Trudeau Civil Case Document 837 and 839 Reciever and FTC 03-14-14

8/12/2019 Trudeau Civil Case Document 837 and 839 Reciever and FTC 03-14-14

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UNITED STATES DISTRICT COURT FOR

THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

KEVIN TRUDEAU,

Defendant.

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Case No.: 03-C-3904

Hon. Robert W. Gettleman

RECEIVERS SECOND MOTION FOR

INTERIM APPROVAL OF FEES AND EXPENSES

Robb Evans & Associates, LLC (the Receiver), in its capacity as court-appointed

receiver over the assets of Kevin Trudeau and the Trudeau Entities, respectfully submits this

second interim fee application seeking approval to pay fees and expenses of the Receiver and

professionals retained by the Receiver, including the law firm Hiltz Wantuch & Zanzig LLC

(HWZ). In this application, the Receiver seeks approval of fees and expenses incurred during

the period from October 1, 2013 through December 31, 2013 (the Second Interim Period). In

further support of its motion, the Receiver states as follows:

BACKGROUND

1. On August 7, 2013, the Court entered the Order Appointing a Receiver and

Implementing Ancillary Relief [Dkt. # 742] (the Receivership Order) appointing Robb Evans

& Associates LLC as receiver over the assets of Defendant Kevin Trudeau (Trudeau), the

Trudeau Entities, and any affiliates or subsidiaries thereof controlled by Trudeau or any Trudeau

Case: 1:03-cv-03904 Document #: 837 Filed: 03/14/14 Page 1 of 10 PageID #:15256


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Entity.1 In appointing the Receiver, the Court adopted the FTCs recommendation that any such

receiver should be a forensic accountant with asset-tracing experience.

2. Under the Receivership Order, the Receiver was authorized to retain attorneys and

other professionals as the Receiver deemed advisable or necessary in the performance of the

Receivers duties. (Receivership Order at V(6).) Pursuant to such authority, the Receiver

retained the law firm of Hiltz Wantuch & Zanzig LLC (HWZ) to represent the Receiver and

assist it in carrying out its duties in the matter.

3. Pursuant to the terms of the Receivership Order, the Receiver and its

professionals are entitled to reasonable compensation for the performance of duties undertaken

pursuant to this order and for the cost of actual out-of-pocket expenses they incur. (Receivership

Order XII(1).) If approved, such compensation is to be paid first from assets recovered

pursuant to the Receivership Order, and then, if necessary, from the Escrow Account described

in the Receivership Order. (Id.at XII(4) & (5).)

4. On November 21, 2013, the Court granted the Receivers First Motion for

Approval of Fees and Expenses covering the period from August 7, 2013 through September 30,

2013, approving the Receivers professional fees of $289,405.40, out-of-pocket expenses of

$17,869.92 and HWZs legal fees of $42,486.

5. In this Motion, for the Second Interim Period, the Receiver seeks approval of its

professional fees totaling $246,315.50 and out-of-pocket expenses of $15,030.12. In addition,

the Receiver seeks approval of legal fees and expenses totaling $76,770.16, which includes

$9,419.99 to Liechtenstein and Australian law firms who assisted the Receiver with its

investigation of overseas accounts.

1 Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in theReceivership Order.



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6. As reflected in the financial report accompanying the Receivers most recent

report filed on January 28, 2014 [Dkt. #815] and reattached here as Exhibit A, during the Second

Interim Period, the Receiver has collected additional net funds of totaling $1,846,214.94 before

Receivers fees and expenses.

7. Accordingly, the Receiver has more than sufficient funds to pay the professional

fees and expenses, including legal fees, requested herein from assets recovered pursuant to the

Receivership Order, without needing to draw on the Escrow Account. Indeed, even after

applying all professional fees and expenses sought here, as of December 31, 2013, the

receivership estate still has a net balance of approximately $2.5 million, excluding an additional

$2.7 million in credit card reserve accounts.

OVERVIEW OF RECEIVERS ACTIVITIES AND FEES

8. During the Second Interim Period, the Receiver continued to shift its activities

from assuming control over the various Trudeau Entities located in the United States and abroad

to conducting a more detailed forensic review of the known assets of the Receivership Estate and

the past income of Trudeau and the Trudeau entities, identification of previously unknown

assets, and continued management of Trudeau Entities, including the Global Information

Network (GIN).

9. The Receiver has maintained detailed records of the billable time it has devoted to

this matter and for which it is now seeking authority to pay. Attached as Exhibits B, C and D to

this application are comprehensive invoices for October 2013, November 2013 and December

2013, prepared by the Receiver (and redacted for privilege) setting forth the specific tasks

performed and the time spent performing those tasks by the Receivers timekeepers. The

Receiver also prepared and submitted supplemental reports on October 25, 2013 [Dkt. # 785],



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November 18, 2013 [Dkt. # 796], and December 19, 2013 [Dkt. # 805] further detailing its

certain of its activities and investigation. As reflected in more detail in its invoices and reports to

the Court, the Receiver provides the following overview of its activities during the Second

Interim Period:

10. The Receiver has continued to manage the Trudeau Entities, including the Global

Information Network (GIN). As part of the continuing control, the Receiver has worked with

those entities management and staff while overseeing those entities operations. The Receiver

has adjusted staffing levels, including retaining a chief operating officer, to ensure appropriate

resources are available to operate the Trudeau Entities while minimizing expenses.

11. Having been authorized to operate the Trudeau Entities legally, the Receiver

completed its review of GINs marketing claims and commission program. The Receiver

removed claims from its websites that it deemed false and misleading, including income claims

and references to the GIN Council. The Receiver analyzed GINs commission program,

including conferring with experts from the FTC. Determining that it likely constituted an

impermissible pyramid scheme, the Receiver caused GINs management to terminate the

program and develop new programs consistent with the GINs social and educational objectives.

The Receiver also coordinated with GINs management regarding operational issues related to

the Family Reunion Event held in Washington, D.C. during October 2013.

12. The Receiver continued investigating various overseas accounts held by Trudeau

or the Trudeau entities. As a part of the work, the Receiver retained overseas counsel to advise

the Receiver with respect to foreign banking laws and request turnover of accounts and account

information. The Receiver also continued to attempt to coordinate with Mr. Lee Kenny and

other Trudeau associates regarding the overseas Trudeau Entities and related firms, including



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GIN FDN, Website Solutions Switzerland, Global Sales Solution, Future Transactions Company,

and Office Pool.

13. The Receiver reviewed and analyzed banking records from the various institutions

holding past or present accounts for Trudeau or the Trudeau Entities. The Receiver coordinated

with its counsel to issue subpoenas for additional bank records of third parties that appear to have

received substantial funds from the Trudeau Entities, including those of Mr. Trudeaus wife.

14. The Receiver continued and intensified its review of corporate records of the

Trudeau Entities that had been stored at the Trudeau Entities Westmont offices.

15. The Receiver met with and otherwise corresponded with Trudeau and his counsel

to continue to coordinate the turnover of known receivership assets and to further identify and

investigate the possible existence of any other assets.

16. Throughout the Second Interim Period, the Receiver participated in a number of

hearings (and corresponding effort to prepare for such hearings) addressing the status of

Trudeaus compliance with the Courts orders. In connection with these hearings, the Receiver

solicited Trudeaus cooperation, followed up on any new information, prepared pleadings and

supplemental reports to the Court, and coordinated its efforts with the FTC.

17. On November 18, 2013, certain members of GIN filed a motion to intervene

seekinginter aliato reverse the Receivership Order. The Receiver coordinated with the FTC in

providing a legal response to the motion. Further, the Receiver conducted discussions with the

proposed intervenors regarding their interests, including a possible sale of GIN.

18. The Receiver prepared coordinated with tax counsel for Trudeau to provide

requested information in connection with IRS proceedings.



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19. The Receiver retained and worked with a licensed real estate broker to market

certain real property located in Ojai, California. The Receiver investigated and worked to

resolve issues related to certain encumbrances on the Ojai real property. The Receiver also

secured and maintained the personal property located at the Ojai, California and Oak Brook,

Illinois residences.

20. During the Second Interim Period, the Receivers personnel collectively devoted

1,024.6 hours to this matter (347.9 hours in October 2013, 382.9 hours in November 2013, and

293.8 hours in December 2013), incurring fees totaling $246,315.50, for an effective blended

rate of approximately $240.40 per hour. The principal members of the Receivers firm and

senior associates working on this matter billed at an hourly rate of $301.50. All of the fees

charged by the Receiver in this matter reflect a 10% discount from the firms private sector rates.

As required by the Receivership Order, the compensation sought in this motion is consistent with

the rate structure and terms outlined in Exhibit 1 of the FTCs Statement With Respect to the

Appointment of a Receiver [Dkt. #730]. (SeeReceivership Order XII(2).)

21. In addition to the professional fees sought by the Receiver, the Receiver has also

incurred $15,030.12 in out-of-pocket expenses during the three-month Second Interim Period.

The majority of these expenses are costs associated with travel by the Receivers personnel to

Chicago to meet with management of the Trudeau Entities in Westmont, Illinois. Such travel

expenses total $11,107.77. The remaining expenses for which the Receiver seeks reimbursement

are as follows: $7.78 for investigative search costs; $357.46 for office telephone and supplies;

$1,482.44 for postage and delivery expenses; $1,537.91 for subpoena and document

reproduction, and 536.76 for website support.



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OVERVIEW OF LEGAL SERVICES AND FEES

22. Receivers counsel maintained detailed records of the billable time for which the

Receiver now seeks authority to pay. Attached as Exhibit E to this Motion is a comprehensive

invoice prepared by HWZ (and redacted for privilege) setting forth the specific tasks performed

and the time spent performing those tasks by HWZs timekeepers.

23. As reflected in the detailed invoice, during the Second Interim Period, HWZ

provided the following services to the Receiver:

Advised the Receiver concerning its authority and obligations under theReceivership Order.

Conferred and coordinated with parties on behalf of Receiver, including FTC andcounsel for Trudeau.

Prepared, served and prosecuted on the Receivers behalf subpoenas to variousfinancial institutions seeking to locate assets or potential assets of the receivershipestate.

Prepared and filed various pleadings, including pleadings regarding imposition of

coercive sanctions and responses to statements filed by FTC and Trudeau.

Assisted the Receiver in revising, finalizing and filing Receivers Second andThird Supplemental Reports.

Attended multiple hearings before the Court in connection with imposition ofcoercive sanctions and subsequent hearings affording Trudeau opportunity to

purge contempt.

Advised the Receiver regarding motion to intervene filed by certain member ofGIN.

Conferred and corresponded with counsel for proposed intervenors on behalf ofReceiver regarding pending motion to intervene and intervenors related interests.

Coordinated with tax counsel for Trudeau regarding document requests.

Advised Receiver regarding responses to various entities asserting claims againstreceivership estate for pre-receivership obligations.



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24. During the three months comprising the First Interim Period, HWZ expended

184.3 hours on this matter (109.4 hours in October 2013, 27.6 hours in November 2013, and 47.3

hours in December 2013). Blair Zanzig, one of HWZs members, was principally responsible

for providing these services. For the services outline above and as detailed in the attached

invoices, HWZ has invoiced the Receiver for fees totaling $67,350.17. For similar matters, Mr.

Zanzig ordinarily bills $400 an hour, but in recognition of the interests of consumers in this case,

HWZ has agreed to discount such rates by 10%. Thus, HWZs invoice reflects an effect rate of

$360 per hour for attorney time. The Receiver believes these rates are comparable, if not less

than, those the Receiver has seen in connection with other comparable matters.

25. In addition to its professional fees, HWZ has incurred out-of-pocket expenses of

$1,002.17, consisting of court costs associated with obtaining certified copies of the

Receivership Order, overnight courier fees, and PACER charges.

26. Further, in connection with its attempts investigation of overseas bank accounts,

the Receiver retained the Liechtenstein law firm Holzhacker and the Australian law firm

Meridian Lawyers (collectively, Overseas Counsel). Overseas counsel primarily advised the

Receiver with respect to foreign banking disclosure laws and prepared documents requesting

turnover of foreign accounts held by receivership entities. Attached as Group Exhibit F to this

Motion are invoices prepared by Overseas Counsel setting forth the specific tasks performed and

the time spent performing those tasks. Collectively, Overseas Counsel has incurred fees and

expenses totaling $9,419.99

WHEREFORE, Receiver respectfully requests the Court enter an Order (a) approving

the fees and expenses incurred by the Receiver Robb Evans & Associates LLC for the Second

Interim Period in the amount of $261,345.62; (b) approving the legal fees and expenses incurred



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by Receivers counsel Hiltz Wantuch & Zanzig LLC for the Second Interim Period in the

amount of $67,350.17; (c) approving legal fees and expenses incurred by Overseas Counsel

totaling $9,419.99; (d) approving the Receiver to immediately pay all such approved fees and

expenses from funds held by the Receiver; and (d) grant the Receiver such further relief as the

Court deems just and proper.

Dated: March 14, 2014 Respectfully submitted,

ROBB EVANS & ASSOCIATES LLC,

RECEIVER

By: /s/ Blair Zanzig(One of Its Attorneys)

Blair R. Zanzig (No. 6273293)John F. Hiltz (No.6289744)Kathy Wantuch (No. 6294034)HILTZ WANTUCH & ZANZIG LLC

53 West Jackson Blvd., Suite 205Chicago, Illinois 60604Telephone: 312.566.9008

Fax: 312.566.9015

Counsel for Robb Evans & Associates, Receiver



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CERTIFICATE OF SERVICE

I, Blair R. Zanzig, an attorney, hereby certify that, on the 14th day of March 2014, I

caused a true and correct copy of the foregoing Receivers Second Motion For Interim Approval

of Fees and Expenses to be served through the Courts Electronic Case Filing System on the

following:

Kimball Richard [email protected]

Thomas Lee Kirsch, [email protected]

Katherine E. [email protected]

Michael [email protected]

Jonathan [email protected]

Amanda B. [email protected]

David [email protected]

/s/ Blair R. Zanzig



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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS


Plaintiff,

v.

KEVIN TRUDEAU,

Defendant.

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Case No. 03-C-3904


FTCS STATEMENT IN ADVANCE OF THE MARCH 19 STATUS CONFERENCE

I. INTRODUCTIONIn advance of the upcoming status conference, the FTC raises certain issues regarding the

interview with Trudeau on February 4. Put bluntly, when the FTC and Receiver interviewed

Trudeau (at his counsels insistence), he was no more candid about his assets than he has been

over the past decade. His unrelenting dishonestly underscores the need to continue coercive

incarceration before he begins serving his criminal sentence.

II. THE FEBRUARY 4 INTERVIEWDuring the February 4 interview, Trudeau made numerous demonstrably false statements,

several of which highlight the likelihood that he continues to control significant wealth offshore.

Among other things:

Trudeau represented that his net profits from the Coral Calcium infomercialcampaign were probably zero. PXA 5. However, in 2004, a prominentChicago accounting firm (Kroll) calculated Trudeaus net profit asapproximately $23 million (including money that went to entities Trudeau

controlled).1

To the FTCs knowledge, neither Kroll nor anyone else was ableto determine where this money went.2

1 Under the Courts Receivership Order, this financial document is Receivership property.See DE742 (Aug. 7, 2013) at 5(3) and XIII(4) (giving the Receiver control over Trudeausfinancial records and other documents). The FTC has a copy, but understands that the Receiveris analyzing it and will make it available to the Court if requested.

2 During the interview, Trudeau denied that his general financial condition deteriorated at



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2

Trudeau stated that K.T. Corporation (the Isle of Man-based holding companythat indirectly owns many Trudeau entities)

3cannot provide the Receiver with

account statements because it never had any bank accounts. PXA 7.However, in 2004, Trudeau testified that K.T. Corporation had accounts withAnglo-Irish Bank and Citibank. PXA:1 at 67:12-69:10.

With respect to Marc Lanes critical 2007 Asset Protection Planning emailin which he credits the offshore structure for the relatively favorablesettlement to which the FTC previously agreed, PXA:2, Trudeau denied anyknowledge regarding what offshore structure Lane meant. PXA 8. This isinconsistent with the substantial evidence the FTC presented regardingTrudeaus role in his asset protection efforts.

To provide one additional illustration, Trudeau gave a third, entirely new storyregarding the missing gold bars and coins. This time, Trudeau stated that hiswife, then an NYU graduate film student, sold the gold periodically to coverstudent filmmaking expenses. See PXA 9. Putting aside why Trudeaufailed to offer this particular story until last month, if this story were true,

there should be quite a bit of evidence bolstering it, including, among otherthings, evidence of large periodic deposits in his wifes accounts, and recordsof tens of thousands of dollars spent on (implausibly expensive) student filmproduction. To the FTCs knowledge, no such records exist.

Again, these are only selected examples of dubious or false representations made during the

February 4 interview.

III. CONCLUSIONRequiring Trudeau to disclose (and turn over) his assets fully before he begins his

criminal sentence is consumers best hope for substantial relief. Because, once again, Trudeau

has been dishonest, the FTC asks the Court to continue the status quo until Trudeau either

complies fully or establishes to the Courts satisfaction that he will never comply. Indeed, taking

pressure off (without legal justification) just as it builds is not in consumers interests.

all from 2003 (following the Kroll report) through 2007 (the earliest time when the FTC is awarethat any records exist). PXA 6. Trudeau also denied any significant expenses during thatperiod, such as the acquisition of a company or other expenditure that might explain where the$23 million went. See id.

3SeePXA:3. K.T. Corporation sits atop much of Trudeaus asset protection regime, one

level below the KMT Fiduciary Trust itself. See id. (showing that, prior to the Receivership,K.T. Corporation was wholly owned by the asset protection trust, and that K.T. Corporationdirectly or indirectly owned twelve other entities).



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Dated: March 14, 2014

David OToole ([email protected])Federal Trade Commission55 West Monroe Street, Suite 1825Chicago, Illinois 60603-5001Phone: (312) 960-5601

Fax: (312) 960-5600

Respectfully Submitted,

/s/ Jonathan CohenMichael Mora ([email protected])Jonathan Cohen ([email protected])Amanda B. Kostner ([email protected])Federal Trade Commission

600 Pennsylvania Ave., N.W. M-8102BWashington, DC 20580Phone: 202-326-3373; -2551; -2880Fax: 202-326-2551



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CERTIFICATE OF SERVICE

I, Jonathan Cohen, hereby certify that on March 14, 2014, I caused to beserved true copies of the foregoing by electronic means, by filing such documents through theCourts Electronic Case Filing System, which will send notification of such filing to:

Kimball Richard [email protected]

Thomas Lee Kirsch, [email protected]

Katherine E. [email protected]

Blair R. [email protected]

/s/ Jonathan CohenJonathan Cohen ([email protected])Attorney for PlaintiffFederal Trade Commission



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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS


Plaintiff,

v.

KEVIN TRUDEAU,

Defendant.

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Case No. 03-C-3904


EXHIBITS RELATED TO FTCS STATEMENT IN ADVANCE OF THE MARCH 19

STATUS CONFERENCE

Case: 1:03-cv-03904 Document #: 839-1 Filed: 03/14/14 Page 1 of 20 PageID #:15451


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FTC

EXHIBIT A



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FTC PXA:1



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22/34PXA:1



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FTC PXA:2



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PXA:2Case: 1:03-cv-03904 Document #: 839-1 Filed: 03/14/14 Page 13 of 20 PageID #:15463


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PXA:2Case: 1:03-cv-03904 Document #: 839-1 Filed: 03/14/14 Page 14 of 20 PageID #:15464


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FTC PXA:3



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