Federal Trade Commission v. Federal Check Processing, Inc. et al

Filing 202

DECISION AND ORDER -- The Receiver's 196 and 199 Motions are GRANTED. Signed by William M. Skretny, United States District Judge on 4/17/2020. (JCM)

Case 1:14-cv-00122-WMS-MJR Document 202 Filed 04/17/20 Page 1 of 4

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
FEDERAL TRADE COMMISSION,
Plaintiff,
v.

DECISION AND ORDER
14-CV-122S

FEDERAL CHECK PROCESSING, INC., et al.
Defendants, and
EMPOWERED RACING LLC,
Relief Defendant.

1.

Presently before this Court is the Receiver’s Final Report (Docket No. 197),

the Receiver’s Omnibus Motion for approval of a claims bar date and distribution to
creditors, destruction of files and other wind-up activities, continuation of receivership to
accomplish the foregoing, and termination of receivership and discharge of the receiver
(Docket No. 196), and the Second Interim Motion by counsel for the Receiver and the
Receiver for compensation and reimbursement of expenses. (Docket No. 199.) Plaintiff,
the Federal Trade Commission (“FTC”), has submitted a response expressing its nonopposition to the Second Motion for Attorneys’ Fees. (Docket No. 201).
2.

The Receiver presently holds in the account the total sum of Two Hundred

Fifty-One Thousand, Seven Hundred and Fifty-Eight and 54/100 Dollars ($251,758.54).
(Docket No. 196-2). The Receiver asks that this Court approve a claims bar date and the
distribution to creditors with allowed claims. The Receiver further requests the Court’s
approval of destruction of files, and other wind up activities; continuation of the
receivership to accomplish the foregoing, and termination of the receivership and
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discharge of the Receiver. The Receiver and counsel for the Receiver, Phillips Lytle LLP,
request in a separate motion Forty-Seven Thousand and ninety-four and 01/100 dollars
($47,094.01) in compensation. (Docket No. 199.) This Court addresses each request in
turn.
3.

First, the Receiver requests that this Court approve a claims bar date and

allow it to make distribution to creditors with allowed claims in order of legal priority: first,
for taxes owing; second, for administrative expenses; third to unsecured creditors with
allowed claims, with any balance being remitted to the FTC in accordance with an order
of this Court. The Second Circuit having affirmed this Court’s decision in this case
(Docket No. 195), and this Court being satisfied with the Receiver’s attestations regarding
how he intends to proceed in this matter (Docket No. 196-2), this Court finds it proper to
grant this request.
4.

Further, the Receiver requests that this Court authorize it to destroy paper

files and recycle computers which are currently in storage. The Receiver also requests
a continuation of the Receivership to accomplish the foregoing. For the reasons stated
above, this Court finds it proper to grant these requests.
5.

Further, the Receiver requests a formal termination of the Receivership and

discharge of the Receiver. This Court will grant such relief in a separate order, after
receipt of certification of the completion of the foregoing tasks.
6.

Further, the Receiver requests the allowance of compensation and

reimbursement of expenses to the Receiver and its counsel for services rendered from
April 1, 2014, through June 30, 2019, in the total amount of $47,774.17 ($47,094.01 for
services rendered, plus reimbursement of expenses of $380.16) to be paid to Phillips

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Lytle LLP, where Receiver’s functions with regard to the Receivership and counsel’s legal
services for the Receiver took place. (Docket No. 199 at p. 6.) This amount reflects Phillips
Lytle’s agreement to discount its hourly rate by 7.5%, and the Receiver’s agreement to
be paid at an hourly rate of $250.00 per hour, as a public service discount. (Id.). Plaintiff
FTC does not oppose the Receiver’s request. Accordingly, and upon review of the
Receiver’s application, supporting materials, and applicable law, the Court finds that the
requested fees are reasonable and will grant the Receiver’s request to disburse
$47,474.17 to Phillips Lytle LLP. See S.E.C. v. Byers, 590 F. Supp. 2d 637, 644 (S.D.N.Y.
2008) (amount of a receiver’s compensation is within a court’s reasonable discretion)

In light of the foregoing, IT HEREBY IS ORDERED:
1. That the Receiver’s [196] and [199] motions are GRANTED;
2. That June 16, 2020, is set as the last day to file pre-Receivership claims and
administrative claims against the Receivership Entities (“Bar Date”) by filing
such claims with the Receiver, and by filing a motion with this Court for the
allowance of any administrative claims for professional fees; and
3. That the Receiver shall provide notice of the Bar Date by serving this Order
and the Proof of Claim form on all known unpaid pre-Receivership creditors of
the Receivership Entities and Mark D. Grossman, Esq., Kevin W. Spitler, Esq.,
Herbert L. Greenman, Esq., Defendant William Moses, Defendant Mark
Briandi, all parties who have filed a Notice of Appearance in this action, and all
known pre-Receivership creditors and former employees of the Receivership
Entities, within five (5) business days of the entry of this Order;

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4. That the Receiver shall pay all allowed pre-receivership creditors who file timely
proofs of claim, after payment of tax claims and administrative expenses. If
allowed claims exceed funds on hand for any class of creditors, that class shall
be paid pro-rata;
5. That the Receiver shall destroy by shredding all remaining paper records of the
Receivership Entities and wipe the hard drives of all computers of the
Receivership Entities and thereafter dispose of or recycle those computers;
6. That the Receiver shall continue the Receivership to accomplish the foregoing
with the Receiver to file a certificate of completion with this Court upon
completion of the foregoing tasks;
7. That the Receiver shall disburse $47,474.17 ($47,094.01 in compensation and
$380.16 in reimbursement of expenses) to the law firm of Phillips Lytle LLP;

IT FURTHER IS ORDERED, that, upon the receipt of certification of completion of
the foregoing, this Court will order that the Receivership be terminated and that the
Receiver’s bond be discharged.

SO ORDERED.

Dated: April 17, 2020
Buffalo, New York
s/William M. Skretny
WILLIAM M. SKRETNY
United States District Judge

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