United States of America v. CEI Community Ventures, LLC

Filing 2

CONSENT ORDER of Receivership, Injunctive Relief and Money Judgment. (jlm)

Case 2:17-cv-00349-JAW Document 12 Filed 09/14/17 Page lot 7 PagelD#:36

m THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE

UNITED STATES OF AMERICA,
Plaintiff,
Civil Action No.2:17-cv-00349-JAW

CEI COMMUNITY VENTURES FUND

LLC,
Defendant.

CONSENT ORDER OF RECEIVERSHIP,
INJUNCTIVE RELIEF AND MONEY JUDGMENT

IT IS HEREBY ORDERED,ADJUDGED AND DECREED:

1.

With the consent ofthe Parties pursuant to the provisions ofthe Parties'

Stipxalation effective March 31,2017 and the jurisdiction ofthis Court as reflected

therein, this Court hereby takes exclusive jurisdiction ofthe CEI Community Ventures
Fund, LLC ("CEI"), and all ofits assets and property, of whatever kind and wherever

located, and the U.S. Small Business Administration("SBA")is hereby appointed
Receiver("the Receiver") of CEI to serve without bond until further order ofthis Court.

The Receiver is appointed for the purpose of marshaling and liquidating all of CEI's
assets and satisfying the claims of creditors therefrom in the order of priority as
determined by this Court.

2.

The Receiver shall have all powers, authorities, rights and privileges

heretofore possessed by the managing member,officers, directors, managers and any
general and hmited partners of CEI xmder applicable state and federal law, by the Limited
Liability or Operating Agreement and other corporate governing documents ofsaid

limited liability company,in addition to all powers and authority ofa receiver at equity.

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and all powers and authority conferred upon a receiver by the provisions of Section 363
ofthe Small Business Investment Act and 28 U.S.C.§ 754. The managing member and
any trustees, directors, officers, managers, employees, investment advisors, accoimtants,

attorneys and other agents of CEI are hereby dismissed and the powers of any managing
members are hereby suspended. Such persons and entities shall have no authority with

respect to CEI's operations or assets, except to the extent as may hereafter be expressly
granted by the Receiver. The Receiver shall assume and control the operation of CEI and
shall pursue and preserve all ofits claims.

3.

The Receiver is entitled to take immediate possession of all assets, bank

accoimts or other financial accounts, books and records and all other documents or

instruments relating to CEI. The past and/or present managing member, officers,
directors, agents, managers, general and limited partners, trustees, attomeys, accountants,
and employees of CEI, as well as all those acting in their place, are hereby ordered and
directed to turn over to the Receiver forthwith all books, records, documents, accoimts

and all other instruments and papers of and relating to CEI and all of CEI's assets and all

other assets and property ofthe limited liability company, whether real or personal. The
managing member of CEI shall furnish a written statement within five(5)days after the
entry of this Order, listing the identity, location and estimated value of all assets of CEI, a

list of all employees(and job titles thereof), other persoimel, attomeys, accountants and

any other agents or contractors of CEI. Within thirty(30)days following the entry of this
Order, the managing member of CEI shall also furnish a written report describing all
assets. All persons and entities having control, custody or possession of any assets or
property of CEI are hereby directed to tum such assets and property over to the Receiver.

Case 2;17-cv-00349-JAW Document 12 Filed 09/14/17 Page 3 of 7 PagelD#:38

4.

The Receiver shall promptly give notice of its appointment to all known

managing members, officers, directors, agents, employees, shareholders, creditors,
debtors, managers, and any general and limited partners of CEI, as the Receiver deems
necessary or advisable to effectuate the operation ofthe receivership. All persons and

entities owing any obligation, debt or distribution to CEI shall, imtil fiirther ordered by
this Court, pay or otherwise fulfill all such obligations in accordance with the terms

thereofto the Receiver and its receipt for such payments shall have the same force and
effect as ifCEI had received such payments.
5.

The Receiver is hereby authorized to open such Receiver's accoxmts at

banking or other financial institutions and to extend credit on behalf of CEI,to utilize

SBA personnel, and to retain or employ such other persons as it may deem necessary to

effectuate the operation ofthe receivership including, but not limited to, attorneys,
accoimtants, consultants, advisors, brokers, and appraisers, and is fiirther authorized to

expend receivership funds to compensate such persons in such amounts and upon such
terms as the Receiver shall deem reasonable in light ofthe usual fees and billing practices
and procedures ofsuch persons. The Receiver is not required to obtain Court approval

prior to the disbursement ofreceivership funds for payments to persons retained or
employed by the Receiver or for expenses that the Receiver deems advantageous to the

orderly administration and operation ofthe receivership. In addition, the Receiver is
authorized to reimburse the SBA for travel expenses incurred by SBA persoimel in the
establishment and administration ofthe receivership. The Receiver may, without further

order ofthis Court, transfer, compromise, or otherwise dispose of any claim or asset,
other than real estate.

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6.

CEI's past and/or present managing member, officers, directors, agents,

attorneys, managers, shareholders, employees, accoxmtants, debtors, creditors, managers

and general and limited partners of CEI, and other appropriate persons or entities
(including without limitation, the defendant's portfolio ofsmall business concerns and

financial institutions doing business with defendant and/or defendant's portfolio of small
business concerns) shall answer imder oath to the Receiver all questions which the
Receiver may put to them and produce any documents as required by the Receiver
regarding the business ofsaid limited partnership, or any other matter relevant to the
operation or administration ofthe receivership or the collection offunds due to CEI. In

the event that the Receiver deems it necessary to require the appearance ofthe
aforementioned persons or entities, the Receiver shall make its discovery request(s)in
accordance with the Federal Rules of Civil Procedure.

7.

The parties or prospective parties to any and all civil legal proceedings

(excluding the instant proceeding), wherever located, including, but not limited to

arbitration proceedings, bankruptcy or foreclosure actions, default proceedings, or any
other proceedings involving(i) CEI,(ii) any assets ofCEI,(iii) the Receiver for CEI or(iv)
CEI's present or past officers, directors, managers, general partner, or managing member

(including any managers or members ofsuch general partner or managing member)to the
extent said civil legal proceedings involve any action taken by them while acting in their
official capacity with CEI,are enjoined firom taking any action, including discovery,
commencing or continuing any legal proceeding of any nature without further order ofthis
Court.

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8.

All civil legal proceedings wherever located,including arbitration

proceedings, foreclosure activities, bankruptcy actions, or default proceedings,but
excluding the instant proceeding, involving(i) CEI,(ii) any of assets ofCEI,(iii)the
Receiver for CEI or(iv) CEI's present or past officers, directors, managers, general partner
or managing members(including the managers or members ofsuch general partner or
managing member)to the extent said civil legal proceedings involve any action taken in
their official capacity for CEI are stayed in their entirety, and all Courts having any
jurisdiction thereof are enjoined fi-om taking or permitting any action in such proceedings
rmtil further Order ofthis Comt.

9.

Further, as to a cause of action or claim accrued or accruing in favor of

CEI against a third person or party, any applicable statute oflimitation is tolled to the
extent allowed by applicable law diuing the period in which this injxmction against
commencement of legal proceedings is in effect as to that cause of action or claim.
10.

CEI and its past and/or present managing member, directors, officers,

managers, general or limited partners, agents, employees and other persons or entities
acting in concert or participating therewith be, and they hereby are, enjoined fi-om either
directly or indirectly taking any actions or causing any such action to be taken which

would dissipate the assets and/or property of CEI to the detriment of CEI or ofthe
Receiver appointed in this cause, including but not limited to destruction ofcorporate
records, or which would violate the Small Business Investment Act of 1958, as amended,

15 U.S.C. § 661 et. sea., or the regulations promulgated dierexmder ("Regulations")in
Part 108 of Title 13 C.F.R.

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11.

The Receiver is authorized to borrow up to $1,000,000 from the SBA on

behalf of CEI and is authorized to cause CEI to issue Receiver's Certificates of

Indebtedness in the principal amoimts ofthe sruns borrowed, which certificates will bear

interest at or about 10 percent per anniun and will have a maturity date no later than 18
months after the date ofissue. Said Receiver's Certificates of Indebtedness shall have

priority over all other debts and obligations of CEI, excluding administrative expenses of
the Receivership, whether currently existing or hereinafter incurred, including without
limitation any claims of general or limited partners of CEI.
12.

This Court determines and adjudicates that SBA has made a sufficient

showing that CEI has violated the Act and the Regulations, as alleged in the Complaint
filed against CEI in the instant action, to obtain the relief so requested.
13.

That this Court enterjudgment in favor ofSBA and against CEI as

follows:

(1) in the principal amount of$7,754,771.67; and
(2) interest through September 7,2017,in the amoimt of$1,909,067.68; and
(3) interest through the date ofentry ofjudgment of$1,171.08 per day; and
(4) post-judgment interest pursuant to 28 U.S.C. § 1961; less
(5) any payments received on behalf of CEI Commimity Ventures Fund, LLC

SO ORDERED.

DATED this 14^ day.of September,2017.

/s/ John A. Woodcock. Jr.

John A. Woodcock, Jr.
UNITED STATES DISTRICT COURT JUDGE

Case 2:17-cv-00349-JAW Document 12 Filed 09/14/17 Page 7 of 7 PagelD#:42

SEEN,STIPULATED AND AGREED:

CEI Community Ventures Fund, LLC,tbrough its authorized representative
By;

/s/ Nathaniel Henshaw

Title: President,

CEI community Ventures, Inc., Managing Member and
General Partner of CEI Community Ventures Fimd, LLC
Date: August 17,2017

U.S. Small Business Administration

By:

/s/ Thomas G. Morris
Thomas G. Morris

Title: Director, Office of SBIC Liquidation