1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
DAVID R. ZARO (BAR NO. 124334)TED FATES (BAR NO. 227809) TIM HSU (BAR NO. 279208) ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP 515 South Figueroa Street, Ninth Floor Los Angeles, California 90071-3309 Phone: (213) 622-5555 Fax: (213) 620-8816 E-Mail: [email protected]
[email protected] [email protected]
Attorneys for Receiver WILLIAM J. HOFFMAN
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v. NATIONWIDE AUTOMATED SYSTEMS, INC.; JOEL GILLIS; and EDWARD WISHNER,
Defendants, OASIS STUDIO RENTALS, LLC; OASIS STUDIO RENTALS #2, LLC; and OASIS STUDIO RENTALS #3,
Relief Defendants.
Case No. CV-14-07249-SJO (FFMx) FOURTH INTERIM FEE APPLICATION OF ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP, GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00 a.m. Ctrm: 1 - 2nd Floor Judge: Hon. S. James Otero
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 1 of 84 Page ID #:1613
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
TABLE OF CONTENTS
Page
836178.01/SD (i)
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
I. INTRODUCTION ............................................................................................ 1
II. SUMMARY OF TASKS PERFORMED AND COSTS INCURRED ...................................................................................................... 3
A. General Receivership ............................................................................. 3
B. Asset Investigation ................................................................................. 3
C. Reporting ................................................................................................ 5
D. Operations & Asset Sales ....................................................................... 5
E. Claims and Distributions ........................................................................ 6
F. Third Party Recoveries ........................................................................... 6
G. Employment/Fees ................................................................................... 7
H. Barbara Adler Litigation ........................................................................ 7
I. Gerald & Wilma Ehrens ......................................................................... 8
J. Marvin & Laurie Tarnol ....................................................................... 10
K. Bradley Turell Litigation ..................................................................... 10
L. Berwyn Friedman Litigation ................................................................ 11
M. Harvey Turell Litigation ...................................................................... 11
N. Frances McCaffrey Litigation .............................................................. 12
O. William Firestone Litigation ................................................................ 12
P. Summary of Expenses .......................................................................... 12
III. THE FEES AND COSTS ARE REASONABLE AND SHOULD BE ALLOWED .............................................................................................. 13
IV. CONCLUSION .............................................................................................. 15
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 2 of 84 Page ID #:1614
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
TABLE OF AUTHORITIES
Page(s)
836178.01/SD (ii)
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
Cases
Gaskill v. Gordon, 27 F.3d 248 (7th Cir. 1994) ........................................................................... 13
Imperial 400 Nat'l, Inc. (In re), 432 F.2d 232 (3d Cir. 1970) .......................................................................... 14
SEC v. Elliot, 953 F.2d 1560 (11th Cir. 1992) ..................................................................... 13
SEC v. W.L. Moody & Co., Bankers (Unincorporated), 374 F.Supp. 465 (S.D. Tex. 1974) ................................................................ 14
United States v. Code Prods. Corp., 362 F. 2d 669 (3d Cir. 1966) ......................................................................... 13
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 3 of 84 Page ID #:1615
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
Allen Matkins Leck Gamble Mallory & Natsis LLP ("Allen Matkins"), general
counsel to William Hoffman ("Receiver"), the Court-appointed permanent receiver
for Defendant Nationwide Automated Systems, Inc. ("NASI"), Relief Defendants
Oasis Studio Rentals, LLC, Oasis Studio Rentals #2, LLC, and Oasis Studio
Rentals #3, LLC ("Relief Defendants"), and their subsidiaries and affiliates, hereby
submits this fourth interim application for approval and payment of fees and
reimbursement of expenses ("Application"). This Application covers the period from
July 1, 2015, through September 30, 2015 ("Fourth Application Period"), and seeks
interim approval of $120,108.60 in fees and $14,085.13 in expenses, and an order
authorizing the Receiver to pay, on an interim basis, 80% of fees incurred
($96,086.88) and 100% of expenses incurred. As it has since the beginning of the
receivership, Allen Matkins has discounted its customary hourly rates by 10%.
I. INTRODUCTION
This equity receivership involves a large and complex Ponzi scheme that is the
subject of the Complaint filed by the Securities and Exchange Commission
("Commission"). The Receiver was appointed on a temporary basis on
September 30, 2014, and on a permanent basis on October 29, 2014.
The appointment orders confer broad duties, responsibilities, and powers on
the Receiver which are designed to allow him to secure, preserve, and protect the
assets of the Receivership Entities, investigate and recover sums transferred to third
parties, conduct a forensic accounting and analysis of the Receivership Entities'
financial transactions, review and analyze investor claims, and maximize the amount
ultimately available for distribution to investors. The appointment orders also
authorize the Receiver to engage counsel to assist him in the performance of his
duties. The Receiver promptly determined that experienced, qualified counsel was
critical due to the size and complexity of the receivership estate. Accordingly, the
Receiver engaged Allen Matkins to assist with urgent legal issues facing the
receivership estate and the firm immediately began work, including assisting with the
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 4 of 84 Page ID #:1616
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -2-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
takeover of the companies and securing their assets. The Court approved the
Receiver's proposal to file reports and fee applications on a quarterly basis. Dkt.
No. 47. The Court also approved Allen Matkins' First, Second, and Third Interim
Fee Applications, authorizing payment of 80% of fees incurred and 100% of costs
incurred. Dkt. Nos. 72, 79, 95.
This fee application should be read in conjunction with the Receiver's Fifth
Interim Report ("Fifth Report"), which describes in detail the Receiver's activities
during the Fourth Application Period. So as to avoid repetition, references are made
to relevant portions of the Fifth Report in the below descriptions of Allen Matkins'
work.
This Application seeks interim approval of $120,108.60 in fees for a total of
255 hours worked and payment on an interim basis of 80% of that amount, or
$96,086.88. The work performed is described task-by-task on Exhibit A and is
broken down into the following categories:
Category Hours Amount General Receivership 9.9 4,811.40Asset Investigation 95.5 43,231.95Reporting 4.3 2,089.80Operations & Asset Sales 0.2 97.20Claims & Distributions 3.1 1,672.65Third Party Recoveries 52.6 26,834.85Employment/Fees 4.0 1,944.00Barbara Adler Litigation 9.3 4,648.95Gerald & Wilma Ehrens Litigation 33.2 14,287.95Marvin & Laurie Tarnol Litigation 23.0 10,763.10Bradley Turell Litigation 1.8 874.80Berwyn Friedman Litigation 8.5 4,131.00Harvey Turell Litigation 8.0 3,888.00Frances McCaffrey Litigation 1.0 486.00William Firestone Litigation 0.6 346.95Totals 255.00 $120,108.60
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 5 of 84 Page ID #:1617
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -3-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
Allen Matkins' fees for the Fourth Application Period increased from the prior
period ($67,638.75) due to work on the clawback actions listed above, each of which
is discussed further below. The Receiver's pursuit of clawback claims has been very
successful to date, generating $2,869,374.60 in recoveries.
Allen Matkins has worked diligently and efficiently to assist the Receiver with
urgent legal issues facing the receivership estate. The firm has assisted the Receiver
in carrying out his Court-ordered duties and should be compensated on an interim
basis for its work.
II. SUMMARY OF TASKS PERFORMED AND COSTS INCURRED
A. General Receivership
Allen Matkins' work in the General Receivership category involved
communications with counsel for Defendant Joel Gillis and the Assistant United
States Attorneys working on the related criminal case. Allen Matkins advised and
assisted the Receiver regarding the production of documents and information to the
Assistant United States Attorneys and counsel for Gillis and Wishner in response to
their respective requests. Allen Matkins assisted in making arrangements for Gillis
and Wishner to visit the Receiver's offices to review voluminous investor files.
Finally, the firm advised the Receiver regarding the engagement of a CPA firm to
assist in preparing tax returns for the Receivership Entities. The reasonable and
necessary fees for work in this category total $4,811.40.
B. Asset Investigation
Allen Matkins' time in this category focused on assisting in the Receiver's
investigation and recovery of receivership assets. In particular, during the Fourth
Application Period, Allen Matkins issued 47 subpoenas to various financial
institutions, witnesses (entities and individuals), and other third parties to obtain
documents necessary to the Receiver's investigation and accounting. Allen Matkins
followed up and handled direct communications with the recipients of subpoenas as
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 6 of 84 Page ID #:1618
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -4-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
necessary and appropriate to ensure their compliance. The firm also maintains a
tracking log of subpoenas issued and records received.
During the Fourth Application Period, the Receiver's investigation and
document gathering efforts focused largely on the Oasis entities. Very little
information about the Oasis entities' assets or operations was provided by Defendants
or Relief Defendants. For the most part, the Receiver and Allen Matkins have had to
gather records from scratch, review and analyze bank statements and other
documents, and interview witnesses to ascertain the assets and operations of the
Oasis entities, as well as investments, loans, and other transfers made from Oasis
accounts. Due to the large number of entities, individuals, and vehicles associated
with Oasis, and the lack of record-keeping by the companies, the investigation and
document gathering work continues to take time.
During the prior application period, the Receiver learned that prior to the
receivership, Oasis had transferred funds to Lisa Freede Design, LLC ("LFD"), a
settlement had been reached between LFD and Wishner, and LFD had been making
payments to Wishner pursuant to the settlement. Allen Matkins assisted the Receiver
in contacting Wishner's counsel and securing Wishner's agreement to (a) turn over
the settlement payments to the Receiver and (b) instruct LFD to make all future
settlement payments directly to the Receiver. A total of $12,000 was recovered, with
payments of $1,500 due from LFD each month. During the Fourth Application
Period, Allen Matkins has followed up with counsel for LFD on several occasions
regarding late payments.
During the deposition of Robert Keller taken in March 2015, it was learned
that Robert Keller had taken vehicles previously being managed by Oasis and
continued managing them under the name Fiji Rentals. Allen Matkins assisted the
Receiver in communications with Robert Keller and Fiji Rentals and in attempts to
resolve the matter. Although Keller and Fiji Rentals initially agreed to turn over the
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 7 of 84 Page ID #:1619
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -5-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
rental income from the vehicles, they ultimately failed to do so and the Receiver now
intends to seek relief from the Court.
Finally, Allen Matkins assisted in gathering documents and information
regarding Studios Maui Productions, LLC ("Studios Maui"). After the manager of
Studios Maui, Branscombe Richmond ("Richmond"), failed to respond to repeated
attempts by the Receiver and Allen Matkins to contact him and secure the assets of
Studios Maui, Allen Matkins assisted the Receiver in drafting and filing a motion to
confirm Studios Maui's status as an affiliated entity, and therefore with the scope of
the receivership, as well as an order directing Richmond to turn over all assets, bank
accounts, and records of Studios Maui. Dkt. No. 93. The motion was granted on
September 15, 2015. Dkt. No. 97. The reasonable and necessary fees for work in
this category total $43,231.95.
C. Reporting
Allen Matkins' work in this category during the Fourth Application Period
focused on preparing the Receiver's Fourth Interim Report and Recommendations
("Fourth Report"). Dkt. No. 73. The Fourth Report, filed on August 3, 2015,
provided a detailed summary of the Receiver's activities during the second quarter of
2015, including receipts and disbursements for the receivership estate during that
period. Allen Matkins also assisted in discussing the Fourth Report with counsel for
the Securities and Exchange Commission ("Commission") and in responding to the
Commission's questions. The reasonable and necessary fees for work in this
category total $2,089.80.
D. Operations & Asset Sales
Allen Matkins advised the Receiver regarding issues relating to ATM
operations and the potential sale of the ATM business. The reasonable and necessary
fees for work in this category total $97.20.
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 8 of 84 Page ID #:1620
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -6-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
E. Claims and Distributions
During the Fourth Application Period, Allen Matkins responded to direct
inquiries from investors and creditors and their counsel regarding the Receiver's
appointment, the effect of the receivership, claims against the receivership estate,
clawback actions, the criminal case against Gillis and Wishner, and related issues.
The reasonable and necessary fees for work in this category total $1,672.65.
F. Third Party Recoveries
Allen Matkins' work in this category focused mainly on the pursuit of
clawback claims pursuant to the order authorizing the Receiver to pursue such claims
and approving procedures related thereto. Dkt. No. 72. The firm advised the
Receiver regarding legal issues relating to clawback claims, the scope of recoverable
transfers, and the statute of limitations and repose for such claims. Allen Matkins
also advised on legal issues unique to certain claims, recovery strategy, and forensic
accounting needed to support clawback claims. Allen Matkins assisted with demand
letters, financial hardship applications, and communications with counsel for various
investors who received profits ("Net Winners"), including finalizing settlements with
certain Net Winners pursuant to the Court-approved settlement procedures.1 The
success of the Receiver and Allen Matkins' work on clawback claims is already
evident as more than $2.8 million has been recovered in clawback settlements to
date.
In instances where Net Winners have not accepted the Court-approved
settlement offer (70% of each Net Winner's profit amount or 75% if paid in
12 monthly installments), Allen Matkins has prepared Complaints and related papers
1 It should be noted that Allen Matkins' work on Clawback Claims does not
duplicate or overlap with work performed by the Receiver and his staff. Allen Matkins' role is to prepare legal documents, advise on legal issues and strategy, communicate with counsel for Net Winners who contact the firm directly, and handle litigation in the event Net Winners do not accept the Court-approved settlement offer. The Receiver and his staff perform necessary accounting and analysis, prepare and track demand letters, handle direct communications with Net Winners, and finalize settlements with Net Winners who do not have counsel.
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 9 of 84 Page ID #:1621
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -7-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
to commence clawback actions. These clawback actions each have their own billing
category and are discussed further below.
Initially, the Court declined to relate the first three clawback actions (Barbara
Adler, Gerald & Wilma Ehrens, and Marvin & Laurie Tarnol) to this action. Allen
Matkins assisted the Receiver in preparing a motion for relief from the orders
declining to relate the actions. Dkt. No. 81. The motion was granted and the three
actions are now related to this action. Dkt. No. 89. Relating the actions has
promoted the orderly and efficient administration of these three, as well as
subsequent clawback actions.
Allen Matkins also assisted the Receiver in investigating claims against other
third parties who may have assisted in NASI's fraudulent activities. The Receiver's
investigation and evaluation of such claims is ongoing. The reasonable and
necessary fees for work in this category total $26,834.85.
G. Employment/Fees
Although fee applications are a necessary component of federal equity
receiverships, neither the Receiver nor his professionals charge for time spent
preparing their own detailed applications. Allen Matkins assisted the Receiver in
preparing his Third Interim Fee Application as well as in discussing the fee
applications with counsel for the Commission. The reasonable and necessary fees
for work in this category total $1,944.00.
H. Barbara Adler Litigation
Barbara Adler did not accept the Court-approved settlement offer included in
the demand letter sent to her on May 20, 2015. Accordingly, Allen Matkins assisted
the Receiver in preparing a Complaint and related papers, which were filed on
July 29, 2015, commencing Related Case No. 15-CV-05737-SJO-FFM ("Adler
Clawback Action").
Ms. Adler submitted a Financial Hardship Application ("FHA") and
supporting documents to the Receiver on August 18, 2015. In light of the FHA, the
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 10 of 84 Page ID #:1622
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -8-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
Receiver and Ms. Alder, through their respective counsel, stipulated to extend
Ms. Adler's deadline to respond to the Complaint while the Receiver reviewed her
financial documentation. Dkt. Nos. 16, 17. The Court approved the joint stipulation
and extended Ms. Adler's deadline to respond to the Complaint by 60 days. Dkt.
No. 18.
Recently, the Receiver and Ms. Adler agreed to the terms of a settlement
agreement, subject to Court approval. In light of the settlement, the parties again
sought to extend Ms. Adler's deadline to respond to the Complaint, pending Court
approval. Dkt. Nos. 20, 22. The Court granted the request, extending her deadline to
respond to December 24, 2015. Dkt. Nos. 23, 24. The reasonable and necessary fees
in this category total $4,648.95.
I. Gerald & Wilma Ehrens
Gerald & Wilma Ehrens did not accept the Court-approved settlement offer
included in the demand letter sent to them on May 20, 2015. Accordingly, Allen
Matkins assisted the Receiver in preparing a Complaint and related papers, which
were filed on July 29, 2015, commencing Related Case No. 15-CV-05747-SJO-FFM
("Ehrens Clawback Action").
As noted above, the Court initially declined to relate the Ehrens Clawback
Action to this action. As a result, on August 20, 2015, Judge Andre Birotte issued an
order dismissing the Complaint for lack of subject matter jurisdiction and granting
the Receiver leave to amend the Complaint by August 31, 2015. As discussed above,
the Receiver filed a motion in this case seeking relief from the orders declining to
relate the first three clawback actions, which was granted. In the meantime, the
Receiver sought an extension of the deadline to file an amended complaint in the
Ehrens Clawback Action, which Judge Birotte granted. After this Court issued the
order relating the actions, the Receiver filed a request to vacate Judge Birotte's order
dismissing the complaint for lack of subject matter jurisdiction, which this Court
granted.
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 11 of 84 Page ID #:1623
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -9-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
During this time, the Receiver had made extensive efforts to serve Gerald and
Wilma Ehrens and the entities they control via personal service, mail with
acknowledgement of receipt, and e-mail.2 Other than with respect to Amgest, Ltd.
("Amgest"), these efforts were unsuccessful and the reports from the process server
strongly indicated the Ehrens were intentionally evading service. The Receiver was
able to accomplish proper service on Amgest via another officer of the entity at a
different address. Amgest did not respond to the Complaint and its default has now
been entered.
Accordingly, Allen Matkins assisted the Receiver in preparing a motion for
authority to serve the Ehrens, as well as defendants Riviera Investments, L.P.
("Riviera") and First Abby Corporation ("First Abby"), via publication, which
motion was filed on September 29, 2015, and granted on October 27, 2015. On
October 30, 2015, Allen Matkins received notice that Gerald and Wilma Ehrens filed
bankruptcy in the District of Nevada. Accordingly, Allen Matkins assisted the
Receiver in preparing a notice of the bankruptcy, which was filed on November 2,
2015.
Once the service by publication as to Riviera and First Abby is complete, the
Receiver will seek entry of their defaults and default judgments against Amgest,
Riviera, and First Abby. The Receiver will simultaneously assert a claim in the
Ehrens' Chapter 13 bankruptcy case and take other actions as necessary to protect the
receivership estate's rights to recover through the bankruptcy.
The reasonable and necessary fees for work on this matter during the Fourth
Application Period total $14,287.95.
2 A substantial portion of the costs for Service of Process – Clawback Actions
listed in Subsection P below are for attempts to serve the Ehrens, who refused to answer the door when home and actively evaded service.
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 12 of 84 Page ID #:1624
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -10-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
J. Marvin & Laurie Tarnol
Marvin and Laurie Tarnol (along with their entity LMKT Corporation) did not
accept the Court-approved settlement offer included in the demand letter sent to them
on May 11, 2015. Accordingly, Allen Matkins assisted the Receiver in preparing a
Complaint and related papers, which were filed on July 29, 2015, commencing
Related Case No. 15-CV-05755-SJO-FFM ("Tarnol Clawback Action").
The Tarnols engaged counsel, who contacted counsel for the Receiver and
stated that they intended to object to the constructive trust and unjust enrichment
causes of action in the Complaint. Allen Matkins analyzed the law on these claims
and agreed to amend the Complaint to seek a constructive trust remedy, but not to
assert it as an independent claim. Allen Matkins assisted in preparing a First
Amended Complaint with that change, but keeping unjust enrichment as an
independent claim.
The Tarnols were not satisfied by the amendment and filed a motion to dismiss
the unjust enrichment cause of action in the First Amended Complaint. Allen
Matkins assisted the Receiver in opposing the motion, which was granted. The Court
then gave the Tarnols until October 26, 2015, to file their answer. The Tarnols filed
their answer on October 26, 2015. The Court then issued a scheduling order setting
dates and deadlines in the case, including setting a Scheduling Conference on
December 28, 2015.
The reasonable and necessary fees for work on this matter during the Fourth
Application Period total $10,763.10.
K. Bradley Turell Litigation
Bradley and Laurel Turell did not accept the Court-approved settlement offer
included in the demand letter sent to them on June 15, 2015. Accordingly, Allen
Matkins assisted the Receiver in preparing a Complaint and related papers, which
were filed on September 1, 2015, commencing Related Case No. 15-CV-06700-SJO-
FFM. Bradley and Laurel Turell have since filed an answer pro se and submitted an
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 13 of 84 Page ID #:1625
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -11-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
FHA to the Receiver. The FHA showed assets sufficient to repay the full profit
amount Bradley and Laurel Turell received and therefore was declined. The Court
has issued a scheduling order setting dates and deadlines in the case, including
setting a Scheduling Conference on November 23, 2015. The reasonable and
necessary fees for work on this matter total $874.80.
L. Berwyn Friedman Litigation
Berwyn Friedman did not accept the Court-approved settlement offer included
in the demand letter sent to him on June 3, 2015. Accordingly, Allen Matkins
assisted the Receiver in preparing a Complaint and related papers, which were filed
on September 1, 2015, commencing Related Case No. 15-CV-06714-SJO-FFM.
Mr. Friedman engaged counsel, who contacted Allen Matkins about his
financial condition. Mr. Friedman then submitted an FHA to the Receiver. Allen
Matkins assisted the Receiver in gathering various documents missing from
Mr. Friedman's FHA through his counsel. Once the FHA was complete, the
Receiver and Mr. Friedman stipulated to an extension of his deadline to respond to
the Complaint. The Court approved the stipulation and extended Mr. Friedman's
deadline to respond to December 7, 2015. The reasonable and necessary fees for
work on this matter total $4,131.00.
M. Harvey Turell Litigation
Harvey and Linda Turell did not accept the Court-approved settlement offer
included in the demand letter sent to them on June 15, 2015. Accordingly, Allen
Matkins assisted the Receiver in preparing a Complaint and related papers, which
were filed on September 1, 2015, commencing Related Case No. 15-CV-06720-SJO-
FFM.
The Turells engaged counsel, who contacted Allen Matkins about their
financial condition. The Turells then submitted an FHA to the Receiver. Allen
Matkins assisted the Receiver in gathering various documents missing from the
Turell's FHA through their counsel. Once the FHA was complete, the Receiver and
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 14 of 84 Page ID #:1626
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -12-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
the Turells stipulated to an extension of their deadline to respond to the Complaint.
The Court approved the stipulation and extended the Turell's deadline to respond to
November 30, 2015. The reasonable and necessary fees for work on this matter total
$3,888.00.
N. Frances McCaffrey Litigation
A demand letter was sent to Frances McCaffrey on August 5, 2015. During
the Fourth Application Period, Allen Matkins advised the Receiver regarding issues
raised by McCaffrey relating to the calculation of her profit amount. The reasonable
and necessary fees for work on this matter total $486.00.
On October 6, 2015, the Receiver filed a Complaint and related papers against
Ms. McCaffrey, commencing Related Case No. 15-CV-07843-SJO-FFM.
Ms. McCaffrey then engaged counsel and submitted an FHA to the Receiver. The
Receiver continues to gather financial documents supporting her FHA from
Ms. McCaffrey, through her counsel. Her deadline to respond to the Complaint is
currently set for November 13.
O. William Firestone Litigation
A demand letter was sent to William Firestone on August 5, 2015. During the
Fourth Application Period, Allen Matkins advised the Receiver regarding issues
raised by Firestone relating to the calculation of his profit amount. The reasonable
and necessary fees for work on this matter total $346.95.
On October 30, 2015, the Receiver filed a Complaint and related papers
against Mr. Firestone, commencing Related Case No. 15-CV-08498-SJO-FFM.
P. Summary of Expenses
Allen Matkins requests the Court approve reimbursement of $14,085.13 in
out-of-pocket costs. The itemization of such expenses is summarized below by
category. The majority of expenses incurred relate to the service of the 47 subpoenas
issued by Allen Matkins to assist the Receiver in obtaining necessary records, as well
as filing fees and service of process fees for the six clawback actions commenced
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 15 of 84 Page ID #:1627
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -13-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
during the Fourth Application Period. The total for costs incurred by Allen Matkins
is $14,085.13 and is broken down by category as follows:
Category Total Legal Research / PACER fees 1,918.80Messenger fees (court messenger/FedEx) 578.65Service of Process – Subpoenas 3,912.85Service of Process – Clawback Actions 3,100.25Duplication/Faxes/Postage 1,822.12Court Filing Fees 2,400.00Subpoena Document Production Costs 352.46TOTAL $14,085.13
III. THE FEES AND COSTS ARE REASONABLE
AND SHOULD BE ALLOWED
"As a general rule, the expenses and fees of a receivership are a charge upon
the property administered." Gaskill v. Gordon, 27 F.3d 248, 251 (7th Cir. 1994).
These expenses include the fees and expenses of the Receiver and his professionals,
including Allen Matkins. Decisions regarding the timing and amount of an award of
fees and costs to the Receiver and his Professionals are committed to the sound
discretion of the Court. See SEC v. Elliot, 953 F.2d 1560, 1577 (11th Cir. 1992).
In allowing fees, a court should consider "the time, labor and skill required,
but not necessarily that actually expended, in the proper performance of the duties
imposed by the court upon the receiver[], the fair value of such time, labor and skill
measured by conservative business standards, the degree of activity, integrity and
dispatch with which the work is conducted and the result obtained." United States v.
Code Prods. Corp., 362 F. 2d 669, 673 (3d Cir. 1966) (internal quotation marks
omitted). In practical terms, receiver and professional compensation thus ultimately
rests upon the result of an equitable, multi-factor balancing test involving the
"economy of administration, the burden that the estate may be able to bear, the
amount of time required, although not necessarily expended, and the overall value of
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 16 of 84 Page ID #:1628
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -14-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
the services to the estate." In re Imperial 400 Nat'l, Inc., 432 F.2d 232, 237 (3d Cir.
1970). Regardless of how this balancing test is formulated, no single factor is
determinative and "a reasonable fee is based [upon] all circumstances surrounding
the receivership." SEC v. W.L. Moody & Co., Bankers (Unincorporated),
374 F.Supp. 465, 480 (S.D. Tex. 1974).
As a preliminary matter, the TRO and Preliminary Injunction Order confer on
the Receiver substantial duties and powers, including to conduct such investigation
and discovery as is necessary to locate and account for all receivership assets, take
such action as is necessary and appropriate to assume control over and preserve
receivership assets, and employ attorneys and others to investigate and, where
appropriate, institute, pursue, and prosecute all claims and causes of action of
whatever kind and nature. See Dkt. No. 17 (TRO, Part XIII); Dkt. No. 42
(Preliminary Injunction Order, Part XII). The Receiver promptly determined that
experienced, qualified counsel was necessary due to the size and complexity of the
receivership estate. The Court approved the Receiver's proposal to file interim
reports and fee applications on a quarterly basis. Dkt. No. 47.
Allen Matkins has submitted a detailed fee application which describes the
nature of the services rendered and the identity and billing rate of each individual
performing each task. See Exhibit A. Allen Matkins has endeavored to staff matters
as efficiently as possible while remaining cognizant of the complexity of issues
presented. The request for fees is based on Allen Matkins' customary billing rates
charged for comparable services provided in other matters, less a 10% discount. In
addition, Allen Matkins did not charge for 3.1 hours ($1,506.60) of work during the
Fourth Application Period.
The work performed by Allen Matkins was essential to carrying out the
Receiver's Court-ordered duties. The Receiver and Allen Matkins have worked
diligently since the Receiver's appointment to (a) investigate, secure, and protect the
assets of the receivership estate, (b) preserve and maintain the limited revenue stream
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 17 of 84 Page ID #:1629
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
836178.01/SD -15-
LAW OFFICES
Allen Matkins Leck Gamble Mallory & Natsis LLP
from the ATM business, (c) investigate transfers to third parties and potential claims
related thereto, (d) inform the Court and the parties of the Receiver activities,
(e) make recommendations for the efficient and effective administration of the
receivership, and (f) efficiently disseminate information to investors and respond to
frequently asked questions. It should be noted that Allen Matkins' work does not
duplicate or overlap with work performed by David Wallace, the General Counsel of
the Receiver's company, Trigild, Inc. Mr. Wallace has handled legal issues relating
to NASI's operations, including the ATM business, the servicers, other vendors, and
insurance issues.
Allen Matkins seeks payment of only 80% of fees incurred on an interim basis
in recognition of the fact that its work in assisting the Receiver is ongoing. Payment
of the proposed 20% holdback will be sought at the conclusion of the receivership.
Allen Matkins' fees are fair and reasonable and should be approved and paid on an
interim basis.
IV. CONCLUSION
Allen Matkins therefore respectfully requests this Court enter an Order:
1. Approving Allen Matkins' fees, on an interim basis, of $120,108.60;
2. Authorizing and directing the Receiver to pay 80% of approved fees, or
$96,086.88, from the assets of the Receivership Entities;
3. Approving Allen Matkins' costs in the amount of $14,085.13, and
authorizing and directing the Receiver to reimburse such costs in full; and
4. For such other and further relief as the Court deems appropriate.
Dated: December 9, 2015 ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP
By: /s/ Ted Fates TED FATES Attorneys for Receiver WILLIAM J. HOFFMAN
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 18 of 84 Page ID #:1630
EXHIBIT A Exhibit APage 16
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 19 of 84 Page ID #:1631
Exhibit APage 17
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 20 of 84 Page ID #:1632
Exhibit APage 18
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 21 of 84 Page ID #:1633
Exhibit APage 19
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 22 of 84 Page ID #:1634
Exhibit APage 20
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 23 of 84 Page ID #:1635
Exhibit APage 21
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 24 of 84 Page ID #:1636
Exhibit APage 22
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 25 of 84 Page ID #:1637
Exhibit APage 23
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 26 of 84 Page ID #:1638
Exhibit APage 24
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 27 of 84 Page ID #:1639
Exhibit APage 25
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 28 of 84 Page ID #:1640
Exhibit APage 26
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 29 of 84 Page ID #:1641
Exhibit APage 27
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 30 of 84 Page ID #:1642
Exhibit APage 28
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 31 of 84 Page ID #:1643
Exhibit APage 29
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 32 of 84 Page ID #:1644
Exhibit APage 30
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 33 of 84 Page ID #:1645
Exhibit APage 31
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 34 of 84 Page ID #:1646
Exhibit APage 32
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 35 of 84 Page ID #:1647
Exhibit APage 33
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 36 of 84 Page ID #:1648
Exhibit APage 34
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 37 of 84 Page ID #:1649
Exhibit APage 35
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 38 of 84 Page ID #:1650
Exhibit APage 36
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 39 of 84 Page ID #:1651
Exhibit APage 37
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 40 of 84 Page ID #:1652
Exhibit APage 38
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 41 of 84 Page ID #:1653
Exhibit APage 39
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 42 of 84 Page ID #:1654
Exhibit APage 40
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 43 of 84 Page ID #:1655
Exhibit APage 41
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 44 of 84 Page ID #:1656
Exhibit APage 42
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 45 of 84 Page ID #:1657
Exhibit APage 43
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 46 of 84 Page ID #:1658
Exhibit APage 44
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 47 of 84 Page ID #:1659
Exhibit APage 45
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 48 of 84 Page ID #:1660
Exhibit APage 46
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 49 of 84 Page ID #:1661
Exhibit APage 47
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 50 of 84 Page ID #:1662
Exhibit APage 48
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 51 of 84 Page ID #:1663
Exhibit APage 49
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 52 of 84 Page ID #:1664
Exhibit APage 50
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 53 of 84 Page ID #:1665
Exhibit APage 51
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 54 of 84 Page ID #:1666
Exhibit APage 52
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 55 of 84 Page ID #:1667
Exhibit APage 53
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 56 of 84 Page ID #:1668
Exhibit APage 54
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 57 of 84 Page ID #:1669
Exhibit APage 55
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 58 of 84 Page ID #:1670
Exhibit APage 56
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 59 of 84 Page ID #:1671
Exhibit APage 57
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 60 of 84 Page ID #:1672
Exhibit APage 58
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 61 of 84 Page ID #:1673
Exhibit APage 59
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 62 of 84 Page ID #:1674
Exhibit APage 60
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 63 of 84 Page ID #:1675
Exhibit APage 61
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 64 of 84 Page ID #:1676
Exhibit APage 62
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 65 of 84 Page ID #:1677
Exhibit APage 63
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 66 of 84 Page ID #:1678
Exhibit APage 64
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 67 of 84 Page ID #:1679
Exhibit APage 65
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 68 of 84 Page ID #:1680
Exhibit APage 66
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 69 of 84 Page ID #:1681
Exhibit APage 67
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 70 of 84 Page ID #:1682
Exhibit APage 68
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 71 of 84 Page ID #:1683
Exhibit APage 69
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 72 of 84 Page ID #:1684
Exhibit APage 70
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 73 of 84 Page ID #:1685
Exhibit APage 71
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 74 of 84 Page ID #:1686
Exhibit APage 72
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 75 of 84 Page ID #:1687
Exhibit APage 73
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 76 of 84 Page ID #:1688
Exhibit APage 74
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 77 of 84 Page ID #:1689
Exhibit APage 75
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 78 of 84 Page ID #:1690
Exhibit APage 76
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 79 of 84 Page ID #:1691
Exhibit APage 77
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 80 of 84 Page ID #:1692
Exhibit APage 78
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 81 of 84 Page ID #:1693
Exhibit APage 79
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 82 of 84 Page ID #:1694
Exhibit APage 80
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 83 of 84 Page ID #:1695
Exhibit APage 81
Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 84 of 84 Page ID #:1696