Case 1:05-cv-21169-KMM Document323-1 Entered on...

Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007

IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

Page 1 of 22r]

SECURITIES AND EXCHANGECOMMISSION

Plaintiff,vs.

PENSION FUND OF AMERICA, L.C., PFAASSURANCE GROUP, LTD., PFAINTERNATIONAL, LTD., CLAREN TPA,LLC, LUIS M. CORNIDE and ROBERT DELA RIVA,

Defendants.

Case No. 05-20863-CIV-MOORE/GARBER

MARCELLA CORDOVA, JORGEFLORES, HENRY IURMAN, MARCOSMUSTIELES, And KATIA OCAMPO,individually and on behalf of all others Case No. 05-21169-CIV-MOORE-GARBERsimilarly situated,

Plaintiffs,vs.

LEHMAN BROTHERS, INC., a New YorkCorporation ; MERRILL LYNCH & CO.,INC., a Delaware Corporation; RAYMONDJAMES FINANCIAL SERVICES, INC., aFlorida Corporation ; OLIVA INVESTMENTGROUP, INC., a Florida Corporation;SUNTRUST BANKS, INC., a GeorgiaCorporation, and HSBC BANK, U.S.A.,LUIS CORNIDE and ROBERT A. DE LARIVA,

Defendants.

JOINT MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENTAND INCORPORATED MEMORANDUM OF LAW

Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 2 of

Court-appointed Receiver, Thomas G. Schultz, solely in his capacity as Court-appointed

Receiver in the above -captioned SEC Action, and Plaintiffs in the above-captioned Cordova

Litigation , on behalf of themselves and the putative class (the "Settlement Class )1, by and

through their counsel of record, hereby move the Court for the entry of the [Proposed] Order

Preliminarily Approving Settlement and Providing for Notice ("Preliminary Approval Order ),

attached to the Stipulation as Exhibit A. In support hereof, the Receiver and Plaintiffs state as

follows:

INTRODUCTION

A. Procedural Background

On March 28, 2005, the Securities and Exchange Commission ("SEC ) filed a complaint

commencing the above-captioned SEC Action against Pension Fund of America, L.C. and its

related entities ("PFA ) and principals, alleging that PFA engaged in an offering fraud. There is

pending litigation between the Receiver and the De La Riva Parties over the $450,000 plus

accruing interest held in the trust account of counsel for the De La Riva Parties. On April 17,

2006, the Receiver filed with the Court an Amended Motion for a determination that the funds in

the foregoing account are property of the Receivership and should be transferred to the Receiver

for distribution to all investors (the "Receiver's Turnover Motion ). IPM is a party to the

Turnover Motion. The De La Riva Parties opposed the Motion. The matter remains pending.

On April 21, 2005, a complaint was filed in the United States District Court for the

Southern District of Florida on behalf of a putative class of PFA investors who had purchased

' Capitalized terms have the meaning ascribed to them in the Stipulation and Agreement ofSettlement ("Stipulation ) dated May 25, 2007, attached hereto as Exhibit "1.


trust plans from PFA from 1999 through March 30, 2005. Henry Turman v. Pension Fund of

America L. C. et al. Case No. 05-21101. On April 28, 2005, a second related complaint was filed

on behalf of the same putative class of PFA investors. Samuel Puterman v. Lehman Brothers,

Inc. et al., Case No. 05-21169.

On June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended Class

Action Complaint, styled Cordova, et. al. v. Lehman Brothers, Inc., et. al., Case No. 05-21169

alleging common law claims for (1) breach of fiduciary duty, (2) aiding and abetting PFA's

common law fraud and (3) aiding and abetting PFA's breaches of its fiduciary duties. The

Complaint named Lehman Brothers , Inc., Merrill Lynch & Co., Inc., Raymond James Financial

Services, Inc., Oliva Investment Group, Inc. and HSBC as defendants (hereinafter, the "Financial

Institution Defendants ). The Complaint raised these claims on behalf of a putative class of

investors consisting of

All persons who held and/or retained investments in retirement trust plans offeredby PFA, or its affiliated companies, during the period commencing January 1999through the present ("Class Period ). Excluded from the Class are Defendants,PFA, PFA Assurance, PFA International, Claren TPA, Luis Cornide, Robert de laRiva and all of the Defendants' alter-ego entities, all employees or agents ofDefendants and agents of the Defendants' alter ego entities, all subsidiaries andaffiliates of the Defendants, the Defendants' officers, agents, and employees, anyagents or brokers (and their immediate family members) who sold or solicited thesale of investments in PFA or PFA Assurance.

The consolidated actions are referred to herein collectively as the "Class Action

Litigation . On January 17, 2006, the Court granted Defendants ' motions to dismiss, ruling

the common law claims asserted in the Complaint were preempted by the Securities Litigation

Uniform Standards Act ("SLUSA ). On February 13, 2006, Plaintiffs filed their Second

Amended Class Action Complaint, alleging violations by the Financial Institution Defendants of


Sections 12 and 15 of the Securities Act of 1933 ("Securities Act ) and Section 10(b) of the

Securities Exchange Act of 1934 ("Exchange Act ). Motions to dismiss the Second Amended

Class Action Complaint are currently pending.

B. The Settlement Stipulation

Counsel for the parties to the Stipulation have engaged in substantial arms-length

negotiations in an effort to resolve all claims that have been or could be asserted in the Cordova

Litigation or by the Receiver. The parties then spent a significant amount of time drafting and

negotiating the Stipulation submitted herewith.

The parties believe that the settlement provides significant benefits to creditors of the

Receivership Entities in the SEC Action holding allowable claims , including Settlement Class

Members in the Cordova Litigation:

a. The Settlement Stipulation requires that the Class Settlement Fund of $112,500,

less fees and costs, be distributed to the Class.

b. The Settlement Stipulation calls for the proceeds of the Receiver's Turnover

Action, including the $50,000 currently held in trust, and $62,500 to be paid by

the De La Riva Parties for a total of $112,500, to be transferred by the De La Riva

Parties to the Receiver.

c. The Settlement Stipulation provides for a Plan of Allocation that provides for the

distribution of the net settlement and Turnover proceeds, as well as other

receivership estate assets . The distribution will benefit the Settlement Class and

other Authorized Claimants, because they will avoid prolonged litigation

regarding distribution preferences and claim set-offs. Thus, the putative class will


receive a considerable distribution of money without the uncertainty, delay, and

expense of protracted litigation.

d. The distribution will proceed in accordance with the Plan of Allocation, as soon

as practicable after the Effective Date of the Settlement, and after claims are filed

and reviewed and any necessary reserves for disputed claims are established.

SPECIFIC TERMS OF THE SETTLEMENTWhile the Stipulation (Exhibit "1 ) speaks for itself, the principal terms of the settlement

are as follows:

1. Settlement Distribution Fund

The Settlement Distribution Fund consists of the following three components:

a) The sum of $112,500, plus interest , representing $50,000 in funds

that are currently being held in trust and $62,500 to be paid by the De La

Riva Parties, representing resolution of the Receiver's Turnover Motion;

b) The sum of $112,500, less fees and expenses awarded by the

Court, to be paid by the De La Riva Parties in consideration for settlement

of the Cordova Litigation, after deduction of fees to be approved and

awarded by the Court to Plaintiffs' Settlement Counsel, and other costs

allocable to the settlement as set forth in Paragraph 5.2 of the Settlement

Stipulation;

2. Recipients of the Settlement Proceeds

The following are the recipients of the Settlement Distribution Fund:

a. Members of the Settlement Class with allowable claims under the claims filing

and allowance procedures set forth in the Stipulation (See 4 in ra who do not


exclude themselves from the settlement ("Eligible Settlement Class Members ),

all of whom are also claimants of the Receivership Estate.

b. All other Claimants of the Receivership Estate who timely file claims and whose

claims are thereafter allowed under the procedures set forth in Paragraph 5.3 of

the Stipulation (See 4 in ra).

3. The Proposed Plan of Allocation of the Settlement Distribution Fund

The proposed Plan of Allocation of the Settlement Distribution Fund is the same as the

plan set forth in detail in the HSBC Settlement Order, which is a fair and just allocation of the

funds , and has been preliminarily approved by the Court.

4. Approval of Notice Forms, Claims Procedures and Related Processes

The Settlement Stipulation also provides for the following:

a. The form of a Notice of Settlement to be provided to the Settlement Class

Members, including information on requests for exclusion from the Settlement

Class and the procedure for objections to the Settlement. The form Notice is

attached as Exhibit A to the Stipulation.

b. The form of written proof of claim forms to be filed by Settlement Class Members

and Receivership Creditors in order to be eligible to receive proceeds of the

Settlement Distribution Fund and any future distributions by the Receiver.

c. The establishment of a claims filing deadline of 60 days after a mailing of the

proof of claim form to Settlement Class Members and other Receivership

Creditors after the Effective Date of the settlement.

d. The appointment of a Claims Administrator (Garden City Group) to assist the


Receiver and Plaintiffs Settlement Counsel with the transmission and tabulation

of the Notices, and claims forms and other administrative duties. The Receiver

and his professionals will be responsible for the review of and objections to

claims.

e. Certification of the Settlement Class pursuant to Rule 23(e) of the Federal Rules

of Civil Procedure, confirming the Cordova Plaintiffs as representatives of the

class , and Plaintiffs' Counsel as class counsel.2

5. Attorneys' Fees and Costs

The Stipulation also contains provisions regarding attorneys' fees and costs to Plaintiffs'

Counsel and the Claims Administrator. The Stipulation provides that such Counsel will apply

for (1) an award not to exceed 30% of the Class Settlement Fund to be paid by the De La Riva

Parties, and (2) reimbursement of their reasonable expenses and costs incurred in connection

with prosecuting the Cordova Litigation. Settlement Counsel have agreed not to seek any award

of fees from the proceeds of the Receiver's Turnover Motion to be paid by the De La Riva

Parties as part of the settlement. Settlement Counsel will file a motion for an award of such

expenses and fees , and any such request is subject to the approval of the Court.3

2 This certification is for settlement purposes only. Certification for purposes of theentire litigation is a separate issue, and this Court has entered an Order to Show Cause why theClass should not be certified for all purposes. Plaintiffs responded to the Order to Show Causeon November 15, 2006. That issue is fully briefed and remains pending.

3 The Receiver and his retained professionals, who have received no compensation forperiods commencing on January 1, 2006 will make application to the Court for an award of feesand costs from funds on hand in the Receivership Estate other than the proceeds of thissettlement and the designated Receivership assets which are also to be distributed as part of thesettlement.

Case 1 : 05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 8 of

PROPOSED APPROVAL SCHEDULE

The parties recommend that notice of the Settlement be sent to Members of the

Settlement Class at this time. The Preliminary Approval Order (Exhibit "2") approves the form

and content of the proposed Notice of Pendency of Class Action, Proposed Settlement, and

Fairness Hearing ("Notice ), attached to the Stipulation as Exhibit C. The proposed notice

advises Settlement Class Members of the essential terms of the settlement, defines the Settlement

Class and the Settlement Class Period, sets forth the procedure for opting out of the Settlement

Class or filing objections and will provide specifics on the date, time and place of the final

approval hearing. The Notice provides information which will enable Settlement Class Members

to exercise their rights and make an informed decision regarding the proposed settlement.

In the interest of saving costs and judicial resources, the parties recommend that the

schedule set out in the Court's May 4, 2007 Orders Preliminarily Approving Settlement and

Providing For Notice and the May 22, 2007 Order Granting Motion to Extend Settlement

Approval Deadlines be followed. The schedule for mailing notices to the Settlement Class,

setting dates for Settlement Class Members to opt-out of or object to the settlement, setting a

date by which counsel will file papers in support of the Settlement, and setting a final approval

hearing date is as follows:

Notice mailed to class

Last day for class membersto opt-out of settlement

June 8 , 2007 ("Notice Date )

July 10, 2007

Last day for class membersto object to settlement

Date by which to file papersin support of settlement,

July 23, 2007

August 3, 2007


Plan of Allocation and requestfor attorneys' fees and expenses

Date by which Objectors must file July 23, 2007

any papers in support of their

objections

Final approval hearing August 10, 2007

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This schedule is similar to those used and approved by numerous courts in class action

settlements and provides due process to class members with respect to their rights concerning the

Settlement.

A. Class ActionMEMORANDUM OF LAW

1. Legal Standard

To conclude the Settlement, Rule 23(e) requires that there be notice to the Class, a

fairness hearing, and this Court's approval. Before scheduling a fairness hearing and ordering

Class Notice, this Court must be presented with a settlement that warrants implementing the Rule

23(e) procedures. The purpose of obtaining preliminary approval is "to determine if the proposed

settlement falls within the range of possible approval, i.e., whether probable cause exists to

certify the class and issue notification of the settlement' s terms . Matter ofSkinner Group, Inc.,

206 B.R. 252, 261 (N.D. Ga. 1997).

In determining whether to preliminarily approve a class action settlement, the

court assesses whether there is "probable cause to provide notice and hold a fairness hearing.

See In re Mid-Atlantic Toyota Antitrust Litig., 564 F.Supp. 1379, 1385 (D. Md. 1983). An

inquiry into the ultimate fairness of the Settlement is not necessary at this time, because there


will be a further hearing at which the fairness of the Settlement will be addressed, after notice to

the Class. Therefore, even if there are aspects of a proposed settlement that raise questions, they

"should not derail the orderly workings of the settlement process at this point. Id. at 1386.

Preliminary approval should be denied only if there are apparent grounds to doubt the

settlement's fairness , or other "obvious deficiencies . Manualfor Complex Litig., § 30.41 (3d ed.

1993). See also H. Newberg, Newberg on Class Actions, § 11.25 at 11-37 (3d ed. 1993)

(settlement within the range of possible judicial approval should be preliminarily approved). As

discussed below, no such deficiencies exist here.

2. The Settlement Should be Preliminarily Approved as Fair,Reasonable, and Adequate

Judicial approval of class action settlements requires a two-step process. In the

first step, the court makes a preliminary decision as to whether the settlement "falls within the

range of possible judicial approval. H. Newberg, Newberg on Class Actions § 11/25 at 11-37

(3d ed. 1993). Once the settlement is found to be within the range of possible approval, a final

approval hearing is scheduled and notice is provided to the class. See id. The second step

involves final determination, following a hearing at which pertinent evidence and any objections

by class members may be considered, of whether the settlement is fair, reasonable, and adequate

from the standpoint of the class. See id. at § 11.41. On the instant Motion, the Court is presented

with the initial matter of preliminarily evaluating the Settlement.

In Warren v. City ofTampa, 693 F . Supp . 1051 , 1054 (M.D. Fla . 1988), the district

court described its review of class action settlements as follows:

The Court initially recognizes the principle that settlements are highlyfavored in the law. The Court is required to make a two part determinationthat 1) there is no fraud or collusion in reaching settlement, and 2) the


settlement is fair, adequate and reasonable. The evaluation of whethersettlement is fair, reasonable and adequate is committed to the sounddiscretion of the trial court.

Id. at 987 (citations omitted). See also Ex Parte First Nat'l Bank of Jasper, 717 So.2d

342, 344 (Ala. 1997) (settlement classes "promote the strong policy favoring settlements )

In determining whether a settlement is fair and reasonable, the trial court is

entitled to rely upon the judgement of experienced counsel for the parties. See Behrens v.

Wometco, 118 F.R.D. 534, 538 (S.D. Fla. 1988). Moreover, there is a strong initial presumption

that the compromise is fair and reasonable. See In re Chicken Antitrust Litig,, 560 F.Supp. 998

(N.D. Ga. 1980). Accordingly, courts exercise restraint in examining proposed settlements,

recognizing that settlements, by definition, are compromises that need not satisfy every concern

of the parties, but may fall anywhere within a broad range of upper and lower limits.

In lieu of a more extended inquiry into the claims asserted, courts concentrate on

the negotiating process by which the settlement was reached. See Weinberger v. Kendrick, 698

F.2d 61, 74 (2d Cir. 1982). The courts insist that a settlement be the result of "arm's length

negotiations effected by counsel with the "experiences and ability ... necessary to effective

representation of the class' interests. Weinberger, 698 F.2d at 74 (citation omitted). Once

counsel's experience is established, courts give such counsel's "opinion . . . supporting the

settlement ... ` considerable weight .' In re Saxon Sec. Litig., Nos. 82-Civ-3103 (MJL), 83-3760,

1985 WL 48177, at *5 (S .D.N.Y. Oct . 30, 1985 ). This is done because courts recognize that the

parties' counsel are best able to weigh the relative strengths and weaknesses of their arguments.

See id.

As discussed above, the Settlement was reached after extensive arm's length


negotiations among Class Counsel, Receiver's counsel, and counsel for the De La Riva Parties.

As in the litigation itself, all of the parties aggressively presented their positions, and the

negotiations required continuous efforts over a number of months to bear fruit. There was

nothing collusive about any of the settlement negotiations or the ultimate Settlement reached.

The Settlement Stipulation is fully supported and recommended by counsel for all parties.

Movants believe that there are no terms in the Settlement that militate against preliminary

approval. Although this Settlement comes at a relatively early stage in the litigation, the Receiver

and Class Counsel have engaged in a significant review of materials made available through the

Receivership, and conducted extensive, in-depth factual investigations. In the end, Class

Counsel had sufficient information regarding the case against the De La Riva Parties to make an

informed decision regarding the adequacy of the Settlement. See In re Corrugated Container

Antitrust Litig., 643 F.2d 196 (5th Cir. 1981) (lack of pre-settlement discovery should not

invalidate settlement where other information was available regarding the facts of the case);

Cotton v. Hinton, 559 F.2d 1326 (5th Cir. 1977) (same); Mashburn v. Nat'l Healthcare, Inc., 684

F.Supp. 660 (M.D. Ala. 1988) (early settlements are to be encouraged).

3. The Settlement Class Should be Provisionally Certified

Before exercising its discretion to certify the Settlement Class, the Court should

be satisfied that the requirements of Rule 23 are met. See Anchem Prods. Inc., v. Windsor, 521

U.S. 591 (1997). Thus, a settlement class should be certified where the four requirements of

Rule23(a) - numerosity, commonality, typicality, and adequacy - are satisfied as well as one of

the three subsections of Rule 23 (b). See Strube v. American Equity Inv. Life Ins. Co. 226 F.R.D.

688, 695 (M.D.Fla. 2005). Those requirements are easily met here.


a. The Settlement Class Is So Numerous That Joinder of AllMembers is Impracticable

First, the Settlement Class satisfies the numerosity requirement of Rule 23(a)(1).

Under Rule 23(a)(1), the Class must be so numerous that joinder of all members is

"impracticable . See In re Flat Glass Antitrust Litig., 191 F.R.D. 472 , 477 (W.D.Pa. 1999).

"Impracticable does not mean impossible; showing a strong hardship or inconvenience may be

sufficient. See id. at 477 (citing In re Fine Paper Antitrust Litig., 82 F.R.D. 143 (E.D.Pa. 1979)).

In reviewing the practicability of joinder under Rule 23(a)(1), the size of the proposed class is a

key factor. Courts have found the numerosity requirement satisfied with classes numbering as

few as 20 members. See Vargas v. Meese, 119 F.R.D. 291, 293 (D.D.C. 1987).4 There is no

dispute that the Settlement Class consists of thousands of individuals and entities, a number more

than sufficient to satisfy numerosity. See In re Flat Glass Antitrust Litig., 191 F.R.D. at 477;

Hedges Enters., Inc. v. Continental Group, Inc., 81 F.R.D. 461, 465 (E.D. Pa. 1979) (classes

numbering in the hundreds "have routinely satisfied the numerosity requirement ); Zanni v.

Lippold, 119 F.R.D. 32 (C.D. Ill. 1988) (151 member class certified).

b. There Are Questions of Law and Fact Common to EachMember of the Settlement Class

As for commonality, Rule 23(a)(2) requires only that there be some questions of

law or fact common to the class . "The existence of shared legal issues with divergent factual

predicates is sufficient, as is a core of salient facts coupled with disparate legal remedies within

4B.J. Moore, Moore's Federal Practice 1 23.05 [1] (2d ed. 1987) (modern trend is thattwenty-one or fewer plaintiffs will be insufficient, between twenty-one and forty plaintiffs willreceive a mixed response, and with over forty plaintiffs, the courts always find that therequirement of numerosity has been met).


one class . Hanlon v. Chrysler Corp., 150 F . 3d 1011, 1019 (9th Cir. 1998). Accordingly, the

commonality requirement has been aptly characterized as a "low hurdle easily surmounted.

Scholes v. Stone, Mcguire & Benjamin, 143 F.R.D. 181, 185 (N.D. Ill. 1992) (quotations and

citations omitted). See also Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994).

In this case, there are several issues of law and fact common to each Class

Member, including , among others:

a. whether Robert De La Riva fraudulently transferred $500,000 from thefrom the Receivership Entitles to his parents, Juan and Amanda De LaRiva;

b. whether the De La Riva Parties were unjustly enriched by the above-mentioned transfer;

c. whether the De La Riva Parties breached a fiduciary duty owed to thePlaintiffs by engaging in the above-mentioned transfer; and

d. whether the Plaintiffs were damaged by the De La Riva Parties' course ofconduct.

Because each and every Class Member purchased a "retirement trust from PFA

and have been damaged thereby, it is clear that the commonality requirement is satisfied in this

case . See Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 472 (5th Cir. 1986) (commonality is

satisfied when the members of a proposed class share at least on common factual or legal issues);

Vines v. Sands, 188 F.R.D. 302 (N.D. Ill. 1999) (finding commonality satisfied because the same

form letter was sent to each class member).

c. The Representative Plaintiffs ' Claims Are Typical of the ClassMembers ' Claims

Rule 23(a)(3) requires that "the claims . . . of the representative parties [be]

typical of the claims ... of the class. Typicality focuses on "whether the individual claim of the


class representatives has the essential characteristics common to the claims of the class. In re

Flat Glass Antitrust Litig., 191 F.R.D. at 479. A plaintiffs claim is typical "if it arises from the

same event or practice or course of conduct that gives rise to the claims of other class members

and his or her claims are based on the same legal theory. Rosario v. Livaditis, 963 F.2d 1013,

1018 (7th Cir. 1992) (quoting De La Fuente v. Stokely- Van Camp, Inc., 713 F.2d 225, 232 (7th

Cir. 1983)). See also In re VMS Sec. Litig., 136 F.R.D. 466, 475 (N.D. Ill. 1991). "[F]actual

differences will not render a claim atypical if the claim arises from the same event or practice or

course of conduct that gives rise to the claims for the class members, and if it is based on the

same legal theory. H. Newberg & A. Conte, Newberg On Class Actions § 3.13, at 3-76 (3d ed.

1992) ("Newberg ). See also In re NASDAQ Market-Makers Antitrust Litig., 169 F.R.D. 493,

511 (S.D.N.Y. 1996) (factual differences among class members do not defeat class certification

where all claims arise from the same price-fixing conspiracy); In re Domestic Air Transp.

Antitrust Litig., 137 F.R.D. 677, 699 (N.D. Ga. 1991) (typicality requirement satisfied even

though the 12.4 million class members purchased tickets for an enormous number of different

routes, at diverse times, at a multitude of varying prices, and on diverse terms). Courts have

construed the typicality requirement liberally. See, e.g., Scholes, 143 F.R.D. at 185; Mersay v.

First Republic Corp. OfAm., 43 F.R.D. 465, 468 (S.D.N.Y. 1968).

In this case, Plaintiffs' claims are unquestionably typical of the claims of the

Class they seek to represent . Plaintiffs allege that they were the victims of a massive fraudulent

scheme, of which PFA was at the center. Plaintiffs' claims are typical because their claims, just

like all Class Members' claims , arise out of the same course of conduct by PFA and the trustee

banks and are all based on the same legal theory. Thus, the typicality requirement is satisfied.


See, e.g., Kornberg v. Carnival Cruise Lines, Inc., 741 F.2d 1332, 1337 (11th Cir. 1984)

(typicality found where the claims of the class and class representatives arise from the same

pattern or practice and are based on the same legal theory).

d. The Representative Plaintiffs Will Fairly andAdequately Represent the Settlement Class

The final requirement of Rule 23(a) is that the representative parties fairly and

adequately represent the class . More specifically:

Two criteria for determining the adequacy of representation are generallyrecognized: (1) the named representative must not have antagonistic orconflicting interests with unamed members of the class , and (2) therepresentatives must appear to be able to vigorously prosecute the interestsof the class through qualified counsel.

Nat'l Assn of Reg'l. Med. Program v. Matthews , 551 F.2d 340, 345 (D.C. Cir. 1976)

(citations omitted). See also Sosna v. Iowa, 419 U.S. 393, 403 (1975) (holding that where it is

unlikely that segments of the class would have interests conflicting with the class representative,

and where the interests of the class have been competently urged at each level of the proceeding,

the test of Rule23(a)(4) has been met).

Here, the interests of the Plaintiffs are aligned with the interests of the other Class

Members because they have all been injured by the same conduct. Plaintiffs do not have any

interest antagonistic to those of other Class Members. The central issue in this case - whether

PFA, its Principals, and other related entities fraudulently sold unregistered securities and

whether the Defendants participated in the scheme - are common to the claims of the Plaintiffs

and the other members of the proposed Class. Furthermore, absent this Settlement, each

Settlement Class Member would have the same interest in proving that the De La Riva Parties

are primarily liable for participating in furtherance of PFA's allegedly fraudulent scheme.


Plaintiffs have the same interest as each of the other Class Members in proving each of the

elements of the alleged claims . Proof of these elements by Plaintiffs will necessarily support the

claims of the other Settlement Class Members.

Furthermore, Plaintiffs are represented by qualified and experienced lawyers who

have prosecuted numerous securities class actions to successful resolutions, so "there is no

ground for supposing that plaintiff will not adequately represent the class. In re Glassine &

GreaseproofPaper Antitrust Litig., 88 F.R.D. 302, 306 (E.D. Pa. 1980).

e. The Proposed Class Satisfies the Requirements of Rule 23(b)(3)

Once the four prerequisites of Rule 23(a) are met, the Class must also satisfy at

least one provision of Rule 23(b). See Thomas v. Albright, 139 F.3d 227, 234 (D.C. Cir. 1998).

Pursuant to Rule 23(b)(3), class certification is appropriate where "the questions of law or fact

common to the members of the class predominate over any questions affecting only individual

members, and that a class action is superior to other available methods for the fair and efficient

adjudication of the controversy. Fed. R. Civ. P. 23(b)(3). See Thomas, 139 F.3d at 234; In re

VMS Sec. Litig., 136 F.R.D. at 479. Here, the proposed Class clearly satisfies Rule23(b)(3).

Rule 23 requires only that common issues predominate, not that they be

dispositive of the entire litigation . See, e.g., Brown v. Pro Football, Inc., 146 F.R.D. 1, 4

(D.D.C. 1992) ("common issues need not be exclusive, but must only predominate over

individual concerns ). The Supreme Court has recognized that predominance is a test readily met

in cases alleging consumer fraud. See Amchem, 521 U. S. at 625. "The predominance

requirement is satisfied unless it is clear that individual issues will overwhelm the common

questions and render the class action valueless . NASDAQ, 169 F .R.D. at 517 (citations omitted).


Here, the central issue is whether PFA and other parties took money by constructing a scheme to

defraud investors - an issue that can be proved with class-wide evidence. This central issue

dwarfs any individual issues . Thus, the questions of law or fact common to the members of the

Class predominate over questions affecting only individual Class Members. In addition, the facts

and terms of the Settlement also provide predominating common issues.

A class action is also a superior device for adjudicating the effects of the De La

Riva Parties' actions on the Class. Neither the parties nor the judicial system would benefit from

duplicative litigation in this matter. Class treatment of the Settlement of these claims is plainly

superior to a multiplicity of suits. Finally, class treatment of this Settlement presents no

manageability problems. Because the Settlement will provide the Settlement Class with

substantial monetary benefits without the risk, costs , and delay of litigation, class certification is

superior to the other available methods of resolving the Settlement Class' claims against the De

La Riva Parties.

This Settlement satisfies all the requirements of Rule 23. Numerosity,

commonality, typicality, and adequacy are all present in this case, with common questions

predominating, and class treatment is the superior way to handle this matter. The Court should,

therefore, certify the proposed Settlement Class.

B. Receivership

The Amended Receivership Order at Paragraph 6 empowers the Receiver to settle

actions where the Receiver is a party with the approval of this Court. The proposed Stipulation

will result in significant benefits to the Receivership Estate by avoiding the continued risk,

expense and delay inherent in all litigation, and payment of a significant settlement amount


followed by significant distributions to Receivership Creditors. Securities and Exchange

Commission v. Credit Bancorp, Ltd., 2002 WL 1792053 (S.D. N.Y. 2002); In re Justice Oaks, II,

Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990); In re Arrow Air, Inc., 85 B.R. 886 (Bkrtcy. S.D. Fla.

1988) (approving a proposed settlement of litigation for these exact reasons).5 The approval of

the Settlement is a matter of discretion and will not be disturbed or modified on appeal unless

approval or disapproval is an abuse of discretion. Id. at 891. To aid the court in making its

determination, the court must be given all the relevant facts and must evaluate whether the

compromise falls below the "lowest point in the range of reasonableness. Id. (citing In re

Teltronics Services, Inc., 762 F. 2d 185, 189 (2d Cir. 1985); In re Jackson Brewing Co., 624 F.2d

599, 602-03 (5th Cir. 1980).

When deciding whether to approve or disapprove a settlement, the Eleventh

Circuit, echoing the Arrow Air court, has considered the following factors : (a) The probability of

success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection;

(c) the complexity of the litigation involved; (d) the paramount interest of the creditors and a

proper deference to their reasonable views in the premises . See In re Justice Oaks II, Ltd., 898

F.2d at 1549 (citing Martin v. Kane (In re A&C Properties), 784 F.2d 1377, 1381 (9th Cir. 1986)

(quoting In re Flight Transp. Corp. Sec. Litig., 730 F.2d 1128, 1135 (8th Cir. 1984), cert. denied,

469 U.S. 1207 (1985), cert. denied, 479 U.S. 854 (1986)).

In Arrow Air, Inc., a Chapter 11 corporate debtor and committee of unsecured

creditors sought approval of the settlement of class litigation brought by the class against the

5 Although Justice Oaks and Arrow Air dealt with settlements in a bankruptcycontext , courts have noted the similarity in purpose and duty of a bankruptcy trustee and an


debtor and others . Arrow Air, Inc., 85 B .R. at 887 . The court approved the settlement reasoning

that the settlement would eliminate claims against the estate and provide for payment to the

estate of $300,000. Id. at 892. Furthermore, the court noted that by settling, the continued

expense, risks, and delay of litigation would be avoided. Id. Thus, because the settlement was

"clearly in the best interest of all creditors of the estate, the court granted the motion. Id.

The settlement set forth in the Stipulation (Exhibit "1 ) will result in recovery by

the investors of a significant amount of their losses . This distribution will include the Net Class

Settlement Fund of $112,500, less expenses and fees , as well as $112 ,500 as the proceeds of the

Receiver's Turnover Motion. This result is accomplished without the expense, delay and risk of

continued litigation with the De La Riva Parties. In short, the Agreement, like the settlement that

was ultimately approved in Arrow Air, is in the best interest of the Receivership Estate and

should be approved.

CONCLUSION

The Settlement Stipulation provides a fair resolution to the claims of the class and

the Receiver against the De La Riva Parties for their role in PFA's fraudulent scheme. Settling at

this stage provides numerous benefits to the Class and other Receivership Creditors including

avoiding the expense and delay of further litigation, and providing funds for the Class to pursue

other claims against parties involved in the PFA fraud. Lead Plaintiffs and the Receiver request

that the Court preliminarily approve the Settlement and enter the Proposed Preliminary Order

attached hereto as Exhibit "2.

equity receiver. Scholes v. Lehmann, 56 F.3d 750, 753 (7' Cir. 1995).


Dated : May , 2007

Thomas G. Schultz , not individually,but solely in his capacity as Receiverfor Pension Fund of America, L.C.PFA Assurance Group, Ltd.PFA International, Ltd.Claren TPA, LLCShadow Creek Investments, LLCAtlantic Realty Ventures LLCc/o Tew Cardenas, LLP1441 Brickell Avenue , 15th FloorMiami, Florida 33131305-536-1112305-536-1116 (fax)[email protected]

Harley S. Tropin, Esq.Kozyak Tropin & Throckmorton,P.A.2525 Ponce de Leon, 9th FloorCoral Gables , Florida 33134Telephone : 305.372.1800Facsimile : [email protected]

Page 21 of 22r]

Tew Cardenas LLPCounsel for ReceiverFour Seasons Tower, 15th Floor1441 Brickell AvenueMiami, Florida 33131Telephone: (305) 536-1112Facsimile: (305) 536-1116dml(ctewlaw.com

By:David M. Levine, EsquireFlorida Bar No. 0328731

Victor M. Diaz, Esq.Podhurst, Orseck, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130Telephone : 305.358.2800Facsimile: [email protected] class representatives

By:Victor M. Diaz, Esq.Florida Bar No.


CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing wasfurnished via Electronic Mail (unless otherwise noted) to all parties on the attached service listthis day of May, 2007, and will be posted in English, Spanish and Portugese on theReceiver's website.

22


IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION


Plaintiff, Case No. 05-20863-CIV-MOOREIGARBER

vs.

PENSION FUND OF AMERICA, L.C.,PFA ASSURANCE GROUP, LTD.,PFA INTERNATIONAL, LTD.CLAREN TPA, LLC,LUIS M. CORNIDE andROBERT DE LA RIVA,

Defendant.

MARCELLA CORDOVA, JORGE FLORES,HENRY IURMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,

Plaintiffs, No. 05-211 d9--CIV-MOORE-GARBER

vs.

LEHMAN BROTHERS, INC., a New YorkCorporation ; MERRILL LYNCH & CO., INC.,a Delaware Corporation ; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation ; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andHSBC BANK, U.S.A., LUIS CORNIDE andROBERT A. DE LA RIVA,

Defendants.

-1-EXHIBIT`

---L--


STIPULATION AND AGREEMENT OF SETTLEMENT

This Stipulation and Agreement of Settlement, dated as of May 25, 2007 (the

"Stipulation"), is made and entered into by and among the following Settling Parties (capitalized

terms used herein are defined in §IV hereof) to the above-entitled Class Action Litigation and

Receivership Case: (i) Plaintiffs (as defined in 111.13 herein), on behalf of themselves and each

of the Settlement Class Members, by and through their counsel of record in the Class Action

Litigation; (ii) Thomas G. Schultz, the Court-appointed receiver (the "Receiver") in the above-

captioned action commenced by the Securities and Exchange Commission ("SEC"), by and

through his counsel of record in such action (the "Receivership Case"); (iii) Tistituto de

Prevision Militar ("IPM"); and (iv) Juan De la Riva, Amanda De la Riva, and Robert De la Riva

(collectively, the "De la Riva Parties"). This Stipulation is intended by the Settling Parties,

subject to the approval of the Court and the satisfaction of the conditions of settlement as set

forth herein, to fully, finally and forever resolve, discharge and settle and dismiss with prejudice

the Released Claims, upon and subject to the terms hereof

1. THE LITIGATION

On March 28, 2005, the SEC filed the above-captioned civil action against Pension Fund

of America, L.C. and its related entities (hereinafter "PFA") and principals, alleging PFA

engaged in an offering fraud, On that same day, the District Court for the Southern District of

Florida entered a TRO and appointed the Receiver.

a. The Receiver's Turnover Motion .

There is pending litigation between the Receiver and the De la Riva Parties over the

$450,000 plus accruing interest held in the trust account of counsel for the De la Riva Parties.

On April 17, 2006, the Receiver filed with the Court an Amended Motion for a determination


that the funds in the foregoing account are property of the Receivership and should be transferred

to the Receiver for distribution to all investors (the "Receiver's Turnover Motion"). IPM is a

party to the Turnover Motion. The De la Riva Parties opposed the Motion. The matter remains

pending.

b. The Class Action Litigation

On April 21, 2005, a complaint was filed in the United States District Court for the

Souther District of Florida on behalf of a putative class of PFA investors who had purchased

trust plans from PFA from 1999 through March 30, 2005. Hem)' lurnnan v. Pension Fund of

America L.C. et al. Case No. 05-21101. On April 28, 2005, a second related complaint was filed

on behalf of the same putative class of PFA investors. Samuel Puterman v. Lehmann Brothers,

Inc. et al., Case No. 05-21169.

On June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended Class

Action Complaint, styled Cordova, et. al. v. Lehman Brothers, Inc., et, al., Case No. 05-21169

alleging common law claims for (1) breach of fiduciary duty, (2) aiding and abetting PFA's

common law fraud and (3) aiding and abetting PFA's breaches of its fiduciary duties. The

Complaint named Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond James Financial

Services, Inc., Oliva I Zvestment Group, Inc. and HSBC as defendants (hereinafter, the "Financial

Institution Defendants"). The Complaint raised these claims on behalf of a putative class of

investors consisting of:

All persons who held and/or retained investments in retirement trust plans offered

by PFA, or its affiliated companies, during the period commencing January 1999

through the present ("Class Period"). Excluded from the Class are Defendants,

PFA, PFA Assurance, PFA International, Claren TPA, Luis Cornide, Robert de la

Riva and all of the Defendants' alter-ego entities, all employees or agents of

Defendants and agents of the Defendants' alter ego entities, all subsidiaries and

-3-


affiliates of the Defendants, the Defendants' officers, agents, and employees, any

agents or brokers (and their immediate family members) who sold or solicited the

sale of investments in PFA or PFA Assurance.

The consolidated actions are referred to herein collectively as the "Class Action

Litigation." On January 17, 2006, the Court granted Defendants' motions to dismiss, ruling


Uniform Standards Act ("SLUSA"). On February 13, 2006, Plaintiffs filed their Second

Amended Class Action Complaint, alleging violations by the Financial Institution Defendants,

including HSBC, of Sections 12 and 15 of the Securities Act of 1933 ("Securities Act") and

Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"). Motions to dismiss the

Second Amended Class Action Complaint are currently pending.

II. DE LA RIVA PARTIES' DENIAL OF WRONGDOING AND LIABILITY

The De la Riva Parties have expressly denied and continue to deny, and this Stipulation

may not be deemed and is not an admission of, any and all charges of fault, wrongdoing or

liability against it arising out of any of the conduct, statements, acts or omissions alleged, or that

could have been alleged, in the Receiver's Turnover Motion and the Class Action Litigation, or

of any infirmity in the defenses that the De la Riva Parties asserted or could have asserted in the

Receiver's Turnover Motion and the Class Action Litigation.

Nonetheless, the De La Riva Parties have taken into account the uncertainty and risks

inherent in any litigation, especially in complex cases like the Receiver's Turnover Motion and

the Class Action Litigation, and the sharply contested legal and factual issues, and have

concluded that further conduct of the Receiver's Turnover Motion and the Class Action

Litigation would be protracted, expensive, and disruptive to the De la Riva Parties. The De la

Riva Parties have, therefore, determined that it is desirable and beneficial that the Receiver's

-4-


Turnover Motion and the Class Action Litigation be fully and finally settled in the manner and

upon the terns and conditions set forth in this Stipulation.

Ill. CLAIMS OF THE PLAINTIFFS AND THE RECEIVER AND BENEFITS OF

SETTLEMENT.

Based on the investigation of their counsel, the Plaintiffs believe that the as yet

unasserted claims against the De la Riva Parties in the Class Action Litigation have merit and

that the evidence developed to date supports the claims. However, counsel for the Plaintiffs

recognize and acknowledge the expense and length of continued proceedings necessary to

prosecute the Class Action Litigation against the De la Riva Parties through trial and through

appeals. Counsel for the Plaintiffs also have taken into account the uncertain outcome and the

risk of any litigation, especially in complex actions such as the Class Action Litigation, as well

as the difficulties and delays inherent in such litigation. Counsel for the Plaintiffs are mindful of

the inherent problems of proof under and possible defenses to the unasserted claims in the Class

Action Litigation. Counsel for the Plaintiffs believe that the settlement set forth in this

Stipulation confers substantial benefits upon the Settlement Class. The settlement requires the

De la Riva Parties to pay $112,500 to the Class. The settlement also calls for the resolution of

the Receiver's Turnover Motion through payment by the De la Riva Parties of $62,500 to the

Receiver in addition to the release of $50,000 already held in a Trust under the name of Juan De

la Riva's grandson, for a total settlement with the Receiver of $112,500. These funds have

already been taken into account in the Plan of Allocation set forth in the Stipulation of

Settlement with HSBC that the Court has already preliminarily approved. By achieving a class

settlement against the De la Riva Parties at this early stage in the class action litigation, the

alleged Plaintiff class will receive a considerable distribution of money without the uncertainty,

-5-


delay and expense of protracted litigation. Based on their evaluation, counsel for the Plaintiffs

have determined that the settlement set forth in this Stipulation is fair, reasonable and adequate

and in the best interests of the Settlement Class. Likewise, the Receiver and the De la Riva

Parties recognize the benefits of settlement of both the Receiver's Turnover Motion and the

Class Action Litigation, so that the proceeds of the Receiver's Settlement and the net proceeds of

the Class Action Litigation (after allowance of professional fees and deduction of certain other

costs) may be distributed by the Receiver to creditors of the Receivership Case, including the

Settlement Class, pursuant to the Plan of Allocation described in the HSBC Stipulation at

Section 1.16 and Exhibit A-1.

IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the

Plaintiffs (for themselves and the Settlement Class Members), the Receiver and the De la Riva

Parties, by and through their respective attorneys of record, that, subject to the approval of the

Court, the Released Claims and the Receiver's Turnover Motion shall be finally and filly

compromised, settled, released and dismissed with prejudice as to the De la Riva Parties.

1. Definitions

As used in this Stipulation and the related exhibits attached hereto, the following terms

have the meanings specified below:

1.1 "Authorized Claimant" means any Settlement Class Member and other creditors

of the Receivership Case who submit a valid Proof of Claim, and sufficient supporting

documentation in such form and manner, and within such time, as the Court shall prescribe and

whose claim for recovery thereafter is allowed pursuant to the terms of Paragraph 5.3 this

Stipulation.

-6-


1.2 "Claimant" means any Settlement Class Member and other creditor of the

Receivership Case who file a Proof of Claim in such form and manner , and within such time, as

the Court shall prescribe, as set forth in ¶ 5.3 herein.

1.3 "Claims Administrator" means Garden City Group.

1.4 "Class Action Litigation" shall mean the above-captioned litigation styled

Cordova, et al. v. Lehman Brothers , et al., Case No. 05-21169-CfV-MOORE-GARBER.

1.5 "Class Settlement Fund" means One Hundred Twelve Thousand Five Hundred

Dollars ($112,500) in cash to be paid to the Escrow Agent and to be held in Escrow pursuant to

¶2.1 of this Stipulation, plus all interest earned thereon.

1.6 "Effective Date" means, with respect to the Receiver's Turnover Motion and the

Released Claims, the date of completion of the following: (z) entry of an Order and Final

Judgment, which approves in all material respects (A) the dismissal of the claims that have been

or could be asserted against Juan De la Riva and Amanda De la Riva in the Class Action

Litigation; (B) the releases and bar orders provided for in this Stipulation with respect to the

Released Claims; and (C) the Plan of Allocation set forth in Exhibit A-1 to the HSBC

Stipulation; and (ii) either (A) expiration of the time to appeal or otherwise seek review of the

Order and Final Judgment which approves, in all material respects, the settlement of the

Released Claims and the Receiver's Turnover Motion as provided in this Stipulation, without

any appeal having been taken or review sought, or (B) if an appeal is taken or review sought, the

expiration of five (5) days after an appeal or review shall have been dismissed or finally

determined by the highest court before which appeal or review is sought and which affirms the

material terms of such appealed settlement and/or Order and Final Judgment and is not subject to

-7-


further judicial review; provided, however, that any award of attorneys' fees or costs shall not be

considered a material provision of the Order and Final Judgment and any appeal of any such

award shall not delay the Effective Date and any modification as a result of such appeal shall not

be considered a modification of a material term.

1.7 "Escrow Agent" means Podhurst Orseck P.A.

1.8 "Final" means no longer subject to further appeal or review, whether by

exhaustion of any possible appeal, lapse of time or otherwise.

1.9 "De la Riva Parties" means Juan De la Riva, Amanda De la Riva, and Robert De

la Riva.

1.10 "Judgment" means the judgment to be rendered by the Court, substantially in the

form attached hereto as Exhibit B.

1.11 "Net Class Settlement Fund" means the amount of the Class Settlement Fund to

be distributed by the Receiver pursuant to the Plan of Allocation, after the deductions described

in Paragraph 5.2.

1.12 "Person" means an individual, corporation, partnership, limited partnership,

association, joint stock company, estate, legal representative, trust, retirement plan,

unincorporated association, government or any political subdivision or agency thereof, and any

business or legal entity, and any spouse, heir, legatee, executor, administrator, predecessor,

successor , representative or assign of any of the foregoing.

1.13 "Plaintiffs" means and includes Marcella Cordova, Jorge Flores, Henry Turman,

Marcos Mustieles, Katia Ocarripo, Cesar Aguirre Urbaneja, Malliya Salazar Lara, Fernando M.

-8-


Quevedo Araoz, Martha Landivar Gantier, Fabio Moreno Charme, Enrique Loeser Bravo, Jose

Luis Zambrano Hidalgo, and Julio Ledesma.

1.14 "Plaintiffs' Counsel" means any counsel who have appeared on behalf of

Plaintiffs and/or any Settlement Class Member in the Litigation.

1.15 "Plaintiffs' Settlement Counsel" means: Podhurst Orseck P.A., 25 West Flagler

Street, Suite 800, Miami, FL 33130 and Kozyak Tropin & Tbrockmorton, PA, 2525 Ponce de

Leon, 9th Floor, Miami, FL 33134.

1.16 "Plan of Allocation" means a plan or fora ula of allocation of the Proceeds of the

Receiver's Settlement and the Net Class Settlement Fund, as described in Section VIII of the

Notice of Pendency and Proposed Settlement of Class Action and Receiver's Turnover Action

attached to the HSBC Stipulation as Exhibit A-1, whereby the Net Settlement Fund, the Proceeds

of the Receiver's Settlement and, upon liquidation, of certain other receivership assets shall be

distributed to Authorized Claimants.

1.17 "Proceeds of the Receiver's Settlement" shall mean the sum of 5112,500,

consisting of $50,000 currently held in trust under the name of Juan De la Riva's grandson and

the additional $62,500 to be paid by the De la Riva Parties.

1.18 Receivership Case" shall mean the above-captioned Case No. 05-20863-CIV-

MOORE commenced by the SEC against PFA and its principals.

1.19 "Receivership Claims Procedure" means the procedure set forth in Paragraph 5.3

for the filing of claims in the Receivership Case by Receivership Creditors.

-9-


1.20 "Receivership Creditors" shall mean all Persons, including Settlement Class

Claimants, who have claims against the Receivership Entities and who file claims in the

Receivership Case pursuant to Section 5.3 by the Claims Filing Deadline.

1.21 "Released Claims:" (i)With respect to Juan and Amanda De la Riva, "Released

Claims" means all claims (including "Unknown Claims" as defined herein), demands, rights,

liabilities and causes of action of every nature and description whatsoever, known or unk n.own,

suspected or unsuspected, whether or not concealed or hidden, fixed or contingent, arising out of,

based upon or related to the purchase, acquisition, maintenance or sale of any trust or other plan

or security issued or sold by or on behalf of PFA to the Plaintiffs or any settlement class member

during the settlement class period, and all claims, counter-claims, set-offs or defenses which

were asserted, might have been asserted, or in the future could be asserted, in the Class Action

Litigation and the Receiver's Turnover Motion including, without limitation, claims for

negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, fraud,

breach of fiduciary duty, or disgorgement of any gains, profits or unjust enrichment, or claims

arising under or for violations of any state or federal statutes, rules, regulations or common law.

(ii) With respect to Robert De la Riva, "Released Claims" means any and all claims, counter-

claims, set-offs or defenses which were asserted, might have been asserted, or in the future could

be asserted, in the Receiver's Turnover Motion including, without limitation, claims for

negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, fraud,

breach of fiduciary duty, or disgorgement of any gains, profits or unjust enrichment, or claims

arising under or for violations of any state or federal statutes, rules, regulations or common law.

-10-

Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 11 of 68 F1

1.22 "Settlement Class" means all Persons (other than those Persons who timely and

validly request exclusion from the Settlement Class) who purchased or otherwise acquired trust

plans and/or other securities from PFA during the period between January 1, 1999 and March 31,

2005, inclusive. Excluded from the Settlement Class are (a) any Defendant named in the

Complaint (or any previous complaints), including any and all subsidiaries, affiliates, alter-ego

entities, and/or immediate family members thereof; (b) PFA, PFA Assurance, PFA International,

Claren TPA, including any and all subsidiaries , affiliates and/or alter-ego entities thereof; (c) all

officers, directors, employees or agents (and their immediate family members) of the entities and

individuals described in subsections (a) and (b); (d) all employees, agents and/or brokers (and

their immediate family members ) who sold or solicited the sale of investments in PFA or PFA

Assurance; (e) any person, firm, trust, officer, director or any individual or entity in which any of

the individuals or entities described in subsections (a) through (d) above has a controlling interest

or which is affiliated with any such individuals or entities; (f) the legal representatives, agents,

affiliates , heirs, successors -in-interest or assigns of any such excluded party.

1.23 "Settlement Class Member" or "Member of the Settlement Class" mean a Person

who falls within the definition of the Settlement Class as set forth in $1.4 of this Stipulation.

1.24 "Settlement Class Period" means the period commencing on January 1, 1999

through March 31, 2005, inclusive.

1.25 "Settling Parties" means, collectively, the De la Riva Parties, the Plaintiffs on

behalf of themselves and the Members of the Settlement Class, the Receiver, and IPM.

1.26 "Unknown Claims" means any Released Claims any of the Settling Parties does

not know or suspect to exist in his, her, its or their favor at the time of the release of the Released

-11-


Persons which, if known by him, her, it or them, might have affected his, her, its or their

settlement with and release of the Released Persons, or might have affected his, her, its or their

decision not to object to this settlement . With respect to any and all Released Claims, the

Settling Parties stipulate and agree that, upon the Effective Date, they shall be deemed to have,

and by operation of the Judgment shall have, expressly waived the provisions, rights and benefits

of any statute, rule or provision which prohibits the release of Unknown Claims.

2. The Settlement

a. The Class Settlement Fund

2.1 The $112,500 Class Settleme nt Fund shall be transferred by or on behalf of the

De la Riva Parties to the Escrow Agent on or before five (5) business days after preliminary

approval of the settlement by the Court (the "Transfer Date"). If the $112,500 is not timely

deposited with the Escrow Agent, the unpaid amount shall bear interest at the rate of eight

percent (8%) per annum from the Transfer Date until paid. On the Effective Date, the Class

Settlement Fund, after deduction of fees allowed to counsel for the Settlement class, and the fees

and costs of the Notice and Administration Fund and the Escrow Agent and other items as set

forth in Paragraph 5.2, will be transferred to the Receiver for distribution to Authorized

Claimants in accordance with the Plan of Allocation as approved by the Court.

b. The Proceeds of the Receiver's Turnover Motion

2.2 The $62,500 to be paid by the De la Riva Parties shall be transferred by or on

behalf of the De la Riva Parties to the Receiver on the Transfer Date, and the $50,000 currently

held in trust shall be released to the Receiver. Together, these funds make up the Proceeds of the

Receiver's Turnover Motion, which will be distributed by the Receiver after the Effective Date

-12-


to Authorized Claimants pursuant to the Plan of Allocation in its current form or as may be

approved by the Court. Prior to the Transfer Date, the De la Riva Parties shall continue to hold

the funds in their attorneys' trust account until their turnover to the Receiver on the Transfer

Date. The De la Riva Parties shall continue to hold the $450,000 that is the subject of the

Receiver's Turnover Motion, less payments made as described in 11 2.1 and 2 .2, in their

attorneys' trust account until the Effective Date.

2.3 The payments set forth in Sections 2.1 and 2.2 shall be the only payments that the

De la Riva Parties shall be required to make or cause to be made in connection with the

Settlement Agreement. The De la Riva Parties shall have no responsibility for, interest in or

liability with respect to the investment of the Class Settlement Fund, the determination or

calculation of any claim or payment from, or distribution of such Fund, the administration of

such Fund, or any losses incurred in connection with such matters.

c. The Escrow Agent

2.4 Pursuant to the terms hereof, Podhurst Orseck P.A. is hereby appointed the

Escrow Agent and accepts the duties and obligations of the Escrow Agent set forth herein. The

Escrow Agent shall invest the Class Settlement Fund deposited pursuant to ¶2.1 hereof in

instruments backed by the full faith and credit of the United States Government or fully insured

by the United States Government or an agency thereof, and shall reinvest the proceeds of these

instruments as they mature in similar instruments at their then-current market rates. The Escrow

Agent shall bear all risks related to investment of the Class Settlement Fund.

2.5 The Escrow Agent shall not disburse the Class Settlement Fund except as

provided in this Stipulation, by an order of the Court, and with the written agreement of counsel

for the De la Riva Parties; provided, however, that the Escrow Agent shall transfer to the Net

-13-


Class Settlement Fund to the Receiver on the Effective Date for distribution to Authorized

Claimants in accordance with the Plan of Allocation as approved by the Court.

2.6 Subject to further order( s) and/or directions as may be made by the Court, the

Escrow Agent is authorized to execute such transactions on behalf of the Settlement Class

Members as are consistent with the terms of this Stipulation.

2.7 All funds held by the Escrow Agent shall be deemed and considered to be in

custodies legis of the Court, and shall remain subject to the jurisdiction of the Court, until such

time as such funds shall be distributed pursuant to this Stipulation and/or further order ( s) of the

Court.

d. Taxes

2.8 (a) The Settling Parties and the Escrow Agent agree that the Class Settlement

Fund shall be a "qualified settlement fund" within the meaning of Treas. Reg. §1.468B-1 at all

times after preliminary approval of this Stipulation by the Court. In addition, the Escrow Agent

shall timely make such elections as necessary or advisable to carry out the provisions of this

¶2.8, including the "relation-back election" (as defined in Treas. Reg. §1.468B-1(j)) to enable

the Settlement Fund to be treated as a qualified settlement fund from the earliest permissible

date. Such elections shall be made in compliance with the procedures and requirements

contained in such regulations. It shall be the responsibility of the Escrow Agent to timely and

properly prepare and deliver the necessary documentation for signature by all necessary parties,

and thereafter to cause the appropriate filing to occur. All Settling Parties hereto agree to

cooperate with each other to assist the Escrow Agent in these efforts and effectuate the purpose

of this paragraph, and shall not take a position in any filing or before any tax authority that is

inconsistent with this paragraph or its purpose.

-14-


(b) For the purpose of §468B of the Internal Revenue Code of 1986, as

amended, and the regulations promulgated thereunder, the "administrator" shall be the Escrow

Agent. The Escrow Agent shall timely and properly file all informational and other tax returns

necessary or advisable with respect to the Class Settlement Fund (including without limitation

the returns described in Treas. Reg. §1.468B-2(k)). Such returns shall be consistent with this

¶2.8 and in all events shall reflect that all taxes (including any estimated taxes, interest or

penalties) due with respect to the Class Settlement Fund, to the extent required under federal or

state law, shall be paid out of the Class Settlement Fund as provided in ¶2.8(c) hereof

(c) All (a) taxes (including any estimated taxes, interest or penalties ) arising

under federal or state law with respect to the income earned by the Class Settlement Fund,

including any taxes that may be imposed upon the Class Settlement Fund, the De la Riva Parties,

or their counsel with respect to any income earned by the Class Settlement Fund for any period

during which the Class Settlement Fund does not qualify as a "qualified settlement fund" for

federal or state income tax purposes ("Taxes"), and (b) expenses and costs incurred in

connection with the operation and implementation of this ¶2.8 (including, without limitation,

expenses of tax attorneys and/or accountants and mailing and distribution costs and expenses

relating to filing (or failing to file) the returns described in this $2.8) ("Tax Expenses"), shall be

paid out of the Class Settlement Fund. In all events, the De la Riva Parties and their counsel

shall have no liability or responsibility for the Taxes or the Tax Expenses or any other tax-related

liability with respect to the Class Settlement Fund. The Escrow Agent shall indemnify and hold

the De la Riva Parties and their counsel harmless for Taxes, Tax Expenses and any other tax-

related liability arising out of the Class Settlement Fund (including, without limitation, Taxes

-15-


payable by reason of any such indemnification). Further, Taxes and Tax Expenses shall be

treated as, and considered to be, a cost of administration of the Class Settlement Fund and shall

be timely paid by the Escrow Agent out of the Class Settlement Fund without prior order from

the Court and the Escrow Agent shall be obligated (notwithstanding anything herein to the

contrary) to withhold from distribution to Authorized Claimants any finds necessary to pay such

amounts including the establishment of adequate reserves for any Taxes and Tax Expenses (as

well as any amounts that may be required to be withheld under Treas. Reg. § 1.468B-2(l)(2)); the

De la Riva Parties and their counsel shall not be responsible or have any liability therefore. The

Settling Parties hereto agree to cooperate with the Escrow Agent, each other, and their tax

attorneys and accountants to the extent reasonably necessary to carry out the provisions of this

$18.

(d) For the purpose of this ¶2.8, references to the Class Settlement Fund shall

include both the Class Settlement Fund and any earnings thereon.

e. Termination of Settlement

2.9 In the event that the material terms of this Stipulation are not finally approved by

the Court or this Stipulation is terminated, canceled , or fails to become effective for any reason:

(i) the Class Settlement Fund (including accrued interest) less expenses actually incurred or due

and owing in connection with the settlement provided for herein, shall be refunded by the

Escrow Agent to the De la Riva Parties within five (5 ) business days. In such event, the Escrow

Agent or its designee shall apply for any Tax refund owed to the Class Settlement Fund as set

forth in ¶2.8 hereof, and pay the proceeds, after deduction of any fees or expenses incurred in

connection with such application(s), to the De la Riva Parties, and (ii) the $62,500 paid by the De

la Riva Parties shall be refunded by the Receiver within five (5) business days, and the De la

-16-


Riva Parties shall continue to hold the proceeds of the Receiver's Turnover Motion in their

attorneys' trust account as set forth in ¶2.2 pending further order of the Court. Also, in the event

of termination or if the Stipulation is not finally approved, the De la Riva Parties shall continue

to hold the $450,000 that is the subject of the Receiver's Turnover Motion in their attorneys'

trust pending further order of the Court.

3. Notice Order, Settlement Hearings and Judgment

3.1 For purposes of this Stipulation and Settlement only, the Settling Parties agree

that the claims asserted in the Class Action Litigation on behalf of the putative class be certified

as a class action pursuant to the requirements of Rule 23 of the Federal Rules of Civil Procedure.

3.2 Within ten (10) business days after execution of this Stipulation, Plaintiffs and the

Receiver shall submit to the United States District Court for the Southern District of Florida,

Miami Division, a joint motion, to be stipulated to by the De la Riva Parties, attaching this

Stipulation and requesting the Court enter a Preliminary Approval Order, substantially in the

form of Exhibit A attached hereto, (a) preliminarily certifying the Settlement Class and relevant

claims pursuant to Rule 23 of the Federal Rules of Civil Procedure, solely for the purpose of this

settlement, (b) authorizing the mailing of a settlement notice of the Class Action Litigation and

the Receiver's Turnover Motion (the "Notice"), substantially in the form of Exhibit C attached

hereto, and (c) scheduling a hearing to consider the final approval of this Stipulation of

settlement. The Notice shall include the general terms of the settlement set forth in this

Stipulation, the proposed Plan of Allocation, the general terms of the Fee and Expense

Application as defined in $6.1 hereof, and the date of the Settlement Hearin-, as defined below.

-17-


3.3 Plaintiffs' Settlement Counsel and the Receiver shall request that after notice is

given, the Court hold a hearing (the "Settlement Hearing") and approve the settlement of the

Class Action Litigation, the Receiver's Turnover Motion and Released Claims against the De la

Riva Parties, only, as fair, reasonable and adequate and in the best interests of the Settlement

Class and the Receivership Case. At the same Settlement Hearing, Plaintiffs' Settlement

Counsel and the Receiver also will request that the Court approve the proposed Plan of

Allocation. Plaintiff's Settlement Counsel will also request that the Court approve the Fee and

Expense Application, and approve and enter a Judgment substantially in the form of Exhibit B

hereto.

4. Releases

4.1 Upon the Effective Date, as defined in ¶ 1.6 hereof, the Plaintiffs and each of the

Settlement Class Members, including IPM, including but not limited to each of their respective

successors, predecessors, assigns, attorneys (including Settlement Class Counsel), heirs,

representatives, administrators, executors, legatees, and estates, and the Receiver, his agents,

employees, retained professionals and successors and assigns shall be deemed to have, and by

operation of the order approving this Stipulation and the Judgment shall have, fully, finally, and

forever released, relinquished, discharged and dismissed with prejudice all Released Claims

against the De la Riva Parties (including Unknown Claims).

4.2 The filing of a Proof of Claim by Settlement Class Members shall constitute

further evidence of the release of all Released Claims against the Released Persons. The Proof

of Claim shall be substantially in the form contained in Exhibit A-2 to the HSBC Stipulation.

-18-


4.3 Upon the Effective Date, as defined in 1i 1.6 hereof, each of the De la Riva

Released Persons, including but not limited to each of their respective successors, predecessors,

assigns, attorneys, (including the De la Riva Parties' counsel), heirs, representatives,

administrators, executors, legatees, and estates, shall be deemed to have, and by operation of the

order approving this Stipulation and the Judgment shall have, fully, finally, and forever released,

relinquished, discharged and dismissed with prejudice each and all of the Settlement Class

Members, counsel to the Plaintiffs and the Receiver and his agents, employees and retained

professionals , and successors and assigns, from all claims (including Unknown Claims), arising

out of, relating to, or in connection with the institution, prosecution, assertion , settlement or

resolution of the Class Action Litigation, the Receiver's Turnover Motion, the Receivership Case

or the Released Claims.

5. Administration and Calculation of Claims, Final FeeAwards and Supervision and Distribution of the ClassSettlement Fund and the Proceeds of the Receiver'sTurnover Action

5.1 The Claims Administrator shall supervise and administer the notice process as

well as process claims as more fully set forth below and elsewhere in this Stipulation.

5.2 The Class Settlement Fund shall be applied as follows:

(a) to pay Settlement Class Counsel's fees and expenses with interest thereon

(the "Fee and Expense Award"), if and to the extent allowed by the Court;

(b) to pay all the costs and expenses reasonably and actually incurred in

connection with providing notice, locating Settlement Class Members, soliciting Settlement

Class and Receivership claims, assisting with the filing of claims, processing Proof of Claim and

-19-


Release forms, paying, escrow fees and costs, if any, and administering and distributing the Class

Settlement Fund and Proceeds of the Receiver's Turnover Motion to Authorized Claimant;

(c) to pay the Taxes and Tax Expenses described in ' 192.8 and 2.9 hereof;

and to distribute the balance of the Class Settlement Fund (the "Net Class Settlement Fund") to

the Receiver for distribution to Authorized Claimants and Receivership Creditors as allowed by

this Stipulation, the Plan of Allocation, and/or the Court.

5.3 Upon the Effective Date and thereafter, and in accordance with the terms of this

Stipulation, the Plan of Allocation, or such further approval and further order(s) of the Court as

may be necessary or as circumstances may require, the Net Class Settlement Fund and the

Proceeds of the Receiver's Turnover Motion shall be distributed to Authorized Claimants,

subject to and in accordance with the following.

(a) Within thirty (30) days after the Effective Date, the Proof of Claim form

shall be mailed to all Settlement Class Members and Receivership Creditors. Within sixty (60)

days after the mailing of the Proof of Claim or such other time as may be set by the Court, (the

"Claims Filing Deadline"), each Claimant and all other known creditors of the Receivership Case

shall be required to submit to the Claims Administrator a completed Proof of Claim,

substantially in the form of Exhibit A-2 attached to the HSBC Stipulation, signed under penalty

of perjury and supported by such documents as are specified in the Proof of Claim and as are

reasonably available to the Claimant. The duties of the Claims Administrator shall be to transmit

the Proof of Claim forms to all known claimants and creditors of the Receivership Case, and to

report to the Receiver and to Plaintiffs' Settlement Counsel regarding an analysis and tabulation

of claims filed by the Claims Filing Deadline.

_20..


(b) The Receiver and his professionals will be responsible for reviewing, and,

if appropriate, filing objections to the validity and amount of filed claims. These objections will

be determined by the Court under procedures to be recommended by the Receiver and approved

by the Court.

(c) The allowed amount of the claim of an Authorized Claimant for purposes

of all distributions to be made by the Receiver pursuant to this Stipulation and all other

distributions in the Receivership Case shall be the amount allowed by the Court, after objection

by the Receiver, or the amount set forth in the claimant's Proof of Claim timely filed by the

Claims Filing Deadline, assuming no objection by the Receiver.

(d) Except as otherwise ordered by the Court, all Settlement Class Members

and Receivership Creditors: (i) who fail to timely submit a Proof of Claim by the Claims Filing

Deadline and who do not timely and validly request exclusion from the Settlement Class, or (ii)

whose claim is disallowed after objection by the Receiver, shall be forever barred from receiving,

any payments from the De la Riva Parties pursuant to this Stipulation and the settlement set forth

herein and from the Receivership Estate, but will in all other respects be subject to and bound by

the provisions of this Stipulation, including the releases contained herein, and the Judgment.

(e) The Net Class Settlement Fund and the proceeds of the Receiver's

Turnover Motion shall be distributed by the Receiver to the Authorized Claimants, substantially

in accordance with a Plan of Allocation to be described in the Notice of Pendency and Proposed

Settlement of Class Action and Receiver's Turnover Motion, attached hereto as Exhibit A-1 and

approved by the Court. If there is any balance remaining in the Net Class Settlement Fund after

six (6) months from the date of distribution of the Net Class Settlement Fund (whether by reason

_21_


of tax refunds, encashed checks or otherwise), the Receiver shall, if economically feasible and

practical, reallocate such balance among Authorized Claimants in an equitable and economic

fashion.

5.4 This is not a claims-made settlement, and if all conditions of the settlement are

satisfied and the settlement becomes Final, no portion of the Class Settlement Fund will be

returned to the De la Riva Parties. Except for a violation of the terms of this Stipulation (e.g.

¶2.2), the De la Riva Parties shall have no responsibility for, interest in, or liability whatsoever,

and no Person shall have any claim against the De la Riva Parties, with respect to (i) the

investment, the distribution or administration of the Class Settlement Fund, the Net Settlement

Fund, the proceeds of the Receiver's Turnover Motion or the Plan of Allocation; (ii) the

determination, administration, or solicitation, calculation of claims, or Proofs of Claims; or (iii)

the payment or withholding of Taxes, or any losses incurred in co nection therewith.

5.5 No Person shall have any claim against the Plaintiffs, Settlement Class Counsel,

the Receiver and his agents, employees and retained professionals, any claims administrator, or

the De la Riva Parties based on the distributions made substantially in accordance with this

Stipulation and the settlement contained herein, the Plan of Allocation, or further order(s) of the

Court.

6. Plaintiffs' Settlement Counsel's Fees and Reimbursement of Expenses

6.1 The Plaintiffs and/or their counsel may submit an application or applications (the

"Fee and Expense Application") for distributions to them from the Class Settlement Fund (but

not from the proceeds of the Receiver's Turnover Motion) for: (a) an award of attorneys' fees not

to exceed 30% of the Class Settlement Fund; plus (b) reimbursement of actual expenses, plus (c)

-22-


any interest on such attorneys' fees and expenses at the same rate and for the same periods as

earned by the Settlement Fund (until paid).

6.2 The attorneys' fees and expenses, as awarded by the Court, shall be paid to

Plaintiffs' Settlement Counsel from the Class Settlement Fund only, as ordered, immediately

after the Court executes an order awarding such fees and expenses . Plaintiffs ' Settlement

Counsel have allocated the attorneys' fees in a manner in which they in good faith believe

reflects the contributions of Plaintiffs' Counsel to the prosecution and settlement of the Released

Claims and the Class Action Litigation. Settlement Class Counsel shall hold such court-awarded

fees and expenses in an interest bearing, trust account until the Effective Date, at which time they

will be distributed. In the event that the Effective Date does not occur, or the Judgment or the

order making the Fee and Expense Award is reversed or modified, or this Stipulation is canceled

or terminated for any other reason, then Plaintiffs' Settlement Counsel shall within five (5)

business days from receiving, notice from the De la Riva Parties' counsel or from a court of

appropriate jurisdiction, refund to the Settlement Fund the fees and expenses previously paid to

Plaintiffs' Settlement Counsel's trust account, plus any accrued interest thereon. The Receiver

and the Receivership Case Estate shall have no liability for the refund of any such fees and

expenses.

6.3 Any order or proceeding relating to the Fee and Expense Application, or any

appeal from any order relating thereto or reversal or modification thereof, shall not operate to

terminate or cancel the Stipulation, or affect or delay the finality of the Judgment approving the

Stipulation and the settlement of the Released Claims and/or the Class Action Litigation and

Receiver's Turnover Motion as to the De la Riva Parties.

- 23 -


6.4 The De la Riva Parties shall have no responsibility for any payment of attorneys'

fees and expenses to Plaintiffs' Settlement Counsel, however, Settlement Class Counsel may

apply for a portion of that Fund as a fee, as set forth in 11 6.3. The Receiver and the Receivership

Case shall have no liability whatsoever for the payment of such fees and expenses to Settlement

Class Counsel.

6.5 The De la Riva Parties shall have no responsibility for the allocation among

Plaintiffs' Counsel, and/or any other Person who may assert some claim thereto, of any Fee and

Expense Award that the Court may make in the Class Action Litigation, and the De la Riva

Parties take no position with respect to such matters.

6.6 Each such. Plaintiffs Counsel, as a condition of receiving such fees and expenses,

on behalf of itself and each partner and/or shareholder of it, agrees that the law firin and its

partners and/or shareholders are subject to the exclusive jurisdiction of the Court for the purpose

of enforcing the provisions of this section.

7. Conditions of Settlement, Effect of Disapproval, Cancellation orTermination

7.1 The Effective Date of this Stipulation shall be conditioned on the occurrence of

all of the following events:

(a) the De la Riva Parties have timely made its contributions to the Class

Settlement Fund and continued investment of the proceeds of the Receiver's Turnover Motion as

required by' 112.1 and 2.2 hereof;

(b) neither Plaintiffs nor the De la Riva Parties have exercised their option to

ten-ninate this Stipulation pursuant to 117.3 hereof;

(c) the Court has entered the Notice Order, as required by 113.2 hereof;

-24-


(d) the Court has certified the Settlement Class, for purposes of this

Stipulation and Settlement, as defined in ¶1.22 hereof;

(e) the Court has entered the Order and Judgment approving this Stipulation,

substantially in the form of Exhibit B attached hereto; and

(f) the Order and Judgment has become Final, as defined in ¶ 1.8 hereof.

7.2 Upon the occurrence of all of the events referenced in ¶7.1 hereof, any and all

remaining interest or right of the De la Riva Parties in or to the Class Settlement Fund and the

Proceeds of the Receiver's Turnover Motion, if any, shall be absolutely and forever

extinguished. If all of the conditions specified in ¶7.1 hereof are not met, then the Stipulation

shall be canceled and terminated subject to ¶112.9 and 7.4 hereof unless Plaintiffs' Settlement

Counsel, the Receiver and counsel for the De la Riva Parties mutually agree in writing to

proceed with the Stipulation.

7.3 Unless otherwise ordered by the Court, in the event this Stipulation shall

tenilinate, or be canceled, or shall not become effective for any reason, within five (5) business

days after written notification of such event is sent by counsel for the De la Riva Parties or

Plaintiffs' Settlement Counsel to the Escrow Agent, subject to the terms of ¶2.8 hereof, the

Settlement Fund (including accrued interest), shall be refunded by the Escrow Agent pursuant to

written instructions from counsel for the De la Riva Parties. At the request of counsel for the De

la Riva Parties, the Escrow Agent or its designee shall apply for any tax refund owed on the

Settlement Fund and pay the proceeds, after deduction of any fees or expenses incurred in

connection with such application(s) for refund, at the written direction of counsel for the Dc la

Riva Parties.

25


7.4 In the event that this Stipulation is not approved by the Court or the settlement set

forth in this Stipulation is terminated or fails to become effective in accordance with its terms,

the Settling Parties shall be restored to their respective positions in the Litigation as of May 25,

2007. In such event, the terms and provisions of this Stipulation, with the exception of IT I 1.1-

1.25, 2.2-2.9, 5.2, 7. 3, 8.2-8.5 and 8 . 11-8.13 hereof, shall have no further force and effect with

respect to the Settling Parties and shall not be used in this Litigation or in any other proceeding

for any purpose, and any judgment or order entered by the Court in accordance with the terms of

this Stipulation shall be treated as vacated, nunc pro tunc. No order of the Court or modification

or reversal on appeal of any order of the Court concerning the Plan of Allocation or the amount

of any attorneys' fees, costs, expenses and interest awarded by the Court to Plaintiffs' Settlement

Counsel shall constitute grounds for cancellation or termination of this Stipulation.

7.5 If the Effective Date does not occur , or if this Stipulation is terminated pursuant to

its terms, neither the Plaintiffs, the Receiver nor any of their counsel shall have any obligation to

repay any amounts actually and properly disbursed from the Notice and Administration Fund and

to pay Tax Expenses.

8. Miscellaneous Provisions

8.1 The Settling Parties (a) acknowledge that it is their intent to consummate this

agreement; and (b) agree to cooperate to the extent reasonably necessary to effectuate and

implement all terms and conditions of this Stipulation and to exercise their best efforts to

accomplish the foregoing terms and conditions of this Stipulation.

8.2 The Settling Parties intend this settlement to be a final and complete resolution of

all disputes between them with respect to the Receiver ' s Turnover Motion. With respect to the

- 26-


Class Action Litigation, the Settling Parties intend this settlement to be a final and complete

resolution of all claims between Plaintiffs and Juan and Amanda De la Riva. The settlement

compromises claims which are contested and shall not be deemed an admission by any Settling

Party as to the merits of any claim or defense. The Settling Parties agree that the amount paid to

the Settlement Fund and the other terms of the settlement were negotiated in good faith by the

Settling Parties, and reflect a settlement that was reached voluntarily after consultation with

competent legal counsel. The Settling Parties reserve their right to rebut, in a manner that such

party deters-nines to be appropriate, any contention made in any public forum that the Litigation

was brought or defended in bad faith or without a reasonable basis.

8.3 Neither this Stipulation nor the settlement contained therein, nor any act

performed or document executed pursuant to or in furtherance of the Judgment, this Stipulation

or the settlement: (a) is or may be deemed to be or may be used as an admission of, or evidence

of, the validity of the Class Action Litigation, the Receiver's Turnover Motion and/or any

Released Claim, or of any fault, wrongdoing, liability, misrepresentation or omission of the

Released Persons or of any infirmity in the defenses that the De la Riva Parties asserted or could

have asserted in the Class Action Litigation and the Receiver's Turnover Motion; (b) is or may

be deemed to be or may be used as an admission of, or evidence of, any fault, wrongdoing,

liability, misrepresentation or omission of the De la Riva Parties in any civil, criminal or

administrative proceeding in any court, administrative agency or other tribunal; or (c) is or may

be alleged or mentioned by or on behalf of any Settlement Class Member in any litigation or

other action unrelated to the enforcement of this Stipulation. Provided, however, that the

Released Persons may file or offer into evidence this Stipulation, Judgment and/or the releases

- 27 -


executed pursuant thereto in any action or proceeding that may be brought against them in order

to support a defense or counterclaim based on principles of res judicata, collateral estoppel,

release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion

or issue preclusion or similar defense or counterclaim.

8.4 All agreements made and orders entered during the course of the Litigation

relating to the confidentiality of information shall survive this Stipulation. The Settling Parties

will coordinate jointly any news releases or other comments to the press or media regarding the

settlement.

8.5 All of the Exhibits to this Stipulation are material and integral parts hereof and are

fully incorporated herein by this reference.

8.6 This Stipulation may be amended or modified only by a written instrument signed

by or on behalf of all Settling Parties or their respective successors-in-interest.

8.7 This Stipulation, the Exhibits attached hereto, and all documents executed

pursuant hereto constitute the entire agreement among the parties hereto and no representations,

warranties or inducements have been made to any party concerning this Stipulation or its

Exhibits other than the representations, warranties and covenants contained and memorialized in

such documents. Except as otherwise provided herein, each party shall bear its own costs.

8.8 Plaintiffs' Settlement Counsel, on behalf of the Settlement Class, and the

Receiver and his agents , employees or professionals are expressly authorized by the Plaintiffs to

take all appropriate action required or permitted to be taken by the Settlement Class and

Receivership Estate pursuant to this Stipulation to effectuate its terms and also are expressly

28

Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 29 of 6811

authorized to enter into any modifications or amendments to this Stipulation on behalf of the

Settlement Class and Receivership Estate which they deem appropriate.

8.9 Each counsel or other Person executing this Stipulation or any of its Exhibits on

behalf of any party hereto hereby warrants that such counsel or Person has the full authority to

do so, subject to the approval of the Court.

8.10 This Stipulation may be executed in one or more counterparts. All executed

counterparts and each of them shall be deemed to be one and the same instrument. A complete

set of original executed counterparts shall be filed with the Court.

8.11 This Stipulation shall be binding upon, and inure to the benefit of, the successors

and assigns of the parties hereto.

8.12 The Court shall retain exclusive jurisdiction with respect to implementation and

enforcement of the terms of this Stipulation, and all parties hereto submit to the exclusive

jurisdiction of the Court for purposes of implementing and enforcing the settlement embodied in

this Stipulation.

8.13 This Stipulation and the Exhibits hereto shall be considered to have been

negotiated, executed and delivered, and to be wholly performed, in the State of Florida, and the

rights and obligations of the parties to this Stipulation shall be construed and enforced in

accordance with, and governed by, the internal, substantive laws of the State of Florida without

giving effect to that State's choice-of-law principles.

8.14 The Settling Parties acknowledge, represent and warrant to each other that the

mutual releases and payments hereunder are such that each of the Settling Parties is to receive

adequate consideration for the consideration given.

-29-


8.15 The Settling Parties may not waive or vary any right hereunder except by an

express written waiver or variation . Any failure to exercise or any delay in exercising any such

rights, or any partial or defective exercise of such rights, shall not operate as a waiver or

variation of that or any other such right. The waiver by one Settling Party of any breach of the

Stipulation by another Settling Party shall not be deemed a waiver of any other prior or

subsequent breach of this Stipulation.

8.16 Each Settlement Class Member hereby represents and warrants that he, she or it

has not assigned any rights, claims or cause of action that was asserted or could have been

asserted in connection with, under, or arising out of any of the claims being settled or released

herein, provided, however, that nothing contained in this Stipulation should prevent any

Settlement Class Member or Receivership Creditor from assigning his, her or its right to

distribution.

8.17 Any signature to this Stipulation, to the extent signed and delivered by means of a

facsimile machine, shall be treated in all manners and respects as an original signature and shall

be considered to have the same binding legal effect as if it were the original signed version

thereof delivered in person . At the request of a Settling Party to this Stipulation , any other

Settling Party to this Stipulation so executing and delivering this document by means of a

facsimile machine shall re-execute original forms thereof and deliver them to all Settling Parties.

No party to this Stipulation shall raise the use of a facsimile machine to deliver a signature or the

fact that any signature or agreement was transmitted or communicated through the use of a

facsimile machine as a defense to the formation or enforceability of this Stipulation and each

such Person forever waives any such defense.

-30-


IN WITNESS WHEREOF, the Settling Parties hereto have caused this Stipulation to be

executed , by their duly authorized attonzeys , dated as of May 2007.

-31-


Victor M. Diaz, Jr.Podhurst Orseck P.A.25 West Flagler Street, Suite 800Miami, Florida 33130(305) 358-2800(305) 358-2382 (fax)VD1AZ(@,PODHURST.com

//1 4,111 ^^-Victor M. Diaz, Jr.

Harley S. TropinKozyak Tropin & Throckmorton,PA2525 Ponce de Leon, 9th FloorMiami, Floirda 33134(305) 372-1800(305) 372-3508 (fax)hstQa.kttlaw.com

Harley S . Tropi

Counsel for Plaintiffs and the Settlement ClassMembers

Kathy E. RentasBecker & Poliakoff, F.A.3111 Stirling RoadFt. Lauderdale, Florida 33312(954) 364-6026(954) 985-4176 (fax)krentasa,becker-poliakoff.com

Kathy E. Rentas

Counsel for the De la Riva Parties

32


Thomas G. Schultz, notindividually, but solely in hiscapacity as Receiver forPension Fund of America, L.C.PFA Assurance Group, Ltd.PFA International, Ltd.Claren TPA, LLCShadow Creek Investments, LLCAtlantic Realty Ventures LLCc/o Tew Cardenas, LLP1441 Brickell Avenue15`h FloorMiami, Florida 33131305.536-1112305-536-1116 (fax)[email protected]

David M. Levine

Tew Cardenas, LLP

1441 Brickeli Avenue

15Lh Floor

Miami, Florida 33131305-536-1112305-536 -111 ax)

Davidp. Levine

VAttorney for Court-Appointed Receiver ThomasG. Schultz

-33-


Jonat han Cohen

Slmtts & Bowen , L.L.P.

1500 Miami Center

201 South Biscayne Blvd.

Miami, Florida 3313 1305-379-9173305-347-7873) (P{lx)

C]^011 l7 C1 ? S11Lltt5.C0111

Jonat4 hell

Counsel [or the Innstituto de Prevision Nlilitar

-34-

Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007

IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAMIAMI DIVISION


Plaintiff,

vs.

PENSION FUND OF AMERICA, L.C.,PFA ASSURANCE GROUP, LTD.,PFA INTERNATIONAL, LTD.CLAREN TPA, LLC,LUIS M. CORNfDE andROBERT DE LA RNA,

Defendant.

MARCELLA CORDOVA, JORGE FLORES,HENRY TURMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,

Plaintiffs,

vs,

LEHMAN BROTHERS , INC., a New YorkCorporation; MERRILL LYNCH & CO., INC.,a Delaware Corporation; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andHSBC BANK-, U.S.A., LUIS CORNIDE andROBERT A. DE LA RIVA,

Defendants.

Case No. 05-20863-CIV-MOOREIGARBER

No. 05-21169-CIV-MOORS-GARBER

EPROPOSEDI ORDERPRELIMINARILY APPROVINGSETTLEMENT AND PROVIDINGFOR NOTICE

EXHIBIT A

Page 35 of 6811


WHEREAS, on March 28, 2005, the SEC filed a civil action against Pension Fund of

America, L. C. and its related entities (hereinafter "PFA") and principals , alleging PFA engaged in an

offering fraud. On that same day, the District Court for the Southern District of Florida entered a

Temporary Restraining Order and appointed the Receiver;

WHEREAS, there is pending litigation between the Receiver and the De la Riva Parties over

the $450,000 plus accruing interest held in the trust account of counsel for the De la Riva Parties.

On April 17, 2006, the Receiver filed with the Court an Amended Motion for a determination that

the funds in the foregoing account are property of the Receivership and should be transferred to the

Receiver for distribution to all investors (the "Receiver's Turnover Motion"). IPM is a party to the

Turnover Motion. The De la Riva Parties opposed the Motion. The matter remains pending.

WHEREAS, on April 21, 2005, a complaint was filed in the United States District Court for

the Southern District of Florida on behalf of a putative class of PFA investors who had purchased

trust plans from PFA from January 1, 1999 through March 31, 2005, inclusive (the "Settlement Class

Period"). Henry Iacrjrzan v. Pension Fui:d ofAnie3 ica L. C. et al. Case No. 05-21101. On April 28,

2005, a second related complaint was filed on behalf of the same putative class of PFA investors.

Sa nuel Putermaza v. Lehman Brothers, Inc. et al., Case No. 05-21169;

WHEREAS, on June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended

Class Action Complaint styled Cordova, et al. v. Le/unwz Bros., Inc., et al., Case No. 05-21169. The

consolidated cases are collectively referred to herein as the "Cordova Litigation." The First

Amended Complaint alleged con non law claims for (1) breach of fiduciary duty, (2) aiding and

abetting PFA's common law fraud and (3) aiding and abetting PFA's breaches of its fiduciary duties.

The Complaint named Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond James Financial

Services, Inc., Oliva Investment Group, Inc. and HSBC Bank, U.S.A. as defendants (hereinafter, the

"Financial Institution Defendants");

-1-


WHEREAS, on January 17, 2006, the Court granted Defendants' motions to dismiss, ruling


Uniform Standards Act ("SLUSA");

WHEREAS, on February 13, 2006, Plaintiffs filed their Second Amended Class Action

Complaint ("Complaint") alleging violations by HSBC ofSections 12 and 15 ofthe Securities Act of

1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act");

WHEREAS, motions to dismiss the Second Amended Class Action Complaint are currently

pending;

WHEREAS, the Court has received the Stipulation of Settlement, dated as ofMay 25, 2007

(the "Stipulation"), that memorializes the Settlement entered into by Plaintiffs ' Settlement Counsel

on behalf of the Plaintiffs and the Settlement Class, Receiver through his counsel, and Juan De La

Riva, Amanda De La Riva, and Robert De La Riva, through their counsel (the "De La Riva Parties"),

and the Court has reviewed the Stipulation and its attached Exhibits;

WHEREAS, all defined tern-ms contained herein shall have the same meanings as set forth in

the Stipulation;

WHEREAS, counsel for the Settling Parties represent that they have engaged in substantial

am m.'s length negotiations in an effort to resolve all claims that have been or could be asserted in the

Cordova Litigation and/or by the Receiver in the Turnover motion or in any civil or administrative

proceeding, including, conducting, numerous meetings and telephone conferences where the terns of

the agreements detailed herein were extensively debated and negotiated;

WHEREAS, based on the investigation of their counsel , Plaintiffs believe that the claims

asserted in the Cordova Litigation have merit and that the evidence developed to date supports the

claims. However, Plaintiffs' Settlement Counsel recognize and acknowledge the expense and length

of continued proceedings necessary to prosecute the Cordova Litigation against the De La Riva

.. 7 ..


Parties through trial and through appeals. Plaintiffs' Settlement Counsel also have taken into

account the uncertain outcome and the risk of any litigation, especially in complex actions such as

the Cordova Litigation, as well as the difficulties and delays inherent in such litigation. Plaintiffs'

Settlement Counsel are mindful ofthe inherent problems ofproofunder and possible defenses to the

securities law violations asserted in the Cordova Litigation. Plaintiffs' Settlement Counsel have

concluded that the proposed Settlement is fair, reasonable and adequate and in the best interests of

the Settlement Class;

WHEREAS, the De La Riva Parties expressly have denied and continue to deny any and all

charges of fault, wrongdoing or liability against them arising out of any of the conduct, statements,

acts or omissions alleged, or that could have been alleged, in the Cordova Litigation and/or by the

Receiver in the Turnover Motion or in any civil or administrative proceeding, or of any infirmity in

the defenses that the De La Riva Parties asserted or could have asserted in such action or

proceedings, and are entering into the Settlement in order to eliminate the burden, distractions,

expense and uncertainty of further litigation;

WHEREAS, the Litigation is being, settled against the De La Riva Parties only, and the

Settlement shall have no effect whatsoever on the pending Cordova Litigation between Plaintiffs and

the Non-Settling Defendants, nary ely Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond

James Financial Services, Inc., Oliva Investment Group, Inc., and Luis Cornide (the "Non-Settling

Defendants");

WHEREAS, the Settling Parties having made application, pursuant to Federal Rule of Civil

Procedure 23(e), for an order preliminarily approving the Settlement of this Cordova Litigation, in

accordance with the Stipulation which, together with the Exhibits annexed thereto, sets forth the

terms and conditions for the proposed Settlement; and

-3-


WHEREAS, the Court having read and considered the Stipulation and the Exhibits annexed

thereto;

NOW, THEREFORE, IT IS HEREBY ORDERED:

1. The Court does hereby preliminarily approve the Stipulation and the Settlement set

forth therein, subject to further consideration at the Settlement Approval Hearing described below.

Settlement Approval Hearing

2. A hearing (the "Settlement Approval Hearing") shall be held before the undersigned,

United States District Judge K. Michael Moore, at the United States Courthouse, Courtroom #3,

Room 1104, James Lawrence King Federal Justice Building, 99 Northeast, 4`' Street #1168, Miami,

Florida 33142 on August 10, 2007 , at 10:00 a.m., to determine:

(a) whether the Court should certify the Settlement Class for purposes of this

Settlement only and whether Plaintiffs and Plaintiffs' Settlement Counsel have adequately

represented the Settlement Class;

(b) whether the proposed Settlement of the Released Claims on the terms and

conditions provided for in the Stipulation is fair, reasonable and adequate to the Settlement Class and

Receivership Creditors and should be approved by the Court;

(c) whether a Judgment as defined in § 1.10 of the Stipulation and as set forth in

the Stipulation, Exhibit B should be entered herein;

(d) whether the Court should permanently enjoin the assertion of any claims

against the De La Riva Parties that arise from or relate to the subject matter of the Cordova

Litigation or the Released Claims by any Plaintiff, Settlement Class Member, Non-Settling

Defendant, the Receiver or any other persons;

(e) whether the proposed Plan of Allocation should be approved;

-4-

Case 1:05-cv-21169-KM M

(f)

Counsel; and

(I)

Document 323-2 Entered on FLSD Docket 05/29/2007 Page 40 of

the amount of fees and expenses that should be awarded to Plaintiffs'

such other matters as the Court may deem necessary or appropriate.

Preliminary Certification of Settlement Class

3. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, the Court

preliminarily certifies, for purposes of effectuating this Settlement only, a Settlement Class of all

Persons who purchased, sold, held and/or retained investments in trust plans and/or other securities

from PFA, or its affiliated companies, during the Settlement Class Period. Excluded from the

Settlement Class are (a) any Defendant named in the Complaint (or any previous complaints),

including any and all subsidiaries, affiliates, alter-ego entities, and/or immediate family members

thereof; (b) PFA, PFA Assurance, PFA International , Claren TPA, including any and all subsidiaries,

affiliates and/or alter-ego entities thereof; (c) all officers, directors, employees or agents (and their

immediate family members) of the entities and individuals described in subsections (a) and (b); (d)

all employees, agents and/or brokers (and their immediate family members) who sold or solicited the

sale of investments in PFA or PFA Assurance or any subsidiaries, affiliates and/or alter-ego entities

thereof; (e) any Person, firm, trust, officer, director or any individual or entity in which any of the

individuals or entities described in subsections (a) through (d) above has a controlling interest or

which is affiliated with any such individuals or entities; (f) the legal representatives, agents,

affiliates, heirs, successors-in-interest or assigns of any such excluded party.

4. For purposes of this Settlement only, the Plaintiffs are temporarily appointed as

representatives of the class and Plaintiffs' Settlement Counsel are temporarily appointed as

settlement class counsel.

5. For purposes of this Settlement only, this Court preliminarily finds and concludes

that: (a) the Settlement Class Members are so numerous thatjoinder ofall Settlement Class Members

-5 -


in the Cordova Litigation for purposes of this Settlement is impracticable; (b) there are questions of

law and fact common to the Settlement Class which predominate over any individual questions; (c)

the claims of the Plaintiffs are typical of the claim of the Settlement Class; (d) the Plaintiffs and

Plaintiffs' Settlement Counsel have fairly and adequately represented and protected the interests of

all of the Settlement Class Members; and (e) a class action is superior to other methods for the fair

and efficient adjudication of this controversy, considering: (i) the interests of the Settlement Class

Members in individually controlling the prosecution ofthe separate actions, (ii) the extent and nature

of any litigation concerning the controversy already commenced by Settlement Class Members, (iii)

the desirability or undesirability of concentrating the litigation of these claims in this particular

forum, and (iv) the difficulties likely to be encountered in the management of the Cordova

Litigation . In the event that this Settlement is not approved or the De La Riva Parties withdraw from

the Settlement, these findings will be set aside and the issues of class certification and the

appointment ofrepresentative or lead plaintiff and class or lead counsel may be contested. Nothing

in this Order or the Stipulation shall effect the issue of class certification, the appointment of

representative or lead plaintiff, or the appointment of lead or class counsel in the pending Cordova

Litigation against the Non-Settling Defendants.

Approval of Notice Forms, Claims Filing Procedures and Related Processes

6. The Court approves, as to form and content, the Notice of Pendency and Proposed

Settlement of Class Action (the "Notice") annexed as Exhibit C to the Stipulation, and finds that the

mailing and distribution of the Notice substantially in the manner and form set forth in 118 of this

Order meet the requirements of Federal Rule of Civil Procedure 23 and due process, and is the best

notice practicable under the circumstances and shall constitute due and sufficient notice to all

Persons entitled thereto.

-6-


7. The Court finds that the Notice and Claims Procedure for the Settlement Class

Members and the Receivership Creditors may be coordinated pursuant to a single Claims Procedure

as set forth in the Stipulation, since Settlement Class Members are also creditors ofthe Receivership

Estate. The Court also approves the claims filing procedure for Receivership Creditors and

Settlement Class Members as set forth in Paragraph 5.3 of the Stipulation, and further referred to in

Paragraphs 21-22 hereof, including, but not limited to the establishment of the Claims Filing

Deadline referenced therein and the provisions regarding disallowance of untimely filed claims.

8. Garden City Group ("Claims Administrator") is hereby retained to supervise and

administer the notice procedure as well as the processing of claims as more fully set forth below:

(a) The Claims Administrator, with the cooperation of the Receiver, shall make

reasonable efforts to identify all Persons who are Settlement Class Members, Receivership Creditors

and/or potentially interested parties, and not later than June 8, 2007 (the "Notice Date"), shall cause

a copy of the Notice, substantially in the form annexed as Exhibit C to the Stipulation, to be mailed

by first class mail to all Settlement Class Members who can be identified with reasonable effort; and

(b) At least seven (7) calendar days prior to the Fairness Hearing, the Class

Administrator shall cause to be served on the De La Riva Parties' counsel and Plaintiffs' Settlement

Counsel and filed with the Court proof, by affidavit or declaration , of such mailing and publishing.

9. All reasonable expenses incurred in identifying and notifying Settlement Class

Members and the Receivership Creditors, as well as administering the Distribution Fund, shall be

paid as set forth in the Stipulation. In the event the Settlement is not approved by the Court, or

otherwise fails to become effective, neither the Plaintiffs nor Plaintiffs' Settlement Counsel shall

have any obligation to repay any amounts actually and properly disbursed from the Notice and

Administration Fund.

-7-


10. Any person receiving notice of the settlement who purchased or acquired PFA trust

plans for the benefit of another during the period from January 1, 1999 through March 31, 2005,

inclusive, shall forward the Notice to all beneficial owners of such PFA plans within ten (10) days

after receipt thereof, or send a list of the names and addresses of such beneficial owners to the

Claims Administrator within ten (10) days of receipt thereof, in which event the Claims

Administrator shall promptly mail the Notice to such beneficial owners.

11. All Settlement Class Members and/or Receivership Creditors shall be bound by all

determinations and judgments contained herein and/or in the Final Order, whether favorable or

unfavorable to the Settlement Class and/or Receivership Creditors.

Objections to Settlement and/or Exclusions from Settlement Class

12. Any Settlement Class Member and/or Receivership Creditors may enter an

appearance in the Cordova Litigation, at their own expense, individually or through counsel of their

own choice. If Settlement Class Members do not enter an appearance, they will be represented by

Plaintiffs' Settlement Counsel.

13. Any Person falling within the definition of the Settlement Class may, upon written

request, be excluded from the Settlement Class. Any such Person must submit to Settlement Class

Counsel a request for exclusion ("Request for Exclusion"), postmarked no later than July 10, 2007.

A Request for Exclusion must state: (a) the name, address, and telephone number of the Person

requesting exclusion; (b) the name, address, and telephone number of the Person who originally

purchased the PFA trust plan; (c) each of the Person's acquisitions of a PFA trust plan during the

Settlement Class Period, including the dates ofpurchase or sale, the type of trust plan purchased, the

amount of the initial investment, and the amount of the total investment in such plan; (d) any

distributions , refunds or other monies received from PFA; and (e) that the Person wishes to be

excluded from the Settlement Class. All Persons who submit valid and timely Requests for

-8-


Exclusion in the manner set forth in this paragraph shall have no rights under the Stipulation, shall

not share in the distribution of the Net Settlement Fund, and shall not be bound by the Stipulation or

the Judgment entered in the Litigation.

14. Any Settlement Class Member may appear and show cause, if he, she or it has any,

why the proposed Settlement of the Released Claims should or should not be approved as fair,

reasonable and adequate, why a Judgment should or should not be entered thereon, why the Plan of

Allocation should or should not be approved, or why attorneys' fees and expenses should or should

not be awarded to Plaintiffs' Settlement Counsel; provided, however, that no Settlement Class

Member, or any other Person shall be heard or entitled to contest the approval of the terms and

conditions ofthe proposed Settlement, or, if approved, the Judgment to be entered thereon approving

the same, or the order approving the Plan of Allocation, or the attorneys' fees and expenses to be

awarded to Plaintiffs' Settlement Counsel, unless that Person has delivered by hand or sent by first

class mail written objections and copies of any papers and briefs such that they are received on or

before July 23, 2007, by Podhurst Orseck P.A., Victor M. Diaz, 25 West Flagler Street, Suite 800,

Miami, FL 33130, Kozyak Tropin & Throckmorton, PA, Harley S. Tropin, 2525 Ponce de Leon, 9"

Floor, Miami, FL 33134; David M. Levine, Esq., Tew Cardenas, LLP, Miami Center, 26'1' Floor, 201

South Biscayne Boulevard, Miami, FL 33131-4336 and Becker & Poliakoff, P.A., Kathy E. Rentas,

3111 Stirling Road, Fort Lauderdale, FL 33312, and filed said obj ections, papers and briefs with the

Clerk of the United States District Court for the Southern District ofFlorida, Miami Division, James

Lawrence King Federal Justice Building, 99 Northeast, 4"' Street #1168, Miami, Florida 33142 on or

before July 23, 2007. Any person who does not make his, her or its objection in the manner

provided shall be deemed to have waived such objection and shall forever be foreclosed from

making any objection to the fairness, reasonableness or adequacy of the proposed Settlement as set

-9-


forth in the Stipulation, to the Plan of Allocation, or to the award of attorneys' fees and expenses to

Plaintiffs' Settlement Counsel, unless otherwise ordered by the Court.

15. All papers in support ofthe Settlement, the Plan ofAllocation, and any application by

Plaintiffs' Settlement Counsel for attorneys' fees or reimbursement of expenses shall be filed and

served seven (7) calendar days prior to the Settlement Approval Hearing.

Distribution Funds

16. All fiends held by the Escrow Agent shall be deemed and considered to be in custodia

legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such

funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court.

17. At the Settlement Approval Hearing, the Court shall determine whether the Plan of

Allocation proposed by Plaintiffs' Settlement Counsel, and any application for attorneys' fees or

reimbursement of expenses shall be approved.

18. The S 112,500 Class Settlement Fund shall be transferred by or on behalfofthe De La

Riva Parties to the Escrow Agent within five (5) business days of the date of this Order (the

"Transfer Date"). If the S 112,500 is not timely deposited with the Escrow Agent, the unpaid amount

shall bear interest at the rate of five percent (5%) per annum from the Transfer Date until paid.

Upon the Effective Date, the Net Settlement Fund shall be transferred to the Receiver for distribution

to Authorized Claimants in accordance with the Plan of Allocation finally approved by this Court.

19. Pursuant to 112.2 of the Stipulation, the De la Riva Parties shall transfer the Turnover

Proceeds to the Receiver on or before the Transfer date, subject to the terms and conditions of the

Stipulation. After transfer to the Receiver on the Transfer Date, the Turnover Proceeds will be held

by the Receiver in a separate account at market rate interest in instruments backed by the full faith

and credit of the United States Government or fully insured by the United States Goverment or an

agency thereof until the Effective Date. Upon the Effective Date, $112,500 of the Turnover

-10-


Proceeds may be distributed by the Receiver to Authorized Claimants pursuant to the Plan of

Allocation in its current form or as may be approved by the Court.

20. Neither the De La Riva Parties, their Related Parties, nor its counsel shall have any

responsibility for the Plan of Allocation or any application for attorneys' fees or reimbursement of

expenses submitted by Plaintiffs' Settlement Counsel, and such matters will be considered separately

from the fairness, reasonableness and adequacy of the Settlement.

Claims Process

21. Within thirty (30) days after the Effective Date the Proof of Claim form shall be

mailed to all Settlement Class Members and Receivership Creditors in the form attached as Exhibits

A-2 and A-3 to the HSBC Stipulation and/or as modified by the Court in the Final Order.

22. All Settlement Class Members and/or Receivership Creditors who wish to participate

in the Settlement shall complete and submit Proof ofClaim forms in accordance with the instructions

contained therein. Unless the Court orders otherwise, all ProofofClaim forms must be submitted no

later than sixty (60) days from the date the Proof of Claim Forms were mailed. Any Settlement

Class Member and/or Receivership Creditor who does not timely submit a Proof ofClaim within the

time provided for, shall be barred from sharing in the distribution of the proceeds ofthe Distribution

Fund or from the Receivership Estate, unless otherwise ordered by the Court.

Miscellaneous Provisions

23. Neither the Stipulation, nor any of its tern-ms or provisions, nor any ofthe negotiations

or proceedings connected with it, shall be offered or received into evidence in any action or

proceeding, or be used or construed in any was as an admission or concession by the De La Riva

Parties of the truth of any ofthe allegations in the Litigation, or of any liability, fault, or wrongdoing

of any kind.

_11_


24. All proceedings against the De La Riva Parties in the Cordova Litigation, other than

proceedings necessary to carry out the terns and conditions ofthe Settlement, are hereby stayed and

suspended until further order of the Court. Pending final determination of whether the Settlement

and Stipulation should be approved and the Settlement Class certified for purposes ofthis Settlement

only, all Settlement Class Members, the Receiver and any Non-Settling Defendants are hereby

barred and enjoined from commencing or prosecuting against the De La Riva Released Persons any

action asserting any Released Claims.

25. The Court reserves the right to adjourn the date of the Settlement Approval Hearing

without further notice to the Settlement Class Members or Receivership Creditors, and retains

jurisdiction to consider all further applications arising out of or connected with the proposed

Settlement. The Court may approve the Settlement, with such modifications as maybe agreed to by

the Settling Parties, if appropriate, without further notice to the Settlement Class or Receivership

Creditors.

IT IS SO ORDERED.

DATED:

THE HONORABLE K. MICHAEL MOOREUNITED STATES DISTRICT JUDGE

-12-


IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION


Plaintiff,

vs.


Defendant.

MARCELLA CORDOVA, JORGE FLORES,HENRY [URMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,

Plaintiffs,


No. 05-21169-CIV-MOORE-GARBER

vs,

LEHMAN BROTHERS, INC., a New YorkCorporation; MERRILL LYNCH & CO., INC.,a Delaware Corporation ; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation ; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andLUIS CORNIDE and ROBERT A. DE LARIVA,

[PROPOSED] FINAL JUDGMENTAND ORDER OF DISMISSAL WITHPREJUDICE

Defendants.

{ EXHIBIT

D

EXHIBIT B


This matter came before the Court for hearing pursuant to the Order of this Court, dated

2007 on the application of the parties for approval ofthe settlement set forth in the

Stipulation of Settlement dated as ofMay 25, 2007 (the "Stipulation "). The Court having reviewed

and considered the Joint Motion for Final Approval of Settlement, dated , 2007 in the above-

captioned actions, and having reviewed and considered the terms and conditions of the proposed

settlement (the "Settlement") as set forth in the stipulation of Settlement dated May 25, 2007 (the

"Stipulation"), a copy of which has been submitted to the Court, and having reviewed and

considered the applications of Plaintiffs' Settlement Counsel for an award of attorneys' fees and

expenses, and the Court having held a Fairness Hearing after being satisfied that notice to the

Settlement Class Members had been provided in accordance with the Court's Order Preliminarily

Approving Settlement and Providing for Notice entered on , 2007 (the "Preliminary Approval

Order"), and the Court having taken into account the objections submitted prior to the Settlement

Approval Hearing in accordance with the provisions of the Preliminary Approval Order and the

presentations and other proceedings at the Settlement Approval Hearing, the Court makes the

following FINDINGS:

A. This Judgment incorporates by reference the definitions in the Stipulation, and all

terns used herein shall have the same meanings as set forth in the Stipulation, unless otherwise set

forth herein.

B. This Court leas jurisdiction over the subject matter ofthe Cordova Litigation and SEC

Action pursuant to 28 U.S.C. § 1331, and over all parties thereto, including all Settlement Class

Members.

C. Notice to members of the Settlement Class has been provided in accordance with the

notice requirements specified by the Court in the Preliminary Approval Order. Such notice

constitutes the best means ofnotice to members ofthe Settlement Class, that is practicable under the

_1_CEHIDI _50407100633369900002 3/30/2007 12:34 PM


circumstances and is due and sufficient notice of the Settlement and the Fairness Hearing to all

persons affected by and/or entitled to participate in the Settlement or the Fairness Hearing, in full

compliance with the requirements of due process and the Federal Rules of Civil Procedure.

D. The Court has held a hearing to consider the fairness, reasonableness and adequacy of

the Settlement, has been advised of all objections to the Settlement and has given fair consideration

to such objections.

E. The Settlement is the product of good faith, arm's length negotiations between

Plaintiffs' Settlement Counsel on behalf ofthe Plaintiffs and the Settlement Class, Receiver through

his counsel, and Juan De La Riva, Amanda De La Riva, and Robert De La Riva, through their

counsel (the "De La Riva Parties")

F. The Settlement , as provided for in the Stipulation , is in all respects fair, reasonable,

adequate and proper and in the best interest of the Settling Paris and the, the Settlement Class. In

reaching this conclusion, the Court has considered a number of factors, including: (i) an assessment

ofthe likelihood that the Plaintiffs and/or the Settlement Class would prevail at trial; (ii) the range of

possible recovery available to Plaintiffs and/or the Settlement Class as a result ofsuch a trial; (iii) the

consideration provided to Settlement Class Members pursuant to the Settlement, as compared to the

range of possible recovery discounted for the inherent risks of further litigating the Cordova

Litigation, the Receiver's Turnover Motion or the Released Claims; (iv) the complexity, expense and

possible duration of such litigation in the absence of a settlement; (v) the nature and extent of any

objections to the Settlement; and (vi) the stage ofproceedings at which the Settlement was reached.

Specifically, the settlement calls for the payment by the De La Riva Parties of S 112,500 (the "Class

Settlement Fund"). The settlement also requires the De La Riva Parties to pay over to the Receiver

$112,500, $50,000 ofwhich is currently held in trust by the Receiver (the "Turnover Proceeds"), and

the remaining $62,500 to be paid by the De La Riva Parties. Finally, the settlement provides for a

CH10150407100 6 333099 00002 3/30/200713:34Phi


Plan of Allocation that is in accordance with the plan set forth in the HSBC Settlement, which

distribution will inure to the benefit of the Settlement Class Members and other Authorized

Claimants and avoid prolonged litigation between and among Settlement Class Members and other

Authorized Claimants regarding distribution preferences and claim set-offs. By achieving a class

settlement against the De La Ri.va parties at this stage in the Cordova Litigation , the putative plaintiff

class will receive a considerable distribution ofmoney without the uncertainty, delay and expense of

protracted litigation.

G. A list of those Settlement Class Members who have timely elected to opt-out of the

Settlement and the Settlement Class and who therefore are not bound by the Settlement, the

provisions of the Stipulation, this Order and the Judgment to be entered by the Clerk of the Court

hereon, has been submitted to the Court as an exhibit to the Affidavit of

sworn to on , 2007. A copy of such Exhibit is attached hereto and

incorporated by reference herein. All other Settlement Class Members (as permanently certified

below only for purposes of this Settlement) shall be subject to all ofthe provisions of the Settlement,

the Stipulation , this Order and the Judgment to be entered by the Clerk of the Court.

H. The bar order provision of this Order, which prohibits the assertion of claims against

the De La Riva Parties, as set forth below, is a condition of the Settlement and a significant

component of the consideration afforded to the De La Riva Parties in the Settlement, and that

provision is reasonable under the circumstances. Supporting this conclusion is the fact that as an

express term of that provision, the persons who are enjoined from asserting any claims against the

De La Riva Parties shall have any subsequent verdict in the Cordova Litigation reduced by the

amount of the De La Riva Parties' liability or the an ount the De La Riva Parties paid to the

Settlement Class as a result of the Settlement, S250,000. To the extent that a Non-Settling

Defendant's claims against the De La Riva Parties have been barred and permanently enjoined, the

-3-CH[O1_504071006_3 33699 00002 3130/2007 12:34 PM


claims of the De La Riva Parties against that person or entity respecting those Released Claims are

similarly finally and fully barred.

I. The dismissal with prejudice and entry of Judgment contemplated by the Settlement

and this Order will dispose of fewer than all of the claims at issue, or parties to, the Cordova

Litigation. The Court finds that there is no just reason for delay in entering judgment in the form

attached hereto (the "Judgment") dismissing the Action with prejudice as to the De La Riva Parties

and that entry ofthe Judgment to that effect, as directed below, is warranted under Rule 54(b) ofthe

Federal Rules of Civil Procedure.

On the basis of the foregoing findings and the submissions and proceedings referred to

above, NOW THEREFORE, IT IS HEREBY ORDERED ADJUDGED AND DECREED:

1. Pursuant to Federal Rule of Civil Procedure 23(e), this Court finds that the settlement

as set forth in the Stipulation is, in all respects, fair, reasonable and adequate to the Settlement Class

and the Receivership Creditors, the result of good-faith and arn's-length negotiations and is hereby

finally approved in all respects. The Settling Parties are hereby directed to perform its terns.

2. This Court certifies a Settlement Class for settlement purposes only. This Court finds

and concludes that the prerequisites for a class action have been satisfied in that. (a) the Members of

the Settlement Class are so numerous that joinder of all Settlement Class Members in the Cordova

Litigation is impracticable; (b) there are questions of law and fact common to the Settlement Class

which predominate over any individual question; (c) the claims of the Plaintiffs are typical of the

claims of the Settlement Class; (d) the Plaintiffs and Plaintiffs' Settlement Counsel have fairly and

adequately represented and protected the interests of the Settlement Class Members; and (e) a class

action is superior to other available methods for the fair and efficient adjudication of this

controversy, considering: (i) the interests of the Settlement Class Members in individually

controlling the prosecution of the separate actions, (ii) the extent and nature of any litigation

-4-CFt1OI 5030710D 6 333699 OOQQ2 3130/ 2 007 12 : 34 PM


concerning the controversy already commenced by Settlement Class Members, (iii) the desirability

or undesirability of concentrating the litigation of these claims in this particular forum, and (iv) the

difficulties likely to be encountered in the management of the Cordova Litigation.

3. "Settlement Class" means all Persons (other than those Persons who timely and

validly request exclusion from the Settlement Class) who purchased, sold, held and/or retained

investments in trust plans and/or other securities from PFA during the period between January 1,

1999 and March 31, 2005, inclusive. Excluded from the Settlement Class are (a) any Defendant

named in the Complaint (or any previous complaints), including any and all subsidiaries, affiliates,

alter-ego entities, and/or immediate family members thereof; (b) PFA, PFA Assurance, PFA

International , Claren TPA, including any and all subsidiaries, affiliates and/or alter-ego entities

thereof; (c) all officers, directors, employees or agents (and their immediate family members) of the

entities and individuals described in subsections (a) and (b); (d) all employees, agents andlorbrokers

(and their immediate family members ) who sold or solicited the sale of investments in PFA or PFA

Assurance; (e) any person, fire, trust, officer, director or any individual or entity in which any ofthe


which is affiliated with any such individuals or entities ; (f) the legal representatives, agents,


4. To the extent not already addressed by this Court, and for purposes ofthis Settlement

only, Plaintiffs are certified as representatives of the Settlement Class and Plaintiffs' Settlement

Counsel is appointed counsel to the Settlement Class. The Court concludes that Plaintiffs'

Settlement Counsel and Plaintiffs have fairly and adequately represented the Settlement Class with

respect to the Settlement and the Stipulation.

5. Notwithstanding the certification ofthe foregoing Settlement Class and appointment

of class representatives for purposes ofeffecting the Settlement, if this Order is reversed on appeal or

-5-CH101 50407100 6 333699 00002 3/30/2007 12:34 PSI


the Stipulation is terririnated or is not consummated for any reason, the foregoing certification ofthe

Settlement Class and appointment of class representatives shall be void and of no further effect and

the Settling Parties shall be returned to the status each occupied before entry of this Order, without

prejudice to any legal argument that any of the Settling Parties might have asserted but for the

Settlement and Stipulation. The certification of the Settlement Class and appointment of Plaintiffs

and Settlement Class Counsel shall have no effect on the pending litigation between Plaintiffs and

the Non-Settling Defendants.

6. The Notice given to the Settlement Class was the best notice practicable under the

circumstances, including the individual notice to all Settlement Class Members and Receivership

Creditors who could be identified through reasonable effort. Said Notice provided the best notice

practicable under the circumstances of those proceedings and of the matters set forth therein,

including the class certification for settlement purposes, the proposed Settlement set forth in the

Stipulation, and the Settlement Approval Hearing to all Persons entitled to such notice, and said

Notice fully satisfied the requirements ofFederal Rule ofCivil Procedure 23 and the requirements of

due process.

7. The Court approves the Plan of Allocation attached hereto as Exhibit and finds

that it distributes the Settlement Class Fund and S 112,500 ofthe Turnover Proceeds in a manner that

is reasonable and fair to all Settlement Class Members.

8. Except as to any individual claim of those Persons (identified in Exhibit - attached

hereto) who have validly and timely requested exclusion from the Settlement Class, the Cordova

Litigation and all claims contained therein, as well as all of the Released Claims, are dismissed with

prejudice as to the Plaintiffs and the other Members of the Settlement Class, as against each and all

of the De La Riva Parties. The Court also dismisses with prejudice all claims that could have been

brought by the Receiver in any civil or administrative proceeding against each and all of the De La

_6-CU1O1 504071OU 6 333699 00DO2 3/30f2007 12:34 Pal


Riva Parties. The Settling Parties are to bear their own costs, except as otherwise provided in the

Stipulation.

9. The Claims Administrator, appointed by and subject to such supervision and direction

of the Court as may be necessary or as circumstances may require, shall calculate the claims

submitted by Plaintiffs, Settlement Class Members and Receivership Creditors and the Receiver

shall be responsible for reviewing, and if appropriate, objecting to claims, and shall oversee

distribution of the Settlement Fund to the Authorized Claimants in accordance with the approved

Plan of Allocation.

10. On the Effective Date hereto, the Class Settlement Fund, after deduction of fees

allowed to counsel for the Settlement Class, and the fees and costs ofthe Notice and Administration

Fund and the Escrow Agent and other items as set forth in Paragraph shall be transferred to the

Receiver for distribution to Authorized Claimants in accordance with the Plan of Allocation as

approved herein.

11. Upon the Effective Date and thereafter, and in accordance with the terms of the

Stipulation and the Plan ofAllocation, the Net Class Settlement Fund and S 112,500 of the Turnover

Proceeds shall be distributed to Authorized Claimants, subject to and in accordance with the

following.

(a) Within thirty (30) days after the Effective Date, the Receiver shall cause a

copy of the Proof of Claim form to be mailed to all Settlement Class Members and Receivership

Creditors in the forms attached to the HSBC Preliminary Approval Order as Exhibits A-2 and A-3.

(b) Within sixty (60) days after the mailing of the Proof of Claim Form (the

"Claims Filing Deadline"), each Claimant shall be required to submit to the Claims Administrator a

completed Proof of Claim, substantially in the form of Exhibit A-2 attached hereto, signed under

penalty ofperjury and supported by such documents as are specified in the Proofof Claim and as are

C€€101 50407€00 5 33369900002 3130/2007 12:34 P%I


reasonably available to the Claimant. The duties of the Claims Administrator shall be to transmit the

Proof of Claim forms to all known Claimants and to report to the Receiver and to Plaintiffs'

Settlement Counsel regarding an analysis and tabulation of claims filed by the Claims Filing

Deadline.

(c) The Receiver and his professionals will be responsible for reviewing, and, if

appropriate, filing objections to the validity and amount of filed claims. These objections will be

determined by the Court under procedures to be recommended by the Receiver and approved by the

Court.

(d) The allowed amount of the claim of a Claimant for purposes of all

distributions to be made by the Receiver pursuant to this Stipulation shall be the amount allowed by

the Court, after objection by the Receiver, or the amount set forth in the Claimant's Proof of Claim

timely filed by the Claims Filing Deadline, if no objection by the Receiver.

(e) Except as otherwise ordered by the Court, all Settlement Class Members and

Receivership Creditors: (i) who fail to timely submit a Proof of Claim by the Claims Filing

Deadline and who do not timely and validly request exclusion from the Settlement Class, or (ii)

whose claim is disallowed after objection by the Receiver, shall be forever barred from receiving any

payments from the De La Riva Parties pursuant to this Stipulation and the settlement set forth herein

and from the Receivership Estate, but will in all other respects be subject to and bound by the

provisions of this Stipulation, including the releases contained herein, and the Judgment.

(f) The Net Class Settlement Fund and S 112,500 of the Turnover Proceeds shall

be distributed by the Receiver to the Authorized Claimants, substantially in accordance with a Plan

of Allocation to be described in the Notice of Pendency and Proposed Settlement of Class Action,

Receiver's Turnover Motion and Receivership Claims, attached hereto as Exhibit A-1 and/or as

modified and approved by the Court.

_g_CH101 50407100 G 3336990000_ 3/3012007 12:34 PM


12. Upon the Effective Date hereto, the Plaintiffs, each ofthe Settlement Class Members,

including, but not limited to each of their respective successors, predecessors, assigns, attorneys

(including Settlement Class Counsel), heirs, representatives, administrators, executors, legatees, and

estates, and the Receiver, his agents, employees, attorneys, retained professionals and successors and

assiggns, shall be deemed to have, and by operation of the Order approving this Stipulation and the

Final Judgment shall have, fully, finally, and forever released, relinquished, discharged and

dismissed with prejudice all Released Claims in the Class Action Litigation and the Receiver's

Turnover Motion against Juan and Amanda De La Riva.

13. Upon the Effective Date hereto, the Plaintiffs, each ofthe Settlement Class Members,

including but not limited to each of their respective successors, predecessors, assigns, attorneys

(including Settlement Class Counsel), heirs, representatives, administrators, executors, legatees, and

estates, and the Receiver, his agents, employees, attorneys, retained professionals and successors and

assigns, shall be deemed to have, and by operation of the Order approving this Stipulation and the

Final Judgment shall have, fully, finally, and forever released, relinquished, discharged and

dismissed with prejudice Robert De La Riva from any and all claims, counter-claims, set-offs or

defenses which were asserted, might have been asserted, or in the future could be asserted, in the

Receiver's Turnover Motion.

14. Upon the Effective Date, as defined in I[ 1.6 of the Stipulation, each ofthe De La Riva

Parties, including but not limited to each of their respective successors, predecessors, assigns,

attorneys, (including the De La Riva Parties ' counsel), heirs, representatives , administrators,

executors, legatees, and estates, shall be deemed to have, and by operation of the order approving

this Stipulation and the Judgment shall have, fully, finally, and forever released, relinquished,

discharged and dismissed with. prejudice each. and all of the Settlement Class Members, Plaintiffs'

Settlement Counsel and the Receiver and his agents, employees and retained professionals, and

-9-CIIIQ1 504071006333 699000023/301 2 007 12 :34 PM


successors and assigns, from all claims (including Unknown Claims), arising out of, relating to, or in

connection with the institution , prosecution, assertion , settlement or resolution of the Cordova

Litigation, the Receiver's Turnover Motion, the Receivership Estate or the Released Claims.

15. Any order or proceeding relating to the Fee and Expense Application or the Plan of

Allocation, or any appeal from any order relating thereto or reversal or modification thereof, shall

not operate to terminate or cancel the Stipulation, or affect or delay the finality of the Judgment

approving the Stipulation and the settlement of the Released Claims, the Cordova Litigation and/or

the Receiver's Turnover Motion as to the De La Riva Parties.

16. Neither the Stipulation nor the Settlement contained therein, nor any act performed or

document executed pursuant to or in furtherance of the Judgment, the Stipulation or the Settlement:

(a) is or may be deemed to be or may be used as an admission of, or evidence of, the validity of any

Released Claim, or of any fault, wrongdoing, liability, misrepresentation or omission of the De La

Riva Parties or of any infirmity in the defenses that the De La Riva Parties asserted or could have

asserted relating to the Released Claims; (b) is or may be deemed to be or may be used as an

admission of, or evidence of, any fault, wrongdoing, liability, misrepresentation or omission of any

of the De La Riva Parties in any civil, criminal or administrative proceeding in any court,

administrative agency or other tribunal; or (c) is or may be alleged or mentioned by or on behalf of

any Settlement Class Member in any litigation or other action unrelated to the enforcement of the

Stipulation. Provided, however, that the De La Riva Parties may file or offer into evidence the

Stipulation, Judgment and/or the releases executed pursuant thereto in any action or proceeding that

may be brought against them in order to support a defense or counterclaim based on principles ofres

judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other

theory of claim preclusion or issue preclusion or similar defense or counterclaim.

_10_CHi01 _50407100_6 333399_00002 3/30/2007 12:34 PM


17. Without affecting the finality of this Judgment in any way, this Court hereby retains

continuing jurisdiction over: (a) implementation ofthis Settlement and any award or distribution of

the Distribution Fund, including interest earned thereon; (b) disposition ofthe Distribution Fund; and

(c) all parties hereto for the purpose of construing, enforcing and administering the Stipulation.

18. The Court finds that during the course of the above-captioned litigation, the Settling

Parties and their respective counsel at all times complied with the requirements of Federal Rule of

Civil Procedure 11.

19. The De La Riva Parties are by virtue of the Settlement hereby released and

discharged from all claims for contribution that have been or may hereafter be brought by any person

or entity, whether arising under state, federal or common law, based upon, arising out of, relating to,

or in connection with the Released Claims. Accordingly, to the full extent provided by the Private

Securities Litigation Reform Act ("PSLRA"), the Court hereby bars all claims for contribution

arising out of, relating to, or in connection with the Released Claims: (a) against the De La Riva

Parties; and (b) by the De La Riva Parties against any person or entity (the "Reform Act Bar Order").

20. The De La Riva Parties are by virtue of the Settlement hereby released and

discharged to the fullest extent allowed by law from and against any and all claims, however styled,

whether for indemmnifcation, contribution, or otherwise arising out of or relating to the acts and

transactions that are the subject of the Released Claims, whether arising under federal , state, or

common law (the "Complete Bar Order").

21. Pursuant to the PSLRA, by virtue of the De La Riva Parties entering into this

Settlement with Plaintiffs and the Settlement Class prior to final judgment or verdict of all claims

and parties, any subsequent verdict orjudgment against the Non-Settling Defendants in the Cordova

Litigation shall be reduced by the greater of (i) an amount that corresponds to the percentage of

-ii-c1110150.107100 63336990000 2 3/3012007 32:34 PM


responsibility of the De La Riva Parties; or (ii) the amount the De La Riva Parties paid to the

Settlement Class as a result of the Settlement.

22. In the event that the Settlement does not become effective in accordance with the

terms of the Stipulation, or the Effective Date does not occur, or in the event that the Distribution

Fund is returned to the De La Riva Parties in accordance with the Stipulation, then this Judgment

and Order shall be rendered null and void to the extent provided by and in accordance with the

Stipulation and shall be vacated and, in such event, all orders entered and releases delivered in

connection herewith shall be null and void to the extent provided by and in accordance with the

Stipulation.

23. There is no just reason for delay in the entry of this Final Judgment and Order and

immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54(b) ofthe Federal

Rules of Civil Procedure.

IT IS SO ORDERED.

DATED:THE HONORABLE K. MICHAEL MOOREUNITED STATES DISTRICT JUDGE

_12C I I10 t _50407 [ 00_6_33 3 699_00002 3130/? 007 1234 PM[


UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

CASE NO.: 05-21169-CIV-MOORE

MARCELA CORDOVA, et al.,individually and on behalf of allothers similarly situated,

Plaintiffs,vs.

LEHMAN BROTHERS, INC., et al.,

Defendants.

NOTICE OF PENDENCY OF CLASS ACTION,PROPOSED SETTLEMENT AND FAIRNESS HEARING

TO: ALL PERSONS WHO PURCHASED OR HELD INVESTMENTS IN PENSION

FUND OF AMERICA, KNOWN AS RETIREMENT TRUST PLANS.

IF YOU HAVE RECEIVED THIS NOTICE, YOU HAVE ALREADY BEENIDENTIFIED FROM THE RECORDS OF PENSION FUND OF AMERICA ASBEING A POTENTIAL CLASS MEMBER

THIS NOTICE EXPLAINS YOUR RIGHTSPLEASE READ IT CAREFULLY

THIS IS NOT A LAWSUIT AGAINST YOU.IT IS THE PARTIAL SETTLEMENT OF A LAWSUIT IN WHICH YOUMAY BE ENTITLED TO RECEIVE MONETARY COMPENSATION

1. PURPOSE OF NOTICE

An asserted class action lawsuit has been filed in the United States District Court for the

Southern District of Florida on behalf of a class of investors as defined in Section II, below(hereinafter referred to as "Lawsuit"). The plaintiffs in this lawsuit pending before the

Honorable K. Michael Moore in the United States District Court for the Southern District ofFlorida ("Court"), have agreed to a settlement with Juan De La Riva, Amanda De La Riva, andRobert De La Riva (hereinafter referred to collectively as "the De La Riva Parties"), to resolveall claims related to or in connection with their handling and investment of, or involvement in

any way with, any monies invested with Pension Fund of America ("PFA"). The proposed

Settlement is with only the De La Riva Parties. The Plaintiffs shall continue to pursue all theirclaims against the other non-settling defendants for their involvement with PFA. The Settlement

EXHIBIT


is described in more detail in Section IV below. The proposed Settlement is subject to approval

by the Court at a final approval hearing (the "Fairness Hearing").

The purpose of this Notice is to inform you as a potential member of the Settlement Class

(described below) of your rights. The provisions of this Notice are qualified and subject in their

entirety to the terms of the Stipulation of Settlement, copies of which are available for review in

the manner provided in Section IX below. Capitalized terms used but not defined herein have

the meanings given to them in the Stipulation of Settlement.

II. THE SETTLEMENT CLASS

The "Settlement Class" or "Class," which this Court has conditionally certified for the

purposes of the Settlement, consists of all persons who purchased, sold, held and/or retained

investments in "retirement trust" plans offered by PFA, or its affiliated companies, during the

period commencing January 1999 through the present ("Class Period"). Excluded from the

Class are the Defendants , PFA, PFA Assurance, PFA International , Claren TPA, Robert

De la Riva, Luis Cornide, and all of the Defendants ' alter-ego entities , all employees or

agents of Defendants and agents of the Defendants ' alter-ego entities , all subsidiaries and

affiliates of the Defendants, the Defendants ' officers , agents, and employees, any agents or

brokers (and their immediate family members) who sold or solicited the sale of investments

in PFA or PFA Assurance.

IF YOU ARE COVERED BY ONE OF THESE EXCLUSIONS YOU ARE NOT APARTY TO THE SETTLEMENT CLASS.

III. BACKGROUND OF THIS LITIGATION

On March 28, 2005, the Securities and Exchange Con-emission ("SEC") filed a Complaintagainst PFA and other related entities and individuals , alleging that PFA's sale of retirementtrusts was in violation of federal securities laws. On that same day, the Court appointed ThomasSchultz, Esq . as Receiver for PFA and related entities.

On April 21 and 25, 2005, Plaintiffs filed two separate class actions complaint againstnumerous parties in connection with the PFA scheme. These two cases were ultimately

combined into one consolidated lawsuit. Plaintiffs subsequently filed a second amended classaction complaint against various banking institutions and other individuals and entities forviolation of federal securities laws related to the PFA scheme. The Plaintiffs have engaged innegotiations with the De La Riva Parties in order to resolve all claims against those Partiesrelated to their handling, investment or involvement with funds invested with. PFA.

Class Counsel have met several times with counsel for the De La Riva Parties to discussthe potential settlement of this Action. Class Counsel reached a binding settlement with the De

La Riva Parties, resolving all issues relating to the De La Riva Parties' handling and investmentof, or involvement in any way with, any monies invested with PFA. A written SettlementAgreement was executed on May 25, 2007, and was preliminarily approved by the Court.


Plaintiffs and Class Counsel all have concluded that it would be in the best interests of

the Class to enter into the Settlement Agreement with the De La Riva Parties because the

Settlement would be a fair, reasonable and adequate resolution of this Action. The Settlement

calls for the payment by the De La Riva Parties of $112,500 (the "Class Settlement Fund"). The

Settlement also requires that the Proceeds of the Receiver's Turnover Action, including the

$50,000 currently held in trust, and $62,500 to be paid by the De La Riva Parties, for a total of5112,500 be allocated to Authorized Claimants. Finally, the settlement provides for a Plan of

Allocation that provides for the distribution of the Net Class Settlement Fund that is in accordwith the Plan set forth in the settlement with the HSBC Parties, which distribution will inure tothe benefit of the Settlement Class Members and other Authorized Claimants and avoid

prolonged litigation between and among Settlement Class Members and other AuthorizedClaimants regarding, distribution preferences and claim set-offs. By achieving a class settlement

with the De La Riva Parties relatively early in the litigation, the Settlement Class Members willreceive a significant amount of money without the uncertainty, delay, and expense of protractedlitigation. Based on their evaluation, counsel for the Plaintiffs have determined that thesettlement set forth in this Stipulation is fair, reasonable and adequate and in the best interests ofthe Settlement Class.

The De La Riva Parties, while continuing to deny vigorously Plaintiffs' claims and anyliability with respect to such claims, nevertheless recognize the costs and uncertainties attendantupon further litigation of the claims in this Action, and have therefore concluded that it isdesirable to enter into the proposed Settlement to avoid further expenses.

IV. PROPOSED SETTLEMENT OF THIS ACTION

After extensive negotiations among the attorneys for the parties in this Action, the partieshave agreed to a Settlement of the Action ("Settlement"), subject to final approval by the Court.The parties agree that the Settlement shall not be deemed or construed to be an admission orevidence of any violation of any statute or law or of any liability or wrongdoing or of the truth ofany of the claims or allegations in the Action. The terns and conditions of the Settlement areincorporated in a Stipulation of Settlement, which is on file with the Court. The following is asummary description of the Stipulation of Settlement.

Class Settlement Fund

The first financial term of the Settlement is as follows: Upon final approval of thissettlement, the De La Riva Parties shall pay a total of ONE HUNDRED TWELVETHOUSAND FIVE HUNDRED DOLLARS ($112,500) ("Settlement Fund") to the Class inexchange for a release of all Released Claims as defined in the Stipulation, and for otherpromises and consideration set forth in the Stipulation of Settlement.

The Settlement Fund, net of attorneys' fees and expenses as awarded by the Court, andthe net of the expenses for administering the Settlement ("Net Settlement Fund") will betransferred to the Receiver for distribution to the Class pursuant to the Plan of Allocation.

Turnover Proceeds


The second financial term of the Settlement is as follows: upon final approval of this

Settlement, the De La Riva Parties shall pay over to the Receiver ONE HUNDRED TWELVE

THOUSAND FIVE HUNDRED DOLLARS ($112,500), plus accrued interest , Fifty Thousand

Dollars ($50,000) of which is currently held in trust by the Receiver (the "Turnover Proceeds"),

and the remaining Sixty Two Thousand Five Hundred Dollars ($62,500) to be paid by the De La

Riva Parties.

All of the Turnover Proceeds, net of the expenses for administering the Settlement, will

be transferred to the Receiver for distribution to the Class pursuant to the Plan of Allocation.

Plan of Allocation

The Plan of Allocation calls for distribution to qualified Settlement Class Members,

WHO DO NOT ELECT TO EXCLUDE THEMSELVES FROM THE SETTLEMENT, of thefollowing monies: ( 1) the Net Settlement Fund ($112,500, less Court awarded fees and expenses,

expenses attributable to administration of the Settlement and Taxes) and (2) $ 112,500 of the

Turnover Proceeds.

The total amount of the monies to be distributed will be divided equally between twofunds. The first fund will be distributed on a pro-rata basis to all qualified Settlement ClassMembers , WHO DO NOT EXCLUDE THEMSELVES FROM THE SETTLEMENT, and who

did not receive any distribution or return of their investment from PFA prior to the appointment

of the Receiver . The second fund will be distributed on a pro-rata basis among all qualifiedSettlement Class Members, WHO DO NOT EXCLUDE THEMSELVES FROM THESETTLEMENT, regardless of whether they received the prior distribution or return of theirinvestment , and Receivership Creditors whose claims are allowed by the court after anyobjections deemed appropriate are made by the Receiver . Therefore , those investors who havenot received any return of their investment from PFA prior to the appointment of the Receiverwill share in distributions from the entire amount to be distributed by the Receiver. Thoseinvestors who have already received a partial return or liquidation of their investment from PFAprior to the appointment of the Receiver will share on a pro -rata basis in the distribution of onlyhalf of the recovered fiends.

After final approval of the Settlement, and 30 days after the Effective Date of theSettlement , the Receiver shall mail a Proof of Claim form to all Settlement Class Members,WHO DID NOT ELECT TO EXCLUDE THEMSELVES FROM THE SETTLEMENT. Theform of the proof of claim has been approved by the Court as part of this Settlement. ALLINVESTORS WHO WISH TO SHARE IN ANY OF THE RECOVERIES FROM THESETTLEMENT WILL BE REQUIRED TO COMPLETE THE PROOF OF CLAIM ANDRETURN IT TO THE RECEIVER, ALONG WITH SUPPORTING DOCUMENTATION. TheReceiver will verify all claim for i s that are submitted and will either confirm the amount ofclaim or may object.

The exact amount of money that you will receive from the Settlement cannot bedetermined until all claim forms are submitted and verified. Please note that the proof of claim


form will not be mailed until 30 days after the Settlement is approved and the effective date of

the Settlement.

Attorneys' Fees and Costs

The award of attorneys ' fees to Class Counsel is a matter committed to the sole discretion

of the Court. The Settlement provides that Class Counsel will apply for ( 1) an award not to

exceed thirty percent (30%) of the Class Settlement Fund, and (2) reimbursement of their

reasonable expenses and costs incurred in connection with prosecuting this Action ("the Fee

Request" ). AS PART OF THIS SETTLEMENT, CLASS COUNSEL HAVE AGREED

NOT TO SEEK THE AWARD OF ANY FEE FROM THE TURNOVER PROCEEDS TOBE PAID BY HSBC AS PART OF THIS SETTLEMENT . Any award made by the Court in

response to the Fee Request shall be paid solely from the Settlement Fund. The fairness,

reasonableness , and adequacy of the Settlement may be considered and ruled upon by the Courtindependently of any award of attorneys' fees and costs.

V. RELEASE AND DISCHARGE OF CLAIMS

The following is a sui ary of the Release agreed to by the Settling Parties as part of theSettlement: Juan and Amanda De la Riva shall be released and forever discharged from allmanner of claims, demands, rights, liabilities and causes of action of every nature anddescription whatsoever, known or unknown, suspected or unsuspected, whether or not concealed

or hidden, fixed or contingent, arising out of, based upon or related to the purchase, acquisition,maintenance or sale of any trust or other plan or security issued or sold by or on behalf of PFA

by the Plaintiffs or any settlement class member during the settlement class period, and allclaims, counter-claims, set-offs or defenses which were asserted, might have been asserted, or inthe fixture could be asserted, in the Class Action Litigation and the Receiver's Turnover Motionincluding, without limitation, claims for negligence, gross negligence, breach of duty of careand/or breach of duty of loyalty, fraud, breach of fiduciary duty, or disgorgement of any gains,profits or unjust enrichment, or claims arising under or for violations of any state or federalstatutes, rules, regulations or common law. Robert De la Riva shall be released and foreverdischarged from any and all claims, counter-claims, set-offs or defenses which were asserted,might have been asserted, or in the future could be asserted, in the Receiver's Turnover Motionincluding, without limitation, claims for negligence, gross negligence, breach of duty of careand/or breach of duty of loyalty, fraud, breach of fiduciary duty, or disgorgement of any gains,profits or unjust enrichment, or claims arising under or for violations of any state or federalstatutes, rules, regulations or common law.

VI. YOUR RIGHT TO BE EXCLUDED FROM THE SETTLEMENT

If the Settlement is finally approved, you will be bound by the final judgment and releaseas entered by the Court unless you exclude yourself from the Settlement. Thus, if you are aClass Member, you have a choice whether or not to remain a member of the Class. This choicewill have consequences that you should understand before malting your decision. IF YOUWANT TO REMAIN A MEMBER OF THE CLASS AND BE ABLE TO APPLY TORECEIVE PART OF THE MONIES RECOVERED AS PART OF THIS SETTLEMENT,


YOU ARE NOT REQUIRED TO DO ANYTHING AT THIS TIME. By remaining a Class

Member, you cannot assert in any other lawsuit, any claims against the De La Riva Parties

arising out of your investment with PFA. Also, by remaining a Class Member, you will have the

opportunity to, at a later date, receive a distribution in accordance with the Plan of Allocation.

IF YOU WANT TO BE EXCLUDED FROM THE CLASS FOR ANY REASON AND

DO NOT WANT TO SHARE IN THE MONIES RECOVERED AS PART OF THISSETTLEMENT, YOU MUST MAKE A WRITTEN REQUEST FOR EXCLUSION FROM

THE CLASS AND SEND IT, VIA FIRST CLASS MAIL, TO

De La Riva Settlement Exclusion

c/o Ailyn PopowskiPodhust Orseck, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130

Your request for exclusion must be received by no later than July 10, 2007. It should include

(a) the name, address, and telephone number of the Person requesting exclusion; (b) the name,

address, and telephone number of the Person who originally purchased the PFA trust plan; c)

each of the Person's acquisitions of a PFA trust plan during the Settlement Class Period,including the dates of purchase or sale, the type of trust plan purchased, the amount of the initial

investment, and the amount of the total investment in such plan; (d) any distributions, refunds orother monies received from PFA; and (e) that the Person wishes to be excluded from theSettlement Class. IF YOU ELECT TO BE EXCLUDED, YOU WILL NOT SHARE IN

ANY RECOVERY TO BE PAID TO THE CLASS AS A RESULT OF THESETTLEMENT OF THIS ACTION, YOU WILL NOT BE ENTITLED TO APPEAR ATTHE FAIRNESS HEARING DISCUSSED IN SECTION VII BELOW, AND YOU WILLNOT BE BOUND BY THE RELEASE SET FORTH IN THE STIPULATION OFSETTLEMENT.

VII. THE FAIRNESS HEARING

The Court has scheduled a hearing to be held on August 10, 2007 at 10:00a.m . beforethe Honorable K. Michael Moore, Judge of the United States District Court for the SouthernDistrict of Florida, at the United States Courthouse, Eleventh Floor, Courtroom No. III, 99Northeast Fourth Street, Miami, Florida 33132, for the purpose of determining whether to:finally approve the terms of the Settlement, approve Class Counsel's motion for attorneys' feesand costs, finally certify the Settlement Class, and such other matters that the Court deemsappropriate to consider ("Fairness Hearing,"). The time and date of the Fairness Hearing may becontinued or rescheduled by the Court without further notice. Furthermore, the Court mayapprove the proposed Settlement at or after the Fairness Hearing with any modification agreed toby the De La Riva Parties and without further notice to the Class.

If you wish to comment in support of, or in opposition to, the Settlement, the Plan ofAllocation, or the motion for attorneys' fees and costs, you may do so, but you MUST first mailyour comments and/or objections in writing, postage prepaid, upon Class Counsel and


Counsel for the De La Riva Parties at the addresses below, and file your comments and/or

objections with the Court no later than July 23, 2007. You must include your name and

current address with your comments and/or objections.

ANY PERSON WHO FILES ANY OBJECTION TO THIS SETTLEMENT MUSTAGREE TO SUBMIT THEMSELVES EXCLUSIVELY TO THE JURISDICTION OFTHIS COURT FOR FINAL DETERMINATION OF THEIR OBJECTION.

If you also wish to be heard at the Fairness Hearing in person or through your own

attorney, you or your attorney MUST file a written Notice of Appearance with the Clerk of

the Court for the United States District Court for the Southern District of Florida, 301North Miami Avenue, Room 150 , Miami, Florida 33128, on or before July 23, 2007, andinclude a statement of the position to be asserted and the reasons for your position, together with

copies of any supporting papers or briefs. Your notice must include in a prominent location the

name of the case (Cordova, et al. iJ Lehman Bros., et al.) and the case number (No. 05-21169-CIV-MOORE). You MUST also mail a copy of your Notice of Appearance along with allaccompanying papers to Class Counsel and Counsel for the De La Riva Parties (addressesbelow).

Counsel for the Plaintiffs and the Class

Harley S. Tropin, Esq.Kozyak, Tropin & Throckmorton, P.A.2525 Ponce de Leon, 9`t' FloorCoral Gables, Florida 33134

Victor M. Diaz, Esq.Podhurst Orseck, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130

Counsel for the De La Rivas Parties

Kathy E. Rentas, Esq.Becker & Poliakoff, P.A.3111 Stirling RoadFt. Lauderdale, FL 33312-6525

Counsel for the Receiver

David M. Levine, EsquireTew Cardenas LLPMiami Center 26th Floor201 South Biscayne BlvdMiami, FL 33131-4336

Except as provided herein, no person shall be entitled to contest the terms and conditionsof the Settlement, or to object to counsel's motion for attorneys' fees and costs, and persons whofail to object as provided herein shall be deemed to have waived and shall be foreclosed foreverfrom raising any such objections. You need not appear at the hearing in order to object.


VIII. TERMINATION

The Settlement Agreement shall terminate (1) at the option of either party if the Court, or

any appellate court(s) modifies or denies approval of any portion of the Stipulation, other than

the Plan of Allocation or the award to Plaintiffs' Counsel of any fees or expenses; and (2) at the

option of either party if a court does not enter and confirm the Final Order of Judgment.

IX. ADDITIONAL INFORMATION

The above is only a summary of the Settlement. A copy of the Stipulation of Settlement,

which includes the Release, as well as other pleadings, are on public file with the Clerk of the

Court for the United States District Court for the Southern District ofFlorida, 301 North Miami

Avenue, Room 150, Miami, Florida 33128. In addition, Class Counsel will file with the Court

their motion for attorneys' fees and costs as previously described (7) seven days prior to the

Fairness Hearing. The Stipulation of Settlement and counsel's motion for attorneys' fees and

costs will be available for inspection during normal business hours at the Office of the Clerk.

PLEASE DO NOT CONTACT THE COURT REGARDING THE SETTLEMENT

Dated: , 2007 BY ORDER OF THE COURTUNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

Case 1 : 05-cv-21169-KMM Document 323-3 Entered on FLSD Docket 05/29/2007

IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAMIAMI DIVISION


Plaintiff,

vs.


Defendant.

MARCELLA CORDOVA, JORGE FLORES,HENRY IURMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,

Plaintiffs,

vs,

LEHMAN BROTHERS, INC., a New YorkCorporation; MERRILL LYNCH & CO., INC.,a Delaware Corporation; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andHSBC BANK, U.S.A., LUIS CORNIDE andROBERT A. DE LA RIVA,

Defendants.


No. 05-21169-CIV-MOORE-GARBER

IPROPOSEDI ORDERPRELIMINARILY APPROVINGSETTLEMENT AND PROVIDINGFOR NOTICE

EXHIBIT A

Page 1 of 13[1


WHEREAS, on March 28, 2005, the SEC filed a civil action against Pension Fund of

America, L.C. and its related entities (hereinafter "PFA") and principals, alleging PFA engaged in an

offering fraud. On that same day, the District Court for the Southern District of Florida entered a

Temporary Restraining Order and appointed the Receiver;

WHEREAS, there is pending litigation between the Receiver and the De la Riva Parties over

the $450,000 plus accruing interest held in the trust account of counsel for the De la Riva Parties.

On April 17, 2006, the Receiver filed with the Court an Amended Motion for a determination that

the funds in the foregoing account are property of the Receivership and should be transferred to the

Receiver for distribution to all investors (the "Receiver's Turnover Motion"). 1PM is a party to the

Turnover Motion. The De la Riva Parties opposed the Motion. The matter remains pending.

WHEREAS, on April 21, 2005, a complaint was filed in the United States District Court for

the Southern District of Florida on behalf of a putative class of PFA investors who had purchased

trust plans from PFA from January 1, 1999 through March 31, 2005, inclusive (the "Settlement Class

Period"). Heavy Iia-man v. Pension Fund ofAmerica L. C. et al. Case No. 05-21101. On April 28,

2005, a second related complaint was filed on behalf of the same putative class of PFA investors.

Samuel Puterman v. Lehman Brothers, Inc. et al., Case No. 05-21169;

WHEREAS, on June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended

Class Action Complaint styled Cordova, et al. vv. Lehman Bros., Inc., et al., Case No. 05-21169. The

consolidated cases are collectively referred to herein as the "Cordova Litigation." The First

Amended Complaint alleged common law claims for (1) breach of fiduciary duty, (2) aiding and

abetting PFA's common law fraud and (3) aiding and abetting PFA's breaches ofits fiduciary duties.

The Complaint named Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond James Financial

Services, Inc., Oliva Investment Group, Inc. and HSBC Bank, U.S.A. as defendants (hereinafter, the

"Financial Institution Defendants");

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WHEREAS, on January 17, 2006, the Court granted Defendants' motions to dismiss, ruling


Uniform Standards Act ("SLUSA");

WHEREAS, on February 13, 2006, Plaintiffs filed their Second Amended Class Action

Complaint ("Complaint") alleging violations by HSBC of Sections 12 and 15 ofthe Securities Act of

1933 ("Securities Act") and Section 10(b) ofthe Securities Exchange Act of 1934 ("Exchange Act");

WHEREAS, motions to dismiss the Second Amended Class Action Complaint are currently

pending;

WHEREAS, the Court has received the Stipulation of Settlement, dated as ofMay 25, 2007

(the "Stipulation"), that memorializes the Settlement entered into by Plaintiffs' Settlement Counsel

on behalf of the Plaintiffs and the Settlement Class, Receiver through his counsel, and Juan De La

Riva, Amanda De La Riva, and Robert De La Riva, through their counsel (the "De La Riva Parties"),

and the Court has reviewed the Stipulation and its attached Exhibits;

WHEREAS, all defined terms contained herein shall have the same meanings as set forth in

the Stipulation;

WHEREAS, counsel for the Settling Parties represent that they have engaged in substantial

arm's length negotiations in an effort to resolve all claims that have been or could be asserted in the

Cordova Litigation and/or by the Receiver in the Turnover motion or in any civil or administrative

proceeding, including conducting numerous meetings and telephone conferences where the terns of

the agreements detailed herein were extensively debated and negotiated;

WHEREAS, based on the investigation of their counsel, Plaintiffs believe that the claims

asserted in the Cordova Litigation have merit and that the evidence developed to date supports the

claims. However, Plaintiffs' Settlement Counsel recognize and acknowledge the expense and length

of continued proceedings necessary to prosecute the Cordova Litigation against the De La Riva

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Parties through trial and through appeals. Plaintiffs' Settlement Counsel also have taken into

account the uncertain outcome and the risk of any litigation, especially in complex actions such as

the Cordova Litigation, as well as the difficulties and delays inherent in such litigation. Plaintiffs'

Settlement Counsel are mindful of the inherent problems ofproof Linder and possible defenses to the

securities law violations asserted in the Cordova Litigation. Plaintiffs' Settlement Counsel have

concluded that the proposed Settlement is fair, reasonable and adequate and in the best interests of

the Settlement Class;

WHEREAS, the De La Riva Parties expressly have denied and continue to deny any and all

charges of fault, wrongdoing or liability against them arising out of any of the conduct, statements,

acts or omissions alleged, or that could have been alleged, in the Cordova Litigation and/or by the

Receiver in the Turnover Motion or in any civil or administrative proceeding, or of any infirmity in

the defenses that the De La Riva Parties asserted or could have asserted in such action or

proceedings, and are entering into the Settlement in order to eliminate the burden, distractions,

expense and uncertainty of further litigation;

WHEREAS, the Litigation is being settled against the De La Riva Parties only, and the

Settlement shall have no effect whatsoever on the pending Cordova Litigation between Plaintiffs and

the Non-Settling Defendants, namely Lehman Brothers, Inc., Merrill Lynch. & Co., Inc., Raymond

James Financial Services, Inc., Oliva Investment Group, Inc., and Luis Comide (the "Non-Settling

Defendants");

WHEREAS, the Settling Parties having made application, pursuant to Federal Rule of Civil

Procedure 23(e), for an order preliminarily approving the Settlement of this Cordova Litigation, in

accordance with the Stipulation which, together with the Exhibits annexed thereto, sets forth the

terms and conditions for the proposed Settlement; and

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WHEREAS, the Court having read and considered the Stipulation and the Exhibits annexed

thereto;

NOW, THEREFORE, IT IS HEREBY ORDERED:

1. The Court does hereby preliminarily approve the Stipulation and the Settlement set

forth therein, subject to further consideration at the Settlement Approval Hearing described below.

Settlement Approval Hearing

2. A hearing (the "Settlement Approval Hearing") shall be held before the undersigned,

United States District Judge K. Michael Moore, at the United States Courthouse, Courtroom #3,

Room 1104, James Lawrence King Federal Justice Building, 99 Northeast, 4`^' Street #1168, Miami,

Florida 33142 on August 10, 2007 , at 10:00 a. n., to determine:

(a) whether the Court should certify the Settlement Class for purposes of this

Settlement only and whether Plaintiffs and Plaintiffs' Settlement Counsel have adequately

represented the Settlement Class;

(b) whether the proposed Settlement of the Released Claims on the terms and

conditions provided for in the Stipulation is fair, reasonable and adequate to the Settlement Class and

Receivership Creditors and should be approved by the Court;

(c) whether a Judgment as defined in § 1.10 of the Stipulation and as set forth in

the Stipulation, Exhibit B should be entered herein;

(d) whether the Court should permanently enjoin the assertion of any claims

against the De La Riva Parties that arise from or relate to the subject matter of the Cordova

Litigation or the Released Claims by any Plaintiff, Settlement Class Member, Non-Settling

Defendant, the Receiver or any other persons;

(e) whether the proposed Plan of Allocation should be approved;

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(f) the amount of fees and expenses that should be awarded to Plaintiffs'

Counsel; and

(g) such other matters as the Court may deem necessary or appropriate.

Preliminary Certification of Settlement Class

3. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, the Court

preliminarily certifies, for purposes of effectuating this Settlement only, a Settlement Class of all

Persons who purchased, sold, held and/or retained investments in trust plans and/or other securities

from PFA, or its affiliated companies, during, the Settlement Class Period. Excluded from the

Settlement Class are (a) any Defendant named in the Complaint (or any previous complaints),

including any and all subsidiaries, affiliates, alter-ego entities, and/or immediate family members

thereof; (b) PFA, PFA Assurance, PFA International, Claren TPA, including any and all subsidiaries,

affiliates and/or alter-ego entities thereof; (c) all officers, directors, employees or agents (and their

immediate family members) of the entities and individuals described in subsections (a) and (b); (d)

all employees, agents and/or brokers (and their immediate family members) who sold or solicited the

sale of investments in PFA or PFA Assurance or any subsidiaries, affiliates and/or alter-ego entities

thereof; (e) any Person, firm, trust, officer, director or any individual or entity in which any of the


which is affiliated with any such individuals or entities; (f) the legal representatives, agents,


4. For purposes of this Settlement only, the Plaintiffs are temporarily appointed as

representatives of the class and Plaintiffs' Settlement Counsel are temporarily appointed as

settlement class counsel.

5. For purposes of this Settlement only, this Court preliminarily finds and concludes

that: (a) the Settlement Class Members are so numerous that joinder of all Settlement Class Members

-5-


in the Cordova Litigation for purposes of this Settlement is impracticable; (b) there are questions of

law and fact common to the Settlement Class which predominate over any individual questions; (c)

the claims of the Plaintiffs are typical of the claim of the Settlement Class; (d) the Plaintiffs and

Plaintiffs' Settlement Counsel have fairly and adequately represented and protected the interests of

all of the Settlement Class Members; and (e) a class action is superior to other methods for the fair

and efficient adjudication of this controversy, considering: (i) the interests of the Settlement Class

Members in individually controlling the prosecution ofthe separate actions, (ii) the extent and nature

of any litigation concerning the controversy already commenced by Settlement Class Members, (iii)

the desirability or undesirability of concentrating the litigation of these claims in this particular

forum, and (iv) the difficulties likely to be encountered in the management of the Cordova

Litigation. In the event that this Settlement is not approved or the De La Riva Parties withdraw from

the Settlement, these findings will be set aside and the issues of class certification and the

appointment of representative or lead plaintiff and class or lead counsel may be contested. Nothing

in this Order or the Stipulation shall effect the issue of class certification, the appointment of

representative or lead plaintiff, or the appointment of lead or class counsel in the pending Cordova

Litigation against the Non-Settling Defendants.

Approval of Notice Forms, Claims Filing Procedures and Related Processes

6. The Court approves, as to form and content, the Notice of Pendency and Proposed

Settlement of Class Action (the "Notice") annexed as Exhibit C to the Stipulation, and finds that the

mailing and distribution of the Notice substantially in the manner and form set forth in 118 of this

Order meet the requirements of Federal Rule of Civil Procedure 23 and due process, and is the best

notice practicable under the circumstances and shall constitute due and sufficient notice to all

Persons entitled thereto.

-6-


7. The Court finds that the Notice and Claims Procedure for the Settlement Class

Members and the Receivership Creditors may be coordinated pursuant to a single Claims Procedure

as set forth in the Stipulation, since Settlement Class Members are also creditors ofthe Receivership

Estate. The Court also approves the claims filing procedure for Receivership Creditors and

Settlement Class Members as set forth in Paragraph 5.3 of the Stipulation, and further referred to in

Paragraphs 21-22 hereof, including, but not limited to the establishment of the Claims Filing

Deadline referenced therein and the provisions regarding disallowance of untimely filed claims.

8. Garden City Group ("Claims Administrator") is hereby retained to supervise and

administer the notice procedure as well as the processing of claims as more fully set forth below:

(a) The Claims Administrator, with the cooperation of the Receiver, shall make

reasonable efforts to identify all Persons who are Settlement Class Members, Receivership Creditors

and/or potentially interested parties, and not later than June 8, 2007 (the "Notice Date"), shall cause

a copy ofthe Notice, substantially in the form annexed as Exhibit C to the Stipulation, to be mailed

by first class mail to all Settlement Class Members who can be identified with reasonable effort; and

(b) At least seven (7) calendar days prior to the Fairness Hearing, the Class

Administrator shall cause to be served on the De La Riva Parties' counsel and Plaintiffs' Settlement

Counsel and filed with the Court proof, by affidavit or declaration, of such mailing and publishing.

9. All reasonable expenses incurred in identifying and notifying Settlement Class

Members and the Receivership Creditors, as well as administering the Distribution Fund, shall be

paid as set forth in the Stipulation. In the event the Settlement is not approved by the Court, or

otherwise fails to become effective, neither the Plaintiffs nor Plaintiffs' Settlement Counsel shall

have any obligation to repay any amounts actually and properly disbursed from the Notice and

Administration Fund.

-7-


10. Any person receiving notice of the settlement who purchased or acquired PFA trust

plans for the benefit of another during the period from January 1, 1999 through March 31, 2005,

inclusive, shall forward the Notice to all beneficial owners of such PFA plans within ten (10) days

after receipt thereof, or send a list of the names and addresses of such beneficial owners to the

Claims Administrator within ten (10) days of receipt thereof, in which event the Claims

Administrator shall promptly mail the Notice to such beneficial owners.

11. All Settlement Class Members and/or Receivership Creditors shall be bound by all

determinations and judgments contained herein and/or in the Final Order, whether favorable or

unfavorable to the Settlement Class and/or Receivership Creditors.

Objections to Settlement and/or Exclusions from Settlement Class

12, Any Settlement Class Member and/or Receivership Creditors may enter an

appearance in the Cordova Litigation, at their own expense, individually or through counsel oftheir

own choice. If Settlement Class Members do not enter an appearance, they will be represented by

Plaintiffs' Settlement Counsel.

13. Any Person falling within the definition of the Settlement Class may, upon written

request, be excluded from the Settlement Class. Any such Person must submit to Settlement Class

Counsel a request for exclusion ("Request for Exclusion"), postmarked no later than July 10, 2007.

A Request for Exclusion must state: (a) the name, address, and telephone number of the Person

requesting exclusion; (b) the name, address, and telephone number of the Person who originally

purchased the PFA trust plan; (c) each of the Person's acquisitions of a PFA trust plan during the

Settlement Class Period, including the dates ofpurchase or sale, the type of trust plan purchased, the

amount of the initial investment, and the amount of the total investment in such plan; (d) any

distributions, refunds or other monies received from PFA; and (e) that the Person wishes to be

excluded from the Settlement Class. All Persons who submit valid and timely Requests for

-8-


Exclusion in the manner set forth in this paragraph shall have no rights under the Stipulation, shall

not share in the distribution of the Net Settlement Fund , and shall not be bound by the Stipulation or

the Judgment entered in the Litigation.

14. Any Settlement Class Member may appear and show cause, if he, she or it has any,

why the proposed Settlement of the Released Claims should or should not be approved as fair,

reasonable and adequate, why a Judgment should or should not be entered thereon, why the Plan of

Allocation should or should not be approved, or why attorneys' fees and expenses should or should

not be awarded to Plaintiffs' Settlement Counsel; provided, however, that no Settlement Class

Member, or any other Person shall be heard or entitled to contest the approval of the terms and

conditions of the proposed Settlement, or, if approved, the Judgment to be entered thereon approving

the same, or the order approving the Plan of Allocation, or the attorneys' fees and expenses to be

awarded to Plaintiffs' Settlement Counsel, unless that Person has delivered by hand or sent by first

class mail written objections and copies of any papers and briefs such that they are received on or

before July 23, 2007, by Podhurst Orseck P.A., Victor M. Diaz, 25 West Flagler Street, Suite 800,

Miami, FL 33130, Kozyak Tropin & Throcknnorton, PA, Harley S. Tropin, 2525 Ponce de Leon, 9`j'

Floor, Miami, FL 33134; David M. Levine, Esq., Tow Cardenas, LLP, Miami Center, 26'' Floor, 201

South Biscayne Boulevard, Miami, FL 33131-4336 and Becker & Poliakoff, P.A., Kathy E. Rentas,

3111 Stirling Road, Fort Lauderdale, FL 33312, and filed said objections, papers and briefs with the

Clerk ofthe United States District Court for the Southern District of Florida, Miami Division, James

Lawrence King Federal Justice Building, 99 Northeast, 4"' Street #1168, Miami, Florida 33142 on or

before July 23, 2007. Any person who does not make his, her or its objection in the maimer

provided shall be deemed to have waived such objection and shall forever be foreclosed from

making any objection to the fairness, reasonableness or adequacy of the proposed Settlement as set

-9-


forth in the Stipulation, to the Plan of Allocation, or to the award of attorneys' fees and expenses to

Plaintiffs' Settlement Counsel, unless otherwise ordered by the Court.

15. All papers in support of the Settlement, the Plan ofAllocation, and any application by

Plaintiffs' Settlement Counsel for attorneys' fees or reimbursement of expenses shall be filed and

served seven (7) calendar days prior to the Settlement Approval Hearing.

Distribution Funds

16. All funds held by the Escrow Agent shall be deemed and considered to be in custodia

legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such

funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court.

17. At the Settlement Approval Hearing, the Court shall determine whether the Plan of

Allocation proposed by Plaintiffs' Settlement Counsel, and any application for attorneys' fees or

reimbursement of expenses shall be approved.

18. The $112,500 Class Settlement Fund shall be transferred by or on behalf ofthe De La

Riva Parties to the Escrow Agent within five (5) business days of the date of this Order (the

"Transfer Date"). If the $112,500 is not timely deposited with the Escrow Agent, the unpaid amount

shall bear interest at the rate of five percent (5%) per annum from the Transfer Date until paid.

Upon the Effective Date, the Net Settlement Fund shall be transferred to the Receiver for distribution

to Authorized Claimants in accordance with the Plan of Allocation finally approved by this Court.

19. Pursuant to 112.2 of the Stipulation, the De la Riva Parties shall transfer the Turnover

Proceeds to the Receiver on or before the Transfer date, subject to the terms and conditions of the

Stipulation. After transfer to the Receiver on the Transfer Date, the Turnover Proceeds will be held

by the Receiver in a separate account at market rate interest in instruments backed by the full faith

and credit of the United States Government or fully insured by the United States Government or an

agency thereof until the Effective Date. Upon the Effective Date, $112,500 of the Turnover

-10-


Proceeds may be distributed by the Receiver to Authorized Claimants pursuant to the Plan of

Allocation in its current form or as may be approved by the Court.

20. Neither the De La Riva Parties, their Related Parties , nor its counsel shall have any

responsibility for the Plan of Allocation or any application for attorneys' fees or reimbursement of

expenses submitted by Plaintiffs' Settlement Counsel, and such matters will be considered separately

frorn the fairness, reasonableness and adequacy of the Settlement.

Claims Process

21. Within thirty (30) days after the Effective Date the Proof of Claim form shall be

mailed to all Settlement Class Members and Receivership Creditors in the form attached as Exhibits

A-2 and A-3 to the HSBC Stipulation and/or as modified by the Court in the Final Order.

22. All Settlement Class Members and/or Receivership Creditors who wish to participate

in the Settlement shall complete and submit ProofofClaim forms in accordance with the instructions

contained therein. Unless the Court orders otherwise, all ProofofClaim forms must be submitted no

later than sixty (60) days from the date the Proof of Claim Forms were mailed. Any Settlement

Class Member and/or Receivership Creditor who does not timely submit aProofofClaim within the

time provided for, shall be barred from sharing in the distribution of the proceeds of the Distribution

Fund or from the Receivership Estate, unless otherwise ordered by the Court.

Miscellaneous Provisions

23. Neither the Stipulation , nor any of its terms or provisions , nor any ofthe negotiations

or proceedings connected with it, shall be offered or received into evidence in any action or

proceeding, or be used or construed in any was as an admission or concession by the De La Riva

Parties ofthe truth of any of the allegations in the Litigation, or of any liability, fault, or wrongdoing

of any kind.

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24. All proceedings against the De La Riva Parties in the Cordova Litigation, other than

proceedings necessary to carry out the terms and conditions of the Settlement, are hereby stayed and

suspended until further order of the Court. Pending final determination of whether the Settlement

and Stipulation should be approved and the Settlement Class certified for purposes ofthis Settlement

only, all Settlement Class Members, the Receiver and any Non-Settling Defendants are hereby

barred and enjoined from commencing or prosecuting against the De La Riva Released Persons any

action asserting any Released Claims.

25. The Court reserves the right to adjourn the date of the Settlement Approval Hearing

without further notice to the Settlement Class Members or Receivership Creditors, and retains

jurisdiction to consider all further applications arising out of or connected with the proposed

Settlement , The Court may approve the Settlement , with such modifications as may be agreed to by

the Settling Parties, if appropriate, without further notice to the Settlement Class or Receivership

Creditors.

IT IS SO ORDERED.

DATED:THE HONORABLE K. MICHAEL MOOREUNITED STATES DISTRICT JUDGE

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