RECEIVER'S TWENTY-FIRST INTERIM REPORT (07/30/08) - The Receiver has prepared a Twenty-first Interim Report. To view this report, click here.
RECEIVER'S FINANCIAL AND MATURITY REPORTS - 07/30/08
The Receiver has filed updated Financial and Maturity Reports.
Click the preceeding links to view the reports.
You may recall that in early 2005, the Court approved the sale of the Trade Partner's insurance portfolio to Universal Settlements International, Inc. ("USI"). Since then we have been working to transfer the approximate 800 policies to USI and as each one is transferred, the Receiver has been paid for the policy.
Approximately 78 policies remain to be transferred. Issues arose between USI and the Receiver concerning the sale and transfer of policies. That lead to negotiations between the two parties as to how to move forward. In the last few days those negotiations were completed and the issues have been resolved between the Receiver and USI.
The terms of the resolution must be approved by the court and the Receiver will be filing a Motion in the near future to seek that approval. If the court approves the resolution, the sale agreement will be terminated, and the Receiver will look for a new buyer for the policies that have not yet been transferred. Some discussions have already begun with interested parties.
Once the remaining policies are sold and two remaining claims are resolved, the Receiver will be in a position to make a final distribution and close this Receivership. We cannot predict the timing but the Receiver and Examiner are working to complete these tasks by the end of the year.
Remaining Claims Litigation:
There are two remaining claims in active litigation. First, the materials have all been presented to the Court on an investor claim and the court is considering that matter. We expect a ruling on this issue this month. Second, the Receiver has brought a claim against one fo the insurance companies regarding one of the policies. That matter has only recently come to light and is expected to be resolved by late summer.
Distributions:
The first distribution of approximately 43.5 million dollars from the Receivership was made beginning January 22, 2007. The Receiver continues to work on the transfer of the remaining insurance policies to the purchaser USI. USI experienced some change in management and the process slowed in the early part of last year. It appears to be back on track. With each transfer, additional money is paid into the Receivership. The Receiver is working diligently to complete this process, however it is a process that is not entirely in the control of the Receiver as the insurance companies have to cooperate.
There are still about 69 policies that have not been transferred. The Receiver is in the process of filing a motion with the court to cause these insurance companies to show cause as to why they have not transferred.
The Receiver does not know at this time when a second distribution will be made. It appears that the best case is near the end of this year.
Remaining Claims Litigation:
The Receiver has two remaining investor claims that are in dispute. One is on appeal to the Sixth Circuit Court of Appeals. One is still in the District Court in which the Receivership is pending.
Distributions:
The first distribution of approximately 43.5 million dollars from the Receivership was made beginning January 22, 2007. The Receiver continues to work on the transfer of the remaining insurance policies to the purchaser USI. USI experienced some change in management and the process slowed in the early part of this year. It appears to be back on track. With each transfer, additional money is paid into the Receivership. The Receiver is working diligently to complete this process, however it is a process that is not entirely in the control of the Receiver as the insurance companies have to cooperate.
The Receiver does not know at this time whether a second distribution will be made near the end of this year, but it appears unlikely. The effort to issue and mail the thousands of checks is a major undertaking and is expensive. The Receiver would prefer to make one final distribution and only incur that cost one more time. However, it would only be wise to make the distribution after all insurance policies have been transferred and the two investor claim disputes are resolved.
FISERV UPDATE
Many of the investors have contacted the office of the Examiner and the office of the Receiver raising issues that have been created by FISERV. Apparently, FISERV has reported that the value of each investor's account was the amount of the investor's claim, when in fact it had previously been reported as $0. The Receiver has contacted FISERV to explain to them that the value of each account should remain $0 for the year 2006 and that for the year 2007, the value of the account should be reported as the amount of the distribution each of you received. FISERV has agreed to make these changes.
By now you have received a letter from Fiserv who was the acting trustee when the funds were sent to you directly from our offices. A copy of the letter is attached at this link. We recently provided Fiserv a breakdown that will reflect the funds that you received. If the funds are not returned to your Fiserv retirement plan they will be reporting the amount as a 2007 distribution. You also have the option of rolling these funds to another IRA. We encourage you to speak with your personal tax advisor. Also, the 60 day deadline to return those funds to a qualified account is March 22nd.
DISTRIBUTION TO INVESTORS
Checks are being sent over the next several days to investors. There will be one check per investment, so investors may receive multiple checks, each sent separately. If you hold an approved investor claim and have not received anything by February 19, please contact us through this site. If you need to update your address, please send us an e-mail through this site. If you invested from an IRA and wish to maintain the qualified nature of these funds, we strongly advise you to contact your IRA and/or tax accountant before doing anything with the check.
Update: January 17, 2007SPECIAL NOTICE TO RETIREMENT ACCOUNT INVESTORS
The claimant/investor is the payee of the distribution check. The checks are not payable to FISERV or RAI or any custodian, trustee or agent of an IRA or retirement accoount. You are urged to talk with your own accountant, tax advisor, attorney or retirement account custodian as to the proper way to sign over, deposit or cash the distribution check to maintain their funds as qualified funds, if that is the desire of the investor/claimant.
Update: January 9, 2007The Distribution Plan has now been approved by Judge Bell. No objections were filed to the Magistrate’s opinion and recommendations that the Plan be approved, and an appeal is therefore not anticipated. The Receiver has been directed to implement the Plan forthwith, and therefore the Receiver will proceed immediately to effect an interim distribution to investors. The Receiver anticipates that checks will be sent out over the next two weeks. If you hold an approved claim, and have not received a check by February 10, please contact us through this site.
The proposed Distribution Plan was approved by Magistrate Judge Carmody on December 1, 2006. This approval is subject to appeal, but no objections have yet been filed. As approved, the Plan provides for an interim distribution to investors, pro-rata, based upon the net cash losses approved to date. The Receiver will proceed to effect an interim distribution as soon as the time for appeal has run, or, if any appeal is made, then once any appeal is resolved.
The Sojkara Bankruptcy Proceeding (In re Sojkara, LLC, Case No. 03-04872, Bankr. W.D.Mich.) has concluded. The Trustee in that case was unable to obtain sufficient assets to make a distribution to creditors in that case. Investors who filed claims in that case may have received notices to that effect. The result in that case has no effect at all on the Trade Partners Distribution Plan. It continues to be the expectation in this case that there will be a distribution to investors in this case.
On Friday, July 21, 2006, the Receiver filed the following documents:
These documents are attached to this website and should be reviewed by you. In short, the Receiver has reached the point in these proceedings where he believes that the claims evaluation is substantially complete, substantial funds have been collected and a process for distributing the money to approved claimants should be approved by the court. The Disclosure Statement is a summary of the Plan of Distribution, intended to be in plain English, and will be considered by the court on August 1, 2006. If approved by the Court, it will be sent to everyone. The court will then set a date for the approval of the Plan of Distribution, which the Receiver hopes will be in late August or early September 2006. If the Plan of Distribution is approved at that time, once the order approving the Plan has become final, the Receiver can make the first distribution to approved claimants. It is the Receiver’s sincere hope that the first distribution can be made in the fourth quarter of this year. After that, the final matters in the Receivership will be concluded, additional money collected and a final distribution will be made in 2007.
If you have an approved claim and you have no objection to the Plan to distribute the money in the Receivership as set out in the Disclosure Statement and Plan, YOU ARE NOT REQUIRED TO DO ANYTHING. If you object to the Plan to distribute, you must file a written objection with the court as set forth in the Disclosure Statement.
As you know, the sale of the portfolio has been approved by the Court and the process of changing the title to each of the 800 or more insurance policies into the name of the purchaser is underway. The Receivership is paid for each policy as the title changes. This is a large task and is progressing. Policies have been transferred and payments are being received. Because we are dealing with multiple insurance companies, each with different requirements, the process sometimes takes longer than we would like. As of today, we have transferred approximately 477 policies. This work is being done every day but it is slow due to all the bureaucracy of the insurance companies.
In addition to turning this large asset into cash that can be distributed to investors, the process of getting everyone’s claim approved is moving along also. Of the 6,977 claims that the Receivership has received, 6,611 have been approved by the Court, for a total of $140,838,940, and 186 are pending or under objection. Those claims amount to $42,188,212. The “easier” claims have been approved; claims about which there was little or no controversy. Those that remain are of a kind that the Court will have to invest greater analysis because of disagreements with the claimants. Essentially, we have to get all of the claims finished before distributions can be made because each of the investors is going to get your share of the assets that the Receivership has to distribute. Until we know the total amount of the claims to be paid, we cannot determine what each investor’s pro-rata share will be. The Receiver is bringing these contested claims before the Court each month and working diligently to complete the process. We expect the claims approval process to be completed by the end of June 2006. We can then have the Court determine the final Plan for Distributions and distributions to follow as soon as there is final approval by the Court.
OPINION AND ORDER ISSUED BY JUDGE BELL – March 29, 2006
On March 29, 2006, Judge Bell approved the settlement of litigation with Leonard Zedeck, Howard Bloom, Stone Financial Group and Joel Stone. The Receivership will be paid $650,000 and will receive the transfer of three viaticals with a death benefit of $11,290,000.
CLASS ACTION VS. MACATAWA BANK
The Class Action against Macatawa Bank is a matter separate from the Trade Partners Receivership. The Receiver is a party to that lawsuit having been sued by Macatawa Bank. The Receiver is not asserting any claims in that proceeding on behalf of Trade Partners. Individual investors will likely be contacted by the Class Action Plaintiffs’ attorneys. Each investor will need to make an independent judgment as to whether they will be part of the class, should one be approved by the Court. The Receiver cannot advise investors with regard to that decision.
The receiver has filed a Tenth Motion to Approve A claims. To view this motion, click here.
On July 19, 2005, Judge Bell issued an Opinion and an Order approving and adopting the Magistrate Judge's Report and Recommendation which authorizes the sale of policies free and clear of interests. To read copies of the Opinion and Order, please Click Here.
On May 23, 2005, the Magistrate Judge issued a Report and Recommendation regarding the Receiver's Motion to Approve Sales Procedures and to Authorize Sale of Policies Free and Clear of Interests. Click Here to see a copy of the Report and Recommendation.
In summary, the Court approved the Motion to Sell and overruled the objections of Macatawa Bank and Dr. Abraham. The Report and Recommendation of the Magistrate must be reviewed for approval by Judge Holmes. There is no timetable for him to do so.
On Friday, April 22, 2005, Tom Smith was sentenced for his role in the Trade Partners fraud scheme. The sentencing hearing was held before the United States District Court for the Western District of Michigan, Chief Judge Bell presiding. Smith had previously pled guilty to federal criminal charges for wire fraud, mail fraud, and securities fraud.
The Court sentenced Smith to serve eight years in federal prison, to be followed by three years of supervised release. The Court directed that Smith pay $100,000 at the end of each of the three years of his probation, and that he refrain from holding employment involving the use of funds belonging to others during that time.
The Court stated that the sentence reflected a balance between the fact that Smith had no prior criminal history and the seriousness of these crimes. The Court advised that, in determining the sentence, the Court considered the 509 letters received from investors, the presence in the courtroom of a substantial number of investors, the remarks of Examiner Steve Harr on behalf of investors and the testimony of Special Counsel Michael J. Quilling with respect to the nature of the scheme and the damage suffered to investors. The Court particularly noted the fact that thousands of investors had been severely impacted, and that in fact many investors had lost their life savings. The Court stated its concern for the damage to the trust and confidence of the public in the financial representations of financial advisors.
Smith stated that he was deeply ashamed of his conduct, and that he wished that things had worked out better for investors. When asked by the Court what he would do differently in the future, Smith indicated that he hoped to do a better job of helping people. The Court expressed a stronger hope that Smith would learn to be honest.
The Court has established procedures for the sale of Trade Partners Gateway Center LLC k/n/a TPI Desert Carmel LLC's real estate located in Casa Grande, Arizona. See order attached. On April 12, 2005, the Court conducted a hearing on objections to the sale of this property and ruled that the objections were overruled. That allowed for an auction of the property to be conducted on April 13, 2005 . The auction was held and the property sold for 13.5 million dollars. The final sale order should be entered any day and the closing should take place within two weeks.
When investing in viaticals with Trade Partners, did you -
FIRST MOTION TO APPROVE A CLAIMS (04/01/04) – On April 1, 2004, the Receiver filed a motion to seek court approval of over 850 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver’s First Motion to Allow Claims. Click here to see copies of the Magistrate’s Report and Recommendationthat the claims should be allowed as unsecured claims against the Receivership and the Court’s Order Approving Report and Recommendation entered 6/28/04.
SECOND MOTION TO APPROVE A CLAIMS (07/01/04) - On July 1, 2004, the Receiver filed his second motion seeking court approval of 1,435 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Second Motion to Allow Claims. Click here to see copies of the Magistrate’s Report and Recommendationthat the claims should be allowed as unsecured claims against the Receivership and the Court’s Order Approving Report and Recommendation entered 10/18/04.
THIRD MOTION TO APPROVE A CLAIMS (10/01/04) - On October 1, 2004, the Receiver filed his third motion seeking court approval of 1,650 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Third Motion to Allow Claims. Click here to see copies of the Magistrate’s Report and Recommendationthat the claims should be allowed as unsecured claims against the Receivership and the Court’s Order Approving Report and Recommendation entered 12/13/04.
FOURTH MOTION TO APPROVE A CLAIMS (01/03/05) - On January 3, 2005, the Receiver filed his fourth motion seeking court approval of 326 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Fourth Motion to Allow Claims. Click here to see copies of the Magistrate’s Report and Recommendationthat the claims should be allowed as unsecured claims against the Receivership and the Court’s Order Approving Report and Recommendation entered 3/7/05.
FIFTH MOTION TO APPROVE A CLAIMS (04/01/05) - On April 1, 2005, the Receiver filed his fifth motion seeking court approval of 1,340 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Fifth Motion to Allow Claims. Click here to see a copy of the Magistrate's Report and Recommendation that the claims should be allowed as unsecured claims against the Receivership. Click here to see a copy of the Court's Order Approving Report and Recommendation entered 6/23/05.
SIXTH MOTION TO APPROVE A CLAIMS (07/01/05) - On July 1, 2005, the Receiver filed his sixth motion seeking court approval of 419 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Sixth Motion to Allow Claims.Click here to see a copy of the Magistrate's Report and Recommendation that the claims should be allowed as unsecured claims against the Receivership. Click here to see a copy of the Court's Order Approving Report and Recommendation entered September 21, 2005
SEVENTH MOTION TO APPROVE A CLAIMS (10/3/05) - On October 3, 2005, the Receiver filed his seventh motion seeking court approval of 140 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Seventh Motion to Allow Claims. Click here to see a copy of the Court's Order approving the Motion entered October 21, 2005.
EIGHTH MOTION TO APPROVE A CLAIMS (1/4/06) - On January 4, 2006, the Receiver filed his eighth motion seeking court approval of 139 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Eighth Motion to Allow Claims. Click here to see a copy of the Magistrate's Report and Recommendations that the claims should be allowed as unsecured claims against the Receivership.
NINTH MOTION TO APPROVE A CLAIMS (04/05/06) On April 5, 2006, the Receiver filed his ninth motion seeking court approval of 47 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Ninth Motion to Allow Claims. Click here to see a copy of the Court's Order approving the Motion entered April 26, 2006.
TENTH MOTION TO APPROVE A CLAIMS (05/18/06) On May 18, 2006, the Receiver filed his ninth motion seeking court approval of 29 of the investor claims submitted to the Receiver. Click here to see a copy of Receiver's Tenth Motion to Allow Claims. Click here to see a copy of the Court's Order approving the motion entered June 13, 2006.
There are several things you should know.
First, THESE
MOTIONS DO NOT ADDRESS ALL OF THE CLAIMS.
Of the thousands and thousands we have received, these are the claims
that have been reviewed as of April 1, 2006, and on which the Receiver and
the claimant agree. These are being submitted to the court for approval. Once
they are approved, the claimant will receive notice from the Receiver that
the claim has been approved by the court.
Second, if your claim number
and name are not on the lists attached to these motions, that just means that
at this time your claim has not been reviewed or there is some issue that the
Receiver needs to address with you. IT
DOES NOT MEAN THAT YOUR CLAIM HAS BEEN REJECTED. The
Receiver will contact you; you do not need to contact the Receiver or the Examiner.
Third, payment
of claims will not begin until all claims have been resolved.
It is impossible for the Receiver to know how much to pay each claimant until
all of the claims have been approved by the Court.
This is a significant step towards
completing the claims process. Each
month, the Receiver will file a similar motion with the additional
claims that he seeks to have approved.
NOTICE to INVESTORS and POTENTIAL CLAIMANTS (01/05/2004) Information regarding returning claim forms. Click here to read the notice.
INVESTORS NOTICE (12/19/2003) Information regarding claim forms sent to investors between October 30, 2003 and November 1, 2003. Click here to read the notice.
NOTICE TO INVESTORS WITH IRA'S WITH RETIREMENT ACCOUNTS,
INC. (2/19/04)
Many of you are over age 70 1/2 and are concerned with having to take
mandatory distributions from your IRA accounts that have Trade Partners investments.
The exact status of your investment in Trade Partners is currently unknown
and thus it is impossible to determine what a proper distribution should
be . Also, there are currently no funds available for your distribution
from the Trade Partners related investments. As a result, the Receiver asked
and the Court has granted a motion to allow RAI to go back and determine your
account value with Trade Partners to be "unknown", which would
then allow you to not have to take a distribution or pay tax on it. Click
here to see a copy of the motion and here to see the order.
PREMIUM FUNDING – The Trade Partners Receiver reports that his collections on matured policies continue to support premium requirements. A standby line of credit is additionally available through Grand Bank n/k/a Macatawa Bank.
CLAIMS PROCESS – A claims process has been approved by the Court. Claims forms have been mailed. You should complete the information as instructed and return them as soon as possible. You will get a postcard confirming that your claim has been received. You will get a response from the Receiver after he has reviewed the information you submitted. None of the claims are considered “approved” until they are submitted to the Court and approved by the Court.
DISTRIBUTION PLAN – A distribution plan is currently being developed by the Receiver.
DISTRIBUTION – Although the Receiver has be able to obtain adequate cash from collections on matured policies to pay premiums, the primary assets of the estate on not liquid assets. In order to permit a distribution, these assets would have to be sold or divided. The Receiver is currently considering the most appropriate steps to take to maximize the value of the Receivership Assets, and to permit orderly and efficient distributions to pay Claims.
RETIREMENT ACCOUNTS INCORPORATED
For information concerning Retirement Accounts Incorporated, please see
the Frequently Asked Questions.
OTHER CLAIMS - SOJKARA / SEITTERS / QUANTUM - In addition to the Sojkara bankruptcy proceeding (see note below), there are two related proceedings pending in the same court, one initiated by a Sojkara affiliate, and one by its principal. The asset schedules filed in these three bankruptcies all indicated limited assets relative to the claims asserted. In the Quantum proceeding, however, the Bankruptcy Trustee has recently sent a claims solicitation notice, and will accept claims. According to the Bankruptcy Trustee in these three actions, Quantum was the telecommunications company for which Sojkara raised capital. Anyone holding a Sojkara Note or who otherwise made an investment in Sojkara or Quantum may wish to review this matter, and determine whether to make a claim. Click here to review certain pleadings in the Quantum matter. Click here to obtain a claim form and instructions for the use of same. The deadline for submitting claims was
GENERAL INFORMATION
Trade Partners Background. In 1995, Thomas J. Smith and Christine M. Zmudka
formed Trade Partners, Inc. Smith and Zmudka went on to create an expansive
empire of financial investments. Click here to view a
chart.
Trade Partners Receivership. In April, 2003, Bruce Kramer was appointed a Receiver for Trade Partners in the course of a suit that claims a failure to maintain adequate reserves to maintain insurance policies. The suit was brought by Michael Quilling, who is himself a Receiver for a former Trade Partners broker, Advanced Financial Services. When Mr. Quilling’s investigation led him to conclude that Trade Partners had failed to maintain adequate reserves, he sued Trade Partners and others and sought the appointment of Mr. Kramer.
Premium Funding Restored. Smith and Zmudka initially represented that adequate funding existed and additional funding could be obtained. As a result, on May 5, 2003 letter to investors to this effect was sent. Thereafter, Mr. Kramer conducted his own investigation, and it became clear that additional funding would not be forthcoming and that further sales of viaticals should not continue. Mr. Kramer therefore made efforts to secure a loan and to use such funds as were on hand to pay premiums. In the end, negotiations by Mr. Kramer, Mr. Quilling and Mr. Harr with Macatawa Bank f/k/a Grand Bank led to the establishment and approval of a standby line of credit. Click here for further information regarding Macatawa Bank. The Court also approved the application of the remaining Trade Partners cash to pay premiums. Additionally, Mr. Kramer has recovered some funds on matured policies, which the Court permitted to be applied to pay premiums. Mr. Kramer is now hoping that matured policies now in the claims process will produce sufficient funding, and the line of credit is providing a backup.
Pooling of Interests. In the course of this proceeding, both the Magistrate Judge in the AFS Receivership and the District Judge in the Trade Partners Receivership made determinations that all policy interests should be pooled in order to achieve the largest return possible for the group. Click here for a further discussion of pooling of interests.
Assistance with Investigation. If you have any evidence that confirms or may serve to correct or to supplement the information provided on this site, please contact us and provide us with that information.
Further Information. Additional information, including the reports of the Receivers and the Examiners as made in court documents, can be obtained through the Receivers’ respective websites.
Please periodically check this site for further updates and information.
If your question is not stated on the FAQ Responses, we will be happy to
research your
question. We will provide you a written response, and will update the FAQ list.