FAQ

Answers to Frequently Asked Questions

This section is designed to efficiently address e-mail inquiries and to provide answers to questions which may arise.  Because information is limited and because the questions are abstract at this point, these answers may change over time.

     1.  What is a Receiver?

         A Receiver is a fiduciary who is appointed by the court to take over control of all of a company's property and to administer it for the benefit of its creditors and investors.  Generally, the Receiver gathers and liquidates all of the company's property at the highest available price.  The proceeds obtained from those sales, after the costs of administration are subtracted, are then returned pro-rata to defrauded investors.  In addition to the funds on hand in the receivership companies at the time that the receiver is appointed, the receiver can also bring suit against and collect from persons who have wrongfully taken money from the company or committed other acts of wrongdoing.

     2. What Authority Does a Receiver Have?

         Federal equity receivers are governed by Rule 66 of the Federal Rules of Civil Procedure and by Title 28 of the United States Code.  While these provisions give the receiver and the court general guidelines about the conduct of receiverships, they are necessarily broad.  Each receivership presents unique factual circumstances.  Receivership courts are vested with wide discretion as they try to fairly administer the receivership.

     3.  Do I need to file a claim form?

         At some point, I expect to request claim forms.  I intend to gather more information before doing so.  I will post the claim form on this site and will e-mail it or mail it to the most recent address I have for you when the time comes.  I will also notify you of the date the complete claim form must be submitted.

       

         If your mailing address has changed since June 1, 2006, please notify my office by sending an email or letter to one of the attorneys listed below.

     4.  How long will this process take?

         Receiverships take a long time, typically several years.  Some of the factors affecting the time line are:

         Sale of Real Estate.  I have had two investors familiar with the Las Vegas real estate market discourage immediate sale of properties there based on market conditions.  I will try to balance such concerns with my desire to act quickly.

         Litigation.  After the forensic accounting is completed, I expect to file lawsuits in an effort to regain money for distribution to investors.  Unfortunately, litigation is an expensive and time consuming process.

         Distribution.  I anticipate the Securities and Exchange Commission will propose a plan of distribution.  If we are successful in gathering suffieient assets, there may be an interim distribution.  Each distribution requires court approval and an opportunity for objections.  This can also be time consuming.

         Taxes.  Before the receivership can be completed, I will give notice to the Internal Revenue Service and allow it time to respond.

     5.  What is a Ponzi Scheme?

         The SEC alleges that Val Southwick and the receivership companies were violating the federal securities laws by conducting a "Ponzi Scheme."  A Ponzi Scheme is an illegal investment scheme where money from new investors is used to pay off earlier investors.

     6.  What happened to my money?

         The SEC alleges that your money was imiproperly used to repay other investors, pay Southwick's and his family's living expenses, and fund expenses associated with the real estate developments and operations of the VesCor enterprise.

     7.  Will I get my money back?  If so, how much and when?

         This is the reasonable question of all investors.  Unfortunately, I cannot provide much information until I have a better idea of the assets of the company and the strength of its claims in litigation.

         The answer to these questions depends on the results of the Receiver’s efforts to recover from third parties who owe money to the Receivership estate.

         In addition to gathering assets within the VesCor companies, the Receiver is trying torecover money with several types of legal claims.  As lawsuits are filed, this website will be updated with developments.

     8.  What do I need to do?

         The Receiver requests that at this time investors begin to gather their records which reflect investments with the receivership companies.  Claim forms have not yet been sent to investors, but when they are sent there will likely be a deadline for submitting proofs of claim.  Gathering your records now will help ensure you do not miss the deadline for submitting your claim.

 

         Please do not send this documentation to the Receiver at this time.  The Receiver will request this information once claim forms are sent.

     9.  Do I have claims that I should assert?  Do I need a lawyer?

         The Receiver cannot give investors legal or business advice. If you have legitimate claims against the receivership companies, they should be submitted through the proof of claim process when appropriate. If there is a dispute between you and the Receiver as to the validity or amount of your claim, you may need counsel to represent you.

         Also, the Receiver will be evaluating and asserting claims against third parties. You may also have claims against those same parties or against others which the Receiver cannot assert. If you do not assert those claims, they may be lost. You will need to consider and make your own decision whether to hire counsel and whether to assert any personal claims you may have. Although the Receiver cannot advise you on the matter, you and/or your counsel are welcome to discuss these matters with the Receiver or the Receiver’s counsel.

     10.  Are all investors treated equally?  What does "pro-rata" distribution mean?

         All investors with legitimate claims must be treated equally and all distributions will be made “pro-rata.” That means that each investor of an allowed claim will receive the same percentage distribution on his or her claim. For example, if the Receiver has $50,000 in proceeds from the liquidation of receivership company assets to distribute to a total of two investors, and if Investor “A” has a claim of $100,000 and Investor “B” has a claim of $150,000, then the combined investor claims will total $250,000, and investors will be able to receive 20% of their claims. Investor “A” will receive $20,000 and Investor “B” will receive $30,000.

    11.  How does the Receiver get paid?  How are the costs of administration of the receivership companies' estates paid?

         Receivers’ compensation and the expenses incurred in pursuing claims and administering the receivership estates must come from the assets of the receivership estate – they are not funded or supported by the SEC or other government funding. The Receiver must pay counsel, accountants and other professionals, and other service providers to assist in the administration of the estates.

         The SEC does have the right to seek and recover monetary penalties and disgorgement that will be turned over to the Receiver for the benefit of investors. However, the SEC is not in a position to pursue all available avenues of recovery. There are certain parties and certain claims that only the Receiver can pursue. The Receiver will be weighing the cost-effectiveness of recovery efforts and looking for ways in which to minimize receivership expenses. The Receiver requests that investors keep administration costs in mind when seeking information regarding the status of the receiverships and check the information on this website before contacting the Receiver or his counsel.

     12.  What has happened to Val Southwick?

         Val Southwick was sentenced by Utah District Court Judge Robin Reese, on June 12, 2008, to serve nine consecutive 1-15 year prison terms in the Utah State Prison, which was the maximum prison sentence under state law.

Mr. Southwick was also ordered to pay restitution to all investors.  It is contemplated that once a forensic accounting of VesCor is complete there will be a hearing to determine the amount of restitution Mr. Southwick owed to investors.

 

If you have questions regarding this matter, please feel free to direct them to:

Robert G. Wing, Esq.

Sally B. McMinimee, Esq.

Jared N. Parrish, Esq.

Prince Yeates & Geldzahler

175 East 400 South, Suite 900

Salt Lake City, UT 84111

rgw@princeyeates.com

sbm@princeyeates.com

jnp@princeyeates.com

phone: (801) 524-1000

fax:      (801) 524-1099