Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 1 of 8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No. 12-61872-CIV-SCOLA FEDERAL TRADE COMMISSION, Plaintiff, vs. PRIME LEGAL PLANS LLC, a Delaware limited liability company, et al. Defendants, and THE 2007 SAN LAZARO IRREVOCABLE LIFE INSURANCE TRUST, et al. Relief Defendants. ________________________________________/ RECEIVER’S SIXTH STATUS REPORT TO THE COURT Charles H. Lichtman, this Court’s Receiver (“Receiver”), hereby provides the Court with a Status Report on matters related to this receivership, and states: THE RECEIVER’S ONGOING LITIGATION ACTIVITIES 1. Since the Receiver’s Fifth Status Report, the Receiver has continued to pursue conspirators and recipients of funds from the Receivership Defendants’1 (“Prime Entities”) fraudulent mortgage assistance relief services scheme (the “Legal Plans Scheme”). Litigation and pre-suit negotiated settlement activities account for the majority of time spent these past months by the Receiver and his professionals. 2. These activities are set forth in greater detail in the Receiver’s Fourth Application for Receiver’s Fees, Attorney’s Fees and Forensic Accountant Fees filed on March 4, 2014. 1 See ECF No. 156 for the expanded list of Receivership Defendants. 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 2 of 8 ECF No. 266/267. The fee application identifies the majority of the Receiver’s activities, including the net settlements from lawsuits and clawback demands, which continue to lead to substantial recoveries by the Receiver for the receivership estate. Notably, during the period covered by the most recent fee application, the Receiver spent less than $5,000 preparing demand letters and claims against the litigation targets which yielded $115,000 in new recoveries for the receivership estate. 3. Over the last past 3 months, the Receiver has continued to pursue recoveries of assets for the benefit of the receivership estate. Through the use of limited discovery and by negotiated settlement the Receiver has recently recovered another $25,000 for the receivership estate.2 4. The Receiver has also scheduled settlement conferences in the coming months with other third-parties which may lead to additional recoveries from his pre-suit efforts. The Receiver remains ready to file additional lawsuits to recover funds from those third-parties who are unwilling to engage in meaningful settlement negotiations. The number of litigation targets is down to fewer than five and the Receiver continues to analyze the cost-benefit of pursuing each such target. 5. The Receiver’s litigation against Gennady Litvin, Esq., Litvin Law Firm, P.C., Luis A. Torrens, Esq., and Litvin Torrens & Associates PLLC (collectively “Litvin”) is ongoing. See Lichtman v. Litvin Law Firm, P.C., et al. Case 0:13-cv-61119-KAM. The lawsuit is pending before the Honorable Kenneth A. Marra in the Southern District of Florida. 2 Consistent with this Court’s Stipulated Final Judgment and Order for Permanent Injunction and Monetary Relief entered on December 27, 2013 (the “Final Order”), the Receiver turns over the funds recovered to the FTC within 60 days of each such settlement. See ECF No. 259, Section XI. -2- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 3 of 8 6. The Receiver has been practical and fee sensitive in his approach to plenary litigation matters. In his case against Litvin, for example, the Receiver agreed to forestall expensive discovery while Litvin’s motion to dismiss was pending before the court. After the motion to dismiss was decided, leaving most of the Receiver’s claims intact and granting him leave to re-plead certain claims, the Receiver filed a second amended complaint and commenced discovery. The Receiver anticipates that the litigation with Litvin will incur additional fees and costs to be borne by the receivership estate but that any judgment in the Receiver’s favor would be recoverable as Litvin continues to operate an ongoing and possibly thriving law practice representing consumers. 7. The Litvin case before Judge Marra is currently set for the trial period to commence in December, 2014. 8. The Receiver wishes to preview for the Court that there is a possibility that the Receiver’s activities may not be completed within the 365 day period set by the Final Order. See ECF No. 259, Section XI. If necessary and only for good cause, the Receiver may seek to extend the Receiver’s term for the limited purpose of concluding his litigation efforts. See id. CLAIMS ADMINISTRATION AND CONSUMER REDRESS 9. Concurrently with the Fifth Status Report, the Receiver filed a Motion for (i) Order Setting a Bar Date for Taxing Authorities to Verify Claims and for Determination of Claims Procedures, (ii) Declaration of Constructive Trust and Determination of Priority of Use of Receivership Funds, and (iii) Declaration of Satisfaction of 31 U.S.C. § 3713(b) (the “Procedures Motion”). ECF No. 244. 10. On November 13, 2013, this Court entered the Order on Receiver’s Motion Regarding Tax Claims and Related Matters (the “Claims Order”). ECF No. 246. The Claims Order -3- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 4 of 8 deferred ruling, in part, and required “Any person or entity that wishes to contest the relief sought by the Receiver in items (3) through (5) on the first page of this Order must file a written opposition on the docket in this case by December 23, 2013.” Id. at 2 (footnote omitted). 11. Notably, no claims were filed by any person, entity or governmental authority, within the time period established by the Claims Order. 12. The Procedures Motion, along with the remaining portions of the Claims Order, and the Receiver’s Motion for Relief from Tax Filing Obligations and Administrative Corporate Matters [ECF No. 260] were thereafter granted by the Court on January 28, 2014. ECF No. 263. 13. Following the resolution of the claims administration matters described above, the Court entered the Order Granting Plaintiff’s Motion to Approve Consumer Redress Plan (the “Redress Plan”). ECF No. 265. 14. The Redress Plan sets forth the priority of payments of funds recovered by the FTC and by the Receiver’s activities. Id. The definition of “Redress Fund” includes “any additional funds transferred from the Receiver to the FTC.” Id. at ¶ 2. 15. Accordingly, the funds recovered by the Receiver continue to be paid to the FTC to be used by the FTC pursuant to the Redress Plan. 16. On May 28, 2014, the FTC issued a press release announcing the refund of nearly $3 Million to consumer victims of the Legal Plans Scheme. The FTC’s press release is available at: http://www.ftc.gov/news-events/press-releases/2014/05/ftc-mails-refund-checks-totalingnearly-3-million-consumers. 17. Consumers can also access information about the refund process by going to the FTC’s refund website: www.FTC.gov/refunds. -4- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 5 of 8 18. The FTC’s claims administrator, Gilardi & Co, LLC, also operates a consumer hotline about this case: 1-877-291-8511. Consumers who may have moved, lost checks, or otherwise need to contact the claims administrator can send an e-mail to: [email protected] or mail a letter to the claims administrator at: FTC v. Prime Legal Plans, LLC c/o Gilardi & Co. LLC P.O. Box 8060 San Rafael, CA 94912-8060 THE RECEIVER’S ONGOING OBLIGATIONS 19. The Receiver continues to operate a website, www.primelegalreceivership.com to provide consumer victims of the Legal Plans Scheme with information about the receivership, the Court, the consumer redress program operated by the FTC, and the above-mentioned contact information for the FTC’s consumer claims administrator. 20. The Receiver also spends $1,060.00 each month to preserve the records recovered by the Receiver at the shutdown of Prime Legal in an offsite storage facility. 21. The Receiver also maintains the storage of electronically stored information (ESI) collected from the Prime Entities and from third-parties through the Receiver’s discovery powers authorized by the Court at no charge to the receivership estate. 22. The Receiver and his team also respond to consumers’ inquiries as they come in and are in consultation with the FTC regarding the Redress Plan and its administration. See ECF No. 264, 265. 23. The Receiver and his team also assist several state attorneys general in their respective investigations of third-parties affiliated with the Legal Plans Scheme, as requested. -5- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 6 of 8 Dated: May 28, 2014 Respectfully submitted, BERGER SINGERMAN LLP 350 E. Las Olas Boulevard, Suite 1000 Ft. Lauderdale, Florida 33301 Direct: (954) 712-5138 By:_/s/ Charles H. Lichtman__________ Charles H. Lichtman, Esq. (Receiver) Florida Bar No. 501050 [email protected] By and through: BERGER SINGERMAN LLP Attorneys for the Receiver, Charles H. Lichtman 350 E. Las Olas Boulevard, Suite 1000 Ft. Lauderdale, Florida 33301 Direct: (954) 712-5138 By: _/s/ Gavin C. Gaukroger Gavin C. Gaukroger Florida Bar No. 76489 [email protected] -6- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 7 of 8 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 28th day of May, 2014, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record or pro se parties identified on the attached service list in the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or in some other authorized manner for those counsel or parties who are not authorized to receive electronically Notices of Electronic filing. By: _/s/ Gavin C. Gaukroger Gavin Gaukroger, Esq. -7- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872 Case 0:12-cv-61872-RNS Document 272 Entered on FLSD Docket 05/28/2014 Page 8 of 8 SERVICE LIST Jonathan E. Nuechterlein, Esq., General Counsel Leah Frazier, Esq. Jane Ricci, Esq. Rebecca M. Unruh, Esq. Federal Trade Commission 600 Pennsylvania Avenue N.W. Room NJ-31 58 Washington, D.C. 20580 (202) 326-2187 [email protected] [email protected] [email protected] 5668629-1 -8- 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 t: 954-525-9900 f: 954-523-2872