Case :-cv-00-rs Document 0 Filed 0// Page of Elizabeth Berke-Dreyfuss (Bar No. ) WENDEL, ROSEN, BLACK & DEAN LLP Telephone: () -00 Fax: () - Email: edreyfuss@wendel.com Attorneys for Susan L. Uecker, Receiver UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION SECURITIES AND EXCHANGE COMMISSION, vs. Plaintiff, SAN FRANCISCO REGIONAL CENTER, LLC; THOMAS M. HENDERSON; CALIFORNIA GOLD MEDAL, L.P.; CALLSOCKET, L.P.; CALLSOCKET II, L.P.; CALLSOCKET III, L.P.; COMPREHENSIVE CARE OF OAKLAND, L.P.; NAPL, L.P.; WEST OAKLAND PLAZA, L.P.; CALLSOCKET, LLC; CALLSOCKET II, LLC; CALLSOCKET III, LLC; COMPREHENSIVE CARE OF CALIFORNIA, LLC; IMMEDIA, LLC; and NORTH AMERICA PL, LLC, Defendants, -and- CALLSOCKET HOLDING COMPANY, LLC; CALLSOCKET III HOLDING COMPANY, LLC; BERKELEY HEALTHCARE DYNAMICS, LLC; CENTRAL CALIFORNIA FARMS, LLC; and JL GATEWAY, LLC, Relief Defendants. Case No. :-CV-00-RS RECEIVER S SECOND QUARTER REPORT RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of I. CASE BACKGROUND This matter was initially brought before the Court pursuant to a Complaint filed on January,, by the Securities and Exchange Commission (the SEC ), alleging that the named Defendants had exploited a federal EB- visa program by defrauding investors seeking to invest in the job creation program, earn a return on their investments and obtain a permanent U.S. visa as a way toward United States residency. (Docket No. ) On January,, the SEC filed a motion seeking an order appointing a receiver over the entity Defendants and Relief Defendants. (Docket No. ) On March,, the Court entered the Order Granting Motion for Preliminary Injunction and to Appoint a Receiver, pursuant to which the Court, among other things, appointed Susan L. Uecker as a receiver over the Receivership Entities and monitor over the Monitor Entities (Docket No. ). Pursuant to the terms of the Order Granting Motion for Preliminary Injunction and Motion to Appoint a Receiver, on March,, the Court entered the Order Appointing Receiver and Monitor ( Appointment Order ). (Docket No. 0). On June,, the Court entered the Order Extending Scope of Receivership. (Docket No. ). The Receiver s Quarterly Report for First Quarter was filed on April, (Docket No. ). II. ACTIVITIES TO DATE A. Employment of Professionals The Receiver requested approval to engage estate professionals as follows:. Uecker & Associates, receiver and office. Wendel Rosen Black & Dean, receivership counsel. Baker, Donelson, Bearman, Caldwell, Berkowitz PC, EB immigration counsel. Akawie & LaPietra, leasing counsel. Bachecki, Crom & Co, LLP CPA s (forensic and tax preparation). Dentons, health care counsel RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of The Court approved the request and an Order was entered on April, and May, (Docket No. and Docket ). follows: B. Turnover requests for information and compliance Upon her appointment, the Receiver requested turnover of documents from individuals as. Randy Sugarman, managing member of SFRC effective January,. Marvin Tate, CPA for Defendants, Relief Defendants and other affiliates. James Yang, Pegasus Law Group, PC, immigration counsel for investors. Martin Lawler, Lawler & Lawler, immigration counsel for investors and SFRC. James Wolf, Lipman & Wolf, immigration counsel for CCOO.. Leeds Disston, Casalina & Disston, corporate counsel for SFRC, and numerous entities Additionally turnover requests were issued to numerous banks and Central Escrow Company regarding banking and investor information. C. Borrow Funds to Pay Expenses and Authorize Continued Operation of CallSocket II, LP, California Gold Medal, LLC and Central California Farms, LLC The Receiver required funding and requested to borrow funds to continue business operations for the first quarter of the case covering April through June. The Order approving was entered on April, 0. (Docket No. ). D. Monitor Report Pursuant to the Order Granting Motion for Preliminary Injunction and to Appoint Receiver, the Monitor was tasked with reporting on Comprehensive Care of California and Comprehensive Care of Oakland and North America PL, LLC and Berkeley Health Care Dynamics, LLC as to: (a) whether there are reasons justifying expansion of her authority over The Receiver disputes the quality and quantity of the turn over by Mr. Sugarman and is continuing to pursue the records of SFRC. The Receiver has made a demand upon counsel for Mr. Thomas Henderson and Mr. Matt Henderson to turn over records, or provide an explanation as to why records cannot be turned over. RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of those entities from monitor to receiver and (b) the likelihood, if any, her appointment as receiver over any or all of those entities would cause disruption to any of those entities contractual relationships. (Docket No., p. :-). The Receiver prepared and filed the Monitor Report on May, (Docket No ). Thereafter, on June, the Court entered the Order Expanding Scope of Receivership (Docket No. ) and appointed Susan L. Uecker as the Receiver for Comprehensive Care of California and Comprehensive Care of Oakland, and North America PL, LLC and Berkeley Health Care Dynamic, LLC. E. Receiver s Recovery Plan Pursuant to paragraphs and 0 of the March,, Appointment Order (Docket No. 0), the Receiver was authorized and directed to develop a plan for the fair, reasonable, and efficient recovery and liquidation of all remaining, recovered, and recoverable Receivership Property (the Recovery Plan ) within ninety (0) days of the entry of the order. The Recovery Plan was filed on June, (Docket No. ). The Plan indicated that the Receiver will be filing motions relating to specific project issues with priorities as follows:. CallSocket II File a motion seeking authority to either operate the call center with a funding source that addresses the current funding issues, or to shut down the operation.. California Gold Medal The Receiver obtained a broker s opinion as to value indicating that the value of the real property owned by relief defendant Central California Farms, LLC is worth less than the debt. The Receiver will be filing a motion for authority to sell the remaining equipment and approve an agreement with the lender to accept a deed in lieu of foreclosure.. West Oakland Plaza File a motion for authority to retain a broker to market and sell the real estate owned by relief defendant JL Gateway, LLC. RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of. North America PL, LLC Meet with the necessary parties to discuss future operations, wind down, and sale of real estate.. California Care of Oakland, L.P. Obtain business and real estate valuations.. SFRC Liquidation of interests in other entities.. Forensic Accounting Expand scope of Bachecki Crom & Co. LLP, CPA engagement. The Receiver is proceeding with the priorities as noted and will be filing motions. F. Sale of Runway Assets Runway is a technology innovation hub for entrepreneurs and corporate partners. It provides a place and the partners to assist early stage start-ups. It includes co-working space, corporate partnerships, events and accelerators. Runway was operated by CallSocket I as a dba and was located in the Twitter Building at Market Street, San Francisco, California. In February during the State Court Action, the Receiver was authorized to market and sell Runway, and to enter into a Commission Agreement with two current employees of Runway. The first Commission Agreement expired and the Receiver sought approval of a new agreement along with the approval of overbidding and auction provisions for the sale of the Runway assets to the highest bidder. (Docket No. ) The auction was held at Court on June,. The sale price was set at $,000 with the initial bid of $0,000. Runway Global Innovation Corporation was the successful bidder at $. million with closing set for June,. The Order approving the sale to Runway Global In her application to retain the accountants, the Receiver requested authority to retain Bachecki Crom & Co., LLP for purposes of performing a forensic accounting. (Docket No. ). On July,, the Receiver obtained an order authorizing her to expend funds for a forensic accounting. (Docket no. ) Young v. Henderson et al., Case No. RG, pending before the Superior Court of the State of California, County of Alameda. RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of Innovation Corporation was entered on June, (Docket No. ). However Runway Global Innovation was unable to perform and the Receiver proceeded with the sale of assets to the to the approved backup bidder, Vanke Holdings USA LLC at $,0,000. (Docket No. ) The closing date was extended to July, and once again to July,. The sale of Runway assets was closed on July,. The Receiver has notified Runway Global Innovation Corporation that estate will be retaining its deposit as damages for its failure to close escrow pursuant to the terms of the Asset Purchase Agreement. G. Tax Review The Receiver is working with the CPA firm to obtain and compile the information in order to complete tax returns for the estate entities. III. ASSET REVIEW A. Cash The Standardized Fund Accounting Report includes the Consolidated report on a cash basis for the Receivership Entities. Attached to the consolidated report are the individual entity Reports with balance sheet and income statement. The individual reports are as follows:. CallSocket LP. CallSocket II, LP. CallSocket III, LP. CallSocket Holding Company, LLC. NAPL (escrow funds). North America PL, LLC. Berkeley Healthcare Dynamics, LLC. JL Gateway, LLC. West Oakland Plaza, LP. Comprehensive Care of Oakland, L.P.. Crystal Golden LLC. California Gold Medal, LP (escrow funds) RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of Comprehensive Care of Oakland ( CCOO ), Comprehensive Care of California, LLC ( CCOC ) along with North America PL, LLC and Berkeley Healthcare Dynamics, LLC were added to the receivership on June, pursuant to the Order Extending Scope of Receivership. (Docket No. ). The June accounting for the business operations of CCOO and North America PL are included however a review is in process and may result in restated financials for June. The current cash at June 0, is $,,.. B. Real Estate There are three remaining real estate assets held by the estate as follows:. JLGateway, LLC which holds title to the retail shopping center complex located at 00-00 Market Street, Oakland, CA. The shopping center contains approx.,00 sq feet of leasable area. The site area is. acres or, square feet, which includes. acres or, sq ft of land comprising a common area condominium site that was approved for development of an additional,000 sq ft of retail space within a larger adjacent senior apartment complex. This property has been valued at $,00,000 by Colliers. The title report shows a loan of approximately $ million in debt indicating potential net sale proceeds to the estate. The property is being managed by a professional management company previously retained by the state court receiver.. Berkeley Healthcare Dynamics, LLC holds title to the warehouse property located at 00 th Street in Oakland. This property has been valued at $,0,000 by Colliers. The title report shows a loan of approximately $. million in debt indicating potential net sale proceeds to the estate.. Central California Farms, LLC holds title to a former dairy processing plant located at N Burnett Road in Tipton, CA. The property has been valued at $. million by Newark Grubb Knight & Frank. The title report shows a loan of approximately $. million and delinquent taxes of approximately $0,000. There appears to be no equity in this property. C. Businesses The operating businesses are as follows:. Runway Assets see Sale of Runway Assets in Section II. F. RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of. CallSocket II, LP The call center business continues to operate at the Dufwin building in Oakland, CA. A motion will be filed in July seeking authority to either operate the call center with a funding source of new capital from investors, or to shut down the operation.. North America PL, LLC The Receiver is working with the existing tenant, Customs and Border Patrol, regarding operations and an orderly wind down.. CCOO/CCOC The Receiver will be engaging a consultant to prepare a valuation of the business. The Receiver is working on developing cash management systems to determine the profitability of the businesses. D. SFRC and Other Interests This Is There Restaurant Group, LLC is a restaurant (Tribune Tavern) located in the Tribune Tower of which SFRC owns a % interest. The other members have proposed a buy-out of the SFRC interest however extensive construction work is anticipated which may affect the value. The Receiver will be obtaining a valuation of the business. The Receiver believes there may be additional SFRC interests available to the estate and is investigating. IV. INVESTOR UPDATE The Receiver has responded to investor inquiries and has established a website at SFRC- EB.com. The website has all the court filings and reports available to the investors. Additionally the Receiver and counsel have met with and had conference calls with counsel for various investors. The Receiver continues to work on reconciliation of the investor lists with escrow receipts in order to determine the final investor lists for each entity. V. ASSET RECOVERY The Receiver is investigating and reviewing numerous causes of action and claims against third parties and when appropriate, will seek Court authority to pursue those claims pursuant to Paragraphs and 0 of the Order Appointing Receiver and Monitor. VI. ACCRUED PROFESSIONAL FEES The accrued professional fees and costs are as follows: RECEIVER S nd QUARTER REPORT :-CV-00-RS
Case :-cv-00-rs Document 0 Filed 0// Page of Uecker & Associates $0,. Wendel Rosen Black & Dean $,.0 Bachecki, Crom and Co $,.00 Akawie & LaPietra $,.0 Baker, Donelson $,. Denton s $,.00 The fee applications have been completed and submitted to the SEC. They will be filed with the Court in August. DATED: July, By: /s/ Susan L. Uecker Susan L. Uecker, Receiver RECEIVER S nd QUARTER REPORT :-CV-00-RS