Updates

Update - July 18, 2007

Claims Process:

Claim forms have been mailed to all investors that are in the ABC Viaticals data base. If you do not have a claim form, please contact Stephen M. Tomasky at stomasky@qsclpc.com or 214 880 1812.

Many investors have asked whether they can assign their claim to someone who desires to purchase the claim. The Receiver has agreed to this under certain conditions. The Receiver will only allow a claim to be assigned ONE TIME. You will have to provide evidence of payment for the claim and will also need to include a Notice of Claim Transfer signed by both parties. Please click here to download a copy of the Notice of Claim Transfer and read the instructions and limitations for transfers. While the Receiver does not intend to seek court approval for claim transfers, he does reserve the right to verify them. If there are any problems with the Notice of Claim Transfer or the Claim Form, the Receiver's office will contact you. Finally, all claims have to be submitted by the Receiver to the Court for final approval. You will receive notice once your claim has been approved by the Court. If you have any questions regarding the transfer of a claim, please contact the Receiver’s office.

Portfolio:

All premiums continue to be paid current.  All policies are in force.  The Receiver has secured and signed the appropriate documents for a line of credit in the amount of $9,000,000 secured by the insurance policies in the portfolio.  This will assure that premiums will continue to be paid while the strategies for the portfolio are developed and implemented. The funding is from a local Texas bank at 1.5% over prime.  The Receiver and the Examiner investigated the market, including obtaining competitive bids for the loan.  This loan at this interest rate and with no charges, points or fees was the most attractive.

At present, we are unaware of any maturity that would pay funds to the Receivership estate. US data bases are checked each month to determine whether any of the insureds have died. 

The Receiver has given considerable thought and analysis to the strategies outlined in the February 8 update.  At present, the best strategy and the one being pursued is partial sale and partial hold of policies in the portfolio.  The Receiver knows that he cannot continue to borrow funds and burden the estate with unnecessary debt just to keep the policies in force with the uncertain hope that a large number of maturities occur.  Also, the Receiver does not believe that selling the entire portfolio is wise as he does not believe at this time that he will get the maximum value that can be obtained.  He has concluded that it would be wise to sell some of the policies for an attractive price, providing funds to the estate to allow it to hold other policies and without more borrowings – all with the expectation that some of the policies held will mature and the estate will obtain the full value of those policies. 

To accomplish this strategy, essentially, the following describes what is being done:

Bonding Companies: 

IFS - The investigation of the bonding companies continues. The Receiver has filed suit against IFS and its principals in an effort to recover premiums paid for bonds believed to be fictitious and to recover a full judgment for the bonding obligations on which IFS has failed to perform.  The Receiver claimed that IFS was essentially the creation of David Goldenberg, Mark Wollock and Arie Kotler and is not legitimate.  The Receiver has frozen the assets of Mr. Goldenberg and is in the process of trying to negotiate a resolution with him. Mr. Wollock is in bankruptcy and the Receiver has a 48 million dollar non-dischargeable judgment against Mr. Wollock. After investigation of the matter more fully, the Receiver dropped his claims against Mr. Kotler he was dismissed from the case. The Receiver also has a 48 million dollar judgment against IFS.

Albatross - The Receiver has just completed an analysis of the documents in the files of ABC that related to Albatross.  The files are incomplete but tell some of the story.  The bonds were apparently issued out of Italy , the home country of Albatross.  There is some association between Albatross Invest SpA and Unicredit (Xelion) Banc, SpA.   The full extent of the relationship is not known or understood in full at the present. All money of ABC paid to or for the benefit of those associated with the Albatross bonds have been identified.   Attorneys were hired by ABC in England to do due diligence on both Italian entities.  Now that the documents of ABC have been fully reviewed, the Receiver and Examiner are beginning a full investigation of the records of those in England that were obtained in the process of these bonds being issued.  The investigation will proceed to Albatross and Xelion themselves. The Receiver and the Examiner believe that any strategy for the portfolio that includes Albatross as a possible source of funding can only be full considered if these entities and the relevant documents are fully explored and understood.

Litigation:

IFS - As stated above, the Receiver has filed suit against IFS, David Goldenberg, Mark Wollock and Arie Kotler.  This suit also involves two accounting firms that apparently had some involvement with IFS.  These accounting entities are in foreign jurisdictions and the long process of obtaining service on these entities is underway.

Kaplan -  The Receiver has filed a Motion to Show Cause against Donald S. Kaplan.  The Motion is filed in the court in which the receivership is pending in Dallas, Texas.  Mr. Kaplan was paid approximately $1,200,000 in commissions for assisting the recruiting of investors into ABC.  Kaplan benefited from the ABC program, receiving a portion of the investors investment money.  The Receiver believes that the law supports that commissions from a scheme like ABC are transfers of ABC assets that are voidable under law.  The Receiver has asked that the court consider this motion on an expedited basis so as to speed the recovery of as much as possible from Mr. Kaplan.  Mr. Kaplan has filed numerous motions and other papers to attempt to defend and defeat the efforts of the Receiver.

Erwin & Johnson -  The Receiver has filed suit against Erwin & Johnson LLP and Christopher R. Erwin, the former trustees of the trusts that held each policy owned and sold by ABC.  The Receiver alleges that in order to cloak themselves in legitimacy and supposedly enhance the safe nature of the investment and the handling of investor funds, the LaMondas, on behalf of ABC, retained and touted the services of an independent trustee/escrow agent who would handle all investor funds.  The last in a series of trustees was Defendant Erwin & Johnson, who conducted its services through Defendant Erwin.  Erwin has been a licensed attorney licensed in California since 2002 and currently has offices in Irvine, California.  Investors were instructed to send their money to the trustee. The Receiver alleges that the trustee under its agreements was obligated to establish and properly fund the premium escrow accounts. Determination of the amount to satisfy the premium requirements and the deposit of that amount into a separate account was unquestionably one of the single-most important features of the arrangement and a critical aspect of the performance of its duties by Erwin & Johnson.  The Receiver believes he can prove that the trustee had no clue as to the amount of premiums due and knowingly allowed the premium escrow account to become under funded. Erwin & Johnson made sure they were protected once they learned that the LaMondas had been indicted in Florida, requiring that ABC post a $500,000 retainer and give them a $1,000,000 interest in an insurance policy. The Receiver has sued Erwin & Johnson and Christopher R. Erwin for breach of contract, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, aiding and abetting corporate waste, professional negligence, gross negligence and exemplary damages, fraudulent transfer and for disgorgement and a constructive trust.