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NAFER President’S Letter What’S Inside Years Ago, Lawyers We Worked Effective Planning for Asset Recovery

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NAFER President’S Letter What’S Inside Years Ago, Lawyers We Worked Effective Planning for Asset Recovery N.A.F.E.R. NATIONAL ASSOCIATION OF FEDERAL EQUITY RECEIVERS THE RECEIVER January 2017 | Issue 4 NAFER President’s Letter What’s Inside years ago, lawyers we worked Effective Planning for Asset Recovery ....... 4 with still refer to him as “The Exciting New Partnership with Leading Receiver.” I had the office next Distressed Deal Database: DailyDAC ........ 6 door from 1990 to 2000, and there First Receiver Training Camp Scores a was always laughter coming from Touchdown! .................................................. 7 his office. He took great pleasure in unwinding frauds and was The Receiver Interview with Greg Hays .... 9 called a “Fraudbuster” by Forbes. CONFERENCE REVIEW: NAFER Fifth Dad is now 89, doing very well, Annual Conference, Washington D.C., S. Gregory Hays, NAFER President and always loves to hear a good Oct. 13-15, 2016 .......................................... 12 receiver story. It is interesting for me to write an It’s a Fraud, It’s a Scam, It’s a Ponzi-Like Scheme: The Legal Definition of article for The Receiver when, for Back in his day, little information Labeling a Scheme a Ponzi ........................ 14 over 25 years, I have consistently existed on authority on referred to one person in business receiverships, and there was no More Pictures from the NAFER Annual Conference .................................................. 23 as “The Receiver.” I learned the communication with these other receiver business from my father, receivers. We all just learned William G. Hays, Jr., who served from our own cases. NAFER NAFER Officers now provides a voice of wisdom as a receiver in many SEC, CFTC, President FTC, and SIPC cases. As a young and authority. It has become an Greg Hays man, I found it appropriate to refer outstanding organization where to him in business discussions receivers can get to know other President Emeritus as “The Receiver.” I could not receivers and learn from them. Ira Bodenstein bring myself to refer to him by his I want to thank NAFER Past Treasurer first name, and saying “my Dad” Presidents Robert Wing, Steve Jeff Brandlin just did not seem to appropriate. Donell, and Ira Bodenstein for Hence, “The Receiver” became a Secretary all their hard work. Serving as very common phrase. Charlene Koonce President, I now understand just Though my Dad retired many how much time and effort they dedicated to growing the respected organization that The Best Practices Committee will be led by it is today. member Terry Banich (Shaw, Fishman, Glantz, and Towbin; Chicago). We need more members to assist The Publication Committee has done a great job in drafting Best Practices. Gary Caris (Diamond on The Receiver over the years, but we need more McCarthy; Los Angeles) wrote a paper on managing NAFER members to draft articles, provide case real estate, which we will post on the website. reviews, and supply content to make this publication the authority on receivership issues. We must also We saw an influx of membership interest after the do more with social media. We also plan to print conference; many applications were received, and The Receiver and mail it to our judicial and agency the Membership Committee is busy reviewing and contacts to help spread the news on NAFER. approving new members. We plan to use the receiver database to contact more new members. The Conference Committee did an outstanding job on the 5th Annual Conference. Thanks to Bob The Outreach Committee is working to increase Mosier, Kathy Phelps, Kevin Duff, and the conference NAFER’s visibility by connecting with agency and committee. The DailyDac published a very nice article, judicial representatives. Their work has resulted rating the conference a “Solid A.” (See page 12.) in an increase in both NAFER Judicial and Agency Membership, as well as conference participation. The Receiver Training Camp was a well-received This year, their goal is to offer programs at judicial addition to the conference. Attendees had many conferences on receivership issues and to work very favorable comments and requested we make through agency members to streamline tax and the program longer next year. Plans are underway case-closing procedures with the IRS. to expand the content and add additional topics. The initial Receiver Training Camp was just the The Website Committee has many improvements “First Quarter” of a receivership, and we have a lot in the works, including a docket that lists articles, of content to add, including managing a receivership pleadings, cases, and other items of interest. case, pursuing litigation, and closing a case. I look forward to being of service as I embark on Our International Committee is planning a one-day my role as NAFER President. I welcome your input, conference in Grand Cayman on February 8, 2017. This recommendations, ideas, and participation. conference is the day before the American Bankruptcy Greg Hays can be reached via email at ghays@ Institute’s Caribbean Insolvency Symposium, and haysconsulting.net. several of us are planning to attend both events. We hope you’ll join us at our first off-shore event. NAFER Needs YOU! NAFER’s members are the sum and substance of our organization. Our volunteer leaders are the reason we stand apart from all other professional organziations. If you are interested in contribuing to the work of one of our vibrant committees, please contact the committee chair. For a description of the work of each, please visit http://www.nafer.org/Forum (Please note: Only NAFER members are eligible. Must be logged in to website to see committee descriptions). PUBLICATIONS COMMITTEE BEST PRACTICES COMMITTEE INTERNATIONAL COMMITTEE Jordan Maglich, 813-347-5115 Terry Banich, 312-980-3859 Alex Moglia, 847-884-8282 [email protected] [email protected] [email protected] OUTREACH COMMITTEE CONFERENCE COMMITTEE MEMBERSHIP COMMITTEE Burt Wiand, 813-347-5101 Bob Mosier, 714-432-0800 Henry Sewell, 404-926-0053 [email protected] [email protected] [email protected] WEBSITE COMMITTEE Steve Donell, 310-207-8481 [email protected] Page 2 Page 3 Effective Planning for Asset Recovery duties; (c) management by single person or small group; (d) reliance on investment by word-of-mouth; (e) use by promoters of small cap stocks; and (f) simply hiding assets from legitimate and lawful creditors, such as an ex-spouse, business partner, or third party investor. As noted above, the three phased process for successful offshore asset recovery generally entails the following: By Paul Richard Brown 1. Understanding Scheme and Movement of Attorney at Law | [email protected] | Assets: this task includes the evaluation of Office: 206.224.8073 | Fax: 206.682.7100 Karr Tuttle Campbell | 701 Fifth Avenue, Suite 3300 | assets and misappropriated funds; identification Seattle, WA 98104 | www.karrtuttle.com of concealment techniques and accounts or instruments used to hold and move assets; This article is intended to be a summary identifying discovery of potential third-party facilitators the general procedure for successful offshore asset (including determining if they are insured); and recovery, particularly in cases where fraud and ascertaining bank secrecy and legally-imposed concealment are at issue. It is not intended to be confidentially requirements of particular foreign a comprehensive and exhaustive analysis of this jurisdictions. There are no uniform rules on complex and multilayered matter. confidentiality. Some courts base what law International asset recovery requires planning, applies upon the substantial relationship with the persistence, and patience. Your adversary may have jurisdiction where the claim arose. had a head start in designing and implementing a 2. Assessment of Issues Affecting Discovery and plan to conceal, obscure, and pre-position assets Recovery: for this part of the process, lawyers and possibly even change their character from cash should take the following steps to determine if there to precious metal to rare gems and back again. It are common tools to obtain verifiable evidence; will take time to find and follow the branches of an analyze jurisdictions involved and examine if asset trail and there may well be false starts and those jurisdictions are favorable to recovery; intentional misdirection along the way. Untangling a evaluate issues of legal reciprocity and mutual sophisticated web of money-laundering or other asset assistance agreements; where appropriate, movement takes time and skill particularly in foreign use Letters Rogatory and Norwich Pharmacal jurisdictions. These issues are best managed by a (case law discussed below) to collect verifiable well-conceived, three phased approach including: evidence; further exam the potential utilization (1) understanding the scheme and initial movement of jurisdictions’ Financial Fraud or Investigative of assets offshore and identifying specific assets in Units; and examine if Mutual Legal Assistance particular institutions or locations; (2) assessment Treaties can be useful to obtain financial records. and execution of sovereign laws affecting discovery 3. Liquidation/Repatriation of Assets: the lawful and recovery; and (3) liquidation and/or repatriation creditor (legal title holder of the assets) is entitled of assets for the benefit of creditors. to assets when debtor’s transfer or concealment Typically, these matters involve some form of financial was an attempt to conceal, hinder, delay or defraud fraud. Fraud factors to examine include creditors. The creditor obtains an attachment the following: (a) significant related-party order prohibiting debtor from disposing of transactions; (b) inadequate segregation of assets and requiring repatriation. Page 4 General International Discovery Procedures (available C. Norwich Pharmacal to US parties with foreign counsel assistance) To discover otherwise private or protected information, A. Letters Rogatory English law offers a remedy based on the case of Norwich Pharmacal Company v. Commissioner of The Letter of Request Procedure is the main means Custom and Excise. The US has entered into MLAT of evidence gathering under the Hague Convention. treaties with more than 45 countries, including many It is the Hague Evidence Convention.
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