UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
UNITED STATES SECURITIES AND EXCHANGE COMMISSION, |
Judge: John Daniel Tinder CIVIL ACTION NO.: 1:05-CV-1102-JDT-TAB Magistrate Judge: Tim A. Baker |
FIRST MOTION FOR INTERIM COMPENSATION OF LAW FIRM
AND ACCOUNTING FIRM RETAINED BY RECIEVER
Bradley W. Skolnik, the Receiver herein, petitions the Court for authorization of payment of fees and expenses to Stewart & Irwin, the counsel for Receiver, and BGBC Partners, P.C., the accounting firm that the Receiver has retained to assist in these proceedings. In support thereof, the Receiver shows the Court as follows:
Background
1. On July 26, 2005, the Court entered an Order of Permanent Injunction and Other Relief in which it appointed Bradley W. Skolnik as the Independent Monitor in this proceeding.
2. Pursuant to an Order entered by this Court on August 25, 2005, the Independent Monitor was authorized to retain the accounting firm of BGBC Partners, P.C. to provide accounting services and assist in the forensic investigation in this matter.
3. On December 20, 2005, this Court entered its Order Granting Plaintiff Securities and Exchange Commission’s Motion to Convert Monitorship to Receivership. Pursuant to this Order, the Independent Monitor Bradley W. Skolnik was appointed as the Receiver in this action and was authorized to employ the law firm of Stewart & Irwin, P.C. and the accounting firm of BGBC Partners, P.C.
4. The request for interim compensation for the law firm of Stewart & Irwin, P.C. and the accounting firm of BGBC Partners, P.C. is for work on behalf of the Independent Monitor/Receiver performed by these firms. The Receiver believes all such work performed and services rendered were proper and necessary in order for Stewart & Irwin, P.C. to represent the Receiver and for BGBC Partners, P.C. to provide accounting services and assist in the forensic investigation in this matter.
5. The services to be rendered by the Receiver, his counsel and the forensic accountants retained by him are extensive as Alanar and the related entities that comprise the Receiver Defendant can best be described as a financial services conglomerate that consists of approximately:
Request for Interim Compensation of Law Firm of Stewart & Irwin, P.C.
6. The law firm of Stewart & Irwin, P.C. has performed various services all of which are described in detail in the statement for services, a copy of which is attached hereto and incorporated by reference herein as Exhibit A. The services performed by Stewart & Irwin, P.C. for and on behalf of the Receiver through March 15, 2006 include, but are not limited to, the following:
a. Because some of the Receiver Defendants hold mortgages or liens on real estate owned by issuers located throughout the country, the Receiver, immediately following his appointment, filed copies of the Complaint and Order Granting Plaintiff Securities and Exchange Commission’s Motion to Convert Monitorship to Receivership in virtually every U.S. District Court in the country in accordance with 28 U.S.C. § 754. This action was taken to better ensure that the Receiver could assert jurisdiction over property located in the several states in which issuers are located.
b. The Receiver and his counsel have been required to devote a significant amount of time to pending or threatened litigation involving the Receiver or Receiver Defendants, including the petition for intervention filed in this action by an ad hoc committee of investors and the action filed by the Southern Michigan Bank & Trust, a trustee on several open bond issues, in the United States District Court for the Southern District of Indiana in a matter encaptioned, Southern Michigan Bank & trust v. Guardian Services, LLC, Cause No. 1:05-cv-1880-JDT-TAB.
c. Counsel for the Receiver has participated in conferences with the Receiver regarding various pending legal matters and issues, including, but not limited to, matters involving the Southern Michigan Bank & Trust, the petition for intervention filed by an ad hoc committee of investors and the inventory of assets and liabilities and report to the Court and preparation for plan for the resolution of the case.
d. The Receiver and his counsel have spent a considerable amount of time responding to communications from and working with issuers that are interested in refinancing, paying off or working out their indebtedness on the bonds. Because of the Receiver Defendants’ wide-spread instances of misapplication and/or inappropriate co-mingling of funds in bond proceed and repayment accounts, the misuse and misapplication of monies in the bond funds, the failure to comply with accepted accounting standards and confusion occasioned by the myriad number of transactions that must be scrutinized, this has proven to be a challenging task for the Receiver, counsel, the accountants and the staff of Guardian Services, LLC who are assisting the Receiver and the accountants.
7. The attorneys from the law firm of Stewart & Irwin, P.C. have devoted a total of 292 hours to this matter through March 15, 2006 at an average hourly rate of approximately $215.00, for a total amount of fees of $62,778.50 and incurred expenses of $274.37, for a total amount due of $63,052.87.
8. No agreement or understanding exists between the members of Stewart & Irwin, P.C. and any other person for the sharing of compensation to be received for services rendered in connection with this case.
9. Stewart & Irwin, P.C. was employed by the Receiver pursuant to an agreement that its services would be billed on an hourly rate, subject to review and approval of this Court which is to be paid from the Receiver’s unencumbered funds. Stewart & Irwin, P.C. has not received, prior to the filing of this Motion, any payment for its legal services.
Request for Interim compensation of Accounting Firm of BGBC Partners, P.C.
10. The accounting firm of BGBC Partners, P.C. has performed various services all of which are described in detail in the detailed description of services rendered and statement attached hereto and incorporated by reference herein as Exhibit B.
11. The accountants and staff of BGBC Partners, P.C. devoted a total of 1,408.50 hours to this matter during the period from October 31, 2005 through March 7, 2006 at an average hourly rate of approximately $127.00, for a total amount of fees of $178,742.00, and incurred costs and expenses of $1,949.24, for a total amount due of $180,691.24.
12. No agreement or understanding exists between the BGBC Partners, P.C. and any other person for the sharing of compensation to be received for services rendered in connection with this case.
13. BGBC Partners, P.C. was employed by the Receiver pursuant to an agreement that its services would be billed on an hourly rate, subject to review and approval of this Court which is to be paid from the Receiver’s unencumbered funds. Pursuant to the Order of this Court entered on November 21, 2005, the accounting firm of BGBC Partners, P.C. received the sum of $29,500.00 for services rendered on behalf of the Impendent Monitor in this action through October 31, 2005.
WHEREFORE, Bradley W. Skolnik, the Receiver herein, respectfully prays that:
a. The Court award the Receiver’s counsel, Stewart & Irwin, P.C., an interim allowance of compensation for legal fees and expenses in the amount of $63,052.87, or such sum as the Court deems proper, and
b. The Court award BGBC Partners, P.C., the accountants retained by the Receiver, an interim allowance of compensation for accounting fees and expenses in the amount of $180,691.24, or such sum as the Court deems proper.
EXHIBIT A: LAW FIRM
EXHIBIT B: ACCOUNTING FIRM
Respectfully submitted,
s/Bradley W. Skolnik
Bradley W. Skolnik (1770-49)
Receiver
CERTIFICATE OF SERVICE
Service of the foregoing was accomplished via the United States District Court’s Electronic Notification and/or via U.S. Mail, first class postage pre-paid, this 26th day of April 2006, addressed to:
John Joseph Sikora, Jr.
UNITED STATES SECURITIES & EXCHANGE COMMISION
sikoraj@sec.gov
Cassandra Becker
UNITED STATES SECURITIES & EXCHANGE COMMISION
beckerc@sec.gov
Michael J. Rusnak, Jr.
STEWART & IRWIN, P.C.
mrusnak@silegal.com
David I. Rubin
STEWART & IRWIN, P.C.
drubin@silegal.com
H. James Maxwell
hjmesq@kc.rr.com
Mark J. R. Merkle
KRIEG DEVAULT, LLP
mmerkle@kdlegal.com
Joshua D. Hague
KRIEG DEVAULT, LLP
jdh@kdlegal.com
Vaughn A. Reeves, Sr.
2122 Lakeview Drive
Sullivan, IN 47882
Vaughn A. Reeves, Jr.
900 Hillside Drive
Sullivan, IN 47882
Jonathan Christopher Reeves
302 West Washington Street
Sullivan, IN 47882
Joshua Craig Reeves
330 West Washington Street
Sullivan, IN 47882
s/Bradley W. Skolnik
Bradley W. Skolnik
Bradley W. Skolnik
STEWART & IRWIN, P.C.
251 E. Ohio Street, Suite 1100
Indianapolis, Indiana 46204-2147
(317) 639-5454/Fax: (317) 632-1319
bskolnik@silegal.com