Status
of the Case
On May 5, 2010, the State of Texas filed suit against
Retirement Value, LLC, a Texas limited liability company,
Bruce Collins and Richard H. Gray. The 126th Judicial
District Court of Travis County, Texas, issued a Temporary
Restraining Order and appointed me as Temporary Receiver
over Retirement Value’s assets. On May 28, 2010,
the Court entered, by agreement of the parties, a temporary
injunction against Gray and Retirement Value and continued
the Receiver’s appointment. The State subsequently
amended its suit to include Wendy Rogers as a defendant,
and to seek a receivership over Hill Country Funding,
LLC, a Texas limited liability company, and Hill Country
Funding, LLC, a Nevada limited liability company each
a Retirement Value affiliate. Also named in the lawsuit
as a relief defendant is the law firm of Kiesling, Porter,
Kiesling & Free, P.C. Kiesling Porter served as escrow
agent in connection with the alleged investment scheme.
The temporary injunction and the receivership will remain
in place until the end of the trial of this matter, which
is currently unscheduled.
The lawsuit alleges that the Defendants orchestrated a
fraudulent investment scheme in which hundreds of people
invested as much as $77 million. The State has alleged,
among other things, that the defendants: sold unregistered
securities; are not registered to offer or sell securities;
made material misrepresentations and omissions in connection
with the offer or sale of securities; and otherwise violated
the Texas State Securities Act and the Texas Deceptive
Trade Practices Act. The Petition, for example, states
that the defendants made material misrepresentations or
omissions regarding the calculation of the insured’s
life expectancy; the character of Midwest Medical's control
persons; Midwest Medical's analysis’ accuracy, reliability
and historical performance; defendant Gray’s repute,
qualifications and experience; and the securities’
value.
The Receiver has asserted a cross claim against Richard
Gray, Wendy Rogers and Catherine Gray, the wife of Richard
Gray. In his cross/claim, the Receiver alleges that Mr.
and Mrs. Gray and Mrs. Rogers diverted substantial sums
of money from Retirement Value in violation of the Texas
Business Organizations Code and the Texas Uniform Fraudulent
Transfer Act. In addition, the Receiver has sued Mr. Gray
and Mrs. Rogers to recover the damages caused to Retirement
Value due to the fraudulent scheme alleged by the State.
The Receiver has also filed suit against David and Elizabeth
Gray (former owners of Retirement Value) to recover the
substantial sums of money paid to them by Retirement Value.
The Receiver has also asserted claims against a number
of licensees, consultants retained by Retirement Value,
Ron James, Don James and James Settlement Services (who
sold the policies acquired by Retirement Value). The Receiver
anticipates adding additional defendants depending upon
the success of ongoing efforts to resolve claims with
those defendants.
The Special Receiver, Janet Mortensen, has asserted claims
against various Wells Fargo entities. If you have questions
or comments regarding these claims, please contact Ms.
Mortensen directly.
The Receiver has retained the law firm of George &
Brothers, LLP, to prosecute claims against the licensees
and others. George & Brothers will be paid a contingency
fee based on the amounts recovered from the licensees.
Settlements and Assets Recovered by Receivership
The Receiver secured a settlement with defendant Bruce
Collins, which transferred approximately $319,000 in cash
and other assets to the Receivership. The Court approved
that settlement on June 17, 2010.
On May 26, 2011, the Court approved the sale by the Receiver
of Retirement Value’s office building for $755,000.
Per the Court’s order, the net proceeds of the sale
are to be used solely for the payment of policy premiums
or distribution to investors.
A group of investors, acting on behalf of a class of all
investors, asserted claims against Kiesling, Porter, Kiesling
& Free, P.C., (“KPKF”). A second group
of investors intervened and asserted individual claims
against KPKF. In addition, the Receiver had informally
approached KPKF for the purpose of settling his claims
against KPKF. On October 4, 2011, the court approved a
settlement between the class, the individual investors
and the Receiver, on the one hand, and KPKF on the other
in the amount of $710,000. The settlement proceeds have
been paid to the Receiver and the settlement is now final.
The Receiver reached a settlement with defendant Richard
H. Gray and his family, which recovers approximately $650,000
in additional assets for the estate. Pursuant to an agreement
reached with Don Taylor, the Receiver for Hill Country
Funding, the proceeds of the settlement will be split
between the two receiverships – the RV estate will
receive real property worth approximately $600,000 and
the HCF estate will receive a CD worth approximately $50,000.
In the future, the estates have agreed to split the recoveries
obtained from parties against whom both estates have claims
– 90% to RV and 10% to HCF. The Receiver and the
HCF Receiver will jointly prosecute claims against these
persons. The court approved the Gray settlement on November
22, 2011 and that settlement is now final.
