Securities and Exchange Commission v. Alleca et al

Filing 78

OPINION AND ORDER on the Receiver Robert D. Terry's 48 Motion for Compensation. The Receiver is authorized to pay the amount of $1,020.00 to the law firm of DowLohnes PLLC. IT IS HEREBY ORDERED that Receiver is required to file, on or before October 25, 2013 the information outlined on page 5 and 6 of the order. Signed by Judge William S. Duffey, Jr on 10/10/2013. (anc) Modified on 10/10/2013 in order to update docket text (anc).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.

1:12-cv-3261-WSD

ANGELO A. ALLECA, SUMMIT
WEALTH MANAGEMENT, INC.,
SUMMIT INVESTMENT FUND,
LP, ASSET DIVERSIFICATION
FUND, LP, and PRIVATE CREDIT
OPPORTUNITIES FUND, LLC,
Defendants.

OPINION AND ORDER
This matter is before the Court on Robert D. Terry, the Court-appointed
receiver, (“Receiver”)’s Motion for Compensation [48].
I.

BACKGROUND
This action involves alleged violations of securities laws by Defendants,

resulting in significant investment losses by numerous investors. On September
19, 2012, the Court entered a permanent injunction against Defendants enjoining
them from violating certain securities laws, freezing Defendants’ assets, and

requiring an accounting of assets. On September 21, 2012, the Court appointed
Robert D. Terry as Receiver for the estates of Defendants Summit Wealth
Management, Inc., Summit Investment Fund LP, Asset Class Diversification Fund,
LP, and Private Credit Opportunities Fund, LLC (the “Receivership Entities”). On
November 21, 2012, the Court entered an order authorizing the Receiver to recover
and secure the assets of the Receivership Entities.
The Receiver now moves to have the Court approve the Receiver’s
application for fees and expenses incurred only for the period of September 21,
2012, to December 31, 2012.
II.

DISCUSSION
The Receiver moves for approval of the Receiver’s own fees and expenses

that were incurred from September 21, 2012, when the Receiver was appointed,
through December 31, 2012. The Receiver seeks to be compensated for 874.05
hours of work, and requests an amount of $199,924.50. In addition, the Receiver
requests reimbursement for expenses totaling $8,908.94. Finally, the Receiver
requests approval to make a payment of $1,020.00 to the law firm of DowLohnes
PLLC for case-related expenses.1 Counsel for the Securities and Exchange
1

The Receiver also requests authorization to pay invoices submitted by the law
firm of Berger Harris. The Court has already addressed and approved that
payment in a separate Order.
2

Commission has not filed any response to the Receiver’s application for
compensation.
On March 29, 2013, The Meyers Group, Inc. (“TMG”), claiming to be the
Summit’s largest unsecured creditor, filed objections to the Receiver’s request for
compensation. TMG argues that the Receiver has demonstrated incompetence and
failed to properly discharge his duties. Among other objections, TMG contends
that the Receiver should not have assigned certain accounts to Bey-Douglas
Investments, LLC (“Bey-Douglas”) in exchange only for release of liability related
to a libel claim. The Receiver responds that he determined the assigned accounts
were not worth much to the estate, and that “it would have been extraordinarily
poor judgment to use the resources of the receivership to litigate over the retention
of a relatively small number of accounts that has no associated advisor and
therefore little, if any, sale value.” (Receiver’s Reply Br. at 11 – 10.) The
Receiver further explains that he learned that Martin Lysaght, a former Summit
financial advisor who had left to join Bey-Douglas, believed he had been libeled
by Summit representatives. The Receiver states that he properly exercised his
authority and, in his business judgment, determined that it was in Summit’s best
interest to obtain a release of liability in exchange for the assigned accounts.
The Court does not at this point express any opinion on the objection

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asserted by TMG. Independent of it and having carefully reviewed the Receiver’s
partial request for attorneys’ fees and expenses, the Courthas fundamental concerns
about the high number of hours incurred by a large number of lawyers who have
billed time to this matter over a period of only three months. The Court further is
concerned with the overall amount of the attorneys fees requested by the Receiver
for work over a period of only three months. The Court renews the concern it has
stated before, specifically, that the services performed by the Receiver and his
substantial staff working on this matter may not produce a recovery sufficient even
to cover the total fees and expenses for which the Receiver may seek
reimbursement in this matter.2 Under these circumstances, the Court is not
prepared to consider the Motion for Compensation without additional information.
Once the information detailed below is provided to the Court, it will determine any
additional steps necessary to consider the Receiver’s Motion for Compensation and
the schedule for such consideration.
III.

CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Receiver is required to file, on or before

2

The Receiver has not submitted a statement for, nor has he estimated, the services
performed and the expenses incurred by the Receiver for the nine month period
beginning on January 1, 2013.

4

October 25, 2013, the information described below:
1. An accounting, up to and including October 1, 2013, of the following:
a. The total amounts collected by the Receiver, showing the person or
entity from whom the amount was collected, whether the collection
was the result of a claim asserted or a lawsuit filed by the Receiver,
and the date of the collection;
b. Each disbursement made for expenses of any kind related to the
Receiver’s work in this matter;
2. A list of each person or entity against whom a claim was asserted, or a
lawsuit filed, the amount sought in each claim or lawsuit, and the
amount, if any, collected;
3. A list of each person or entity against whom a claim is anticipated to be
asserted, an estimate of the amount for which each claim will be asserted,
and the date by which each claim is expected to be asserted;
4. The Receiver’s statement of attorneys’ fees and expenses incurred from
January 1, 2013, to October 1, 2013, including:
a. The total amount of hours of service provided, broken down by the
lawyer and his billing rate, with a description of each service
performed by each lawyer;

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b. The total expenses incurred, describing each expense and its
amount; and,
5. The total additional recovery the Receiver expects to realize in this
matter.
IT IS FURTHER ORDERED that the Receiver is authorized to pay the
amount of $1,020.00 to the law firm of DowLohnes PLLC.

SO ORDERED this 10th day of October, 2013.

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