Robert S. Banks, Jr., OSB No. 821862 [email protected] ...€¦ · Robert S. Banks, Jr., OSB...

Robert S. Banks, Jr., OSB No. 821862 [email protected] SAMUELS YOELIN KANTOR LLP Attorneys at Law 111SW5th Ave., Suite 3800 Portland, Oregon 97204-3642 Telephone (503) 226-2966 Facsimile (503) 222-2937

Lawrence R. Cock, OSB No. 102524 [email protected] CABLE, LANGENBACH, KINERK & BAUER, LLP Suite 3500, 1000 Second Avenue Building Seattle, Washington 98104-1048 Telephone (206) 292-8800 Facsimile (206) 292-0494

Of Attorneys for Plaintiffs

IN THE UNITED STATES DISTRICT COURT OF THE STATE OF OREGON

DISTRICT OF OREGON

Portland Division

Leon Brown, Kirk Clothier, Nancy Gilbert, Rollin Chew, Edwin L. Chew Family Trust, and Bernard Gutow as Trustee of the Gutow Family Trust dtd 10/28/1991, all individually and on behalf of all others similarly situated,

Plaintiffs,

vs.

Norman Gary Price and Christina A. Price; Ronald J. Robertson and Kathryn Robertson; RP Capital, LLC; Douglas R. Bean and Megan Susanne Bean; S. Christopher Bean and Jodi J.

Page 1 - STIPULATION OF SETTLEMENT

NO. 3:17-CV-00869-MO

STIPULATION OF SETTLEMENT

SAMUELS YOELIN KANTOR LLP Atto!illeys at Law

111 SW 5 Ave.i..Suite 3800 Portland, OR 91204-3642 TeleP.hone (503) 226-2966 Facsimile (503) 222-2937

Case 3:17-cv-00869-HZ Document 62 Filed 08/02/17 Page 1 of 41

SAMUELS YOELIN KANTOR LLPAttorneys at Law

111 SW 5th Ave., Suite 3800 Portland, OR 97204-3642 Telephone (503) 226-2966 Facsimile (503) 222-2937

Page 2 – STIPULATION OF SETTLEMENT

Ronald J. Robertson and Kathryn Robertson; RP Capital, LLC; Douglas R. Bean and Megan Susanne Bean; S. Christopher Bean and Jodi J. Bean; Bean Holdings, LLC; Jonathan Bishopp and Monica Bishopp; Timothy J. Feehan, Jr. and Kimberly A. Feehan; Strategic Capital Alternatives LLC; and SCA Holdings LLC, Defendants.

This Stipulation of Settlement (the "Settlement") is made and entered into by and

among: (i) the plaintiff representatives and the plaintiff class as defined below, (ii) Strategic

Capital Group, LLC (“SCG”) and Craig D. Johnsen; (iii) the following defendants named in the

lawsuits called Brown, et al. v. Price, et al., King County Superior Court No. 16-2-19544-0 SEA;

and Brown, et al. v. Price, et al., U.S. District Court for Oregon, Case No. 3:17-CV-00869-HZ:

Norman Gary Price and Christina Price, Ronald J. Robertson and Kathryn Robertson, Timothy

Feehan, Jr. and Kimberly A. Feehan, Antonio Ramirez and Wendy Ramirez; Aaron Maurer and

Laura Maurer; Kenneth Peterson and Patricia Peterson; RP Capital, LLC; Strategic Capital

Alternatives, LLC; and SCA Holdings, LLC.

This Settlement is intended to fully, finally, and forever resolve, discharge, settle

and completely release all claims against the Settling Defendants (defined below) that

have been or could have been brought in the above-entitled action or in the Predecessor

Litigation (defined below), subject to the Final Approval of the United States District

Court for the District of Oregon, and the terms and conditions set forth in this

Settlement.

1. DEFINITIONS


SAMUELS YOELIN KANTOR LLPAttorneys at Law

111 SW 5th Ave., Suite 3800 Portland, OR 97204-3642 Telephone (503) 226-2966 Facsimile (503) 222-2937

Page 3 – STIPULATION OF SETTLEMENT

As used in this Stipulation of Settlement, the following terms are defined as follows:

A. Aequitas Investments means all investments, including promissory notes and

funds, issued by any Aequitas Entity as defined in the attached Exhibit A.

B. The Litigation means Brown v. Price, Case No. 3:17-cv-00869-HZ, pending

in the District of Oregon.

C. Plaintiff Class means all persons who purchased or renewed and continue to

hold Aequitas Investments, and made such purchases or renewals while clients of Strategic

Capital Group, LLC or Private Advisory Group LLC, RP Capital, LLC and/or upon the

advice or recommendation of SCG, PAG or RP Capital, and all persons who purchased or

renewed and continue to hold Aequitas promissory notes and funds while they were clients

of Strategic Capital Group, LLC or Private Advisory Group LLC and upon the advice or

recommendation of SCG or PAG or their investment advisor representatives. The Class does

not include Settling Defendants, their officers, directors or employees. The Class also does

not include any of the Aequitas affiliated companies, and their officers, directors, board

members, advisors, agents, employees, and affiliates, and the immediate family members of

each of them.

D. Plaintiffs’ Class Counsel means Robert S. Banks, Jr. of Samuels Yoelin

Kantor, LLP and Lawrence R. Cock of Cable Langenbach Kinerk & Bauer, LLP.

E. Settling Defendants means those individuals and entities who are identified in

sections (ii) and (iii) in the first paragraph of this Stipulation of Settlement.

F. Predecessor Litigation means the case known as Brown v. Price, et al., King

County, Washington, Superior Court Case No. 16-2-19544-0 SEA.


G. Settling Parties means all persons and entities who sign this Stipulation of

Settlement, including those parties identified in (i) through (iv) above, and Craig D. Johnsen

who was previously a registered representative of RP Capital LLC.

2. SUMMARY OF THE CASE

Plaintiffs were purchasers of Aequitas Investments, including securities called Aequitas

Commercial Finance Secured Subordinated Promissory Notes ("ACF Notes"), the Aequitas

Income Opportunity Fund Senior Secured Promissory Notes ("AIOF Notes"), and the Aequitas

ETC Founders Fund {"Founder's Fund").

The Aequitas Investments have failed. The companies issuing the Aequitas Investments

have been ordered into receivership by in the United States District Court for the District of

Oregon. The Receiver has been appointed to wind down the Aequitas businesses, liquidate any

assets and pay creditors.

Plaintiffs allege that defendants named in the Litigation are (a) the principals and control

persons of SCG and PAG, the Registered Investment Advisory firms ("RIA Firms"), that sold or

were a substantial contributive factor in the sales of the Aequitas Investments to the Plaintiff

Class; (b) Investment Advisory Representatives ("IAR") from SCG and P AG who sold or were

a substantial contributive factor in the sale of those Aequitas Investments to plaintiffs; and ( c) a

broker-dealer, RP Capital, that promoted and/or was a substantial contributive factor in, or

materially aided, the sale of the Aequitas Investments to Plaintiff Class.

The Plaintiff Class allege that they hired PAG, SCG and their IARs to provide objective

investment advice, to act in Plaintiff Class' best interests, to disclose all material facts about the

investments those IARs solicited, promoted and sold; and to recommend investments that were

suitable to their needs. Plaintiff Class allege that Defendants breached their contracts with


SAMUELS YOELIN KANTOR LLP Attom~s st Law

111 SW 5111 A've.a. Suite 3800 Portland, ORY 1204-3642 TeleP.hone ~03) 226-2966 FacSimile (503) 222-2937


Plaintiff Class, were negligent, breached their fiduciary duties to Plaintiff Class, aided in the

breach of fiduciary duties, failed to supervise the IARs, violated the Washington and California

securities laws, and violated the Washington Consumer Protection Act. Plaintiffs allege that

their Aequitas Investment losses are approximately $120 million.

Defendants deny each and all of the material allegations made against them, believe that

they have valid defenses, and have filed motions to dismiss the claims in the Predecessor

Litigation.

3. TERMS OF SETTLEMENT AGREEMENT

IT IS HEREBY STIPULATED AND AGREED by and among the Settling Parties that,

subject to the approval of the Court, the Released Claims as defined below shall be finally and

fully compromised, settled, released, and dismissed with prejudice, as to all Settling Defendants

only, upon and subject to the terms and conditions of the Settlement, as follows:

A. Payments To Plaintiff Class.

1. A total payment of $1,200,000 shall collectively be made by Norman Gary Price

and Christina Price, Ronald J. Robertson and Kathryn Robertson, Timothy Feehan, Jr. and

Kimberly A. Feehan, Antonio Ramirez and Wendy Ramirez; Aaron Maurer and Laura Maurer;

RP Capital, LLC; Strategic Capital Alternatives, LLC and SCA Holdings, and RP Capital's

insurance carrier, Lloyd's of London.

2. Payments shall be made within 31 days of the entry of a final non-appealable

Approval Order by a court of competent jurisdiction, except that payment of the remainder

needed to make up the $1,200,000 payment obligation under subparagraph 3 A 1 above (after

Lloyd's of London shall have contributed the balance of the policy covering RP Capital et al., be

made jointly by all those identified in Paragraph 2 above (except Lloyd's of London) (hereinafter


SAMUELS YOELIN KANTOR LLP AttoM?eys at Law

111 SW 5 Ave.i.Suite 3800 Portland, OR 91204-3642 TeleP.hone (503) 226-2966 Facsimile (503) 222-2937


"joint payment") via wire transfer no later than December 7, 20 I 7 if a final non-appealable

Approval Order has been entered prior to that date (for example, if Lloyd's of London's payment

was to be $600,000, and a final non-appealable Approval Order has been entered on October I,

then the joint payment to be made on December 7 would be $600,000). All payments will be

made by wire transfer to an escrow company or Claims Administrator agreed to by the Settling

Parties or ordered by the Court.

3. After the payment of any court approved costs and attorney fees, all of the

settlement payments shall be paid to the proposed class on a pro rata basis, or as directed by the

court.

B. Limited Fund Settlement.

1. The damages in the disputed claims greatly exceed the available insurance of

certain of the Settling Defendants, and the assets of the Settling Defendants.

2. Prior to reaching this Settlement, at the request of Plaintiffs' Class Counsel, the

following parties provided copies of all insurance policies that might provide, coverage for the

claims of the Plaintiff Class, as well as complete personal financial statements made under the

penalties of perjury: Norman Gary Price and Christina Price, Ronald J. Robertson and Kathryn

Robertson, Timothy Feehan, Jr. and Kimberly A. Feehan, Antonio Ramirez and Wendy Ramirez,

Aaron Maurer and Laura Maurer; Kenneth Peterson and Patricia Peterson. In addition,

defendants RP Capital, Strategic Capital Group, LLC, Strategic Capital Alternatives LLC;

and SCA Holdings LLC represent that they are no longer doing business, and have no assets.

3. Those individual Settling Defendants identified in the previous paragraph 3 B 2

shall each file a declaration with the Court under the penalties of perjury attesting to the accuracy


SAMUELS YOELIN KANTOR LLP Attogieys at Law

111 SW S Avc.i.Suite 3800 Portland, OR 91204-3642 TeleP.hone (503) 226-2966 Facsimile (S03J 222-2937


of the previously provided financial statement, and affinning that there were no material changes

in their financial condition since the time of the filing of the Predecessor Litigation.

4. The Plaintiff Class is relying on the representations made in the financial

statements described above in reaching this settlement. If the financial condition of any Settling

Defendant who is required to file a declaration regarding his financial condition has changed

materially since providing a financial statement, a new financial statement will be provided as a

part of the motion for approval of the settlement (described below in the Conditions of

Settlement), supported by a declaration of its accuracy by the maker under the penalties of

perjury. Financial statements provided previously, as well as any new financial statements

provided, shall be treated as confidential. In the event that the Court requires the individual

Defendants to submit their personal financial statements for inspection, Plaintiffs' Class Counsel

will not object to any motion by any of the Settling Parties for the filing of the sworn financial

statements themselves under seal.

5. If the Court approving the Settlement finds that any financial statement was

materially untrue, then the Plaintiff Class may, at its option, void the Settlement as to that

individual supplying the materially untrue financial statement; however, any action to void the

Settlement on this basis must be taken by no later than February 1, 2018.

6. The Plaintiff Class and the parties identified in paragraph 3 B 2 above agree that

all balances of available insurance are being contributed towards the settlement payments

provided for in this Settlement, and that making additional contributions beyond those called out

in this Agreement would put the parties at risk of insolvency.

C. Released Claims and Parties.


SAMUELS YOELIN KANTOR LLP Atto~eys at Law

111 SW s Ave ... Suite 3800 Portland, OR 91204-3642 TelcP.hone {~03) 226·2966 Facsimile (503) 222-2937


1. Claims Released. Effective as of the dates specified in paragraph 3 C 4 below,

the Plaintiff Class releases and forever discharges the Settling Defendants from all claims and

causes of action in any way related to the recommendation, purchase, renewal and/or sale of any

Aequitas Investments, whether known or unknown, whether arising under federal, state,

common, or foreign law, that has been asserted or that could have been asserted by the Plaintiff

Class against only each and every Settling Defendant, including but not limited to claims for

breach of contract, securities law violations, negligence, gross negligence, breach of fiduciary

duty, elder abuse, intentional conduct, indemnification, breach of duty of care and/or breach of

duty of loyalty or good faith, fraud, misrepresentation, unjust enrichment, constructive trust,

negligent misrepresentation, professional negligence, or breach of contract, and including claims

for economic and non-economic damages, interest, attorneys' fees, expert or consulting fees, and

any other costs, liability, or harm that arise from or relate to advice or services performed

relating to any Aequitas Investment. This release includes, to the fullest extent allowed by law,

all claims and causes of action arising out of, relating to, or in connection with the defense,

settlement, or resolution of the Litigation and the Predecessor Litigation

2. Claims Not Released. Released Claims excludes (a) claims that have been

asserted or may be asserted against persons or entities not included in the Released Parties

identified in subparagraph 3 C 3 immediately below, including but not limited to claims against

non-Settling Defendants asserted in the Litigation, the Predecessor Litigation, the lawsuit

pending in the U.S. District Court for the District of Oregon called Cuiffetelli v. Deloitte &

Touche, No. 3:16-cv-00580-AC (D. Or.), or any other pending or future action; ((b) claims for

distribution that any party may be entitled to receive from the Receiver as a part of the

liquidation and distribution process that may be made pursuant to the Order Appointing Receiver


SAMUELS YOELIN KANTOR LLP Atto~~s at Law

111 SW s Ave ... Suite 3800 Portland, OR 91204-3642 TelCP.hone ~03) 126-2966 Facsimile (503) 222-2937


entered in Securities and Exchange Commission v. Aequitas Management, LLC, et al., Case

3:16-cv-00438 .. PK (D. Or.); (c) claims against Aequitas Capital Management, Inc., affiliated

Aequitas Entities, and its fonner officers and directors other than Settling Defendants and the

Released Parties; and ( d) claims based upon, relating to, or arising out of the interpretation or

enforcement of the terms of this Settlement. For avoidance of doubt and to clarify the rights that

are maintained by Kenneth Peterson and Patricia Peterson in connection with this Settlement, the

Released Claims explicitly excludes any claims that Kenneth Peterson and Patricia Peterson may

have against any persons or entities, except (i) the claims they might otherwise have in the

Litigation, which they release through this Settlement by excluding themselves from the Plaintiff

Class, and (ii) their claims to insurance coverage under Liberty Surplus Policy no.

IASSAA267M002, which they release as set forth in paragraph 3E, so long as this Stipulation of

Settlement is approved and the Settlement is not voided or terminated.

3. Released Parties. The Release described in paragraphs 3 Cl and 2 above shall be

for the benefit only of Norman Gary Price and Christina Price, Ronald J. Robertson and Kathryn

Robertson, Timothy Feehan, Jr. and Kimberly A. Feehan, Antonio Ramirez and Wendy Ramirez;

Aaron Maurer and Laura Maurer; Joel Price; Kenneth Peterson and Patricia Peterson; RP

Capital, LLC, Strategic Capital Group, LLC, Strategic Capital Alternatives, LLC SCA Holdings,

LLC;, and Lloyd's of London.

4. Non-Released Parties. Claims against the defendants Douglas R. Bean and

Megan Susanne Bean; S. Christopher Bean and Jodi J. Bean; Bean Holdings, LLC; Jonathan

Bishopp and Monica Bishopp are not released.

Page 9- STIPULATION OF SETTLEMENT

SAMUELS YOELIN KANTOR LLP AJt2SPeyS at Law

111 SW S A~ Suite 3800 Portland, OR ~ 1204·3642 TclcP.honc (~03) 226-2966 Facsimile (503} 222-2937


5. Effective Date of Release. The releases shall be effective for each of the released

parties as of the date Payments to Plaintiff Class required by paragraph 3A are made, conditioned

upon Court approval.

D. Dismissal of Predecessor Litigation.

Upon the complete execution of this Stipulation of Settlement, the parties agree to

dismiss without prejudice and without costs or fees all claims against the Settling Defendants in

the Predecessor Litigation, with the agreement that the case could be recommenced in King

County Superior Court if the Court in the Litigation does not issue a final order approving the

terms of this Stipulation of Settlement. If the Predecessor Litigation is restarted, all applicable

statutes of limitations are tolled between August 17, 2016, and the later of thirty days after one of

the following occurrences: (i) breach of this stipulation or of a settlement approved by the Court

in the Litigation; (ii) voiding of this settlement under paragraph 3B5; or (iii) termination under

paragraph SA. The Settling Defendants shall not otherwise be prevented from raising any claims

or defenses to any allegations made in the Predecessor Litigation. Consistent with the terms of

the Release of Claims (paragraph 3C 1 ), in the event that the Court approves this Settlement in

the Litigation, any rights preserved by this paragraph to recommence the King County Superior

Court action are null and void.

E. Withdrawal of Claims For Coverage.

The Settling Parties Norman Gary Price and Christina Price, Ronald J. Robertson and

Kathryn Robertson, Timothy Feehan, Jr. and Kimberly A. Feehan, Antonio Ramirez and Wendy

Ramirez; Aaron Maurer and Laura Maurer; Kenneth Peterson and Patricia Peterson RP Capital,

LLC, Strategic Capital Alternatives, LLC , SCA Holdings, LLC and Craig D. Johnsen agree to

withdraw and forego any claims for coverage from, Liberty Surplus Insurance Corporation

Page 10- STIPULATION OF SETTLEMENT

SAMUELS YOELIN KANTOR LLP Attogicys at Law

111 SW s Av~ Suite 3800 Portland. OR :111204-3642 Tcl~onc ~03) 226-2966 Facsimile (503) 222-2937


("Liberty Surplus") issued Policy no. IASSAA267M002 with a policy period of November 25,

2015 to November 25, 2016, in which Private Advisory Group, Douglas Bean or Christopher

Bean are insureds. However, if the Court in the Litigation does not issue a final order approving

the terms of this Stipulation of Settlement, or the Settlement is voided or terminated for any

reason, or the Settlement is reversed on appeal, the rights of the Settling Parties to coverage

under Liberty Surplus Policy no. IASSAA267M002 shall be fully reinstated.

F. Attorneys' Fees.

The Plaintiff Class or Plaintiffs' Class Counsel may file a petition with the Court for an

award of fees and costs to Plaintiffs' Class to be paid out of the settlement Amount. Such

petition shall be filed when the Plaintiff Class file the motion with the Court asking it to grant

final approval of the settlement, and shall be set for hearing on the final approval of the

settlement. The Settling Defendants agree not to challenge Plaintiffs' Class Counsel's petition

for an award of fees and costs and/or Incentive A ward or the Court's determination of an award

of any such fees or costs, so long as the total request for attorneys' fees does not exceed 25% of

the total settlement amount paid in this Settlement.

4. CONDITIONS OF SETTLEMENT

A. Participation of Bean Defendants In Settlement.

This Settlement shall be void and of no effect if each of the following defendants in the

Litigation and the Predecessor Litigation have not reached an agreement to settle with the

Plaintiff Class or provide assurances related to this Settlement to the satisfaction of the Plaintiff

Class before July 7, 2017: Douglas R. Bean, S. Christopher Bean and Jodi J. Bean; Bean

Holdings, LLC; Jonathan Bishopp and Monica Bishopp.

Page 11 - STIPULATION OF SEITLEMENT

SAMUELS YOELIN KANTOR LLP Attol'~a at Law

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PROVIDED, however, that the Plaintiff Class alone may waive this condition on behalf

of all Settling Parties by sending written email notification to attorneys Peter Ehrlichman and

Nathan Alexander of their waiver before July 7, 2017.

B. Court Aporoval.

The Settlement is conditioned on the Court's final approval of a Rule 23(b)(l), limited

fund, non-opt-out class action settlement. Accordingly, this Settlement is conditioned upon one

or more parties to the Litigation filing, and the Court granting and approving in substantial form,

each of the following:

1. A Motions For Order Determining That Class Action May Be Maintained

Pursuant To Rule 23(b )(1) and Preliminarily Approving Settlement and Approving Form Of

Notice And Setting Fairness Hearing, substantially in the form of the attached Exhibit B ;

2. A Notice of Class Action Settlement Fairness Hearing, setting a fairness hearing

on or before October 17, 2017; and

3. A Final Order Approving Class Action Settlement.

5 TERMINATION OF SETTLEMENT

A. If the Court does not approve this Settlement, or if the highest appellate court to

accept review of this matter reverses the final Court approval of this Settlement, then the

Settlement shall be cancelled and terminated, unless the Settling Parties mutually agree in

writing otherwise (including without limitation by agreeing to proceed with the Settlement.)

B. If the Settlement is terminated, the full amount of the Settlement Payment shall be

returned, within ten days of the termination, to the persons or insurers who made the payments.

In the event of a return of funds, the non-insurance portion of funds contributed by the RP

Capital-related individuals shall be paid to DORSEY & WHI1NEY LLP, in trust for Gary Price,

Page 12- STIPULATION OF SETILEMENT

SAMUELS YOBLIN KANTOR LLP Attom~s at Law

111 SW sm>.vc.t. Suite 3800 Partland. OR 91204-3642 TclCJ!honc ~0~) 226·2966 Facsimile (503J 222-2937


Tim Feehan, Ron Robertson, Doug Maurer and Anthony Ramirez. Additionally, ifthe

Settlement is terminated, the rights of the Settling Parties to coverage under Liberty Surplus

Policy no. IA5SAA267M002 shall be fully reinstated.

6. MISCELLANEOUS PROVISIONS

A. The Settling Parties agree to cooperate to the extent reasonably necessary to

effectuate the terms and conditions of the settlement.

B. The Settlement shall be binding upon, and inure to the benefit of, the successors

and assigns of the Settling Parties and the Released Persons.

C. The Court shall retain jwisdiction with respect to implementation and

enforcement of the terms of the Settlement, and the Settling Parties submit to the jurisdiction of

the Court for purposes of implementing and enforcing the Settlement.

D. All agreements made by the Settling Parties relating to the confidentiality of

information provided and documents produced in connection with and for purposes of the

settlement negotiations for and mediation of the Released Claims between the Settling Parties

shall survive this Settlement and/or termination of it if not approved as described in paragraph

6Aherein.

E. The Settling Parties may agree to reasonable extensions of time to carry out any

of the provisions of this Settlement.

F. The Settling Parties agree that the statutes of limitation for all claims that could be

asserted in The Litigation are hereby tolled during the pendency of the motion for the

Preliminary Approval Order, Final Approval Order and all related appeals.


SAMUELS YOELIN KANTOR LLP AttQXDey& at Law

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G. Plaintiff Class To Keep Aequitas Investments. Nothing in this Settlement

Agreement shall affect the ownership interest that each class member has in the Aequitas

Investments. Plaintiff Class is not tendering or transferring any interests they have in their

Aequitas Investments.

H. No Admission of Wrongdoing. The Defendants have denied and continue to deny

any liability, negligence, breach of duty, violation of statutory or common law and wrongdoing

related to the subject matter of the Released Claims. This settlement shall not be offered or

received as evidence of any wrongdoing or admission of wrongdoing with respect to the legal or

factual validity of any Released Claim.

I. Negotiated Agreement. This Agreement constitutes a negotiated contract. Its terms

are not merely recitals but are the result of negotiation among the Parties. Each of the Parties

participated in the drafting of this Agreement. In interpreting this Agreement, there shall not be a

presumption of interpretation against any Party, and each Party expressly waives any such

presumption.

J. Counterpart Signatures. The Settlement may be executed in one or more

counterparts. A faxed or electronically scanned (in PDF format) signature shall be deemed an

original signature for the purposes of this Settlement. All executed counterparts and each of them

shall be deemed to be one and the same instrument. A complete set of counterparts, either

originally executed or copies thereof, shall be filed with the Court.

K. The Plaintiff Class, by this Settlement, expressly waive any and all provisions,

rights, and benefits conferred by any law of any jurisdiction or any state or territory of the United


SAMUELS YOELIN KANTOR LLP Attc!tneys at Law

111 SW S"' Ave ... Suite 3800 Portland. OR 91204-3642 TclCP.boric (S03} 226-2966 Facsimile (503} 222-2937


States or principle of common law that is similar, comparable, or equivalent to California Civil

Code § 1542, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WlilCH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT TIIE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HA VE MATERIALLY AFFECTED 1-IlS OR HER SETTLEMENT WITH THE DEBTOR.

wrence R. Cock

Peter lichman

Of A~eys for Plaintiffs

A (\ff?< 0rerory .V'Hfil'a

Nathan Alexander Attorney for Kenneth and Patricia Peterson Of Attorneys for Nonnan an~ Christina Price; Ronald and Kathryn Robertson; RP Capital, LLC; Timothy and Kimberly Feehan; Strategic Capital Alternatives LLC and SCA Holdings, LLC


SAMUEI.S YOEUN KANTOlt LLP An-Iii.a>•

111 SW S• A~lo 3&00 l'onland, ORY ,,....)642 Tekohone (.$0)) ll6·l966 Fadlmno (50lJ n2·29l1


Jul 18 17, 06:38p Patricia Crowley

~~ Leon Brown

Nancy Gilbert

Rollin Chew, Co-Trustee Edwin L. Chew Family Trust

Norman Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez

Aaron Maurer

KeMeth Peterson

RP Capital, LLC Print Name:

---~-~~--Ti tie: ----~------

SCA Holdings, LLC Print Name:

~~-~-----Title: ~-~----~---

Page 16-STIPULATION OF SETTLEMENT

9493050582 p.2

Kirk Clothier

Rollin Chew

Bernard Gutow. Trustee Gutow Family Trust dtd 10/28/1991

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez.

Laura Maurer

Patricia Peterson

Strategic Capital Alternatives, LLC Print Name:. ________ _ Title: __________ _

'11Uju' 11sW 11 l

-29J1


LeonBrown ·

Nancy Gilbert


Nonnan Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez

Aaron Maurer

Kenneth Peterson

RP Capital, LLC Print Name: ----------------Title: ----------------SCA Holdings, LLC Print Name: Title: ------------


Rollin Chew

Bernard Outow, Trustee Gutow Family Trust dtd 10/28/1991

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

Laura Maurer

Patricia Peterson

Strategic Capital Alternatives, LLC Print Name: -------------Tit I e: ----------------


Rollin Chew, Co- ruste~~-c..u.tw. Edwin L. Chew Family Trust 1i:\'""1t:1'1Q.J Yf'

Nonnan Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

· Antonio Ramirez

Aaron Maurer

Kenneth Peterson


~~~~~~~~~

Title: ~~~~~~~~~~~-


~~~~~~~~~

Title: ~~~~~~~~~~~-


Rollin Chew

Bernard Gutow, Trustee Out ow F amity Trust dtd l 0/28/ l 99 l

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

Laura Maurer

Patricia Peterson

Strategic Capital Alternatives, LLC Print Name:

~~~~~~~~~

Title: ~~~~~~~~~~~-


Leon Brown

Nancy Gilbert


Nonnan Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez

Aaron Maurer

KeMeth Peterson


~-------~ Title: ~-----------


·~----~--~ Title: ·~-----------

Page 16 - STIPULATION OF SETILEMENT

Kirk Clothier

emard Gutow, Trust Gutow Family Trust dtd 10/28/1991

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

Laura Maurer

Patricia Peterson

Strategic Capital Alternatives, LLC Print Name: ________ _ Tille: __________ _ _


Leon Brown

Nancy Gilbert

Rollin Chew, C<r Trustee Edwin 1J\ Chew ~ily Trust

fJ.1:.J2t c_ Norman Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez

Aaron Maurer

Kenneth Peterson

fJ .il,/L RP Capital, LLC Print Name: Norman Gary Price Title: ilaging Member (} /t . ~

SCA Holdings, LLC Print Name: Norman Gary Price Title: Member


Kirk Clothier

Rollin Chew

Bernard Gutow, Trustee Gutow Family Trust dtd 10/28/1991

~--k l~<q Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

Laura Maurer

Patricia Peterson

fJ ./k,/L Strategic Capital Alternatives, LLC Print Name: Norman Gary Price Title: Member

SAMUELS VOELIN KANTOll LLP 111 s¢>1~~~~ 3800 Ponl&11d OR 97204·3642 Te~l:SO)) 226·2966 Facsimile S03) 222-2931


Leon Brown

Nancy Gilbert


Timothy Feehan, Jr.

Antonio Ramirez

Aaron Maurer

Kermeth Peterson


----------------~ Title: ----------~~~--~~-

SCA Holdings, LLC Print Name: Title: --~--~----~~~

-----------------------


Kirk Clothier

Rollin Chew

Bernard Gutow, Trustee Outow Family Trust dtd 10/28/1991

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

Laura Maurer

Patricia Peterson

Strategic Capital Alternatives, LLC Print Name: ------------------Title:

----------~----~------

SAMUELS YOELIN KANTOR. LLP ~~11_4w __ .

·~si:.i61_~,1.8r T•ICP.hOllC CS03) 226-2966 Facsimile ($03} 222-2!'37


Leon Brown

Nancy Gilbert


Nonnan Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez

Aaron Maurer

Kermeth Peterson


~-------~ Title: ~~~--~------


---~--~~~ Title: ------------


Kirk Clothier

Rollin Chew


Christina Price

/(C\~~ Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

Laura Maurer

Patricia Peterson


-----~--~ Title: ___________ _


Leon Brown

Nancy Gilbert


Nonnan Gary Price

Antonio Ramirez

Aaron Maurer

Kenneth Peterson

RP Capital, LLC Print Name: ._.._. ________ ~ Title: ._. __________ ._.~._.._._ SCA Holdings, LLC Print Name: Title:

._.-~------._.~---~ _._. _____________ _


Kirk Clothier

Rollin Chew


Christina Price

Kathryn Robertson

~~ Wendy Ramirez

Laura Maurer

Patricia Peterson


----------~ Title: __ ._.._. ____ ._. __ _

SAMUELS YOELIN KANTOR L1.P

·~::u~~JJr' Tolcohorie (~!13) 226-2966 F1e11milc (503) 222·2937


Leon Brown

Nancy Gilbert


Nonnan Gary Price

Ronald J. Robertson

Aaron Maurer

Kenneth Peterson

RP Capital, LLC Print Name: ---------Tit I e: -~~---------

SCA Holdings, LLC Print Name: Title: ---------


Kirk Clothier

Rollin Chew


Christina Price

Kathryn Robertson

Kimber!J.m ( -, Wendy Ramirez

Laura Maurer

Patricia Peterson

Strategic Capital Alternatives, LLC Print Name: · Title: ___________ _

S/\MUELS YOELI~OR LLl' II s051~81 VI

'~oi' 1Lsr' Te~ne (SOl) 226-2966 fm1mile (503} 22l·29J7


Leon Brown

Nancy Gilbert


Nonnan Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez

~ Aaron Maurer

Kenneth Peterson

RP Capital, LLC Print Name: ---------Tit I e: -------------------SCA Holdings, LLC Print Name:

-----------~ Title: ----------------


Kirk Clothier

Rollin Chew

Bernard Gutow, TniStee Outow Family Trust dtd 10/28/1991

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

~~ Patricia Peterson

Strategic Capital Alternatives, LLC Print Name: ------------Title: ___________ _


Leon Brown

Nancy Gilbert


Norman Gary Price

Ronald J. Robertson

Timothy Feehan, Jr.

Antonio Ramirez


--.

Title: --------

SCA Holdings, LLC Print Name: Title: ---------

Page 16-STIPULA TION OF SETl'LEMENT

Kirk Clothier

Rollin Chew

Bernard Gutow, Trustee Outow Family Trust dtd 10/28/1991

Christina Price

Kathryn Robertson

Kimberly A. Feehan

Wendy Ramirez

~.aurer/~ ~'~~~

Patricia Peterson

Strategic Capita] Alternatives, LLC Print Name:

~-~-~-~--Tit 1 e: ~~~----~--~


1 Aequitas Enterprise Seavices, LLC 2 Aequitas Hybrid Fund, LLC 3 Aequitas Income Opportunity Fund 11, LLC 4 Aequitas P1·ivate Client Fund, LLC 5 Aequitas Income Opportunity Fund, LLC 6 Aequitas ETC Founders Fund, LLC 7 Aequitas Enhanced Income Fund, LLC 8 Aequitas WRFP I, LLC 9 Aequitas Income Protection Fund, LLC 10 Aequitas EIF Debt Fund, LLC 11 ACC C Plus Holdings, LLC 12 ACC Holdings 2, LLC 13 ACC Funding Tn1st 2014-2 14 Aequitas Peer-To-Peer Funding, LLC 15 CarePaymeut Holdings, LLC 16 CarePayment, LLC 17 CP Funding I Holdings, LLC 18 CP Funding l Trust 19 Campus Student Funding, LLC 20 ACC F Plus Holdings, LLC 21 ACCHoldings 1, LLC 22 ACC Funding Trust 2014·1 23 ML Financial Holdings, LLC 24 Motolease Financial, LLC 25 Unigo Student Funding, LLC 26 The Hill Land, LLC

EXIDBITA

27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

EXHIBIT A Page 1 of 1

Aequitas Senior Housfne:, LLC Aequitas Capital Opportunities Fund, LP Aequitas Capital Opportunities GP, LLC ACC Holdings 5, LLC ACC Funding Serles Trust 2015-5 Aequitas Corporate LendinJt, LLC Aequitas Wealth Mana2ement, LLC Aequitas Wealth ManaJ?ement Partner Fund, LLC Hickory Growth Partners, LLC Aspen Grove Eauitv Solutions, LLC Aequitas International Holdin1?s, LLC Aequitas Asset Management Oregon, LLC AAM Fund Investment. LLC Aeciuitas Senior Housin2 Ooerations, LLC Executive Citation, LLC Executive Falcon, LLC APP Holdin.Rs, LLC Aequitas Partner Fund, LLC


Robert S. Banks, Jr., OSB No. 821862 [email protected] SAMUELS YOELIN KANTOR LLP Attorneys at Law 111SW5th Ave., Suite 3800 Portland, Oregon 97204-3642 Telephone (503) 226-2966 Facsimile (503) 222-2937

Lawrence R. Cock, OSB No.102524 [email protected] CABLE, LANGENBACH, KINERK & BAUER, LLP Suite 3500, 1000 Second Avenue Building Seattle, Washington 98104-1048 Telephone (206) 292-8800 Facsimile (206) 292-0494

Of Attorneys for Plaintiffs

IN THE UNITED STATES DISTRICT COURT OF THE STATE OF OREGON

DISTRICT OF OREGON

Portland Division

Leon Brown, John and Deborah Newcomb, Majid Majidian, William and Roberta Isgreen, Kirk Clothier, Karen Schoen, Souror Baetjer, Nancy Gilbert, Rollin Chew, Edwin L. Chew Family Trust, Bernard Gutow as Trustee of the Gutow Family Trust dtd 10/28/1991, all individually and on behalf of all others similarly situated,

Plaintiffs,

vs.

Page - I-MOTIONS FOR ORDER DETERMINING THAT CLASS ACTION MAY BE MAINTAINED PURSUANT TO RULE 23(b)(l)(B) ...

EXHIBIT B Page 1 of 14

NO. 3:17-cv-00869

PLAINTIFFS' MOTIONS FOR ORDER DETERMINING THAT CLASS ACTION MAY BE MAINTAINED PURSUANT TO RULES 23(a) and 23(b)(l)(B) AND PRELIMINARILY APPROVING SETTLEMENT AND APPROVING FORM OF NOTICE AND SETTING FAIRNESS HEARING

SAMUELS YOELIN KANTOR LLP

Atto!i!1eys at Law 111 SW 5 A"ve.1.Suite 3800 Portland, OR 91204-3642 TeleP.honc (503) 226-2966 Facsimile (503) 222-2937


Norman Gary Price and Christina A. Price; Ronald J. Robertson and Kathryn Robertson; RP Capital, LLC; Douglas R. Bean and Megan Susanne Bean; S. Christopher Bean and Jodi J. Bean; Bean Holdings, LLC; Jonathan Bishopp and Monica Bishopp; Timothy J. Feehan, Jr. and Kimberly A. Feehan; ; Strategic Capital Alternatives LLC; and SCA Holdings LLC,

Defendants.

MOTIONS

Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs move the court for

an Order as follows:

l. Pursuant to Rule 23(c), certifying this case as a class action and defining the class as

all persons who purchased or renewed and continue to hold Aequitas Investments,

and made such purchases or renewals while clients of Strategic Capital Group, LLC ,

Private Advisory Group LLC, RP Capital Group, LLC, and/or upon the advice or

recommendation ofSCG, PAG or RP Capital and their licensed registered

representatives or investment adviser representatives. Excluded from the class and

subclass are the Defendants and their immediate family members, and officers,

directors, and employees of any Aequitas entity.

2. Pursuant to Rule 23(b )( 1 )(B), ordering that this case may proceed as a class action as

a limited fund, non-opt out class.

3. Pursuant to Rules 23(c) and 23(g), appointing Robert S. Banks Jr. and Lawrence R.

Cock as co-counsel to represent the class.

4. Pursuant to Rule 23(e), preliminarily approving the settlement described in the

Stipulation for Settlement filed with this motion, approving a form of notice attached

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EXHIBIT B Page 2of14


Attolircys al Law 111 SW 51 Ave.1.Suitc 3800 Ponland, OR 91204-3642

TclcP-honc (503) 226-2966 Facsimile (503) 222-2937


as Exhibit_ to the Declaration of Robert S. Banks, Jr ("Banks Declaration")., and

scheduling a fairness hearing on or before October 17, 2017.

MEMORANDUM

I. INTRODUCTION

This case is brought on behalf of a class of persons and entities who purchased

investments in promissory notes and funds issued by Aequitas Capital Management, Inc. and its

subsidiaries upon the advice of investment advisor representatives ("IARs") of two registered

investment advisory firms, Strategic Capital Group, LLC ("SCG"), and Private Advisory Group,

LLC ("PAG"), and one securities broker-dealer, RP Capital, LLC. The gravamen of the case is

that the plaintiffs were led to believe that they were receiving independent, unconflicted

investment advice from financial industry professionals, when in fact those professionals had

financial relationships with Aequitas, and that the IARs recommended the Aequitas investments

not because it was in the plaintiffs' best interests, but because it was to defendants' financial

benefit to sell Aequitas investments. Additionally, plaintiffs have named as defendants persons

they allege were control persons of SCG, P AG and RP Capital.

The Aequitas investments have failed. Aequitas has been placed into receivership by this

court in the case of Securities and Exchange Commission v. Aequitas Capital Management, Inc.,

No. 3:16-cv-00438-PK. The total aggregated liquidated claims of the proposed class resulting

from that failure is approximately $120 million. Since those claims far exceed any recovery

fund that could be available from the defendants, the plaintiff class and certain defendants and

others have reached a settlement agreement designed to preserve the available wasting insurance

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proceeds, maximize the personal contributions that can be made to a settlement fund, and treat

equitably on a pro rata basis all class members-the clients of P AG, SCG and RP who purchased

Aequitas investments on the advice of their advisors. Thus, the plaintiffs seek approval of a

limited fund, no opt-out class pursuant to Rule 23(b)(l)(B).

II. MOTION FOR CLASS CERTIFICATION

Plaintiffs move pursuant to Rule 23(c) to certify this case as a class action and define the

class as all persons who purchased or renewed and continue to hold Aequitas Investments, and

made such purchases or renewals while clients of Strategic Capital Group, LLC , Private

Advisory Group LLC, RP Capital Group, LLC, and/or upon the advice or recommendation of

SCG, P AG or RP Capital and their licensed registered representatives or investment adviser

representatives.

Rule 23(a) provides that a case may proceed as a class action where:

{l) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and ( 4) the representative parties will fairly and adequately protect the interests of the class.

This case meets those requirements. In ruling on a motion for class certification, the

court takes the substantive allegations in the complaint as true. The rule does not require or

permit the court to inquire into the merits. And, an extensive evidentiary showing by the

plaintiff is not required as long as the court has sufficient material before it to determine the

nature of the allegations and to rule on compliance with the requirements of Rule 23. Villanueva

v. Liberty Acquisitions Servicing, LLC, 3:14-CV-01610-HZ, 2017 WL 1021523, at *2 (D Or Jan.

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13, 2017), citing In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust

Litigation., 691 F.2d 1335, 1342 (9th Cir. 1982). The allegations in the complaint and material

in the record satisfy the Rule 23(a) standards.

A. Rule 23(a) Prerequisites Are Satisfied.

1. Class Definition.

Plaintiffs seek certification of a class defined as "all persons who purchased or renewed

and continue to hold Aequitas promissory notes and funds while they were clients of Strategic

Capital Group, LLC or Private Advisory Group LLC and upon the advice or recommendation of

SCG or P AG or their investment advisor representatives. The Class does not include

Defendants, their officers, directors or employees. The Class also does not include any of the

Aequitas affiliated companies, and their officers, directors, board members, advisors, agents,

employees, and affiliates, and the immediate family members of each of them." Complaint,~ 78.

2. Numerosity.

Plaintiffs allege that members of the class of investors who purchased Aequitas

investments from defendants exceeds 200 members, id. at ~ 79. The defendants will not deny

that allegation. As this court has observed, "[ c ]ases from the Ninth Circuit and this Court

support a conclusion that a class of fewer than 100 potential class members and as low as forty,

satisfies the numerosity requirement. Villanueva, 3: 14-CV-01610-HZ, 2017 WL 1021523, at *3

(D Or Jan. 13, 2017).

3. Commonality.

Plaintiffs allege as follows:

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EXHIBIT 8 Page 5 of 14


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There are questions of law and fact common to the class, including (a) the duties that SCG, PAG and their investment advisor representatives owe to their clients; (b) the extent to which RP Capital, and individual defendants Price Robertson and Feehan were substantial contributive factors in the sales of the Aequitas Investments to the plaintiffs and the class; ( c) the extent to which material information was not adequately disclosed to the plaintiffs and the class prior to their purchase of the Aequitas Investments; ( d) whether defendants owed and breached fiduciary duties to the plaintiffs by failing to disclose the nature of the relationships between the defendants and Aequitas; ( e) the extent to which defendants performed adequate due diligence before offering and/or playing a substantially contributive role in the sale of the Aequitas investment to plaintiffs and the class; f) the extent to which the defendants received undisclosed compensation of any kind resulting from the sale of the Aequitas Investments to plaintiffs and the class; (g) whether the defendants were a substantial contributive factor in the sale of the Aequitas Investments to plaintiffs and the class.

Complaint,~ 80. They also allege that the common questions oflaw and fact

predominate over other questions affecting individual class members. Id., ~ 81.

Plaintiffs satisfy the Rule 23(a) requirements for commonality. Those

requirements have been construed permissively, and do not require that all questions of

law and fact be common; a single issue common to all class members is sufficient.

Villanueva at *5. As this court explained in that case, "[t]he claims must depend upon a

common contention and that common contention must be of such a nature that it is

capable of classwide resolution-which means that determination of its truth or falsity

will resolve an issue that is central to the validity of each one of the claims in one stroke.

Villanueva at *5, citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct.

2541, 180 L.Ed.2d 374 (201 l)(intemal quotation marks omitted). The Ninth Circuit uses

a "common sense approach'' to commonality such that the requirement is satisfied where

the class is ''united in a common interest in determining whether a defendant's course of

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AttO!iflCYS at Law 111 SW 5 Ave.r. Suite 3800 Portland, OR 9 1204-3642 TclcP.honc (503) 226-2966 Facsimile {503) 222-2937


conduct is in its broad outlines actionable." Blackie v. Barrack, 524 F2d 891, 902 (9th

Cir 1975) cert denied 429 US 816. When defendants have "engaged in some course of

conduct that affects a group of persons and gives rise to a cause of action, one or more of

the elements of that cause of action will be common to all of the persons affected."

Villanueva at *5, citing Oregon Laborer's-Employers Health and Welfare Trust v. Phillip

Morris, Inc., 188 FRD 365, (D. Or 1998).

Here, the class of plaintiffs all purchased Aequitas investments from the same

investment advisory firms and broker dealers. Among the detailed allegations made in

the complaint, plaintiffs allege that the defendants breached duties they owed to their

investor clients by failing adequately to disclose their close affiliations with Aequitas.

That is sufficient to satisfy the commonality requirement.

4. Typicality.

The typicality requirement is designed to ensure that the interests of the named

representatives align with the interests of the class. Wolin v. Jaguar Land Rover N. Am.,

LLC, 617 F.3d 1168, 1175 (9th Cir. 2010). Claims are typical "if they are reasonably

coextensive with those of the absent class members." Hanlon v. Chrysler Corp., 150

F .3d 1011, 1020 (9th Cir. 1998). "The test of typicality is whether other members have

the same or similar injury, whether the action is based on conduct which is not unique to

the named plaintiffs, and whether other class members have been injured by the same

course of conduct." Wolin, 617 F3d at 1175.

The claims of the class representatives, like the claims of the proposed class, all

arise out of the sale of the Aequitas investments by salespersons, investment advisory

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EXHIBIT 8 Page 7 of 14


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firms and broker-dealers who recommended the investments. The class representatives

have claims that are coextensive with those of the absent class members.

5. Adequacy. Rule 23(a)(4) requires the class representative(s) have no

conflicts of interest with the proposed class, and that the plaintiffs are represented by

qualified counsel. Hanlon, 150 F.3d at 1020; Villanueva at *5.

Here, the class representatives have no conflicts with the class. Plaintiffs'

counsel are qualified to represent the class. Robert Banks and Lawrence Cock have more

than 55 years of combined experience handling complex cases, including class actions.

They regularly represent parties in cases in which the liability of registered investment

advisers and broker-dealers and their agents and control persons are at issue. See:

Banks Declaration, and Declaration of Lawrence R. Cock, filed with this motion.

B. The Requirements of Rule 23(b)(l)(B) Are Satisfied.

Plaintiffs move the court for an order certifying the class as a Rule 23(b)(l)(B) no

opt-out, limited fund class. That rule provides that "A class action may be maintained if

Rule 23(a) is satisfied and if ... adjudications with respect to individual class members

that, as a practical matter, would be dispositive of the interests of the other members not

parties to the individual adjudications or would substantially impair or impede their

ability to protect their interests." As the court explained in Stott v. Capital Financial

Services., Inc., 277 F.R.D. 316, 326 (N.D. Tex. Sept. 12, 2011), Rule 23(b)(l)(B) class

actions are appropriate:

where there is a definite, limited amount of capital that is available to class members, and that such a fund is insufficient to cover all claims . . . In a traditional "limited fund" situation, the

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Attogicys at Law 111 SW s Avc.L Suite 3800 Portland, OR 91204-3642 TclcP.honc (503) 226-2966 Facsimile (503) 222-2937


aggregation of the claims would be greater than the amount made available in this tangible fund. A court would subsequently have the ability to enforce a settlement that provided for a pro rata distribution of the fund to all claimants, to ensure each claimant was treated fairly and equitably under the circumstances.

The Supreme Court established three elements for a limited fund class: (1) the

total of the liquidated claims, and the funds available to satisfy them demonstrate an

inability to pay all claims; (2) the entire settlement fund is to be devoted to satisfying

claims (and not to benefit the defendants); and (3) the members of the class benefitting

from the fund are equitably treated. Ortiz v. Fibreboard Corp., 527 U.S. 815, 838-839,

119 S.Ct. 2295, 144 L.Ed.2d 715(1999). Here, those elements are satisfied. I

1. Total Amount of Liquidated Claims and Availability of Funds Demonstrate an

Inability to Pay All Claims.

The total of the liquidated claims of the class, consisting of the net out of pocket

investment losses of the class is estimated by the plaintiffs and defendants as $120

million. Banks Declaration, ~ _. The total amount of money available from the

settling defendants RP Capital, Strategic Capital Alternatives, LLC , SCA Holdings,

LLC, Gary and Christina Price, Ronald and Kathryn Robertson, Timothy and Kimberly

Feehan, plus contributions from non-defendants Antonio Ramirez, Aaron Maurer and

Kenneth Peterson, is $1,200,000.00. I

That settlement amount was arrived at after four months of arms' length

negotiations between counsel for the plaintiff class and those settling parties. Banks

1 The terms of the proposed settlement are set forth in the Stipulation of Settlement filed with the court and discussed in section _, infra.

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EXHIBIT 8 Page 9of14


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~--· Those negotiations included a two-day mediation in Seattle on March 1 and 2,

2017, in which the parties failed to reach a settlement. The parties had many subsequent

discussions attempting to negotiate the amount and terms of a settlement. After many,

many discussions between counsel for plaintiffs, the RP Defendants, and separate counsel

for settling party Kenneth Peterson, Lloyd's agreed to contribute the balance of the policy

subject to acceptable terms to be further negotiated, the parties agreed upon a total

settlement of $1.2 million on June 2, 2017. Banks Declaration ~ _.

Plaintiffs took steps to ensure that the amount of the settlement represented the

settling parties' demonstrated ability to pay. As a part of the negotiations, the plaintiffs

required the defendants to provide personal financial statements sworn to under the

penalties of perjury. Banks Declaration~_. In addition, counsel for plaintiffs retained

an asset search company in an effort to verify that the personal financial statements were

complete. And, counsel for plaintiffs ordered, obtained and reviewed comprehensive

asset reports on the settling parties from the LexisNexis Accurint For Legal Professionals

Program. The documents plaintiffs' counsel obtained and reviewed did not disclose any

assets that were materially different than the assets that the settling parties had disclosed

in their sworn financial statements. Banks Declaration ~ _.

The settling parties are filing with this court sworn declarations under the

penalties of perjury attesting to the accuracy of their sworn financial statements that were

provided to counsel for plaintiffs. See Declarations of. . . . . . . . Counsel for plaintiffs

have reviewed those statements, together with the financial information they obtained,

and have concluded from them that that the settlement amount represents that the funds

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available demonstrate an inability on behalf of the defendants to pay all claims. Banks

Declaration 1f _.

2. The entire settlement fund is to be devoted to satisfying claims.

In evaluating and resolving this second Ortiz requirement, the court in Stott said:

"Regarding the second Ortiz factor, it is clear that the whole of the settlement fund will

be devoted to paying claimants. Should the Court approve the settlement, the $1.52

million fund, minus costs and attorneys' fees, will be distributed to all class members

who have claims" against the settling defendant. Stott, 211 FRD at 327-328. The same

is true here. Pursuant to the proposed Stipulation of Settlement filed herewith, the

settling parties will pay the settlement funds into an escrow account. Pursuant to the

Stipulated Settlement, ~-' after payment of any costs and attorney fees approved by the

court, all of the settlement fund will be used to satisfy claims of the proposed plaintiff

class.

3. The members of the class benefitting from the fund are equitably treated.

The third Ortiz requirement is satisfied. The terms of the Stipulated Settlement, ~

_ require that the funds be equitably distributed to all members of the proposed class

on a pro rata basis.

For all of the foregoing reasons, the court plaintiffs request that the court issue an

order certifying the class and allowing this case to proceed as a limited fund, no opt-out

class pursuant to Rule 23(b)(l)(B) of the Federal Rules of Civil Procedure.

III. MOTION TO APPOINT CLASS COUNSEL

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Rule 23(g) provides that "[u]nless a statute provides otherwise, a court that certifies a

class must appoint class counsel." The rule goes on to require the court to consider the work that

counsel has done, the counsel's experience in handling class actions, other complex litigation,

and the types of claims asserted in the action, knowledge of the law, resources that counsel will

commit to representing the class, and other pertinent matters.

Plaintiffs request that the court appoint Robert S. Banks, Jr. and Lawrence R. Cock as co-

lead counsel. This motion is based upon the facts set forth in the declarations of Messrs. Banks

and Cock.

IV. MOTION TO PRELIMINARILY APPROVE CLASS SETTLEMENT, APPROVE FORM AND METHOD OF NOTICE, AND SET FAIRNESS HEARING.

The plaintiff class representatives and defendants have reached a settlement whose terms

are detailed in the Stipulation of Settlement filed with the court, subject to this court's approval

pursuant to Rule 23( e ). The plaintiffs move the court for an order preliminarily approving the

settlement, directing that notice of the class certification and proposed class settlement be sent to

all class members with the assistance of Ronald Greenspan and FTI, Inc., the court appointed

Receiver in Securities and Exchange Commission v. Aequitas Capital Management, Inc., No.

3:16-cv-00438-PK. A copy of the proposed Notice is attached as Exhibit_to the Banks

Declaration

A. The Proposed Settlement Is Fair.

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The proposed settlement requires the settling parties to provide sworn testimony about

their financial conditions, and pay $1.2 million for the benefit of the class, and to be distributed

to class members on a pro rata basis is fair to the class.

Plaintiffs' counsel believe that the proposed settlement is fair, reasonable, adequate,

and in the best interests of the plaintiffs, and the proposed Plaintiff Class. In order to maximize

recovery to the class, an early settlement is necessary. The available insurance proceeds have

already been reduced from $1 million to approximately $525,000 in the wasting insurance

policy. There are competing claims of individuals who have filed arbitrations over the same

investments and some of the same defendants, which this court has temporarily enjoined to

preserve assets for the class. See Docket No. 27. If the proposed settlement is not approved,

there is a very real chance that the class will receive nothing from these defendants because the

insurance proceeds will be exhausted from defending the arbitrations, and because the size of the

arbitration demands exceeds the funds available to the class for settlement. See Declaration of

Nathan Alexander In Support of Motion For Temporary Restraining Order, Docket No 4.

Additionally, as set forth in section II above, the terms of the settlement require the

settling parties to contribute the maximum amount that they are able to pay. Declarations of [list

all settling parties filing declarations]. Simply put, there are no other significant assets

available to contribute to the settlement fund. If the settlement is not approved, the insurance

proceeds will be wasted, and a very few putative class members stand to take all of the available

settlement funds.

B. The Proposed Notice ls Fair And Adequate.

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The court may, but is not required, to provide notice of class certification for a Rule

23(b)(l)(B) class. Fed.R.Civ.P. 23(c)(2). The court must direct reasonable notice to all class

members of a proposed settlement. Fed.R.Civ.P. 23(e)(l). Plaintiffs proposed to provide

adequate notice to all class members, notifying them of both the class certification order and the

proposed settlement in a manner designed to reach all class members. A copy of the proposed

Notice is attached to the Banks Declaration as Exhibit_. The plaintiff class representatives

have requested that the Receiver assist in sending out the notices. The parties believe that the

Receiver has in his files last known addresses for all class members. Plaintiffs propose to send

out the notice not later than ten days of the court's order directing that notice be sent.

C. Plaintiffs Seek A Fairness Hf?aring On Or Before October 17. 2017.

The Stipulation of Settlement provides that the parties shall request that the court hold a

fairness hearing to consider whether to issue a final approval order for the settlement by October

17, 2017. That provision addresses the needs of some elderly class members to have some

recovery, and avoids unnecessary delays which can only result in further dissipation of

settlement proceeds.

Dated June_, 2017

Presented by: SAMUELS YOELIN KANTOR LLP

By: /J/ 8oi>ert S. Bankf; fr. ROBERTS. BANKS, JR., OSB No. 821862 Telephone: 503-226-2966 Facsimile: 503-222-293 7 BBANKS@SAMUELSLA W.COM

Page - 14-MOTIONS FOR ORDER DETERMINING THAT CLASS ACTION MAY BE MAINTAINED PURSUANT TO RULE 23{b)(l)(B) • • •



Atl01if1CYS at Law 111 SW 5 Avc.1.Suitc 3800 Portland, OR 91204-3642 TeleP.honc (503) 226-2966 Facsimile (503} 222-2937


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