Receiver’s Fifth Report

30 Jun

The Receiver has filed his fifth report to the Court summarizing the Receiver’s efforts to marshal and collect assets, administer the receivership estate and otherwise perform the duties mandated by the Court.

Fifth Receiver Report

Exhibit A to Fifth Receiver Report

Exhibit B to Fifth Receiver Report


10 Responses to “Receiver’s Fifth Report”

  1. Vohn Austin June 30, 2014 at 3:48 pm #

    What a joke this is.  Why isn’t the receiver asking the court to allow distribution?  This is plain ridiculous and a blatant attempt to keep as much of the customer’ money as possible.  It is time to consult with private attorneys, which I will be doing immediately, to stop this theft – yes you heard it – theft!!!  You’ll be hearing from me soo.

    • Susan December 3, 2014 at 9:13 am #

      Vohn, have you contacted a private attorney? What did they say? I wish we could all file a class action law suit? Having the same attorney working for all of us would be more powerful. But, who knows who “we” all are? Who knows how many victims James has??? It’s all pretty overwhelming. Does anyone have any scruples any more? We were all just “little” investors…does anyone have any sense of right and wrong? Thanks for your post.

  2. Mark June 30, 2014 at 3:53 pm #

    Why isn’t the receiver asking the court to allow a settlement? It is time to talk with private attorneys. This is ridiculous. The recevier has already logged over $300,000 of expenses out of the 1.2 mil. This will continue until the customers are left with Pennies. This is theft in it’s purest form and it’s time that what’s going on here is made known….possibly to news agancies. Maybe it’s time for an investigation into this. How about this, how about posting my e-mail instead of deleting this – it will not change my intentions to move forward with an investigation

    • Susan December 3, 2014 at 9:05 am #

      Mark, I totally agree. I wonder if it would do any good to contact each state’s consumer protection office? Have you found out anything else since June when you posted this?

  3. Pantherfan June 30, 2014 at 3:57 pm #

    If the receivership collects the $300,000 paid to the man in TX who bought & paid for a house with his “earnings”, it will cover the cost of all of the attorney’s fees. Of course, he thinks he “earned it” so it will end up in court and further deplete the funds.

  4. Richard Smith July 2, 2014 at 9:52 am #

    The receiver collected $1,258,208,16 but charged $305,882.98 over the last 15 months, yes the receiver has been eating up our money steadily & surely.

    As I kept saying our case has structural issues as follows;
    1. the total alleged amount is small ($4.7 million)
    2. the receiver’s fee agreement is Hourly Fee rather than Contingency Fee
    Under the conditions, when the cases drags out the only winner is the receiver because he can keep charging the Fixed Fee that accounts disproportionately high to the recoverable assets.

    The receiver said in the 5th report that “currently in settlement negotiations with many of the net winners”, of which actions already costs around $17,000 (calculated by just summing up the $ relevant to clawback in the receiver’s activity log called Exhibit A to 5th Application for Payment of Attorney Fees), well we hope it’s been really a productive practice.
    Allow me to remind you of Zeek Reward clawback historical fact as below;
    – 1st Negotiation: Oct ’12 Sent Subpoena to net winners — until Apr ’13 No single settlement was realised, means no money returned
    – 2nd Negotiation: Apr ’13 – July ’13 — despite strong threat of future litigation & average 40%+ discount offer for each payback amount, only 135 people out of 77,000 net winners (just 0.2%) and $1.8 million out of $292 million originally paid to the net winners (accounts only 6%) was settled
    – 3rd Negotiation: July ’13 – Oct (effectively by end of Nov) ’13 — ultimatum threat to the rest of the net winners ended with miserable result of only 21 additional net winners out of total 77,000 (accounts 0.03%) accepted settlement and recover $418,000 out of $740,000 they owe (means 44% discount), this $418,000 recovery accounts 0.14% out of total $292 million paid to the net winners.
    Surely every statistic does not automatically apply to our case though, it’s a proven example that clawback negotiation is extremely difficult.
    In any case, the above $17,000 plus the fee already incurred after 6th June up to now are sunk costs that may still not be significant.
    However, if the receiver moves into clawback litigation, then it will be no longer a joke, we have to file an objection with the court based on the rationale I explained many times in the past.
    BTW, the Zeek Reward receiver made clawback litigation against 9,000 net winners after all the above pointless negotiation. I found a very informative post related with this litigation which are very useful for all victims therefore I am posting the full copy of it in the Welcome thread where all the victims & visitors can conveniently find at any time.
    Here, I just extracted the paragraph explaining the status of Zeek Clawback Litigation;
    “Litigation was filed on March 3 ’14, and up until May 7 ’14 merely 100+ out of 9,000 are being negotiated for POTENTIAL settlement, that accounts only 1.1% for the 1st 2 months. Note that these are not the numbers already settled but just being discussed for potential settlement, then how long does it take to settle all 9,000? With this velocity, well over 200 months (17 years) is anticipated. It’s long enough for the receiver & other involved professionals to consume all the reserve funds & recovering assets.“
    The Zeek’s receiver has not updated the status of the litigation after that, therefore we don’t know how it’s been moving, but obviously such progress is devastating.
    The scale of Zeek (targeting hundreds of $millions from clawback recovery ) may still result in net recovery given the extremely small fee ratio.
    However, our case can’t afford to do it, and calwback litigation is ABSOLUTELY OUT OF QUESTION.

    I found another tragedy happened recently in Charlotte which is J.V. Huffman $25 million Ponzi case. After the lengthy clawback litigation, the victims received only 11% recovery, of which details to be explained in the Welcome thread together with the above Zeek details, for all the victims’ information.

    The other concern in the receiver’s 5th Report is the Customer Claim Report. I’m bit confused with which report he is referring to though if it is a spread sheet previously publicized then the revised Customer Claim Report should not be publicized again as mentioned in this thread: .
    Let me summarize why;
    – Given the combination of the 2 facts of ” the receiver’s failure to assign the new serial number to each member’s account and the use of the original account numbers given by Mason” and “impossibility to deny the chance any outsiders own the original Mason’s list”, the information the receiver disclosed is deemed to be Personal Information.
    – Therefore, the publication of such personal information is most probably not complying the law and violating the ethical code of conduct. The receiver should have taken the action that can prevent any risk even under Mason’s list was known to anybody.
    – BTW, the receiver has not answered to my past question asking for the convincing rationale for choosing the method of Spreadsheet Disclosure . I already challenged his 2 reasons of “Cost” and “Knowing the other members’ claim”, because from my perspective these can’t justify the risks I already listed before due to the following grounds (if he had assigned new account numbers that are different from the original numbers Mason used, then I don’t have so much problems but unfortunately he didn’t and it’s too late because the list was already publicized). For the Cost saving, the receiver already communicated with many claimants directly during the process of verifying the amounts, then I can’t see so much cost savings from this approach, sending e-mail with the account information to each member as most of the receivers do could have achieved the equivalent economic result, means it is not a convincing reason. For the Knowing the other members’ claim, I still can’t figure out the value of it and I never heard such rationale in other cases, what is the whole benefit of it? Yes, as a nature of human being, some members may be interested in knowing the other members’ loss or gain, but it doesn’t give more benefit than just satisfying people’ curiosity, and some members don’t like that as confirmed by e-mails they sent to me. I don’t believe there are any legal ground that he has to let all the members know other members’ account details (because receivers usually don’t do), beware that his disclosure is even not only among the members but open to public.
    Having said, the receiver should structure a claim process without any publication of such personal information of Preliminary Claims Report or whatever he names it.


  5. Susan December 3, 2014 at 9:11 am #

    Richard, how can the real “victims” here file a class action law suit? I thought the receiver was paid by the state of North Carolina. Who holds HIM accountable for keeping his costs in line? Who holds the bank from where James operated accountable? What about the Exchange Securities Comm? Who is OUR advocate? Who is looking out for OUR best interest??? It should make us all feel better that beach condos will be bought and kids will get to go to the finest schools because of our stupidity in being sucked in by James in the first place. But, somehow, that feeling escapes me. Thanks for your posts. Keep ’em comin!

    • Pantherfan December 3, 2014 at 2:38 pm #

      Susan, it’s always been a mystery as to why the Greer firm was selected as the receivership at $500 per hour. I bet that if it was put out there for other firms to bid on, there would be other companies that would have come in substantially lower. Since the $$ that has been recouped is less than 1.5 mil, when its all said and done, the attorneys will have 50% of it.

  6. Chris December 3, 2014 at 10:10 am #

    I agree we need have class action lawsuits at the Bank that James did business at .The securities exchange had to know about James pass.

  7. Charlie December 3, 2014 at 6:03 pm #

    I agree with everyone’s comments, lets do something!!!

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