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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Case 8:19-cv-00499-JVS-KES Document 60 Filed 06/12/19 Page 1 of 22 Page ID #:864 1 SMILEY WANG-EKVALL, LLP Lei Lei Wang Ekvall, State Bar No. 163047 2 [email protected] Kyra E. Andrassy, State Bar No. 207959 3 [email protected] Michael L. Simon, State Bar No. 300822 4 [email protected] 3200 Park Center Drive, Suite 250 5 Costa Mesa, California 92626 Telephone: 714 445-1000 6 Facsimile: 714 445-1002 7 Counsel for Robert P. Mosier, Receiver 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION 10 11 SECURITIES AND EXCHANGE Case No. 8:19-CV-499-JVS-KES LLP 1002 - 12 COMMISSION, PRELIMINARY LIQUIDATION 13 Plaintiff, PLAN OF ROBERT MOSIER, EKVALL, COURT-APPOINTED RECEIVER - 14 v. [No hearing required] 1000 • Fax 714 445 714 Fax • 1000 - 15 KENT R.E. WHITNEY, DAVID LEE PARRISH, THE CHURCH FOR Costa Mesa, California 92626 16 THE HEALTHY SELF A/K/A CHS 3200 Park Center Drive, Suite 250 Tel 714 445 714 Tel TRUST, AND CHS ASSET SMILEY WANG 17 MANAGEMENT, INC., 18 Defendants. 19 20 Pursuant to Section XIII of the Order Appointing Receiver (the 21 "Receiver Order"), Robert P. Mosier, the Court-appointed receiver (the 22 "Receiver"), submits the following Preliminary Liquidation Plan to apprise the 23 Court of the progress made thus far, the issues that need to be resolved to 24 continue to make progress, and the anticipated next steps. 25 26 I. SCOPE OF THE RECEIVERSHIP ESTATE 27 Pursuant to the Receivership Order, the Receiver was authorized and 28 directed to take control of the assets of Kent R.E. Whitney, David Parrish, 2792283.3 Case No. 8:19-CV-499-JVS-KES LIQUIDATION PLAN Case 8:19-cv-00499-JVS-KES Document 60 Filed 06/12/19 Page 2 of 22 Page ID #:865 1 The Church for the Healthy Self aka CHS Trust ("CHS Trust"), and CHS 2 Asset Management, Inc. (together, the "Receivership Defendants"), as well 3 as of their affiliates. In March 2018, iCare Financial Solutions, Inc. ("iCare"), 4 an entity owned by Ngoc Ha Nguyen ("Ha Nguyen"), notified its investors 5 that it was merging with CHS Trust. It appears from the Receiver's review of 6 the books and records that this merger was implemented, and there were 7 significant transfers between CHS Trust, iCare, and Ha Nguyen based on 8 the evidence. The Receiver believes that iCare and Ha Nguyen should be 9 considered to be affiliates of CHS Trust. He also believes that an account 10 belonging to a restaurant believed to be owned by Ha Nguyen should be determined to be within the scope of the Receivership Estate because it 11 LLP 1002 - 12 received a significant amount of funds indirectly from CHS Trust. Indeed, 13 the preliminary injunction entered by the Court included in its scope bank EKVALL, - 14 accounts belonging to iCare and Ha Nguyen. However, in order to avoid 1000 • Fax 714 445 714 Fax • 1000 - 15 any ambiguity, the Receiver believes that Ha Nguyen and iCare should be Costa Mesa, California 92626 16 explicitly made part of the Receivership Estate. If the Securities and 3200 Park Center Drive, Suite 250 Tel 714 445 714 Tel SMILEY WANG 17 Exchange Commission does not seek this relief in the near future, then the 18 Receiver intends to file either a motion to expand the scope of the 19 Receivership Estate or a petition for further instruction from the Court. 20 The Receiver has also traced some funds into an account in the name 21 of 2DC Partners, LLC dba CHS Asset Mgt or CHS and is in the process of 22 obtaining turnover of the funds, though the balance that was frozen is 23 believed to be less than $1,500. 24 25 II. PERSONAL PROPERTY 26 As set forth in the prior status reports, after the Receiver's appointment 27 on March 14, 2019, he and/or his agents along with representatives of the 28 SEC and the FBI went to addresses associated with the Receivership 2792283.3 2 Case No. 8:19-CV-499-JVS-KES LIQUIDATION PLAN Case 8:19-cv-00499-JVS-KES Document 60 Filed 06/12/19 Page 3 of 22 Page ID #:866 1 Defendants to change the locks and gain control over those locations and to 2 take control of assets and books and records. Specifically, the Receiver 3 went to residences at 118 Garnet Avenue, Newport Beach, CA and 1000 4 San Joaquin Plaza #6309, Newport Beach CA, and to the following office 5 locations: (1) the CHS Trust office at 14082 Magnolia St., Westminster, CA 6 92683; (2) a former CHS Trust office on Bolsa Avenue in Westminster, CA; 7 (3) a CHS Trust address at 141 West Jackson Blvd., Suite 400, Chicago, Il 8 60604; (4) an office address for iCare located at 2114 Senter Rd., Suite 12, 9 San Jose, CA 95112; and (5) the Church for the Healthy Self address at 10 3131 McKinney Avenue, Suite 600, Dallas, Texas 75204. The Receiver had the locks changed at the residences and at the CHS Trust office on 11 LLP 1002 - 12 Magnolia Avenue in Westminster, although the Receiver has since returned 13 possession of the Magnolia Avenue location to the landlord. EKVALL, - 14 At the residential properties, the Receiver took possession of various 1000 • Fax 714 445 714 Fax • 1000 - 15 personal property, including jewelry, clothing, computers, sports equipment, Costa Mesa, California 92626 16 and three cell phones. The Receiver located $53,037 in cash and deposited 3200 Park Center Drive, Suite 250 Tel 714 445 714 Tel SMILEY WANG 17 that cash. At the office locations, the Receiver took possession of office 18 equipment, books and records, and computer records. He had the 19 computers imaged and reviewed, and the books and records are in the 20 process of being reviewed for information that may assist the Receiver with 21 the identification and location of assets for the Receivership estates. 22 Because the Receiver Order authorized the Receiver to liquidate 23 personal property in the manner that the Receiver believed was most 24 beneficial to the Receivership Estate, the Receiver retained Tranzon Asset 25 Strategies ("Tranzon") to conduct an online auction of the personal property, 26 including a Bentley automobile, that was seized at the residential and office 27 locations. The auction was conducted in late April and generated 28 $54,194.94 for the benefit of the Receivership Estate after the payment of 2792283.3 3 Case No. 8:19-CV-499-JVS-KES LIQUIDATION PLAN Case 8:19-cv-00499-JVS-KES Document 60 Filed 06/12/19 Page 4 of 22 Page ID #:867 1 costs associated with the sale. A copy of the report of the auction is 2 attached as Exhibit "1." 3 The Receiver also took possession of a Mercedes and a BMW. Both 4 are in Tranzon's possession now and will be liquidated shortly. There are 5 five other cars believed to be under Mr. Whitney's control, but the cars are 6 older makes believed to be in the possession of third parties and do not 7 appear to be worth the cost that would be incurred locating them, taking 8 possession of them, and then selling them. 9 There are a number of items that were confiscated by the Receiver 10 when he visited the various locations referenced above that did not sell in Tranzon's auction and where the cost to sell the items is expected to exceed 11 LLP 1002 - 12 any benefit generated. These items range from clothing to a fake Rolex 13 watch. As authorized by the Order Granting Motion of Receiver, Robert P. EKVALL, - 14 Mosier, for Order in Aid of Receivership (the "Abandonment Order"), the 1000 • Fax 714 445 714 Fax • 1000 - 15 Receiver intends to give notice to either Mr. Whitney or Mr. Parrish, Costa Mesa, California 92626 16 depending on which home the items were confiscated from, that they have 3200 Park Center Drive, Suite 250 Tel 714 445 714 Tel SMILEY WANG 17 five days to retrieve the property and, if they fail to make arrangements to 18 retrieve the items, the Receiver will donate the useful items to Goodwill and 19 dispose of the rest. At least one third party with clothing that was removed 20 from one of the residences and that was not sold by Tranzon has retrieved 21 her items from storage and there may be one or two more third parties who 22 also retrieve clothing items. The small amount of personal property at the 23 Westminster office that was not sold as part of the auction was abandoned 24 to the landlord when the premises were returned to it. 25 The Receiver has also identified some partnership units that Church 26 for the Healthy Self holds in a publicly traded limited partnership and expects 27 to retain a broker to assist in their liquidation. The units are expected to be 28 worth approximately $10,000. 2792283.3 4 Case No. 8:19-CV-499-JVS-KES LIQUIDATION PLAN Case 8:19-cv-00499-JVS-KES Document 60 Filed 06/12/19 Page 5 of 22 Page ID #:868 1 III. BANK ACCOUNTS 2 A. Funds Recovered by the Receiver 3 Upon his appointment, both the Receiver and the SEC sent letters to 4 all financial institutions believed to be holding accounts for the Receivership 5 Defendants to give them notice of the asset freeze. This included accounts 6 in the name of iCare, Ha Nguyen, and Crawfish Lovers and Cajun Seafood, 7 a restaurant that is believed to be owned by Ms.
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