FAQs

This section is designed to efficiently address common questions. Because information is still limited at this early stage and because the questions are abstract at this point, answers may change over time. We strongly encourage parties in interest to visit this website and check for updates periodically.

1. What is a receivership?

When the U.S. Securities and Exchange Commission (the “SEC”) brings a legal action to stop conduct prohibited under various securities laws, the SEC frequently seeks Court appointment of a Receiver to take control of the assets of the defendant and named relief defendants (collectively the “defendants”) pending the outcome of the litigation. The Receiver is an officer of, and overseen by, the Court. Accordingly, in this case, the Receiver was appointed by the District Court and charged with, among other things, gathering and preserving the assets of the defendants pending a determination as to whether any securities laws were violated.

2. What authority does a Receiver have?

Mr. Bertschy’s authority was set out by Judge Michael Mihm in his Order appointing him as Receiver, which you can view under the Civil Court Documents tab on this website. That authority may be modified from time to time. For example, if we learn of assets that should be a part of the receivership, the SEC may ask Judge Mihm to broaden the scope of the receivership.

Federal equity receivers are governed by the order appointing them, by Rule 66 of the Federal Rules of Civil Procedure and by Title 28 of the United States Code. While these provisions give the Receiver and the court general guidelines about the conduct of receiverships, they are necessarily broad. Each receivership presents unique factual circumstances. Receivership courts are vested with wide discretion as they try to fairly administer the receivership.

3. How do I file a claim?

A claim form is posted under the “Claims” tab for completion by anyone claiming entitlement to compensation from any of the defendants, whether as a creditor, investor, or other the like. Even if you have already been in contact with the Receiver, we ask that you complete a claim form. A deadline by which claims forms must be submitted will be set. Please visit the “Claims” tab for additional information.

4. How long will this process take?

Receiverships take a long time, typically over one year in duration. Some of the factors affecting the time line are accounting work, appraisals, sales of property, negotiating, litigating, and distribution.

The Receiver will prepare a proposed plan of distribution in consultation with the SEC, and will submit it for approval to Judge Mihm. If the Receiver is successful in gathering sufficient assets, there may be an interim distribution. Each distribution requires court approval and an opportunity for objections. This can also be time consuming.

5. How much might I expect to receive?

This is a reasonable question of anyone entitled to monies from the defendants. Unfortunately, the Receiver cannot provide much information until there is a better idea of the actual value of the assets and a complete understanding of the estate’s financial condition.

6. Should I hire my own attorney?

If you desire, you may retain independent legal counsel. There is no requirement that you do so. As the court appointed Receiver, Mr. Bertschy is tasked to fairly and efficiently regain funds for investors and creditors as a whole. He does not, however, represent any individual investors or creditors, and he cannot offer legal advice to you.

7. What is the order of priority for payment? Where do investors fall in line?

In addition to investors and creditors, other entities must be paid, including outstanding tax payments, employee back wages, and secured creditors. Once assets are collected and liquidated and all claims are verified, there will be a pro rata distribution among all investors. Some investors or creditors may have priority over others.

8. Will the businesses named as Relief Defendants operate as usual?

At this time, the Receiver is in the process of determining the best course of action with respect to each individual business. For website customers, your websites should still function as usual unless you have been specifically informed otherwise by someone from the Receiver’s firm. Therefore, if your website is no longer operating, please contact us.

9. What is the best way to get in touch with the Receiver if I have a question?

The best way to contact the Receiver is to submit your question, along with your contact information, to the email address provided under the “Contact Us” tab on this website.