained control of Summer Place Development Corporation by virtue of
Scoop Capital's ownership interest in that entity. However, for various reasons, a formal
order expanding the Receivership to include this entity has not been sought.

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such estimations, valuations or appraisals are subject to change. Due to the poor state ofthe
real estate markets, the estimates provided may differ markedly from the actual amounts
realized upon the selling of any real property.
1.

Venice Jet Center, L L C .

Venice Jet Center, LLC ("VJC"), is a Florida limited liability company formed in
April 2006. Nadel was its managing member and registered agent, and its principal address
was the Office. The assets of VJC were purchased with proceeds of Nadel's scheme, and
over time additional proceeds of the scheme were transferred to VJC.
On January 27, 2009, the Court expanded the Receivership to include VJC. VJC was
a fully operating fixed-base operator that included a flight school, fueling service, hangar
rentals, and a cafe. On January 20, 2010, the Court approved the sale of the VJC's assets and
an agreement with Northern Trust (Motion, Doc. 254; Order, Doc. 321.) In pertinent part,
VJC's assets were sold to Tristate Aviation Group of Florida LLC for (1) $300,000 cash at
closing; (2) a $250,000 unsecured promissory note payable over a term of three years; (3)
resolution of a $1,960,169 loan with Northern Trust; and (4) assumption of prosecution of the
Part 16 Complaint subject to an offset of the note obligations to the Receiver for up to
$50,000 for expenses and costs actually incurred in connection with efforts to resolve all
disputes with the City of Venice, including the Part 16 Complamt. For more information,
please refer to prior Interim Reports.
2.

Tradewind, L L C .

Tradewind, LLC ("Tradewind") was formed in Delaware in January 2004 and
registered for the first time in Florida in March 2008. Nadel was Tradewind's managing

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member and registered agent, and its principal address was the Office. Tradewind owned
and controlled five planes and one helicopter and owns 31 hangars at the Newnan-Coweta
County Airport in Georgia (the "Georgia Hangars"). The Receiver's investigation revealed
that Tradewind was funded with money from Nadel's scheme.

Tradewind is a fully

operating business with potential to generate assets for the Receivership estate.
On January 27, 2009, the Court expanded the Receivership to include Tradewind.
Since the Receiver's appointment as Receiver of Tradewind, he has taken control of it and is
continuing to operate the business. Tradewind collects approximately $20,000 in monthly
rent and incurs varying monthly expenses, which include land rent, loan payments, and
various utilities. The Receiver is entertaining offers to purchase this business or any of its
assets.
The Receiver has possession and control of the Georgia Hangars, which have one
known encumbrance: a loan with the Bank of Coweta with a remaining balance of
approximately $903,252.60 (as of June 2011) and monthly payments of $8,055. There is also
monthly rent of $3,079.89 due to the Newnan Coweta Aviation Authority. The Receiver has
been making these monthly payments as he believes they are in the best interest of the
Receivership.

The Receiver has received offers to purchase the Georgia Hangars.

The

offers, however, were below what the Receiver believes to be the fair market value of the
Hangars.
The Receiver also acquired possession and control of the five planes and helicopter.
The Receiver sold four of these aircraft for a total of $301,500 and returned the remaining
two in exchange for cancellation of outstanding debts on those aircraft.

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information regarding the various aircraft and their respective Court-approved dispositions,
please refer to prior Interim Reports.

3.

Laurel Mountain Preserve, L L C ; Laurel Preserve, L L C ; and
Laurel Mountain Preserve Homeowners Association, Inc.

Laurel Mountain Preserve, LLC ("Laurel Mountain"), was formed in Florida in
December 2003.

Nadel was Laurel Mountain's manager and member, and its principal

address was the Office. Laurel Mountain was "withdrawn" as a limited liability company in
January 2006.
Laurel Preserve, LLC ("Laurel Preserve"), was formed as a North Carolina limited
liability company in February 2006.

Nadel was Laurel Preserve's registered agent and

manager, and its principal address was the Office.

The Laurel Mountain Preserve

Homeowners Association, Inc. (the "HOA"), is a North Carolina non-profit corporation
formed in March 2006. Nadel was the HOA's registered agent, and its principal address was
the Fairview, North Carolina home. Documentation reviewed and information obtained by
the Receiver shows that Laurel Preserve holds title to approximately 420 acres near
Asheville, North Carolina in Buncombe and McDowell counties, intended for development
of home-sites (the "Laurel Mountain Property").
On Februaiy 11, 2009, the Court expanded the Receivership to include Laurel
Mountain, Laurel Preserve, and the HOA. Since the Receiver's appointment as Receiver of
these entities, he has taken control of them and is working on marketing for sale the Laurel
Mountain Property.

This property currently does not generate any income.

The Laurel

Mountain Property encompasses 29 lots, including 23 estate-sized and 6 cottage-sized lots.

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There is also a cabin home on this property that, according to the Buncombe County Property
Appraiser, is valued at $319,800. The Laurel Mountain Property's infrastructure is fully
developed: infrastructure and utilities are currently in place and are fully functional.
The Laurel Mountain Property has two Icnown encumbrances. The first encumbrance
is a $360,157.37 loan from BB&T Banlc. The second encumbrance is a $1,900,000 interest
only loan from Wachovia Bank. There is a monthly payment of $5,149.66 due on this latter
loan and the Receiver presently is not making the loan payments.
At the time the Receiver recovered the Laurel Mountain Property it also had a third
encumbrance. The third encumbrance was an easement of approximately 169 acres of the
Laurel Mountain Property, which was granted to a land conservancy in 2005 (the
"Easement").

It appeared that this donation was made in part for the Nadels' own tax

benefit. The Receiver determined that it would be in the best interests of the Receivership to
recover this Easement from the conservancy as it may generate an exponential increase in the
value of the full acreage.
The Receiver instituted an ancillary civil proceeding against the Carolina Mountain
Land Conservancy ("the Conservancy") to extinguish the Easement on December 1, 2009.
Burton W. Wiand, as Receiver v. Carolina Mountain Land Conservancy, M.D. Fla. Case No.
8:09-cv-2443-T-27TBM ("Conservancy Action"). On May 21, 2010, the Receiver filed an
Amended Complaint seeking to extinguish the easement, or alternatively, recover from the
Conservancy a sum of money equal to the greater of the value of the property that is subject
to the Easement or the diminution in value to the Laurel Mountain Property as a result of the
Easement.

(Conservancy Action, Doc. 10.)

31

The Amended Complaint also sought the

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recovery of all donations made by the Receivership Entities to the Conservancy because the
donations were made with proceeds of Nadel's scheme and were fraudulent transfers. These
donations totaled approximately $30,429. The parties mediated this matter on January 6,
2011 and ultimately were able to reach an accord.
On April 1, 2011, the Receiver filed a motion to approve the settlement with the
Conservancy. (Doc. 614.) In pertinent part, the settlement provides that the Receiver will
dismiss the Conservancy Action in consideration of the Conservancy (1) returning the unused
donations in the amount of $10,115 and (2) agreeing to obtain an order vacating the
Easement. The Court granted this motion in its entirety on April 4, 2011. (Doc. 615.)
For more information regarding the Laurel Mountain Property, please visit
http://www.laurehnountainpreserve, com.

Parties interested in purchasing this property

should contact:
Jason Burk
Sperry Van Ness/Whitney Commercial Real Estate
1100 Ridgefield Blvd., Suite 100
Asheville, NC 28806
Office: [phone]
Email: [e-mail]
4.

Marguerite J . Nadel Revocable Trust UAD 8/2/2007.

The Marguerite J. Nadel Revocable Trust Under Agreement Dated 8/2/2007 (the
"Trust") was created on August 2, 2007. The Receiver's investigation revealed that the
Trust was funded entirely with proceeds of Nadel's scheme thi-ough (1) a transfer of
$500,000 from Scoop Management in August 2007 and (2) a transfer of $150,000 from
Scoop Capital on the day before Nadel fled. On February 11, 2009, the Court expanded the

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Receivership to include the Trust. The Receiver took control of the Trust's bank account and
used the funds for Receivership costs and expenses.
5.

Guy-Nadel Foundation, Inc.

The Guy-Nadel Foundation, Inc. (the "Foundation"), is a Florida non-profit
corporation Nadel formed in December 2003 for "charitable, educational and scientific
purposes." The Foundation was funded with proceeds of Nadel's scheme. On March 9,
2009, the Court expanded the Receivership to include the Foundation. Since the Receiver's
appointment as Receiver of the Foundation, he has taken control of it and is working on
marketing the real property owned by the Foundation.
The Receiver has discovered that from 2000 through 2008, the Foundation made a
total of approximately $2,484,589 in contributions from scheme proceeds to various nonprofit organizations and charities. The Receiver has focused his attention on the charitable
organizations that received the most contributions. As discussed in Section V.E.4, the
Receiver sought to obtain tolling agreements from all charitable organizations so he could
contemplate the appropriate action to take regarding these significant disbursements. Three
charities did not provide such agreements, thus the Receiver had no recourse but to initiate
actions against them. Further, one of the tolling agreements expired and the charity refused
to extend the agreement. Accordingly, the Receiver had no choice but to initiate an action
against this charity as well. (See discussion of litigation at Section V.E.4 below.)
The Receiver has pursued settlement negotiations with the charitable organizations
with tolling agreements with little success.

33

The Receiver has mediated with two such

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organizations and was unable to reach an accord. At this time, the Receiver plans to proceed
with filing complaints against these organizations.
North Carolina Parcels
The Receiver has possession and control of approximately eight lots that are
essentially adjacent to each other and to the Laurel Mountain Property. The lots appear to
have been purchased by Laurel Mountain and the Nadels as part of the same general
transaction in which Laurel Mountain purchased the Laurel Mountain Property.

In

December 2003 and December 2004, Laurel Mountain and Nadel and his wife deeded these
lots to the Foundation. The Receiver is currently marketing this property with the Laurel
Mountain Property. Parties interested in purchasing this property should contact:
Jason Burk
Sperry Van Ness/Whitney Commercial Real Estate
1100 Ridgefield Blvd., Suite 100
Asheville, NC 28806
Office: [phone]
Email: [e-mail]
Thomasville,, Georgia Parcels
Additionally, the Receiver has possession and control of two small parcels of
unimproved land in Thomasville, Georgia (this land is separate from the Thomasville
Property discussed in Section V . B . I , below) owned by the Foundation. According to the
Thomas County Board of Tax Assessors, the first lot (located on North Stevens Street) has a
2010 tax valuation of $34,745, and the second lot (located on Church Street) has a 2010 tax
valuation of $4,276.

Parties interested in purchasing these parcels should contact the

Receiver directly.

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Lime Avenue Enterprises, L L C , and A Victorian Garden Florist,
LLC.

Lime Avenue Enterprises, LLC ("Lime") was formed in Florida in August 2006.
Nadel was a managing member of Lime. Lime owned a building located at 599 North Lime
Avenue, Sarasota, Florida 34237 (the "Lime Building"). Lime purchased the Lime Building
in August 2006. Public records and other information reviewed by the Receiver indicate that
Lime was formed by Nadel and Mrs. Nadel (who also was a manager of Lime) for the
purpose of purchasing the Lime Building. The Lime Building houses a flower shop, which
was owned by A Victorian Garden Florist, LLC (the "Florist"), which was formed in Florida
in April 2005. The Receiver's investigation revealed that Lime and the Florist were funded
with proceeds from Nadel's scheme.
On March 17, 2009, the Court expanded the Receivership to include Lime and the
Florist. The Receiver had possession and control of the Lime Building. The Lime Building
had one known encumbrance: a mortgage owed to the individuals who sold the building to
Lime (Ron Carter and James Neal) on which the balance was approximately $600,000. The
Receiver also took control of the business and determined that ownership of the Florist was
not in the best interest of the Receivership. The Florist did not have sufficient revenue to
cover its expenses.
Neither the Lime Building nor the Florist was generating any income for the
Receivership. Further, it appeared that the market value of the Lime Building was less than
the amount of its encumbrance. Accordingly, the Receiver determined that it was in the best
interests ofthe Receivership estate to convey the Lime Building and the Florist's remaining
business assets to Messrs. Carter and Neal ("Carter and Neal") in exchange for the release

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of all claims against the Receivership estate.

Page 40 of 78 PagelD 9417

In short, the Receiver believed that this

conveyance was in the best interests of the Receivership because: (1) the Receiver does not
believe there was any equity in this property; (2) the remaining business assets of the Florist
had no realizable value; (3) the conveyance would eliminate over $600,000 in debt
obligations and a claim of over $1,160,000 against the Receivership estate; and (4) it would
save the Receivership the ongoing costs of maintaining the Lime Building.
On May 25, 2011, the Receiver filed his motion to convey the Lime Building and the
Florist's remaining business assets to Carter and Neal (Doc. 631). The Court granted the
Receiver's motion in its entirety on May 26, 2011 (Doc. 633).
The Receiver also took possession and control of two vans owned by Lime: a 1999
Ford van and a 2003 Dodge van. The Receiver sold these vans for $500 and $2,000,
respectively.
7.

Viking Oil & Gas, L L C .

Viking Oil & Gas, LLC ("Viking Oil") is a Florida limited liability company formed
in January 2006 by the Moodys to make personal investments in an oil and gas venture. Its
principal address was the Office. The Receiver's investigation revealed that Viking Oil was
funded with proceeds from Nadel's scheme. The funds invested in Viking Oil were used to
purchase an investment interest in Quest Energy Management Group, Inc. ("Quest EMG").
Between February 2006 and April 2007, through Viking Oil, the Moodys invested $4 million
to fund a working interest in Quest EMG.
As discussed in Section V.C.4, below, the Receiver also has possession of a
promissory note from Quest EMG and two individuals to Valhalla Investment Partners in the

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amount o f $1,100,000. On July 15, 2009, the Court expanded the Receivership to include
Viking Oil. Since the Receiver's appointment as Receiver of this entity, he has taken control
of it and is determining the most prudent course of action to take with respect to the working
interest in Quest EMG. A n examination of this venture has caused the Receiver to question
the viability and value of this investment. The Receiver hired a forensic accountant, Otto L.
Wheeler, CPA/ABV, to assist with further examination of Quest EMG and the
Receivership's interest therein. Mr. Wheeler identified various issues that were the subject
of further inquiry. While pursuing those issues, the parties had reached an agreement to
resolve this matter, however Quest failed to make the required settlement payment timely and
so the agreement expired on its own terms.

The Receiver will therefore proceed with

collection efforts.
8.

Home Front Homes, L L C .

Home Front Homes, LLC ("Home Front Homes"), is a Florida limited liability
company that was formed in 2006. Nadel was the sole managing member of Home Front
Homes, and Scoop Capital owned a majority membership interest in it. Home Front Homes
was engaged in the business of manufacturing, marketmg, and sellmg energy-efficient
homes. Home Front Homes was an operating business until September 2009. On August 10,
2009, the Court expanded the Receivership to include Home Front Homes. (Doc. 170.)
On January 6, 2010, the Court granted the Receiver's motion to sell certain of Home
Front Homes' assets and approve an agreement with M & I Banlc in its entirety. (See Jan. 6,
2010, Order, Doc. 293; Motion, Doc. 291.) In salient part, (1) South American Development
Corporation ("SADC") agreed to purchase certain assets for $250,000, with $150,000 to be

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paid at closing and a zero interest promissory note secured by the assets due December 18,
2010 for the $100,000 balance

11

and (2) M & I agreed to waive over $3,000,000 in debt

obligations and forego any deficiency claims against the Receivership estate in exchange for
65% of the cash and note proceeds after $12,000 has first been paid to the Receiver for
expenses incurred. As a result of this agreement, the Receiver should realize over $95,000
from the sale of Home Front Homes' assets and alleviate over $3,000,000 of debt
12

obligations.
After the sale of certain of Home Front Homes' assets, Home Front Homes continued
to own a parcel of real property located at 512 Paul Morris Drive, Englewood, Florida 34223,
Lot 81 of the Morris Industrial Park. The Receiver determined that it was in the best interests
of the Receivership to convey this property to William Bishop, as Trustee of the William F.
Bishop Revocable Trust in exchange for the release of all claims against the Receivership
estate. For more information regarding Home Front Homes and related litigation, please
refer to prior Interim Reports.
9.

Summer Place Development Corporation.

Summer Place Development Corporation ("Summer Place") is a Florida company
that was formed in 2005.

The Receiver has not sought a formal order expanding the

11

On March 22, 2011, SADC paid $25,000 on the promissory note. On June 24, 2011,
SADC paid $80,225 which was the $75,000 balance due on the note plus 7% interest on the
previous unpaid balance.
1 2

The Receiver sold, or otherwise disposed of several assets that were not included in the
asset purchase agreement discussed above for a total amount of $7,600. These assets
included a pick-up truck, two small free standing storage structures, and a telephone system.

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Receivership to include Summer Place. However, Nadel purchased 50% of the holdings in
Summer Place with a $200,000 investment in Home Front Homes and payment of $50,000 to
the co-managing member's investment company. Nadel became a managing member of
Summer Place, and Scoop Capital owns a fifty-percent interest in Summer Place. By virtue
of this fifty-percent interest, the Receiver has not assumed full control over Summer Place
but is working with the other managing member and fifty-percent owner in directing the
operation of Summer Place for the benefit of the Receivership estate.
Summer Place is an operating business and owns a 6-acre parcel in Bradenton,
Florida.

The owners originally intended to build thirty affordable home sites on this

property. However, due to the decline in the market for affordable housing, no development
has taken place. Taxes on the property are approximately $3,000 a year. The Receiver
intends to sell Scoop Capital's equity interest ih this entity in a manner most beneficial to the
Receivership estate. Parties interested in marketing or purchasing Scoop Capital's interest in
this business should contact the Receiver directly.
10.

Traders Investment Club.

Traders was a Florida partnership formed in December 1998 to operate as a purported
"investment club." Nadel controlled Traders and purported to buy and sell securities on its
behalf in an effort to generate trading profits. Records in the Receiver's possession show that
Traders was in existence until December 2005.

During its existence, Traders had

approximately 35 different investors many of whom were also simultaneously investors in
the Hedge Funds. Aside from raising money for Traders from investors, the Receiver's

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investigation revealed that Nadel funded Traders with unlawful transfers from the Hedge
Funds.
Nadel purported to close Traders in 2005 by distributing supposed "principal and
trading gains" directly to investors or to the Hedge Funds as purported "roll-overs" into the
pertinent investors' Hedge Fund "accounts."

Further, representations Nadel made to

Traders' investors regarding investment performance were grossly overstated. Because of
the commingling of funds between Traders and the Receivership Entities and the fraud
perpetrated by Nadel through his control of all of these entities, the Receiver sought the
expansion of the Receivership to include Traders. (See Motion to Expand Receivership to
Include Traders, Aug. 9, 2010, Doc. 453.) On August 9, 2010, the Court expanded the
Receivership to include Traders (Doc. 454).
B.

Recovery of Real Property.

In addition to the assets discussed in conjunction with the expansion of the
Receivership in Section V.A, the Receiver has also recovered a number of other assets, most
of which continue to be valued, assessed, and otherwise analyzed for liquidation, disposition,
or other action. Again, given the state of the U.S. economy at the time of submission of this
Report, the Receiver emphasizes that any estimates, appraisals, or valuations are subject to
change because of market forces. In particular, due to the poor state of the real estate
markets, the estimates provided in this section may be significantly different from the
amounts realized upon selling such real property.

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Thomasville, Georgia.

The Receiver obtained possession and control of approximately 14 acres in
Thomasville, Georgia (the "Thomasville Property") which encompassed 45 lots, 44 of
which were undeveloped. The Thomasville Property was purchased on January 5, 2007 for
$285,000 with proceeds from Nadel's scheme.

The Thomasville Property was heavily

encumbered with debt in excess of $759,000 owed to Thomasville National Bank ("TNB")
as of February 23, 2010.
The Receiver was able to sell the Thomasville Property for $725,000 which he
believed fairly represented the market value of the property. Because the purchase price was
insufficient to satisfy the outstanding liens on the property, the Receiver reached an
agreement with TNB wherein TNB agreed to accept the purchase price less commissions in
exchange for the full settlement of all amounts owed under the loans and the waiver of all
claims against the Receivership estate. On February 26, 2010, the Court approved the sale of
the Thomasville Property and Agreement with TNB as provided in the motion submitted by
the Receiver.

(Motion, Doc. 350; Order, Doc. 352.)

The Receiver believes that the

disposition of the property as described above was in the best interests of the Receivership.
For more information regarding the Thomasville Property and the terms of its sale, please
refer to prior Interim Reports.
2.

Grady County, Georgia.

The Receiver was in possession of approximately 33 acres of undeveloped land
owned by Scoop Capital in Grady County, Georgia (the "Grady Property"). According to
Grady County public records, the land value of the Grady Property in 2010 was $151,125.

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On April 25, 2011, the Receiver filed an unopposed motion to approve the sale of the Grady
Property (Doc. 619). The Court granted the motion in its entirety on April 25, 2011 (Doc.
620). I n pertinent part, the Order approved the sale of the Grady Property for $135,000. The
purchaser provided the Receiver with $1,000 in earnest money and paid the balance of the
purchase price at closing, which occurred on May 3, 2011. The Receivership estate netted
approximately $123,717.84 from the sale of the property after payment of commissions and
other expenses associated with the sale. The Receiver believes that this sale was in the best
interest of the Receivership and that the purchase price represents the fair market value for
the Grady Property.
3.

Graham, North Carolina.

The Receiver has possession and control of a building located at 841 South Main
Street, Graham, North Carolina 27253 (the "Rite-Aid Building").

This building was

purchased for $5,310,000 and is currently being leased to a Rite-Aid Pharmacy for
$33,073.08 per month. The Rite-Aid Building has one known encumbrance: a $2,655,000
interest-only loan with Wachovia Bank, which matured in June 2009. The Receiver paid
interest on this loan through October 2009. He currently is not making any payments on this
loan. The Receiver had reached agreements in principle to sell the Rite-Aid Building. The
parties, however, were unable to reach a final agreement. Parties interested in purchasing the
Rite-Aid Building should contact:
Jim Hamilton, Director
Holliday Fenoglio Fowler, L.P.
3414 Peachtree Road NE, Suite 736
Atlanta, GA 30326
Telephone: [phone]
Fax: [phone]

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Email: [e-mail]
4.

Raleigh, North Carolina.

The Receiver has possession and control of a building located at 4905 Waters Edge,
Raleigh, North Carolina 27060 (the "Waters Edge Building"). This building was purchased
for $1,900,000 and was leased to Electronic Data Systems ("EDS"), a technology services
provider, for $29,688.54 per month. EDS' lease term ended January 2010 and EDS did not
renew its lease. The Receiver is working on reletting this property. The Waters Edge
Building has no Icnown encumbrances. Parties interested in purchasing or leasing the Waters
Edge Building should contact:
John La Rocca
J. Rex Thomas, John Linderman
Grubb & Ellis/Thomas Linderman Graham
1511 Sunday Drive, Suite 200
Raleigh, NC 27607
Office: [phone]
Fax:
[phone]
Email: [e-mail]
5.

Tupelo, Mississippi.

The Receiver had possession and control of a building located at 2433 West Main
Street, Tupelo, Mississippi 38801 (the "Starbucks Building"). This building was purchased
for $941,000 and was being leased to Starbucks (Store #8809) for $6,279.19 per month. The
Starbucks Building had no known encumbrances. On February 18, 2011, the Receiver filed
an unopposed motion to approve the sale of the Starbucks Building (Doc. 599). The Court
granted the motion in its entirety on February 22, 2011 (Doc. 601). In pertinent part, the
Order approved the sale of the Starbucks Building for an all-cash offer of $715,000. The
purchaser provided the Receiver with $25,000 in earnest money and paid the balance of the

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purchase price at closing, which occurred on February 24, 2011. The Receivership estate
netted approximately $651,216 from the sale of the property after payment of commissions
and other expenses associated with the sale. The Receiver believes that this sale was in the
best interest of the Receivership and that the purchase price represented the fair market value
for the Starbucks Building.
6.

Ncwnan, Georgia.

The Receiver had possession and control of a gas station located at 5 McCollum
Station, Newnan, Georgia 30265 (the "Newnan Property"). This property was purchased
on January 20, 2006 for $2,450,000 and had no encumbrances.

The Newnan Property

consists of approximately two acres of land and a 3,500 square-foot building.
The sale of the Newnan Property was completed on August 5, 2010. In total, the
Receivership received proceeds of $1,750,000 from the sale of the Newnan Property. Prior
to the sale of this propeity, the Receiver received opinions from real estate professionals in
the area that the property was valued between $1.2 million and $1.4 million.

For more

information regarding the sale of the Newnan Property, please refer to prior Interim Reports.
7.

Fairview, North Carolina.

On March 30, 2009, the Court granted the Receiver's motion (Doc. 98) for possession
of property located in Fairview, North Carolina (the "Fairview Property"). (Doc. 100.)
Nadel and his wife purchased the Fairview Property for $335,000 on June 14, 2004. The
Fairview Property was a secondary residence of the Nadels and is located in the mountains of
North Carolina. The Fairview Property has one known encumbrance: a loan with BB&T
Bank on which there is a remaining principal balance of approximately $248,941.73. The

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Receiver received two offers for the purchase of the Fairview Property. One offer was below
what the Receiver believed to be the fair market value of the property. The Receiver
negotiated with the other prospective buyer; however, the buyer was unable to obtain
financing. The Receiver retained $2,000 from funds put in escrow by this prospective buyer.
Parties interested in purchasing the Fairview Property should contact:
The Armour Team
Mike and Nona Armour
Keller Williams Professionals
86 Asheland Avenue
Asheville, NC 28801
Mike Armour: [phone]
Nona Armour: [phone]
http://armourteam.homesandland.com, listing ID #13704540
8.

Sarasota, Florida (Fruitville Road).

On July 8, 2009, the Court granted the Receiver's motion (Doc. 146) for possession
of property located at 15576 Fruitville Road in Sarasota, Florida (the "Fruitville Property").
(Doc. 148.) To purchase the property, Nadel paid a $5,000 deposit on March 5, 2003, and
$201,163.93 at closing. The Fruitville Property is residential propeity that was purchased in
the names of Nadel and Mrs. Nadel, was deeded to their trusts, and was rented to third
parties. Presently, the tenant pays a monthly rent of $500. The Fruitville Property has one
known encumbrance: a loan with Northern Trust on which there is a remaining principal
balance of approximately $173,929.23.
Parties interested in purchasing the Fruitville Property should contact:
Sharon Chiodi
Sotheby's International Realty
50 Central Avenue, Suite 110
Sarasota, Florida
Phone: [phone]

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Fax: [phone]
Email: [e-mail]
9.

Oberlin, Ohio.

The Receiver has title to a condominium in Oberlin, Ohio (the "Oberlin Property").
The Oberlin Property was purchased on or about September 23, 2003, with the funds of Intex
13

Trading Corp. ("Intex") and was originally titled in Nadel's name. There are no known
encumbrances on the Oberlin Property. Parties interested in purchasing the Oberlin Property
should contact the Receiver directly.
10.

Sarasota, Florida (La Bellasara).

On January 28, 2010, the Court granted the Receiver's motion (Doc. 324) for
possession of property located at 464 Golden Gate Point, Unit 703, Sarasota, Florida (the
"Bellasara Property"). (Doc. 327.) The Bellasara Property is a residential condominium
unit in a building called La Bellasara. (Doc. 100.) On or about May 23, 2006, Neil Moody
as Trustee of the Neil V. Moody Revocable Trust dated February 9, 1995 purchased the
Bellasara Property for $2,160,000.
Florida residence.

The Bellasara Property was Neil Moody's primary

The Bellasara Property has two known encumbrances: a primary

mortgage loan from MSC Mortgage, LLC in the amount of $956,000 and a home equity line
of credit from Wells Fargo Bank N.A. with an initial balance of $880,000, both of which
were obtained by Neil Moody on or about the date of the closing of the purchase of the

13

Nadel created Intex and at all times was its sole director and officer. Intex was the
General Partner of Scoop Investments, Ltd., which is the predecessor of Victory Fund. On
November 27, 2002, Scoop Investments, Ltd. was renamed Victory Fund, Ltd. . On
December 20, 2002, Intex was replaced by Receivership Entity, Scoop Capital, as Victory
Fund's general partner.

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Bellasara Property. The Bellasara Property is currently subject to a foreclosure proceeding in
the Twelfth Circuit in and for Sarasota County, Florida. The Receiver has notified all parties
in the pending foreclosure to effectively stop the proceeding and has undertaken to market
the property and negotiate with the lenders in an effort to generate money for the
Receivership estate. Parties interested in purchasing the Bellasara Property should contact:
Sharon Chiodi
Sotheby's International Realty
50 Central Avenue, Suite 110
Sarasota, Florida
Phone: [phone]
Fax: [phone]
Email: [e-mail]
11.

Evergreen, Colorado.

The Receiver has possession and control of property located at 30393 Upper Bear
Creek Road, Evergreen, Colorado ("Evergreen Property"). The Evergreen Property is a
residential property that was used by Neil and Sharon Moody. The property was purchased
in 1988 for $290,000. The Evergreen Property has one known encumbrance: a loan with
Wells Fargo on which there is a remaining balance of approximately $387,778.56 as of May
2011. Parties interested in purchasing the Evergreen Property should contact:
Yvette Putt
Fuller Sotheby's International Realty
32156 Castle Court, Suite 201
Evergreen, Colorado
Phone: [phone]
Fax: [phone]
Email: [e-mail]

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Tazewell, Tennessee.

The Receiver has possession and control of property located at 780 Woodlake Blvd.,
Tazewell, Tennessee ("Tazewell Property"). The Tazewell Property is an undeveloped lot
in a golf community that the Receiver obtained through a settlement with Profiteers. The
property was purchased in 2007 for $60,000.

The Tazewell Property has no known

encumbrances. Parties interested in purchasing the Tazewell Property should contact:
Debra Schuemann Realty
Debra Schuemann, Broker
Woodlake Golf Resort
330 Woodlake Blvd
Tazewell, TN 37879
Phone: [phone]
Fax: [phone]
Email: debschuemann(S>email.com
13.

Sarasota, Florida (Jefferson Avenue).

The Receiver had possession and control of a condominium located at 774 North
Jefferson Avenue in Sarasota, Florida ("Jefferson Avenue Property").

The Jefferson

Avenue Property is a residential property that was used by an employee of the Florist. The
employee had executed a promissoiy note payable to Mrs. Nadel for $126,556.24 which was
secured by a mortgage on the property. The employee defaulted on the note. The Receiver
obtained the property through a foreclosure and judicial sale as a result of the default.
The Sarasota County Property Appraiser assessed the fair market value of the
Jefferson Avenue Property at $51,700 in 2010. On May 18, 2011, the Receiver filed an
unopposed motion to approve the sale of the Jefferson Avenue Property (Doc. 629). The
Court granted the motion on the same day (Doc. 630). In pertinent part, the Order approved
the sale of the Jefferson Avenue Property for an offer of $55,000. The purchaser provided

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the Receiver with $5,000 in earnest money and paid the balance of the purchase price at
closing, which occurred on May 31, 2011. The Receivership estate netted approximately
$48,347.79 from the sale of the property after payment of commissions and other expenses
associated with the sale. The Receiver believes that this sale was in the best interest of the
Receivership and that the purchase price represents the fair market value for the Jefferson
Avenue Property.
C.

Recovery of Vehicles and Other Items.
1.

Vehicles.

The Receiver took control of seven vehicles: (1) 2008 Mercedes-Benz E63; (2) 2009
Volkswagen EOS; (3) Maserati Grand Turismo; (4) 1998 Jeep Wrangler; (5) 2006 Subaru
Legacy Outback; (6) 1997 Jeep Wrangler customized in "Barbie" colors; and (7) John Deere
Buck 4x4.

The first three vehicles were leased by Valhalla Management and Viking

Management. Because there was no value to these three vehicles and only the continuing
obligation of lease payments, the Receiver surrendered them to the respective leasing
companies without penalty and without the lessor retaining any claim to Receivership assets.
The remaining four vehicles were sold for a total of $32,175.

For more information

regarding the sale of these vehicles, please refer to prior Interim Reports.
2.

Condominium Note and Mortgage.

On April 30, 2009, the Court granted the Receiver exclusive interest in a note and
mortgage for the Jefferson Avenue Property. (Doc. 116.) The condominium's owner, an
employee of the florist (see Section V.A.6 above), had executed a promissory note payable to
Mrs. Nadel for $126,556.24. The note was secured by a mortgage held by Mrs. Nadel. On

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February 9, 2009, Mrs. Nadel assigned the note and mortgage to Nadel's former criminal
defense attorneys, who subsequently assigned the note and mortgage to the Receiver, per the
Court's order.

The condominium's owner was in default, and the Receiver initiated

foreclosure proceedings. A summary judgment hearing was held on June 18, 2010 and an
order of foreclosure was entered the same day. A judicial sale of the property was held on
October 12, 2010. (See Section V.B.13 above for a discussion of the disposition o f t h e
condominium).
The Receiver filed a Motion for Deficiency Judgment on October 26, 2010. After a
hearing on the motion, on February 2, 2011, the Court entered a Deficiency Judgment against
the former owner in the amount of $99,963.37. The Receiver recorded this judgment and is
taking appropriate steps to attempt to collect on it.
3.

Bonds.com Assets.

The Receiver's investigation revealed that proceeds of the scheme were used to fund
a number of assets related to Bonds.com, Inc. ("Bonds.com"). Bonds.com is a registered
securities broker dealer established in 2007. Bonds.com developed and operates an online
trading platform for the sale of fragmented lots of fixed income securities. Through the
course of the Receivership, the Receiver has obtained control of interests and related rights in
Bonds.com, including promissory notes and shares of stock.
Promissory Notes
The Receiver has five (5) promissory notes from Bonds.com in the total amount
outstanding of $1,840,636. The notes are as follows:

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1) A term note issued to Valhalla Investment Partners with a principal amount
due of $100,000. The principal amount of this note when the Receiver took
possession of it was $400,000. Through the course of the Receivership the
Receiver has received three payments on this note totaling $332,875, which
included $300,000 of principal and $32,875 of accrued interest;
2) A convertible note in the amount of $203,800 also issued to Valhalla
Investment Partners, convertible to 849,167 shares ofBonds.com stock;
3) A convertible note issued to Chris Moody in the amount of $1,236,836,
convertible to 5,153,483 shares ofBonds.com stock;
4) A convertible note issued to Chris Moody in the amount of $50,000,
convertible to 208,333 shares ofBonds.com stock; and
5) A convertible note issued to Neil Moody in the amount of $250,000,
convertible to 1,041,667 shares ofBonds.com stock.
The term note accrues interest at 9% and the convertible notes accrue interest at 10%.
The notes are in part secured by the domain name www.bonds.com. With the exception of
the term note, the rest of the promissory notes are convertible to Bonds.com shares of stock
at the Receiver's option. No payments have been made on the convertible notes.
In October 2010, senior management from the company met with the Receiver to
discuss its current financial condition. Senior management asked the Receiver (and other
noteholders) to consent to the restructuring of Bonds.com's debt obligations to allow
Bonds.com to raise much-needed capital to continue its business operations. The success of
Bonds.com would be of significant benefit to the Receivership Estate. Accordingly, on

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October 18, 2010, the Receiver filed a Motion for Leave to Agree to Restructuring
Transactions with Bonds.com (Doc. 499). The Court granted the motion on October 19,
2010 (Doc. 500). In pertinent part, the Receiver agreed to a three-year extension on the
above promissory notes. Although the Receiver agreed to the three-year extension, he was
given the right to demand payment on these notes beginning on April 22, 2012, with the
then-outstanding and accrued interest payable in full 90 days from the date of demand. The
Receiver further agreed to a modification to the current anti-dilution protections applicable to
the Receiver's equity interests discussed below to the same anti-dilution protections afforded
to new strategic investors.
In exchange for the Receiver's consent to the restructuring, Bonds.com agreed to use
commercially reasonable best efforts to provide the Receiver with a first priority security
interest in the Bonds.com domain name. As of October 18, 2010, approximately two-thirds
of noteholders other than the Receiver had agreed to subordinate their security interests in the
domain name to those of the Receiver. Further, Bonds.com granted the Receiver (and other
noteholders) the right to receive additional shares of common stock i f Bonds.com does not
meet certain performance thresholds within a year from the date of the restructuring. In light
of Bonds.com's capital requirements, a capital infusion was necessary for the company to
continue operating. Due to that circumstance and the potential beneficial impact to the
Receivership i f the company is successful, the Receiver believes that the agreements outlined
above are in the best interests of the Receivership.

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Shares of Stock
The Receiver has possession and control of 7,582,850 unrestricted shares of stock in
Bonds.com. As of July 20, 2011, the shares are valued at approximately $682,457 ($0.09 per
share of common stock). For more information regarding how the Receiver obtained these
shares, please refer to prior Interim Reports.
At this time, the stocks are thinly traded and their realizable value is highly dependent
upon the success of the company in the near-to-intermediate term. I f the Receiver were to
sell all of these shares through the secondary market, assuming the market could absorb the
sell order, the shares would likely have to be sold at a substantial discount compared to the
then-current price per share being traded on the OTC Bulletin Board. I n other words, the
proceeds from such a secondary market sale would most likely equal to only a small fraction
of the current market value stated above. The Receiver is contemplating the appropriate
action to take with respect to all of the Receivership's interests in Bonds.com,
4.

Quest E M G Promissory Note.

As mentioned above in Section V.A.7, the Receiver also has a promissory note from
Quest EMG and two individuals to Valhalla Investment Partners i n the amount of
$1,100,000. Interest is being paid monthly on this note.
5.

Miscellaneous Items.

The Receiver recovered a myriad of other items that he may be able to sell, including
a variety of furniture, artwork, sculptures, fixtures, computers, and miscellaneous supplies.
The Receiver will make reasonable efforts to maximize the amount he is able to recover from
the possible sale of these items.

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The Receiver also obtained possession of jewelry from Queen's Wreath Jewels, Inc.,
Mrs. Nadel, Sharon Moody, and another Profiteer. On March 10, 2011, the Receiver filed a
motion to approve the sale of this jewelry by auction through a consignment agreement with
Leslie Hindman Auctioneers in Chicago (Doc. 607). The Court granted this motion on
March 11, 2011 (Doc. 608). The auction was held on April 10 and 11, 2011. Through this
auction, the Receiver successfully sold all 39 pieces of jewelry for a total of approximately
$643,890, which substantially exceeded pre-auction estimates of $300,000 to $550,000.
After the payment of commission and other related expenses, the Receivership estate realized
approximately $591,663.85 from the sale of this jewelry.
D.

Recovery of Assets from the Moodys.

The Receiver's investigation has revealed that a significant portion of activities of
certain Hedge Funds should have been managed and directed by the Moodys. Together, the
Moodys received approximately $42 million in fees from certain Receivership Entities.
In April 2009, the Receiver initiated contact with the Moodys' counsel. On April 17,
2009, the Receiver received a letter from the Moodys agreeing that they would not transfer
any assets of value owned by them, nor would they remove any such assets from the state of
Florida without prior written notice to the Receiver.

Chris Moody has satisfied this

commitment and has fully cooperated with the Receiver in connection with the turnover of
all of his assets. On January 19, 2010, Chris Moody gave the Receiver a power of attorney
which allows the Receiver to effectuate the transfer of most of his assets without any direct
participation from Chris Moody.

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The Receiver met with Chris Moody, confirmed the assets he owned, and reviewed in
detail Chris Moody's interests and liabilities in those assets. Meaningful assets the Receiver
has identified are delineated on the attached Exhibit B. Where possible, the Exhibit provides
percentage of interest acquired or purchase price, the estimated value, and status or
disposition ofthe asset. For the most part, the Receiver is continuing to evaluate these assets
and

will take appropriate actions as he determines are in the best interests of the

Receivership. Any entity in which the Receiver believes he may have a viable interest or
potential for meaningful recovery has been put on notice of the Receiver's interests and
rights.
Additionally, Chris Moody surrendered all bank and brokerage accounts to the
Receiver. On February 24, 2010, Chris Moody sent the Receiver a check in the amount of
$8,085 which represented the total balance in Chris Moody's personal bank account. Shares
of stock were transferred to accounts held by the Receiver. In addition to the Bonds.com
interests discussed above, the Receiver also received the shares of stock identified on Exhibit
B.
The Receiver has reached an agreement with Neil Moody contingent upon the Court's
approval wherein he agrees to cooperate with the Receiver to effect the orderly transfer of all
of his meaningful assets and to provide assistance, as necessary, in connection with the
Receiver's efforts to recover monies from third parties. The Commission is continuing to
review this agreement. Neil Moody's assets include (1) personal property; (2) real property;
(3) bank and brokerage accounts; (4) various corporate interests, including the Bonds.com
interests discussed above; and (5) the tax refund also discussed above. The Receiver will

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provide pertinent details of the agreement and Neil Moody's assets in a future Interim Report
after the Commission has completed its review of the agreement.
On January 28, 2010, the Receiver obtained possession of a condominium owned by
Neil Moody in Sarasota (see Discussion at V.B.10 above for Bellasara Property; Order, Jan.
28, 2010 (Doc. 327)).
Enforcement Action Instituted Against Moodys
On January 11, 2010, the Commission instituted an enforcement action against the
Moodys alleging that they violated antifraud provisions of the federal securities laws in
connection with their involvement in Nadel's scheme. See generally SEC v. Neil V. Moody,
et al, Case No. 8:10-cv-00053-T-33TBM (M.D. Fla.) (the "Moody SEC Action"), Compl.
(attached as Exhibit A to Doc. 325). Also on January 11, 2010, Neil Moody and Chris
Moody, without admitting or denying the allegations of the complaint, consented to entry of
a permanent injunction and agreed to disgorge all ill-gotten gains upon the Commission's
request. (Moody SEC Action, Consent of Def. Neil V . Moody f 3, Doc. 2, Ex. 2) (also
attached as Ex. B to Doc. 325.); (Moody SEC Action, Consent of Def. Christopher D. Moody
f 3, Doc. 2, Ex. 1). On April 7, 2010, Judgments of Permanent Injunction and Other Relief
were entered against Neil and Chris Moody. (Moody SEC Action, Docs. 9 (Neil Moody) and
9-1 (Chris Moody)). The Judgments permanently enjoin Neil and Chris Moody from further
violations of the antifraud provisions of the federal securities laws. The Judgments also
allow the Commission to seek an order for disgorgement of ill-gotten gains and/or a civil
penalty.

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E.

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Litigation.

In January 2010, the Receiver filed 134 lawsuits seeking $71,096,326.43.

The

lawsuits seek (1) the recovery of false profits from investors; (2) the recovery of distributions
from Receivership Entities to Neil and Sharon Moody, Donald and Joyce Rowe, and certain
of their affiliated entities; (3) the recovery of other distributions, such as commissions, from
other individuals and/or entities; and (4) the recovery of certain charitable contributions made
with scheme proceeds. The Receiver also continues to pursue malpractice litigation against
Holland & Knight and continues to evaluate possible additional litigation. Not including the
litigation against Holland & Knight, as of July 20, 2011, 48 lawsuits filed by the Receiver
remain pending.
1.

Recovery of False Profits from Investors.

As discussed in Section III.C above, the Receiver has determined that some purported
investor accounts received monies in an amount that exceeded their investments. These
purported profits were false because they were not based on any trading or investment gain,
but rather were fruits of a Ponzi scheme that consisted of commingled funds of new and
existing investors. To date, the Receiver has discovered approximately $35 million in such
"false profits." The Receiver spent substantial time identifying recipients of these false
profits (the "Profiteers"). In consultation with the Commission, the Receiver concluded
that, in the best interests of the Receivership Entities and the investors as a whole, these
inequitable distributions should be recovered and distributed in an equitable manner among
claimants holding legitimate and allowed claims (as to be determined by the claims process).

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As of April 30, 2011, the Receiver reached settlements with 121 Profiteers for a total
sum of $17,684,817.77. The Court has approved all 121 of these settlements. During the
time covered by this Interim Report, the Receiver settled 15 cases for the total amount of
$2,568,720.25. The Receiver's efforts during this period also led to the settlement of eight
additional cases as of July 20, 2011, for a further amount of $1,556,910.26. As of July 20,
2011, the Receiver has reached agreements to settle with 129 Profiteers for a total amount of
$19,241,728.03 (plus additional non-cash assets).
In January 2010, the Receiver initiated 121 lawsuits against Profiteers seeking to
recover total false profits of approximately $32,755,269.13 ("January 2010 Cases"). The
complaints set forth claims for unjust enrichment and fraudulent transfers pursuant to
Florida's Uniform Fraudulent Transfer Act ("FUFTA").

Except in situations where

defendants had, or should have had, knowledge of the fraudulent investment scheme or
otherwise cannot satisfy the pertinent good-faith standard, the Receiver is seeking to recover
false profits but not the amount equivalent to the principal investment. Individuals and/or
entities who the Receiver believes cannot satisfy the good-faith defense are discussed in subsections V.E.2 and V.E.3 immediately below.
The Receiver is proceeding with this litigation. Scheduling conferences required by
Rule 16 of the Federal Rules of Civil Procedure have been held for all of the Januaiy 2010
Cases.

At these conferences, the Court ordered the parties to mediate all cases before

proceeding with litigation except those brought to recover charitable contributions discussed
in Section E.4 below. The Court stayed all formal discoveiy and set deadlines for responses
to the complaints for after the mediations had been conducted. A l l January 2010 Cases

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which remain pending have been mediated as of April 2011.

Page 63 of 78 PagelD 9440

As of July 20, 2011, the

Receiver has mediated 70 cases, and as a result of these mediations 26 cases have been fully
resolved.
The parties also attended additional Rule 16 conferences by order of the court for
purposes of further scheduling to effectively manage the cases. Trials have been set in all of
these matters beginning in March 2012 and continuing through February 2013. Responsive
pleadings, including motions to dismiss, answers and motions to compel arbitration, have
been filed in all of the January 2010 cases. On May 25, 2011, the Receiver filed an Omnibus
Motion for Partial Summary Judgment ("Summary Judgment Motion") in all January 2010
Cases still pending. Specifically, the Receiver seeks summary judgment on the following:
(1) Nadel's guilty plea establishes that he operated the Hedge Funds as a Ponzi scheme from
1999 to January 2009; (2) because Nadel operated the Hedge Funds as a Ponzi scheme from
1999 to January 2009, every transfer of an asset from a Hedge Fund during that time was
made with actual intent to hinder, delay, or defraud creditors of the Hedge Funds; and (3)
because Nadel operated the Hedge Funds as a Ponzi scheme from 1999 to January 2009,
during that period each of the Hedge Funds and Nadel were insolvent. If summary judgment
is not entered on issues (1) and (2) above, the Summary Judgment Motion seeks summary
judgment that: because Nadel pled guilty to securities fraud, mail fraud, and wire fraud,
every transfer of an asset from a Hedge Fund during that period was made with actual intent
to hinder, delay, or defraud creditors of the Hedge Funds. The Receiver has requested oral
argument.
In 23 ofthe January 2010 Cases, Defendants filed motions to compel arbitration. The

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Receiver opposed these motions. Oral argument was held before the Honorable Magistrate
Judge Mark A. Pizzo on April 25, 2011. On June 8, 2011, the Magistrate Judge issued his
Omnibus Report and Recommendation. In short, the Report and Recommendation refers the
cases to arbitration. The Receiver filed objections to the Report and Recommendation on
June 22, 2011.
On or about September 27, 2010, the Receiver filed 12 additional actions against
Profiteers who invested with Traders' "accounts." The lawsuits seek to recover false profits
of approximately $962,197.43. In anticipation of initiating these lawsuits, the Receiver filed
a Motion to Reappoint Receiver (Doc. 492). That motion was granted on September 23,
2010. (Order, Doc. 493.) Rule 16 conferences have not yet been held in these matters.
On April 20, 2011, the Receiver filed a Motion for Approval to Serve Proposals for
Settlement i n connection with Ancillary Actions (Doc 617). The Receiver sought to serve
proposals for settlement pursuant to Fla. Stat. § 768.79 to (1) encourage settlement of the
ancillary actions, which would help preserve Receivership assets while increasing assets
available for distribution, and (2) avoid the need to seek Court approval of the settlement i f
the proposal is accepted. The Court granted the motion on April 21, 2011 (Doc. 618). From
April 21, 2011 through May 25, 2011, the Receiver has sent 44 proposals for settlement.
The Receiver believes that he has identified all of the Profiteers. However, the
Receiver is verifying that identification and will bring additional actions if appropriate and in
the best interests of the Receivership. The Receiver is continuing to engage in settlement
discussions with defendants of the lawsuits discussed above.

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Litigation against Moodys and Rowe.
a.

Moodys.

On January 20, 2010, the Receiver filed suit against Neil V. Moody, individually and
as Trustee of the Neil V. Moody Revocable Trust; Sharon G. Moody, individually and as
Trustee of the Sharon G. Moody Revocable Trust; and the Neil V. Moody Charitable
Foundation, Inc. (collectively the "Moody Defendants") for the return of $28,341,953.10.
See Wiand, as Receiver v. Neil V. Moody, et al, Case No. 8:10-cv-249-T-17MAP (M.D.
Fla.).
On November 5, 2010, the Receiver filed a motion to approve the settlement of all
claims asserted against Sharon G. Moody in her individual capacity and in her capacity as
Trustee of the Sharon G. Moody Trust (collectively referred to as "Ms. Moody") (Doc. 516).
The Court approved the settlement in its entirety on November 8, 2010 (Doc. 517). In
pertinent part, the Receiver agreed to settle all claims against Ms. Moody in exchange for the
following: (1) payment of $39,000 within 5 business days after the Court's approval of the
settlement agreement; (2) conveyance of title to real property located in Evergreen, Colorado
(which according to an appraisal obtained by the Receiver and a separate realtor's estimate,
has approximately $450,000 to more than $500,000 in equity); (3) transfer by Ms. Moody to
the Receiver of all jewelry, furnishings, antiques, and other personal property in the
possession, custody, or control of Ms. Moody which was funded by Neil Moody (which
items had a collective purchase price of approximately $350,000 or greater); and (4) transfer
and assignment by Ms. Moody to the Receiver of any and all claims Ms. Moody has or may

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have for tax refunds arising from her investment in the Receivership Entities (the Receiver
has already received $417,964 in tax refunds for Ms. Moody, see Section IV.C.l, above).
The Receiver believes that the settlement with Ms. Moody is in the best interests of
the Receivership because resolution of these claims avoids protracted litigation, conserving
Receivership assets and judicial resources; avoids the risk of litigation and of an unfavorable
outcome; and, in the event of a favorable outcome, avoids a significant risk of not being able
to fully collect on any eventual judgment.
The Receiver has reached an agreement in principle with Neil Moody which would
resolve the remainder of this litigation. The Receiver will provide the pertinent details of this
agreement in a future Interim Report after the Commission has completed its review of the
agreement.
b.

Rowe.

On January 20, 2010, the Receiver filed suit against Donald Rowe ("Rowe"),
individually and as Trustee of the Wall Street Digest Defined Benefit Pension Plan, Joyce
Rowe, and Carnegie Asset Management, Inc. ("CAM") (collectively "Rowe Defendants")
for the return of $8,610,428.90, which includes approximately $2,106,568.89 in false profits.
See Wiand, as Receiver v. Donald Rowe, etal, CaseNo. 8:10-cv-245-T-17MAP (M.D. Fla.).
As set forth in the Complaint, Donald Rowe, both in his individual capacity and as Trustee of
the Wall Street Digest Defined Benefits Pension Plan, and Joyce Rowe were investors in one
or more of the Hedge Funds and received distributions of purported trading profits or
purported principal redemptions in connection with their investments which do not satisfy
FUFTA's "good faith" standard and which are unjust. The Receiver seeks to recover those

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transfers under FUFTA, or alternatively, seeks disgorgement of those amounts pursuant to
equitable claims of unjust enrichment.
Rowe played a key role in Nadel's scheme, and was also a major financial beneficiary
as he, his wife, and his entities received millions of dollars of investor funds. He actively
solicited a large number of investors in violation of federal and state securities laws. He also
repeatedly touted and recommended the Hedge Funds in his investment newsletter, "The
Wall Street Digest," and in "reports." He extolled that the Hedge Funds were managed by
"America's Top-Ranked Money Manager" or with similar praise. In addition to Rowe's
violation of various state and federal securities laws by his general solicitation of investors
for the Hedge Funds, he further violated these laws by: (1) his receipt of purportedly
performance-based fees and commissions for soliciting investors even though neither he nor
his entities were registered with the State of Florida or the Commission as a broker/dealer,
associated person of a broker/dealer, or an investment adviser; and (2) his repeated material
omissions and misrepresentations made in connection with his solicitation of investors.
Further, CAM (and Carnegie Wealth Management ("CWM"), a division of CAM)
also received certain funds from the Hedge Funds under the terms of a purported "NonSolicitation Agreement." This Agreement was merely a fmancial settlement pursuant to
which money from the Hedge Funds was transferred to C A M and CWM for "management"
and "performance" fees Rowe claimed he was supposed to receive for his referral and
solicitation of investors to the Hedge Funds. The Receiver believes this Agreement was
fraudulent and nothing more than a document designed for the sole purpose of paying

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improper fees to CAM and CWM. The Receiver seeks to recover all such sums distributed
to CAM and CWM from Receivership Entities.
The Hedge Funds also paid "management" and "performance" fees based on the
purported value and performance of the Hedge Funds to another entity controlled by Rowe,
Wall Street Online ("WSO"). WSO is now defunct, however, the Receiver has information
and believes that its assets remain under Donald Rowe's control. The Receiver seeks to
recover all such sums distributed to WSO from Receivership Entities.
The parties mediated this matter on September 13, 2010 and September 28, 2010, but
were unable to reach an accord. The Rowe Defendants filed an answer on January 27, 2011
(Doc. 39). The Receiver filed a motion for partial summary judgment on May 25, 2011
(Doc. 40) and requested oral argument (Doc. 42). No order has been issued on this motion.
The trial in this matter is set for March 2012. The parties are engaging in discovery.
3.

Recovery of Fees from Recipients of Commissions or Other
Transfers.

Information available to the Receiver revealed that at least three individuals received
commissions as "compensation" under circumstances that warrant the Receiver's recoveiy of
those sums.

14

In January 2010, the Receiver initiated lawsuits against these three individuals.

See Wiand, Receiver v. Kelvin V. Lee and Barbara Lee, Case No. 8:10-cv-251-T-17MAP
(M.D. Fla.) (seeking the return of $93,921.28 in purported fees and $33,077.26 in false
1 4

The Receiver also determined that two entities received improper distributions in
connection with Nadel's Scheme: GQ Digital Home Integration, Inc. and Alpha Ventures
Securities Company. Both of these matters have been resolved. For further information
regarding these matters, please refer to prior Interim Reports.

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profits); Wiand, Receiver v. Michael Corcione, CaseNo. 8:10-cv-234-T-17MAP (M.D. Fla.)
(seeking the return of $7,500 in purported fees); and Wiand, Receiver v, Steve Ellis, Case No.
8:10-cv-233-T-17MAP (M.D. Fla.) (seeking the return of $62,299.64 in purported fees). The
Hedge Funds paid the Defendants in these cases "management" and "performance" fees
based on the purported value and performance of the Hedge Funds. The Receiver seeks to
recover those transfers under FUFTA, or alternatively, seeks disgorgement of those amounts
pursuant to equitable claims of unjust emichment.
The Receiver has resolved the Lee and Corcione matters for a total payment of
$137,121.09. For details regarding these settlements, please refer to prior Interim Reports.
4.

Recovery of
Proceeds.

Charitable Contributions Made with

Scheme

Nadel formed the Guy-Nadel Foundation in December 2003 as a non-profit
corporation for charitable, educational and scientific purposes. The Foundation was funded
solely with proceeds of Nadel's scheme. A l l money Nadel wrongfully caused to transfer or
pay to the Foundation was diverted and misappropriated by him in connection with his
scheme.

The Receiver has discovered that from 2000 tiirough 2008, the Guy-Nadel

Foundation made a total of $2,484,589 in contributions to various non-profit organizations
and charities.
The Receiver has focused his attention on the charitable organizations that received
the most misappropriated funds. The Receiver sought to obtain tolling agreements from all
charitable organizations so he could contemplate the appropriate action to take regarding
these significant disbursements.

Three charities did not provide such agreements and one

refused to extend a tolling agreement it had entered with the Receiver upon its expiration,

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thus the Receiver had no recourse but to initiate actions against them.

See Wiand, as

Receiver v. Catholic Charities, Diocese of Venice, Inc., Case No. 8:10-cv-247-T-17MAP
(M.D. Fla.) (seeking the return of $40,000) (the "Catholic Charities"); Wiand, as Receiver
v. Diocese of Venice in Florida, Inc., Case No. 8:10-cv-247-T-17MAP (M.D. Fla.) (seeking
the return of $370,000) (the "Diocese"); Wiand, as Receiver v. Sarasota Opera Association,
Inc., Case No. 8:10-cv-248-T-17MAP (M.D. Fla.) (seeking the return of $353,125) (the
"Sarasota Opera"); Wiand, as Receiver v. The Florida House Foundation of Sarasota, Inc.,
Case No. 8:10-cv-2071-T-17MAP (seeking the return of $61,000) (the "Florida House").
The Diocese, Catholic Charities, and Sarasota Opera Association have each filed a
motion to dismiss the Receiver's complaint. (See Catholic Charities, at Doc. 31; Diocese, at
Doc. 31; and Sarasota Opera, at Doc. 32.) Those motions are currently pending and the
Receiver's response was filed on March 3, 2011. Florida House provided the Receiver with
financial documents and an affidavit to prove its current financial condition rather than
respond to the complaint. Based on those documents and sworn statements, the Receiver
determined that Florida House has no collectible assets nor does it have an expectation of
receiving assets in the near future. Therefore, the Receiver dismissed the Florida House case
without prejudice.
Mediation for the Diocese,

Catholic

Charities,

and Sarasota

Opera has been

scheduled for August 8, 2011. Trial dates have been set for these matters for March 2012.
The Receiver has also attempted to reach resolutions with the charities that entered tolling
agreements which are still in effect. I f no resolution is reached soon, the Receiver will have
no choice but to initiate actions against these organizations as well.

66

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5.

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Class Action Litigation.

The Receiver had communications with the law firm of Johnson, Pope, Bokor,
Ruppcl & Burns, LLP ("Johnson Pope") regarding the institution of a class action against
Holland & Knight, LLP ( " H & K " ) , the law firm that prepared the private placement
memoranda used to solicit investors into the Nadel scheme. On March 20, 2009, Johnson
Pope on behalf of investor Michael Sullivan and others similarly situated, instituted a class
action suit against H & K , Michael Sullivan v. Holland & Knight LLP, Case No. 09-cv-0531EAJ (M.D. Fla.). On March 31, 2010, the Court entered an order of dismissal based on the
determination that this class action was preempted by the Securities Litigation Uniform
Standards Act of 1998 ("SLUSA"). The plaintiffs filed a motion for reconsideration of this
determination on April 7, 2010. No ruling on the plaintiffs motion for reconsideration has
been issued yet.
6.

Receiver's Litigation Against Holland & Knight L L P .

The Receiver entered into a contingency fee agreement with Johnson Pope whereby
Johnson Pope will pursue professional malpractice claims by the Hedge Funds against H&K,
seeking to recover as much as possible of the approximately $168 million out-of-pocket
losses suffered by investors. (See also Order dated August 12, 2009 (Doc. 175).) On or
about August 31, 2009, the Receiver initiated an action against H & K on behalf of the Hedge
Funds. Scoop Real Estate, L.P,, et al. v. Holland & Knight, LLP, et al, Case No. 2009-ca014887-NC (Sarasota County, Fla., 12th Jud. Cir.).
The Receiver successfully overcame a motion for removal to federal court and
motions to dismiss. Discoveiy is underway. Hundreds of thousands of documents have been

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exchanged and several depositions have been taken. On September 8, 2010, the court on its
own motion designated this case as a "complex case" as defined by Rule 1.201 of the Florida
Rules of Civil Procedure. This matter is not yet set for trial.
7.

Other Potential Litigation.

The Receiver continues to examine the actions of other professionals and businesses
that provided services to Receivership Entities to determine whether he needs to take
additional steps with respect to any of those professionals and businesses to recover assets for
the Receivership.
VI.

Claims Process.
On April 20, 2010, the Receiver filed his Motion to (1) Approve Procedure to

Administer Claims and Proof of Claim Form, (2) Establish Deadline for Filing Proofs of
Claim, and (3) Permit Notice by Mail and Publication and Incorporated Memorandum of
Law (Doc. 390) ("Claims Motion"). On April 21, 2010, the Court granted the Receiver's
Claims Motion in its entirety (Doc. 391). The Court established a Claim Bar Date of the later
of 90 days from the date of the Order granting the Claims Motion or the mailing of Proof of
Claim Forms to all known investors (as the term Claim Bar Date is defined in the Receiver's
motion). Pursuant to the Court's Order, any person or entity who failed to submit a proof of
claim to the Receiver so that it is actually received by the Receiver on or before the Claim
Bar Date is barred and precluded from asserting any claim against the Receivership or any
Receivership Entity.
The Court's Order further provided that sufficient and reasonable notice was given by
the Receiver i f made (1) by mail to the last known addresses of all known potential

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claimants, (2) by global publication on one day in The Wall Street Journal and publication on
one

day

in the

Sarasota-Herald

Tribune, and

(3)

on the

Receiver's

website

(www.nadelreceivership, com).
In compliance with the Court's Order, on June 4, 2010, the Receiver mailed 1256
packages to known investors and their attorneys, i f any, and any other known potential
creditors of the Receivership Estate thereby establishing September 2, 2010 as the Claim
Bar Date. Each package included a cover letter, the Notice of Deadline Requiring Filing of
Proofs of Claim (the "Notice"), and a Proof of Claim Form. The Receiver also published the
Notice in the global edition of The Wall Street Journal and in the Sarasota Herald-Tribune on
June 15, 2010, and provided the Notice and a Proof of Claim form on his website.
As of July 20, 2011, the Receiver has received 477 Proof of Claim Forms from
investors and 27 Proof of Claim Forms from other possible creditors, for a total of 504
submitted claims. Fourteen of the 504 Proof of Claim Forms were received after the Claim
Bar Date. The Receiver completed an initial review of the claims. As a result of this review,
the Receiver sent approximately 134 letters to claimants notifying them of deficiencies in
their respective Proof of Claim Forms. The claimants were given thirty days from the date of
the notice of deficiency to return an amended Proof of Claim Form to preserve their claims.
As of June 27, 2011, the Receiver has received approximately 123 amended Proof of Claim
Forms.

The Receiver has completed his review of all claims initially submitted and is

nearing completion of his review of amended claims. The Receiver also has substantially
completed his recommended determinations of these claims to present to the Court. As of
July 20, 2011, the Receiver has received claims from investors in the amount of

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approximately $148,294,304.25 and claims from other creditors in the amount of
approximately $9,202,181.14, for atotal claim amount of approximately $157,496,485.39.
VII.

15

Investigating Receivership Affairs and Tracing Receivership Funds.
The Receiver has retained the services of PDR Certified Public Accountants

("PDR"), forensic accountants, to assist in investigating and analyzing the flow of funds both
into and out of the Receivership Entities, and to assist in locating additional funds, i f any.
The Receiver has also retained the services of Riverside Financial Group ("Riverside"),
fmancial analysts to assist in investigating and analyzing all of the trading activity. In
conjunction with the Receiver, PDR and Riverside are further attempting to identify
additional individuals and/or entities who may be in possession of Receivership funds. PDR
is also assisting in determining the amount of each investor's loss. The Receiver has also
retained the services of Otto L. Wheeler, CPA/ABV, of Wheeler Fairman & Kelly Certified
Public Accountants in Austin, Texas, in connection with the Viking Oil & Gas venture
discussed at Section V.A.7, above.
The Receiver has also retained the services of RWJ Group, LLC ("RWJ") as an asset
manager for the Receivership Entities. RWJ is owned and operated by Roger Jernigan. Mr.
Jernigan has over 24 years of law enforcement and investigative experience. He also has
experience in managing multiple businesses with gross sales exceeding $1.5 million. Mr.
1 5

These numbers are subject to change as the Receiver, completes his review of all claims.
Also, the amount set forth above for other creditors does not include claimed interest, fees or
penalties which may be sought by these creditors. The other creditors include certain banks.
Further, these numbers reflect the amount to which the claimants are claiming they are
entitled, and not how much the Receiver has determined is the value of proper and allowable
claims.

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Jernigan formerly was the manager of the VJC and has significant Icnowledge of the
maintenance of assets recovered by the Receiver. Mr. Jernigan is a commercial pilot with
over 10,000 hours of accident and incident free flying. After conducting due diligence, the
Receiver determined that Mr. Jernigan had no involvement with Nadel's scheme and was not
an investor in the Hedge Funds.

Mr. Jernigan has been an invaluable asset to the

Receivership. Mr. Jernigan assists the Receiver with overseeing ongoing business operations
and property recovered by the Receiver, including aiding with efforts to sell such businesses
and property. His efforts are designed to ensure that Receivership assets are maintained
and/or enhanced to allow for maximum recovery for the Receivership estate. Pursuant to an
agreement with the Receiver, RWJ receives $5,500 per month for its services and is
reimbursed for related expenses.
VIII.

The Next Sixty Days.
The Receiver has received useful information from investors and third parties during

the course of the Receivership. A number of people have contacted him with respect to the
location of assets. The Receiver would like to thank those parties for their efforts. For
anyone who may have information that they believe would be of use to the Receivership, the
Receiver encourages those parties to bring that information to him.
The Receiver has received most but not all of the documents he has subpoenaed from
third parties. He will continue to malce efforts to obtain additional relevant documents and to
review such documents in connection with his efforts to investigate matters underlying this
Receivership, including to identify any additional sources of recovery and to prepare an
accounting. The Receiver is working diligently on this task, but without knowing the full

71

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volume of documents he expects to receive, it is difficult to estimate the time needed for
completion.
The Receiver will proceed with the claims process by continuing to review and
analyze all submitted claims and addressing any questions potential claimants and/or their
attorneys may have. After the Receiver has reviewed all submitted claims, he will submit a
motion to the Court with his claim determinations. The Receiver anticipates that this motion
will be filed before the filing of the next Interim Report.
The Receiver will proceed with the pending cases. He will engage in discovery and
motion practice. The Receiver will attend the court-ordered mediations. He will continue to
thoroughly consider and review any settlement offers for pending cases and engage in
settlement negotiations. The Receiver will make every effort to reach compromises that are
in the best interests of the Receivership Entities and the investors.
The Receiver will continue to review information to determine i f any third parties
may have liability either to the Receivership estate or investors. The Receiver will likely
institute litigation against financial institutions that assisted Nadel and his companies.
The Receiver will continue to pursue the recovery of tax refunds where possible, and
w i l l . continue to attempt to locate additional funds and other assets. I f appropriate, the
Receiver will institute proceedings to recover assets on behalf of the Receivership Entities.
In an effort to more fully understand the conduct at issue and in an attempt to locate
more assets, the Receiver will continue to conduct interviews and/or depositions of parties
and third parties with knowledge.

72

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The Receiver will also continue the operations of all ongoing businesses of the
Receivership Entities to maintain and, i f possible, enhance their value. The Receiver will
continue to market properties for sale and entertain offers for purchase.
CONCLUSION
Creditors and investors in the Receivership Entities are encouraged to periodically
check the informational website (www.nadelreceivership.com) for current information
concerning this Receivership. The Receiver and his counsel have received an enormous
amount of emails and telephone inquiries and have had to expend significant resources to
address them. To minimize those expenses, creditors and investors are strongly encouraged
to consult the Receiver's website before contacting the Receiver or his counsel. However,
the Receiver continues to encourage individuals or attorneys representing investors who may
have information that may be helpful in securing further assets for the Receivership estate or
identifying other potential parties who may have liability to either the Receivership estate or
investors directly to either email j rizzo @wiandlaw. com or call Jeffrey Rizzo at 813-3475100.
Dated this 21st day of July, 2011.

Respectfully submitted,

s/Burton W. Wiand
Burton W. Wiand, Receiver

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that, on M y 21, 2011,1 electronically filed the foregoing with
the Clerk of the Court by using the CM/ECF system.
I FURTHER CERTIFY that on July 21, 2011,1 mailed the foregoing document and
the notice of electronic filing by first-class mail to the following non-CM/ECF participant(s):
Arthur G. Nadel
Register No. 50690-018
FCI BUTNER LOW
Federal Correctional Institution
P.O. Box 999
Burner, NC 27509

s/Gianluca Morello
Gianluca Morello, FBN 034997
[e-mail]
Maya M . Lockwood, FBN 0175481
[e-mail]
WIAND GUERRA KING P.L.
3000 Bayport Drive
Suite 600
Tampa, FL 33607
T: [phone]
F: [phone]
Attorneys for the Receiver, Burton W. Wiand

Case 8 : 0 9 - c v - 0 0 0 8 7 - R A L - T B M

Document 647-1

Filed 07/21/11

Page 1 of 2 P a g e l D 9456

Standardized Fund Accounting Report
for Consolidated Nadel Entities - Cash Basis
Receivership; Civil Court Docket No. 8:09-cv-87-T-26TBM
Reporting Period 1/1/11 to 4/30/11

Fund Accounting (Sec Instructions);
Subtotal

Detail

:

-

Grand Total

<P-

Line 1
Line
Line
Line
Line
Line

2
3
4
5
6

Line 7
Line 8

Beginning Balance (As of 1/1/11):
Increases in Fund Balance:
Business Income
Cash and Securities
Interest/Dividend Income
Business Asset Liquidation
Personal Asset Liquidation
Third-Party Litigation Income
Miscellaneous - Other (see attached)

Total Funds Available (Line 1 - 8):
Decreases in Fund Balance:
Disbursements to Investors
Line 9
Disbursements for Receivership in Operations
Line 10
Professionals
Line 10a Disbursements to Receiver or Olher
Line 10b Business Asset Expenses
Line 10c Personal Asset Expenses
Line lOd Investment
Expenses

17,809,413.67
228,165.64
106,026.96

•

706,098,82

•

2,368,733.76
976,250.12

A

Line 11

h

57,337.74
113,485.54

a

l
I\
!V

7,210,36

Independent Distribution Consultant (IDC)
Distribution Agent
Consultants
Legal Advisors
Tax Advisors
2. Administrative Expenses
3. Miscellaneous
Total Plan Development
Expenses

$178,033.64

$178,033,64
=

Disbursements for Distribution Expenses Paid by

the Fund:
Line 11a Distribution Plan Development Expenses:
1, Fees:
Fund Administrator

22,194,688,97

y
^
W

1

Line lOe P
1. Attorney Fees
2. Litigation Expenses
Total Third-Party Litigation Expenses
Line Wf Tax Administrator Fees and Bonds
Line lOg Federal and State Tax Payments
Total Disbursements for Receivership Operations

%

.6
h
f

r

Case 8 : 0 9 - c v - 0 0 0 8 7 - R A L - T B M

D o c u m e n t 647-1

Filed 07/21/11

Page 2 of 2 PagelD 9457

Standardized Fund Accounting Report
for Consolidated Nadel Entities - Casii Basis
Receivership j Civil Court Docket No, 8;09-cv-87-T-26TBM
Reporting Period 1/1/11 to 4/30/11

Fund Accounting (See Instructions):
Detail
Line

lib Distribution Plan Implementation
1, Fees:
Fund Administrator
IDC

Subtotal

i

Grand Total

Expenses:

Distribution Agent
Consultants
Legal Advisors
Tax Advisors

&

2, Administrative Expenses
3, Investor Identification:
Notice/Publishing Approved Plan
Claimant Identification
Claims Processing
Web Site Maintenance/Call Center
4, Fund Administrator Bond
5, Miscellaneous
6, Federal Account for Investor Restitution
( F A I R ) Reporting Expenses
Total Plan Implementation
Expenses

ii

i

Total Disbursements for Distribution Expenses
Paid by the F u n d

X

Line 12
Disbursements to Court/Other;
Line 12a Investment Expenses/Court Registry
Investment
System (CRIS) Fees
Line 12b Federal Tax Payments
Total Disbursements to Court/Other!

t

Line 13
Ending Batance (As of 4/30/11)
Line 14
Ending Balance of Fund - Net Assets:
Line 14a Cash & Cash
Equivalents
Line 14b Investments
Line 14c Other Assets or Uncleared Funds
Total Ending Balance of Fund - Net Assets

S?.
K
"

T

m

2

22,016,655,33
22,016,655.33
20,133,628,93
1,883,026,40
22,016,655.33

3lD 9458
1 of 5 Pag<

Chris Moody's Assets

C
D
CD
C
O

Purchase Price or
,

Asset

1

>'

% of Interest

Share
Information
k

Market Value - Loans/Liens

br

' 5U

T
v

Status/Disposition

,

- —

Real a n d Personal P r o p e r t y
2140 Hillview St., Sarasota (Rental

$228,000

Moody's interest in this property given that there
was no equity In the property.

$241,300

The Receiver did not exercise his right to obtain Chris

(as of 1/2009)

Property)

The Receiver did not exercise his right to obtain Chris

(as of 1/2009)

$296,000

Moody's interest in this property given that there

a.
1881 Summerwalk Circle, Sarasota

^:

$312,000

(Rental Property)

C
M

was no equity in the property.

o
•a
_D
C

nt 647-2

iT

Hideaway Bay Club, Unit K2, Little

Sold for $7,875 on or about March 2,2010 (Order,

$4,000

1997 Jeep (Barbie)

Doc. 357).

1996 Wellcraft Scarab Sport boat

rs
o

(Purchased in 1999)

o
Q

this property.

Gasparilla, FL (1/3 ownership in
Vacation Condominium)

C
D
C

a

The Receiver is evaluating Chris Moody's interest in

$150,000

$45,000

Approximately

$26,200 (as of

$25,000

1/2009)

The Receiver did not exercise hisrightto obtain Chris
Moody's interest in this boat given that there was no
equity in the boat.

$1,000,000

King Air (Valkyrie Aviation)

The Receiver is evaluating Chris Moody's interest in
this entity.

cn

fi

<
cc
1

hco
o
o
oi

>
o
1

o
CO

C
D
C
O
C
D

O
Page l o f 5

w
m
x
X

ii

Chris Moody's Assets
Purchase Price or
Asset

v'

,

Drinks Americas Holdings, Ltd.

% of Interest
Acquired

1

Share
Information

233,293 shares

Market Value

$489.92

Status/ Disposition

Loans/Liens

None

The Receiver has possession of these shares and is
attempting to determine the available market for

(as of 10/21/10)

these shares.

China New Energy Group Company

2,500 shares

$825

None

The Receiver has possession of these shares and is
attempting to determine the available market for

(as of 1/29/10)

these shares.
Flagship Global Healthcare, Inc.

Celsia Technologies (formerly iCurie)

153,265 shares

2,912 shares

None

This company is currently in bankruptcy.

None

Unknown

The Receiver has possession of these shares and is

Series A pfd. -

attempting to determine the available market for

$2,912

these shares.

Page 2 of 5

Chris Moody's Assets
Purchase Price or

Asset

r

>,

% of Interest
Acau<<"ed

CD.M. Leasing LLC

-

{ Share „ _
si Information

Market Value

Status/Disposition

Loans/Lsens

-

This is an inactive Florida Limited Liability Company.

100%

The Company owns two vehicles which are currently
being leased to Respiro, Inc. The leases likely will be
restructured in connection with the loan to Respiro
discussed below. '

Valkyrie Aviation, LLC

This is an inactive Florida Limited Liability Company

100%

established to co-own and operate King Air. This
company has a potential $112,500 interest in an
airplane transferred to another entity which assumed
the note and mortgage. The Receiver is evaluating
this transaction and Chris Moody's interest in the
airplane.

Collingwood Construction Group, LLC is in

Collingwood Construction Group, LLC 16%

bankruptcy. Chris Moody invested approximately
$263,750 in this company. It appears that the
Receiver will not be able to recover any of this
investment.
3.22% Umited

Chris Moody invested approximately $59,500 in this

Partnership Interest

TRD Land 43, LLC

company to help fund the purchase of 43 acres in
Arcadia, Florida. The Receiver is evaluating Chris
Moody's interest in this property.

Screen Test Studios, LLC

11 limited Partnership

The Receiver is evaluating Chris Moody's interest in

units

Rand Hillview, LLC

this entity.

The Receiver is evaluating Chris Moody's interest in

150,000 est units

this entity.

Page 3 of 5

Case 8 : 0 9 - c v - 0 0 0 8 7 - R A L - T B M

Document 647-2

Filed 07/21/11

Page 4 of 5 PagelD 9461

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Chris Moody's Assets
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Share
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Market Value > Loans/Liens

•Status/Disposition

Receivables / Notes
iCurie; Celsia Technologies

This was a bridge note. The Receiver is evaluating

$24,992

this receivable.

Dennis Fontaine - Rocket Science

2 loans and a note-

The Receiver is contemplating the appropriate course

Labs (RSL Wrist ID); Pet Tattoos &

Note for $50,000 and

to take for collection of these receivables.

Other Pet Products

loans of $140,910.

Callahan Energy Partners

$50,000

The Receiver believes that $30,000 is still
outstanding on this loan and Is evaluating the
appropriate course of action to take with respect to
collection ofthe outstanding balance.

Respiro, Inc.

Chris Moody loaned $577,500 to this company

$577,500

owned by his wife. The company is currently
operating and the Receiver is working on recovering
the funds loaned to Respiro.
One World Ocean, LLC

This limited liability company Is a program for

$120,500

fractional ownership in yachts. Chris Moody made a
series of loans to Dennis Greers in connection with
this company. The Receiver is evaluating these loans.

Collingwood Construction Group

Chris Moody loaned Collingwood $100,000. As this

$100,000

company is in bankruptcy, it Is unlikely that the
Receiver will be able to collect on this loan.
Sea Gate Land

The Receiver is contemplating the appropriate course

$90,000

to take for collection of this receivable.

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Page 5 of 5