Case 1:15-cv-23070-MGC Document 118 Entered on FLSD Docket … · 2018-09-03 · Case...

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA

Case No. 15-23070-Civ-COOKE/TORRES

CONSUMER FINANCIAL PROTECTIONBUREAU,

Plaintiff,

v.

ORION PROCESSING, LLC, a Texas limitedliability company, d/b/a World Law Processing,Wld Credit Repair, and World Law Debt; FAMILYCAPITAL INVESTMENT &MANAGEMENTLLC, a Delaware limited liability company, a/k/aFCIAM Property Management; WORLD LAWDEBT SERVICES, LLC, a Delaware limitedliability company; WORLD LAW PROCESSING,LLC, a Delaware limited liability company; DERINSCOTT, an individual; DAVID KLEIN, anindividual; and BRADLEY JAMES HASKINS,individually and d/b/a World Law Group, LLP,World Law Group America, LLP, WLD PriceGlobal, Inc., World Law Forms and Mediation, andWorld Law South;

Defendants,

SHANNON SCOTT, an individual,

Relief Defendant.

NOTICE OF FILING OF MOTION FOR ORDER APPROVING AND AUTHORIZINGPAYMENT OF FEES AND EXPENSES OF THE RECEIVER AND ITSPROFESSIONALS FROM MARCH 1, 2016 THROUGH JUNE 30, 2016

PLEASE TAKE NOTICE that Robb Evans &Associates LLC as Receiver ("Receiver")

over Family Capital Investment &Management, LLC, and its successors, assigns, affiliates, or

subsidiaries, and each of them, by whatever names each might be known, provided that the

Receiver has reason to believe they are owned or controlled in whole or in part by any of the

Case 1:15-cv-23070-MGC Document 118 Entered on FLSD Docket 09/29/2016 of 23

Defendants, and World Debt Services, LLC and World Law Processing, LLC, and their

successors, assigns, affiliates, or subsidiaries, and each of them, by whatever names each might

be known, provided that the Receiver has reason to believe they are owned or controlled in

whole or in part by any of the Defendants, has filed its Motion for Order Approving and

Authorizing Payment of Fees and Expenses of the Receiver and Its Professionals from March 1,

2016 Through June 30, 2016 ("Motion"). Pursuant to the Motion, the Receiver moves the Court

for an order approving and authorizing payment of the fees and expenses of the Receiver and its

professionals from March 1, 2016 through and including June 30, 2016 (the "Expense Period")

The Receiver specifically moves the Court for an order approving and authorizing payment of

receivership fees and expenses incurred for the Expense Period comprised of the fees of the

Receiver, the Receiver's members, agents, staff and professionals, and reimbursement of costs.

The fees of the Receiver, its members, agents and staff total $41,853.80 and the Receiver's

expenses total $10,692.09 during the Expense Period, include fees for the services of the

Receiver's outside accountants Squar Milner LLP of $6,397.10 for tax return preparation. The

Receiver's legal fees and expenses total $25,126.91 during the Expense Period, including fees in

the sum of $21,328.05 and expenses in the sum of $98.90 incurred for the services of the

Receiver's former lead counsel Dentons US LLP ("Dentons")1, fees in the sum of $2,173.50

incurred to the Receiver's present lead counsel Diamond McCarthy LLP, and fees in the sum of

$1,500.00 and expenses in the sum of $26.46 incurred for the services of the Receiver's local

counsel in Austin, Texas, Munsch Hardt Kopf &Harr, P.C.

1 Gary Owen Caris and Lesley Anne Hawes, lead counsel for the Receiver, moved their practicefrom Dentons to Diamond McCarthy on or about June 13, 2016 and with Court approval,Dentons was substituted out as counsel for the Receiver and Diamond McCarthy was substitutedin. See Order issued August 3, 2016 (Doc. No. 107). Carlton Fields also gave notice of itsappearance as local counsel for the Receiver. See Notice of Appearance and Substitution ofCounsel (Doc. No. 95).

2


The Motion is made pursuant to Local Civil Rule 7.1, Section XVII of the Preliminary

Injunction with Asset Freeze, Appointment of Receiver, Expedited Discovery, and Other

Equitable Relief as to Defendants Orion Processing, LLC, Bradley James Haskins, World Law

Debt Services, LLC and World Law Processing, LLC entered September 2, 2015 (Doc. No. 28)

("World Law Preliminary Injunction"), Section XVII of the Preliminary Injunction with Asset

Freeze, Appointment of Receiver, Expedited Discovery, and Other Equitable Relief for

Defendants Derin Scott, David Klein, Family Capital Investment &Management LLC, and

Relief Defendant Shannon Scott (Doc. No. 42) ("FCIAM Preliminary Injunction") and Section

VII, paragraph 71, of the Default Judgment and Order Against World Law Debt Services, LLC,

World Law Processing, LLC, and Family Capital Investment &Management LLC (Doc. No.

104) ("World Law Judgment"). The Motion is based upon this separate notice of filing of the

Motion and on the Motion, the memorandum of law, the Declarations of Brick Kane and Gary

Owen Caris in support thereof filed concurrently herewith, the proposed order submitted

concurrently herewith, upon any reply, on the pleadings, records and files of the Court in this

action of which the Receiver requests the Court take judicial notice under Federal Rule of

Evidence 201, including without limitation the Report of Receiver's Activities for the Period

from September 1, 2015 Through September 4, 2015 (Doc. No. 30) ("First Report") and the

Report of Receiver's Financial Analysis September 4, 2015 Through November 30, 2015 (Doc.

No. 57) ("Second Report"), and upon such other pleadings and documentary evidence and

argument of counsel as may hereafter be presented to the Court by the Receiver in support of the

Motion.

PLEASE TAKE FURTHER NOTICE that the Motion is posted on the Receiver's

website at www.robbevans.com, without the time billing records. Copies of the Motion in its


entirety will be provided to any interested party upon receipt of a written request which may be

sent to: Robb Evans &Associates LLC, Attn: Imelda Perez, 11450 Sheldon Street, Sun Valley,

CA 91352-1121; Telephone: (818) 768-8100; Facsimile: (818) 768-8802.

Dated: September ~ 2016 Respectfully submitted,

By: /s/ Michael E. StrauchMerrick L. GrossFlorida Bar No. 716677Michael E. StrauchFlorida Bar No. 13988CARLTON FIELDSMiami Tower100 S.E. 2nd Street, Suite 4200Miami, Florida 33131Tel: (305) 530 — 0050Fax: (305) 530 — 0055E-mail: [email protected]

powers@carltonfields. [email protected]@carltonfields.com

Local Counsel for Receiver

By: /s/ Gary Owen CarisGary Owen CarisAppearing Pro Hac ViceCalifornia Bar No. 088918Lesley Anne HawesAppearing Pro Hac ViceCalifornia Bar No. 117101DIAMOND MCCARTHY LLP1999 Avenue of the Stars, Suite 1100Los Angeles, CA 90067Tel: (310) 651-2997Fes: (424) 253-1101E-mail: [email protected]

lhawes@diamondmccarthy. comLead Counsel for Receiver

L~





Plaintiff,

u


Defendants,


Relief Defendant.

MOTION FOR ORDER APPROVING AND AUTHORIZING PAYMENT OF FEES ANDEXPENSES OF THE RECEIVER AND ITS PROFESSIONALS FROM

MARCH 1, 2016 THROUGH JUNE 30, 2016;MEMORANDUM OF LAW IN SUPPORT THEREOF

Robb Evans &Associates LLC as Receiver ("Receiver") over Family Capital Investment

& Management, LLC, and its successors, assigns, affiliates, or subsidiaries, and each of them, by

whatever names each might be known, provided that the Receiver has reason to believe they are

Case 1:15-cv-23070-MGC Document 118 Entered on FLSD Docket 09/29/2016 Page 6 of 23

owned or controlled in whole or in part by any of the Defendants, and World Debt Services, LLC

and World Law Processing, LLC, and their successors, assigns, affiliates, or subsidiaries, and

each of them, by whatever names each might be known, provided that the Receiver has reason to

believe they are owned or controlled in whole or in part by any of the Defendants, hereby moves

the Court for an order approving and authorizing payment of the fees and expenses of the

Receiver and its professionals from March 1, 2016 through June 30, 2016 ("Expense Period").

The Receiver specifically moves the Court for an order approving and authorizing payment of

receivership fees and expenses incurred for the Expense Period comprised of the fees of the

Receiver, the Receiver's members, agents, staff and professionals, and reimbursement of costs.

The fees of the Receiver, its members, agents and staff total $41,853.80 and the Receiver's

expenses total $10,692.09 during the Expense Period, including $6,397.10 in fees for the services

of the Receiver's outside accountants Squar Milner LLP for tax return preparation. The

Receiver's legal fees and expenses total $25,126.91 during the Expense Period, including fees of

$21,328.05 and expenses of $98.90 incurred for the services of the Receiver's former counsel

Dentons US LLP ("Dentons")1, fees of $2,173.50 for the services of the Receiver's present lead

counsel Diamond McCarthy LLP ("Diamond McCarthy"), and fees of $1,500.00 and costs of

$26.46 incurred for the services of Munsch Hart Kopf &Harr, P.C. ("Munsch Firm"), the

Receiver's local counsel in Austin, Texas.

This Motion is made pursuant to Local Civil Rule 7.1, Section XVII of the Preliminary

Injunction with Asset Freeze, Appointment of Receiver, Expedited Discovery, and Other

1 Gary Owen Caris and Lesley Anne Hawes, lead counsel for the Receiver, moved their practice

from Dentons to Diamond McCarthy on or about June 13, 2016 and with Court approval,

Dentons was substituted out as counsel for the Receiver and Diamond McCarthy was substituted

in. See Order issued August 3, 2016 (Doc. No. 107). Carlton Fields also gave notice of its

appearance as local counsel for the Receiver. See Notice of Appearance and Substitution of

Counsel (Doc. No. 95).

2


Equitable Relief as to Defendants Orion Processing, LLC, Bradley James Haskins, World Law

Debt Services, LLC and World Law Processing, LLC entered September 2, 2015 (Doc. No. 28)

("World Law Preliminary Injunction"), Section XVII of the Preliminary Injunction with Asset

Freeze, Appointment of Receiver, Expedited Discovery, and Other Equitable Relief for

Defendants Derin Scott, David Klein, Family Capital Investment &Management LLC, and

Relief Defendant Shannon Scott (Doc. No. 42) ("FCIAM Preliminary Injunction") and Section

VII, paragraph 71, of the Default Judgment and Order Against World Law Debt Services, LLC,

World Law Processing, LLC, and Family Capital Investment &Management LLC (Doc. No.

104) ("World Law Judgment"). The Motion is based upon this motion, on the separate notice of

filing of this motion served concurrently herewith, on the accompanying memorandum of law,

on the Declarations of Brick Kane and Gary Owen Caris in support hereof filed concurrently

herewith, upon any reply, on the pleadings, records and files of the Court in this action of which

the Receiver requests the Court take judicial notice under Federal Rule of Evidence 201,

including without limitation the Report of Receiver's Activities for the Period from September 1,

2015 Through September 4, 2015 (Doc. No. 30) ("First Report") and the Report of Receiver's

Financial Analysis September 4, 2015 Through November 30, 2015 (Doc. No. 57) ("Second

Report"), and upon such other pleadings and documentary evidence and argument of counsel as

may hereafter be presented to the Court by the Receiver in support of the motion.

3


WHEREFORE, the undersigned moves this Court to enter an Order granting relief as

requested herein.

CERTIFICATION OF COUNSEL L7NDER LOCAL RULE 7.1(a)(3)

Counsel for the Receiver hereby certifies that prior to filing this motion, counsel for the

Receiver conferred with counsel for the plaintiff Consumer Financial Protection Bureau

("CFPB") and with Defendants Derin Scott and David Klein, and Relief Defendant Shannon

Scott, in writing commencing on September 21, 2016 in a good faith effort to address the issues

raised in this motion. The relief sought by the Receiver cannot be resolved by the parties as the

Court is required to rule on the Receiver's motion for approval of fees and expenses for itself and

its attorneys. Defendants Derin Scott and David Klein and Relief Defendant Shannon Scott have

stipulated to judgment in favor of the CFPB. Defendants World Law Debt Services, LLC, World

Law Processing, LLC, and Family Capital Investment &Management LLC have had a default

judgment entered against them. The other defendants have not appeared. The Receiver

requested that the parties provide the Receiver's counsel with their position on the motion by

close of business on September 26, 2016. The CFPB has no objection to the relief sought in the

motion. The other defendants have not responded to counsel's request for their position as of the

date of filing of the motion.

Dated: September , 2016 Respectfully submitted,

By: /s/Michael E. StrauchMerrick L. GrossFlorida Bar No. 716677Michael E. StrauchFlorida Bar No. 13988CARLTON FIELDSMiami Tower100 S.E. 2°d Street, Suite 4200Miami, Florida 33131Tel: (305) 530 — 0050


Fax: (305) 530 — 0055E-mail: [email protected]

[email protected]@[email protected]

Local Counsel for Plaintiff

By: /s/ Gary Owen CarisGary Owen CarisAppearing Pro Hac ViceCalifornia Bar No. 088918Lesley Anne HawesAppearing Pro Hac ViceCalifornia Bar No. 117101DIAMOND MCCARTHY LLP1999 Avenue of the 'Stars, Suite 1100Los Angeles, CA 90067Tel: (310) 651-2997Fax: (424) 253-1101E-mail: [email protected]

lhawes@diamondmccarthy. com

Lead Counsel for Plaintiff

5


MEMORANDUM OF LAW

I. INTRODUCTION

This action is a civil enforcement action filed by plaintiff CFPB. On August 19, 2015,

the Court issued a Temporary Restraining Order (Doc. No. 12) with an asset freeze and other

provisions applicable to all defendants. On August 28, 2015, Magistrate Judge Torres issued his

report and recommendation (Doc. No. 26), recommending that a Preliminary Injunction Order be

imposed which included the appointment of a receiver for corporate defendants World Law Debt

Services, LLC ("WL Debt") and World Law Processing, LLC ("WL Processing"). On

September 1, 2015, the Court entered an order approving the Stipulated Extension of the

Temporary Restraining Order for Defendants Derin Scott, David Klein, Family Capital

Investment &Management, LLC ("FCIAM") and Relief Defendant Shannon Scott (Doc. No. 27)

("FCIAM TRO") pursuant to which the Receiver was appointed as Temporary Receiver for

FCIAM. On September 2, 2015, the Court issued the World Law Preliminary Injunction

pursuant to which the Receiver was appointed receiver over defendants WL Debt and WL

Processing, and their successors, assigns, affiliates, or subsidiaries, and each of them, by


owned or controlled in whole or in part by any of the Defendants. On September 14, 2015, the

Court issued the FCIAM Preliminary Injunction, appointing the Receiver as receiver over

FCIAM and its successors, assigns, affiliates, or subsidiaries, and each of them, by whatever

names each might be known, provided that the Receiver has reason to believe they are owned or

controlled in whole or in part by any of the Defendants.2

2For convenience, the World Law Preliminary Injunction and the FCIAM Preliminary Injunction

are referred to collectively herein as the "Preliminary Injunctions." In addition, WL Debt, WL

Processing, and FCIAM and their successors, assigns, affiliates and subsidiaries, and each of

,~.~


The Receiver filed a brief initial report primarily focused on FCIAM on September 8,

2015 prior to the hearing on the CFPB motion for a preliminary injunction and appointment of a

receiver for FCIAM. On December 1, 2015, the Receiver filed its Report of Receiver's Financial

Analysis September 4, 2015 Through November 30, 2015 (Doc. No. 57) ("Second Report")

analyzing in detail the business, banking, accounting and other financial information and records

then available regarding the Receivership Defendants.

In February 2015, prior to the commencement of this action by the CFPB, defendant

Orion Processing, LLC ("Orion") filed a voluntary Chapter 11 petition under the Bankniptcy

Code in the United States Bankruptcy Court for the Western District of Texas. Nearly

contemporaneously with the commencement of this case, on August 20, 2015, the Bankruptcy

Court converted the Orion bankruptcy case to a Chapter 7 liquidation proceeding, appointing

Randolph N. Osherow as the Chapter 7 trustee for Orion ("Trustee"). The Receiver and the

Trustee have worked cooperatively in the administration of their respective estates, with the

Trustee taking primary responsibility for addressing the assets and creditors of, and other issues

pertaining to, Orion, and the Receiver taking responsibility for addressing the assets and

creditors of, and other issues pertaining to, the Receivership Defendants.

Receivership Defendants WL Debt, WL Processing and FCIAM have not appeared in the

action and their defaults have been entered by the Clerk of the Court. See Clerk's Default entered

December 21, 2015 (Doc. No. 75). No appearance has been made by defendant Bradley

them, by whatever names each might be known, provided that the Receiver has reason to believe

they are owned or controlled in whole or in part by any of the Defendants are referred to herein

as the Receivership Defendants. Various successors, assigns, subsidiaries and affiliates of WL

Debt, WL Processing and FCIAM, including without limitation World Law Forms and

Mediation, Inc. ("Forms") and WLD Price Global, Inc. ("Price Global"), are sometimes refereed

to herein as the Affiliated Entities.

7


Haskins. Defendants David Klein and Derin Scott ("Scott") and Relief Defendant Shannon Scott

were represented by counsel but are now appearing in pro per after their counsel withdrew with

Court approval. See Order entered January 28, 2016 (Doc. No. 82).

Section XIII of the each of the Preliminary Injunctions sets forth the Receiver's powers

and duties, including the authorization and direction for the Receiver to engage attorneys,

accountants and others as the Receiver deems "advisable or necessary" in order for the Receiver

to perform its duties. Preliminary Injunctions, Section XIII.J. The Receiver previously engaged

Gary Owen Caris and Lesley Anne Hawes of Dentons as its counsel in this matter to assist and

advise the Receiver in matters pertaining to the implementation of the Preliminary Injunctions

and the performance of the Receiver's powers and duties thereunder.

During this Expense Period, judgments have been entered against several of the named

defendants. Specifically, defendants Derin Scott and David Klein and Relief Defendants

Shannon Scott entered into the Stipulated Final Judgment and Order Against Defendants Derin

Scott, David Klein and Relief Defendant Shannon Scott ("Individual Stipulated Judgment")

which was filed with the Court and approved by Court order entered on August 1, 2016 (Doc.

No. 105). The CFPB also filed a motion for entry of default judgment against defendants World

Law Debt Services, LLC, World Law Processing, LLC, and Family Capital Investment &

Management LLC which are also Receivership Defendants. The Court entered the Default

Judgment and Order Against World Law Debt Services, LLC, World Law Processing, LLC and

Family Capital Investment &Management LLC on August 1, 2016 (Doc. No. 104) ("World Law

Judgment"). The Receiver continues as receiver over the Receivership Defendants under the

World Law Judgment.

8


Pursuant to a deadline set in Section XVII of the Preliminary Injunctions, the Receiver

filed its initial fee motion on December 16, 2015. Doc. No. 70. No response or objection to the

initial fee motion was filed, and that motion was granted by order entered Apri129, 2016. Doc.

No. 88. The Receiver filed its second fee motion in May 2016. The second fee motion was

granted by order entered on June 17, 2016. Doc. No. 94.

This motion is the Receiver's third motion for approval and payment of receivership fees

and expenses and covers the four-month period from March 1, 2016 through June 30, 2016

("Expense Period"). The fees and expenses for which the Receiver seeks approval, and the

services rendered by the Receiver and its counsel during this Expense Period are summarized

hereafter and described in detail in the billing records attached to the supporting Declarations of

Brick Kane and Gary Owen Caris.

IL SUMMARY' OF SERVICES RENDERED

The Receiver seeks payment of the Receiver's fees and expenses summarized in the

Receivership Administrative Expenses and Fund Balance spreadsheet ("Financial Summary")

attached as Exhibit 1 to the Declaration of Brick Kane in support of this Motion and detailed in

the billing suimnaries attached to the Kane Declaration as Exhibits 2 through 5. During the

Expense Period, the Receiver has incurred fees for the Receiver and its members of $7,660.80,

Senior and Accounting Staff fees of $33,656.40, and Support Staff fees of $536.60. The

Receiver has incurred Receiver's expenses of $10,692.09, including accountant fees incurred to

the Receiver's outside accountants Squar Milner LLP for tax return preparation of $6,397.10. A

copy of the Squar Milner bill is attached as Exhibit 6 to the Kane Declaration.

The Receiver has also incurred attorneys' fees and costs during the Expense Period.

During this period, the Receiver incurred attorneys' fees of $21,328.05 and costs of $98.90 for a

7


total of $21,426.95 for the services of Dentons. Copies of the billing records reflecting those

services and costs are attached as Exhibits 1 through 4 to the Declaration of Gary Owen Caris

filed concurrently with this Motion. The Receiver has also incurred attorneys' fees of $2,173.50

to Diamond McCarthy, as set forth in Exhibit 5 to the Caris Declaration. The Receiver has

incurred attorneys' fees of $1,500.00 and costs of $26.46 for the services of the Munsch Firm in

Austin, Texas which has assisted the Receiver regarding the administration of the receivership

property located at 9011 Mountain Ridge in Austin, Texas ("Mountain Ridge Property").

During the Expense Period the Receiver recovered an additional $61,816.86 from various

sources, including primarily collection of rent and receipts from All Things Energy LLC, as

described below. Total receipts of the receivership estate as of June 30, 2016 are $7,496,027.54.

A. Receiver's Services and Activities During the Expense Period

The Receiver's activities have been varied and extensive. The Receiver's financial

reconstruction of the business of the Receivership Defendants was completed in this Expense

Period. In connection with its forensic accounting, the Receiver continued to analyze banking,

accounting and business records of the Receivership Defendants and obtained additional banking

records necessary to complete the accounting during this Expense Period. As previously reported

to the Court, the Defendants and Receivership Defendants did not turn over any banking,

accounting or financial records for the Receivership Defendants, and the Receiver was unable to

locate Quickbooks records or other financial and accounting records for some of the

Receivership Defendants.

The Receiver's activities during this Expense Period also included attempts to recover

data from the Receivership Defendants' database/program known as "Debt Manager" ("DM") on

the Receivership Defendants' server. The Receiver's IT personnel and an outside computer

consultant attempted to recover that data during the Expense Period to obtain information on the

10


consumers injured by the Receivership Defendants' activities which is relevant to the Receiver's

forensic accounting analysis and to determine and reconcile payments that were made on behalf

of those consumers to their creditors and the amount of fees paid by the consumers to the

Receivership Defendants.

The Receiver also continued its investigation and administration of the receivership

assets during this Expense Period, including taking steps to arrange for the disposition of

personal property located at the Mountain Ridge Property and investigating the value of the

Mountain Ridge real property, real estate brokers and other information pertinent to the

Receiver's proposed disposition of that real property. The Receiver negotiated a proposed

agreement with a local auctioneer in Texas to dispose of the personal property located at the

Mountain Ridge Property. The Receiver obtained appraisals of the Mountain Ridge Property and

addressed the potential listing of that property with multiple local real estate brokers. The

Receiver circulated a proposed stipulation to authorize the Receiver to auction the personal

property and list the Mountain Ridge Property for sale which was later signed and filed with the

Court during the Expense Period. The Receiver obtained the assistance of the Munsch Firm in

supervising access to the Mountain Ridge Property for inspections and the appraisers.

The Receiver also administered the receivership assets by collecting rents and arranging

for necessary repairs and maintenance of the Mountain Ridge Property and handling payment of

its related expenses. Various issues arose during the Expense Period requiring repairs to be

made and to address issues with tenants at the Mountain Ridge Property. The Receiver's

members and staff also continued to supervise a Receivership Defendant's income-producing

investment in the entity All Things Energy LLC ("All Things Energy"), which continues to make

sales of products for which the Receiver is obtaining payments and paying commissions. All

11


Things Energy is operated by an independent non-party, and the Receiver has monitored the

company's operations post-receivership to ensure the estate receives the interest it is entitled to

from the company's activities. The sales receipts from All Things Energy are deposited with the

Receiver, the sales are accounted for to the Receiver and the Receiver pays the related

commissions to the third party operator.

The Receiver also addressed information needed by plaintiff Consumer Financial

Protection Bureau ("CFPB") in connection with the negotiations between the CFPB and Derin

Scott, David Klein and Shannon Scott which culminated in the Individual Stipulated Judgment.

The Receiver provided information needed in connection with the Receiver's action against

Aksiban, LLC for the Receiver's motion to obtain a default judgment against that entity. The

Receiver also addressed a number of other administrative matters, including responding to a

creditor of the entity GNS Frac regarding its efforts to foreclose and recover its collateral from

that entity, responding to numerous contacts and requests for information from consumers and

other potential creditors of the receivership estate, and addressing tax issues. The Receiver also

prepares regular financial accountings for the receivership estate.

B. Professionals' Services and Activities During the Expense Period

The Receiver's lead counsel since the inception of the receivership has been Gary Owen

Caris and Lesley Anne Hawes previously with Dentons and now attorneys with Diamond

McCarthy. The Receiver has incurred attorneys' fees of $21,328.05 and costs of $98.90 for the

services of Dentons during the Expense Period. After Caris and Hawes moved their law practice

to Diamond McCarthy on ar about June 13, 2016, the Receiver has incurred fees for services of

Diamond McCarthy of $2,173.50 during the Expense Period. The services performed by

Dentons and Diamond McCarthy were varied during this Expense Period and included multiple

court filings made during the Expense Period.

12


During this Expense Period, Dentons addressed the sale of personal property assets

located at the Mountain Ridge Property as well as the Receiver's right to list and market the

Mountain Ridge Property for sale. Dentons reviewed the proposed auction sale contract with the

auction company and provided the Receiver advice in connection with that agreement. Dentons

addressed other issues regarding the proposed listing of the Mountain Ridge Property. Dentons

prepared a stipulation to allow the Receiver to auction the personal property at the Mountain

Ridge Property location as well as to allow the Receiver to list the Mountain Ridge Property for

sale with a local real estate broker to be chosen by the Receiver. The draft stipulation was

circulated to the interested parties and revised based on comments from the CFPB and defendant

Derin Scott. The final stipulation was signed and filed with the Court and approved by Court

order entered on August 1, 2016 (Doc. No. 106).

During the Expense Period, Dentons also addressed issues and provisions affecting the

Receiver and the receivership es~ate in draft proposed judgments circulated to the Receiver for

review and comment. The CFPB and Derin Scott, David Klein and relief defendant Shannon

Scott ultimately entered into a final form of stipulated judgment, and the Individual Stipulated

Judgment was entered by the Court on August 1, 2016 (Doc. No. 105).

Dentons and Diamond McCarthy also began taking steps to obtain a default judgment

against the defendant, Aksiban LLC ("Aksiban"), in a related lawsuit filed by the Receiver

against that entity. Aksiban obtained title to two properties in Florida that were paid for with

funds from a World Law-related receivership entity. Aksiban failed to timely respond to the

summons and complaint and its default was entered by the Court on February 26, 2016 in the

Receiver's action. During the Expense Period, the Receiver's counsel Dentons and later

Diamond McCarthy continued to analyze the applicable law, obtain evidence and began to

13


prepare the pleadings necessary to have a default judgment entered against Aksiban. The motion

to enter the default judgment was filed after the end of the Expense Period, and a default

judgment was recently entered in the Receiver's favor.

Caris at Dentons and later Diamond McCarthy also assisted the Receiver in addressing

additional issues that arose concerning GNS Frac. The Receiver was contacted by a creditor of

that entity that had secured claims and wanted to address the wind up of that entity and its

recovery of its collateral. Caris responded to certain communications and provided advice to the

Receiver concerning the creditor's request.

During the Expense Period, Dentons also prepared and filed the Receiver's second fee

motion covering the period from October 1, 2015 through February 29, 2016. The second fee

motion was filed pursuant to the provisions of the Preliminary Injunctions. No objections to the

second fee motion were filed by any party, and the second fee motion was granted by order

entered on June 17, 2016.

III. THE FEES AND EXPENSES OF THE RECEIVER AND ITS PROFESSIONALS

ARE REASONABLE AND SHOULD BE PAID

It is a fundamental tenet of receivership law that expenses of administration incurred by

the receiver, including those of the receiver, his counsel and others employed by him, constitute

priority expenses for which compensation should be paid from the assets of the receivership. As

explained in the leading treatise Clark on Receivers:

The obligations and expenses which the court creates in itsadministration of the property are necessarily burdens on the

property taken possession of, and this, irrespective of the question

who may be the ultimate owner, ar who may have the preferred

lien, or who may invoke the receivership. The appointing court

pledges its good faith that all duly authorized obligations incurred

during the receivership shall be paid.

14


2 Clark, Ralph Ewing, A Treatise on the Law and Practice of Receivers § 637, p. 1052 (3 a ed.

Rev. 1992).

The Receiver is an officer of the Court charged with a myriad of duties under the Court's

receivership orders, many of which have no relationship to recovery of assets or increasing the

funds available for distribution to creditors. Because of the nature of the administrative and

other services required in receiverships, the benefit a receiver confers on receivership property

cannot be determined based solely on the increase or decrease in the value of property in the

receiver's possession. As the Court explained in Securities and Exchange Commission v. Elliott,

953 F. 2d 1560, 1577 (11th Cir. 1992):

[I]t is sometimes difficult to ascertain what type of benefits areceiver has bestowed on receivership property..... [A] benefit toa secured party may take more subtle forms than a bare increase inmonetary value. Even though a receiver may not have increased,or prevented a decrease in, the value of the collateral, if a receiverreasonably and diligently discharges his duties, he i~-entitled tocompensation. [Citations omitted.]

Securities and Exchange Commission v. Elliott, 953 F. 2d at 1577.

The Court has broad discretion in determining the reasonableness of fees to be awarded a

receiver. See In re San Vicente Medical Partners Ltd., 962 F. 2d 1402, 1409-1410 (91h Cir.

1992). The Court may evaluate the time and effort expended by the Receiver with respect to

specific projects and aspects of the administration of the estate, and may look to a number of

different factors under the case law in approving receiver's and counsel's fees. In re San Vicente

Medical Partners Ltd., 962 F. 2d at 1409-1410. The Receiver and its professionals have

performed numerous and varied tasks during the Expense Period. This motion establishes that

the Receiver, its staff and its professionals rendered reasonable and necessary services for the

receivership estate since the commencement of the receivership that were beneficial to the estate.

See Federal Trade Commission v. Capital Acquisitions &Management Corp., 2005 U.S. Dist.

15


LEXIS 18504 (N.D. Ill. August 26, 2005). The Receiver submits the fees are reasonable in light

of the services rendered, and that the fees and expenses requested should be awarded in their

entirety. As set forth above and in Exhibit 1 to the Kane Declaration in support of the Motion,

there are sufficient assets in the receivership estate to allow for payment of all fees and expenses

requested.

The Receiver has provided notice of this motion by serving the parties to the case or their

counsel. The Receiver also has caused a notice of the filing of this motion to be served on the

known non-consumer creditors in the case. In addition, the Receiver will post a copy of the

motion and supporting declarations, without copies of the time billing records, on the Receiver's

web site for this case and will provide a complete copy of the motion to any interested party who

requests it, to the extent that interested party has not been served with the motion.

IV: CONCLUSION

Based on this motion, on the supporting declarations of Brick Kane and Cary Owen Caris

filed and served concurrently herewith, and on the pleadings, records and files of the Court of

which the Receiver requests the Court take judicial notice pursuant to Rule 201 of the Federal

Rules of Evidence, the Receiver respectfully requests that the Court grant relief as requested in

the motion.

Dated: September ~, 2016 Respectfully submitted,

By: /s/ Michael E. StrauchMerrick L. GrossFlorida Bar No. 716677Michael E. StrauchFlorida Bar No. 13988CARLTON FIELDSMiami Tower100 S.E. 2°d Street, Suite 4200Miami, Florida 33131

16


Tel: (305) 530 — 0050Fax: (305) 530 — 0055E-mail: [email protected]

powers@carltonfields. [email protected]@carltonfields.com

Local Counsel for Plaintiff

By: /s/ Gary Owen CarisGary Owen CarisAppearing Pro Hac ViceCalifornia Bar No. 088918Lesley Anne HawesAppearing Pro Hac ViceCalifornia Bar No. 117101DIAMOND MCCARTHY LLP1999 Avenue of the Stars, Suite 1100Los Angeles, CA 90067Tel: (310) 651-2997Fax: (424) 253-1101E-mail: [email protected]

lhawes@diamondmccarthy. com

Lead Counsel for Plaintiff

17





Plaintiff,

v,


Defendants,


Relief Defendant.

DECLARATION OF BRICK KANE IN SUPPORT OF MOTION FOR ORDERAPPROVING AND AUTHORIZING PAYMENT OF FEES AND EXPENSES OF THERECEIVER AND ITS PROFESSIONALS FROM MARCH 1, 2016 THROUGH JUNE 30,

2016

I, Brick Kane, declare:

I am the President and Chief Operating Officer of Robb Evans &Associates LLC.

Robb Evans &Associates LLC has been appointed as Receiver ("Receiver") over Family Capital

Investment &Management, LLC, and its successors, assigns, affiliates, or subsidiaries, and each

of them, by whatever names each might be known, provided that the Receiver has reason to


believe they are owned or controlled in whole or in part by any of the Defendants, pursuant to

the Preliminary Injunction with Asset Freeze, Appointment of Receiver, Expedited Discovery,

and Other Equitable Relief for Defendants Derin Scott, David Klein, Family Capital Investment

& Management LLC, and Relief Defendant Shannon Scott (Doc. No. 42) ("FCIAM Preliminary

Injunction") and World Debt Services, LLC and World Law Processing, LLC, and their



whole or in part by any of the Defendants, pursuant to the Preliminary Injunction with Asset

Freeze, Appointment of Receiver, Expedited Discovery, and Other Equitable Relief as to

Defendants Orion Processing, LLC, Bradley James Haskins, World Law Debt Services, LLC and

World Law Processing, LLC entered September 2, 2015 (Doc. No. 28) ("World Law Preliminary

Injunction"). If called upon to testify as to the facts set forth in this declaration, I could and

would testify competently thereto as the facts are true based on my own personal knowledge.

2. This declaration is submitted in support of the Receiver's third fee motion and

covers fees and expenses incurred for the services of the Receiver, its staff and its professionals

from March 1, 2016 through June 30, 2016 (the "Expense Period"). The Receiver seeks approval

and authorization for payment of the Receiver's fees and expenses and those of its professionals

described in the Receiver's financial report entitled Receivership Administrative Expenses and

Fund Balance ("Financial Summary") attached hereto as Exhibit l . During the Expense Period,

the Receiver has incurred fees for the Receiver and its members of $7,660.80, Senior and

Accounting Staff fees of $33,656.40, and Support Staff fees of $536.60 for total Receiver's fees

of $41,853.80. The Receiver has incurred Receiver's expenses of $10,692.09, including

expenses for the services of an outside computer consultant to address the recovery of data on the

Receivership Defendants' database/program known as "Debt Manager" ("DM") which tracked

2


consumer activity such as fees paid by consumers and payments made by the Receivership

Defendants on behalf of the consumers to their credit card companies or other creditors, and the

sum of $6,397.10 incurred to the Receiver's outside accountants Squar Milner LLP for

preparation of tax returns. Copies of the Receiver's redacted billing records axe attached hereto

as Exhibits 2 through 5. A true and correct copy of the invoice from Squar Milner for its

accounting services for the Expense Period is attached hereto as Exhibit 6. As explained in the

Declaration of Gary Owen Caris ("Caris Declaration") in support of the Receiver's fee motion,

the Receiver's bills and those of its counsel have been redacted to prevent the disclosure of

attorney-client privileged communications, attorney work product and other confidential

information.

3. The Receiver has also incurred attorneys' fees and costs during the Expense

Period. The Receiver's former counsel was Dentons US LLP ("Dentons"), to which the Receiver

has incurred attorneys' fees of $21,328.05 and costs of $98.90 for a total of $21,426.95 for its

services during this Expense Period. In June 2016, the Receiver's attorneys Gary Owen Caris

and Lesley Anne Hawes moved their law practice from Dentons to the Receiver's present lead

counsel, Diamond McCarthy LLP ("Diamond McCarthy"). The Receiver incurred fees to

Diamond McCarthy during the Expense Period of $2,173.50. In addition, the Receiver engaged

a local firm in Austin, Texas, Munsch Hart Kopf &Harr, P.C. ("Munsch Firm"), to assist the

Receiver in connection with its evaluation and appraisal of the receivership estate's real property

located at 9011 Mountain Ridge in Austin ("Mountain Ridge Property"). The Receiver has

incurred fees of $1,500.00 and costs of $26.46 for the services of the Munsch Firm during the

Expense Period. Copies of the bills for those services are attached to the Caris Declaration.

4. On August 19, 2015, the Court issued a Temporary Restraining Order with an

asset freeze and other provisions as to all defendants. On August 28, 2015, Magistrate Judge


Torres issued his report and recommendation, recommending that a Preliminary Injunction Order

be imposed which included the appointment of a receiver for corporate defendants World Law

Debt Services, LLC ("WL Debt") and World Law Processing, LLC ("WL Processing"). On

September 1, 2015, the Court entered an order approving the Stipulated Extension of the

Temporary Restraining Order for Defendants Derin Scott, David Klein, Family Capital

Investment &Management, LLC ("FCIAM") and Relief Defendant Shannon Scott ("FCIAM

TRO") pursuant to which the Receiver was appointed as Temporary Receiver for FCIAM. On

September 2, 2015, the Court issued the World Law Preliminary Injunction pursuant to which

the Receiver was appointed receiver over defendants WL Debt and WL Processing, and their



whole or in part by any of the Defendants. On September 14, 2015, the Court issued the FCIAM

Preliminary Injunction, appointing the Receiver as receiver over FCIAM and its successors,

assigns, affiliates, or subsidiaries, and each of them, by whatever names each might be known,

provided that the Receiver has reason to believe they are owned or controlled in whole or in part

by any of the Defendants. The World Law Preliminary Injunction and the FCIAM Preliminary

Injunction are referred to collectively herein as the "Preliminary Injunctions." WL Debt, WL

Processing, and FCIAM and their successors, assigns, affiliates and subsidiaries, and each of

them, by whatever names each might be known, provided that the Receiver has reason to believe

they are owned or controlled in whole or in part by any of the Defendants are referred to herein

as the Receivership Defendants and various successors, assigns, subsidiaries and affiliates of WL

Debt, WL Processing and FCIAM, including without limitation World Law Forms and

Mediation, Inc. ("Forms") and WLD Price Global, Inc. ("Price Global"), are sometimes referred

to herein as the Affiliated Entities.

4


5. I have been primarily responsible for the supervision and administration of the

receivership estate, the Receiver's review and investigation of assets and analysis of financial

and business records relevant to the receivership, and the Receiver's exercise of its powers and

duties under the Temporary Restraining Order and the Preliminary Injunctions. I have been

involved in the Receiver's ongoing review and detailed analysis of the Receivership Defendants'

financial records and other business records and files and those of Orion Processing, LLC

("Orion"), which is in a Chapter 7 liquidation bankruptcy case pending before the Bankruptcy

Court for the Western District of Texas. I was personally involved in the preparation•and review

of the Report of Receiver's Activities for the Period from September 1, 2015 Through September

4, 2015 ("First Report") and the Report of Receiver's Financial Analysis September 4, 2015

Through November 30, 2015 ("Second Report").

6. The Receiver's financial reconstruction of the business of the Receivership

Defendants was completed in this Expense Period. The Receiver also continued its investigation

and administration of the receivership assets during this Expense Period, including taking steps

to arrange for the disposition of persona] property located at the Mountain Ridge Property and

investigating the value of the Mountain Ridge real property, real estate brokers and other

information pertinent to the Receiver's proposed disposition of that real property. The Receiver

negotiated a proposed agreement with a local auctioneer in Texas to dispose of the personal

property located at the Mountain Ridge Property. The Receiver obtained appraisals of the

Mountain Ridge Property and addressed the potential listing of that property with multiple local

real estate brokers. The Receiver circulated a proposed stipulation to authorize the Receiver to

auction the personal property and list the Mountain Ridge Property for sale which was later

signed and filed with the Court during the Expense Period. The Receiver obtained the assistance


of the Munsch Firm in supervising access to the Mountain Ridge Property for inspections and the

appraisers.

7. The Receiver also administered the receivership assets by collecting rents and

arranging for necessary repairs and maintenance of the Mountain Ridge Property and handling

payment of its related expenses. Various issues arose during the Expense Period requiring

repairs to be made and to address issues with tenants at the Mountain Ridge Property. The

Receiver's members and staff also continued to supervise a Receivership Defendant's income-

producing investment in the entity All Things Energy LLC ("All Things Energy"), which

continues to snake sales of products for which the Receiver is obtaining payments and paying

commissions, All Things Energy is operated by an independent non-party, and the Receiver has

monitored the company"s operations post-receivership to ensure the estate receives the interest it

is entitled to from the company's activities. The sales receipts from All Things Energy are

deposited with the Receiver, the sales are accounted for to the Receiver and the Receiver pays

the related commissions to the third party operator. During the Expense Period, the Receiver

collected a total of $61,816.86 primarily from the rents generated by the Mountain Ridge

Property and the revenues from sales by All Things Energy, with collections by the estate from

its inception to June 30, 2016 totaling $7,496,027.54.

8. In connection with its forensic accounting, the Receiver continued to analyze

banking, accounting and business records of the Receivership Defendants and obtained

additional banking records necessary to complete the accounting during this Expense Period. As

previously reported to the Court, the Defendants and Receivership Defendants did not turn over

any banking, accounting or financial records for the Receivership Defendants, and the Receiver

was unable to locate Quickbooks records or other financial and accounting records for some of

the Receivership Defendants.


9. The Receiver's activities during this Expense Period also included attempts to

recover data from the DM database on the Receivership Defendants' server. The Receiver's IT

personnel and an outside computer consultant attempted to recover that data during the Expense

Period to obtain information on the consumers injured by the Receivership Defendants' activities

which is relevant to the Receiver's forensic accounting analysis and to determine and reconcile

payments that were made on behalf of those consumers to their creditors and the amount of fees

paid by the consumers to the Receivership Defendants.

10. The Receiver has also addressed information needed by plaintiff Consumer

Financial Protection Bureau ("CFPB") in connection with the negotiations between the CFPB

and Derin Scott, David Klein and Shannon Scott which culminated in the Individual Stipulated

Judgment. The Receiver provided information needed in connection with the Receiver's action

against Aksiban, LLC for the Receiver's motion to obtain a default judgment against that entity.

The Receiver also addressed a number of other administrative matters, including responding to a

creditor of the entity GNS Frac regarding its efforts to foreclose and recover its collateral from

that entity, responding to numerous contacts and requests for information from consumers and

other potential creditors of the receivership estate, and addressing tax issues. The Receiver also

prepares regular financial accountings for the receivership estate.

11. The billing rates charged by the Receiver in this case reflected in the billing

records filed in support of the Motion for the Receiver, the Receiver's members and senior

accounting staff are discounted at 10% from the rates charged by the Receiver's firm in private

sector cases as of the time of the Receiver's appointment in 2015. The Receiver does not raise

the rates charged for the Receiver and its senior and accounting staff during the receivership

case.

7


12. As a member of Robb Evans &Associates LLC, I am familiar with the methods

and procedures used by the Keceiver and its staff and employees to record the time spent

rendering services to receivership estates over which. Robb Evans and Robb Evans &Associates

LLG have been appointed. The records attached hereto as Exhibits 2 through 5 are regularly

prepared by the members, staff and employees of the Receiver at or about the time of the

ser~~ices rendered and each of whom has a business duty to accurately record the information

regarding their services set forth in these records. The records are reviewed by the Receiver's

accounting staff and summarized in the Receiver's Financial Summary, Exhibit 1 attached

hereto. As explained in the accompanying Declaration of Gary Owen Caris, the Receiver's time

records and the records of its professionals have been redacted where appropriate to preserve

descriptions containing confidential, tactical, strategic, attorney-client privileged and/or attorney

work-product i~rformation. Based upon my experience with Robb Evans &Associates LLC, I

believe the Receiver's methods and procedures for recording and accounting for time and

services for the receivership estates over which Robb Cvans and Robb Evans &Associates LLC

have been appointed are reliable and accurate.

I declare under penalty of perjury that the foregoing is true and correct and that this

declaration was executed this~U day of September 2016 at Sun Valley, California,

~..~.__

~w~~ 4- ~

S3I~1C4~ KANE


~~ ~~

Case 1:15-cv-23070-MGC Document 119-1 Entered on FLSD Docket 09/29/2016 Page 1 of 5

Robb Evans &Associates LLC`

Receiver of World Law Debt Services L

LC er, aL

Receivership Administrative Expenses and Fund Balance

From Inception (

September 1, 2015,) to J

une 30, 2

A16

Previously 3/1/16 to

Reported

Mar 16

Apr 16

Ma}' 16

... Jun 16

6/30/26

TOTAL

Funds Transferred In

Bank of America

WLD Price G

lobal Inc

120,168.54 O.UO

0.00 0.00

0.00 0.00

12b,1G8.54

World Lary Forms and Mediations

?,U?5,203.00 6.00

UAO

0.170 0.00

0.00 2,0%5,203.Q0

~,~_

~~

~~

Total~BankofAmerica

2,195,371.:14 (7t1f~

i}.fip O.00R

0.4t~ ii.t)i}

2,i~)5,3~15~

IBC Bank

All Things Energ}= L

LC

3 ;

4..42.~i7 O.00

0.00 O.OU

0.00 (1.00

3?,~2.C?

Family Capital I

nv & Mgmt

8,Q79.1~F U.00

0.0(7 U.OQ

0.00 0.00

8,0%9.14.,~`._

Total IBC Bank

45,521.51. U.00

OAO

U_O0 0.00

(7.00 45,521.81

`TD Bank

World Law Forms &Mediation Inc

5,090,034.8£1 0.00

0.00 0.00

O.OU O.OU

5,090,b3A,88~_

.~-

Tota1TDBank

S,Cf~>r},(~~.~5 ' E)1 )t;}

ti.00 f~.l'1~~

~)_~)E~ C1,~~0

5,~19Q.034.88

Total Funds Transferred In

7,336,92~?3 ~.UU

0.00 0.00

0.00 0.00

7,330,92823

9011 Mountain Ridge Rent

6$,369:?fi 11,394.88

11,394.88 1?.,Ua1.R8

11,613.S~r =~G,4a5.~2

11~,924.$Q

All Things Energy Revenue

2;,364:49 1G,8S1.12

('1;5:03). 3; 7~F9:7?`

~~0:99 14,G~6.85

42,Q?1.34

Vendor Refunds

6,G50.59 0.00

O.QO 'J:00~

O:QCI G:00`

G,tiSii59

Miscellaneous

2~5Ot1 O.QO

Q'00 O t~0

0 (lU

9.0(7 2~S.Ou

Interestlncome

693.09 1.8(1.0O

168.5, 185.13

1-0.19 ?(Y~,~9

.... 1,39-.58

TvtalFundsCollected

%.~3~1,210.6fi ?2,-} 6.00

10,548.42 15;~~$%.38

12,;7 .06 C1,~16.8G

~:. ~,~96,027.~~

Expenses

9011'Mtn Ridge Building Expense.

Alarm & 1blonitoring Services

210.00 10.00

0:06 0.00

3~?.33 42.33

GG2.33

Appraisal& BOV Fees

$,940.00 0.00

O.GfJ O.Ol1

0.00 O.00

8,100.OD

Common Area Maintenance Fees,

G," ~~7'~ 0.00

3,21 L00

O.UO 0.(lU

3,'_11.Qu 10,000.27

Electricity./Water/Sewer 25;1?37.73

4,809.36 3;932.40

3,~~F.40 3,37.6.01

15,12:1 %

43,49.95

Insurance

0.O0 6,900.60

3,=450.31 3,56531

3,450.31 17,3GGS3

17,36(1.5:1

Pagelof4


Robb Evans & Associates L

LC'


LC et aL

Receivership Administrative Expenses and Fund Balance

From Inception (September 1, X0]5) to June 30, 2016

Janitorial ServicesMaintenance &Repairs

Mortgage Note Payments

On-Site M

gmt Fees

Phone &Internet

Properh~ Taxes

Total 9QI1 Mtn Ridge Building Expense

Business &Operation Expenses

Co-Location Rental`Fees

Commissions

Employer Taxes

OCC Assessment Fees

Payroll Expense

Professional Services

PUCO Assessment Fees

Small Equipment & Hardnare

Softcrare Expenses

Storage Unit Rents:

Truck Rental

Total Business & ~petation Expenses

Receiver Fees &Expenses

Receivez Fees

Receiver

B. Kane

KJotulsonA.Jen

Total Receiver

PreviouslyReported

ltiiar 16

Apr 16

May 16

.ter ~ ~~. ~~.

5,34G.~4"i _

9%5.5)

78?.6G )02.20

3,91t:F31 Q.00

4,075.04 OAO

116,3{x .00 16,8?3.00

1G,8?3.00 16,8?3.00

7,3X3.,33 2,?00.00

1,120.00 0.00

G`:~fl.4U 0.~0

0.00 69'L.95

83,750.09 0.00

(1.00 0.00

_...,,:

26Q,3G2.15 32,363.SS

3.1,429:41 25,E??.~G

3,56 ]..91

19,564.E

1,O"5.25

1.00.00

9,121.01

2,3?..5.00

130.64

508.34

140.$0

0.00

a.oa36,5? %:39

1-1,090.~C1

15.~57.~U

C7:C10

0.00

0:00

0.00

(1:00

(1.f)0

U.UU

'O.Q~}

264.1

~:OQ

272.3

536.50

~~:5A0

~-

1..; ;, 7U,2.p

(1.0

3,2Q?.93

0.00

0.(?U

0.00

O(i(l

0.00

0:00

0.x(1

3'3:12

0.00

3,581.05

649. ~i0

239.~F0

3,C113.R0_

(?.b0

1,507.64

O.QO

a.ao0.00

f).f10

O.OU

0.00

0.(?0

296.GQ

0.00

1,804.24

1,13G.4Q

0.00

2. 3.60

1,710:00

Jun 16

904.33

1,2t2.iS

16,873.00

0.00

G 19.50

0.00

2G,? 33.03

11~~0

1,9~5.G4

o.aao.000.00

U.QO

0:00

o:ouU:OC~

3?1:12

0'00

2,31 G.7G

] ()~;C[1

Q:UQ

31:20

136.$0

3/1/16 to

6/30/16

3,569.? 8

5,267.59

C7,~92.00

3,82UA0

1,312.1

QACI

118,003:35

(l.0(~

6,661.21

o.00o.on0.00

():O17

0:00

ac~o264.15

1,0~0.8~1

272.35

8,238.55

3,043.80

1,846. SO

'L,?70.?.tl

7~G60.80

TOTAL

8,916:29,1: 9.~0

1S3;s~~.uo

11,1)3.33

] ,990.8:1

83,550.09..

3 ~ 8,3~iG.UO

3,561.91

26,22~.G~

~,a~5.?sioo.00

9,12'1.01

2,:325.0

130.64

5Q$3~4

417.95

1,0=FQ.84

272.35

44,65.94

17,13~i20

2,~72.8~

38,133.00

Page 2 of 4


Senior &Accounting Staff

T. Chung

'F. Jen

C: Callahan

E. Roop

C. DeCus

J. Dadbin

N. Wolf

TotaiSenior &Accounting Staff

Support Staff'

Total Receiver Fees

Receives Costs

Bank Fees.

Data RecoverS~ Expenses

External Hard Drive

:Information Search Costs

"Locksmith Services

Office Supplies

Postage & Deliver}r

Ta~c Return Preparation F

ees

Travel Expenses

UCC & Tit1e Searches

Website Support.

Total Receiver Costs

E~obb Evans &Associates LLC


LC et aL

Receivership Administrative 'Expenses and Fund Balance

From Inception (Sepcemfiet 1, 2(I1S }

to June 30,.2016


Reported

Mar 16

Apr 16

May 16

Jun 16

6/30/16

TOTAL

52,581.60 G,?73.45`

211:5`

'0.~~ 0:0(l

6,934.50 59,S1G.t0

1,59'.95 Q.UO

301.Sb 2,2.1:5

633.1 a 3,3?G.80

=~,9 i4. r 7

2.9,4~?.50 1,30.00

1,327.50 G30.00

- 720.00

3,982.50 2$,~40.OU

15,619.50 9,1.80.00

1,485.00 1,458.00

0.00 12,123.00

2-,742.0

9,18; .20 970.20

1,356.30 722.70

950.40 3,999.60

13,18G.S0

7,434.00 7D8:OQ

9~?.(?~ 6'~:Q

~

)OO.bO 3,22£~,UU

1(1,662,()0

30.00 0.00

1?.00~ 0.00.

0.00 12.00

=2.00 ~

110,901.75 18,886.65

5,635.35 5,93Q.8~

3,203.55 33,656.40

1~4,56~.1a

3,fl24.20 1~7?0

1~=~:GQ 130.60

1?~.20 536.60

4,360.80

14a,204.1~ 21,814.05

$,803."5 i,'1.=~~

3,~G~ti.S~ 41,853.80

1S',057.95

32.00 0.00

(2~.Ob) 7.Oa

i'l)Q (11.00)

?l.p~

'0.00 O.UO

0.00 3,SOO:QO

0.00 3,:i0C~A0

3,~OO.OQ'

91.9'? 0.00

15]..39 0.00

t10O 151.39

2 3.31

~4?.8~ Q.00

Q.00 O.Cx)

0:00 0.00

54?.fi9'x`].43

0.00 0.00

O:QO Q.00

0.00 ?21. 3

313.83 OAO

0.00 Q.00

OAO

OAO

313.83'10,76

110.1 i

123.94 13H.~3

95.66, X68.29

1,1?9:UL.00

0.00 0.00

6.00 6,397:10

G,39?.10 Ga39'.14

=1,45).96 U.UO

0.00 O:OG

0:00 0.00

4,99;961~aU~

0.0O O.OU

0.011 i~~.(1(l

0.00 1~S.U1

".~.r3 75.41

3]_(~5 44.g0

3~.t)~ 186.71

904.94

7.?41.42 1~S.S8

281.38 3,69a ~2

G,53t~:S1 1QG92.09

18,433.1

Page 3 of 4


Robb Evans &Associates LLC'


LC et a

L

Receivership Administrative`Expenses and Fund Balance'

From Incepaoa (September 1, ZO1S) to June 30, 2016

Legal Fees &Costs

Dentons

Legal Fees

Legal Costs

Total Dentons

Diamond 1~icCa~thv L

LP

Legal Fees

Total Diamond McCarthy: LLP

Munsch Hardt Kopf & Harr, PC

Legal Fees

Legal Costs

Total Munsch Hardt Kopf & Harr, PC

Total Legal Fees &Costs

Total Receiver Fees &Expenses

Total Expenses

Net Transactions

Fund Balance


Reported

Mar 16

Apt 16

May 16

Jun 16

6/30/16

TOTAL

68,954.85 5,31~.2~

8,89.457,133.35

0.00 21,328>OS

90,22.90

3,$31.~'~5 0.00

QAQ

0.00 9$.90

9£1.90 3,930.3:1

'2,78G.~0 5,31;.?..~

8,829.45 'r,1.$3.3:i

98.90 21,426.95

94,?13?5

U. UO

0.00 O.OQ

OAS

2,1?3.50 2,173.50

2,1X3.50

U.00 ~.OU

U.QU O.Q(7

2,1''350 2,1%350

2, 1' 3.50

Q.UU ?40.OU

0.00 440.0(:!

3_'b.00 1,500.00

1',Sl]O (1O'

U.Ob 0.00

0.00 O.00

?~.+6 26.46

26.46

0.00 ?0.00

0.00 440.Q0

34G.~6 15?6.~6

1,526.46

72,'SG.~~ G,Oa~.2~

8,8?9.45 7,623.3;

2,u1g.8~ 25,1?G.91

9',):13.21:_

~_,

_. .....w...-.--.—...,

225;'31.£37 2F3,054.88

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(30,383.84) (29,108.95)

(142,098.34)

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Page 4 of 4





Plaintiff,

►►~


Defendants,


Relief Defendant.

DECLARATION OF GARY OWEN CARIS IN SUPPORT OF MOTION FOR ORDER

APPROVING AND AUTHORIZING PAYMENT OF FEES AND EXPENSES OF THE

RECEIVER AND ITS PROFESSIONALS FROM MARCH 1, 2016 THROUGH NNE 30,2016

I, Gary Owen Caris, declare:

1. I am an attorney at law duly admitted to practice before the courts of the State of

California and have been admitted to practice pro hac vice before this Court in this matter. I am

a partner in the firm of Diamond McCarthy LLP ("Diamond McCarthy") and was formerly a

partner in the firm of Dentons US LLP ("Dentons"), the attorneys for Robb Evans &Associates


LLC as Receiver ("Receiver") over Family Capital Investment &Management, LLC, and its



whole or in part by any of the Defendants, and World Debt Services, LLC and World Law

Processing, LLC, and their successors, assigns, affiliates, or subsidiaries, and each of them, by


owned or controlled in whole or in part by any of the Defendants. I am lead counsel for the

Receiver. I have personal knowledge of the matters set forth in this declaration, and if I were

called upon to testify as to these matters, I could and would competently testify based upon my

personal knowledge.

2. I have been the primary attorney representing the Receiver since the receivership

commenced on September 1, 201 S, when the Court entered an order approving the Stipulated

Extension of the Temporary Restraining Order for Defendants Derin Scott, David Klein, Family

Capital Investment &Management, LLC ("FCIAM") and Relief Defendant Shannon Scott (Doc.

No. 27) ("FCIAM TRO") pursuant to which the Receiver was appointed as Temporary Receiver

for FCIAM. The Receiver was subsequently made permanent receiver pursuant to the Receiver's

appointments under the September 2, 2015 Preliminary Injunction with Asset Freeze,

Appointment of Receiver, Expedited Discovery, and Other Equitable Relief as to Defendants

Orion Processing, LLC, Bradley James Haskins, World Law Debt Services, LLC and World Law

Processing, LLC entered September 2, 2015 (Doc. No. 28) ("World Law Preliminary

Injunction"), and the September 14, 2015 Preliminary Injunction with Asset Freeze,

Appointment of Receiver, Expedited Discovery, and Other Equitable Relief for Defendants

Derin Scott, David Klein, Family Capital Investment &Management LLC, and Relief Defendant

Shannon Scott (Doc. No. 42) ("FCIAM Preliminary Injunction"). On or about June 13, 2016,


Lesley Anne Hawes, also formerly of Dentons, and I moved our law practice to Diamond

McCarthy where we have continued to represent the Receiver. A substitution of counsel was

approved by the Court by order issued August 3, 2016 (Doc. No. 107) pursuant to which

Dentons was substituted out and Diamond McCarthy substituted in as counsel for the Receiver,

and Carlton Fields is now appearing as local counsel for the Receiver (Doc. No. 95).

3. Attached hereto as Exhibits 1 through 4 are copies of time records by the

attorneys and paralegal at Dentons who performed work on this receivership case during the

four-month period from March 1, 2016 through June 30, 2016 (the "Expense Period"). Attached

hereto as Exhibit 5 is a true and correct copy of the Diamond McCarthy billing summary for

June 2016, and attached hereto collectively as Exhibit 6 are true and correct copies of billing

statements of the firm of Munsch Hart Kopf &Harr, P.C. ("Munsch Firm"), the Receiver's local

counsel in Austin, Texas who provided assistance to the Receiver in addressing the 9011

Mountain Ridge property in Austin, Texas ("Mountain Ridge Property").

4. During the Expense Period, the Receiver has incurred attorneys' fees of

$21,328.05 and costs of $98.90 for a total of $21,426.95 for the services of Dentons. The

Receiver incurred attorneys' fees of $2,173.50 for the services of Diamond McCarthy during the

Expense Period, and the Receiver incurred attorneys' fees of $1,500.00 and costs of $26.46 for

the services of the Munsch Firm. The time records itemize and detail the hours spent and the

work performed by those attorneys and other time keepers rendering services on the matter. The

time records attached hereto as Exhibits 1 thxough 6, as well as the time records for the Receiver,

its members and staff, have been redacted by my firm where appropriate to preserve descriptions

containing confidential, sensitive, tactical, strategic, attorney-client privileged and/or attorney

work-product information.


5. During this Expense Period, my firms addressed the sale of personal property

assets located at the Mountain Ridge Property as well as the Receiver's right to list and market

the Mountain Ridge Property for sale. Dentons reviewed the proposed auction sale contract with

the auction company and provided the Receiver advice in connection with that agreement.

Dentons addressed other issues regarding the proposed listing of the Mountain Ridge Property.

Dentons prepared a stipulation to allow the Receiver to auction the personal property at the

Mountain Ridge Property location as well as to allow the Receiver to list the Mountain Ridge

Property for sale with a local real estate broker to be chosen by the Receiver. The draft

stipulation was circulated to the interested parties and revised based on comments from plaintiff

Consumer Financial Protection Bureau ("CFPB") and defendant Derin Scott. The final

stipulation was signed and filed with the Court and approved by Court order entered on August

1, 2016 (Doc. No. 106).

6. During the Expense Period, Dentons also addressed issues and provisions

affecting the Receiver and the receivership estate in draft proposed judgments circulated to the

Receiver for review and comment. The CFPB and Derin Scott, David Klein and relief defendant

Shannon Scott ultimately entered into a final form of stipulated judgment that was lodged with

the Court in July 2016 and entered by the Court on August 1, 2016 (Doc. No. 105) ("Individual

Stipulated Judgment"). The CFPB also filed a motion for entry of a default judgment against

receivership defendants World Law Debt Services, LLC, World Law Processing, LLC and

Family Capital Investment &Management LLC, and a default judgment was entered by the

Court against those entities on August 1, 2016 (Doc. No. 104) ("World Law Default Judgment").

7. Dentons and Diamond McCarthy also began taking steps to obtain a default

judgment against the defendant, Aksiban LLC ("Aksiban"), in a related lawsuit filed by the

Receiver against that entity. Aksiban obtained title to two properties in Florida that were paid

4


for with funds from a World Law-related receivership entity. Aksiban failed to timely respond to

the summons and complaint and its default was entered by the Court on February 26, 2016 in the

Receiver's action. During the Expense Period, the Receiver's counsel continued to analyze the

applicable law, obtain evidence and began to prepare the pleadings necessary to have a default

judgment entered against Aksiban. The motion to enter the default judgment was filed after the

end of the Expense Period, and a default judgment was recently entered in the Receiver's favor.

8. I also assisted the Receiver in addressing additional issues that arose concerning

GNS Frac. The Receiver was contacted by a creditor of that entity that had secured claims and

wanted to address the wind up of that entity and its recovery of its collateral. I responded to

certain communications and provided advice to the Receiver concerning the creditor's request.

9. During the Expense Period, Dentons also prepared and filed the Receiver's second

fee motion covering the period from October 1, 2015 through February 29, 2015. No objections

to the second fee motion were timely filed by any party, and the second fee motion was granted

by order entered on June 17, 2016 (Doc. No. 94).

10, The billing rates charged by Dentons in this case reflected in the summary

attached hereto as Exhibits 1 through 5 are discounted at 10% from the standard rates charged by

Dentons in non-federal equity receivership cases as of 2015. The rates charged by Diamond

McCarthy for my services and those of Lesley Anne Hawes are the same as the discounted rates

charged by Dentons in this matter.

11. I am a partner of Diamond McCarthy and was formerly a partner with Dentons. I

am familiar with the methods and procedures used to create, record and maintain billing records

for clients of Diamond McCarthy and Dentons. The time record summaries attached hereto as

Exhibits 1 through 6 are computerized time records prepared contemporaneously with the

services rendered by each attorney and paralegal billing time to this matter. These computerized


records are prepared in the ordinary course of business by the attorneys and paralegals employed

by Diamond McCarthy and Dentons who have a business duty to accurately record their time

spent and services rendered on the matters on which they perform work. In the normal course of

business after the conclusion of the calendar month to which the time records pertain, the

computerized billing program for each firm generates monthly invoices under the supervision of

the respective firm's accounting department. Based upon my experience with Diamond

McCarthy and with Dentons, I believe that the methods and procedures for recording and

accounting for time and services for the clients of Diamond McCarthy and Dentons are reliable

and accurate.

12. I have over 35 years' experience as a business and commercial litigator and also

have extensive experience as a bankruptcy attorney representing creditors in Chapter 11 and

Chapter 7 bankruptcy cases. For more than seventeen years I have also specialized in

representing receivers in federal equity receiverships. I believe the rates charged and the amount

incurred by the Receiver for the services rendered during the Expense Period are reasonable and

appropriate based on the nature of the services rendered, the quality and amount of services

provided, the complexity of the issues involved and other factors under the circumstances.

I declare under penalty of perjury that the foregoing is true and correct and that this

declaration was executed this ,2 ~' day of September 2016 at Los Angeles, California.

"M"' f

~ •


Case 1:15-cv-23070-MGC Document 118 Entered on FLSD Docket … · 2018-09-03 · Case...

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