Securities and Exchange Commission v. Nadel et al
RESPONSE re 831 Objection Receivers Reply To Limited Objection Of Wells Fargo Bank, N.A. In Opposition To ReceiversUnopposed Motion To (1) Approve First Interim Distribution, (2) Establish Reserves, And (3)Approve Revisions To Certain Claims Determinations filed by Burton W. Wiand. (Cohen, Jonathan)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
SECURITIES AND EXCHANGE
SCOOP CAPITAL, LLC,
SCOOP MANAGEMENT, INC.,
CASE NO.: 8:09-cv-0087-T-26TBM
SCOOP REAL ESTATE, L.P.,
VALHALLA INVESTMENT PARTNERS, L.P.,
VALHALLA MANAGEMENT, INC.,
VICTORY FUND, LTD,
VIKING IRA FUND, LLC,
VIKING FUND, LLC, AND
VIKING MANAGEMENT, LLC.
RECEIVER’S REPLY TO LIMITED OBJECTION OF WELLS FARGO BANK, N.A. IN
OPPOSITION TO RECEIVER’S UNOPPOSED MOTION TO (1) APPROVE FIRST
INTERIM DISTRIBUTION, (2) ESTABLISH RESERVES, AND (3) APPROVE
REVISIONS TO CERTAIN CLAIMS DETERMINATIONS
Burton W. Wiand, as Receiver (the “Receiver”), by and through the undersigned counsel,
replies to the Limited Objection of Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”) in
Opposition to Receiver’s Unopposed Motion to (1) Approve First Interim Distribution, (2)
Establish Reserves, and (3) Approve Revisions to Certain Claims Determinations (“Limited
Objection”) (Doc. 831) as follows in further support of his Unopposed Motion.
On March 2, 2012, a hearing was held before this Court regarding several Receivership
matters, including, but not limited to, Wells Fargo’s objection to the Receiver’s Motion to (1)
Approve Determination and Priority of Claims, (2) Pool Receivership Assets and Liabilities, and
(3) Establish Objection Procedure (the “Motion”). (Docs. 675, 689, 774) As reflected in the
Court’s Order dated March 2, 2012, the Receiver and Wells Fargo left this hearing with the
understanding that the Court’s granting of the Motion would not affect any claims asserted by
the Bank against real property within the Receivership estate, and that such claims would be
considered and resolved by the Court at a later date. (Doc. 776) It was also made clear at the
March 2 hearing that any interest that Wells Fargo has as a secured creditor to the property
located at 841 South Main Street, Graham, North Carolina (the “Rite Aid Property”) would
simply transfer to the proceeds of the Court-approved sale of the Property and could not exceed
the value of such sale.1 As previously asserted by the Receiver, the Bank would not be able to
recover any deficiency from the Receivership estate. And any such deficiency claim would be a
Non-Investor Unsecured Claim and thus would receive lower priority than Class 1 Claims.
Despite the above-described understandings, Wells Fargo’s Limited Objection continues
the Bank’s pattern of attempting to put its own monetary interests before those of the hundreds of
defrauded investors scheduled to receive the first interim distribution for their Class 1 Allowed
Claims in the amount of $25,994,012.73.
Now, Wells Fargo contends that the reserve
established by the Receiver in the amount of $1,120,480.72 in connection with the Bank’s claim
The Receiver contends that the Bank has no valid claim against the Rite Aid Property or any other Receivership
asset as a direct result of the Bank’s role in enabling, facilitating and executing Nadel’s Ponzi scheme. As reflected
elsewhere in the record, the Receiver is currently litigating a separate action against the Bank for aiding and abetting
fraud, breach of fiduciary duty and conversion, and negligence, fraudulent transfer and unjust enrichment.
and asserted interests is not enough and should be increased. As a general creditor, the Bank is
demanding special treatment that far exceeds what other creditors are receiving. Specifically,
Wells Fargo argues that the established reserve should be increased to ensure 100% coverage of
the purported value of its claim, while all other claimants are receiving 20% of the value of their
Allowed Claims. The Bank provides no explanation or support for why it should be treated more
favorably than other creditors.
The status of the Receivership’s assets should moot any concern raised by the Bank.
Although the Receiver has denied Wells Fargo’s claim regarding the Rite Aid Property, should
this Court determine that the Receiver must satisfy the Bank’s claim, the Receiver has more than
adequate assets to satisfy the claim, as valued by Wells Fargo.2 The Receiver currently has an
asset balance of $35,128,556.76. Following the first interim distribution, the Receiver will have
a remaining balance of $9,134,544.03. In addition, the Receiver has receivables in the amount of
approximately $5,005,738.95 resulting from other Court-approved land sales and clawback
action settlements. Clearly, the Receiver has assets well in excess of the purported value of the
Bank’s claim against the Rite Aid Property. Accordingly, Wells Fargo has no valid basis for
objecting to the Motion or continuing its attempt to derail the first interim distribution.
WHEREFORE, the Receiver respectfully requests that the Court grant his Unopposed
Motion to (1) Approve First Interim Distribution, (2) Establish Reserves, and (3) Approve
Revisions to Certain Claims Determinations so that the Receiver may proceed with the
distribution of $25,994,012.73 to the innocent victims of Nadel’s Ponzi scheme without further
Notably, Wells Fargo has inflated the value of its security interest against the Rite Aid Property by $283,929.85 by
including unexplained legal fees from three separate law firms totaling $277,089.85 and a property appraisal fee in
the amount of $6,840.00.
/s/ Jonathan B. Cohen
Jonathan B. Cohen (FBN 0027620)
JAMES, HOYER, NEWCOMER
& SMILJANICH, P.A.
One Urban Centre, Suite 550
4830 West Kennedy Blvd.
Tampa, FL 33609
Telephone: (813) 397-2300
Facsimile: (813) 397-2310
Attorney for the Receiver, Burton W. Wiand
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on May 4, 2012, I electronically filed the foregoing with the
Clerk of the Court by using the CM/ECF system.
/s/ Jonathan B. Cohen
Attorney for the Receiver, Burton W. Wiand
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