United States of America v. Walnut Investment Partners

Filing 2

Copy of ORDER from USDC-Southern District of Ohio-Western Division, Case No. 1:14CV965, appointing United States Small Business Administration as receiver of Walnut Investment Partners, LP.(CS)

Case: .1:14-cy-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 1of11 PAGEID #: 9
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INTHE UNITED:-ST.ATES'-DISTRICTt~otJltT

FOR sotrrimRN i>tstmct· of' omo
ClNClNNATll>IVJSION

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·-on,'beha:lf of its ,agency, the United.
.Statfi Smilll. Bhsiness Adminbttation.

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~-$TAtEs. OF-~RICJ\,

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rWALNtJT INVESTMENT PARTNERS, L.P~

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CiV. Action No. 1: 14-cv-965

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Defendant:

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CONSENT ORDEB OF RECElVERSHIP·
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lT IS HERB8'1·0lIDERED~ ADJtJDGED AND DECREED:
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twsuant t~:nhe.-proV:isions of lS' US.C. §,687c, this Court takes exclusive

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JuriSdictio.n of Walnut Investrnent partners;. L.P. (i'WlP0 ) and-.atl ofits ass.ets and property, of
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whatever kind +nd wherever lo~ted, .a,Qd the United·States Small Business Administration
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(nSBA") is he~by app<iinted:Receiver ('1theJteeeivet'"). of'WIP to s~e. without bond until
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further order -otthis Coilrt. The Receiveds.appoili.ted.for.the purpose of-marsbaliing and

liquidating in

·4i orderly ~~~r all. o(WIP~s assets and satisfying the c~airns of c:redjto.rs
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thereoffu. the o~er-0f priority as-determined by this- Court.
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·t.he Recei.vct shall have all powers, authorities. rights and privileges

heretof~r.e pos~sed.hy the g~neral partner~ managers, officers, directors;

invesbnent

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advisors. and o~er a~ents ofWIP under applicable state and fedetal law., by.the Certificate of.
Limited- Partnetship and Agreement ofLimited. Partnership- of said limited partnership, m
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Case: 1:14-cV,-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 2 of 11 PAGEID #: 10
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addition to all Pi>wers Jmd· authoritr. ofa receiver at equity, and all powers and authority
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c~· upon the Receiver by tbe."prbv.isions.:of l:5

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u:S.C. § 687c and

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.iiru.s.c. ,§ 75~. The managers, officers, direetot'S, investmentadv~ot$,andagettts·ofWll>
are be• d*se(fand·tlre powers Qftbe·general p~~ are· hereby ~spended~.with the
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exception that(~) James M~ Gould shall continue to .represent WIP on the Board .of Directors
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of ~e followin."WIP p0rtfolio concerns~ (i) The O'Gar~ Oroup. I'nc.; (U) Marian Heath
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O~ting:CardsJ. LLC; and (iii)"Seed Media Oroup, LLC on .the terms·~et by, and. at the sole.

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di$.ete.tion·of;·~ Receiver and (b)·that,.'Ftederic H. Mayersort.-ShaU co~tinue tq ~resentWiP
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on·:the Boai:d·o~Directors·of.the. foU.owing·wip portfolio concerns: (i} :PECOJ..ogistics~'LLC;
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and (ii) Marian jHeath Greeting Canw; LLC ·on'fhe: terms set by. and at the sole discretion -0t
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the Receiver. l:fnless·-0therwise·set forth herein,~ managers, office~ directors, investment
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advisors and ~ts ofWIP shall have no authority with respect to WIP's operations or
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assets.. except t~ the extent as may ·h~after be expressly granted by 1h~ Receiver. ne
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~eivet shall ~smne and

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conU'Ol the operation of WIP and shall pursue and preserve fill ·.of

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its claims.

lne past .and/or present generaJ partners. managers•. o.fffoets~ directors,.

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.mvestine.nt adv.fsors~ ageil~,' ltlistees.. attorneys,. accountants, and employees of W1P, as well
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as .all those ·ac~g in their place, lµ'e hereby ordered and directed to UU'tl·PVet to the Receiver
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fptthwith a11 t,~k$, tecord$;.d0cuments'; accounts and all other. instruments and· papers of and.
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relitmg ~o WIP!and its assets and all other ~_sets ·ana· property .ofthe corporation, ·whether
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real or person.ail The General Partner and/or other agent of WIP, shall fumiSh ·a .wP,tten
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statement withip ten (IO) days after the entry Qf tbis:Qtder, listing the id.entity, location and
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·estimated valud-of'all assets ofWIP as well as the ruunes. ad4resses and amounts of claims of
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Case: 1:14-cy-00965-SJD Doc_#: 3 Filed: 12/23/14 Page: 3 of 11 PAGEID #: 11

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all kt)own credilors ofW.IP. Within thirty (30) days.following: the: entry ofthis Order; sueh

pemoil shall als+ furnish a-written report describing all assets. All-persons haVing contr.ol,
custody·.or poss~iOn of.any assets or property of WJP are h~reby dire.ct«! to tum such assets
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-and property ov~r to,the Receiver.
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ine Receiver $ball.promptly giye :notice o'tit$. appointment to all known
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padne~, ofticetf• directors~.agents, employees, shateholders1 creditors.and debtors ofWIP,

as the Receiver

reems ·necessary or·advisable to effectuate the Operation of the .receivership.

.Altpe.mons·and~titities owing any· obligation or debt to WIP, ·until further ordered by. this
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CQurt, pay~ mkh: obll~tiQn~ . in accordance· with the terms thereof to. tbe.:Receiver- anf!l its
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receipt for such raymeiltS shall have the same force and effect as 'ifWlP hacheC,eived such
~)'Diellts.

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'lthe Receiver is hereby authQri~d to open:sµch.Rece.ivet's accounts at.
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banJci.ilg·-Ot c;>t,he~ financialinstitutions to·ex.tend·credit·on behalfo-fWIP.. to utilize.SBA
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~onnei, and t4>· employ such other·personnel as 'it mJ!,Y- d¢~m ·neeessary to effectiliite lhe
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Q~on oft.be ~~eivership :includ~. but nofllinited 'to, attorneys, a.ccounUm-ts, .and
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appraisers, and i~ further authorized to expend r~eiversbip funds to c.omPen.se.te such
personnel 'in.sue~ amQunt$·an~,upqn such.terms.&$ the Receiver Shall deem r~onable i~
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light of the

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u:suaJ fees and billing practices and·prooedures Qfsuch personilel.

The Receiver

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is not required t~' obtain Court approval priQrto thl:Hlisbtirsement of reeeivership.funds for
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payments·to pe~nnel employed by the Reeeiv~ pr for expe,nses Umtthe Receiver.deems
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ac:lv-.tageoqs tQ !fhe .orderly admirtiStratiort and operation oC-the receivership. In addition~ the
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,Receiver is .4uth.rized to reimburse the SBA for travel expenses incurred by SBA personnel

in the establishntep.t and adorin,istration ofthe receivershjp. The R~eiver·may, witbou,t
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Case: 1:14-cV,-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 4 of 11 PAGEID #: 12

further-order or'this Co~ transfer, tomproliUse, or otherwise· dispose of any asset (incl~ing;
without limitati~l;l any claim); other than real estate.
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W:lrs past ~d/or·pn=sent partners~- officers,·diteetors,_ .~gents; accountants,
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.managers, .sbar+old.ers, employees, debtors and ·creditors of Wii> and other appropriate
persons (includi~g witbo'!lt limitaition. the defendant's _portfol_io· of.small .business. con-cems
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-and-.financial i114titutions doing_ ·business. wjih defendant andhtt defendant's portfolio Qf small
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busiile$S concetjm) s~l,

upon ~ble notice, answer. unc:Jer oath to the 'Reeeiyer all

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quastioris:.Whi~.The Receiver may _put to.them in compliance with tlie Federal Rule's: ofCivil

Procecture,.-and ~utsuant t®~to-sball produce any documents as.-.,equired by the- E,9ceiver.
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regarding-the b'fsiness of.said .corporation, .or any other matter ieleY.ant- to the epemtioh or

®mi'sµstrafien qfthe teceivet:sbip or the collect.ion of funds.due·:to

ww.. .ln the-eve~l1hat me-

Receiver deem~:it necessary to require the appearance·ef the aforementioned persons, the
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production of d~umenlS.-infonnation, or any other diseovety-.conterning the $Sets, properfy
or buSinesS ope~tions of WIP, or any:.othcr matter relevant to the, operation or administration

·of.the Receiv~p or·the- collection:offOndS du.e to WIP, the Recetver shall make its
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discovery requt$t(s) in compliance with the .notiee1 -subpoena and other- Federitl Rtiles of
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Civil -Proced~

'fhe parties or prospective parties to any and alt civil legal ·proceedings
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wherever· locate-, including, ·but ·'10t limited to ·aroi~on.p.1'9ceedings, bankruptcy· er

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:fureclosute a.cti~D.$,. default proceedings, or any other proceeding~ involving (i) WJP, .(ii) ~Y.
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assets of WW.,.

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4ii) the ·Receiver for. WW or (iv) WlP's present or·past officer~, directors,

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lllib,agers, -or ge~eral partner8 (including the 1.11~~ or me1.11bers: of:such general partner) to
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the extent W.d~~ le~ proe~~Jnvolve,:any-action t$kenby tbeinwhile aetlngintheir
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o.fficial capaeit)'jwlth. WIP, ate·enjomed :fr.~m lakin1r~raction, :including discovery;o
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-0ommencing or.~ntinuing any-lepl proc:;eed..U;ig of..1!1ly·_n.ature. without further order· ofthis

Court;. Except

ttJtt PECO LOgistics, LLC; v. Wiln1,1Unve.stment Partners, L.-P.,-WalnutPrivate
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·&J_w'"t{FUil.d, L.~., MK Capital SBIC, LP-.t·MK.Capitai; LP•; The.ProductivitY Fund TY, L.P.;
Tbe;P~tiyitj Funci lV Advtsors·Fun(t, L;tt.;~ange.P.a,$ers

12. LLC, ~ge

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Partners, LLC, 1*id James 07.8lllle, Case.No. 9978-CVP cunently pending in the Court of
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c~~·Qf tb~-~ of Delaware~ ~all® ·e~cluded:from·.such inj\Jnction and. the.action shall
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~11.-civff legal proceedfu~s wherever"lacated, including arbitration proeeedings~

fotoclosure .acti~ties, bankruptcy actions, or default proceedings, but excludi:ng·fhe instant

p~eeding, inv~g (l) \Vil', ·(ii) an;. ofas9$$ of WIP? ~iii) the Receiver for WJP or(iv)
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WIP's present o~past officers, directors, ·-~gers, or general partners (inciuding ~e managers
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or members of~ ge®ral.pa,rtne.r.) .to.,the.·~xtent said civil legal proceedings involve any
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·action taken in ~eir official capacity fur WIP. are- ~yed ·in their entirety~ and·all .tourts having
any:juri.sdictj.on (hereof ate enjoined ftotil. taking:or·pemiittiitg:any-action in such proceedings
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until- further Orobr of th1s·.Court•. Except <that'P.ECO Logistics,, I.LC, v. Walnuflnvestmen~.
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"fainut J>ri:vale. Equ)ty fund,. tip., MK Capital SBI~ L.P~. MK Capital~.L~P;,
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Partners, L.,P .,

The Productivi~ Ftmd IV, L.P.,.The Productivity Fund N Advisors Fund, L.P., Greenrange
Partners 12, LL¢, Greenrange Par:tners:. LLC, ·an4 Jam~-Omnne.,. Case No. 99.78~CVP

curtently.pendin~ in the CourtofChati:cery-oftheState ofDel;.tware, sh~ b~excludedftom
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sud:r:$.ta.y and th~ aotipn shall be· alfowed.:ta ptoeeed.:m.·the CoUrt of ~eery. ofthe State of
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Delaware.

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Case:

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Doc#: 3 Filed: 12/23/14 Page: 6 of 11 PAGEID #: 14

.irUrthet, as to .a .cause of a.ctiun accrued or accruing in.favor,of WIP-against a
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tbinl :person or·~, any a.pp~able statute oflimitation is tolled· to the-extent ·anowed by
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applicable law 4ut1ng-the-period in which this iiljurtction ~airist COilllllencement of legal

pt()Ceedings. is
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in effect as to-that~~ -of action.
WIP and its past and/or present managers, general partner or: limited partners.

oftiee~ direc*, ~gen.ts, investtnent-advisors. employee$ and other ~sons acting .in

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conceit or parti~ipating·:tberewith -be,.·and they-hereby are, ell}oined ftom either _directly or
indirectly takin$ any actions or causing any such action to be·tak~n which w.ould dissipate
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the assets and/~ pro~ey ofWIP t9 the.detriment of the Receiver appointe<J in this cause,

inctuding ·but n+Uimited to:destruction of..e.orp,ohtte recor~ or whlch would violate·-tJ'ie
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Srnatl Business!lnvesbnent A~tof1958, as.ame~d~, 1.5 U.S.C, .661

m:. ~or the

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regt.ilations pro'1ulgated· thereundet'("Regulatiolis.11 ~; 13-C.RR. Pan 107.
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The· Receiver is ~uthprizecr to bQ~w on belµij.f ofWIP; from the ·sB~ up to
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*2;000,000_, an4:is authorized·to-cause WIPto issue Receiver's Certificates of Indebtedness. in
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the prlneipal anicmnts of the sums bottowed, which certificates will :bear-interest at or about i-0"
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_percent per ann~ and. will have ·a maturity date no later'than 18 ·months after the date of issue.

S•4 .R~iver's !ce~•es of ln4ebtedne$$ $.all have priotity·over ~l other debts and
·oblig,Uioris· of WlP, exclud!Qg.adniinistrative.e~nses. of the· Receivership, whether presently
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eld$ting orh~efhaftet incutred, including. withoµt litnitation any·c::laims of pa.J:tners ofWIP.
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'PUs Court determines and adjudicates that WIP has violated the :small Business

Investment Actj ts·u.s.c..66i et.. seq, and the RegulatioJts promulgated thereunder at 13
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C.F.R. §107.t ¥seq, as alleged in.the Complaint-filed in thiirmatter,

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Case: 1:14-c~-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 7 of 11 PAGEID #: 15

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Mei: completing its activities in· ac.cordance with ibis Order, tb.e·.Receiver mtly

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recmmnend·tbat·Wn>. s license. as.an SBIO be· revoked and.that control ofthe Jbrµted
partnership be·returned to WIP's genenµ partner andlor.lts·designee·ot successor in interest.

SQ ORllERED ltms
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\ .,J:... day of "\s~E:.A. ' 20_!1.
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Ta~· HONORAilLE

UNJ.TBD STATES DISTRICT COURT .ttJDGE
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-SEEN AND A$£ED BY WALNUT lNVESTMENT"PARTNERS LP. AND THE U.S.
SMALL BusINP:!ss ADMINISTRATION, THROUGH THEIR DuLy AUTHORIZED
REPRESENTAtlVES:
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WALNUT INV*STMENT PARTNERS, L.P.
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By:c W$lnut.Invcistment.Hol~s co, LLC
It$ Oeneraj Parm,Fr
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By:

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F~eric H.thltlyers~.a .tvl~aging M~be

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By:: Dani~l Siat1>~ a M1lllaging· Member
By: Joseph

oaif ~·~ memb~r
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U.S. SMALL B~SINESS ADMINISTRATION

B.y:'-------+.---.,..,.--Thomas O .. t+forrls, Difector
Office .of SJ¥C·Liquidanon

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Case: 1:14-cv-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 8 of 11 PAGEID #: 16

Mter comple~g.its. ~vities·in ~~.wi~ this Or4er, the Receiver.may

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recommend that l\vn> ·s licen8e as an smc·be. revoked and 1hat control of the limited
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partneiship be ~ .to ·ww.2s general partner .and/or it$·4esignee or W,CeeSSor in ln•re.st
SQ ORDERED~(hl~: l :~..f

day-of ~~\)~ct. ;

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·nd:aoNoRAbiE

UNITED STA.Tj?S·DISTRICT COURT JUDGE
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SEEN AND AGlmED BY WALNUT lNVBSTMENT'PARTNERs~·L.P. AND'TI:IBU.S.
.SMALLBUSINB$s· ADMINISTRATION, THROUOlI TlmIRDULY AUTHORIZEO
.RBPR.EsENTAtIVES:

·WALNUT nw.kSTMENT PARTNERS~.l..P.
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By; Walnutlil~ ffoldinp CO., LLC

lts Genen.al~~r
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BY!.' ·Frederic H ~yerson, a Managing.Member

By! Daniel. Stat~~ aMana~g Member

u~s. SMALL e~snmss A.P~JNISTRATION
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By:'
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Thomu o~ Morris, Director
omee tir S1$c Llqmdation

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Case: 1:14-c~-00965-SJD Doc#: 3 Filed: 12/23/14 Page: 9of11 -PAGEID #: 17

~ ~letlng!ts actiVi~ µi acmrdance·with·this·~>· the·R~ermay

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reeonmieml~ WIP·s·lieettBe--as· an SBIC-be .-evobfJ.-and tlutt control of tbe;.liinited
partnetsbip be·rkurne~t:tQ· Wll>'s general partnerandi.or.ita d~ignee or ~ssodn interest.
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SOOIW~~ this _

day or ------· 2Q_~
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UNn:EP ,$T.t\'fBS DI$TRICT COURJ rubGB .

SIEN ANO AtmBED BY WALNUT ffiVBBTMENT PAR!NERS, t.P. ANO: nm·u.s.
Sl\fAU., BUS$asS ADMINISTRAt!ON> Ta.ROUGH TaBIR DULY AUTHORIZED

RBPRBSBNtA.TIVB.S:

WALNUT
By~·

oofBSTMENt P.Alt.TNBR&, L.P~
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WalnµUnt,estm:entHQldings CO, ·LLC

Its Genenl Patjner

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James.M.1Gould.. a Managing Member
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L hUSINBSS ADMiNISTRATION

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By:

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Tho~

:MOlTiS, DireCtor

Offiot ()f . IC Liqw~tion

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fJlet completing·"its·actiflties iil.accotdance·With this Order, the Receiver may
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recommend

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that! WlP s license 'as ~ SBIC"'bl?~~Qkeµ and that· control- ofihe1imited

·partnei'Shi'.p be r~tutned ·ro WIP"s .general partner..and/or itS, design~ ()t -successor jJl. mterest
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SO ORD~tbis _ _ day of ......_...__. . . . . . . . _, 20_.
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1JIE HONO · E.pNfroD. STAit.Es DISTRICT COURT WOGE
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:SEEN AND Aq~ED BY WALNUT iNVESTMENTPARTNERS, L.P. ~THE U.S.
SMALL_ BUSilffl.SS, :ADMINISTRATION, THROUGH THEIR DULY AUTHOruzED
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RP.PRESENTAiTlVES:

WALNUT ~STMENT PARTNERS, LP.

Sy~ W.alntJt'.Uivbtment Hot~ CO, LLC
Its"Genera.l Partfr
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By: James Go1d. a Managing Member

·ay;..Frederic· Mt1erson, :a MEµt8JPng. Member
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By: .:Omnel Stmf.ton, a Managing.Member .
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"By:·

Josei)h"4antz. a.managingmember

~u:s·, SMALL Bl.JSINESS ADMJNJS!RAtlbN
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.Alfter compl~ting its activities in accordance wi~ tbis Order~ the Reeeiver may
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teeo~nd that "tVn> ·S license as an SBIC. be revoked.and that control ofthe1imit&l
p~ei;Ship. be·re#Jmed to WIP's.general partner.and/or its.designee :or success.or in lnte,rest.
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so.:o.RDERED·thls ~ d~yof 4-/UJe._
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· HONO
LE
UNITED STAT.$ D:IS

.,.:201!/

' CT COURT JODG:E

AND

.SEaNANDAGtmED BY WALNUT INvESTMENTPARTNERS, LP.
THE U.S.
£MA.LL BU~Jt¢~s A?MXNISTAA'tlON, nm.ouGH THEIR.DULY AU'.THOR1ZED·
REPRESENTAiiVES.

W~NOT INVJ$sTMENT PARTNERS, L.P.
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By: Jamei.Goulkl. a Managing Member
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Byf .Joseph. Ga$; . a M&naging Member
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1].S:. SMALL BbSINESS ADMINISTRATION

llJ;·.__..__...,..._._ _ _ _____

Thomas. G. ?tlorris, Director
bftic_e, of SB!IC Liq'1i_datio~

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