UPDATE - 11/29/2011

On November 28, 2011, the Receiver and the Examiner filed a Joint Status Report updating the status of the ABC Receivership. A copy of the Report is attached at this link.

NOTICE

The new contact information for Tom Tong is as follows:

通知
童律师(TOM TONG)的最新联系方式如下
地址 :Locke Lord Bissell & Liddell LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
电话 : 214-740-8429 Direct
传真 : 713-229-2508 Fax
电邮:ttong@lockelord.com

UPDATE - 3/23/2011

The Order approving the interim distribution has been entered. A copy of the Order is attached at this link. At this time, the timing of the mailing of checks is unclear both based on the need for certain certificates of deposit to mature and the logistics of issuing the checks. We will update this important issue as soon as these issues become more definite.

UPDATE - 1/12/2011

The Receiver has filed an updated report on the status of the ABC receivership and a motion to request authority to make an interim distribution. A copy of the motion is attached at this link. As well, an updated financial statement on the ABC receivership was attached to the filing (Ex. 1) and is available at this link. Finally, a list of approved claims and proposed distribution amount was attached to the motion (Ex. 2) and is available at this link.

Please review the motion and the attachments for an update on the status of this matter and the proposed distribution of money on hand.

UPDATE - 5/28/10

The Receiver has filed a Tenth Motion to Allow "A" Claims. See Claims Information below.

UPDATE - 03/02/2010

Claims against Jason Sun
Despite the concern by the Receiver that suit against Jason Sun would not be a cost-effective use of the Receivership's assets; the Receiver did file a motion to disgorge commissions against Mr. Sun at the request of a number of Taiwanese investors. Mr. Sun has stated on numerous occasions that his financial condition is such that the Receiver should not pursue the case. Mr. Sun has provided a sworn financial statement of his assets and liabilities which includes only some residential real estate in Northern Virginia which has a large amount of secured debt attached to it which would be paid off prior to any recovery by the Receivership. The Receiver will continue to pursue his claims against Mr. Sun and update the Examiner about the prospects of recovery.

Some investors continue to inquire about criminal claims against Mr. Sun. As stated previously, the Receiver is only empowered to bring civil claims. Any criminal action will have to be taken by the government authorities and does not appear likely to happen. Some investors have also indicated that they would individually like to bring claims against Mr. Sun. Such actions are not either encouraged or discouraged by the Receiver and each investor will need to seek legal counsel and decide for themselves.

Claims Process
At present, 4,061 claims have been filed with the Receiver. 3,252 claims have been submitted and approved by the court. The total amount of approved claims at present is $95,373,906.20. The Receiver has in the last week submitted 588 additional claims for approval which total $19,435,819.30. Currently, there are 157 identifiable claims which have not been submitted to the Receiver, 51 of those claims are from investors in Taiwan. The principal reason these Taiwanese claims have not been filed and resolved is because the Receiver's contact information for the investors is invalid. Operatives in Taiwan are attempting to contact each of the claimants to determine whether the claim amounts can be agreed upon. The name, claim number and address of the Taiwanese claims that are still open are attached at this link. Any investor who recognizes their name or claim number should contact the Receiver immediately by email at stomasky@qsclpc.com to discuss resolution of their claim.

The Receiver needs to resolve these un-submitted claims before any consideration can be given to a distribution and despite extended efforts by the Receiver to resolve them; they remain open and thus a barrier to a distribution. The Receiver is considering a motion to the Court to approve a claim bar date, after which, any claim submitted would be considered untimely and subordinate to all timely-submitted claims.

Additionally, there are 14 claims on which the Receiver will file objections with the Court for a variety of reasons. These objections must also be resolved prior to a distribution being accomplished.

Legal Claims
The Receiver is continuing to pursue his claim against Mr. Erwin, the former Trustee of ABC. Mr. Erwin previously filed Motions to Join Third Parties, Jason Sun and DMH Stallard and Kit Stenning (collectively "DMH Stallard "). The court denied the motion to bring in Jason Sun, but granted the motion to bring DMH Stallard into the suit. Currently, DMH Stallard has a motion to dismiss based on the court's lack of jurisdiction over DMH Stallard, among other things. These ancillary issues continue to delay the ability to get a discovery schedule for the case and a trial setting to prosecute the Receiver's claims. As this is a major claim for value to be returned to the Receivership, the Receiver has every intention of continuing to pursue collection of all amounts due by Mr. Erwin.

The Receiver also continues to pursue the Receivership's claims against Albatross and others related to the procuring of the Albatross bonds. These efforts are primarily being pursued in England and Italy and require many unique procedural steps under English and Italian Law. These too are significant claims for the Receivership and will be pursued by the Receiver.

Unliquidated Assets
In addition to the law suits to be resolved, the Receiver still owns an interest in a condo in Ft. Lauderdale, Florida and a house in Orlando, Florida. The market for sales of real estate in Florida continues to be weak and the Receiver is working to obtain the best offers he can for sale of the real estate and for the benefit of the Receivership, but this process could still take many more months.

Distribution / Interim Distribution
Many investors continue to inquire about the prospects of a distribution. As stated previously, any distribution has to be approved by the Court. Also, as explained before, the Receiver must know the full amount of approved claims in the Receivership before he can make a distribution. This can be substantially established if the Judge approves a claim bar date which likely will be proposed to the Court very soon.

Another consideration that continues to be evaluated is the cost of an interim distribution. In this case over 4000 checks have to be prepared and mailed, with many going to international investors that could be very difficult to reach. Given the expense/seriousness of the litigation along with the expense of an interim distribution, the Receiver is still considering whether an interim distribution is in the best interest of the Receivership.

UPDATE – 12/15/2009

Claims against Jason Sun
Over the course of the last year, many investors have requested that the Receiver file claims for repayment of commissions against a large broker who sold ABC investments in Taiwan. The Receiver has been concerned about such a measure being cost effective, but has filed suit against Mr. Sun. The belief at the time of filing is that Mr. Sun benefited to the tune of about three million dollars. Mr. Sun has been served, has hired counsel and counsel has indicated that although Mr. Sun does not feel that he is liable to the Receiver, his financial condition is such that the Receiver should not pursue the case. The Receiver has asked Mr. Sun to provide a sworn financial statement of his assets and liabilities so that he can evaluate Mr. Sun's claim and decide on whether to continue the litigation or reach a settlement.

Some investors have repeatedly asked the Receiver to bring criminal claims against Mr. Sun. The Receiver is only empowered to bring civil claims. Any criminal action will have to be taken by the government authorities.

Some investors have indicated that they would individually like to bring claims against Mr. Sun. Such actions are neither encouraged or discouraged by the Receiver and each investor will need to seek legal counsel and decide for themselves.

Claims Process
At present, 4,046 claims have been filed with the Receiver. 3,252 claims have been submitted and approved by the court. The total amount of approved claims at present is $95,373,906.20. There are 123 claims left to be resolved. The Receiver's office has been attempting to contact each of the remaining claimants to determine whether the claim amounts can be agreed upon. In the event these claims are not resolved within the next couple of weeks, the Receiver intends to file a motion with the court to approve the claims at the amount that the Receiver believes is an appropriate amount. These claims must be approved before any consideration can be given to a distribution. Despite extended efforts by the Receiver to resolve them; they remain open and thus a barrier to a distribution.

The name, claim number and address of the claims that are still open are attached at this link. Any investor who recognizes their name or claim number should contact the Receiver's office immediately by sending an email to Leslie Finn at lfinn@qsclpc.com to discuss resolution of their claim.

Legal Claims
The Receiver is continuing to pursue his claim against Mr. Erwin, the former Trustee of ABC. Mr. Erwin has filed Motions to Join Third Parties and these motions have not been ruled on. This is delaying the ability to get a schedule for the case and a trial setting. As these are major claims for value to be returned to the Receivership, the Receiver has every intention of continuing to pursue collection of all amounts due.

The Receiver continues to pursue the estate's claims against Albatross and others related to the procuring of the Albatross bonds. These too are significant claims for the Receivership and will be pursued by the Receiver.

Unliquidated Assets
In addition to the law suits to be resolved, the Receiver still owns an interest in a condo in Ft. Lauderdale, Florida and a house in Orlando, Florida. This real estate was previously owned by Mr. La Monda. The market for sales of real estate in Florida is weak and the Receiver is working to obtain the best offers he can for sale of the real estate and for the benefit of the Receivership.

Distribution / Interim Distribution
Many investors continue to inquire regarding a distribution. First, any distribution has to be approved by the Court. Also, as explained before, the Receiver must know the full amount of approved claims in the proceeding before he can make a distribution. He must know the total against which the amount paid will be divided. As indicated, he is near the end of that process and has agreed to file motions to resolve the remaining claims in the event the investors are not contacted or do not come forth to resolve the claims.

As well, the Receiver usually wants to have all claims liquidated so that one distribution can be made. Distributions are expensive. In this case over 4,000 checks have to be prepared and mailed. Given the seriousness of the litigation and the inability to sell the real estate, the Receiver is considering making an interim distribution of some of the Receivership's cash once all of the claims are resolved. He is hopeful that an interim distribution can seriously be considered and presented to the Court in the first quarter of 2010.

UPDATE – 10/8/09

The Receiver has been proceeding consistent with the overall strategy outlined in our last update. He is continuing to pursue legal claims, complete the investor claims process, determine a final percentage to be paid to investors, and evaluate when best to make a distribution of funds to investors. Some more detail on each of these follows.

Legal Claims
The Receiver is continuing to pursue his claim against Mr. Erwin, the former Trustee of ABC. Mr. Erwin has filed Motions to Join Third Parties that have not been ruled on and which are delaying the ability to get a schedule for the case and a trial setting. The Receiver has asked the Court for a Scheduling Conference to assist in defining the remaining time to a resolution.

The Receiver continues to consider the estate's claims against Albatross and others related to the procuring of the Albatross bonds. He expects a decision in association with London counsel this month.

The Receiver has also initiated an action against Jason Sun. The Receiver is currently in communication with Mr. Sun, and the parties are discussing whether it will be possible to reach an agreed resolution of this claim.

Claims Process
At this point, there are 4,037 claims submitted by aggrieved parties. Of these claims, 3,755 have been reviewed and adjusted, and less than 282 now remain. The remaining claims have proved more difficult to resolve than the Receiver anticipated. These claims are largely held by persons in Taiwan, and so the communications necessary to resolve these claims is requiring more time. The Receiver is not certain as to how long it will take to resolve all of these claims, but is currently estimating another 60-90 days. We will provide a further update on this as that time approaches.

Interim Distribution of Money Held
It will be very expensive to process any distribution in this proceeding, including an estimated interim distribution. Thus, the Receiver would prefer to make only one distribution if it appears that the Legal Claims will be resolved within a reasonable time. If it appears that the litigation will be protracted, he will more seriously consider making an interim distribution in the first quarter of next year.

UPDATE - 6/22/2009

The Receiver has been proceeding consistent with the overall strategy outlined in our last update. He is continuing to pursue legal claims, complete the investor claims process, determine a final percentage to be paid to investors, and seek to make a distribution of funds to investors.

The Receiver is continuing to pursue his claim against Mr. Erwin. Currently, trial is set for early 2010. Discovery remains ongoing in the case. The Receiver is also continuing work to bring claims against Albatross and/or related parties.

The Receiver has revised his projection for the completion of the claims process. Thousands of claims have been reviewed and adjusted, and less than 500 now remain. The Receiver anticipates, however, another 60-90 days to complete his review of these claims.

At this point, it appears likely that the claims process will be concluded before the litigation claims are resolved. If so, then the Receiver and Examiner will confer to determine whether to propose an interim distribution, or whether it makes more sense to wait until the litigation claims are likewise resolved.

UPDATE - 2/5/2009

The Receiver has been continuing to pursue legal claims, complete the investor claims process, determine a final percentage to be paid to investors, and seek to make a distribution of funds to investors. As previously reported, the completion of the legal claims may take a significant amount of time, but the Receiver is aware of the need to balance between pursuing every possible claim, and making a distribution. The Receiver is only pursuing those claims that he believes will increase the amount of the distribution to investors.

With respect to the Receiver's claim against IFS, the Receiver ultimately recovered over $3.1 million. That claim is now closed.

The Receiver has settled his claim against Mr. Kaplan, and presented a motion seeking approval of the settlement to the Court. The settlement was conditioned upon the accuracy of certain financial information that Mr. Kaplan provided. In the settlement agreement, Mr. Kaplan agrees to pay $160,000 in cash, and to enter into a note to pay an additional $20,000.

The Receiver's claim against Mr. Erwin remains open. However, the Court has denied Mr. Erwin's motion to dismiss, and so discovery is now proceeding.

The Receiver is also moving forward on potential claims, particularly with respect to Albatross and related parties.

The Receiver currently projects that the claims process will continue until the early summer. If you are aware of any investors who have not yet made claims, we would appreciate very much if you would so advise us.

UPDATE 11/21/08 (Clarification)

The website update immediately below indicates that Mr. Diaz ultimately agreed to allow the sale to SGI to close. Mr. Diaz has since advised that he is concerned that some may misunderstand this statement as indicating that he generally agreed to the sale to SGI, which the Examiner agrees that he never did. To the contrary, he wanted the Receiver to extend the lines of credit and to maintain the policies. In fact, he himself had obtained the stay of the sale in order to allow for continued negotiations between the Receiver and an interested fund manager, which appeared to Mr. Diaz to have been fruitful and which he hoped would result in a restructuring of the portfolio after all. When those negotiations fell through, however, there was no legal basis upon which the stay could remain in effect, and so it was only at that point that Mr. Diaz agreed to allow the stay to be dissolved.

UPDATE - 11/21/2008

The sale closed on November 14, 2008. After the sale was approved on October 8, the parties from Taiwan who had appeared at the hearing presented no further objections to the sale. But, for a number of weeks following the Court's approval order, Mr. Diaz, a broker from Puerto Rico, sought to overturn the decision. First, he asked for a review by a second judge. In response to Mr. Diaz's request, Judge Solis reviewed the determination of Judge Ramirez. Judge Solis issued his own opinion, explaining that he also concluded that the sale was in the best interest of the investors. Second, Mr. Diaz asked for a last opportunity to see if a higher or better offer would by made by Highland Capital. Judge Solis granted more time. Highland Capital decided, however, not to make a higher offer. Unable to find a better buyer, Mr. Diaz ultimately agreed to allow the sale to close. (For more information about these proceedings, please review the Documents section of this site.)

Although the Court ultimately approved the sale, two separate judges carefully considered all of the objections to the sale raised by investors. These objections were considered first by Magistrate Ramirez and then, on review, by Judge Solis. Both decided that a sale was in the best interest of the investors. The SEC thought the same.

As it happened, just after the sale price was fixed, the financial markets collapsed. The price currently looks very good compared to the alternative of attempting to borrow money when banks are simply not lending. A total loss of the portfolio might well have occurred otherwise.

The Receiver will now work to complete his efforts. He will pursue legal claims, complete the investor claims process, determine a final percentage to be paid to investors, and seek to make a distribution of funds to investors.

The completion of the legal claims may take a significant amount of time, but the Receiver is aware of the need to balance between pursuing every possible claim, and making a distribution. The Receiver is only pursuing those claims that he believes will increase the amount of the distribution to investors.

The claims process is ongoing, and the Receiver has now sent a claim form to every address that was contained in the ABC files. If you know anyone who has not received a claim form, please let us know right away. The Receiver has been approving claims regularly for payment, and once the case is over, anyone who has not filed a claim form, will not receive a share of the distribution. The Receiver wants very much for every investor to receive a share, and so we very much appreciate any assistance in ensuring that every investor who wishes to make a claim is able to do so.

The amount of the distribution and the percentage paid will not be known until the claim process is over and the legal claims are resolved. Presently, it is anticipated that there will be a loss of over eighty percent. Although this is a very large loss, it is much better than losing everything, which is what would likely have happened if either the Receiver had not been appointed, or if a sale had not taken place when it did.

SALE HEARING UPDATE - 09/16/2008

As previously reported, the Receiver's Motion to Sell All Insurance Policies is set for an evidentiary hearing on September 23-24, 2008, at 9:00 a.m. before U.S. Magistrate Judge Ramirez.

The SEC has now filed a response in support of the Receiver's Motion. Click here for a copy.

Because of the potential number of persons who have expressed an interest in the hearing, the hearing is being moved to a larger courtroom, specifically Room 1525, which is normally Judge Fitzwater's courtroom.

SALE HEARING UPDATE - 09/15/2008

As previously reported, the Receiver's Motion to Sell All Insurance Policies is set for an evidentiary hearing on September 23-24, 2008, at 9:00 a.m. in Courtroom 1566 before U.S. Magistrate Judge Ramirez. A number of questions have arisen as to the hearing, to which the following responds.

The hearing will commence with a final round of bidding. This will occur in such a way as to allow bidding by any interested party who can demonstrate to the Receiver a capacity to pay at least $50 million from liquid funds. After the bidding, there will be an evidentiary presentation. The Receiver will be seeking to show, if appropriate, that the resulting sale agreement is fair, reasonable, and in the best interest of the receivership estate.

A specific agenda for the proceedings is not available. However, the Receiver will proceed on the basis set forth in his Motion, a copy of which is available below. The Receiver will likely present witnesses and evidence in support of his Motion.

The Examiner also expects to comment on the proposed sale. The Examiner has received comments from investors favoring and opposing a sale. Click here for a copy of a Report from the Examiner that is being filed, which provides a summary of the responses received, the Examiner's own analysis, and objections that remain unresolved. For those investors who cannot appear in person, the Examiner will make an effort to present their views for the Court to consider. If you have additional objections that are not set forth in this Report, please contact us, and we will endeavor to present any additional points.

The Examiner will recommend to the Court that any interested investors who appear should be given an opportunity to be heard.  There are limits, however, on the amount of time available, and it is expected that some limits will be placed on the length of time that any particular investor is allowed to speak or to present evidence.  Preparing written questions or statements in advance is recommended.  If there are any witnesses or documentary evidence that you wish to present, it is recommended that advance notice be provided to the Examiner of your intention to do so, and of the time that you believe will be necessary to present the evidenced.

A number of investors from Taiwan have indicated an interest in attending the hearing.  Accordingly, arrangements have been made for simultaneous translation of the proceedings into Chinese.  Anyone needing a Spanish translator should contact us immediately, as presently there are no plans to have a Spanish translator available.

Ultimately, the Court is the one conducting the hearing, and the one making the final decision in this matter.  The hearing will therefore proceed according to the rules and procedures of the Federal Courts of the United States, taking into consideration that the Court is acting in equity.

The hearing will be a public hearing, and so open to anyone who chooses to attend.  No particular form of identification is necessary to gain entrance to the courtroom; a passport or domestic identification will be fine.

Recordings are not allowed.  The federal court will have a court reporter present, who will make a record of the entire proceeding.  The federal courts do not otherwise allow recording equipment in the courtroom.

Following a hearing, the Examiner intends to provide a further report.

IMPORTANT NOTICE - 08/12/2008

On July 30, 2008, the Court entered an Order setting the Receiver's Motion to Sell All Insurance Policies for an evidentiary hearing on September 23-24, 2008, at 9:00 a.m. in Courtroom 1566 before U.S. Magistrate Judge Ramirez. The Receiver anticipates that the Court will oversee the second round of auction bidding for those policies at that time and approve the final sale.

Interested parties may view a copy of the Receiver's Motion to Sell All Insurance Policies, a list of those policies (Exhibit 1), and and the proposed Purchase and Sale Agreement (Exhibit 2). Through this motion, the Receiver asks the Court (1) to set a hearing date to oversee the second round of bidding by auction and (2) to approve the final sale price at the conclusion of that auction.

Over the last several weeks, numerous Taiwanese investors have sent e-mails to the Receiver and Examiner inquiring about the procedures for this sale. In an effort to respond to those questions, the Receiver has prepared a page answering the Frequently Asked Questions about those procedures.

On August 6, 2008, the Receiver also sent a letter to all known investors explaining the procedures for this sale.

UPDATE - 7/09/2008

The Receiver has recently issued responses to frequently asked questions about the proposed sale of the portfolio. Click here to review.

UPDATE - 6/27/2008

In light of the fact that we are receiving the same questions from many investors, we are in the process of posting these questions and our responses on the website. As such, we will not repetitively respond to each inquirer.

Update on Sale of Policies

As you may know from the pleadings posted on this site, the Receiver received Court permission to establish a secure website for access to key portfolio documents for interested buyers. Buyers were to submit sealed bids to the Receiver on or before April 30, 2008. The Receiver asked for bids on various groupings of the policies and on the portfolio as a whole.

The plan of the Receiver was to get bids and if a high enough bid was offered, to submit that to the Court for approval. If submitted, all other interested bidders will be invited to the Court house for an auction to occur in the Court house with the expectation that those who did not have the highest bid would over-bid the offer.

The bids have come in and the highest bid was $27,100,000. Although this amount is very disappointing, the Receiver and Examiner have met and given substantial consideration to this bid by virtue of the auction, the likelihood of the bid increasing, the continuing high cost of the premiums for these policies (about a million dollars a month) and alternatives to selling the portfolio.

The alternative that has seriously been considered is whether there are some policies that can be abandoned to save costs, some sold and some held with the hope of maturity. The Receiver would only consider abandoning a policy or policies in the event the premiums are high and the life expectance is long. For instance, one policy is a $2,500,000 policy and the premiums are about 880,000 a year. A plan to abandon some, hold some and sell some has been analyzed and it was determined that it did not present a reasonable chance of a greater return than a sale of the portfolio now.

The Receiver has also been informed by at least two parties that they intend to come to the auction and over bid the high bid.

Accordingly, the Receiver is in the process of signing a contract with the high bidder and preparing the necessary motion papers for the Court to obtain approval to sell the portfolio to the highest bidder at the auction.

There are several things you should know.
First, THESE MOTIONS DO NOT ADDRESS ALL OF THE CLAIMS. Of the thousands and thousands we have received, these are the claims that have been reviewed as of May 1, 2008, and on which the Receiver and the claimant agree. These are being submitted to the court for approval. Once they are approved, the claimant will receive notice from the Receiver that the claim has been approved by the court.

Second, if your claim number and name are not on the lists attached to these motions, that just means that at this time your claim has not been reviewed or there is some issue that the Receiver needs to address with you. IT DOES NOT MEAN THAT YOUR CLAIM HAS BEEN REJECTED. The Receiver will contact you; you do not need to contact the Receiver or the Examiner.

Third, payment of claims will not begin until all claims have been resolved. It is impossible for the Receiver to know how much to pay each claimant until all of the claims have been approved by the Court.

This is a significant step towards completing the claims process. Each month, the Receiver will file a similar motion with the additional claims that he seeks to have approved.

UPDATES

• February 8, 2010
• December 15, 2009
• October 8, 2009
• March 15, 2008
• January 2, 2008
• November 14, 2007
• October 17, 2007
• October 1, 2007
• September 4, 2007
• July 19, 2007
• July 18, 2007
• June 14, 2007
• April 12, 2007
• February 8, 2007
• December 19, 2006
• December 6, 2006
• December 5, 2006

QUESTIONS FROM INVESTORS

The Examiner frequently gets questions from investors regarding various issues and on going operations of the Receivership. The questions, as stated, along with the Examiner's answers are accessible by this link and will be updated by adding the new questions and answers as a newly numbered addition at the end of the existing list.