Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 1 of 9

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1 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 1 of 9 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF, vs. BRIAN A. BJORK, THE ESTATE OF JOEL DAVID SALINAS, J. DAVID GROUP OF COMPANIES, INC., J. DAVID FINANCIAL GROUP LP, SELECT ASSET MANAGEMENT LLC, SELECT ASSET CAPITAL MANAGEMENT LLC, SELECT ASSET FUND I, LLC, AND SELECT ASSET PRIME INDEX FUND, LLC. DEFENDANTS. CIVIL ACTION NO. 4:11 CV RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES TO THE HONORABLE KEITH P. ELLISON, UNITED STATES DISTRICT COURT: Receiver Steven A. Harr ( Receiver ) moves the Court to Appoint Disinterested Real Estate Appraisers/Brokers ( Appraisers/Brokers ) for the Apple Blossom and New Ulm real properties ( Motion ) subject to the ownership and control of the Receiver. 1 In support of the Motion, the Receiver respectfully states the following: 1 The Honorable Court has already approved the Motion to Appoint Disinterested Real Estate Appraisers/Brokers for the other real property under the Receiver s control. See Order, Exhibit 1, attached hereto. RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 1 OF 9

2 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 2 of 9 I. BACKGROUND OF THE RECEIVERSHIP AND THIS ASSET 1. On August 1, 2011, the Securities and Exchange Commission ( SEC ) filed its Complaint against Defendants. In conjunction therewith, the SEC sought, and by Order Appointing Receiver (the Order ), the Court appointed, Steven A. Harr as the Receiver for Brian A. Bjork, The Estate of Joel David Salinas, J. David Group of Companies, Inc., J. David Financial Group LP, Select Asset Management LLC, Select Capital Management, LLC, Select Asset Fund I, LLC and Select Asset Prime Index Fund, LLC (collectively, the Receivership Entities ). 2. As the Court ordered, the Receiver was authorized to have complete and exclusive control, possession and custody of all Receivership Assets and Receivership Records of Defendants. Receivership Assets and Receivership Records were defined in the Order as assets, monies, securities, properties, real and personal, tangible and intangible, of whatever kind and description, wherever located, and the legally recognized privileges (with regard to the entities), of the [Receivership Entities] and all entities they own or control..., and the books and records, client lists, account statements, financial and accounting documents, computers, computer hard drives, computer disks, internet exchange servers telephones, personal digital devices and other informational resources of or in possession of the [Receivership Entities] or issued by [Receivership Entities] and in possession of any agent or employee of the [Receivership Entities] The Receiver has fulfilled his duties as Receiver since his appointment and has conducted various investigations of the Receivership Entities with the intent to marshal the 2 Order Appointing Receiver, 1. RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 2 OF 9

3 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 3 of 9 Receivership assets for the benefit of the Receivership Entities investors and creditors. These efforts have included interactions with existing and former employees, reviews of corporate records and discussions with involved third-parties. These efforts have also included identifying, securing, and maintaining all real estate assets of the Receivership Entities. 4. The Receiver s investigation has revealed that the Receivership Entities own and control several pieces of real property ( Receivership Properties ). The Receiver has maintained all Receivership Properties by paying all applicable property taxes, hiring appraisers and brokers to value the properties, and by ensuring that the Receivership Properties are maintained in good condition for their ultimate disposition. 5. As the Court is aware, 28 U.S.C controls the sale of real property subject to Receiverships Sale of realty generally (a) Any realty or interest therein sold under any order or decree of any court of the United States shall be sold as a whole or in separate parcels at public sale at the courthouse of the county, parish, or city in which the greater part of the property is located, or upon the premises or some parcel thereof located therein, as the court directs. Such sale shall be upon such terms and conditions as the court directs. Property in the possession of a receiver or receivers appointed by one or more district courts shall be sold at public sale in the district wherein any such receiver was first appointed, at the courthouse of the county, parish or city situated therein in which the greater part of the property in such district is located, or on the premises or some parcel thereof located in such county, parish, or city, as such court directs, unless the court orders the sale of the property or one or more parcels thereof in one or more ancillary districts. (b) After a hearing, of which notice to all interested parties shall be given by publication or otherwise as the court directs, the court may order the sale of such realty or interest or any part thereof at private sale for cash or other consideration and upon such terms and conditions as the court approves, if it finds that the best interests of the estate will be conserved thereby. Before confirmation of any private sale, the court shall appoint three disinterested persons to appraise such property or RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 3 OF 9

4 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 4 of 9 different groups of three appraisers each to appraise properties of different classes or situated in different localities. No private sale shall be confirmed at a price less than two-thirds of the appraised value. Before confirmation of any private sale, the terms thereof shall be published in such newspaper or newspapers of general circulation as the court directs at least ten days before confirmation. The private sale shall not be confirmed if a bona fide offer is made, under conditions prescribed by the court, which guarantees at least a 10 per cent increase over the price offered in the private sale. (c) This section shall not apply to sales and proceedings under Title 11 or by receivers or conservators of banks appointed by the Comptroller of the Currency Notice of sale of realty A public sale of realty or interest therein under any order, judgment or decree of any court of the United States shall not be made without notice published once a week for at least four weeks prior to the sale in at least one newspaper regularly issued and of general circulation in the county, state, or judicial district of the United States wherein the realty is situated. If such realty is situated in more than one county, state, district or circuit, such notice shall be published in one or more of the counties, states, or districts wherein it is situated, as the court directs. The notice shall be substantially in such form and contain such description of the property by reference or otherwise as the court approves. The court may direct that the publication be made in other newspapers. This section shall not apply to sales and proceedings under Title 11 of or by receivers or conservators of banks appointed by the Comptroller of the Currency. As such, for the sale of any real property under Receivership, the Court must appoint three disinterested persons to appraise or issue price opinions of value on each of the Receivership Properties prior to their sale. The Receiver has taken steps to obtain broker s price opinions on each of the referenced properties in order to get good market information on value at a price that is reasonable and conserves the corpus of the estate. RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 4 OF 9

5 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 5 of 9 RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 5 OF 9 II. INTRODUCTION TO RELIEF REQUESTED 6. The two pieces of property subject to this Motion are the 806 Apple Blossom Drive property ( Apple Blossom ) and the New Ulm ( New Ulm ) property (collectively, Properties ). The Properties and related assets are currently owned and controlled by the Receiver. 7. Apple Blossom is a garden home located at 806 Apple Blossom Drive, Pearland, Texas The home is currently deeded to the Receiver and will be sold as soon as an interested buyer is found and this Honorable Court approves the sale. The property is currently listed on the market. 8. New Ulm is a vacant residential lot purchased by the decedent, Joel David Salinas, and is described as follows: a +/-.47 acre of a lot being lot 1, Block 5 The Falls Subdivision, located along the south line of Pinehurst Drive, just west of North Falls Drive, New Ulm, Texas It has not been listed but will be upon the conclusion of the Receiver s investigation of broker candidates. 9. The Receiver seeks to appoint the following persons as disinterested real estate Appraisers/Brokers on Apple Blossom and New Ulm. A. Apple Blossom 10. For Apple Blossom, the Receiver respectfully requests the Court appoint the following Appraisers/Brokers: (1) Steve Hughes, State Appraiser Certification No. TX G; (2) Martha Jefferies, Broker; and (3) Lisa Chaney, Broker. 11. Steve Hughes is employed by Bay Area Property Appraisers & Consultants, 1802 Broadway, Suite 212, Galveston, Texas Mr. Hughes has completed an Exterior-Only Inspection Residential Appraisal Report on October 24, See Exhibit 2 attached hereto.

6 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 6 of Martha Jefferies is employed by Martha Turner Properties, 1345 Space Park Drive, Suite B, Nassau Bay, Texas Ms. Jefferies is in the process of completing a broker s opinion of value on the property. 13. Lisa Chaney is employed by Martha Turner Properties, 1345 Space Park Drive, Suite B, Nassau Bay, Texas Ms. Chaney is in the process of completing a broker s opinion of value on the property. B. New Ulm 14. For New Ulm, the Receiver respectfully requests the Court appoint the following Appraisers/Brokers: (1) Ian E. Bader, Broker; (2) Nicola Hammett, Broker; and (3) Angie Evans, Broker. 15. Ian E. Bader is employed by Bill Johnson & Associates Real Estate, 420 E. Main St., Bellville, Texas Mr. Bader has completed a Broker s Price Opinion on May 3, See Exhibit 3 attached hereto. 16. Nicola Hammett is employed by Texas Star Realty, 930 Walnut St., Columbus, Texas Ms. Hammett is in the process of completing a Broker s Price Opinion of the property. 17. Angie Evans is employed by Texas Land Group, 4310 Leslie Rd., Fayetteville, Texas Ms. Evans is in the process of completing a Broker s Price Opinion of the property. 18. To the knowledge of the Receiver, none of the aforementioned real estate appraisers/brokers are related in any fashion to the events that led to this receivership, have made claims against the receivership nor have any interest in the properties to be sold. The Receiver informs the Court that Martha Jefferies and Lisa Chaney, identified in connection with the Apple RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 6 OF 9

7 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 7 of 9 Blossom property, are independent contractors under the broker s license of Martha Turner Properties. A different independent contractor real estate agent under the Martha Turner Properties broker s license has listed this property for sale. Martha Jefferies and Lisa Turner have no interest in the commissions to be earned or other proceeds that will result from the sale of Apple Blossom. Based on this information, the Receiver believes that all of the persons named above are disinterested in the values to be determined. III. AUTHORITIES 19. In receiverships, federal courts have broad equitable powers enabling them to fashion appropriate ancillary remedies necessary to grant full relief. SEC v. Blatt, 583 F.2d 1325 (5th Cir. 1978); Manor Nursing Centers, 458 F.2d 1082, (2d Cir. 1972). 20. It is also well settled that this Court has the authority to direct property to be sold by a receiver. See generally Moore s Federal Practice, Vol 13, Ch. 66 (Matthew Bender 3d ed. 1997); Federal Practice & Procedure, Vol 12, ; Clark on Receivers (Anderson 2d ed. 1929); also see, e.g., First Nat l Bank of Cleveland v. Shedd, 121 U.S. 74 (1887); SEC v. Forex Asset Mgmt. v. Waller, Receiver, 242 F.3d 325 (5th Cir. 2001). 3 3 This Court's authority to effect a sale of property derives from its equitable power, which is fundamentally granted by Section 2 of Article III of the United States Constitution, and also by statute, as being coextensive with the powers of an English court of chancery at the time of the separation of the two countries. Matthews v. Rodgers, 284 U.S. 521, 529, 52 S. Ct. 217, 221 (1932) (referring to Judiciary Act of 1789, 1 Stat. 78). The Federal Rules of Civil Procedure, in turn, expressly provide that: The practice in the administration of estates by receivers or by other similar officers appointed by the court shall be in accordance with the practice heretofore followed in the courts of the United States or as provided in rules promulgated by the district courts. Fed. R. Civ. P. 66. The practice of appointing receivers is commonly dated to the reign of Queen Elizabeth I of England. See, e.g., I Clark on Receivers 6, at 8 (Anderson 2d ed. 1929). It continues to the present. See, e.g., SEC v. Forex Asset Management v. Waller, Receiver, 242 F.3d 325 (5th Cir. 2001) (affirming an order of the United States District Court for the Northern District of Texas approving a distribution plan proposed by a receiver appointed by Judge Solis). Moore's Federal Practice devotes an entire chapter to the subject. Moore's Federal Practice, Vol 13, Ch. 66 (Matthew Bender RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 7 OF 9

8 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 8 of The only statutory restrictions upon the exercise of the Court s discretion are found in 28 U.S.C & 2002 (2004). 22. The Receiver proposes to sell Apple Blossom and New Ulm. Therefore, the Receiver requests that the Court grant its Motion to appoint the above-mentioned Appraisers/Brokers to comply with 28 U.S.C The Receiver advises the Court that the Plaintiff Securities and Exchange Commission does not object to the relief requested in this Motion. The Defendant entities are all controlled by the Receiver. CONCLUSION WHEREFORE, the Receiver prays that the Court enter an Order in the form submitted with this Motion, or for substantially the same relief in such form as the Court may find just and proper. 3d ed. 1997). Wright and Miller's procedural treatise has six sections. Federal Practice & Procedure, Vol 12, RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 8 OF 9

9 Case 4:11-cv Document 75 Filed in TXSD on 05/31/12 Page 9 of 9 Respectfully submitted, MUNSCH HARDT KOPF & HARR, P.C. By: /s/ Randy A. Canché Randy A. Canché, # MUNSCH HARDT KOPF & HARR, P.C. Bank of America Center 700 Louisiana, Suite 4600 Houston, Texas (713) (telephone) (713) (telecopy) rcanche@munsch.com COUNSEL FOR STEVEN A. HARR, RECEIVER CERTIFICATE OF CONFERENCE On May 31, 2012, I conferred with Tim McCole and he stated that the Securities and Exchange Commission is not opposed to the relief sought in this Motion. /s/ Randy A. Canché CERTIFICATE OF SERVICE I certify that a copy of the foregoing was filed electronically with the Clerk via the CM/ECF system. Notice of this filing will be sent to all parties by operation of the Court s electronic filing system. Houston, Texas, this 31st day of May /s/ Randy A. Canché Randy A. Canché RECEIVER S UNOPPOSED MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES PAGE 9 OF 9

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29 Case 4:11-cv Document 75-4 Filed in TXSD on 05/31/12 Page 1 of 1 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF, vs. BRIAN A. BJORK, THE ESTATE OF JOEL DAVID SALINAS, J. DAVID GROUP OF COMPANIES, INC., J. DAVID FINANCIAL GROUP LP, SELECT ASSET MANAGEMENT LLC, SELECT ASSET CAPITAL MANAGEMENT LLC, SELECT ASSET FUND I, LLC, AND SELECT ASSET PRIME INDEX FUND, LLC. DEFENDANTS. CIVIL ACTION NO. 4:11 CV ORDER GRANTING RECEIVER S MOTION TO APPOINT DISINTERESTED REAL ESTATE APPRAISERS/BROKERS FOR THE APPLE BLOSSOM AND NEW ULM PROPERTIES On this day of 2012, the Court considered Receiver s Unopposed Motion to Appoint Uninterested Real Estate Appraisers/Brokers for the Apple Blossom and New Ulm Properties. The Motion is GRANTED. SIGNED this day of, UNITED STATES DISTRICT JUDGE MHDocs _