Securities and Exchange Commission v. Nadel et al

Filing 697

Unopposed MOTION for attorney fees Receiver's Unopposed Tenth 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 Tenth Interim Report, #3 Exhibit 3-Scoop Receivership-Rep of Scoop Receivership, #4 Exhibit 4-Scoop Receivership-HFH v. B. Bishop, #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-Holland & Knight, #8 Exhibit 8-Categorization and Summary of WGK Costs, #9 Exhibit 9-Attorney Fee Schedule, #10 Exhibit 10-Scoop Legal Team-Scoop Capital, LLC Receivership, #11 Exhibit 11-Fowler White, #12 Exhibit 12-Scoop Legal Team-HFH v. B. Bishop, #13 Exhibit 13-Scoop Legal Team-Carolina Mtn Land Conservancy, #14 Exhibit 14-Scoop Legal Team-Recovery from Investors, #15 Exhibit 15-Johnson, Pope, #16 Exhibit 16-Scoop Legal Team-Recovery of Assets from N. and C. Moody, #17 Exhibit 17-Scoop Legal Team-Recovery of Commissions, #18 Exhibit 18-Scoop Legal Team-Holland & Knight, #19 Exhibit 19-PDR, #20 Exhibit 20-Riverside Financial Group, #21 Exhibit 21-E-Hounds, Inc., #22 Exhibit 22-RWJ Group, LLC, #23 Exhibit 23-Wheeler, Fairman & Kelley, #24 Exhibit 24-Leonard Starr, PC, #25 Exhibit 25-Proposed Order)(Morello, Gianluca)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.

Case No. 8:09-cv-87-T-26TBM

ARTHUR NADEL;
SCOOP CAPITAL, LLC;
SCOOP MANAGEMENT, INC.
Defendants,
SCOOP REAL ESTATE, L.P.;
VALHALLA INVESTMENT PARTNERS, L.P.;
VALHALLA MANAGEMENT, INC.;
VICTORY IRA FUND, LTD;
VICTORY FUND, LTD;
VIKING IRA FUND, LLC;
VIKING FUND, LLC; AND
VIKING MANAGEMENT, LLC
Relief Defendants.
____________________________________/
RECEIVER’S UNOPPOSED TENTH INTERIM MOTION FOR ORDER
AWARDING FEES, COSTS, AND REIMBURSEMENT OF COSTS
TO RECEIVER AND HIS PROFESSIONALS
Burton W. Wiand, as Receiver, by and through his undersigned counsel and pursuant
to Rule 66 of the Federal Rules of Civil Procedure and the Court’s Order Appointing
Receiver dated January 21, 2009 (the “Order Appointing Receiver”; Doc. 8), respectfully
moves this Court for the entry of an order awarding fees, costs, and reimbursement of costs
to the Receiver and his professionals. This motion covers all fees and costs incurred for the
four month period from May 1, 2011 through August 31, 2011.

The Standardized Fund

Accounting Report (“SFAR”) for this period is attached hereto as Exhibit 1.1 For the time
covered by this Motion, the Receiver and Wiand Guerra King P.L. (“WGK”) seek total fees
and costs of $628,455.63. During this same time, the Receiver collected $3,378,150.20 in
cash from settlements, gross business income, interest/dividend income, business asset
liquidation, and other miscellaneous income. From the inception of the Receivership through
August 31, 2011, the Receiver has collected $30,566,884.59 in cash from these same sources,
as well as securities and personal asset liquidation.
Since the appointment of the Receiver, he and those he has retained to assist him have
engaged in substantial and continuing efforts for the benefit of the Receivership. As of the
date of this Motion, among other things, the Receiver and his professionals have done the
following:


Pursued and continue 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 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;



Reached agreements to settle with 135 Profiteers for a total amount of
$19,523,449.53 as of November 30, 2011;



Engaged in intensive settlement negotiations with Goldman Sachs Execution &
Clearing, L.P. (“GSEC”), which recently culminated in a settlement between the
Receiver and GSEC. The settlement provides, among other things, that GSEC
will pay $9,850,000 to the Receiver and contemplates the entry of an order
barring any claims against GSEC;

1

The Securities and Exchange Commission (the “Commission”) provided the Receiver with
detailed Billing Instructions for Receivers in Civil Actions Commenced by the Commission
(the “Billing Instructions”). The SFAR is one of the requirements contained in the Billing
Instructions.

2



Sold or reached agreements in principle to sell Receivership assets that should
result in approximately $4,329,781.69 for the Receivership and the waiver or
resolution of more than $8 million in debt obligations of Receivership Entities; 



Filed the appropriate federal tax forms on behalf of Chris Moody, Neil Moody,
Marguerite Nadel, and Sharon Moody seeking refunds in the total amount of
approximately $3,737,243;



Successfully recovered the total amount of approximately $2,555,225 in federal
tax refunds issued for Peg and Art Nadel, Sharon Moody, and Chris Moody;  



Expanded the Receivership to include 11 additional business entities and one
trust;



Obtained possession of additional property in Georgia, North Carolina,
Mississippi, Ohio, Colorado, Tennessee, and Florida bringing the Receivership’s
current real and personal property holdings to more than 420 acres; two
office/retail buildings; six residential properties; 31 aircraft hangars; and other
miscellaneous items, including artwork and furniture;



Obtained control of (1) a $4 million interest in Quest Energy Management, (2)
more than 7.5 million shares of Bonds.com stock, and (3) various promissory
notes totaling more than $2.7 million;



Assisted the Commission with obtaining the entry of judgments enjoining Neil V.
Moody and Christopher D. Moody (at times collectively referred to as the
“Moodys”) from further violations of the anti-fraud provisions of the federal
securities laws and allowing the Commission to seek disgorgement and/or civil
penalties from the Moodys by motion to the Court;



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 and Chris Moody; 



Pursued his malpractice action against Holland & Knight, including successfully
overcoming motions to dismiss; the complaint seeks to recover as much as
possible of the approximately $168 million out-of-pocket losses suffered by
investors;

3



Instituted the claims process and published notice of the same by (1) direct mail
of more than 1250 packages to known investors and their attorneys, if any, and
other known potential creditors of the Receivership estate; (2) global publication
on one day in The Wall Street Journal and publication on one day in the SarasotaHerald Tribune on June 15, 2010; and (3) web access to all pertinent claims
process documents on the Receiver’s website, www.nadelreceivership.com;



Reviewed and analyzed more than 500 Proof of Claim Forms, identified
deficiencies in numerous Proof of Claim Forms and sent more than 130 letters to
claimants notifying them of deficiencies in their respective Proof of Claim Forms
and allowing them an opportunity to timely return an amended Proof of Claim
Form to preserve their claims;



Continued work on the claims process, including the preparation of the Receiver’s
Motion to (1) approve determination and priority of claims, (2) pool Receivership
assets and liabilities, (3) approve plan of distribution, and (4) establish objection
procedure which was filed on December 7, 2011 and includes the Receiver’s
recommended determination and priority of each of the 504 claims submitted; and



Continued to operate ongoing businesses, and where possible, enhance the value
of those businesses resulting in the generation of more than $3,949,854.26 in
gross business income since the appointment of the Receiver.  

Case Background and Status
As of the date of filing this Motion, the Court has appointed Burton W. Wiand as
Receiver over the following entities and trust:
a)

Defendants Scoop Capital, LLC; and Scoop Management, Inc.;

b)

Relief Defendants Scoop Real Estate, L.P.; Valhalla Investment Partners,
L.P.; Victory IRA Fund, Ltd.; Victory Fund, Ltd.; Viking IRA Fund, LLC;
and Viking Fund LLC; Valhalla Management, Inc.; and Viking Management,
LLC; and

c)

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.

4

(See Docs. 8, 17, 44, 68, 81, 153, 172, 454.) The foregoing entities and trust are collectively
referred to as the “Receivership Entities.”
On December 15, 2011, the Receiver filed the Tenth Interim Report (Doc. 685). This
Interim Report contains comprehensive and detailed information regarding the case
background and status; the recovery and disposition of assets; financial information on
Receivership Entities; the proposed course of action to be taken regarding assets in the
Receivership estate; and related litigation involving Receivership Entities. The Receiver
incorporates the Tenth Interim Report into this Motion for Fees and has attached a true and
correct copy of the Tenth Interim Report as Exhibit 2 for the Court’s convenience. This
Interim Report reports on all of the activity which resulted in the fees and costs sought in this
Motion. Throughout this Motion, the Tenth Interim Report will be referred to as “Interim
Report.”
Professional Services Rendered and Costs Incurred
Paragraph 4 of the Order Appointing Receiver authorizes the Receiver to
[a]ppoint one or more special agents, employ legal counsel,
actuaries, accountants, clerks, consultants and assistants as the
Receiver deems necessary and to fix and pay their reasonable
compensation and reasonable expenses, as well as all
reasonable expenses of taking possession of the assets and
business of the Defendants and Relief Defendants, and
exercising the power granted by this Order, subject to approval
by this Court at the time the Receiver accounts to the Court for
such expenditures and compensation.

5

Pursuant to this paragraph, the Receiver retained, among others,2 (1) PDR Certified Public
Accountants (“PDR”) to provide accounting services; (2) Riverside Financial Group
(“Riverside”) to provide financial analyses; (3) E-Hounds, Inc. (“E-Hounds”) to provide
computer forensic services; (4) Fowler White Boggs P.A. (“Fowler White”), and
subsequently WGK to provide legal services; and (5) RWJ Group, LLC (“RWJ”) to provide
asset management services (collectively, the “Professionals”).3
On May 13, 2009, the Receiver filed his First Interim Motion for Order Awarding
Fees, Costs, and Reimbursement of Costs to Receiver and His Professionals. (Doc. 129.)
The amounts requested therein were as follows:
Burton W. Wiand
Fowler White Boggs P.A.
PDR Certified Public Accountants
Riverside Financial Group
E-Hounds, Inc.

$59,080.00
$206,974.14
$44,794.00
$14,962.50
$10,453.12

The Court granted the First Interim Motion in full. (Doc. 130). No amounts remain unpaid.
On July 27, 2009, the Receiver filed his Second Interim Motion for Order Awarding
Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc. 164.)
The amounts requested therein were as follows:
2

The others retained in more limited capacities include: (1) Wheeler, Fairman & Kelley,
Certified Public Accountants (“Wheeler Fairman”) to provide forensic accounting services
in connection with the Receivership’s interest in Quest Energy Management Group, Inc.; (2)
Johnson, Pope, Bokor, Ruppel & Burns (“Johnson Pope”) to provide legal services in
connection with one action against a profiteer; and (3) Leonard Starr, P.C. (“Leonard
Starr”), a law firm located in Virginia, to assist with a bankruptcy matter in that state.

3

As noted in the Fourth Interim Report (Doc. 240 at n.2), the Receiver and certain of his
counsel of record in this case moved from Fowler White Boggs P.A. to Wiand Guerra King
P.L. The Receiver has continued to use some professionals at Fowler White Boggs where
such use is in the best interests of the Receivership.

6

Burton W. Wiand
Fowler White Boggs P.A.
PDR Certified Public Accountants
Riverside Financial Group
E-Hounds, Inc.

$59,143.00
$298,425.61
$60,558.71
$2,450.00
$8,781.25

The Court granted the Second Interim Motion in full. (Doc. 165.) No amounts remain
unpaid.
On September 21, 2009, the Receiver filed his Third Interim Motion for Order
Awarding Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc.
200.) The amounts requested therein were as follows:
Burton W. Wiand
Fowler White Boggs P.A.
PDR Certified Public Accountants
Riverside Financial Group
E-Hounds, Inc.

$38,360.00
$251,286.46
$48,238.61
$1,312.50
$2,975.00

The Court granted the Third Interim Motion in full. (Doc. 201.) No amounts remain unpaid.
On December 16, 2009, the Receiver filed his Fourth Interim Motion for Order
Awarding Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc.
259.) The amounts requested therein were as follows:
Burton W. Wiand
Fowler White Boggs P.A.
PDR Certified Public Accountants
Riverside Financial Group
E-Hounds, Inc.

$51,378.39
$204,708.77
$39,918.75
$4,371.20
$43.75

The Court granted the Fourth Interim Motion in full. (Doc. 266.) No amounts remain
unpaid.

7

On April 21, 2010, the Receiver filed his Fifth Interim Motion for Order Awarding
Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc. 392.)
The amounts requested therein were as follows:
Burton W. Wiand
Fowler White Boggs P.A.
Wiand Guerra King P.L.
Johnson Pope, Bokor Ruppel &
Burns, LLP
PDR Certified Public Accountants
Riverside Financial Group
E-Hounds, Inc.

$51,450.00
$289,244.41
$373,023.44
$1,670.20
$113,044.80
$3,113.75
$4,281.25

The Court granted the Fifth Interim Motion in full. (Doc. 395.) No amounts remain unpaid.
On October 7, 2010, the Receiver filed his Sixth Interim Motion for Order Awarding
Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc. 496.)
The amounts requested therein were as follows:
Burton W. Wiand
Wiand Guerra King P.L.
Fowler White Boggs P.A.
Johnson Pope, Bokor Ruppel &
Burns, LLP
PDR Certified Public Accountants
RWJ Group, LLC
Wheeler, Fairman & Kelley, CPA

$37,450.00
$345,503.61
$16,270.32
$3,612.96
$76,740.00
$11,064.23
$7,497.68

The Court granted the Sixth Interim Motion in full. (Doc. 497.) No amounts remain unpaid.
On December 15, 2010, the Receiver filed his Seventh Interim Motion for Order
Awarding Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc.
577.) The amounts requested therein were as follows:

Burton W. Wiand, Receiver
Fowler White Boggs P.A.
Wiand Guerra King P.L.

$27,090.00
$19,506.85
$446,083.43

8

RWJ Group, LLC
Johnson, Pope, Bokor, Ruppel &
Burns, LLP
PDR Certified Public Accountants
Riverside Financial Group
E-Hounds, Inc.

$17,207.93
$1,252.80
$104,677.40
$28,974.44
$3,221.25

The Court granted the Seventh Interim Motion in full. (Doc. 582.) No amounts remain
unpaid.
On June 30, 2011, the Receiver filed his Eighth Interim Motion for Order Awarding
Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc. 645.)
The amounts requested therein were as follows:
Burton W. Wiand, Receiver
Wiand Guerra King P.L.
PDR Certified Public Accountants
Fowler White Boggs P.A.
RWJ Group, LLC
Johnson, Pope, Bokor, Ruppel & Burns, LLP
Riverside Financial Group
E-Hounds, Inc.
Jones & Keller, P.C.
Jones, Blechman, Woltz & Kelly, P.C.
Stanifer & Stanifer
Husch Blackwell
Wheeler Fairman & Kelley
Suplee & Shea, P.A.

$63,175.00
$708,442.72
$117,746.12
$69,489.40
$28,783.05
$6,557.45
$14,700.00
$4,100.00
$2,088.00
$832.90
$200.00
$979.00
$3,450.00
$18,757.38

The Court granted the Eighth Interim Motion in full. (Doc. 646.) No amounts remain
unpaid.
On September 14, 2011, the Receiver filed his Ninth Interim Motion for Order
Awarding Fees, Costs, and Reimbursement of Costs to Receiver and his Professionals. (Doc.
652.) The amounts requested therein were as follows:

9

Burton W. Wiand, Receiver
Wiand Guerra King P.L.
PDR Certified Public Accountants
Fowler White Boggs P.A.
RWJ Group, LLC
Johnson, Pope, Bokor, Ruppel & Burns, LLP
E-Hounds, Inc.
Cheney Brock & Saudek, P.C.
Goosman Rose Colvard & Cramer, P.A.

$49,455.00
$697,336.18
$87,005.50
$7,204.05
$23,694.75
$9,738.09
$1,627.35
$905.00
$433.00

The Court granted the Ninth Interim Motion in full. (Doc. 657.) No amounts remain unpaid.
As described above and more fully in the Interim Report, the Professionals have
provided services and incurred expenses to investigate the affairs of the Receivership
Entities, preserve and sell Receivership assets, attempt to locate and recover additional
assets, and institute and pursue litigation. These services are for the benefit of aggrieved
investors, creditors, and other interested parties of the Receivership Entities.
I.

The Receiver.
The Receiver requests the Court award him fees for the professional services rendered

for the four months from May 1, 2011, through August 31, 2011, in the amount of
$24,045.00. The standard hourly rate which the Receiver charges clients is $450. However,
the Receiver agreed that for purposes of his appointment as the Receiver, his hourly rate
would be reduced to $350 per hour, representing a little more than a twenty-two percent
(22%) discount off the standard hourly rate which he charges clients in comparable matters.
This rate was set forth in the Commission’s Emergency Motion for Appointment of Receiver
and Memorandum of Law (Doc. 6), which the Court granted on January 21, 2009 (Doc. 8).
The Receiver commenced services immediately upon his appointment. The Receiver
has billed his time for these activities in accordance with the Billing Instructions. The Billing

10

Instructions request that this Motion contain a narrative of each “business enterprise or
litigation matter” for which outside professionals have been employed.

The Billing

Instructions identify each such business enterprise or litigation matter as a separate “project.”
Further, the Billing Instructions request that time billed for each project be allocated to one of
several Activity Categories.4
A.

The Receivership.

During the relevant period of this Receivership, the work of the Receiver and WGK
focused on investigating the fraud and related activities underlying this matter; locating and
taking control of Receivership assets; investigating, pursuing, and recovering additional
assets for the Receivership; selling or otherwise disposing of assets in a manner that is in the
best interests of the Receivership; and pursuing litigation to recover false profits and other
improper transfers. These activities of the Receiver are set forth in detail in the Interim
Report. (Ex. 2.) A copy of the statement summarizing the Receiver’s services rendered and

4

The Activity Categories set forth by the Commission in the Billing Instructions are as
follows: (1) Asset Analysis and Recovery, which is defined as identification and review of
potential assets including causes of action and non-litigation recoveries; (2) Asset
Disposition, which is defined as sales, leases, abandonment and related transaction work
(where extended series of sales or other disposition of assets is contemplated, the Billing
Instructions provide that a separate category should be established for each major
transaction); (3) Business Operations, which is defined as issues related to operation of an
ongoing business; (4) Case Administration, which is defined as coordination and compliance
activities, including preparation of reports to the court, investor inquiries, etc.; (5) Claims
Administration and Objections, which is defined as expenses in formulating, gaining
approval of and administering any claims procedure; and (6) Employee Benefits/Pensions,
which is defined as reviewing issues such as severance, retention, 401k coverage and
continuance of pension plan. The Billing Instructions provide that time spent preparing
motions for fees may not be charged to the Receivership Estate. In accordance with these
instructions, the Receiver created an additional Activity Category for work on fees motions
and has accounted for the time spent on such work but has not charged any amount for this
work.

11

costs incurred for the Receivership is attached hereto as Exhibit 3. The Receiver’s time and
fees for services rendered for each Activity Category for the four months from May 1, 2011,
through August 31, 2011, are as follows:
Receivership
Receiver’s Time and Fees for Services Rendered
Hours
Expended
19.30
14.30
0.50
3.80
0.30
38.20

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
Claims Administration
Case Administration
TOTAL
B.

Fee Amount
$6,755.00
$5,005.00
$175.00
$1,330.00
$70.00
$13,335.00

Discrete Litigation Matters and Projects.

In conjunction with the Receivership, the following six discrete litigation matters or
projects have been formally commenced by the Receiver.
1.

Home Front Homes Litigation.

This was a lawsuit against Brian C. Bishop, a former employee who also had an
ownership interest in Home Front Homes, LLC (“Home Front Homes”) an operating
business. (See also Ex. 2 § V.A.8.) Although the litigation settled, Mr. Bishop did not
comply with the terms of the settlement, and the Receiver had to initiate contempt
proceedings against him. (See also id.) This matter has since been resolved. (See id.) A
copy of the statement summarizing the services rendered and costs incurred by the Receiver
for the four months from May 1, 2011, through August 31, 2011, for this project is attached
hereto as Exhibit 4. The Receiver’s time and fees for services rendered for each Activity
Category are as follows:

12

Home Front Homes Litigation
Receiver’s Time and Fees for Services Rendered
Hours
Expended
0.90
0.90

Activity Category
Asset Disposition
TOTAL
2.

Fee Amount
$315.00
$315.00

Carolina Mountain Land Conservancy Easement.

This is a project involving the recovery of a conservancy easement that Laurel
Mountain Preserve, LLC, granted to the Carolina Mountain Land Conservancy. (See also
Ex. 2 § V.A.3.) The Receiver did not charge any fees or incur any costs for this matter for
the time covered by this Motion.
3.

Recovery of False Profits from Investors.

This is a project involving the Receiver’s efforts to recover profits from investors
whose purported accounts received monies in an amount that exceeded their investments.
(See also Ex. 2 § V.E.1.) 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
funds of new and existing investors. A copy of the statement summarizing the services
rendered and costs incurred by the Receiver for the four months from May 1, 2011, through
August 31, 2011, for this project is attached hereto as Exhibit 5. The Receiver’s time and
fees for services rendered for each Activity Category are as follows:
Recovery from Investors
Receiver’s Time and Fees for Services Rendered
Hours
Expended
22.80
22.80

Activity Category
Asset Analysis and Recovery
TOTAL

13

Fee Amount
$7,980.00
$7,980.00

4.

Recovery of Assets from the Moodys.

This is a project involving the Receiver’s efforts to recover money and assets from
the Moodys. (See also Ex. 2 §§ V.D and V.E.2.) A copy of the statement summarizing the
services rendered and costs incurred by the Receiver for the four months from May 1, 2011,
through August 31, 2011, for this project is attached hereto as Exhibit 6. The Receiver’s
time and fees for services rendered for each Activity Category are as follows:
Recovery from Chris and Neil Moody
Receiver’s Time and Fees for Services Rendered
Hours
Expended
1.40
0.50
1.90

Activity Category
Asset Analysis and Recovery
Asset Disposition
TOTAL
5.

Fee Amount
$490.00
$175.00
$665.00

Recovery from Recipients of Commissions and Other Transfers.

This is a project involving the Receiver’s efforts to recover commissions and/or other
transfers from individuals and/or entities who received commissions or other improper
transfers from the Receivership Entities. (See Ex. 2 § V.E.3.) The Receiver did not charge
any fees or incur any costs for this matter for the time covered by this Motion.
6.

Litigation Against Holland & Knight LLP.

This is a project involving the Receiver’s pursuit of malpractice and other claims by
the Hedge Funds against Holland & Knight seeking to recover as much as possible of the
approximately $168 million out-of-pocket losses suffered by investors. (See Ex. 2 § V.E.6.)
A copy of the statement summarizing the services rendered and costs incurred by the
Receiver for the four months from May 1, 2011, through August 31, 2011, for this project is

14

attached hereto as Exhibit 7. The Receiver’s time and fees for services rendered for each
Activity Category are as follows:
Litigation Against Holland & Knight
Receiver’s Time and Fees for Services Rendered
Hours
Expended
5.00
5.00

Activity Category
Asset Analysis and Recovery
TOTAL

II.

Fee Amount
$1,750.00
$1,750.00

Wiand Guerra King P.L.
The Receiver requests the Court award WGK fees for professional services rendered

and costs incurred for the four months from May 1, 2011, through August 31, 2011, in the
amounts of $579,435.15 and $24,975.48, respectively. A categorization and summary of all
costs for which WGK seeks reimbursement is attached hereto as Exhibit 8.
As an accommodation to the Receiver, WGK agreed to reduce the hourly rates of the
Receiver’s counsel in accordance with the discounted fee structure that was in place at
Fowler White as provided in the Fee Schedule attached hereto as Exhibit 9. WGK began
providing services on November 8, 2009. The activities of WGK for the time covered by this
Motion are set forth in the Interim Report. (See Ex. 2.) WGK has billed time for these
activities in accordance with the Billing Instructions.
A.

The Receivership.

As discussed above, during the relevant period of this Receivership, the work of the
Receiver and WGK focused on investigating the fraud and related activities underlying this
matter; locating and taking control of Receivership assets; investigating, pursuing, and
recovering additional assets for the Receivership; and pursuing litigation as detailed in the

15

Interim Report. (Ex. 2.) A copy of the statement summarizing the services rendered and
costs incurred by WGK for the foregoing for the four months from May 1, 2011, through
August 31, 2011, is attached hereto as Exhibit 10. WGK’s time and fees for services
rendered on this matter for each Activity Category are as follows:
Receivership
WGK’s Time and Fees for Services Rendered
Hours
Expended
Fee Amount
222.10 $49,806.00
55.90
$8,158.50
16.00
$2,240.00
48.90 $12,249.20
600.30 $134,940.10
943.20 $207,393.80

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
Case Administration
Claims Administration
TOTAL

As mentioned above, the Receiver has continued to utilize select Fowler White
attorneys to continue work on certain limited and discrete matters related to the Receivership
where such use is in the best interests of the Receivership. Fowler White started providing
services immediately upon the appointment of the Receiver. The activities of Fowler White
for the time covered by this Motion are set forth in the Interim Report. (See Ex. 2.) Fowler
White has billed time for these activities in accordance with the Billing Instructions. Fowler
White has continued to bill time in accordance with the discounted fee structure that was in
place while the Receiver was at Fowler White. (See Ex. 9.) The Receiver requests the Court
award Fowler White fees for professional services rendered and costs incurred for the four
months from May 1, 2011, through August 31, 2011, in the amounts of $5,050.35 and $0.15,
respectively. A copy of the statement summarizing Fowler White’s services rendered and
costs incurred from May 1, 2011 through August 31, 2011, is attached hereto as Exhibit 11.

16

Fowler White’s time and fees for services rendered on this matter for each Activity Category
are as follows:
Receivership
Fowler White’s Time and Fees for Services Rendered
Hours
Expended
Fee Amount
25.10
$4,856.85
0.60
$116.10
0.40
$77.40
26.10
$5,050.35

Activity Category
Asset Analysis and Recovery
Asset Disposition
Case Administration
TOTAL

B.

Discrete Litigation Matters and Projects.

WGK professionals also provided services in connection with the six litigation
matters and/or projects discussed above.
1.

Home Front Homes Litigation.

This was a lawsuit against Brian C. Bishop, a former employee who also had an
ownership interest in Home Front Homes, LLC (“Home Front Homes”) an operating
business. (See Ex. 2 § V.A.8.) Although the litigation settled, Mr. Bishop did not comply
with the terms of the settlement, and the Receiver had to initiate contempt proceedings
against him. (See id.) This matter has since been resolved. (See id.) A copy of the
statement summarizing WGK’s services rendered and costs incurred for the four months
from May 1, 2011, through August 31, 2011, for this project is attached hereto as Exhibit 12.
WGK’s time and fees for services rendered on this matter for each Activity Category are as
follows:

17

Home Front Homes Litigation
WGK’s Time and Fees for Services Rendered
Hours
Expended
Fee Amount
3.50
$560.00
0.60
$84.00
0.10
$14.00
4.20
$658.00

Activity Category
Asset Analysis and Recovery
Asset Disposition
Business Operations
TOTAL

2.

Carolina Mountain Land Conservancy.

This is a project involving the recovery of a conservancy easement that Laurel
Mountain Preserve, LLC, granted to the Carolina Mountain Land Conservancy. (See also
Ex. 2 § V.A.3.) A copy of the statement summarizing WGK’s services rendered and costs
incurred for the four months from May 1, 2011, through August 31, 2011, for this project is
attached hereto as Exhibit 13. WGK’s time and fees for services rendered on this matter for
each Activity Category are as follows:
Carolina Mountain Land Conservancy
WGK’s Time and Fees for Services Rendered
Hours
Expended
2.10
2.10

Activity Category
Asset Analysis and Recovery
TOTAL
3.

Fee Amount
$521.50
$521.50

Recovery of False Profits from Investors.

This is a project involving the Receiver’s efforts to recover profits from investors
whose purported accounts received monies in an amount that exceeded their investments.
(See also Ex. 2 § V.E.1.) 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
funds of new and existing investors. A copy of the statement summarizing WGK’s services

18

rendered and costs incurred for the four months from May 1, 2011, through August 31, 2011,
for this project is attached hereto as Exhibit 14. WGK’s time and fees for services rendered
on this matter for each Activity Category are as follows:
Recovery from Investors
WGK’s Time and Fees for Services Rendered
Hours
Expended
1,281.50
1,281.50

Activity Category
Asset Analysis and Recovery
TOTAL

Fee Amount
$333,373.45
$333,373.45

The Receiver also retained the services of Johnson Pope to institute and pursue one
action against a profiteer.

WGK was unable to bring this action because it had a

representation conflict with the defendant.

Johnson Pope began providing services on

January 18, 2010. The activities of Johnson Pope for the time covered by this Motion are set
forth in the Interim Report. (See Ex. 2.) Johnson Pope has billed time for these activities in
accordance with the Billing Instructions. The Receiver requests the Court award Johnson
Pope fees for professional services rendered and costs incurred for the four months from May
1, 2011 through August 31, 2011, in the amounts of $1,230.00 and $.80, respectively. A
copy of the statement summarizing Johnson Pope’s services rendered and costs incurred from
May 1, 2011 through August 31, 2011, for this project is attached hereto as Exhibit 15.
Johnson Pope’s time and fees for services rendered on this matter for each Activity Category
are as follows:

19

Recovery from Investors
Johnson Pope’s Time and Fees for Services Rendered
Hours
Expended
7.60
7.60

Activity Category
Asset Analysis and Recovery
TOTAL

4.

Fee Amount
$1,230.00
$1,230.00

Recovery of Assets from the Moodys.

This is a project involving the Receiver’s efforts to recover money and assets from
the Moodys. (See also Ex. 2 §§ V.D and V.E.2.) A copy of the statement summarizing
WGK’s services rendered and costs incurred for the four months from May 1, 2011 through
August 31, 2011, for this project is attached hereto as Exhibit 16. WGK’s time and fees for
services rendered on this matter for each Activity Category are as follows:
Recovery of Assets from Chris and Neil Moody
WGK’s Time and Fees for Services Rendered
Hours
Expended
64.80
64.80

Activity Category
Asset Analysis and Recovery
TOTAL
5.

Fee Amount
$15,388.70
$15,388.70

Recovery of Commissions and Other Transfers.

This is a project involving the Receiver’s efforts to recover commissions and/or other
transfers from individuals and/or entities who received commissions or other improper
transfers from the Receivership Entities. (See Ex. 2 § V.E.3.) A copy of the statement
summarizing WGK’s services rendered and costs incurred for the four months from May 1,
2011 through August 31, 2011, for this project is attached hereto as Exhibit 17. WGK’s
time and fees for services rendered on this matter for each Activity Category are as follows:

20

Recovery of Commissions and Other Transfers
WGK’s Time and Fees for Services Rendered
Hours
Expended
39.10
39.10

Activity Category
Asset Analysis and Recovery
TOTAL
6.

Fee Amount
$7,011.20
$7,011.20

Litigation Against Holland & Knight LLP.

This is a project involving the Receiver’s pursuit of malpractice and other claims by
the Hedge Funds against Holland & Knight seeking to recover as much as possible of the
approximately $168 million out-of-pocket losses suffered by investors. (See Ex. 2 § V.E.6.)
A copy of the statement summarizing WGK’s services rendered and costs incurred for the
four months from May 1, 2011 through August 31, 2011, for this project is attached hereto as
Exhibit 18. WGK’s time and fees for services rendered on this matter for each Activity
Category are as follows:
Litigation Against Holland & Knight
WGK’s Time and Fees for Services Rendered
Hours
Expended
93.40
93.40

Activity Category
Asset Analysis and Recovery
TOTAL
III.

Fee Amount
$15,088.50
$15,088.50

PDR Certified Public Accountants.
The Receiver requests the Court award PDR fees for professional services rendered

and costs incurred for the four months from May 1, 2011 through August 31, 2011 in the
amount of $57,007.50. PDR started providing services for the Receivership on January 22,
2009. PDR has billed time for these services in accordance with the Billing Instructions.
Because PDR’s work for the period covered by this motion could be allocated to specific

21

Receivership Entities and/or related entities, PDR has billed its time separately for each
entity and indicated the appropriate Activity Category for each time entry.5 Copies of the
statements summarizing the services rendered and costs incurred for the pertinent period are
attached as composite Exhibit 19. The total hours billed by each PDR professional and their
respective total amount of billing are set forth on composite Exhibit 19. PDR’s statements
also include a summary of the total time spent on each relevant Activity Category in
connection with each Receivership Entity (or “project” as identified in the Billing
Instructions).

For a discussion of entities delineated in the statements, please refer to

Sections III and V.A of the Interim Report.
IV.

Riverside Financial Group.
The Receiver requests the Court award Riverside fees for professional services

rendered for the four months from May 1, 2011 through August 31, 2011 in the amount of
$7,656.25. Riverside started providing services for the Receivership on January 27, 2009.

5

The Activity Categories that apply to PDR and Riverside as set forth in the Billing
Instructions for Financial Activities are as follows: (1) Accounting/Auditing, which is
defined as activities related to maintaining and auditing books of account, preparation of
financial statements and account analysis; (2) Business Analysis, which is defined as
preparation and review of company business plan; development and review of strategies;
preparation and review of cash flow forecasts and feasibility studies; (3) Corporate Finance,
which is defined as review financial aspects of potential mergers, acquisitions and disposition
of company or subsidiaries; (4) Data Analysis, which is defined as management information
systems review, installation and analysis, construction, maintenance and reporting of
significant case financial data, lease rejection, claims, etc.; (5) Status Reports, which is
defined as preparation and review of periodic reports as may be required by the Court;
(6) Litigation Consulting, which is defined as providing consulting and expert witness
services relating to forensic accounting, etc.; (7) Forensic Accounting, which is defined as
reconstructing books and records from past transactions and bringing accounting current,
tracing and sourcing assets; (8) Tax Issues, which is defined as analysis of tax issues and
preparation of state and federal tax returns; and (9) Valuation, which is defined as appraising
or reviewing appraisals of assets.

22

Riverside has billed time for these services in accordance with the Billing Instructions. The
activities of Riverside are described in the Interim Report. (See Ex. 2 § VII.) A copy of the
statement summarizing the services rendered, the hours billed, and the total amount of billing
by Riverside for the pertinent period is attached as Exhibit 20.
V.

E-Hounds, Inc.
The Receiver requests the Court award E-Hounds fees for professional services

rendered for the four months from May 1, 2011, through August 31, 2011, in the amount of
$612.50. E-Hounds started providing services for the Receivership on January 22, 2009.
The activities of E-Hounds for the time covered by this Motion are described in the Interim
Report. (See Ex. 2 § IV.A.) Copies of the statements summarizing the services rendered for
the pertinent period are attached as composite Exhibit 21.
VI.

The RWJ Group, LLC.
The Receiver requests the Court award RWJ fees for professional services rendered

and costs incurred for the four months from May 1, 2011 through August 31, 2011, in the
amount of $23,393.52. RWJ started providing services for the Receivership on February 1,
2010. The activities of RWJ are described in the Interim Report. (See Ex. 2 § VII.) Copies
of the statements summarizing the services rendered and costs incurred for the pertinent
period are attached as composite Exhibit 22.
VII.

Wheeler, Fairman & Kelley.
The Receiver requests the Court award Wheeler Fairman fees for professional

services rendered for the four months from May 1, 2011 through August 31, 2011, in the
amount of $225.00. Wheeler Fairman started providing services for the Receivership on

23

August 27, 2009. The activities of Wheeler Fairman are described in the Interim Report.
(See Ex. 2 §§ V.A.7 and VII.) A copy of the statement summarizing the services rendered
and costs incurred for the pertinent period is attached as Exhibit 23.
VIII. Miscellaneous Others.
To assist with a bankruptcy matter in Virginia, the Receiver determined that it would
be cost-effective and beneficial to retain the services of a local attorney. Accordingly, the
Receiver requests the Court award Leonard Starr, P.C. fees and costs for professional
services rendered and costs incurred for the four months from May 1, 2011 through August
31, 2011, in the amount of $10,000.00. Copies of the statements summarizing the services
rendered and costs incurred for the pertinent period are attached as composite Exhibit 24.
MEMORANDUM OF LAW
It is well settled that this Court has the power to appoint a receiver and to award the
receiver and those appointed by him fees and costs for their services. See, e.g., SEC v. Elliott,
953 F.2d 1560 (11th Cir. 1992) (receiver is entitled to compensation for faithful performance
of his duties); Donovan v. Robbins, 588 F. Supp. 1268, 1272 (N.D. Ill. 1984) (“[T]he
receiver diligently and successfully discharged the responsibilities placed upon him by the
Court and is entitled to reasonable compensation for his efforts.”); SEC v. Custable, No. 94C-3755, 1995 WL 117935 (N.D. Ill. Mar. 15, 1995) (receiver is entitled to fees where work
was of high quality and fees were reasonable); SEC v. Mobley, No. 00-CV-1316, 1317RCC,
2000 WL 1702024 (S.D.N.Y. Nov. 13, 2000) (court awarded reasonable fees for the receiver
and his professionals); see also (Doc. 8, Order Appointing Receiver, at p. 14).

The

determination of fees to be awarded is largely within the discretion of the trial court. See

24

Monaghan v. Hill, 140 F.2d 31, 34 (9th Cir. 1944). In determining reasonable compensation
for the services rendered by the Receiver and his Professionals, the Court should consider the
circumstances surrounding the receivership. See Elliot, 953 F.2d at 1577.
Here, because of the nature of this case, it was necessary for the Receiver to employ
attorneys and accountants experienced and familiar with financial frauds, federal
receiverships, securities laws, banking, finance, and trusts and estates. Further, in order to
perform the services required and achieve the results obtained to date, the skills and
experience of the Receiver and the Professionals in the areas of fraud, securities, computer
and accounting forensics, and financial transactions were indispensable.
As discussed above, the Receiver and WGK have discounted their normal and
customary rates as an accomodation to the Receivership and to conserve Receivership assets.
The rates charged by the attorneys and paralegals are at or below those charged by attorneys
and paralegals of comparable skill from other law firms in the Middle District of Florida.
This case has been time-intensive for the Receiver and his Professionals because of
the need to resolve many issues rapidly and efficiently. The attached Exhibits detail the time,
nature and extent of the professional services rendered by the Receiver and his Professionals
for the benefit of investors, creditors, and other interested parties. The Receiver anticipates
that additional funds will be obtained through the Receiver’s negotiations or litigation with
third parties.
Although the Commission investigated and filed the initial pleadings in this case, the
Receiver has assumed the primary responsibility for the investigation and forensic analysis of
the events leading to the commencement of the pending lawsuits, the efforts to locate and

25

gather investors’ money, the determination of investor and creditor claims and any ultimate
payment of these claims.

While the Receiver is sensitive to the need to conserve the

Receivership Entities’ assets, he feels that the fees and costs expended to date were
reasonable, necessary, and benefited the Receivership. Notably, the Commission has no
objection to the relief sought in this motion. Custable, 1995 WL 117935, *7 (“In securities
law receiverships, the position of the SEC in regard to the awarding of fees will be given
great weight.”).
CONCLUSION
Under the terms and conditions of the Order Appointing Receiver, the Receiver,
among other things, is authorized, empowered, and directed to engage professionals to assist
him in carrying out his duties and obligations. The Order further provides that he apply to
the Court for authority to pay himself and his Professionals for services rendered and costs
incurred. In exercising his duties, the Receiver has determined that the services rendered and
their attendant fees and costs were reasonable, necessary, advisable, and in the best interest
of the Receivership.
WHEREFORE, Burton W. Wiand, the Court-appointed Receiver, respectfully
requests that this Court award the following sums and direct that payment be made from the
Receivership assets:6
Burton W. Wiand, Receiver
Wiand Guerra King P.L.
PDR Certified Public Accountants
Fowler White Boggs P.A.
Riverside Financial Group
RWJ Group, LLC
6

A proposed order is attached as Exhibit 25.

26

$24,045.00
$604,410.63
$57,007.50
$5,050.50
$7,656.25
$23,393.52

Johnson, Pope, Bokor, Ruppel & Burns, LLP
E-Hounds, Inc.
Wheeler, Fairman & Kelley
Leonard Starr, P.C.

$1,230.80
$612.50
$225.00
$10,000.00

LOCAL RULE 3.01(g) CERTIFICATION OF COUNSEL
The undersigned counsel for the Receiver is authorized to represent to the Court that
the SEC has no objection to the Court’s granting this motion.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on December 28, 2011, I electronically filed the
foregoing with the Clerk of the Court by using the CM/ECF system.
I FURTHER CERTIFY that on December 28, 2011, I mailed the foregoing
document and 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
Butner, NC 27509
s/Gianluca Morello
Gianluca Morello, FBN 034997
Email: [e-mail]
WIAND GUERRA KING P.L.
3000 Bayport Drive
Suite 600
Tampa, FL 33607
Tel.: [phone]
Fax: [phone]
Attorney for the Receiver Burton W. Wiand

27

RECEIVER’S CERTIFICATION
The Receiver has reviewed this Tenth Interim Motion for Order Awarding Fees,
Costs, and Reimbursement of Costs to Receiver and His Professionals (the “Motion”).
To the best of the Receiver’s knowledge, information, and belief formed after
reasonable inquiry, the Motion and all fees and expenses herein are true and accurate and
comply with the Billing Instructions provided to the Receiver by the Securities and Exchange
Commission.
All fees contained in the Motion are based on the rates listed in the Fee Schedule,
attached as Exhibit 9. Such fees are reasonable, necessary, and commensurate with (if not
below the hourly rate that is commensurate with) the skill and experience required for the
activity performed.
The Receiver has not included in the amount for which reimbursement is sought the
amortization of the cost of any investment, equipment, or capital outlay (except to the extent
that any such amortization is included within the permitted allowable amounts set forth in the
Billing Instructions for photocopies and facsimile transmission).
To the extent the Receiver seeks reimbursement for any service which the Receiver
justifiably purchased or contracted for from a third party (such as copying, imaging, bulk
mail, messenger service, overnight courier, computerized research, or title and lien searches),
the Receiver has requested reimbursement only for the amount billed to the Receiver by the
third-party vendor and/or paid by the Receiver to such vendor. The Receiver is not making a
profit on such reimbursable service.
s/Burton W. Wiand
Burton W. Wiand, as Receiver