Securities and Exchange Commission v. Fujinaga et al

Filing 194

ORDER appointing Rob Evans & Associates LLC as equitable receiver. Signed by Judge James C. Mahan on 2/23/2015. (Copies have been distributed pursuant to the NEF - DKJ)

Case 2:13-cv-01658-JCM-CWH Document 181 Filed 12/10/14 Page 1 of 8

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
___________________________________________
:
SECURITIES AND EXCHANGE COMMISSION, :
:
Plaintiff, :
:
v.
:
:
EDWIN YOSHIHIRO FUJINAGA and
:
MRI INTERNATIONAL, INC.,
:
:
Defendants, :
:
and
:
:
CSA SERVICE CENTER, LLC,
:
THE FACTORING COMPANY,
:
JUNE FUJINAGA, and
:
THE YUNJU TRUST,
:
:
Relief Defendants. :
___________________________________________:

Case No.: 2:13-cv-1658-JCM-CWH

[PROPOSED] ORDER
APPOINTING AN
EQUITABLE RECEIVER

This cause comes before the Court on the motion of Plaintiff Securities and Exchange
Commission, pursuant to Rule 66 of the Federal Rules of Civil Procedure and Local Rules 66-1
through 66-10, for an order appointing an equitable receiver for certain commercial properties,
identified in Exhibit 1, which are owned or controlled by Defendants Edwin Fujinaga or MRI
International, Inc., or Relief Defendants CSA Service Center, LLC, or The Factoring Company
(collectively, “MRI International” or “Defendants”). 1 The Court has received, read and
considered the papers submitted by the parties on this motion, held the hearing required by Local
Rule 66-2 and, being fully advised in the premises,

1

Defendants have reviewed this proposed order and have no objection to the form of this
proposed order.

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THE COURT HEREBY ORDERS THAT:
1. A Receiver is appointed for the commercial properties and their rents and issues
(collectively, the “Properties”) described in Exhibit 1.
2. The Court hereby appoints Robb Evans &
____________________ to be the Receiver (the
Associates LLC
“Receiver”).
3. MRI International shall relinquish its occupancy rights with respect to the Properties
to the Receiver within seven calendar days of the date of this Order.
4. The Receiver is hereby authorized, empowered and directed to perform the following
duties and responsibilities, as reasonably appropriate and necessary to comply with and
effectuate the goals and purposes of the equitable receivership:
a. Take and retain immediate possession, custody and control of the Properties, all
personal property located in or at the Properties, and the books and records owned by, controlled
by or belonging to MRI International pertaining to the Properties.
b. Take and retain immediate and exclusive possession, custody and control from MRI
International of all keys, key cards, passwords, user names, and any other means of access to the
Properties and any locked or secure areas within the Properties including, but not limited to,
safes, secure computer or information systems, secure rooms and locked cabinets.
c. Take all steps the Receiver deems necessary to secure and protect the Properties
including, but not limited to, their personal property, premises, files and computer or information
systems.
d. Take all steps the Receiver deems necessary to maintain the confidentiality of
information contained in the Properties, and to dispose of such information in an appropriate
manner and in consultation with MRI International.

2

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e. May, in the Receiver’s discretion, pay all debts and remove all encumbrances as
necessary and reasonable to preserve the Properties against foreclosure and loss including, but
not limited to, all local, state and federal taxes, priority liens and property insurance. The
Receiver may pursue negotiated settlements of all such debts and encumbrances.
5. Insofar as there is a tenant occupying a portion of the property located at 150 East
Harmon Avenue, Las Vegas, Nevada, the Receiver shall take over the role of landlord, collect all
rents and issues paid by the tenant, and take over the occupancy of the property upon the
expiration or termination of the lease.
6. In accordance with Local Rule 66-7, and except as otherwise allowed by statute or
ordered by the Court, no party in interest, and no accountant, attorney, or representative of a
party in interest, shall be employed by the Receiver.
7. The Clerk of the Court shall issue a check in the full amount of the funds in the
Registry Account of the Court in this action. The check shall be payable to the Receiver, and the
check proceeds shall be used to pay the ongoing expenses of the Properties, such as insurance,
maintenance, property taxes, repairs, security and utilities. The Receiver shall file and serve a
quarterly report accounting for the use of the check proceeds received from the Registry Account
of the Court.
8. The Receiver shall deposit the check and check proceeds described in paragraph 7
above in a custodial account at a federally insured bank.
The check proceeds described in paragraph 7 above shall also be used to pay the
reasonable costs, expenses and fees of the Receiver incurred in connection with the performance
of its duties described herein. All requests for payment of costs, expenses and fees of the

3

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receiver shall be made by application to the Court, setting forth in reasonable detail the nature of
any such costs, expenses and fees.
9. The Receiver shall take all necessary steps to enable the check proceeds described in
paragraph 7 above to obtain and maintain the status of a taxable “Settlement Fund,” within the
meaning of Section 468B of the Internal Revenue Code and of the regulations, whether
proposed, temporary or final, or pronouncements thereunder, including the filing of the elections
and statements contemplated by those provisions. The Receiver shall be designated the
administrator of the Settlement Fund, pursuant to Treas. Reg. § 1.468B-2(k)(3)(i), and shall
satisfy the administrative requirements imposed by Treas. Reg. § 1.468B-2, including but not
limited to (a) obtaining a taxpayer identification number, (b) timely filing applicable federal,
state, and local tax returns and paying taxes reported thereon, and (c) satisfying any information,
reporting or withholding requirements imposed on distributions from the Settlement Fund. The
receiver shall cause the Settlement Fund to pay taxes in a manner consistent with treatment of the
Settlement Fund as a “Qualified Settlement Fund.” MRI International shall cooperate with the
Receiver in fulfilling the Settlement Fund’s obligations under Treas. Reg. § 1.468B-2.
10. The Receiver shall deposit the net proceeds of any lease effected pursuant to
paragraph 4 above into the custodial account described in paragraph 8 above. The net lease
proceeds shall be maintained in the custodial account until the Court enters an order of
distribution or other action to be taken.
11. Pursuant to Rule 65(a) of the Federal Rules of Civil Procedure, the Receiver shall not
be required to post a bond or other security.
12. The Receiver shall not be liable for any act or omission of the Receiver unless it shall
be proven that the Receiver acted, or omitted to act, in bad faith.

4

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13. MRI International shall indemnify, defend and hold harmless the Receiver and the
Receiver’s firm from and against all actions (pending or threatened and whether at law or equity
in any forum), liabilities and damages. This paragraph applies to costs, expenses and losses,
including but not limited to reasonable attorneys’ and other professional fees, arising from acts
or omissions of the Receiver and the Receiver’s firm under the terms of this Order.
14. The Receiver may be removed at any time by the Court and replaced with a
successor, sua sponte, upon request of the Commission, or otherwise. In the event that the
Receiver decides to resign, the Receiver shall first give written notice to the Commission’s
counsel of record and the Court of its intention, and the resignation shall not be effective until the
Court appoints a successor. The Receiver shall follow such instructions as the Court may
provide.
15. All persons who receive actual notice of this Order by personal service or otherwise
are enjoined from in any way disturbing the Properties and from filing or prosecuting any
judicial action or proceeding of any kind (e.g., administrative, civil or criminal), pertaining to the
Properties, and from appointing a receiver or administrator of the Properties, except on leave
having been granted by this Court. The Receiver shall not be required to respond to any
subpoena or other court process (for documents or testimony) relating to the Receiver’s duties,
except on order of this Court.
16. On the request of the Commission, the Receiver shall provide the Commission with
any documentation in the possession of the Receiver that the Commission deems necessary to
meet its reporting obligations, that is mandated by Congress or statute, or that is otherwise
necessary to further the Commission’s mission.

5

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17. In accordance with Local Rule 66-4, within sixty days of being appointed, the
Receiver shall file a verified report and account of the Receiver’s administration, which shall be
heard in a hearing before the Court upon fourteen days’ notice to all parties and known creditors
of MRI International. The report and account shall contain the following:
a. A summary of the operations of the Receiver.
b. An inventory of the Properties and the personal property located therein.
c. A schedule of all the Receiver’s receipts and disbursements.
d. A list of all known creditors who have claims on one or more of the Properties, with
their addresses and the amounts of their claims. This sub-paragraph does not apply to investors
who purchased certificates of investment from MRI International.
e. The Receiver’s recommendations for a continuation or discontinuation of the
receivership and the reasons for the recommendations.
In accordance with Local Rule 66-4 and this Court’s order dated December 2, 1014,
beginning after the hearing provided for in paragraph 17 above, the Receiver shall submit a
status report every 90 days for the purpose of apprising the Court of the Receiver’s activities.
18. The Receiver shall file and serve appraisals of the Properties within 120 days of
being appointed.
19. At the hearing provided for in paragraph 17 above, the Court shall approve or
disapprove the Receiver’s report and account, determine whether the receivership may continue,
and fix the time for further regular reports by the Receiver, if applicable.
20. In accordance with Local Rule 66-5, the Receiver shall give all interested parties and
creditors at least fourteen days’ notice of the time and place of hearings of:
a. All further reports of the Receiver.

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b. All petitions for approval of the payment of dividends to creditors.
c. All petitions for confirmation of sales of real or personal property.
d. All applications for fees of the Receiver.
e. Any application for the discharge of the Receiver.
f. All petitions for authority to sell property at private sale.
21. Subject to all rights and privileges available under the law, MRI International, and its
agents, directors, officers, servants, employees and attorneys-in-fact, and anyone affiliated with,
in control of, or under the control of, MRI International, shall:
a. Provide to the Receiver complete and unfettered access to all non-privileged books,
records and documents of MRI International pertaining to the Properties, wherever located, and
in whatever form or format they exist, including computerized and electronic records, contracts
and lease agreements. MRI International and Edwin Fujinaga shall cooperate fully with the
Receiver in this regard, and shall turn over or provide complete and unfettered access to such
non-privileged books, records and documents.
b. Provide to the Receiver complete, immediate and exclusive possession, custody and
control of all keys, key cards, passwords, user names, and any other means of access to the
Properties and any locked or secure areas within the Properties including, but not limited to,
safes, secure rooms, secure computer or information systems, and locked cabinets.
c. Provide to the Receiver immediately upon receipt all deliveries, email, facsimiles,
mail and any other correspondence of MRI International pertaining to the Properties.

7

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d. Take no action, directly or indirectly, to hinder, obstruct, delay or otherwise interfere
in any manner with the actions of the Receiver or any other person engaged or employed by the
Receiver to assist in carrying out the Receiver’s duties herein.
SO ORDERED.
Dated: Las Vegas, Nevada
February , 2014
December 23, 2015.

___________________________________
HON. CARL W. HOFFMAN JUDGE
UNITED STATES DISTRICT
UNITED STATES MAGISTRATE JUDGE

8

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Exhibit 1
Property List
No.

Address

Clark County
Parcel No.
163-28-301-001

Description

Reason/Concern

1

5330 South Durango
Drive, Las Vegas, Nevada
(MRI) and 5370 South
Durango Drive, Las
Vegas, Nevada (Claims
Servicing of America)

The West Half (W1/2) of
the Northwest Quarter
(NW1/4) of the Northwest
Quarter (NW1/4) of the
Southwest Quarter (SW1/4)
of Section 28, Township 21
South, Range 60 East,
M.D.M.
The West Half (W1/2) of
the Southwest Quarter
(SW1/4) of the Northwest
Quarter (NW1/4) of the
Southwest Quarter (SW1/4)
of Section 28, Township 21
South, Range 60 East,
M.D.B. & M.

Vandalism and
waste

2

5420 South Durango
Drive, Las Vegas, Nevada
(MRI Building No. 3)

163-28-301-007

3

2955 Coleman Street,
North Las Vegas, Nevada
(Med-Health Medical
Supplies)

139-17-610-006

See Exhibit A, Parcel 1

Vandalism and
waste

4

2865 Coleman Street,
North Las Vegas, Nevada
(Med-Health
Pharmaceutical Products)

139-17-610-007

See Exhibit A, Parcel 2

Vandalism and
waste

5

2875 Coleman Street,
North Las Vegas, Nevada
(Med-Health
Pharmaceutical Products)

139-17-610-008

See Exhibit A, Parcel 3

Vandalism and
waste

6

150 East Harmon Avenue,
Las Vegas, Nevada
(Harmon Medical Center)

162-21-202-004

That portion of the
Northwest Quarter
(NW1/4) of Section 21,
Township 21 South, Range
61 East, M.D.B.& M., more
particularly described as
follows: Lot One (1) of the
certain parcel map on file in
File 13, Page 40, in the
Office of the County
Recorder of Clark County,
Nevada

Vandalism and
waste; No viable
owner

Vandalism and
waste

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