Class Action Settlement (March 2009) - Scheck  Investments, LP, et al

Class Action Settlement with Certain Banks (December 2008) -- The Court has granted Preliminary Approval to a settlement reached by the Class Counsel in the class action on behalf of all MBC investors against certain banks. The settlements involve American Express Tax & Business Services, now known as RSM McGladrey, Inc. ($4,750,000), Union Planters Bank, N.A. ($3,000,000) and Citibank, N.A. ($2,000,000), each of which was alleged in the lawsuit to have served as escrow agent for MBC at certain times in the past. The total, gross amount of the settlement is $9,750,000. If the Court grants final approval of the settlement, the settlement funds will be transferred to the Receiver for the benefit of the investors and for inclusion in a plan of distribution to be presented to the Court for approval. All investors eligible to participate in the settlement will be receiving by mail a Notice of Pendency of Class Action, Proposed Settlements and Final Hearing in English and in Spanish, which contains additional information on the settlements.

Class Action Settlement. (October 21, 2007) The Court has granted Final Approval to a settlement reached jointly by the Receiver and the Class Counsel in the class action on behalf of all MBC investors. The settlements involve Peter J. Lombardi, the former President of MBC ($1,500,000), Anthony Livoti, Jr., the former Trustee from MBC ($140,000), and Mark Pettyjohn ($44,624), a former sales agent for MBC. The settlement funds will be transferred to the Receiver for the benefit of the investors and for inclusion in a plan of distribution to be presented to the Court for approval.

On August 22, 2007, the Court entered an Order authorizing the Receiver to enter into a settlement in the amount of $52,000.00 with Ocala Breeders Sales Company in connection with a lawsuit seeking to recover payments that MBC had made to pay for horse-related purchases from this business for Joel and Leslie Steinger, the former principals of MBC. The settlement funds have been transferred to the Receiver for the benefit of the investors and for inclusion in a plan of distribution to be presented to the Court for approval.

On August 13, 2007, the Court entered an Order authorizing the Receiver to enter into a settlement in the amount of $60,000.00 with the American Express Travel Related Services Company, Inc. in connection with a lawsuit seeking to recover payments that MBC had made to pay for the personal obligations of Steven Steiner, MBC’s former Vice President, on his personal American Express card.

Settlement with Spear Safer CPA’s & Advisors. On July 19, 2007, the Court entered an Order authorizing the Receiver to enter into a Settlement Agreement in the amount of $3,500,000 with the accounting firm of Spear Safer CPAs & Advisors. Spear Safer was the accounting firm that audited MBC’s financial statements from 1994 to 2003. The Receiver had filed a lawsuit against Spear Safer for accounting malpractice and alleging that Spear Safer had been negligent in rendering “clean” audit opinions on MBC’s financial statements. The lawsuit settled shortly before it was scheduled to begin trial. The settlement funds have been transferred to the Receiver for the benefit of the investors and for inclusion in a plan of distribution to be presented to the Court for approval.

Settlement with Steven K. Steiner: The SEC and the Receiver have jointly reached a settlement with Steven K. Steiner, the former Vice President of MBC, and his associated consulting companies, Camden Consulting Inc. and SKS Consulting, Inc. The terms of this settlement will require Steiner to pay a total of $3,925,000 to the court-appointed Receiver. Steiner is required to pay $750,000 within 10 days of the entry of Final Judgment in the SEC’s action, and the remaining $3,175,000 within 1 year of that time. The latter amount will accrue interest until it is paid.
Final Judgment of Permanent Injunction and Other Relief as to Defendant Steven Steiner and Relief Defendants Camden Consulting, Inc. and SKS Consulting, Inc.

Settlement in principle with Peter J. Lombardi. On December 8, 2005, the Receiver and Lead Plaintiffs’ Counsel filed a notice with the Court that they had reached a joint settlement in principle with Peter J. Lombardi, the former President of MBC. As part of his settlement of the SEC’s action against him, Mr. Lombardi agreed to pay the SEC $6,000,000 ($5,880,000 in disgorgement and $120,000 in civil fines). As part of his settlement in principle with the Receiver and Lead Plaintiffs’ Counsel, Mr. Lombardi has agreed to provide a sworn financial statement identifying all of his remaining personal assets, to pay a substantial additional amount and to cooperate with the Receiver in their prosecution of other pending litigation. The settlement has not yet been reduced to final documentation or submitted to the Court for approval.

Settlements with Sales Agents: The Receiver has reached settlements with a number of former MBC sales agents in the case of Receiver v. Shao-Feng Wang, et al.. The Receiver brought suit against a number of sales agents who had received commissions on investor funds that were deposited in the Union Planters “pre-closing escrow account.” These investor funds were never invested, and have since been returned to the investors. The Receiver is seeking to collect the commissions paid out to sales agents on these uninvested funds. The suit is still pending against a small number of sales agents, and the settlements total approximately $224,161.21.

Settlement with Mayer, Brown, Rowe & Maw LLP. On October 19, 2006, the COurt entered an Order authorizing the Receiver to enter into a settlement agreement with the law firm of Mayer, Brown, Rowe & Maw, LLP, in which the law firm will return to the Receivership the amount of $241,000. Mayer, Brown, Rowe & Maw, LLP was one of the law firms that did work for MBC prior to the Receivership and the funds being returned represent a retainer deposit that was being held by the law firm on behalf of MBC.
Order Authorizing Settlement with Mayer Brown.pdf
Receiver's Motion for Authorization to Enter Into Settlement with Mayer Brown.pdf
Exhibit A to Receiver's Motion for Authorization to Enter Into Settlement.pdf

Settlement with Brinkley, McNerney, Morgan, Solomon & Tatum, LLP, and Michael McNerney, Esq. On December 2, 2005, the Court entered an Order and Final Judgment giving final approval to the $10,000,000 joint settlement reached between the Receiver and the Lead Plaintiffs’ Counsel for the Class Action, on the one hand, and MBC’s former attorneys, the law firm of Brinkley, McNerney, Morgan, Solomon & Tatum, LLP, and Michael J. McNerney, Esq., and their insurers, on the other hand. The Court also authorized the payment of $2,500,000 in attorney’s fees and $104,711 in costs from this settlement fund to Lead Plaintiffs’ Counsel, the law firms of Hanzman and Criden, P.A. and Podhurst Orseck, P.A., for their work in obtaining this settlement. The net amount of the settlement fund will be transferred to the Receiver for the benefit of the investors and for inclusion in a plan of distribution to be presented to the Court for approval.

Settlement in Government Forfeiture Action. On January 12, 2006, the Court entered an Order authorizing the Receiver to enter into a settlement with the U.S. Department of Justice in a civil forfeiture action captioned United States of America v. $4,000,0000, Case No. 05-61399-Civ-Huck. This forfeiture action involves allegations by the Government that a particular MBC investor used the proceeds of drug trafficking to purchase a particular insurance policy. The Government is seeking the forfeiture of the death benefits on that particular policy. The investor at issue is currently contesting the forfeiture proceeding. However, the Government has agreed to return to the Receiver the amount of $169,166, which represents the commingled MBC investor funds that were used to pay the premiums on the policy at issue until it matured.

Settlement in Government Forfeiture Action. On May 16, 2005, the Court entered an Order dismissing a civil forfeiture action involving the MBC Receivership captioned United States of America v. $695,424, Case No. 03-60726-Civ-Lenard, as a result of a settlement between the Receiver and the U.S. Department of Justice. In this settlement, the Government agreed to return to the Receiver the amount of $695,424 to be used for the benefit of MBC’s investors.

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