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When a judicial enforcement action is brought by the U.S. Securities and Exchange Commission (the “SEC”) to enjoin conduct prohibited under various securities laws, the SEC frequently seeks appointment by the Court of a receiver to take control of the assets of the defendant pending the outcome of the litigation. The Receiver is an officer of, and overseen by, the Court. Accordingly, in this case, the Receiver was appointed by the United States District Court for the District of Oregon and charged with, among other things, marshaling and preserving the assets of the defendant entities pending a determination whether or not Aequitas Management, LLC, Aequitas Holdings, LLC, Aequitas Commercial Finance, Inc., Aequitas Capital Management, Inc., Aequitas Investment Management, LLC and Robert J. Jesenik, Brian A. Oliver, and N. Scott Gillis, and/or other defendants violated any securities law.
Before the Receiver can make a distribution to Aequitas investors or creditors, the District Court must make a determination of liability (or the parties may stipulate to such) and must authorize the making of distributions from the defendants’ assets. Furthermore, a distribution cannot be made unless and until sufficient assets are available for distribution, reserving for the costs of the administration of the receivership and other contingencies. Finally, a distribution will require the compilation of a roster of reconciled claims and amounts owed to each creditor and investor. The Receiver cannot estimate how long this process will take at this time.
At this early stage of the case, the Receiver has not yet located and determined the recoverable value of all potential receivership assets or the amount of claims against those assets. The Receiver is diligently investigating the location and value of receivership assets and has retained professionals to assist him in locating and managing those assets.
If you have not already received a letter from the Receiver dated March 25th, 2016, please submit your contact information through the "Submit an Inquiry" section of this website to ensure the Receiver has the most current contact information on file. The Receiver will periodically post case updates as well as other important information at this website. We encourage parties in interest to visit this website and check for updates periodically. At some point in the future, you will be required to complete a Claim Form stating the amount owed to you by the defendants. There will be a deadline set by which these forms must be submitted. In due course, the Receiver will post the Claim Form and any deadlines at this website and will provide other notification as directed by the District Court. This information is not yet available.
(1) In the next several months a Claim Form will be mailed to all investors (and creditors) and posted on the Receivership website. The claim form, when published, will be very detailed and contain instructions. It will contain separate categories for unpaid principal, pre-Receivership accrued but unpaid interest and post-Receivership accrued interest. Please continue to monitor the website www.kccllc.net/aequitasreceivership for updates.
(2) In the event there is a discrepancy in the values of your claim to our records we will contact you directly.
Please see the response to the prior question. Information on accrued interest will be collected as part of the claim process. How accrued interest will ultimately be treated will be addressed in the Liquidation Plan, the terms of which will be developed after all information is collected and investigations completed. Investor input on the terms of the Liquidation Plan will be solicited broadly and in any event the Liquidation Plan will require notice and court approval.
No. The Receivership Entity only includes the Corporate Defendants and the Exhibit A entities (attached to the Receivership Order [Docket No. 156]). The SEC has filed suit against the three individual defendants (and the Corporate Defendants) and has said it will be seeking significant damages. During the Investigative phase of the Receivership, we will be investigating whether the Receiver has claims against the individuals.
We cannot and are not giving legal advice, including whether or not to hire an attorney. Further, we do not know any individual’s situation so it might be prudent to have your situation evaluated by your lawyer. There is a “stay” in place pursuant to the Receivership Order which prohibits the filing of any action against the Receivership Entity (and all related parties) but it has a limited exception for actions against unrelated entities on causes of action that differ from what might be brought by the Receiver.
The Receivership Order requires the Receiver to obtain court approval before filing bankruptcy. The Receivership Entity has retained bankruptcy counsel in case bankruptcy planning needs to be undertaken but currently there is no intention to file bankruptcy for any of the entities.
You do not need to file any documents with the court. Investors are owed money, are creditors of the Receivership Entity and do not have any “assets of the Receivership Entity” (such as money or securities owned by the Receivership Entity). Therefore, they do not need to do anything right now unless they happen to also possess assets of the Receivership. See above for information on claims.
The SEC has filed the complaint against the three individuals named. We cannot comment in regards to their investigation. The SEC may add or drop names from the complaint as they continue their investigation.
The Receiver's mandate is to fairly and effectively marshal and preserve assets of the Receivership Entity for the benefit of investors and creditors, monetize such assets, investigate and prosecute claims which are held by the Receivership Entity, and ensure an orderly distribution of the assets at an appropriate time after review and approval of a Distribution Plan by the Court. At this time, all distributions to investors have been suspended. Due to the complexity of the Aequitas structure with its numerous entities and myriad of financing vehicles, it is not possible at this time to determine what the recovery might be on an individual investment. Although we cannot predict with any certainty the estimated recovery values at this early stage of the process, it is highly likely that your principal will be compromised and one should not expect any distribution for quite some time.
K-1s will come later in the year, however we plan to send out estimated gains and losses for 2015 prior to April 15. You can also choose to use last year’s number and indicate on your return that it's an estimate or you can choose to file an extension.
The Receivership will pursue claims on behalf of the Receivership entities after a thorough investigation. However, it is important to recognize that other parties (such as investors directly) may institute a cause of action if they have a claim different than any claim owned by the Receivership and if the defendants are not affiliated with the Receivership. At this time, there are several lawsuits proceeding independent of the Receivership---the SEC is pursuing claims against the three individuals named in its Complaint and a class action complaint has been filed on behalf of investors against certain professionals associated with the securities offerings. Both of these fall outside of the purview of the Receiver.
Aequitas Commercial Finance (ACF) is a receivership entity and is the entity which issued the Private Notes. Thus the entity which is obligated on the Private Notes is part of the Receivership Entity and is covered by the Receivership Order.
Federal law provides that the Receiver has jurisdiction in every one of the 93 judicial districts but only if he files notice with these districts within 10 days of the receivership. Since the receiver does not know now in which jurisdictions it might be necessary to appear to claim assets, as a precaution the receiver is filing the notice in all federal districts. This is just a required procedural notice and has no effect on the Receivership proceeding in Oregon.
The Receiver believes that resolving the SEC action is in the best interests of investors. As set forth in the settlement papers, the Receiver, on behalf of the Aequitas-related entities, has committed to continuing to cooperate fully with the SEC staff as the matter progresses.