Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 1 of 104 Page ID
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1 DAVID R. ZARO (BAR NO. 124334)
TED FATES (BAR NO. 227809)
2 TIM C. HSU (BAR NO. 279208)
ALLEN MATKINS LECK GAMBLE
3 MALLORY & NATSIS LLP
501 West Broadway, 15th Floor
4 San Diego, California 92101-3541
Phone: (619) 233-1155
5 Fax: (619) 233-1158
E-Mail: [email protected]
[email protected]
6
[email protected]
7
Attorneys for Receiver
8 KRISTA L. FREITAG
9
UNITED STATES DISTRICT COURT
10
CENTRAL DISTRICT OF CALIFORNIA
11
WESTERN DIVISION
12 SECURITIES AND EXCHANGE
COMMISSION,
13
Plaintiff,
14
v.
15
WORLD CAPITAL MARKET INC.;
16 WCM777 INC.; WCM777 LTD. d/b/a
WCM777 ENTERPRISES, INC.; and
17 MING XU a/k/a PHIL MING XU,
18
19
20
21
22
23
Case No. CV-14-2334-JFW-MRW
SECOND INTERIM FEE
APPLICATION OF ALLEN
MATKINS LECK GAMBLE
MALLORY & NATSIS LLP,
GENERAL COUNSEL TO THE
RECEIVER FOR PAYMENT OF
FEES AND REIMBURSEMENT OF
EXPENSES
Date: March 23, 2015
Time: 1:30 p.m.
Ctrm: 16
KINGDOM CAPITAL MARKET, LLC; Judge: Hon. John F. Walter
MANNA HOLDING GROUP, LLC;
MANNA SOURCE INTERNATIONAL,
INC.; WCM RESOURCES, INC.;
AEON OPERATING, INC.; AND
PMX JEWELS, LTD. TOPACIFIC
INC.; TO_PACIFIC INC.; VINCENT J.
MESSINA; and INTERNATIONAL
MARKET VENTURES,
Defendants,
Relief Defendants.
24
25
26
27
28
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
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TABLE OF CONTENTS
1
Page
2
3 I. INTRODUCTION ........................................................................................... 1 4 II. SUMMARY OF TASKS PERFORMED AND COSTS
INCURRED..................................................................................................... 3 5
A. 6
7
8
9
10
11
12
13
B. Categories and Descriptions of Work ................................................... 3 1. General Receivership .................................................................. 3 2. Asset Investigation and Recovery .............................................. 4 3. Reporting .................................................................................... 9 4. Operations and Asset Sales....................................................... 10 5. Claims and Distributions .......................................................... 11 6. Third Party Recoveries ............................................................. 12 Summary of Expenses Requested for Reimbursement ....................... 13 III. THE FEES AND COSTS ARE REASONABLE AND SHOULD
BE ALLOWED ............................................................................................. 13 15 IV. CONCLUSION ............................................................................................. 15 14
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LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
(i)
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TABLE OF AUTHORITIES
1
Page(s)
2
3 Cases 4 Gaskill v. Gordon,
27 F.3d 248 (7th Cir. 1994) ........................................................................... 13
5
In re Imperial 400 Nat'l, Inc.,
432 F.2d 232 (3d Cir. 1970) .......................................................................... 14
6
7 SEC v. Elliot,
953 F.2d 1560 (11th Cir. 1992) ..................................................................... 13
8
SEC v. W.L. Moody & Co., Bankers (Unincorporated),
374 F.Supp. 465 (S.D. Tex. 1974) ................................................................ 14
9
10 United States v. Code Prods. Corp.,
362 F.2d 669 (3d Cir. 1966) .......................................................................... 14
11
12
13
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15
16
17
18
19
20
21
22
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LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
(ii)
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1
Allen Matkins Leck Gamble Mallory & Natsis LLP ("Allen Matkins"),
2 general counsel to Krista L. Freitag ("Receiver"), the Court-appointed permanent
3 receiver for Defendants World Capital Market Inc., WCM777 Inc., WCM777 Ltd.
4 d/b/a WCM777 Enterprises, Inc., and Relief Defendants Kingdom Capital
5 Market, LLC, Manna Holding Group, LLC, Manna Source International, Inc.,
6 WCM Resources, Inc., ToPacific Inc., To Pacific Inc., and their subsidiaries and
7 affiliates ("Receivership Entities"), hereby submits this second interim application
8 for approval and payment of fees and reimbursement of expenses ("Application").
9 This Application covers the period from July 1, 2014 through September 30, 2014
10 ("Second Application Period"), and seeks interim approval of $234,888.75 in fees
11 and $4,659.32 in expenses, and an order authorizing the Receiver to pay, on an
12 interim basis, 80% of the fees incurred ($187,911.00) and 100% of expenses
13 incurred.
14
15
I.
INTRODUCTION
This equity receivership involves a large, complex, and wide ranging group of
16 enterprises and assets associated with the alleged $68 million Ponzi scheme that is
17 the subject of the Complaint filed by the Securities and Exchange Commission
18 ("Commission"). The Receiver was appointed on a temporary basis on March 27,
19 2014, and on a permanent basis on April 10, 2014. The appointment orders confer
20 broad duties, responsibilities, and powers on the Receiver which are designed to
21 allow her to secure, preserve, and protect the assets of the Receivership Entities,
22 investigate and recover sums transferred to third parties, conduct a forensic
23 accounting and analysis of the Receivership Entities' financial transactions, review
24 and analyze investor claims, and maximize the amount ultimately available for
25 distribution to investors.
26
This fee application should be read in conjunction with the Receiver's Third
27 Interim Report ("Third Report") filed on November 26, 2014, which describes in
28 detail the Receiver's activities during the Second Application Period. So as to avoid
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
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1 repetition, references are made to relevant portions of the Third Report in the below
2 descriptions of Allen Matkins' work.
3
This Application seeks interim approval of $234,888.75 in fees for a total of
4 534.90 hours worked and payment on an interim basis of 80% of that amount, or
5 $187,911.00. The work performed is described task-by-task on Exhibit A and is
6 broken down into the following categories:
7
8
MATTER
General Receivership
9
Asset Investigation & Recovery
HOURS
74.90
AMOUNT
$7,687.80
176.60
80,514.00
40.90
17,486.10
154.20
67,646.70
10
Reporting
11
Operations & Asset Sales
12
Claims & Distributions
24.10
11,000.70
13
Third Party Recoveries
64.20
50,553.45
14
Total
534.90
$234,888.75
15
16
The initial phase of a complex equity receivership always involves substantial
17 work by the receiver and professionals to (a) identify and secure cash, real property,
18 and other assets, (b) preserve their value, (c) investigate and pursue recovery of
19 funds disbursed from the Receivership Entities' accounts, (d) address operational
20 and employee issues, (e) gather and review key documents, and (f) advise the Court
21 on the status of the Receiver's activities. As this type of receivership progresses,
22 fees and costs generally decline as operations are stabilized, assets are secured and
23 protected, and procedures for the efficient administration of the receivership are put
24 in place.
25
Here, the receivership estate includes a large number of affiliated entities with
26 substantial cash, real property assets, and investments/loans. In addition, there are
27 both (a) a large number of transfers to third parties that occurred in the months
28 leading up to the Receiver's appointment and (b) two fully operating golf courses,
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-2-
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1 with significant operational, management, employment, membership, real property,
2 environmental, and water rights issues. These two categories of work – Asset
3 Investigation & Recovery and Operations & Asset Sales – represent approximately
4 63% of the fees incurred in the Second Application Period. The next largest
5 category – Third Party Recoveries – pertains to efforts to recover amounts
6 transferred to third parties, including the $5.2 million transferred to attorney Vincent
7 Messina shortly before the Receiver's appointment. As expected, the fees incurred
8 by Allen Matkins declined substantially from the First Application Period
9 ($443,187) to the Second Application Period ($234,888.75) with the facts regarding
10 many of the investments, loans, and other transfers to third parties more clear and
11 golf course operations having been improved and stabilized.
Allen Matkins has worked diligently and efficiently to assist the Receiver
12
13 with important legal issues necessary to preserve and protect the substantial value of
14 receivership estate assets, including approximately $18.2 million in cash (including
15 net sale proceeds from real estate sales), remaining real estate purchased for
16 approximately $10.45 million, and investments and loans of more than $21 million.
17 The efforts of the Receiver and Allen Matkins in investigating and pursuing
18 recoveries from third parties have already resulted in recovery of significant sums,
19 including approximately $1,158,000 recovered to date, approximately $2,170,000
20 held in escrow pending further order of the Court, and a freeze of residential
21 property purchased in March 2014 for $730,000. Allen Matkins has worked
22 diligently to assist the Receiver in carrying out her Court-ordered duties and should
23 be compensated on an interim basis for its work.
24
25
II.
SUMMARY OF TASKS PERFORMED AND COSTS INCURRED
A.
26
27
Categories and Descriptions of Work
1.
General Receivership
Allen Matkins' work in the General Receivership category focused on review
28 and analysis of key orders, reports and pleadings in the case, and interaction with
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-3-
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1 attorneys for the Commission and Relief Defendants Vincent Messina, International
2 Market Ventures, and PMX Jewels on issues relating to case management and
3 discovery. This work was necessary to advise the Receiver on legal issues in the
4 case as well as fulfill the Receiver's duties as legal representative of the entity
5 defendants and relief defendants included in the receivership.
6
In addition, Allen Matkins advised and assisted the Receiver in meetings with
7 the Federal Bureau of Investigation ("FBI") and in responding to a subpoena issued
8 by the FBI. Finally, as required under 28 U.S.C. § 754, Allen Matkins completed
9 the filings of the Complaint and TRO in other judicial districts in which the
10 Receivership Entities own assets. The effect of these filings is to extend the Court's
11 territorial jurisdiction to the Receivership Entities' assets and interests in those
12 districts. The reasonable and necessary fees for Allen Matkins' work in this
13 category total $7,687.80.
14
15
2.
Asset Investigation and Recovery
The Third Report at Section II.C. (Dkt. No. 258, pp. 7-17) discusses the
16 numerous investments, loans, and other transfers to third parties made by the
17 Receivership Entities. Many of these transfers totaling more than $21 million left
18 the companies in the first quarter of 2014. These transfers include, but are not
19 limited to, oil and gas investments in Texas, diamonds purchased with Receivership
20 Entities' funds located in New York, live concerts and film productions, merchant
21 account service providers, a social media company, a food technology company and
22 not-for-profit donations. During the Second Application Period, Allen Matkins
23 advised and assisted the Receiver with efforts to investigate and recover the
24 following transfers:
25
 PMX Jewels and PMX Holdings - $1.3 million was "loaned" to PMX
26
related entities for purported diamond mining operations in Sierra Leone.
27
Dkt. No. 258, pp. 8-9. Allen Matkins advised and assisted the Receiver in
28
efforts to investigate and recover the 39.8-carat diamond located at
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-4-
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Diamex, Inc. in New York, a second batch of diamonds apparently located
2
in Sierra Leone, and a third batch of diamonds which was the subject of
3
litigation against Ruvanni, Inc. On November 14, 2014, based on
4
PMX Jewels' failure to file any of the required pre-hearing documents or
5
participate in the evidentiary hearing, the Court determined PMX Jewels
6
has no legitimate claim to the $1.3 million it received from Defendants.
7
 WCM Resources ("WCMR") and Aeon Operating - $4.1 million was
8
transferred to WCMR to fund oil and gas investments in Texas and
9
Louisiana, which were apparently operated by Aeon Operating located in
10
Texas. Recovery of $1.2 million was made from the WCMR account,
11
with $2.9 million apparently having been spent on oil and gas investments
12
and operations. Allen Matkins assisted the Receiver in obtaining records
13
through Aeon's counsel, engaging a consultant seasoned in the oil and gas
14
industry to help evaluate WCMR's interests, and determining the best
15
strategy for maximizing the recovery from the investments.
16
 Daniel John Lazarus/Robert Sensi – a total of $1.45 million was
17
transferred to these two individuals, including to foreign accounts held in
18
Germany, for unspecified investments/services. Lazarus received
19
$1.165 million while $385,000 was paid to Sensi. Allen Matkins assisted
20
the Receiver in recovering $750,000 from Lazarus pursuant to the Court-
21
approved settlement and in seeking authority to sue Robert Sensi, which
22
authority was granted on November 20, 2014. The Receiver's complaint
23
against Sensi was filed on November 24, 2014.
24
 Sue Wang/MaNa Fashion/JJ Sparkles/YuanHao - $1 million was
25
transferred to MaNa Fashion for the purported purchase of clothing
26
products with virtually no documentation to support the transaction.
27
MaNa Fashion is controlled by Sue Wang, Ming Xu's sister. Other entities
28
with which Sue Wang is affiliated, JJ Sparkles and Yuanhao, each
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-5-
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1
received $500,000. During the Second Application Period, Allen Matkins
2
assisted the Receiver in investigating these transfers and gathering
3
documentation. Since that time, the Receiver was able to recover
4
$294,915 through the sale of garments being stored by Sue Wang. The
5
Receiver also discovered that $730,000 of the funds transferred to MaNa
6
Fashion were subsequently transferred to Xu's mother, Xiaomei Deng, and
7
used to purchase a residential property in San Gabriel. The Receiver
8
sought and obtained a freeze of the property (Dkt. No. 260) and filed a
9
motion for authority to pursue claims against Sue Mang, Xiaomei Deng,
10
and the entities discussed above on December 19, 2014. Dkt. No. 261.
11
 Governmental Impact/James Dantona – On August 19, 2014, the
12
Receiver filed her motion for authority to pursue claims against
13
Governmental Impact, Inc. ("GII"), James Dantona, Zayda Aberin, and
14
ZHB International Corp. Dkt. No. 131. GII and Dantona opposed the
15
motion (Dkt. No. 171) and the Receiver replied (Dkt. No. 187). After a
16
hearing held on September 22, 2014, the motion was granted. Dkt.
17
No. 204. The Receiver filed her complaint on September 26, 2014. Case
18
No. CV14-07518 JFW (MRWx). GII and Dantona filed answers on
19
October 20, 2014. On November 4, 2014, the parties filed a Joint
20
Rule 26(f) Report.
21
 AsiaWallet/Marcus Almeida – AsiaWallet processed payments to WCM
22
from investors via the Kingdom Pay platform. AsiaWallet also purchased
23
"Kingdom Points" (points sold to investors in the WCM777 scheme) and
24
resold them to investors. The Receiver continues to gather and analyze
25
documents relating to transfers to and from AsiaWallet and the sale of
26
Kingdom Points by AsiaWallet. The Receiver recently obtained records
27
from Bank of America and Blackstone Merchant Services, a payment
28
processor used by AsiaWallet.
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-6-
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 Aladdin LLC – The Receivership Entities transferred $600,000 to
2
Aladdin, LLC. Allen Matkins assisted the Receiver in communications
3
with counsel for Ming Xu regarding the nature of this transaction, which
4
was apparently for the purchase of knock off cell phones located in China.
5
The Receiver is continuing to investigate and analyze potential claims for
6
recovery of this transfer.
7
 James Pollon/BB Pride/Stephen Huntsman – Approximately $203,500
8
was transferred to Jonathan Pollon, his company BBPride, LLC
9
("BBPride"), and Stephen J. Huntsman for the purpose of purchasing
10
"Alluvial Gold Dore Nuggets" from sources in Kenya. The funds were
11
transferred pursuant to two loans made by WCM. Allen Matkins has
12
assisted the Receiver in communicating with counsel for Pollon and
13
BBPride, including negotiating a forbearance agreement and repayment
14
plan for the loans.
15
As noted above, the objective has been to recover and secure as much of these
16 transfers as possible for the benefit of the receivership estate. This very large
17 project comprises the largest part of Allen Matkins' work during the Second
18 Application Period and includes the following tasks:
19
 Reviewing documents found at the Receivership Entities' locations;
20
 Issuing subpoenas to financial institutions, transferees, employees, and
other witnesses;
21
22
 Providing formal notification of the receivership to all known transferees
and making demands for disgorgement;
23
24
 Gathering, organizing, and reviewing documents and information obtained
from third parties;
25
26
 Tracking the status of subpoenas and follow up communications to ensure
full and timely production of documents;
27
28
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
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1
 Scheduling and preparing for meetings with employees, transferees, and
other witnesses;
2
3
 Interviewing transferees and other witnesses;
4
 Investigating the ultimate destination of funds transferred and researching
5
the ownership and control of various entities through which transferred
6
funds were funneled;
7
 Analyzing and evaluating claims and recovery strategies;
8
 Analyzing the potential value and recoverability of hard assets, including
9
personal property as well as various diamonds located both domestically
and abroad;
10
11
 Researching and analyzing legal defenses raised by the transferees'
counsel;
12
13
 Negotiating and corresponding with various transferees and their counsel;
14
 Preparing escrow agreements for funds to be secured pending further order
of the Court;
15
16
 Preparing forbearance and loan modification documents for outstanding
loans;
17
18
 Analyzing proposed settlements and negotiating and drafting settlement
agreements with transferees; and
19
20
 Preparing and filing motions, ex parte applications, and other pleadings for
authority to pursue claims, approval of settlements, and related relief.
21
22
The investigation into these investments, loans and other transfers is
23 particularly challenging and time consuming because the Receivership Entities did
24 not maintain any files for the transactions. In addition, Ming Xu has not provided
25 details on the transactions. Accordingly, documents and information had to be
26 gathered by searching through e-mails and files had to be created from scratch. In
27 some instances, there was little or no contact information for transferees, requiring
28 searches of public records to locate addresses. In addition, several transferees
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-8-
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1 evaded service, requiring repeated attempts to serve them with the Preliminary
2 Injunction Order and subpoenas.
3
The investigation and recovery efforts were further complicated by the fact
4 that certain transferees, upon being contacted, took an adversarial position and hired
5 defense counsel, rather than agreeing to provide documents on an informal basis or
6 to be interviewed. Accordingly, subpoenas had to be issued and communications
7 handled by counsel, adding considerable expense and delay. In many instances,
8 transferees and their counsel demanded more time and produced documents in
9 piece-meal fashion.
10
Language barriers also presented a challenge in investigating certain
11 investments and transfers, many of which went to Chinese-Americans located in the
12 United States. Fortunately, Allen Matkins attorney Tim Hsu is fluent in Mandarin
13 and was able to converse with certain Chinese-American transferees and translate
14 documents written in Mandarin for the Receiver. Another transferee (Marcus
15 Almeida of AsiaWallet) speaks only Portuguese, requiring English translation by his
16 employees and counsel.
17
To date, the efforts of the Receiver and Allen Matkins in investigating and
18 pursuing recoveries from third parties have resulted in recovery of approximately
19 $1,158,000 cash, approximately $2,170,000 held in escrow pending further order of
20 the Court, and a freeze of residential property purchased in March 2014 for
21 $730,000. The Receiver continues efforts to investigate and maximize the recovery
22 from the Receivership Entities' other investments, loans, and transfers to third
23 parties. The reasonable and necessary fees for work in this category during the
24 Second Application Period total $80,514.00, which is a substantial decline from the
25 First Application Period ($237,478.95).
26
27
3.
Reporting
Allen Matkins' work in this category during the Second Application Period
28 focused on preparing the Receiver's Second Interim Report. Dkt. No. 129. The
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-9-
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1 Second Report, filed on August 14, 2014, provides a detailed summary of the
2 Receiver's activities, including her efforts to investigate and recover on specific
3 investments, loans and other transfers to third parties, post-receivership receipts and
4 disbursements for the receivership estate, an update on pending litigation, and the
5 Receiver's recommendations. The Second Report, which is 25 pages in length, also
6 details the Receiver's cash recoveries, the status of each residential and commercial
7 property, the unique issues associated with each golf course property, entities
8 affiliated with WCM and WCM777, and the Receiver's efforts to obtain and analyze
9 data on investor deposits and disbursements. The reasonable and necessary fees for
10 work in this category total $17,486.10.
11
12
4.
Operations and Asset Sales
Allen Matkins' time in this category reflects the volume and complexity of
13 issues that arose during the Second Application Period in connection with the
14 maintenance and operation of the various real properties and businesses owned and
15 operated by the Receivership Entities. These include the two fully operating golf
16 courses, three other residential properties, and a warehouse. These properties and
17 businesses each presented unique challenges.
18
In particular, the two golf courses, Glen Ivy Golf Course and the Links at
19 Summerly, required substantial work to stabilize and improve operations. The
20 Receiver's work relating to the golf courses is discussed in the Third Report. Dkt.
21 No. 258, pp. 5-7. Allen Matkins advised and assisted the Receiver in dealing with
22 various operational issues, including: (i) dealing with the homeowners' association
23 related to Glen Ivy and preparing proposed easement documents for the HOA to
24 repair a lake on the property; (ii) drafting a renewed lease agreement for a third25 party food and beverage/event operator; (iii) handling urgent issues relating to water
26 affordability and shortage caused, in part, by the severe drought conditions in
27 Southern California; (iv) negotiating water rights and rates with a local water
28 district; (v) advising the Receiver on obtaining a conditional use permit for the
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
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1 operation of a tent structure on site for various contracted events; and (vi) handling
2 and submitting insurance claims for incidents on the golf course properties.
3
Allen Matkins also assisted with legal issues pertaining to the three residential
4 properties, including analyzing issues with a non-paying occupant and preparing an
5 unlawful detainer action to remove him from the premises. The non-paying
6 occupant has since left the property and the Receiver has filed a motion for approval
7 of a sale thereof. Dkt. No. 265. Allen Matkins also prepared and filed motions for
8 approval of the sales of the Monrovia and Walnut properties, including advising the
9 Receiver on purchase and sale terms relating to overbids and Court approval of the
10 transaction. The firm also prepared a motion for authority to sell furniture,
11 equipment, and other personal property the Receiver had recovered and stored. The
12 sales motions were all granted by the Court. Dkt Nos. 203, 231, 233.
13
The reasonable and necessary fees for work in this category total $67,646.70.
14
15
5.
Claims and Distributions
Allen Matkins' time in this category focuses on issues relating to investors
16 and creditors and their claims against the receivership estate. The firm responded to
17 direct inquiries from various investors and creditors and their counsel regarding the
18 Receiver's appointment and the impact of the receivership. Many of the inquiries
19 also focused on amounts investors transferred to the Receivership Entities and the
20 claims administration process.
21
In addition, on August 27, 2014, the Receiver and Allen Matkins met to
22 discuss the investor data recovered as of that date and the most efficient and
23 effective means of receiving, reviewing, and determining investor claims. The
24 efficient administration of investor claims poses serious challenges in this case due
25 to the large number of investors, their distribution around the world, the large
26 volume of transactions, and the fact that many investors gave cash to "leaders" who
27 supposedly passed the cash on to WCM.
28
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
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1
Finally, in September 2014, the Receiver learned that Defendant Ming Xu
2 would be talking to investors in a live web chat room. The Receiver asked Allen
3 Matkins' associate Tim Hsu, who speaks Mandarin, to log in and observe the
4 discussion and provide a summary, which he did. The reasonable and necessary
5 fees for work in this category total $10,733.40.
6
7
6.
Third Party Recoveries
This category focuses on efforts to recover the $5.2 million transferred to
8 attorney Vincent J. Messina ("Messina") and the $750,000 transferred to
9 Governmental Impact, Inc. ("GII") from the Receivership Entities. With respect to
10 Messina and International Market Ventures ("IMV"), Allen Matkins
11 (a) communicated with counsel for the Commission and counsel for Messina/IMV,
12 (b) gathered key bank records and other documents, (c) interviewed key witnesses
13 regarding the events, (d) responded to the parties' respective document requests,
14 (e) attended the deposition of Gary Messina, (f) reviewed pleadings filed by the
15 respective parties to stay apprised of the issues and parties' contentions, (g) prepared
16 the Receiver's declaration and exhibits (Dkt. No. 142), and (h) appeared at the
17 evidentiary hearing held on September 5, 2014. Allen Matkins also assisted the
18 Receiver in tendering a claim against the WCM insurance policy for the losses
19 sustained from Messina's conduct. On November 14, 2014, the Court determined
20 that Messina has no legitimate claim to the $5 million he received on February 26,
21 2014, and IMV has no legitimate claim to the $941,505 it received from Messina.
22 Dkt No. 252.
23
With respect to GII and its principal, James Dantona, Allen Matkins filed the
24 Complaint as authorized by the Court, commencing the action. The firm also filed
25 the Notice of Related Action and coordinated service of the Complaint and
26 Summons on GII, Dantona, and Defendant Zayda Aberin.
27
The reasonable and necessary fees for Allen Matkins' work in this category
28 total $50,553.45.
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-12-
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 16 of 104 Page ID
#:6851
1
B.
Summary of Expenses Requested for Reimbursement
2
Allen Matkins requests the Court approve reimbursement of $4,659.32 in out-
3 of-pocket costs. The total for costs incurred by Allen Matkins during the
4 Application Period is $4,659.32 and is broken down by category as follows:
5
Category
Total
6
Legal Research / PACER fees
7
Service of Process/Messenger/FedEx fees
8
Court Fees
755.85
Duplication
482.02
9
10
11
12
13
14
15
17
16.38
Transportation/Parking
50.00
Interpreter
90.00
Conference Calls
17.82
Discovery Costs
95.02
$4,659.32
III.
18
1,078.93
Postage
TOTAL
16
19
$2,073.30
THE FEES AND COSTS ARE
REASONABLE AND SHOULD BE ALLOWED
"As a general rule, the expenses and fees of a receivership are a charge upon
20 the property administered." Gaskill v. Gordon, 27 F.3d 248, 251 (7th Cir. 1994).
21 These expenses include the fees and expenses of this Receiver and her professionals,
22 including Allen Matkins. Decisions regarding the timing and amount of an award of
23 fees and costs to the Receiver and her Professionals are committed to the sound
24 discretion of the Court. See SEC v. Elliot, 953 F.2d 1560, 1577 (11th Cir. 1992)
25 (rev'd in part on other grounds, 998 F.2d 922 (11th Cir. 1993)).
26
In allowing fees, a court should consider "the time, labor and skill required,
27 but not necessarily that actually expended, in the proper performance of the duties
28 imposed by the court upon the receiver[], the fair value of such time, labor and skill
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-13-
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 17 of 104 Page ID
#:6852
1 measured by conservative business standards, the degree of activity, integrity and
2 dispatch with which the work is conducted and the result obtained." United States v.
3 Code Prods. Corp., 362 F.2d 669, 673 (3d Cir. 1966) (internal quotation marks
4 omitted). In practical terms, receiver and professional compensation thus ultimately
5 rests upon the result of an equitable, multi-factor balancing test involving the
6 "economy of administration, the burden that the estate may be able to bear, the
7 amount of time required, although not necessarily expended, and the overall value of
8 the services to the estate." In re Imperial 400 Nat'l, Inc., 432 F.2d 232, 237 (3d Cir.
9 1970). Regardless of how this balancing test is formulated, no single factor is
10 determinative and "a reasonable fee is based [upon] all circumstances surrounding
11 the receivership." SEC v. W.L. Moody & Co., Bankers (Unincorporated),
12 374 F.Supp. 465, 480 (S.D. Tex. 1974).
13
As a preliminary matter, the TRO and Preliminary Injunction Order confer on
14 the Receiver substantial duties and powers, including to conduct such investigation
15 and discovery as is necessary to locate and account for all receivership assets, take
16 such action as is necessary and appropriate to assume control over and preserve
17 receivership assets, and employ attorneys and others to investigate and, where
18 appropriate, institute, pursue, and prosecute all claims and causes of action of
19 whatever kind and nature. See TRO, Part VII; Preliminary Injunction Order,
20 Part VII.
21
The Receiver promptly determined that experienced, qualified counsel was
22 necessary due to the size and complexity of the receivership estate and the Court
23 agreed, specifically approving Allen Matkins' employment. Dkt. No. 86. The Court
24 also approved the Receiver's proposal to file interim reports and fee applications on
25 a quarterly basis. Id.
26
Allen Matkins has submitted a detailed fee application which describes the
27 nature of the services rendered, and the identity and billing rate of each individual
28 performing each task. See Exhibit A. Allen Matkins has endeavored to staff
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-14-
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 18 of 104 Page ID
#:6853
1 matters as efficiently as possible while remaining cognizant of the complexity of
2 issues presented. The request for fees is based on Allen Matkins' customary billing
3 rates charged for comparable services provided in other matters, less a 10%
4 discount. In addition, Allen Matkins did not charge for 64 hours of work
5 ($26,383.05 in fees) during the Second Application Period.
6
The work performed by Allen Matkins was essential to carrying out the
7 Receiver's Court-ordered duties. The Receiver and Allen Matkins have worked
8 diligently since the Receiver's appointment to preserve and protect the assets of the
9 receivership estate, to investigate and recover sums transferred to third parties, and
10 to maximize the funds available for ultimate distribution to investors. Moreover,
11 Allen Matkins seeks payment of only 80% of fees incurred on an interim basis in
12 recognition of the fact that its work in assisting the Receiver is ongoing. Payment of
13 the proposed 20% holdback will be sought at the conclusion of the receivership.
14 Allen Matkins' fees are fair and reasonable and should be approved and paid on an
15 interim basis.
16
IV.
CONCLUSION
17
1.
Allen Matkins therefore respectfully requests the Court enter an Order:
18
2.
Approving Allen Matkins' fees, on an interim basis, of $234,888.75;
19
3.
Authorizing and directing the Receiver to pay 80% of approved fees, or
20 $187,911.00, from the assets of the Receivership Entities;
21
4.
Approving Allen Matkins' costs in the amount of $4,659.32, and
22 authorizing and directing the Receiver to reimburse such costs in full; and
23
5.
For such other and further relief as the Court deems appropriate.
24 Dated: February 17, 2015
25
ALLEN MATKINS LECK GAMBLE
MALLORY & NATSIS LLP
By:
26
27
28
LAW OFFICES
Allen Matkins Leck Gamble
Mallory & Natsis LLP
825837.01/SD
-15-
/s/ Ted Fates
TED FATES
Attorneys for Receiver
KRISTA L. FREITAG
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 19 of 104 Page ID
#:6854
EXHIBIT A
Exhibit A
Page 16
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 20 of 104 Page ID
#:6855
Exhibit A
Page 17
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 21 of 104 Page ID
#:6856
Exhibit A
Page 18
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 22 of 104 Page ID
#:6857
Exhibit A
Page 19
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 23 of 104 Page ID
#:6858
Exhibit A
Page 20
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 24 of 104 Page ID
#:6859
Exhibit A
Page 21
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 25 of 104 Page ID
#:6860
Exhibit A
Page 22
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 26 of 104 Page ID
#:6861
Exhibit A
Page 23
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 27 of 104 Page ID
#:6862
Exhibit A
Page 24
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 28 of 104 Page ID
#:6863
Exhibit A
Page 25
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 29 of 104 Page ID
#:6864
Exhibit A
Page 26
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 30 of 104 Page ID
#:6865
Exhibit A
Page 27
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 31 of 104 Page ID
#:6866
Exhibit A
Page 28
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 32 of 104 Page ID
#:6867
Exhibit A
Page 29
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 33 of 104 Page ID
#:6868
Exhibit A
Page 30
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 34 of 104 Page ID
#:6869
Exhibit A
Page 31
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 35 of 104 Page ID
#:6870
Exhibit A
Page 32
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 36 of 104 Page ID
#:6871
Exhibit A
Page 33
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 37 of 104 Page ID
#:6872
Exhibit A
Page 34
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 38 of 104 Page ID
#:6873
Exhibit A
Page 35
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 39 of 104 Page ID
#:6874
Exhibit A
Page 36
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 40 of 104 Page ID
#:6875
Exhibit A
Page 37
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 41 of 104 Page ID
#:6876
Exhibit A
Page 38
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 42 of 104 Page ID
#:6877
Exhibit A
Page 39
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 43 of 104 Page ID
#:6878
Exhibit A
Page 40
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 44 of 104 Page ID
#:6879
Exhibit A
Page 41
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 45 of 104 Page ID
#:6880
Exhibit A
Page 42
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 46 of 104 Page ID
#:6881
Exhibit A
Page 43
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 47 of 104 Page ID
#:6882
Exhibit A
Page 44
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 48 of 104 Page ID
#:6883
Exhibit A
Page 45
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 49 of 104 Page ID
#:6884
Exhibit A
Page 46
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 50 of 104 Page ID
#:6885
Exhibit A
Page 47
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 51 of 104 Page ID
#:6886
Exhibit A
Page 48
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 52 of 104 Page ID
#:6887
Exhibit A
Page 49
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 53 of 104 Page ID
#:6888
Exhibit A
Page 50
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 54 of 104 Page ID
#:6889
Exhibit A
Page 51
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 55 of 104 Page ID
#:6890
Exhibit A
Page 52
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 56 of 104 Page ID
#:6891
Exhibit A
Page 53
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 57 of 104 Page ID
#:6892
Exhibit A
Page 54
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 58 of 104 Page ID
#:6893
Exhibit A
Page 55
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 59 of 104 Page ID
#:6894
Exhibit A
Page 56
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 60 of 104 Page ID
#:6895
Exhibit A
Page 57
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 61 of 104 Page ID
#:6896
Exhibit A
Page 58
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 62 of 104 Page ID
#:6897
Exhibit A
Page 59
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 63 of 104 Page ID
#:6898
Exhibit A
Page 60
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 64 of 104 Page ID
#:6899
Exhibit A
Page 61
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 65 of 104 Page ID
#:6900
Exhibit A
Page 62
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 66 of 104 Page ID
#:6901
Exhibit A
Page 63
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 67 of 104 Page ID
#:6902
Exhibit A
Page 64
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 68 of 104 Page ID
#:6903
Exhibit A
Page 65
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 69 of 104 Page ID
#:6904
Exhibit A
Page 66
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 70 of 104 Page ID
#:6905
Exhibit A
Page 67
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 71 of 104 Page ID
#:6906
Exhibit A
Page 68
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 72 of 104 Page ID
#:6907
Exhibit A
Page 69
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 73 of 104 Page ID
#:6908
Exhibit A
Page 70
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 74 of 104 Page ID
#:6909
Exhibit A
Page 71
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 75 of 104 Page ID
#:6910
Exhibit A
Page 72
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 76 of 104 Page ID
#:6911
Exhibit A
Page 73
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 77 of 104 Page ID
#:6912
Exhibit A
Page 74
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 78 of 104 Page ID
#:6913
Exhibit A
Page 75
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 79 of 104 Page ID
#:6914
Exhibit A
Page 76
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 80 of 104 Page ID
#:6915
Exhibit A
Page 77
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 81 of 104 Page ID
#:6916
Exhibit A
Page 78
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 82 of 104 Page ID
#:6917
Exhibit A
Page 79
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 83 of 104 Page ID
#:6918
Exhibit A
Page 80
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 84 of 104 Page ID
#:6919
Exhibit A
Page 81
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 85 of 104 Page ID
#:6920
Exhibit A
Page 82
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 86 of 104 Page ID
#:6921
Exhibit A
Page 83
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 87 of 104 Page ID
#:6922
Exhibit A
Page 84
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 88 of 104 Page ID
#:6923
Exhibit A
Page 85
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 89 of 104 Page ID
#:6924
Exhibit A
Page 86
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 90 of 104 Page ID
#:6925
Exhibit A
Page 87
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 91 of 104 Page ID
#:6926
Exhibit A
Page 88
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 92 of 104 Page ID
#:6927
Exhibit A
Page 89
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 93 of 104 Page ID
#:6928
Exhibit A
Page 90
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 94 of 104 Page ID
#:6929
Exhibit A
Page 91
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 95 of 104 Page ID
#:6930
Exhibit A
Page 92
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 96 of 104 Page ID
#:6931
Exhibit A
Page 93
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 97 of 104 Page ID
#:6932
Exhibit A
Page 94
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 98 of 104 Page ID
#:6933
Exhibit A
Page 95
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 99 of 104 Page ID
#:6934
Exhibit A
Page 96
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 100 of 104 Page ID
#:6935
Exhibit A
Page 97
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 101 of 104 Page ID
#:6936
Exhibit A
Page 98
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 102 of 104 Page ID
#:6937
Exhibit A
Page 99
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 103 of 104 Page ID
#:6938
Exhibit A
Page 100
Case 2:14-cv-02334-JFW-MRW Document 291 Filed 02/17/15 Page 104 of 104 Page ID
#:6939
Exhibit A
Page 101