Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 1 of 27 Page ID #:10124

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1 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 1 of 27 Page ID #: ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP DAVID R. ZARO (BAR NO ) PETER A. GRIFFIN (BAR NO ) 865 South Figueroa Street, Suite 2800 Los Angeles, California Phone: (213) Fax: (213) dzaro@allenmatkins.com pgriffin@allenmatkins.com ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP EDWARD G. FATES (BAR NO ) One America Plaza 600 West Broadway, 27th Floor San Diego, California Phone: (619) Fax: (619) tfates@allenmatkins.com Attorneys for Receiver THOMAS A. SEAMAN UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. EMILIO FRANCISCO; PDC CAPITAL GROUP, LLC; CAFFE PRIMO INTERNATIONAL, INC.; SAL SENIOR LIVING, LP; SAL CARMICHAEL, LP; SAL CITRUS HEIGHTS, LP; SAL KERN CANYON, LP; SAL PHOENIX, LP; SAL WESTGATE, LP; SUMMERPLACE AT SARASOTA, LP; SUMMERPLACE AT CLEARWATER, LP; SUMMERPLACE AT CORRELL PALMS, LP; TRC TUCSON, LP; CLEAR CURRENTS WEST, LP; CAFFE PRIMO MANAGEMENT, LP; CAFFE PRIMO MANAGEMENT 102, LP; CAFFE PRIMO MANAGEMENT 103, LP; CAFFE PRIMO MANAGEMENT 104, LP; CAFFE PRIMO MANAGEMENT 105, LP; CAFFE PRIMO MANAGEMENT 106, LP; CAFFE PRIMO MANAGEMENT 107, LP; and CAFFE PRIMO MANAGEMENT 108, LP, Defendants. Case No. 8:16-cv CJC-DFM RECEIVER'S SEVENTH INTERIM REPORT AND RECOMMENDATIONS Ctrm: Judge: 9B, 9th Floor Hon. Cormac J. Carney LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP /SD

2 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 2 of 27 Page ID #: TABLE OF CONTENTS Page I. REPORT SUMMARY... 1 II. RECEIVER'S ACTIVITIES... 3 A. Real Estate Sales and Restructuring... 3 B. Other Receivership Assets... 4 C. Status of EB-5 Investor Applications... 4 D. Potential Claims Against Third Parties... 5 E. Receivership Accounting - Receipts and Disbursements... 6 F. Investor Communications... 7 G. Receiver's Forensic Accounting... 8 III. RECOMMENDATIONS... 8 A. Document Recovery Efforts... 8 B. Asset Preservation and Sales... 8 C. Accounting... 9 D. Claims and Distribution Process... 9 IV. CONCLUSION... 9 LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP /SD (i)

3 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 3 of 27 Page ID #: I. REPORT SUMMARY Thomas A. Seaman ("Receiver") the Court-appointed permanent receiver for the Defendant entities and their subsidiaries and affiliates (collectively, "Receivership Entities"), hereby submits this Receiver's Report reflecting the work of the Receiver for the period April 1, 2018, through July 31, 2018 ("Report Period"). This Report also provides an accounting of receipts and disbursements for the Report Period. During the Report Period, the Receiver made significant progress monetizing and otherwise disposing of the assets of the Receivership Entities for the benefit of the receivership estate investors and other claimants. The Receiver concurrently established a claims bar date, sought and was granted Court approval of a claims process, and has analyzed and reconciled most non-investor claims. Accordingly, the Receiver will be able to propose a plan of distribution in the coming months as the remaining assets are monetized. More specifically, the Receiver worked to market and sell real and personal property interests, including settlement of the dispute concerning MCC's loan and lien interests in connection with a sale of the Lincoln Red Rock and the Sarasota properties. The Receiver also concluded the sale of the other three Sacramento area properties and concluded at settlement involving a buyout of the Receivership Entities' interest in a partnership that owns an assisted living facility in Rancho Cordova, California. The Receiver also concluded a reorganization of a partnership that owned a vacant medical office building in Phoenix contemplated to be redeveloped into an assisted living community. In addition, sale contracts for the Clearwater, Florida, and Summerfield, Florida properties were executed. These transactions will likely close in the coming quarter. The Receiver also entered into a contract to sell the Lincoln Village property and negotiated a discounted payoff of the underlying secured debt from the anticipated sale proceeds. Due diligence is ongoing and if it is satisfactory, the sale LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP /SD

4 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 4 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP will close by year end The Receiver also reached a settlement with the lender that holds a mortgage on the property in Sun City, Florida, which will dispose of that property. Assets still requiring resolution include Professional Loading Services, an ammunition company and associated real property located in Montana, Tucson TRC, a skilled nursing facility, land located in Stockton and Merced, California, and a parcel of land in Kissimmee, Florida. The Receiver also made progress with his forensic accounting and analysis of the Receivership Entities' financial transactions, including (a) evaluating, developing, and pursuing claims against third parties, and (b) formulating procedures and evaluating investor claims, including filing a motion for approval of a claims process motion and setting a deadline to submit claims, or bar date. The Receiver is in the process of evaluating claims. Investor claim amounts are straightforward; however, certain creditor and other claims may require objections. The Receiver has commenced two related actions against insiders to recover transfers for breach of fiduciary duty, negligence, and aiding and abetting the underlying diversion of funds. He also concluded long-running efforts to obtain compliance with a subpoena by Eric Bronk, the Receivership Entities' former counsel. For the three-month period ending July 31, 2018, the Receiver recovered a total of $5,959,091 and disbursed a total of $1,319,990. As of July 31, 2018, the Receiver was holding cash in the amount of $9,203,056. The recoveries were primarily from sales of real properties and the disbursements were primarily real property expenses and Court-approved professional fees. Further details on receipts and disbursements are provided in Section III.G. below. Based on the following detailed explanation of work, the Receiver recommends the receivership proceed such that the value of remaining assets can be realized, investor claims can be properly verified, and as much money as possible can be returned to investors on account of their losses /SD -2-

5 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 5 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP II /SD -3- RECEIVER'S ACTIVITIES A. Real Estate Sales and Restructuring As noted above, the Receiver has been successful in marketing and selling projects in California, Arizona, and Florida. The sale of real property assets over the past quarter reflect the majority of real estate holdings of the Receivership Entities. Most of the valuable remaining assets are under contract subject to certain due diligence and other closing conditions. Certain of the remaining real estate may be abandoned to secured creditors if viable buyers cannot be located. In addition to these asset sales, the Receiver has attempted to locate new equity and restructure ownership interests such that two projects located in Arizona, could proceed with development and the creation of jobs. With regard to the Arizona properties, the Receiver was successful in concluding a partnership reorganization of the Phoenix project that preserved the EB-5 investors' ability to demonstrate that they have invested in an ongoing project and there is at least the possibility that the requisite jobs will be created. Notwithstanding the foregoing, there are several other impediments to the EB-5 investors receiving permanent U.S. residence. 1 The Receiver has also retained a senior living project broker to identify new partners, or buyers for the Tucson TRC facility. The newly constructed facility commenced operations early in the receivership and continues to operate at a loss. The Receiver is exploring a restructuring of the Tucson partnerships project similar to the restructuring of the Phoenix project partnerships. 1 Aside from the Arizona projects, prospective investors and developers have been unwilling to pay a price that would satisfy or restructure the debt and also retain equity for the investors. In light of the USCIS's rejection of a vast majority of the EB-5 investor applications and petitions, as discussed in the updated status of USCIS applications provided below, it appears that other requirements for permanent residency were not, and likely cannot, be satisfied. Among other things, EB-5 investor money was diverted from most of the subject projects and therefore the investors' total capital invested was not at risk. Again, the Receiver is not abandoning all efforts to develop the projects in a manner consistent with the EB-5 Investors' immigration goals. The Receiver, however, does not wish to create unrealistic expectations among investors in the face of existing USCIS denials, and undercapitalized real estate projects.

6 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 6 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP B. Other Receivership Assets The Receiver took possession of the Beroca yacht that was purchased by the Receivership Entities and located in Mexico. A motion to approve the sale is pending. The Receiver assumed possession of the real property located at 1415 Main Street in Santa Ana. At the time the property was occupied by an unlicensed marijuana dispensary. The city had terminated utility service, not for non-payment, but rather due to the unlawful use of the premises. The Receiver considered an unlawful detainer proceeding and collected rent for a short period of time at a rate of $2,000 per week, typically paid by money orders or cash. The business was then shut down by the City of Santa Ana, who removed the tenant and secured the building, thus eliminating the need for an unlawful detainer action. Numerous building code violations were cited in addition to the illegal operation of the dispensary. The Receiver's agent has met with the City planning department, permit department, and code enforcement, and is undertaking to correct the code violations. The property is encumbered with at least three deeds of trust. The Receiver requested and was granted court approval to abandon the asset. C. Status of EB-5 Investor Applications There are currently 133 EB-5 Investors seeking permanent residency who each invested approximately $500,000 and paid administrative fees between $45,000 and $50,000. In addition, approximately 67 investors each paid $15,000 to retain Marilyn Thomassen to represent them in connection with their USCIS petitions. The $500,000 capital contributions were direct investments by the EB-5 Investors into each project. The Receiver has sent a letter to the investors and posted it on the receivership website ( both discussing the receivership and confirming the investors' need to oversee and administer their personal EB-5 program applications and petitions, which are their individual responsibility /SD -4-

7 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 7 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP The Receiver has met with the counsel and staff of the Law Office of Marilyn Thomassen, who represented and administered some of the EB-5 Investor applications. Based on records maintained by Ms. Thomassen's office, review of correspondence and notices from USCIS, and review of case status updates posted by USCIS on its website, the current status of the EB-5 Investor applications with USCIS is summarized as follows: Approved I I-526 approved then revoked 5 Notice of Intent to Revoke I Pending 4 Request for Evidence 2 Notice of Intent to Deny 21 Denied 96 Status unknown 4 3 Based on the foregoing table, prospects for attaining permanent residency for most of the EB-5 investors appear to be poor. There are only two projects where it appears economically feasible to complete the project. Of those two projects, only one, the TRC Tucson project, has created jobs, although for now it is less than the amount of jobs needed. It should be noted, however, that even if the TRC Tucson or Phoenix projects ultimately operate successfully, there are other significant issues and requirements in pending Notices of Intent to Deny ("NOID") issued by the USCIS, so attaining permanent residency is by no means assured. No applications have been approved and most have been denied or will be denied. D. Potential Claims Against Third Parties As noted elsewhere in this Report, the Receiver has determined that significant funds were diverted to the Principals and other insiders. The Receiver has not yet completed his accounting, nor has he traced all the diverted funds. As this work 2 Six I-526 applications were initially approved by USCIS. Since then, five were revoked and the sixth has received a notice of intent to revoke from USCIS. 3 These EB-5 Investors are represented by law firms other than Marilyn Thomassen /SD -5-

8 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 8 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP continues, the Receiver will make demands for return of diverted funds. If appropriate, the Receiver will seek relief from the Court to recover such funds. The Receiver is also investigating potential claims against certain of the Receivership Entities' professionals. On January 25, 2017, the Receiver filed motions for authority to pursue claims against attorney Marilyn Thomassen and related entities (Dkt. No. 165) and Neil Richardson and his family trust (Dkt. No. 167). These motions were granted on February 26, Dkt. No The Receiver filed his Complaint against Marilyn Thomassen and related entities on March 1, 2018, and filed his Complaint against Neil Richardson and his family trust on March 29, With respect to attorney Eric Bronk, after numerous hearings with Magistrate Judge McCormack, Mr. Bronk was ordered to and did produce thousands of additional documents he had improperly withheld based on claims of attorney-client privilege. This process was completed in April The Receiver, with the assistance of counsel, continues to review and analyze these documents and potential claims. In the meantime, the Receiver and Mr. Bronk have signed an agreement tolling all statutes of limitations and similar time-based defenses. E. Receivership Accounting - Receipts and Disbursements Exhibit A provides a profit and loss statement, balance sheet, and general ledger as well as a Standardized Fund Accounting Report ("SFAR") for the threemonth period ending July 31, As noted above, the Receiver has taken control of numerous bank accounts and funds of the Receivership Entities. For the threemonth period ending July 31, 2018, gross receipts were $5,969,091, comprised of $5,954,529 in proceeds of real property sales and interest income of $14,562. From inception through July 31, 2018, the Receiver has recovered $13,485,777, which is comprised of $205,970 turned over by financial institutions, $3,357,906 in unused proceeds of the hard money loans taken out in December 2016, $8,972,978 for the sale of real property interests, $57,071 from Caffe Primo bank /SD -6-

9 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 9 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP accounts, $43,405 from the sale of Caffe Primo assets, $457,711 from the return of construction bonds, $160,381 in unused legal retainers, escrow account proceeds of $192,765, rental income of $18,500, miscellaneous refunds and receipts of $3,566, and interest income of $15,524. For the three-month period ending July 31, 2018, the Receiver disbursed $1,316,990, comprised primarily of Court-approved professional fees of $811,398, an approved break-up fee of $175,000 in connection with a sale of real property, protective advances of $110,000 for the Tucson TRC project, mortgage interest of $56,833, property taxes of $53,879, with the balance of $113,880 for various other operating expenses and administrative expenses of the receivership estate, as set forth in further detail in Exhibit A. From inception through July 31, 2018, the Receiver made disbursements of $4,282,722, comprised of: real estate operating expenses of $1,805,311, which includes $709,667 for real property taxes; Court-approved professional fees in the amount of $2,173,037; $58,314 for Caffe Primo payroll, operating expenses, and costs to vacate certain leased premises; and $246,060 spent on operations as set forth in further detail in Exhibit A. The Receiver was holding cash in the amount of $9,203,056 as of July 31, F. Investor Communications The Receiver has held several meetings with investors and groups of investors at the Receiver's offices. The Receiver has established a receivership website to efficiently disseminate information to EB-5 Investors and interested parties. The receivership website address is Due to the fact that the majority of the EB-5 Investors are located in China, the website includes a tab where the content can be viewed in Mandarin. The Receiver also employs a Mandarinspeaking bookkeeper, who is helpful in these matters. On April 20, 2018, the Receiver filed a motion for approval of procedures for the efficient administration of investor and creditor claims. The Court granted the /SD -7-

10 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 10 of 27 Page ID #: LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP motion and approved the proposed procedures on May 4, Dkt. No Pursuant to the order, the Receiver then filed a notice advising that the deadline (or bar date) to submit claims to the Receiver is July 10, Dkt. No G. Receiver's Forensic Accounting The Receiver is conducting an accounting of the sources and uses of investor funds for the purpose of (1) identifying additional assets; (2) identifying recipients of ill-gotten gains and potential fraudulent conveyance claims; and (3) determining losses sustained by investors. Significant progress has been made and the Receiver estimates the accounting is 97% complete (the only transactions not yet entered into the database are those for some of the Caffe Primo entities and certain credit cards). All bank accounts have been reconciled. When the credit card charges are entered, then the accounts and categories will be reconciled, conclusions can be drawn, and a report will be filed. III. RECOMMENDATIONS The Receiver and his professionals make the following recommendations with regard to their efforts to monetize the remaining assets, conclude the claims process, make distributions to allowed claimants, and close the receivership. A. Document Recovery Efforts The Receiver continues to obtain records from financial institutions where the Receivership Entities maintained accounts as well as from attorneys and accountants engaged by the Receivership Entities. The Receiver has served subpoenas on certain institutions, individuals, and entities and proposes to proceed with these efforts to obtain documents, assets, and information. It may also be necessary to take the depositions of certain individuals to obtain a complete picture of the enterprise. B. Asset Preservation and Sales The Receiver will take appropriate steps to secure assets and preserve their value. With regard to assets that involve litigation, the Receiver will attempt to resolve matters as quickly as possible through mediation of dispositive motions. As /SD -8-

11 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 11 of 27 Page ID #: authorized by the Court, the Receiver will market the remaining real properties for 2 sale through licensed brokers and will seek Court approval of proposed sale 3 transactions. 4 C. Accounting 5 The Receiver will continue with his accounting to establish, among other 6 things, where the funds obtained by the Receivership Entities came from and where 7 they went after they were received by the Receivership Entities. 8 9 D. Claims and Distribution Process The Receiver will file a motion seeking Court approval of all proposed 10 allowed claims and seek rulings addressing disputed claims. Thereafter, the Receiver 11 will file a plan to distribute receivership assets to the allowed claimants. 12 IV. CONCLUSION 13 Based upon his preliminary investigation and findings, the Receiver 14 recommends and requests that the receivership continue pursuant to the PI Order. 15 The Receiver also requests the Court approve this seventh report and the 16 recommendations discussed herein Dated: September 20, Dated: September 20, By: tc. TIIOMAS A. SEAMAN Receiver ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP By: Isl Edward Fates EDWARD G. FATES Attorneys for Receiver THOMAS A. SEAMAN LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP /SD -9-

12 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 12 of 27 Page ID #:10135 EXHIBIT A Exhibit A - Page 10

13 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 13 of 27 Page ID #: :18 AM PDC Capital Receivership 08/29/18 Balance Sheet Accrual Basis As of July 31, 2018 Jul 31, 18 ASSETS Current Assets Checking/Savings PDC Capital Operating Account 49, Treasury Management Acct ,100, Treasury Management Acct ,053, Total Checking/Savings 9,203, Total Current Assets 9,203, Other Assets SAL Phoenix LP Promissory Note 256, Total Other Assets 256, TOTAL ASSETS 9,459, LIABILITIES & EQUITY Liabilities Current Liabilities Other Current Liabilities Disputed West Sacramento Lien 2,100, Total Other Current Liabilities 2,100, Total Current Liabilities 2,100, Total Liabilities 2,100, Equity Retained Earnings 2,468, Net Income 4,890, Total Equity 7,359, TOTAL LIABILITIES & EQUITY 9,459, Page 1 Exhibit A - Page 11

14 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 14 of 27 Page ID #: :15 AM PDC Capital Receivership 08/29/18 Profit & Loss Accrual Basis May through July 2018 May - Jul 18 Ordinary Income/Expense Income SAL Projects Income Sale of Assets 7,129, Total SAL Projects Income 7,129, Total Income 7,129, Expense 1415 Main St Invstmnts Expenses 1, Bank Service Charges 2.45 Caffe Primo Expenses Outside Services Total Caffe Primo Expenses Moving & Storage 3, Outside Services Boat Expenses 21, Computer and Internet Expenses 3, PACER Fees Postage & Delivery Reproduction & Subpoena Fees 2, Total Outside Services 27, Professional Fees Receiver's Fees 323, Receiver's Legal Counsel Costs 19, Fees 468, Total Receiver's Legal Counsel 487, Total Professional Fees 811, Prograde Expenses 16, Senior Living Project Expenses Architectural Services 1, HOA Dues 1, Insurance 8, Landscape & Maintenance 3, Legal Fees 1, Mortgage Loan Interest 56, Outside Services 36, Property Taxes 53, Real Estate Sales Breakup Fee 175, Security 7, Telephone Expense TRC Tucson Debt Servicing 110, Utilities 1, Total Senior Living Project Expenses 456, Travel Expense 1, Total Expense 1,316, Net Ordinary Income 5,812, Other Income/Expense Other Income Interest Income 14, Total Other Income 14, Net Other Income 14, Net Income 5,826, Page 1 Exhibit A - Page 12

15 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 15 of 27 Page ID #: :16 AM PDC Capital Receivership 08/29/18 Inception-to-Date Profit & Loss Accrual Basis As of July 31, 2018 Jul 31, 18 Ordinary Income/Expense Income 1415 Main St Investments Income Rental Income 18, Total 1415 Main St Investments Income 18, Caffe Primo Income Sale of Assets 21, Sale of Personal Property 21, Total Caffe Primo Income 43, SAL Projects Income Sale of Assets 7,129, Total SAL Projects Income 7,129, Turnover/Seizure Banks & Financial Institutions 205, Caffee Primo 57, Constructions Bonds 457, Escrow Accounts 192, Legal Retainers Returned 160, Refunds 3, Unused Loan Proceeds 3,357, Total Turnover/Seizure 4,435, Total Income 11,626, Expense 1415 Main St Invstmnts Expenses 23, Bank Service Charges Caffe Primo Expenses Commercial Cleaning Services 11, Food & Beverage Purchases 13, Insurance Licenses & Fees 1, Locksmith 1, Moving & Storage Expense 7, Outside Services Payroll Expenses 22, Utilities Total Caffe Primo Expenses 58, Moving & Storage 18, Outside Services Boat Expenses 122, Computer and Internet Expenses 13, Locksmith 1, PACER Fees Postage & Delivery Reproduction & Subpoena Fees 14, Total Outside Services 153, Professional Fees Receiver's Fees 953, Receiver's IT Consultant Costs 2, Fees 45, Total Receiver's IT Consultant 47, Receiver's Legal Counsel Costs 49, Fees 1,121, Total Receiver's Legal Counsel 1,171, Total Professional Fees 2,173, Prograde Expenses 42, Page 1 Exhibit A - Page 13

16 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 16 of 27 Page ID #: :16 AM PDC Capital Receivership 08/29/18 Inception-to-Date Profit & Loss Accrual Basis As of July 31, 2018 Jul 31, 18 Senior Living Project Expenses Appraiser Fees 65, Architectural Services 18, Construction/Site Expenses 79, Fire Alarm Monitoring 1, HOA Dues 17, Insurance 76, Landscape & Maintenance 30, Legal Fees 24, Licenses & Fees 5, Mortgage Loan Interest 263, Outside Services 51, Property Management Fees 1, Property Taxes 709, Real Estate Sales Breakup Fee 210, Security 61, Telephone Expense 2, TRC Tucson Debt Servicing 160, Utilities 26, Total Senior Living Project Expenses 1,805, Travel Expense 6, Total Expense 4,282, Net Ordinary Income 7,343, Other Income/Expense Other Income Interest Income 15, Total Other Income 15, Net Other Income 15, Net Income 7,359, Page 2 Exhibit A - Page 14

17 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 17 of 27 Page ID #: :22 AM PDC Capital Receivership 08/29/18 General Ledger Accrual Basis May 1, 2018, through July 31, 2018 Type Date Num Name Memo Split Debit Credit Balance PDC Capital Operating Account 2,281, Check 5/3/ Notary Plus Mobile Service 1 Signature Outside Services ,281, Check 5/4/2018 Wire Club de Yates Palmira, SA de CV Beroca Expenses Boat Expenses 1, ,279, Check 5/4/2018 Wire Jose Rafael Gastelum Cadena Beroca Expenses -SPLIT- 3, ,275, Check 5/4/ Southern CA Edison Moving & Storage ,275, Check 5/4/ AIC Owner, LLC t Moving & Storage ,275, Check 5/4/ HelmCo Electric Invoice 5112 Moving & Storage ,274, Check 5/4/ Wood Gutmann & Bogart Ins Br... Invoice Prograde Expenses 11, ,263, Check 5/4/ Orange County Networking Invoice 8876 Computer and Internet ,262, Check 5/4/ Unishippers Customer UL Postage & Delivery ,262, Check 5/4/ Chapmans Lawn 1515 S Highland Landscape & Maintena ,262, Check 5/4/ FCI Lender Services, Inc. Account Mortgage Loan Interest 5, ,256, Check 5/4/ FCI Lender Services, Inc. Account Mortgage Loan Interest 11, ,245, Check 5/4/ FCI Lender Services, Inc. Account Mortgage Loan Interest 5, ,239, Check 5/4/ SZ Real Co, LLC Costs Reimbursement Insurance 4, ,235, Check 5/4/ City of Glendale Water 7410 N Zanjero Blvd -SPLIT ,234, Check 5/4/ EyeSite Surveillance Invoice Security 3, ,231, Check 5/4/2018 ACH Zanjero Community Association HOA Dues Acct SPLIT- 1, ,230, Check 5/4/ All State Rent-a-Fence Job No Security ,230, Check 5/4/ Arizona Lake & Pond Managem... Invoice Landscape & Maintena... 1, ,229, Check 5/4/ The Nathanson Group Invoice Legal Fees ,228, Check 5/4/ Geffen Mesher & Company, P.C. Client Outside Services 1, ,226, Check 5/4/ Husch Blackwell Invoice Legal Fees ,226, Check 5/4/2018 Transfer Thomas Seaman Company 4th Interim Fee App Receiver's Fees 211, ,014, Check 5/7/ Cox Business Moving & Storage ,014, Check 5/10/ Wood Gutmann & Bogart Ins Br... Quote Prograde Expenses 4, ,009, Check 5/10/2018 Wire Jose Rafael Gastelum Cadena Beroca Expenses Boat Expenses ,009, Check 5/13/2018 Service Charge Bank Service Charges ,009, Check 5/17/2018 Wire Allen Matkins 4th Interim Fee App -SPLIT- 248, ,761, Deposit 5/17/2018 Deposit RE Sales Earnest Mon , ,961, Check 5/17/2018 Wire Jorge Gutierrez Tirado Cotizacion No Boat Expenses 1, ,959, Check 5/18/2018 Wire SET Real Co LLC TRC Tucson Debt Serv... 25, ,934, Transfer 5/24/2018 Funds Transfer Treasury Management... 1,600, , Check 5/30/ Wood Gutmann & Bogart Ins Br... Invoice Main St Invstmnt... 2, , Check 5/31/ AIC Owner, LLC t Moving & Storage , Check 5/31/ Southern CA Edison Moving & Storage , Check 5/31/ Cox Business Moving & Storage , Check 5/31/2018 ACH Placer County Tax Collector APN & 065 -SPLIT- 59, , Check 5/31/ Thomas Seaman Reimbursement -SPLIT- 2, , Check 5/31/ Unishippers Customer UL Postage & Delivery , Check 5/31/ FCI Lender Services, Inc. Account Mortgage Loan Interest 5, , Check 5/31/ FCI Lender Services, Inc. Account Mortgage Loan Interest 11, , Check 5/31/ FCI Lender Services, Inc. Account Mortgage Loan Interest 5, , Check 5/31/ SZ Real Co, LLC Costs Reimbursement Insurance 4, , Check 5/31/ City of Glendale Account Utilities , Check 5/31/ City of Glendale Water 7410 N Zanjero Blvd -SPLIT , Check 5/31/2018 ACH CenturyLink Acct B Telephone Expense , Check 5/31/ EyeSite Surveillance Invoice Security 3, , Check 5/31/ All State Rent-a-Fence Job No Security , Check 5/31/ Arizona Lake & Pond Managem... Invoice Landscape & Maintena... 1, , Check 6/1/ Oversea Insurance Agency Policy # Boat Expenses 1, , Check 6/1/ Chapmans Lawn 1515 S Highland Landscape & Maintena , Check 6/4/2018 ACH CenturyLink Acct B Telephone Expense , Check 6/4/2018 Wire Club de Yates Palmira, SA de CV Beroca Expenses Boat Expenses 1, , Check 6/4/2018 Wire Jose Rafael Gastelum Cadena Beroca Expenses -SPLIT- 3, , Check 6/7/ Notary Plus Mobile Service 1 Signature Outside Services , General Journal 6/7/ First American Title Net proceeds deposited to bank Sale of Assets 163, , General Journal 6/12/ Chicago Title Insurance Company Net sale proceeds deposited Sale of Assets 1,372, ,766, Check 6/15/2018 ACH CenturyLink Acct B Telephone Expense ,766, Check 6/20/2018 Wire Carefield SH Management, LLC Break-up Fee Real Estate Sales Brea , ,591, Check 6/21/ Notary Plus Mobile Service 3 Signatures Outside Services ,591, Check 6/26/2018 Wire SET Real Co LLC TRC Tucson Debt Serv... 25, ,566, General Journal 6/26/ Net Sale Proceeds for 3 CA Properties: Carmichael, Citrus Heights, & Westgate -SPLIT- 4,073, ,639, Check 6/27/2018 Wire Jose Rafael Gastelum Cadena Beroca Expenses 1/2 July Salaries -SPLIT- 1, ,637, Check 6/28/ FCI Lender Services, Inc. Account Mortgage Loan Interest 11, ,626, Deposit 6/29/2018 Deposit Sale of Assets 150, ,776, Check 7/2/2018 Wire Jorge Gutierrez Tirado Cotizacion No Boat Expenses 1, ,775, Page 1 Exhibit A - Page 15

18 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 18 of 27 Page ID #: :22 AM PDC Capital Receivership 08/29/18 General Ledger Accrual Basis May 1, 2018, through July 31, 2018 Type Date Num Name Memo Split Debit Credit Balance Check 7/2/ AIC Owner, LLC t Moving & Storage ,774, Check 7/2/ Cox Business Moving & Storage ,774, Check 7/2/ Southern CA Edison Moving & Storage ,774, Check 7/2/ Orange County Networking Invoice 8893 Computer and Internet ,773, Check 7/2/ Thomas Seaman Tucson Reimbursement Travel Expense ,772, Check 7/2/ LRS Architects, Inc. Project Architectural Services 1, ,771, Check 7/2/ Unishippers Customer UL Postage & Delivery ,771, Check 7/2/ Darren Clevenger Reimbursement -SPLIT ,771, Check 7/2/ Chapmans Lawn 1515 S Highland Landscape & Maintena ,771, Transfer 7/5/2018 Funds Transfer Treasury Management... 3,170, ,601, Transfer 7/6/2018 Funds Transfer Treasury Management... 2,100, , Check 7/9/ Cash 1415 Main St Clean-up 1415 Main St Invstmnt , Check 7/10/2018 Trasfer Thomas Seaman Company Fifth Interim Fee Application Receiver's Fees 111, , Check 7/10/2018 Wire Allen Matkins Fifth Interim Fee Application -SPLIT- 239, , Check 7/13/2018 Wire SET Real Co LLC TRC Tucson Debt Serv... 60, , Deposit 7/16/2018 Deposit Interest Income , Check 7/17/2018 Wire Club de Yates Palmira, SA de CV Beroca Expenses -SPLIT- 1, , Check 7/17/2018 Wire Jose Rafael Gastelum Cadena Beroca Expenses 1/2 July Salaries -SPLIT- 1, , Deposit 7/18/2018 Deposit 1415 Main St Invstmnt... 1, , Check 7/19/2018 Wire Blueprint Healthcare Real Estat... Retainer Fee Outside Services 35, , Check 7/20/ Thomas Seaman Company Q1&Q Reimbursement -SPLIT- 1, , Check 7/20/ Southern CA Edison Moving & Storage , Check 7/20/ Cox Business Moving & Storage , Check 7/20/ Orange County Networking 2 Invoice2 -SPLIT , Check 7/20/ AIC Owner, LLC t Moving & Storage , Check 7/23/ Arizona Lake & Pond Managem... Invoice SPLIT , Total PDC Capital Operating Account 5,962, ,194, , SLALMC, LLC 0.00 Total SLALMC, LLC 0.00 Treasury Management Acct Transfer 7/6/2018 Funds Transfer PDC Capital Operating... 2,100, ,100, Total Treasury Management Acct ,100, ,100, Treasury Management Acct ,269, Transfer 5/24/2018 Funds Transfer PDC Capital Operating... 1,600, ,869, Transfer 7/5/2018 Funds Transfer PDC Capital Operating... 3,170, ,039, Deposit 7/31/2018 Deposit Interest Income 13, ,053, Total Treasury Management Acct ,783, ,053, Advances to Subsidiary 0.00 Total Advances to Subsidiary 0.00 Accumulated Depreciation 0.00 Total Accumulated Depreciation 0.00 Furniture and Equipment 0.00 Total Furniture and Equipment 0.00 SAL Phoenix LP Promissory Note 0.00 General Journal 6/7/ SAL Phoneix LP 18 Month Promissory Note due 12/7/19, 5% Interest based on 360 day year Sale of Assets 256, , Total SAL Phoenix LP Promissory Note 256, , Deposit for CP Total Deposit for CP Disputed Sarasota Lien -2,268, General Journal 5/1/2018 9RRR Settlement with MCC to release lien Sale of Assets 2,268, Total Disputed Sarasota Lien 2,268, Disputed West Sacramento Lien 0.00 General Journal 6/26/ Net Proceeds West Sacramento PDC Capital Operating... 2,100, ,100, Total Disputed West Sacramento Lien ,100, ,100, Page 2 Exhibit A - Page 16

19 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 19 of 27 Page ID #: :22 AM PDC Capital Receivership 08/29/18 General Ledger Accrual Basis May 1, 2018, through July 31, 2018 Type Date Num Name Memo Split Debit Credit Balance Payroll Liabilities 0.00 Total Payroll Liabilities 0.00 RE Sales Earnest Money Deposit -750, Deposit 5/17/2018 MCC Additional Funds Deposit for sale of Lincoln/Red Rocks property PDC Capital Operating , , General Journal 6/7/ Deposit held by Receivership Sale of Assets 50, , General Journal 6/12/ MCC Deposit held by Receivership Sale of Assets 900, Total RE Sales Earnest Money Deposit 950, , Opening Balance Equity 0.00 Total Opening Balance Equity 0.00 Retained Earnings -2,468, Total Retained Earnings -2,468, Main St Investments Income Rental Income Total Rental Income -18, Main St Investments Income - Other 0.00 Total 1415 Main St Investments Income - Other 0.00 Total 1415 Main St Investments Income -18, Caffe Primo Income 0.00 Sale of Assets 0.00 Total Sale of Assets 0.00 Sale of Personal Property 0.00 Total Sale of Personal Property 0.00 Caffe Primo Income - Other 0.00 Total Caffe Primo Income - Other 0.00 Total Caffe Primo Income 0.00 SAL Projects Income 0.00 Sale of Assets 0.00 General Journal 5/1/2018 9RRR Settlement with MCC to release lien Disputed Sarasota Lien 2,268, ,268, General Journal 6/7/ Sale of SAL Phoenix Property -SPLIT- 470, ,738, General Journal 6/12/ MCC Sale of 850 Red Rock Road, Lincoln, CA -SPLIT- 2,269, ,007, General Journal 6/26/ Net Proceeds Carmichael PDC Capital Operating , ,283, General Journal 6/26/ Net Proceeds Citrus Heights PDC Capital Operating , ,838, General Journal 6/26/ Net Proceeds West Sacramento PDC Capital Operating... 1,141, ,979, Deposit 6/29/ Summerset Assisted Living Rancho Cordova PDC Capital Operating , ,129, Total Sale of Assets ,129, ,129, SAL Projects Income - Other 0.00 Total SAL Projects Income - Other 0.00 Total SAL Projects Income ,129, ,129, Sale of Assets 0.00 Total Sale of Assets 0.00 Sales 0.00 Total Sales 0.00 Turnover/Seizure -155, Banks & Financial Institutions -150, Total Banks & Financial Institutions -150, Caffee Primo 0.00 Total Caffee Primo , , Page 3 Exhibit A - Page 17

20 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 20 of 27 Page ID #: :22 AM PDC Capital Receivership 08/29/18 General Ledger Accrual Basis May 1, 2018, through July 31, 2018 Type Date Num Name Memo Split Debit Credit Balance Constructions Bonds 0.00 Total Constructions Bonds 0.00 Escrow Accounts 0.00 Total Escrow Accounts 0.00 Legal Retainers Returned Total Legal Retainers Returned -4, Refunds 0.00 Total Refunds 0.00 Unused Loan Proceeds 0.00 Total Unused Loan Proceeds 0.00 Turnover/Seizure - Other 0.00 Total Turnover/Seizure - Other 0.00 Total Turnover/Seizure -155, Main St Invstmnts Expenses 13, Check 5/30/ Wood Gutmann & Bogart Ins Br Main St Investments PDC Capital Operating... 2, , Check 7/2/ Darren Clevenger Lowes - Security Materials for Property PDC Capital Operating , Check 7/9/ Cash 1415 Main St Clean-up PDC Capital Operating , Deposit 7/18/ Wood Gutmann & Bogart Ins Br... Refund of unsued premium - Property Insurance PDC Capital Operating... 1, , Total 1415 Main St Invstmnts Expenses 2, , , Advertising and Promotion 0.00 Total Advertising and Promotion 0.00 Automobile Expense 0.00 Total Automobile Expense 0.00 Bank Service Charges Check 5/13/2018 Service Charge PDC Capital Operating Total Bank Service Charges Caffe Primo Expenses Commercial Cleaning Services 0.00 Total Commercial Cleaning Services 0.00 Food & Beverage Purchases 0.00 Total Food & Beverage Purchases 0.00 Insurance Total Insurance Licenses & Fees 0.00 Total Licenses & Fees 0.00 Locksmith 0.00 Total Locksmith 0.00 Moving & Storage Expense 0.00 Total Moving & Storage Expense 0.00 Outside Services 0.00 Check 5/3/ Notary Plus Mobile Service Notarized signature re: CP 104 Liquor License Sale PDC Capital Operating Total Outside Services Payroll Expenses Total Payroll Expenses Reissued Returned Paychecks 0.00 Total Reissued Returned Paychecks , Page 4 Exhibit A - Page 18

21 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 21 of 27 Page ID #: :22 AM PDC Capital Receivership 08/29/18 General Ledger Accrual Basis May 1, 2018, through July 31, 2018 Type Date Num Name Memo Split Debit Credit Balance Utilities 0.00 Total Utilities 0.00 Caffe Primo Expenses - Other 0.00 Total Caffe Primo Expenses - Other 0.00 Total Caffe Primo Expenses Depreciation Expense 0.00 Total Depreciation Expense 0.00 Insurance Expense 0.00 Total Insurance Expense 0.00 Interest Expense 0.00 Total Interest Expense 0.00 Licenses & Fees 0.00 Total Licenses & Fees 0.00 Meals and Entertainment 0.00 Total Meals and Entertainment 0.00 Moving & Storage 6, Check 5/4/ Southern CA Edison , Irvine Storage PDC Capital Operating , Check 5/4/ AIC Owner, LLC Irvine Storage Rent PDC Capital Operating , Check 5/4/ HelmCo Electric Main Street, Ste D PDC Capital Operating , Check 5/7/ Cox Business Account PDC Capital Operating , Check 5/31/ AIC Owner, LLC Irvine Storage Rent PDC Capital Operating , Check 5/31/ Southern CA Edison , Irvine Storage PDC Capital Operating , Check 5/31/ Cox Business Account PDC Capital Operating , Check 7/2/ AIC Owner, LLC Irvine Storage Rent PDC Capital Operating , Check 7/2/ Cox Business Account PDC Capital Operating , Check 7/2/ Southern CA Edison , Irvine Storage PDC Capital Operating , Check 7/20/ Southern CA Edison , Irvine Storage PDC Capital Operating , Check 7/20/ Cox Business Account PDC Capital Operating , Check 7/20/ AIC Owner, LLC Irvine Storage Rent PDC Capital Operating , Total Moving & Storage 3, , Office Supplies 0.00 Total Office Supplies 0.00 Outside Services 30, Appraiser Fees 0.00 Total Appraiser Fees 0.00 Boat Expenses 26, Check 5/4/2018 Wire Club de Yates Palmira, SA de CV Factura No. A May marina rent & April services PDC Capital Operating... 1, , Check 5/4/2018 Wire Jose Rafael Gastelum Cadena 1 Month Captain's pay (May) PDC Capital Operating... 2, , Check 5/4/2018 Wire Jose Rafael Gastelum Cadena 1 Month Mate's pay (May) PDC Capital Operating... 1, , Check 5/10/2018 Wire Jose Rafael Gastelum Cadena Boat Repairs - Cleaning Supplies PDC Capital Operating , Check 5/17/2018 Wire Jorge Gutierrez Tirado Reapirs to hydraulic, winch, & switches PDC Capital Operating... 1, , Check 6/1/ Oversea Insurance Agency 4th Installment ' Sunseeker (Beroca) PDC Capital Operating... 1, , Check 6/4/2018 Wire Club de Yates Palmira, SA de CV Factura No. A June marina rent & May services PDC Capital Operating... 1, , Check 6/4/2018 Wire Jose Rafael Gastelum Cadena 1 Month Captain's pay (June) PDC Capital Operating... 2, , Check 6/4/2018 Wire Jose Rafael Gastelum Cadena 1 Month Mate's pay (June) PDC Capital Operating... 1, , Check 6/27/2018 Wire Jose Rafael Gastelum Cadena 1/2 Month Captain's pay PDC Capital Operating... 1, , Check 6/27/2018 Wire Jose Rafael Gastelum Cadena 1/2 Month Mate's pay PDC Capital Operating , Check 7/2/2018 Wire Jorge Gutierrez Tirado Repairs to hydraulic pump and electrical (1/2 payment) PDC Capital Operating... 1, , Check 7/17/2018 Wire Club de Yates Palmira, SA de CV Factura No. A July marina rent & June services PDC Capital Operating... 1, , Check 7/17/2018 Wire Club de Yates Palmira, SA de CV Factura No. A July Parking PDC Capital Operating , Check 7/17/2018 Wire Jose Rafael Gastelum Cadena 1/2 Month Captain's pay PDC Capital Operating... 1, , Check 7/17/2018 Wire Jose Rafael Gastelum Cadena 1/2 Month Mate's pay PDC Capital Operating , Total Boat Expenses 21, , Page 5 Exhibit A - Page 19

22 Case 8:16-cv CJC-DFM Document 295 Filed 09/20/18 Page 22 of 27 Page ID #: :22 AM PDC Capital Receivership 08/29/18 General Ledger Accrual Basis May 1, 2018, through July 31, 2018 Type Date Num Name Memo Split Debit Credit Balance Computer and Internet Expenses 2, Check 5/4/ Orange County Networking Invoice QuickBooks server work and backup Jan PDC Capital Operating , Check 7/2/ Orange County Networking March Services: QuickBooks server work and backup PDC Capital Operating , Check 7/20/ Thomas Seaman Company Network Solutions & domain renewal PDC Capital Operating , Check 7/20/ Thomas Seaman Company Box.net account monthly fee Jan-July 2018 PDC Capital Operating , Check 7/20/ Orange County Networking Invoice April Services PDC Capital Operating , Check 7/20/ Orange County Networking Invoice May Services PDC Capital Operating , Total Computer and Internet Expenses 3, , Locksmith 0.00 Total Locksmith 0.00 PACER Fees Check 7/20/ Thomas Seaman Company Pacer court records PDC Capital Operating Total PACER Fees Postage & Delivery Check 5/4/ Unishippers Invoice PDC Capital Operating Check 5/31/ Unishippers Invoice PDC Capital Operating Check 7/2/ Unishippers Invoice PDC Capital Operating Total Postage & Delivery Reproduction & Subpoena Fees 1, Check 5/31/ Thomas Seaman Publication of Claims Bar Date in OC Register PDC Capital Operating... 1, , Check 5/31/ Thomas Seaman Publication of Claims Bar Date in Tampa Bay Times PDC Capital Operating , Total Reproduction & Subpoena Fees 2, , Outside Services - Other 0.00 Total Outside Services - Other 0.00 Total Outside Services 27, , Professional Fees 744, Receiver's Fees 362, Check 5/4/2018 Transfer Thomas Seaman Company 4th Interim Fee App PDC Capital Operating , , Check 7/10/2018 Trasfer Thomas Seaman Company Fifth Interim Fee Application PDC Capital Operating , , Total Receiver's Fees 323, , Receiver's IT Consultant 6, Costs Total Costs Fees 6, Total Fees 6, Receiver's IT Consultant - Other 0.00 Total Receiver's IT Consultant - Other 0.00 Total Receiver's IT Consultant 6, Receiver's Legal Counsel 375, Costs 12, Check 5/17/2018 Wire Allen Matkins Costs PDC Capital Operating... 9, , Check 7/10/2018 Wire Allen Matkins Fifth Interim Fee Application PDC Capital Operating... 10, , Total Costs 19, , Fees 362, Check 5/17/2018 Wire Allen Matkins Fees PDC Capital Operating , , Check 7/10/2018 Wire Allen Matkins Fifth Interim Fee Application PDC Capital Operating , , Total Fees 468, , Receiver's Legal Counsel - Other 0.00 Total Receiver's Legal Counsel - Other 0.00 Total Receiver's Legal Counsel 487, , Page 6 Exhibit A - Page 20