State Court Receiver for House Savings Investment and AA House Savings Financial, two mortgage processing companies in Houston, Texas, or “Money Service Businesses” (as defined by Texas Statute), with approximately 18,000 customers, which were sued by the Texas Attorney General and the Texas Department of Banking for failing to account for millions of dollars of consumer trust funds and operating a money service business without a license. After running the businesses for a period, it was determined that rehabilitation was not possible if the companies were to operate within the requirements of all relevant regulations. As such, an orderly wind down was conducted of both companies in a manner that insured all active customers’ mortgage payments were timely remitted during the transition. A forensic investigation was conducted to identity defrauded customers, the sources and uses of embezzled consumer trust funds, the location and liquidation of recoverable assets, and the development of an equitable claims and distribution process. Ultimately, funds were traced through 32 different insider bank accounts to the purchase of eight (8) real estate properties with misappropriated customer funds, which were recovered from the insiders and sold for the benefit of defrauded customers.
State Court Receiver for Warr Investment Group, Warr International Group and sixteen (16) other persons and entities sued by the Texas Attorney General and the Texas State Securities Board for selling unregistered securities by unlicensed dealers and though various means of fraud. An orderly wind down was conducted for the assets of each entity and a forensic investigation was conducted to identity affected investors, the source and use of investor funds, the location and liquidation of all recoverable assets, and the development of an equitable claims and distribution process. In the end, investors received a dividend of 44.4% on their investment claims, which is well above the national average for Ponzi scheme recoveries. Harney advisor provided investigative findings to the State Board of Securities and testified at the trial of the companies’ principal, James E. Warr, resulting in a conviction on four first-degree felony counts of theft, securities fraud, money laundering, and misapplication of fiduciary property. Mr. Warr was sentenced to 15 years in prison.
State Court Receiver for Incline Global Technology Services, Ltd. (IGTS), was a high tech service company located in Round Rock, Texas, adjacent to its major customer, Dell Computer. IGTS was the subsidiary of a UK entity “in administration,” which is an insolvency process under the management of a court-appointed administrator. The assignment involved the operation of the business for a period while the orderly wind down and sale was arranged and closed with Jabil Circuit, a Fortune 200 company, which allowed the retention of all 140 local jobs. Lastly, the Harney advisor was able to negotiate a consensual reduction in the unsecured claim of the parent company in the UK against IGTS from $41 million to $0, which allowed for a 52% dividend to unsecured creditors.
State Court Receiver for Austin Baccus Company, Inc., the exclusive online domestic retailer of refurbished Dyson vacuum cleaners through its warehouse showroom and multiple online sales channels, including eBay and Amazon, as well as its own website. The assignment involved the orderly winddown and liquidation of the online warehouse business, as well as a going-concern sale of the defendant’s retail showroom and repair facility.
State Court Receiver for WC 1st and Trinity, LP and WC 3rd and Congress, LP, two single-asset entities each owning prime, undeveloped real property in downtown Austin, TX collectively appraised at approximately $140MM. This is a pending matter.
Federal Court Receiver In Re: Securities and Exchange Commission vs. Kevin Merrill, Jay Ledford, et al, wherein the defendants orchestrated a $400MM Ponzi scheme and the Receiver has been granted exclusive possession and control over approximately 40 entities and all assets of those entities. This matter is currently ongoing and has involved the operations of three (3) separate businesses, including the administration of a $6B portfolio of consumer debt, as well as the liquidation of real estate, exotic cars, a yacht, jewelry and other luxury goods. All three individual defendants were charged criminally, pled guilty to federal charges and the primary actors were sentenced to 22 years (Merrill) and 14 years (Ledford) in prison.
Appointed by State Court In Re: Morton vs. Milam to serve as Receiver over all the defendant’s personal assets in connection with plaintiff’s collection of a seven-figure judgment. The property of the receivership estate included interests in approximately 50 separate limited partnerships and limited liability corporations. After approximately 60 days of investigating Milam’s assets and making an initial report to the Court, Harney was able to assist the parties to reach a full and complete settlement of all pending claims and counterclaims.
Appointed by State Court In Re: Kastleman vs. Kastleman to serve as Receiver over several limited partnerships, which involved seven figures of operating real estate in multiple cities around Texas in a contested divorce proceeding. Harney advisor monitored all real estate operations on a real-time basis and was given authority to approve certain operating transactions proposed by the parties, as well as to resolve disputes between the parties during the pendency of the case. Harney ultimately helped to facilitate a final settlement between the parties.