What is a Receiver?

The Receiver is the individual who assumes responsibility for all assets of the entities in receivership in the civil enforcement action brought by the SEC. He is responsible for determining how the business was operated and where its assets are located. He also is charged with operating the business and reporting to investors and other interested parties. Ultimately, the Receiver will determine the amounts owed to individual creditors and investors and will distribute available assets in accordance with a plan approved by the Court.

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A receiver is an officer of the Court, not an employee of the Securities and Exchange Commission, and ultimately answers to the Court. In this case, Ryan K. Stumphauzer, Esq., is the Court-appointed Receiver for the various Receivership Entities.

What authority does the Receiver have? 

The Court’s Order governs the authority of the Receiver. Federal courts have specific powers, known as “equitable” powers, to order relief to advance the purposes of the federal securities laws, preserve investor funds, and ensure that wrongdoers do not profit from their unlawful conduct. Courts may grant broad powers to receivers, including the authority to sue on behalf of the receivership and to gather, manage and liquidate receivership assets on behalf of potential creditors and harmed investors. A receiver is charged with acting in “good faith” and performing his duties with “reasonable diligence.” A receiver is generally required to report to the Court periodically for the property entrusted to him.

What will happen to the Receivership Entities?

It is too soon to determine what will happen to the Receivership Entities. The Receiver is currently exploring various possibilities with respect to the continued operations of the Receivership Entities and has engaged a consultant, Development Specialists, Inc., who is assisting the Receiver to: (a) review and analyze the financial records of the Receivership Entities; (b) conduct financial analysis and forensic accounting services; and (c) assess the ongoing operations of the Receivership Entities and provide input and guidance regarding the management and oversight of the day-to-day operations of the Receivership Entities, including efforts to collect on accounts receivable and to maximize recovery for investors. At the appropriate time, the Receiver will submit his recommendations regarding ongoing operations to the Court. Ultimately, the Court will be responsible for considering and approving the Receiver’s proposed plan. The Court must conclude that the proposed plan is fair and reasonable and appropriately protects the interests of the investors in the Receivership Entities.

I worked for one of the Receivership entities.  When will I get paid?

The Receiver is in the process of addressing these issues and evaluating operations and will be reaching out to the employees of the Receivership Entities soon with additional information. 

How long does the Receivership process normally take?

At this early stage of the proceedings, we cannot predict how long it will take to complete this process.

Is the Receiver my lawyer?

No. The Receiver is an agent of the Court and is effectuating the Court’s orders. The Receiver will, however, be investigating potential claims or methods of recovery that he can pursue for the benefit of investors in the Receivership Entities.

Should I hire a lawyer?

Although the Receiver cannot provide you legal advice, you certainly have the right to hire or consult with your own lawyer. As authorized by the Court, however, the Receiver will be investigating all potential claims or methods of recovery that he can pursue for the benefit of investors in the Receivership Entities.

How can I stay informed of progress in this case?

The Receiver will post new information on this website from time to time, including Key Court Documents, Receiver Reports, and Important Dates and Deadlines.

If I have other questions, how can I get them answered?

Contact information for the Receiver is available through the following link.