Receiver’s Update – October 20, 2008 – Paul Levy Sentenced to 5 Years Judge Benitez sentenced Paul Levy today to 5 years in federal prison, the maximum sentence for the one count of the Indictment to which Levy has pled guilty. After much discussion with Levy’s counsel about Levy’s health condition, Judge Benitez did not order Levy taken into custody – instead Levy was ordered to “self-surrender” within 4 weeks. A Status Conference was set for December 1, 2008 to review Levy’s compliance with the self-surrender order. Receiver’s Update – October 15, 2008 – Paul Levy Sentencing Continued Again Paul Levy appeared this morning before Judge Benitez for sentencing. Levy’s counsel requested a continuance because Levy had scheduled a doctor’s appointment for this Thursday, October 16, 2008, and preferred that he have all his medicines in order before going off to jail. Judge Benitez continued sentencing to Monday, October 20, 2008 and advised Levy that he would be taken into custody at that time. All investors are reminded that if you wish to participate in the sentencing process, please contact Polly Montano, Victim Witness Coordinator, at the U.S. Attorney’s Office in San Diego, 619-557-5527. Receiver’s Update – August 15, 2008 – Paul Levy Has Again Pled Guilty – To Be Sentenced October 14, 2008 In August, 2008, on the date he and Marvin Friedman were to be sentenced, Paul Levy withdrew his previous guilty plea and opted to proceed to trial. Trial was first set for June 3, 2008, then for September 9, 2008. On July 22, 2008, Levy again pled guilty, this time to one count of conspiracy to commit wire fraud, mail fraud, and file false tax returns. The statutory maximum sentence on this count is 5 years. To read Paul Levy’s Plea Agreement, click here. Formal sentencing is now set for October 14, 2008 before Judge Benitez. All investors are reminded that if you wish to participate in the sentencing process, please contact Polly Montano, Victim Witness Coordinator, at the U.S. Attorney’s Office in San Diego, 619-557-5527. Receiver’s Update – August 14, 2008 – Where is Marvin Friedman? We have received a number of calls from investors asking for details on Marvin Friedman’s location within the federal prison system. This information is readily available to the general public via the Bureau of Prisons website at www.bop.gov. Just type in Marvin Irwin Friedman in the “Inmate Locator” box. At present, the website reports that he is “in transit” with a projected release date in 2013. We suspect that “in transit” means that he is en route to or in San Diego for the upcoming Levy trial, now set for September 9, 2008. Receiver’s Update – July 21, 2008 – Paul Levy Trial Now Set for September 9, 2008 On the date set for his sentencing—April 7, 2008—Paul Levy withdrew his previous guilty plea and Judge Benitez set trial for June 3, 2008. That trial date was later continued and the current trial date is September 9, 2008 before Judge Benitez. Receiver’s Update – June 10, 2008 – Receiver Implements Second Distribution of 12.5% of Approved Claims Pursuant to the GMM Reorganization Plan confirmed by the Bankruptcy Court in November 2007, the Receiver has now approved a second interim distribution of $8.8 million which represents 12.5% of approved claims. When combined with the first interim distribution, this will bring total distributions to $30 million, representing 42.5% of claims. This second distribution will be implemented over the next ten days. We anticipate that there will be a further distribution before the GMM Bankruptcy and the receivership are closed out, but the amount is uncertain. Our rough projection is another 1-2% of claims. Receiver’s Update – May 27, 2008 – Projected Timetable for Second Distribution; Receiver Files Fourth Fee Application The Receiver has filed in the receivership court a Fourth Interim Application for Payment of Fees of the Receiver and his Counsel for the nine month period August 1, 2007 through April 30, 2008. A hearing date of June 27, 2008 at 11:00 a.m. has been assigned by the court, but no hearing will be held unless the court specifically requests one. A hard copy of the Notice of this Application has been mailed to all investors. The Notice may be also accessed by clicking here. The Receiver now anticipates that a second interim distribution through the GMM Bankruptcy of approximately $9 million, or 13% of each claim, will be processed by July 15, 2008. When combined with the $21 million first interim distribution completed in January 2008, this will bring the total return to investors to $30 million or approximately 43%. The Receiver will continue to pursue the collection of additional assets, but the assets remaining are of such dubious collectability that it is impossible to project the likelihood or amount of any additional distributions. Receiver’s Update – April 7, 2008 – Marvin Friedman Sentenced to 6 Years; Paul Levy Withdraws Guilty Plea Marvin Friedman was sentenced today by Judge Benitez to 6 years in federal prison, plus an order to make full restitution of $49 million. Friedman pled guilty in February, 2005 to one count of money laundering and one count of filing a false tax return. Friedman has been in custody since March 10, 2008, but the exact length of his sentence was not decided until today Paul Levy’s sentencing was also on the court’s calendar for this morning, but during the hearing Levy withdrew his guilty plea and invoked his right to proceed with a trial. Levy had pled guilty in July, 2007 to the same felonies as Friedman - one count of money laundering and one count of filing a false tax return. Judge Benitez set his trial for June 3, 2008. Receiver’s Update – March 10, 2008 – Marvin Friedman Taken Into Custody; Formal Sentencing Continued to April 7 The sentencing of Marvin Friedman came on for formal hearing this morning before Judge Benitez. The sentencing hearing began but was not completed—it has been continued to April 7, 2008 at 10:30 a.m. to be simultaneous with the sentencing of Paul Levy. Mr. Friedman was, however, taken into custody and is now incarcerated in the federal system. The length of his term will presumably be decided at the next hearing on April 7. All investor are reminded that if you wish to participate in the sentencing process, please contact contact Polly Montano, Victim Witness Coordinator, U.S. Attorney’s Office in San Diego, 619-557-5527. Receiver’s Update – February 25, 2008 – Paul Levy Sentencing Continued At today's hearing on February 25, 2008, Judge Benitez continued Paul Levy's sentencing to April 7, 2008 at 9:00 a.m. Receiver’s Update – February 4, 2008 – Criminal Sentencings – Marv Friedman and Paul Levy The Receiver has received several inquiries from investors about the likely criminal sentences for Marv Friedman and Paul Levy. The current dates for these sentencings are: February 25, 2008 at 9 a.m. (Levy) and March 10, 2008 at 9 a.m. (Friedman) before Judge Roger T. Benitez, Courtroom 3 (4th floor), U.S. Courthouse, 940 Front Street, San Diego, CA 92101. Please bear in mind that while the Receiver is an interested observer of the criminal case, he is not a party to that case. The parties are the U.S. government and the individual defendants. In the end, the ultimate decision maker on sentence is Judge Benitez who has wide discretion. The only absolute limit on the judge’s discretion is that he may not impose a sentence over the statutory maximum. Both Friedman and Levy have each pled guilty to one count of wire/mail fraud and one count of filing a false tax return. Friedman’s Plea Agreement was filed February 27, 2005. Levy’s was filed more than 2 years later on July 24, 2007. The maximum sentence for each defendant is 96 months (8 years). The Federal Sentencing Guidelines are a key factor in the sentencing process. These Guidelines provide sentencing guidance based on the designated “Offense Level” which is calculated with a scoring system taking into account criminal history, number of victims, losses, and other factors. The Guidelines are not mandatory, but most courts give them considerable weight. In the respective Plea Agreements, the Government has stated that it will recommend a sentence of 96 months in custody plus + full restitution as to Friedman and 46-57 months in custody plus full restitution as to Levy. The prison recommendations are different because the Government assigned Friedman and Levy different Offense Levels under the Sentencing Guidelines – Offense Level 31 for Friedman and Offense Level 23 for Levy. The Probation Department also submits a recommendation on sentence, but that recommendation is only submitted to the Court and is not part of the public record. Any investor who wishes to participate in the sentencing process should contact Polly Montano, Victim Witness Coordinator, U.S. Attorney’s Office in San Diego, 619-557-5527. Receiver’s Update – January 28, 2008 – Interim Distribution Completed; Swiderski Sentencing The Receiver has completed a $21.2 million interim distribution to all approved claimants in the GMM Bankruptcy. This represents 30% of each approved claim. If you invested through a retirement account, we recommend that you confirm with your custodian that the distribution was received and properly credited. Any questions or problems, please contact Allison Trask at the Receiver’s office, atrask@labellamcnamara.com or (619) 696-9200. Receiver’s Update – January 17, 2008 – Criminal Sentencings Update
Receiver's Update – December 21, 2007 - GMM Liquidating Reorganization Plan Approved by Bankruptcy Court; Receiver Implements Interim Distribution of 30% of Approved Claims The work of the GMM/LF Global receivership is nearly complete:
Special Notice to Retirement Account Investors Many GMM accounts were opened in the name of trustees and custodians for IRAs and other retirement accounts. Two issues have arisen in connection with these accounts:
If you have questions regarding the interim distribution contact Allison Trask at the Receiver’s office in San Diego, (619) 696-9200 or atrask@labellamcnamara.com. Receiver’s Update – December 4, 2007 – Criminal Sentencings Update As of today, December 4, 2007, the criminal sentencings are now scheduled as follows: Receiver’s Update – November 15, 2007 – Criminal Sentencings Update Alice Swiderski's sentencing was on calendar for November 13, 2007, but was continued by the Court to January 15, 2008. Paul Levy's sentencing is on calendar for November 19, 2007, but his counsel has requested a continuance to January 28, 2008, which will most likely be granted. Marvin Friedman's sentencing is still scheduled for December 10, 2007. Receiver’s Update – October 22, 2007 – Swiderski Sentencing Continued Again The sentencing of GMM administrative assistant Alice Swiderski has been continued to November 13, 2007 at 9:00 A.M. The sentencings of Paul Levy and Marvin Friedman remain scheduled for November 19, 2007 and December 10, 2007, respectively. Receiver’s Update – October 8, 2007 – Reorganization Plan Nears Completion All investors will be receiving this week a package from GMM Bankruptcy counsel regarding the GMM Plan of Reorganization. This is the Receiver’s Plan which will lead to the formal liquidation of GMM and return of recovered funds to investors with approved claims in the Bankruptcy Court. The Receiver recommends that all investors vote in favor of this Plan. The Plan is now set for a Confirmation Hearing in the Bankruptcy Court on November 14, 2007. Once it is approved, the Receiver will proceed with an interim distribution, pro rata to all approved claimants. The following documents and information can be further accessed from this website:
We recognize that the Bankruptcy documents and procedures can be confusing and a little hard to follow. If you have questions, you may call the Receiver’s counsel, contact person Allison Trask, at 619-696-9200. Receiver’s Update – October 1, 2007 – New Schedule for Sentencing Dates in GMM Criminal Case The court dates for sentencings in the GMM criminal case have been rescheduled again. The new dates are: Alice Swiderski – October 15, 2007 at 9:00 A.M. All those sentencings will be before Judge Roger Benitez, Courtroom 3 at the U.S. District Court, Southern District of California, 940 Front Street, San Diego, California 92101-8900. For additional information as to how investors may participate in the sentencing process, contact Polly Montano, Victim Witness Coordinator at the U.S. Attorney’s Office in San Diego, (619) 557-5527. Receiver’s Update – August 22, 2007 – Third Interim Report Updates Asset Recovery and Timetable for Interim Distributions The Receiver has filed an Interim Report to the District Court which provides an update on the recovery of assets and current timetable and mechanics for a distribution to investors. To access the Report click here. In summary, the Receiver has accumulated cash assets of $25 million and projects that the ultimate fund available for investors will be in excess of $30 million and, based on current calculations of confirmed losses, investors may recover approximately 40% of their net capital losses. The current target date for an interim distribution is late 2007 with a final distribution in 2008. These are projections which could change subject to any unexpected complications in the claims process. The Receiver has also filed a Third Interim Application for Payment of Fees of the Receiver and his Counsel for the seven month period January 1, 2007 through July 31, 2007. A hearing date of October 26, 2007 has been assigned by the court, but no hearing will be held unless the court specifically requests one. A hard copy of the Notice of this Application has been mailed to all investors. The Notice may also be accessed by clicking here. Receiver’s Update – August 1, 2007 – Sentencing Dates in GMM Criminal Case Sentencings are now scheduled as follows: Receiver’s Update – July 27, 2007 – Paul Levy Guilty Plea in Criminal Case In a Plea Agreement entered July 24, 2007, Paul Levy has now pled guilty to criminal charges related to GMM. Levy was originally indicted on June 9, 2005 along with Marvin Friedman and Alice Swiderski. All three were charged with mail fraud, wire fraud, and conspiracy to commit those frauds. Fireman and Levy were also charged with money laundering and Friedman was charged with filing false tax returns. A Superseding Indictment was filed in January 2006, adding tax charges against Levy. In his Plea Agreement, Levy pleads guilty to one count of conspiracy to commit mail and wire fraud and one count of filing a false tax return. All other counts of the indictment will be dismissed. To access the complete Plea Agreement, click here. Marvin Friedman pled guilty in February 2006 to one count of conspiracy to commit mail and wire fraud and one count of filing a false tax return. The Friedman Plea Agreement was previously posted on this site in November 2006. Click here to access. Alice Swiderski pled guilty in October 2006 to two charges not directly related to the GMM fraud. She pled guilty to one count of making a false statement to federal investigators and to one count of filing a false tax return. The false statement at issue was her statement to investigators that she received compensation of $100 per moth from Paul Levy when in fact she received substantially more. All three defendants will be sentenced October 15, 2007, by Judge Roger Benitez. In the Friedman Plea Agreement, the government sates that it will recommend a sentence of 8 years (5 years on the mail/wire fraud and 3 years on the tax charge to run consecutively). The Levy Plea Agreement recites that under the federal sentencing guidelines, Levy’s offense will subject him to a sentence range of 46-57 months. Both Plea Agreements include restitution provisions which compel each to make full restitution up to the amount of net investor losses. Receiver’s Errata – May 23, 2007 - Receiver’s Second Interim Fee Application By letter dated March 28, 2007, all investors and interested parties were sent a hard copy of the Notice of Receiver’s Second Interim Fee Application with a hearing date of May 4, 2007. As with the Receiver’s First Interim Fee Application, we had also intended to make that notice available on this website, but that posting was inadvertently omitted. We correct that now—click here to access the Notice. This is the very same notice sent to all investors and interested parties on March 28, 2007. Levy Criminal Trial Continued to September 18, 2007 The District Court has continued the criminal trial of Paul Levy to September 18, 2007 before Judge Benitez. The trial had previously been set to start May 1, 2007. In August 2006, Levy’s private counsel was disqualified due to a conflict of interest and Levy then petitioned the Court that he was indigent and entitled to the appointment of counsel at the government’s expense. That counsel was appointed August 22, 2006. The original indictment filed in June 2005 also asserted charges against Marvin Friedman and Alice Swiderski. They have both entered guilty pleas to a limited number of charges, but will not be sentenced until after the Levy trial. Marvin Friedman pled guilty in February 2006 to one count of conspiracy to commit mail and wire fraud as to GMM and one count of filing a false tax return.
Alice Swiderski pled guilty in October 2006 to two charges not directly related to the GMM fraud. She pled guilty to one count of making a false statement to federal investigators and to one count of filing a false tax return. The false statement at issue was her statement to investigators that she received compensation of $100 per month from Paul Levy when in fact she received substantially more. Receiver's Update - March 16, 2007 Receiver's Interim Report Updates Asset Recovery and Procedures for Investor Distribution The Receiver has today filed an Interim Report with the District Court which provides an update on efforts to recover assets and sets forth the Receiver's proposed mechanics and timetable for a distribution to investors. To access the Report, click here (444 KB, PDF) Receiver's Update - November 2006 Current Assets The receivership has accumulated cash assets of $16.2 million. That cash is now invested in money market accounts generating approximately $70,000 per month. The settlements with Paul Levy, Mrs. Levy, Sandalwood, and Parvix (which were all reported in the update of March 2006) have all funded, except for a $500,000 payment due from Mrs. Levy by December 31, 2006. The settlement with Paul Levy included entry of a Judgment for $14 million. He has not satisfied that Judgment, but has assigned to the Receiver “all” his assets based on a Declaration under oath. Prior to that Judgment, we received $2.3 million from Levy. Post-judgment, we have received to date an additional $265,000, plus his rights to an assortment of illiquid private companies. As set forth in the settlement with Mrs. Levy, the $3 million she has paid in her settlement has been credited to the Paul Levy judgment, leaving a balance due of $12.7 million. We have no present expectation of further substantial recoveries on that Judgment, but we continue to investigate Levy's assets and to confirm with certainty that the disclosures in his Declaration were accurate and complete. His settlement was expressly conditioned upon the accuracy of his asset disclosures. In addition to cash, the receivership has non-cash assets, including an illiquid position in an investment partnership, pending avoidance actions in the GMM bankruptcy, and limited claims against third parties. We estimate that these assets and claims may bring an additional $3-6 million to the estate. Calculation of Losses Our review of claims confirms 194 investor claims with total investor net capital losses (i.e. contributions in less distributions out) at approximately $70 million. All investors will ultimately receive an equal pro rata share of their actual capital losses from the funds assembled by the Receiver. At this time, we project that investors may recover between 25-30% of their actual net capital losses, but we must caution that this is a projection only which remains subject to a number of variables. In early 2007, we will commence a procedure for the final determination of allowed claims and will seek court approval for an interim distribution once the amount of the claims are resolved. Bankruptcy Proceedings To date, we have filed a total of 28 avoidance and/or preference actions in the GMM Bankruptcy. We have now settled 14 of the filed cases and one unfiled case for total proceeds to the estate of $5,117,400. $4.6 million of those settlements have been fully funded to the estate. The remaining $500,000 is scheduled to fund over the next two months. 14 actions remain active. Of those, we have been unable to serve two and we have a default judgment as to one. We are actively litigating the remaining eleven cases.Claims Against Other Third Parties We have reached a preliminary settlement of the Receiver's claims against accountant Mark Albrecht as part of a bigger settlement including 13 investors who brought individual claims against Albrecht. There remain some details to be finalized, but we are optimistic this deal will be completed. The Receiver's claims against brokerage firm Granite Financial and money management firm Zenith Capital remain active. As to Zenith, we have asserted no claim of wrongdoing, but an equitable claim for return of the incentive fees paid to Zenith. Timetable Our goal is to get investors their money and to minimize on-going administrative costs of the receivership. Since we are still pursuing avoidance actions and other litigation and one of our assets will remain illiquid at least through 2007, the receivership may remain open into 2008. We will, however, pursue all available means to seek court approval of an interim distribution in early 2007. Criminal Case The federal criminal case in the district court in San Diego is still pending, but only as to Paul Levy. Both Marvin Friedman and Alice Swiderski have entered into plea agreements. Click here (765 KB, PDF) to access the Friedman Plea Agreement. They will not be sentenced until after completion of the case against Paul Levy. The court disqualified Paul Levy's retained counsel in August 2006 based on a conflict of interest. The court then appointed new counsel for Levy who now claims to be indigent. His trial is now set for May 1, 2007. Receiver's Update - March 10, 2006 Bankruptcy Court Approves Receiver's Settlements with Paul Levy, Mrs. Levy, and Sandalwood Funds At a hearing on March 10, 2006, Judge Meyers in the Bankruptcy Court in San Diego approved the settlements the Receiver had reached with Paul Levy, Mrs. Levy, and the Sandalwood Funds. The terms of those settlements were summarized in the Receiver's Update on this website dated February 15, 2006 (see below) and in notices sent to all investors. As a result of these settlements, the receivership estate will receive in the next 30 days a total of $6,760,000 cash ($3.5 million from Sandalwood, $3 million from Mrs. Levy, and $265,000 from Paul Levy) and a Judgment will be entered against Paul Levy in the amount of $14 million. Mrs. Levy is required to deliver an additional $500,000 in December, 2006. Under the terms of the settlements, the funds received from Mrs. Levy will be credited against the Judgment as to Mr. Levy. The Receiver has also completed an arrangement with the Parvix Capital Management partnership (previously named Windamere) to resolve LF Global's 79% interest in that partnership. By that arrangement, the receivership will receive 196,237 shares of Santarus, Inc. with a value as of the market close on March 13, 2006 of $1,242,180. After receipt of the cash funds due from the 3 settlements and receipt of the Santarus shares from Parvix, the receivership estate will have assets of approximately $19 million. Receiver's Update - February 15, 2006 As a follow up to our detailed letter and website posting dated September 23, 2005, the Receiver hereby provides a further update to investors. Please refer back to the September 23, 2005, posting for additional details about the receivership in general. Recent Settlements Over the last few months, we have completed settlements with Paul Levy, the former Mrs. Levy, and Sandalwood Funds. The settlement with Paul Levy will confirm a $14 million Judgment against Levy and delivery of all of Levy's remaining assets to the estate. The settlement with Mrs. Levy and Sandalwood will bring a total of $7 million cash to the estate without further resort to expensive and unpredictable litigation. All three settlements are subject to approval of the court and are summarized in detail in notices mailed to all investors. All these settlements are consistent with the Receiver's overall mission to recover assets as cost-effectively as possible. In March 2005, Paul Levy delivered $2.3 million to the Receiver as partial disgorgement of his gains.In April 2005, all the Levy family assets were frozen by the district court in response to the Receiver's Application for an OSC re Contempt.By our settlement, Paul Levy will stipulate to a Judgment for $14 million and deliver to the Receiver all his remaining assets. As disclosed by Levy, his assets outside GMM/LF Global are de minimus versus the amounts he withdrew, but the settlement is expressly conditioned on the accuracy of the asset disclosures.The Receiver will continue to investigate Levy's assets. The Receiver has made no claim of wrongdoing against the former Mrs. Levy and Mrs. Levy has cooperated fully with the Receiver and his staff. We have now settled our equitable claims that assets within her control are traceable to GMM investor funds diverted by Paul Levy. Mrs. Levy will voluntarily deliver $3.5 million to the estate and has been provided a window to raise these funds through refinancing and/or the sale of property. Sandalwood Funds was a substantial investor in GMM.It received $3.2 million in payments during the 90 days before the filing of the GMM Bankruptcy petition.By settlement of the Receiver's preference claims, Sandalwood will return $3.5 million cash to the estate and will then have a claim in the Bankruptcy Court as to that $3.5 million. Calculation of Losses We have made substantial progress in validating the accuracy of claims submitted by investors to the GMM Bankruptcy Court.Our most recent review confirms 194 investor claims with total investor capital losses (capital in less distributions out) at approximately $65 million. This number is still subject to change as our accountants finalize their review and narrow all claims to net stripped capital. All investors will ultimately receive an equal pro rata share of their actual capital losses from the funds assembled by the Receiver. There remain many issues to resolve, but we now roughly project that the ultimate recovery to investors will be approximately 25-30% of their actual capital losses. After approval and funding of the Sandalwood and Levy settlements, the receivership will have assets of approximately $19 million. Bankruptcy Proceedings To date, we have filed a total of 14 avoidance and/or preference actions.We have previously settled 6 of those with gross proceeds to the estate of $989,837.Once approved, the Sandalwood settlement will add $3.5 million to that total. Claims Against Principals of GMM and LF Global With the recent settlements, we have now resolved the Receiver's claims against the primary LF Global principals—Friedman, Levy, and Lohr. Claims Against Other Third Parties The Receiver's claims against accountant Mark Albrecht, brokerage firm Granite Financial, and money management firm Zenith Capital remain active.As to Zenith, we have asserted no claim of wrongdoing, just an equitable claim for return of the incentive fees paid to Zenith by LF Global. We hope to bring those claims to closure on the best possible terms in the next 90 days. Timetable Our goal is to get investors their money. Bankruptcy procedures do not generally permit interim distributions before a complete re-organization or liquidation plan is approved by the Bankruptcy Court.We will, however, pursue all possible vehicles to permit an interim distribution in 2006.Given that substantial assets of the receivership will remain illiquid well into 2007, the receivership will necessarily continue into 2007. We will, however, take all steps to keep expenses under control. The big expenses associated with the forensic reconstruction of GMM and LF Global's finances are now over. September 23, 2005 To: GMM Investors By this Update, I want to speak directly to investors and provide a summary of our efforts to economically recoup as much of your losses as possible. Communication With Investors Given that we have nearly 200 investors, the primary means of communicating with investors is through our website at www.gmmreceiver.com. We will update that site as developments merit. Through that website you can also pull down and print copies of key reports and other court filings. If you have individual questions you can also contact us by e-mail at mkubczak@labellamcnamara.com or call our office, Maria Kubczak, at 619-696-9200. Much of this Update is a restatement of information previously reported on the website, but I want to ensure that all investors receive the information. If you were to read only one document, I refer you to our First Interim Report, filed January 24, 2005. It contains a detailed summary of what happened at GMM. It is available on the Receiver's website. The Role Of The Receiver My primary mission as the Court-Appointed Receiver is to maximize the funds available for ultimate return to investors and to do so as cost-effectively and efficiently as possible. I work for all investors. My goal has been to secure practical business solutions that will bring maximum net return to investors as quickly as possible. Our progress toward this goal has been recounted in our reports to the Court, particularly the First Interim Report filed January 24, 2005, our Application for an OSC Contempt re: Paul Levy filed April 19, 2005, and postings to the Receiver's website. As of the date of this letter, the receivership has made substantial progress. We have current assets of approximately $11 million. We have reached cost-effective settlements with GMM principals Marvin Friedman and Milt Lohr. We have secured an asset freeze as to all assets of Paul Levy, his wife, and their multiple corporate entities. Paul Levy has agreed to stipulate to a judgment in the Receiver's favor for $14.1 million. We have secured nearly $1 million in settlements from avoidance actions filed in the Bankruptcy Court. We are actively pursuing settlements of other avoidance actions and recovery of assets from the Levys and their various entities. We have initiated civil actions against third parties who contributed to GMM's collapse or are in possession of GMM funds. We have cooperated with multiple government agencies including the FBI, the SEC and the US Attorneys office, all which are conducting investigations. There remain many unknowns, but my best estimate at this time is that this receivership should be in a position to return 20 – 40% of capital losses to investors. The Reconstruction Effort The initial challenge of this receivership was to develop a coherent history of the business and to document trading activity, transfers, and payments among and between GMM, related entities and insiders. Absent such a history, we could not accurately identify assets, responsibly pursue claims, or determine just what had gone wrong. The reconstruction of this history has been a complex, cumbersome, and expensive undertaking due in large part to the lack of current records and a lack of cooperation from certain insiders. But, it was an essential task that provided a starting point for the Receiver's evaluation and pursuit of assets and claims. The task required extensive review and analysis of financial records (most subpoenaed by the Receiver from banks and financial institutions), review and analysis of corporate records and interviews of employees, vendors, and the principals. In the end, our reconstruction of GMM revealed a simple story. Of the nearly $108 million invested in GMM, between 1998 and 2004, the majority ($53 million) funded payments to withdrawing investors. These withdrawals included “fictional profits” paid to investors. The balance was either lost in an ill-conceived options program that never made money ($17 million in losses), misappropriated by LF Global as the General Partner (nearly $20 million), or disbursed to LF Global principal Paul Levy (nearly $19 million). Although the reconstructed story of GMM may appear rather simple, the reconstruction was neither simple nor inexpensive. The reconstruction was complicated by multiple factors, including: the woeful state of the corporate and financial records maintained by LF Global; the informal and undisciplined manner in which the business was operated; the destruction of several computer hard drives just prior to the filing of the SEC Action; the fraudulent conduct of certain principals; the abject unreliability of all prior accounting reports, tax returns and schedules K-1s; the very high volume of transactions and transfers, including thousands of undocumented intracompany transfers by and between GMM, LF Global, the principals, and related entities; the deceptive accounting submitted by Paul Levy which understated his GMM withdrawals by more than $16 million; the existence of a “secret” GMM account uncovered by our investigation; and the labyrinth of entities and accounts controlled by Paul Levy to which GMM funds were delivered. When my staff first arrived at the offices of LF Global on March 11, 2004, all office functions had stopped and no employees were present. We later learned that in the days just prior to the shut down, selected hard drives had been destroyed. There was no office manager, no supervisor, no reliable employee who could walk us through the operation. The internal infrastructure of GMM/LF Global was a nightmare. LF Global maintained no coherent or complete financial or administrative systems at any time. By any definition, this business was dysfunctional – no business plans, no budgets, no procedures, no controls, and no accountability. In lieu of a check request procedure, a principal seeking a draw need only write himself a check. In lieu of a check register system to track bank balances, a staffer was tasked to call the bank each morning to obtain balances. Bounced checks and frantic intercompany transfers to cover them were standard operating procedure. Instead of a disciplined file system, key financial records were routinely shred. Instead of an orderly check request system with internal controls, there were no apparent systems for approval of disbursements. Prior to 2000, LF Global maintained no formal accounting system, just manual checks. A modest QuickBooks system introduced in 2000 was an improvement, but not completely reliable because the entries were at best incomplete and unreliable. The QuickBooks system also omitted transactions from several GMM bank accounts, which we uncovered in our reconstruction efforts. Quarterly reports of investors results, tax returns and corresponding Schedule K-1's were pure fiction based on sparse information provided by LF Global to the accountants. They provided no realistic trail for the Receiver – indeed, fictional K-1s were just promotional tools to demonstrate fictional gains. GMM and LF held accounts at multiple banks, but maintained no coherent or disciplined system for filing and retaining bank records. In fact, documents were routinely shred as they were received. The corporate records were maintained with the same sloppy procedures as accounting and financial records. The state of the records and the reliability of the information we did discover was further compromised by the fraudulent activities of the principals (Friedman and Levy) who have since been indicted on multiple criminal charges, along with LF Global administrator Alice Swiderski. The Paul Levy aspect of the reconstruction was particularly complicated because of the arcane financial labyrinth maintained by Levy. The painstaking reconstruction of Levy's participation led to the conclusion that Levy's accounting submitted to the SEC in June 2004 was dramatically inaccurate. While Levy claimed withdrawing only $2.3 million more than he invested in GMM/LF Global, our analysis found that Levy withdrew more than $19 million from GMM. But for the investigative and reconstructive efforts of my counsel and accountants, this apparent deception by Levy may have remained undetected; however, because of their efforts the real story of GMM's collapse is now clear and has provided the Receiver with the factual basis for our current claims against Levy. What Are The Losses? A critical starting point for any discussion of what investors may recover from the receivership is the actual amount of capital losses. Due to the fact that GMM maintained no coherent business records, this has been a difficult task. Based on our initial review of the 198 investor claims submitted to the Bankruptcy Court, our estimate of actual investor capital losses was approximately $65 million. One significant caveat is that many investors included in their claims the fictional profits, which had been reported to them in GMM statements. Now that we have nearly complete bank records, we have tasked our accountants and lawyers to review each and every claim based on all available records to insure that all claims are limited to net stripped capital – i.e. actual capital invested and not recovered. We expect that this detailed review will result in a reduction in the calculation of the losses. We anticipate completing that process within the next 30 days and we will advise all claimants of our preliminary determinations as to the amount of their net-stripped capital. All investors will receive an equal pro rata share of their actual capital losses from the funds assembled by the Receiver. Current Assets The Receivership has current assets of approximately $11 million composed of $7 million in cash, $500,000 in securities, $1 million interest in Parvix Capital Management (formerly known as Windamere), and $2.5 million interest in Highcrest Partners, LP. Except as to the cash figure, these are estimates based on current market conditions and without adjustments to account for the short-term illiquidity of the non-cash assets. The Highcrest investment is a valuable asset, but is decidedly illiquid for the next few years so its current value has been discounted to reflect that lack of liquidity. Bankruptcy Proceedings GMM was placed in bankruptcy the day after the SEC action was filed. Bankruptcy provides a very helpful forum and procedures for the processing of claims in situations like this. One of the other benefits of bankruptcy is the ability of GMM to recover certain transfers of funds that occurred prior to the bankruptcy filing – so-called “avoidance” actions – which may be brought as to transfers made within 90 days of bankruptcy and in some circumstances transfers made as far back as 4 years earlier. These avoidance actions are designed to “spread the pain” equally among all investors. This is particularly so in the limited situations where a few investors towards the end received actual “profits” that were in effect funded by investors who put money into GMM towards the end. Our clear preference is to settle all such avoidance claims without protracted formal litigation. We appreciate that it may seem unusual that claims can be brought against investors who were victims of GMM, but there is no assertion that such investors were involved in any wrongdoing. Rather, such claims are just part of the bankruptcy code's policy that those lucky investors who got out towards the end or who received actual profits within certain time frames should return that money and then participate in the pro rata distribution of the ultimate fund. To date, we have filed a total of 14 avoidance actions. We have now settled 8 of those with gross proceeds to the estate of $989,837; $460,000 of that has already been received, and the remainder will be payable after the settlements are approved by the Bankruptcy Court. Our most significant claim against a New Jersey fund was dismissed without prejudice to being refiled in order that we could pursue settlement discussions. We have made substantial progress in those discussions. Claims Against Principals of GMM and LF Global Although we are pursuing avoidance claims where appropriate, our primary focus is and has been to seek financial redress from those responsible for the GMM fraud. Where possible, we seek to accomplish this without protracted expensive litigation. We have made substantial progress in our claims versus the GMM principals. We have reached a settlement with Marvin Friedman which requires him to deliver all his assets to the Receiver and to cooperate with the Receiver, including the identification of any assets held by family members which were purchased with GMM funds. The settlement is expressly conditioned on the accuracy and completion of the financial disclosures. We are reviewing Friedman's personal bank records for disgorgement actions against family members. Friedman was also indicted on June 9, 2005, and any conviction will include a substantial restitution order. A Consent Judgment has also been entered against Friedman in favor of the SEC in the amount of $5.4 million. To date, we have collected $773,342 from Friedman. As to Paul Levy, we secured an OSC re Contempt and Asset Freeze against Mr. Levy, his wife, and their controlled entities. Levy has since stipulated to a Preliminary Injunction and has agreed in principle to settle with the Receiver by delivering all his assets based on a sworn asset disclosure. On May 20, 2005, through counsel Levy stipulated to a Judgment of $14.1 in favor of the Receiver. We have identified substantial GMM assets which ran through Levy to properties owned by LLCs or his wife and have asserted disgorgement and unjust enrichment claims against them. We are also conducting all appropriate investigations for any additional assets. Levy has also been indicted and any conviction will include a restitution order. To date, we have collected $2.3 million from Levy which was originally placed in an escrow account in May 2004. We have also settled our claims versus Milton Lohr from whom we have collected $570,000. Claims Against Other Third Parties The Receiver has also investigated and made formal claims against third parties who contributed to the demise of GMM, including accountant Mark Albrecht and brokerage firm Granite Financial. We have brought a disgorgement action against money management firm Zenith Capital on the basis that they received substantial fees from GMM. We have asserted no claim of wrongdoing by Zenith, just an equitable claim for return of the fees since they were based on GMM's bogus performance calculations. A limited number of investors have retained counsel and filed individual suits against GMM principals and selected third parties. The Receiver discourages such individual suits, as they are most likely duplicative of the Receiver's efforts. Our view is that the Receiver represents the interest of all investors, now has the benefit of a year-long forensic investigation that has revealed where the money went and who the culprits are, and is in the best position to assert claims against GMM principals and third parties involved in the collapse. Whatever funds the Receiver collects will be distributed to all investors pro rata. Timetable Our goal is to get investors their money. Ideally, we could commence that with an interim distribution in the first half of 2006, but that will be subject to resolving the amount of all allowed claims and working out the procedural requirements with the Bankruptcy Court and the receivership court. Over the next 60 days, we expect to make major progress on two fronts – the resolution of several significant claims which could bring significant additional funds to the receivership; and a final analysis of investor claims which will give us a firm overall losses number. Once these are accomplished, we will be better able to project a more specific timetable. Notice of Receiver's Fee Application The Receiver has filed a First Interim Application for Payment of Fees and Expenses of the Receiver, the Receiver's counsel, and the Receiver's forensic accountants. The Application covers the period March 11, 2004 when the Receiver was appointed through June 30, 2005. The Application is set for hearing before Judge Moskowitz on October 21, 2005. Click here (PDF, 81KB) to see a complete copy of the Notice of First Interim Application and First Interim Application of Receiver for Order Approving Fees and Expenses of (1) The Receiver; (2) Receiver's Counsel; and (3) Receiver's Forensic Accountants. To: GMM Investors
A detailed summary of the Receiver's efforts to reconstruct the financial history of GMM and identify the causes for the collapse is set forth in our Interim Report filed with the Court on January 24, 2005. That Interim Report is available in its entirety on this website. By this Update, I want to speak directly to investors and provide a summary of our efforts to economically recoup as much of your losses as possible. In the end, the Receiver works for all investors with the mission to build as large a fund as possible for distribution to all investors. What Are The Losses? Investor claims will be processed through the claims procedure administered by the Bankruptcy Court. Based on our initial review of the 198 investor claims submitted, our estimate of actual investor capital losses is approximately $65 million. One significant caveat is that many investors included in their claims the fictional profits which had been reported to them in GMM statements – now that we have nearly complete bank records, we will again review the claims to insure that all are limited to net stripped capital – i.e. actual capital invested and not recovered. We expect that this detailed review will result in some reduction in the calculation of losses. All investors will receive an equal pro rata share of their actual capital losses from the funds assembled by the Receiver. That procedure will be administered through the Bankruptcy court. Current Assets The Receivership has current assets of approximately $10 million composed of $4.8 million in cash, $600,000 in securities, $1 million interest in Parvix Capital Management (formerly known as Windamere), and $2.5 million interest in Highcrest Partners, LP. Except as to the cash figure, these are estimates based on current market conditions and without adjustments to account for the short-term illiquidity of the non-cash assets. Bankruptcy Proceedings GMM was placed in bankruptcy the day after the SEC action was filed. Bankruptcy provides a very helpful forum and procedures for the processing of claims in situations like this. One of the other benefits of bankruptcy is the ability of GMM to recover certain transfers of funds that occurred prior to the bankruptcy filing – so-called “avoidance” actions – which may be brought as to transfers made within 90 days of bankruptcy and in some circumstances transfers made as much as 4 years earlier. These avoidance actions are designed to “spread the pain” equally among all investors. Our clear preference is to settle all such avoidance claims without protracted formal litigation. We appreciate that it may seem unusual that claims can be brought against investors who were victims of GMM, but there is no assertion that such investors were involved in any wrongdoing. Rather, such claims are just part of the bankruptcy code's policy that those lucky investors who got out towards the end or who received actual profits within certain time frames should return that money and then participate in the pro rata distribution of the ultimate fund. Claims Against Principals of GMM and LF Global Although we are pursuing avoidance claims where appropriate, our primary focus is and has been to seek financial redress from those responsible for the GMM fraud. Where possible, we seek to accomplish this without protracted expensive litigation. We have made substantial progress in our claims versus the GMM principals. We have reached a settlement with Marvin Friedman which requires him to deliver all his assets to the Receiver and to cooperate with the Receiver, including the identification of any assets held by family members which were purchased with GMM funds. The settlement is expressly conditioned on the accuracy and completion of the financial disclosures. We are reviewing Friedman's personal bank records for disgorgement actions against family members. Friedman was also indicted on June 9, 2005 and any conviction will include a substantial restitution order. To date, we have collected $773,342 from Friedman. As to Paul Levy, we secured an OSC re Contempt and Asset Freeze against Mr. Levy, his wife, and their controlled entities. Levy has since stipulated to a Preliminary Injunction and has agreed in principle to settle with the Receiver by delivering all his assets based on a sworn asset disclosure. On May 20, 2005 through counsel Levy stipulated to a Judgment of $14.1 in favor of the Receiver. We have identified substantial GMM assets which ran through Levy to properties owned by LLCs or his wife and have asserted disgorgement and unjust enrichment claims against them. We are also conducting all appropriate investigations for any additional assets. Levy has also been indicted and any conviction will include a restitution order. To date, we have collected $2.3 million from Levy which was originally placed in an escrow account in May 2004. We have also settled our claims versus Milton Lohr from whom we have collected $570,000. Claims Against Other Third Parties The Receiver has also investigated and made formal claims against third parties who contributed to the demise of GMM, including its accountants, brokerage firms, and others. We will update these claims in subsequent reports. A limited number of investors have retained counsel and filed individual suits against GMM principals and selected third parties. The Receiver discourages such individual suits, as they are most likely duplicative of the Receiver's efforts. Our view is that the Receiver represents the interest of all investors, now has the benefit of a year long forensic investigation which has revealed where the money went and who the culprits are, and is in the best position to assert claims against GMM principals and third parties involved in the collapse. Whatever funds the Receiver collects will be distributed to all investors pro rata through the bankruptcy court. If you have any questions or need specific information about the Receivership, please contact our office in San Diego, 619-696-9200.
June 30, 2005: GMM PRINCIPALS FRIEDMAN AND LEVY INDICTED FOR FRAUD On June 9, 2005, the federal grand jury in San Diego returned a criminal indictment against GMM principals Marvin Friedman and Paul Levy and GMM administrative assistant Alice Swiderski. The indictment was unsealed on June 16, 2005. Paul Levy was arrested at his home by the FBI, taken into custody, and later released on bail. Friedman and Swiderski were permitted by the US Attorney's Office to surrender with their counsel and both completed bail and other arrangements to avoid custody. The indictment asserts counts for mail fraud, wire fraud, money laundering, tax fraud and false statements to a government agency. Click Here to see the entire Indictment. Click Here to read the Press Release issued by the U.S. Attorney's Office on June 16, 2005. All three have entered pleas of Not Guilty. June 1, 2005: Paul Levy Stipulates to Judgment in Favor of Receiver and GMM for $14.1 Million The Court's Order to Show Cause re Contempt as to LF Global principal Paul Levy came on for hearing before Judge Moskowitz on May 18, 2005. The Court did not rule on the OSC Order because the Receiver and Levy reached an agreement which was later put on the record before Judge Moskowitz. That agreement is that Levy stipulates to entry of a judgment in the amount of $14.1 million in favor of the Receiver and GMM and Levy agrees to turn over all of his current assets to the Receiver. Such assets are to be disclosed in a Declaration under penalty of perjury which discloses all assets, direct and indirect. Levy is further required to cooperate with the Receiver in tracing the funds distributed to him from GMM. The accuracy of his asset disclosures is a condition precedent of the arrangement. We expect to complete the documentation of this arrangement by June 7, 2005. If not completed by that date, we will return to Judge Moskowitz. This stipulated judgment for $14.1 million is in addition to the $2.3 million in cash voluntarily delivered to the Receiver by Mr. Levy several months ago. That $2.3 million will not be credited against the $14.1 million judgment. Mr. Levy had previously stipulated to the entry of a Preliminary Injunction which extended the asset freeze as to all his assets as originally set forth in the court's OSC Order of April 20,2005. The Court's Asset Freeze of April 20, 2005 also froze the assets of Mr. Levy's wife and various entities controlled by her. The Receiver makes no claim that Mrs. Levy was involved with the wrongdoing at GMM, only that she may be in possession of assets that were acquired with funds traceable to GMM. We have since agreed to several extensions with counsel for Mrs. Levy and are continuing talks with her counsel in an effort to resolve the Receiver's claims against property in her possession. April 28, 2005: Judge Moskowitz Issues Order to Show Cause re Contempt and TRO Freezing Assets of Paul Levy and Related Entities Upon application of the Receiver, Judge Moskowitz issued several orders on April 20, 2005 which bring to the court the Receiver's immediate claims against Mr. Levy. The Receiver's Application asserted that Levy was in contempt of a May 10, 2004 Stipulation and Order in which he agreed to deposit to a frozen account the amount by which his withdrawals from GMM/LF exceeded his contributions. Levy's subsequent calculation of that number was $2.3 million. After extensive efforts to reconstruct GMM's finances, the Receiver's forensic accountants concluded that Levy and/or his controlled entities received $19.6 million from GMM accounts 1998-2003 and that Levy's calculation of the amount to be placed in the escrow was $14 million short. The April 20, 2005 Order includes: Order to Show Cause re Contempt as to Paul Levy; TRO Freezing Assets of Paul Levy, his wife, Chrisitine Levy and their related entities; Order to Show Cause re Preliminary Injunction; and for Accounting. Neither the SEC or the Receiver have made any claim that Christine Levy was a knowing participant in the GMM fraud. The Receiver only asserts that funds misappropriated from GMM by Paul Levy found their way to family accounts and homes. As to Paul Levy, the Order to Show Cause specifically recites that Levy is “Ordered to appear before Judge Barry Ted Moskowitz…at 9 a.m. on May 4, 2005 and show cause, if there be any, why he should not be adjudged in contempt of the May 10, 2004 Order and the Preliminary Injunction, why he should not be ordered to deposit $14,108,152 into a frozen account, and why if he fails to do so he should not be imprisoned and/or fined until he deposits the funds”. To read a copy of the Judge's Order click here. Settlements with LF Global Principals The Receiver has also recently reached settlements with LF Global principal Marvin Freidman and Milton Lohr. Friedman has assigned all his assets to the Receiver. Mr. Friedman has also consented to entry of a substantial Judgment in favor of the SEC. The exact amount of the Judgment is still subject to approval by the SEC and will be made public upon that approval. Milton Lohr has delivered to the Receiver cash in the amount of $566,000. Portions of these settlements remain subject to approval by the court and/or the SEC.
January 24, 2005 : The Receiver today filed his First
Interim Report with the District Court. In this Report, the Receiver
provides the Court a more comprehensive summary of what transpired within
GMM and LF Global, reports on the examination of the relevant books and
records, and provides an indication of the prospects for any recovery of
assets for the benefit of investors and creditors.
Executive Summary of Interim Report dated January 24, 2005 GMM began as a modest investment hedge fund for family and friends. It evolved, however, into a fraudulent enterprise engineered by its General Partner – LF Global – whose managing members were Marvin Friedman and Paul Levy. LF GIobal solicited investors for GMM based upon fictional financial performance presented in marketing materials, quarterly reports, and Schedules K-1 from GMM's annual tax filings. Over time, the majority of investor capital placed with GMM was disbursed to LF Global and withdrawing investors. Disbursements to investors included fictional gains. In truth, only about 30% of investor funds were ever placed in investment accounts of GMM. The investment accounts performed miserably averaging annual results of negative 50%. All of this took place in an environment with minimal systems, internal controls, or accountability. The operation was bolstered by accountants and brokers whose involvement provided a patina of legitimacy to the venture and the pretense of security to the investors. There remain some unanswered questions, but our investigation has yielded a rough reconstruction of GMM's finances based on bank records for the years 1998 through 2004. During this period, investors contributed approximately $109.8 million in cash. The bulk of that cash evaporated quickly - $53.9 million to investor withdrawals; $17 million in cash losses from trading accounts; $17.4 million net transferred to LF Global as General Partner; and $15.9 million in net withdrawals to one of LF Global's principals, Paul Levy. In the end, GMM had only $8,524 in cash and its investment in Santarus, Inc. with an estimated value of approximately $3 million. With the $17.4 million it misappropriated from GMM, plus capital contributed from its principals (primarily Levy with $1.6 million) and return on investments, LF Global covered its own inflated operating expenses, orchestrated investments for its own benefit, and channeled nearly $8 million in draws and expenses to its principals ($5.7 million to Marvin Friedman, $1.2 million to Paul Levy, and $855,000 to Milt Lohr). In the end, LF Global had only $854 in cash and two viable investment assets, both of which are currently illiquid - Highcrest Partners (estimated current value $2 million) and Windamere Capital Ventures (estimated current value $2 million). GMM failed when LF Global could not raise new investor money fast enough to cover the combined cash drain of withdrawing investors, investment losses, and its own mismanagement and perfidy. Our current estimate of investor capital losses is between $60 and $70 million. There will ultimately be assets available for distribution to investors, derived from the following: investment assets held by GMM and LF Global; disgorgement of fees and reimbursement of personal expenses by the principals of LF Global; return by Mr. Levy of excessive withdrawals from GMM accounts; payments returned by investors who received distributions that are avoidable under the Bankruptcy Code; and potential civil claims against professional third parties. I cannot now calculate a specific percentage, but it appears likely that investors will recover some reasonable percentage of their losses. Mindful that every dollar I spend in the context of our investigation is a dollar that will not be available for investors/creditors in the end, I have attempted to focus on real assets and claims which will yield recoveries for investors/creditors and to keep administrative fees to a minimum. For full text of the Interim Report in PDF format click here.
October 8, 2004: Schedules K-1 for Tax Year 2003 September 1, 2004:
Partnership K-1 Returns September 1, 2004:
Highcrest Investment July 2, 2004: The
Receiver filed his Second Preliminary Report in the United States District
Court, Southern District of California on June 30, 2004.For full
text of the report in PDF format click here.
July 1,
2004:The
Receiver's bankrupcty attorney filed a Notice of Motion and Motion for
extending the exclusivity periods on July 1, 2004 with the Bankruptcy
Court.A hearing will be held on July 29, 2004.For full text
of the Notice of Motion, click here.For full text of the Motion, click here.
April 29, 2004: The
Receiver filed his First Preliminary Report in the United States District
Court, Southern District of California today.For full text of the
report in PDF format click here.
April 23, 2004: The
Auction of items located at the LF Global premises was completed on April
20th, netting the estate $29,448.90.The premises will be released
to the landlord on Monday April 26. *Please see the above information
request*
April 12, 2004: Notice
of Auction (see above). Zenith Update: Zenith counsel provided all
documents requested by the Receiver on Friday, April 9th.
April 9, 2004: The
Receiver conducted a deposition today with Marvin I. Friedman.Pursuant to the court's instructions, the deposition was limited to
"issues of identity of investors, the identity and location of assets,
records, and the identity and location of employees and agents of global
money management and of global investments."
April 8, 2004: Zenith's
attorneys met with the Receiver yesterday and agreed to assist the
Receiver by providing the following information by the date
indicated:
April 6, 2004: Alan Vanderhoff, on behalf of the Receiver, filed Schedules with the Bankruptcy Court for the Southern District of California in regards to the bankruptcy of GMM. The Schedules include a current accounting of GMM's assets - the assets that the Receiver is aware of at this time.It is by no means a final list.The Schedules also include a listing of creditors/investors.If your name is not listed, please email the Receiver at info@gmmreceiver.com. For full text of the Schedules in PDF Format, click here.
By an Order dated March 11, 2004, Judge Barry T. Moskowitz of the United States District Court for the Southern District of California has named Charles G. LaBella of San Diego, California to serve as the court-appointed Receiver for Global Money Management, LP ("GMM") and LF Global Investments, LLC ("LF Global") including their officers, agents, servants, employees, attorneys, subsidiaries and affiliates.This same order freezes certain assets and prohibits the destruction of documents, as well as instructs and empowers the Receiver to take possession of and protect the assets and property of these entities and/or persons. The Receiver was appointed in connection with the civil lawsuit brought by the Securities and Exchange Commission on March 11, 2004 entitled: Securities And Exchange Commission v. Global Money Management, L .P., LF Global Investments, LLC, and Marvin I. Friedman.That action alleges an "ongoing securities fraud" perpetrated by Friedman and the two entities controlled by him - GMM and LF Global.The Complaint specifically alleges that: "Friedman has misrepresented to investors at various times over at least one year that the hedge fund held assets ranging from $60 million to over $100 million.Since at least December 2002, however, the securities GMM holds have been worth no more than $11 million.As of December 2001, the total value of securities in GMM's accounts was only approximately $27,000." Based on those factual allegations, the SEC's Complaint asserts claims for securities fraud against Friedman, GMM and LF Global.The case has been assigned to United States District Court Judge Barry T. Moskowitz.The judge has set a further hearing for March 25, 2003 at 2pm. This website has been established by the Receiver to provide a vehicle for communicating with investors and others involved with GMM, LF Global and Friedman. The Receiver will post updates and status reports on this site. The Receiver can be reached at the address and e-mail listed below. Thank you for your cooperation. For full text of the SEC
Complaint, click here
Please refer to the Receiver's FAQ page (Updated: April 6, 2004 - Tax Section).
If you have any information relating to a Petersville Family Trust, in particular any properties or assets it may hold, please pass this information on to the Receiver via email. Thank you.
 info@gmmreceiver.com |