UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

Transcription

1 Case :-cv-00-ljo-jlt Document Filed // Page of 0 DAVID R. ZARO (BAR NO. ) JOSHUA A. DEL CASTILLO (BAR NO. 0) PETER A. GRIFFIN (BAR NO. 0) ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP South Figueroa Street, Suite 00 Los Angeles, California 00- Phone: () - Fax: () - dzaro@allenmatkins.com jdelcastillo@allenmatkins.com pgriffin@allenmatkins.com Attorneys for Receiver DAVID P. STAPLETON SECURITIES AND EXCHANGE COMMISSION, v. Plaintiff, BIC REAL ESTATE DEVELOPMENT CORPORATION and DANIEL R. NASE, individually and d/b/a BAKERSFIELD INVESTMENT CLUB, Defendants, BIC SOLO 0K TRUST and MARGARITA NASE, UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA Relief Defendants. Case No. :-cv-00-ljo-jlt RECEIVER'S REPLY TO OPPOSITION OF SAGAR LLC TO MOTION FOR ORDER: () ESTABLISHING SUMMARY CLAIMS PROCEDURES; () SETTING CLAIMS BAR DATE; AND () APPROVING PROPOSED CLAIM FORM Date: December, Time: :0 a.m. Ctrm: Judge: Hon. Lawrence J. O'Neill TO ALL PARTIES, THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT David P. Stapleton (the "Receiver"), the Court-appointed permanent Receiver for Defendant BIC Real Estate Development Corporation and its subsidiaries and affiliates, including but not limited to WM Petroleum; Target Oil & Gas Drilling, Inc.; Tier Solar Power Company; Tier 0.0/LA

2 Case :-cv-00-ljo-jlt Document Filed // Page of 0 Solar Power Company, LLC; and Home Sweet Holdings (collectively, the "Receivership Entities" or "Entities"), hereby submits his Reply to the Opposition (the "Opposition") of Sagar LLC ("Sagar") to his pending Motion for Order: () Establishing Summary Claims Procedures; () Setting Claims Bar Date; and () Approving Proposed Claim Form (the "Receiver's "Motion"), as follows: I. ARGUMENT. A. Sagar's Opposition Is Premature And Unwarranted. As previously established, Sagar is an investor in the Receivership Entities, whose investment took the form of a $,00 payment in connection with the purchase of a putative % interest in the Entities' oil company assets. As with Sagar's prior, failed motion to intervene in the above-entitled action [see, e.g., Dkt. Nos., 0,,, ], its Opposition reflects an attempt to obtain unique treatment, ahead of other investors in and claimants against the Receivership Entities. Yet the Opposition presents arguments that Sagar itself admits are premature (and may be inapplicable), and is premised, not on legal authority, but on rhetorical questions and unsubstantiated accusations that could have easily been addressed had Sagar or its counsel reached out to the Receiver or his counsel prior to filing the Opposition, something which they failed to do. As such, the Receiver agrees with Sagar's own admissions: The "concerns voiced" in Sagar's Opposition are "premature" and "may be cured by subsequent filings of the Receiver." (See Opposition at :-.) Put simply, Sagar's Opposition reflects an anticipatory challenge to the Receiver's treatment of Sagar's forthcoming claim, submitted before any claims process has been approved, before any claims (including Sagar's) have been received and reviewed, before the Receiver has developed and recommended treatment for each claim, and most importantly before the Court has had an opportunity to review the Receiver's recommendations and determine whether or not 0.0/LA --

3 Case :-cv-00-ljo-jlt Document Filed // Page of 0 they should be adopted and authorized. The Opposition is therefore the very definition of premature, and provides no basis for denying the Receiver's Motion. B. Sagar's Challenges To The Receiver's Proposed Claims Process Are Misplaced And Unsupported. At its core, Sagar's Opposition rests on three complaints: () the Receiver's recommendations to the Court regarding the treatment of claims will be dispositive; () the Receiver's claims process does not commit to treat Sagar's claim in the manner preferred by Sagar; and () the fact that the Receiver may recommend that certain classes of claims be subordinated to investor claims means that Sagar will be treated unfairly. None of these complaints has merit. First, as is clearly reflected in the Receiver's Motion, once he has completed his review and processing of all timely submitted claims against the Receivership Entities and developed a recommended treatment for each claim, the Receiver will file an omnibus motion with the Court presenting those recommendations for Court review and approval [see, e.g., Dkt. No. (proposed summary claims procedures will include submission of recommended treatment of claims to the Court, as well as an opportunity for claimants to oppose and be heard, including via special briefing, if so requested by the Court)]. As is also clearly reflected in the Receiver's Motion, the Receiver's recommendations will be just that recommendations and it is the Court, not the Receiver, that will ultimately determine how each claim against the Receivership Entities is treated. Second, Sagar's Opposition suggests that it believes it is entitled to direct the manner in which its claim is evaluated, before the claim has even been submitted. Specifically, just as it did when it sought to intervene, Sagar demands that the Sagar's suggestion that the Receiver's recommendations will be made "without any logical or legal basis" is likewise nonsense. Well-defined legal standards apply to evaluating claims in federal receivership matters, and will be presented in the Receiver's omnibus motion, assuming the proposed summary claims procedures are approved and the Receiver is permitted to proceed with soliciting and reviewing claims against the Receivership Entities. 0.0/LA --

4 Case :-cv-00-ljo-jlt Document Filed // Page of 0 Receiver set aside % of any proceeds resulting from the Receivership Entities' oil company assets to satisfy its anticipated claim. (See Opposition at :-:.) Even if Sagar's claim were subject to payment in this manner, the time to address that issue is when the Receiver actually presents his recommendations regarding claims treatment (not months before claims have been submitted, let alone reviewed and processed). Moreover, in denying Sagar's motion to intervene, the Court specifically advised Sagar that it had failed to demonstrate that the Receiver did not adequately represent its interests, further admonishing Sagar that the Court would "address Sagar's concerns through the Receiver's forthcoming claims process." (See Dkt. No. at :-: and :-.) Nothing has changed since then. The Receiver may yet determine that the treatment urged by Sagar for its claim is appropriate, but that determination has not yet been made. The Court should therefore allow the claims process to proceed and address Sagar's claim in the context of evaluating the Receiver's recommended treatment of claims, as it previously indicated it would do. To do otherwise would be to delay the administration of other claimants' claims in order to grant Sagar unilateral relief that it has already once been denied. Third, Sagar's suggestion that the potential subordination of certain classes of claims is grounds for denying the Motion is likewise misplaced. In the receivership context, receivers occasionally determine that the claims of certain claimants should be subordinated to investor claims. For example, a receiver might properly determine that taxing entity claims should be subordinated to investor claims. See, e.g., FTC v. Crittenden, F.Supp., 0 (C.D. Cal. ) (receivership funds held in constructive trust distributed to former customers regardless of effect on IRS claims); FTC v. Ameridebt, Inc., F.Supp.d,, (D. Md. 0) (under the doctrine of constructive trust, "even if the IRS ha[d] placed liens on Defendants' assets, those liens would not attach to property that was wrongfully obtained from consumers"); SEC v. Private Equity Mgmt. Group, Inc., U.S. Dist. LEXIS 0.0/LA --

5 Case :-cv-00-ljo-jlt Document Filed // Page of 0, *- (C.D. Cal. September, ) ("Furthermore, the Court concludes that considerations of expedience and of preserving Receivership funds for distribution to the defrauded investors favor" treating a receivership res as held in constructive trust for investors). In other words, subordination of claims is appropriate in certain cases, and perfectly in keeping with the equitable principles of a receivership. As such, the fact that the Receiver may recommend the subordination of certain claims to investor claims, is not a basis for denying the Receiver's Motion and undermining a process intended to benefit all defrauded investors, not merely Sagar. II. CONCLUSION. For the foregoing reasons, the Receiver respectfully submits that Sagar's Opposition is not grounds for denying the Receiver's Motion, and requests that the Motion be granted, as submitted. Dated: November, 0.0/LA -- ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP DAVID R. ZARO JOSHUA A. DEL CASTILLO PETER A. GRIFFIN By: /s/ Joshua A. del Castillo JOSHUA A. DEL CASTILLO Attorneys for Receiver DAVID P. STAPLETON

6 Case :-cv-00-ljo-jlt Document Filed // Page of 0 PROOF OF SERVICE Securities and Exchange Commission v. BIC Real Estate Development Corporation and Daniel R. Nase, et al. USDC, Eastern District of California Case No. :-cv-00 (LJO) JLT I am employed in the County of Los Angeles, State of California. I am over the age of and not a party to the within action. My business address is S. Figueroa Street, Suite 00, Los Angeles, California 00-. A true and correct copy of the foregoing document(s) described as: RECEIVER'S REPLY TO OPPOSITION OF SAGAR LLC TO MOTION FOR ORDER: () ESTABLISHING SUMMARY CLAIMS PROCEDURES; () SETTING CLAIMS BAR DATE; AND () APPROVING PROPOSED CLAIM FORM will be served in the manner indicated below:. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ("NEF") the above-described document will be served by the Court via NEF. On November,, I reviewed the CM/ECF Mailing Info For A Case and determined that the following person(s) are on the Electronic Mail Notice List to receive NEF transmission at the address(es) indicated below: John Brian Bulgozdy bulgozdyj@sec.gov,larofiling@sec.gov,berryj@sec.gov James M. Duncan jduncan@kleinlaw.com,kratekin@kleinlaw.com Barry L Goldner BGOLDNER@KLEINLAW.COM,mbrown@kleinlaw.com,shayes@kleinlaw.c om Peter Allen Griffin pgriffin@allenmatkins.com James Robert Harvey jharvey@kleinlaw.com Matthew C. McCartney matt@eastmanmccartney.com Noel Thomas McCartney tom@mccartneylaw.net,lacy@mccartneylaw.net,matt@mccartneylaw.net Matthew Thomas Montgomery montgomerym@sec.gov,larofiling@sec.gov,irwinma@sec.gov David P. Stapleton david@stapletoninc.com Manuel Vazquez vazquezm@sec.gov Scott Vick scott@vicklawgroup.com,april@vicklawgroup.com David Robert Zaro dzaro@allenmatkins.com,mdiaz@allenmatkins.com 000./LA - -

7 Case :-cv-00-ljo-jlt Document Filed // Page of 0 Joshua A. del Castillo jdelcastillo@allenmatkins.com. SERVED BY U.S. MAIL: On November,, I served the person(s) and/or entity(ies) on the attached service list and/or listed below, in this case by placing a true and correct copy thereof in a sealed envelope, U.S. Mail first class addressed as stated on the service list. I am readily familiar with this firm's practice of collection and processing correspondence for mailing. It is deposited with the U.S. postal service on that same day in the ordinary course of business. Franchise Tax Board (FTB) P.O. Box Sacramento, CA - Internal Revenue Service 0 Front Street San Diego, CA - Via U.S. Mail Via U.S. Mail I declare that I am employed in the office of a member of the Bar of this Court at whose direction the service was made. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on November, at Los Angeles, California. /s/ Martha Diaz Martha Diaz 000./LA - -