Welcome to the Retirement Value LLC Receivership website. This website was established to provide information regarding the status of the case as well as our efforts to recover assets for the investors’ benefit. If you have questions that are not answered by the website, please contact the Receiver directly. His contact information can be found on the Contact Information page
Although the active phase of the Receivership has ended, the Receiver continues to manage the estate’s cash and insurance policies. To keep the investors and court informed, the Receiver will report on the status of the estate and his activities quarterly. In keeping with prior practice, the Receiver will distribute an annual report effective as of the end of the Second Quarter. The quarterly reports can be found on the Investor Communication page. The most recent quarterly report is below:
To date, seven of the policies in the portfolio have matured generating $26.5 million in death benefits. As a result of these maturities and litigation recoveries, the Receiver was able to distribute about $8.5 million to the investors. With the maturities and distributions to date, the portfolio is performing as expected. This means that there have been sufficient maturities to maintain the cash reserves at a safe level. There have not, however, been sufficient maturities to make another distribution.
While the Receiver anticipates making additional distributions, he does not know when the next distribution will be made or how much it will be. Whether a distribution will be made and the amount of the distribution depends largely on the number and size of the policies that mature. Each maturity will not necessarily result in a distribution. Distributions can only be made when the cash held by the Receiver exceeds the amount he is required to keep in reserve to pay premiums and other expenses.
We do not anticipate making a 2015 Distribution. The 2012 distribution depleted 100% of our excess cash on hand. We retained no more & no less than what the actuaries advised us we needed to adequately fund the portfolio so that it is “self-sufficient.” Inherent in that model is the concept of cannibalizing on death benefits in order to reload the premium reserves. That being said, the portfolio has been performing largely in accordance with the mean, annual projections. In 2012, the net cash flow was right at the mean, 2013 underperformed and 2014 over-performed. Statisticians call this an example of “mean reversion theory.”
Because we are three years into it and now have 6 policies eliminated (the first $10MM policy was not included in the 2012 forecast); we have asked the actuaries to re-run the model, eliminating the matured policies and updating their forecasted cash flows. I am hopeful that our reserve requirement are no longer $17.5MM (or even $15MM) and that we have excess cash on hand. However, I do not expect to hear from the actuaries until late 2015, early 2016 and then we need to seek leave from the Court to make a supplemental distribution. If we make a distribution, it will be in first or second quarter of 2016. Rest assured that we will distribute the maximum amount possible without compromising the portfolios ability to meet its premium obligations.
For further details on the estate’s financial condition, please review the Receiver’s reports on the Investor Communication page.
Indictments Handed Down
The State of Texas has indicted Dick Gray, Wendy Rogers, Michael McDermott, Ron James and Don James for crimes arising out of their roles in Retirement Value. Each has been accused of money laundering, conspiracy, fraud in connection with the sale of a security and theft by fraud, all of which are felonies under state law. The indictments were handed down by a grand jury in Collin County and the case will be prosecuted by the Collin County District Attorney’s Office.
The Receiver has received several inquiries as to the manner in which he is investing the estate’s cash reserves. Except for an account for current needs, he has currently placed the estate’s cash in certificates of deposit and savings accounts at various banks. All of the banks that the Receiver is using are of high quality and he believes that the estate’s accounts qualify for FDIC insurance.
The safety of the estate’s cash reserves is of paramount importance. To date, the Receiver has paid more than $20 million in premiums which have been offset by the $20 million in death benefits received. Maintaining the policies costs more than $4 million a year. Other than the anticipated death benefits from the insurance policies, the estate has no income and little ability to obtain credit on beneficial terms. The existing reserves are the only source of money to pay premiums until the next policy matures. As a result, the estate cannot enter into any investment which puts the estate’s principal at risk.
Over the past several years, the Receiver has asked numerous financial advisors to propose investment strategies that would increase the estate’s return without significantly increasing its risk. With the help of these advisors, he has investigated a variety of strategies including investing in corporate and government bonds, purchasing short term corporate notes and purchasing other more exotic financial instruments. Unless the Receiver was willing to invest in junk bonds (below investment grade), none of these strategies would pay as much as the bank accounts that the Receiver currently holds.
A number of investors have suggested that the Receiver invest in the stock market noting its generally upward trend over the last several years. He cannot do so. The stock market is inherently risky. Just because it has been trending generally upward, there is no guarantee that it will continue to do so. Remember 2008. Moreover, the stock market is very volatile. Even if the market continues to trend upward, it moves up and down rapidly. There is a substantial risk that the Receiver will need to withdraw money to pay premiums at a time when the market is on a downturn and sustain a loss.
Michael McDermott has sued the Receiver seeking indemnification for the criminal charges against him. He has also sued the State seeking injunctive and other relief intended to prevent the criminal charges against him from proceeding. The suit is currently stayed pending the outcome of related motions before the court hearing the criminal case. The Receiver will vigorously oppose McDermott’s attempt to have the estate pay for his criminal defense.
McDermott and Wendy Rogers had previously filed motions with the Court seeking similar relief. Those motions have been fully briefed and are awaiting Judge Triana’s decision.
Copies of the pleadings related to this dispute can be found on the Related Cases page.
Contacting the Court
Please do not call or write the Judge directly. If there is something that you wish to bring to the Judge’s attention, you must file a motion, pleading or other document with the Travis County District Clerk at the following address:
Amalia Rodriguez-Mendoza Travis County District Clerk P.O. Box 679003 Austin, TX 78767-9003
Your document should identify this case by its title and cause number (State of Texas vs. Retirement Value, LLC et al; In the 126th Judicial District Court of Travis County, Texas; Cause No. D-1-GV-10-000454). You must also send a copy to the Receiver and to the other parties to the case. Upon request, the Receiver will provide a copy of the current list for service on the parties and counsel. The Travis County Law Library has forms and other useful information for parties without lawyers.
Court Finds Retirement Value Engaged In Fraud
On February 21, 2013, the Court granted the State’s motion for partial summary judgment against Retirement Value finding that “Retirement Value engaged in fraud or fraudulent practices in the course of selling unregistered securities” in violation of the Texas Securities Act. The Court ordered Retirement Value to make restitution to the RV investor-victims. While it will not change the total amount of money payable to the investors, the order supports the Plan of Distribution and supports the ability of investors to claim that recoveries from the estate should be treated as the recovery of theft losses for tax purposes.