A Publication of the
California Receivers Forum
Winter/Spring 2007 • Issue 24
I n s i d e
5
Ask The Receiver:
Probable Impact of
United States v.
Brown in 9th Circuit
11
New Members
12
13
The List
Receivership
Professional
Profile:
Robb Evans
R ECEIVERSHIP
NEWS
Judicial Profile
Los Angeles County Superior
Court Judge Dzintra Janavs
Discusses Receivership Law
and Issues Germane to Her
Special Central District Writs
and Receivers Department
he Honorable Dzintra Janavs, Los
Angeles County Superior Court
Judge and a mainstay of the Central
District’s Writs and Receivers
Department since 1999, is the
subject of this issue’s Judicial Profile.
T
Judge Janavs’ remarkable record on the bench is matched by an equally remarkable
background of achievement. Many of the attorneys who appear in her always buzzing
Department 85—frequently at the epicenter of major issues swirling in Los Angeles—know of
Judge Janavs’ distinguished educational, legal and judicial background, to wit:
• Graduate of the Boalt Hall School of Law (with an undergraduate degree in economics
summa cum laude earned at San Jose State University);
• 24-year member of the Office of the United States Attorney (rising to the position of
First Assistant Chief of the Civil Division);
• Appointed to the Superior Court by Governor George Deukmejian in 1986 (assigned to
the Southeast District Court in Norwalk as a Civil Trial Judge);
• Reassigned to the Central Division Court in 1988 – initially to the Law and Motion
Department then as Supervising Judge, Writs and Receivers and Law and Motion;
• Reassigned as a civil trial judge in the Central District in 1992;
• Assigned to her current position in the Writs and Receivers Department in 1999 upon
the retirement of Judge Robert O’Brien from that department.
But it isn’t so widely known that Judge Janavs migrated to the United States with her
parents in 1950 after spending some years in a displaced persons camp in Southern Germany
rather than return to their native country of Latvia (then under Soviet rule) following World
War II. Her father—formerly a court clerk and law student—became a gardener, and her
mother—a lawyer in her native country – became a housekeeper upon immigrating. Both
proudly attended their daughter’s enrobement in 1986.
Judge Janavs’ accomplishments are not limited to the bench. She served as an adjunct
professor for trial advocacy at Loyola law School, has served on dozens of bar association, CEB
and state panels and committees on legal topics (as panelist, lecturer and instructor), has
Continued on page 3...
Publisher’s Comments
BY ROBERT MOSIER, PUBLISHER*
e are particularly pleased
that Los Angeles County
Superior Court Judge Dzintra
Janavs agreed to be our
featured jurist for this issue.
She has unparalleled experience in
dealing with receivers and receivership
issues, as you will see. I believe her
insights will be of value to both the
receivership community and to other
jurists who appoint and guide receivers.
W
We are also pleased to feature a
notable member of the receivership
community — Robb Evans — as our
member profiled in this issue. Robb
enjoys a national reputation as a Federal
and State regulatory receiver and has
handled many notable matters for the
Federal Trade Commission, the
Securities and Exchange Commission
and other regulatory agencies. Just as
impressive as Robb is the organization
— Robb Evans & Associates — that
supports him on these assignments.
One principal officer is Kenton
Johnson, an active member of the
LA/Orange County chapter of the
California Receivers Forum, whose
involvement contributes substantially
to its success.
It is said that the only things certain
in life are death, and — you guessed it
— taxes. Tax obligations and what is
considered taxable income in a
receivership estate are the focus of new
decisional law drawing a lot of
attention. Last issue we were pleased to
feature veteran taxman and former IRS
attorney Chuck Rosen’s description of
these recent issues raised in United
States v. Brown. These subjects and
application of United States v. Brown
in the Ninth Circuit are probed in this
issue by our receivership guru Peter
Davidson, author of our “Ask the
Receiver” column. We think these
articles offer an insightful, thoughtful
analysis, and constitute an effective
“heads up” for receivers.
Page 2 • Spring 2007
Our next issue will feature a multifaceted look at Health and Safety Code
receiverships, and – we hope – an
interview with the Honorable John E.
Ryan, who is retiring from the
bankruptcy bench this month after a
distinguished career in the Central
District of California. In addition to
being a founding member and guiding
light of the California Bankruptcy
Forum, Judge Ryan has served as
presiding judge of the Bankruptcy
Appellate Panel and presided over the
Orange County bankruptcy case under
Chapter 9 of the Bankruptcy Code.
Stay tuned.
In the meantime, we hope you enjoy
this issue. We are always seeking
contributions to the RN on topics of
interest to our readership community.
Please contact me or Editor Kirk Rense
with your contributions / story ideas.
—RPM
Robert P. Mosier
*Robert P. Mosier is a Southern California trustee and
receiver and principal of Mosier & Company, Inc., a
firm that has specialized in managing and turning around
troubled companies for more than 25 years.
Kirk Rense
Mr. Rense is a lawyer specializing in insolvency and in
representing court-appointed fiduciaries, with more than
20 years' experience. He was a journalist before
attending law school at the University of Southern
California Law Center. Kirk is a California Receivers
Forum, LA/OC Chapter Board Member.
Receivership News
Published by
California Receivers Forum
954 La Mirada St.
Laguna Beach, CA 92651
949.497.3673 x 200
Publisher
Robert P. Mosier
Rmosier@Mosierco.com
Editor
Kirk S. Rense, Editor
KRense@renselaw.com
Craig Collins, CPA
Associate Editor
Associate Publishers
Kenton Johnson
Beverly McFarland
Ron Oliner
Rob Warren, III
Contributing Columnists
Alan Mirman
Heard in the Halls
Peter Davidson
Ask the Receiver
Charles F. Rosen
Taxes and the Receiver
Officers
Marilyn R. Bessey, Chair
Martin Goldberg, Chair Elect
Ron Oliner, Treasurer
Robert Mosier, Secretary
James Lowe, Project Director
Receivership News is published
quarterly by the California
Receivers Forum, a not-for-profit
association. Articles in this
publication express the opinions
of their authors and do not
necessarily reflect the views of the
directors, officers or members of
the California Receivers Forum.
Articles are intended as a source
of general information and should
not be construed as specific advice
without further inquiry and/or
consultation with professional
counsel.
© copyright 2007
California Receivers Forum.
All rights reserved.
Judge Janavs...
Continued from page 1.
lectured extensively on such diverse topics as trial advocacy,
environmental law (she is one of only a handful of Los Angeles
County Superior Court judges designated to hear CEQA suits),
and is a recognized expert on receiverships and civil proceedings
before trial.
“...one of the most tireless and
intelligent bench officers sitting
today...”
Los Angeles County Superior Court Assistant Presiding
Judge Stephen Czuleger has described Judge Janavs as an
“unparalleled resource” for her work in the Writs and Receivers
Department, saying:
“Judge Janavs is simply one of the most tireless and
intelligent bench officers sitting today…Having her
skill and dedication has made the job for court
administration a much easier one and the public
which we all serve is blessed with the quality she
brings every day to work.”
The RN was fortunate to have an opportunity to interview
Judge Janavs on several issues central to receivership practice.
That interview is presented in a question and answer format.
RN: What are the most important lessons you have learned
about the use of receivers during your tenure in the Writs and
Receivers Department?
JUDGE JANAVS: In this department you learn a huge
amount every single day. In terms of receiverships, what most
judges don’t realize is the tremendous number of different types
of receivers that exist and can exist.
When I was with the U.S. Attorney’s office I had limited
exposure to receivers. Since becoming a judge I’ve learned about
the variety of receiverships that are available—and the specific
problems that receivers may encounter in these different types of
cases. I had no appreciation of this before coming to this
department.
As you know, the appointment of a receiver is a drastic
remedy for a number of reasons. If there is an ongoing business,
the appointment of a receiver over the business takes it away
from the owners or persons who have been running it. Also, a
receivership is a very expensive remedy.
Continued on page 4...
Recently completed the sale of a 25 acre residential estate
in Beverly Hills 90210 for Edythe L. Bronston, Receiver.
$35,000,000
3rd highest sales price in the history of Los Angeles/Beverly Hills.
50,000 square feet consisting of main residence, entertainment villa
and carriage house, plus vineyard.
The Seymour Group has the breadth of experience to meet the unique and
complex needs of the Insolvency Community, providing guidance/expertise
in the disposition of residential and commercial real estate assets.
Receivers, Partition Referees & Trustees
Please contact: Phil Seymour
Executive Vice President/Managing Director
Member: California Receivers Forum & California Bankruptcy Forum
The Seymour Group A Division of Elite Properties Realty Phone 310.271.4040 Fax 310.271.1463
148 South Beverly Drive, Beverly Hills, California 90212
Spring 2007 • Page 3
Judge Janavs...
Continued from page 3.
Generally speaking, there are three different types of
receiverships I see in my court the most. There are receivers
sought in actions by financial institutions against their debtors /
borrowers usually on a promissory note backed by a security
agreement covering a broad range of tangible and intangible
personal property, and often where the company is about to go
out of business. There is usually a legal remedy available in these
situations, but if the company is secreting and liquidating the
lender’s collateral, there may be justification to appoint a
receiver to preserve the property. These generally are fairly
straightforward, fairly routine receiverships and relatively easy
compared to some others.
Some applicants are seeking the appointment of a receiver to
collect a judgment, a post-judgment receivership. These are also
relatively straightforward.
Then there are actions brought by private individuals or
entities such as corporations, partnerships, LLC’s against other
individuals or entities for breach of fiduciary duty, fraud, or for
dissolution. These are the receiverships that give rise to the most
difficulties (for the receiver and sometimes for the court),
because often the parties are antagonistic, contentious and
“The Receiver has to deal with
conflicting views, demands and
expectations”
aggressive. The receiver has to deal with conflicting views,
demands and expectations. Anything the receiver does may be
viewed by one party as favoring the other. In these
circumstances it can be difficult for the receiver to maintain his
or her impartiality and the appearance of impartiality. Often the
most bitter disputes involve family members.
All kinds of issues come up. I sometimes have had hearings
in this type case several times a month. I prefer that receivers
deal with these issues on their own as often as possible, but a
receiver should never hesitate to seek instructions when in
doubt. It is also important for receivers to seek input from both
sides in these disputes, in an effort to minimize or resolve the
problems that arise.
RN: What are the most common errors you see receivers
make in their administration?
JUDGE JANAVS: I can’t think of anything I’d call an
“error.” The receivers I see are quite experienced and know
what they are doing. I find that the quality of the pleadings
presented is generally excellent. The attorneys who appear
before me are very experienced and often specialists in the
handling of the kinds of problems receivers face.
When receivers are having difficulties I think they should
seek instructions from the court and most do just that. A
receiver should not risk going beyond the scope of the
appointing order.
Contact: Zeev Haskal
zeev@megagroupinvestigations.com
www.megagroupinvestigations.com • (888) 988-0075
1903 W. Silver Lake Drive, Los Angeles, CA 90039
The receiver must always act with consideration for all
parties. One question the receiver must always ask – “Is this
[potential action] truly for the benefit of all parties?” Secondly
— “If I were a party in the underlying case, how would I feel
Continued on page 7...
Page 4 • Spring 2007
ASK THE RECEIVER
BY PETER A. DAVIDSON, ESQ.
An Analysis of United States v.
Brown and its Probable Impact
on Receiverships within the
Ninth Court
(Editor’s Note: The last issue of the RN featured a piece by Charles
F. Rosen, our resident tax guru, on a disturbing position taken by the
Internal Revenue Service in a 2003 Tenth Circuit case United States
v. Brown. In a nutshell, in that case the IRS took an expansive view
of the application of Treasury Regulation 1.468B-1(c) governing
taxation of a “Qualified Settlement Fund.” It appeared that the IRS
believed that every estate administered by a receiver was a “qualified
settlement fund” for purposes of the IRS Code, requiring onerous tax
filings and tax payments by every receiver at pain of personal liability
for failure to do so. In this piece Peter Davidson, Esq., our
receivership law expert, discusses Mr. Rosen’s article and the probable
impact of United States v. Brown in the Ninth Circuit.)
Q
A
How will the holding in United States v. Brown
(discussed in the Winter 2006 edition of RN by Charles
Rosen, Esq.) likely affect receivership practice in the
Ninth Circuit?
Many receivers have contacted me alarmed about the
implications of Charles Rosen’s article in the last
edition of Receivership News “IRS Says All
Receivership Estates are Qualified Settlement Funds”.
Chuck and I both agree the IRS is misinterpreting the code
sections and regulations, at least as they apply to receivership cases.
As important, however, the case the IRS is apparently relying on,
United States v. Brown, 348 F.3d 1200 (10th Cir. 2003), is unusual
and should not be applied in the Ninth Circuit.
The facts of the Brown case make it distinguishable from most
receivership cases, even fraud cases such as the Brown case itself.
One of the distinctions is that in the Brown case, the United States
had settled with the defendants and already created a settlement
fund prior to the establishment of the receivership. The fund
included cash and property, which was then turned over to the
receiver to administer. That is not the case in most government
enforcement receivership cases.
Normally, the government agency prosecuting the case gets the
receiver appointed at the inception of the case with the receiver
taking possession of whatever assets constitute the receivership
estate. Another distinction is that the fund in the Brown case
arose as a result of a criminal proceeding, not a civil proceeding.
I believe the Brown case is misdecided and should not be followed
in the Ninth Circuit because it appears that no one argued that the
funds held by the receiver were held in constructive trust for the
defrauded investors and that, as a result, there were no funds
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R
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Contact:
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E-mail: cwelin@frandzel.com
6500 Wilshire Blvd.
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Telephone: (323) 852-1000
Fax: (323) 651-2577
100 Bush Street
Twenty-third Floor
San Francisco, CA 94104
Telephone: (415) 788-7400
Fax: (415) 291-9153
www.frandzel.com
Continued on page 6...
Spring 2007 • Page 5
Ask the Receiver...
Continued from page 5.
available in the receivership estate to pay any taxes the IRS might
claim were due. This argument has been successful in a number of
receivership cases. See Federal Trade Commission v. Crittenden,
823 F. Supp. 699 (C.D. Cal. 1993) which is right on point. See
also a recent Ninth Circuit decision, U.S. v $4,224,958.57, 392
F.3d 1002 (9th Cir. 2004).
While the Ninth Circuit decision deals with forfeiture
proceedings, the Ninth Circuit adopted the same reasoning as the
district court in Crittenden and held that money obtained by fraud
from investors is held in constructive trust for the investors.
Therefore, it is likely Brown would not have been decided the
same way in the Ninth Circuit.
It also does not appear that the decision in Brown would apply in
most receivership cases. For example, it appears it would have no
applicability in rents, issues and profits receivership cases. There
the receiver is appointed pursuant to contract (language in the
deed of trust) pursuant to which the receiver is appointed to take
possession of real property and collect rents which are in fact
additional security for the obligation owed to the secured creditor.
The collection of the rents should not be income to the
receivership estate. Indeed, that is why receivers in rents cases are
advised to use the tax identification number of the property
owner/obligor because the rent is income to him or her. The
receiver is simply collecting the rent (the additional security) and
eventually turning it over to the secured creditor, often only in
Page 6 • Spring 2007
partial payment of the loan. Taxes, therefore, are owed either by
the property owner or the secured creditor, if the total amount of
net rents turned over exceeds the principal obligation.
It does not appear that Brown would be applicable in other types
of receivership cases either. For example, in family law cases the
receiver is often appointed to take possession of a business and
operate it pending the family law court’s decision as to whether
the business should be sold, delivered to one of the parties or
somehow divided.
If the business is incorporated the receiver should use the tax
identification number of the corporation and estate should have
no income tax liability. If the business is a partnership or wholly
owned by the parties to the litigation, again the receiver should be
using their tax identification numbers and any tax would be owed
by those entities or individuals.
Similarly, if the receiver is appointed because of some corporate or
partnership dispute and ordered to operate, manage or sell a
business, pending resolution of the dispute, the receiver again
should be using the tax identification number of those entities and
the income tax obligation should pass through. The Estate should
not be separately taxed.
In addition, in many of the receivership cases discussed above, the
receiver is collecting at least some of the money to pay general
trade creditors. The court in Brown acknowledges that §1.468
Continued on page 10...
Judge Janavs...
Continued from page 4.
“Regulatory receivers’ overall
duties and responsibilities are
no different than those of
other receivers. They must
maintain neutrality...”
about what I am preparing to do?” If receivers always asked
these questions before they acted, many of the matters coming
up before me could be avoided.
RN: What about regulatory receiverships? Do you want your
receiver to automatically shut down the operation or the company
the regulatory agency has alleged is acting outside the law?
JUDGE JANAVS: In these types of cases the goal of the
regulatory agency generally is to shut down the operation.
Basically you have a situation which usually ends in a shutdown of
the entity. As a general rule receivers should do what they are
appointed to do as efficiently and as smoothly as possible.
Regulatory receivers’ overall duties and responsibilities are no
different than those of other receivers. They must maintain
neutrality, just as the judge does.
their own appointments. As judges, we constantly face new issues,
new areas of law, so handling a receivership for the first time is no
different. The fact that receivers and the attorneys representing
them are generally specialists in their fields helps.
RN: Do litigants have common misconceptions about
receivers and receiverships?
JUDGE JANAVS: There are occasions where someone, as a
tactical matter, comes in and says I want a receiver. I always ask
“Have you considered whether there is anything else that could
solve the problem short of appointing a receiver? What about a
TRO or preliminary injunction? Why not a management company
to collect the rent?”
Some people think a receiver is going to do their own discovery
for them and support their litigation effort. This is not a correct
use of a receiver, who must remain neutral.
RN: Do you allow your receivers to promote settlement?
JUDGE JANAVS: This is a very hard question. It can be a
dangerous thing. The receiver can’t risk his or her neutrality.
When you begin analyzing positions you may slip (or be perceived
to have slipped) into the appearance of non-neutrality, and can be
accused of a lack of impartiality. The receiver’s actions are
absolutely bound by the scope of the appointing order. Anything
beyond that should only be undertaken with the approval of the
appointing court.
Continued on page 15...
RN: What is exciting about sitting in this department?
JUDGE JANAVS: The most exciting thing is the
opportunity and ability to participate in resolution of some
especially challenging, interesting and important problems and
issues that may affect many people. Many cases in Writs and
Receivers have novel issues with little or no precedent for
guidance.
There is a vast change in receiverships since the late 1980’s
when I first sat in this department. We did rents and profits
receiverships then, but not anymore. Just like in other cases, the
problems that come up in receivership cases have become much
more complex in recent years. Extremely complex business
arrangements have become much more common. LLC’s didn’t
even exist back then. Also, in mandamus cases we now see bias and
conflict issues being raised with great frequency, and there is a body
of case law that has developed construing these issues. We may see
such issues raised more in receiverships as well.
RN: Do you see a benefit in having all receivership matters
assigned to one department like your court, rather than all judges
doing their own appointments, as is the case in most outlying
courts?
JUDGE JANAVS: Well, this district is unlike most others.
As regards civil litigation, there are many cases we see that are
unique – we continually see matters that are more diversified and
complex then those routinely faced by outlying courts or some
other jurisdictions. Having a centralized Writs and Receivers
Department helps. It avoids some 50 other very busy judges having
to become familiar with a very specialized area of the law and being
involved in the frequently very time consuming task of supervising
receiverships. But I also do not see any problem with judges doing
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Spring 2007 • Page 7
Douglas P. Wilson
Douglas Wilson Companies
Tel: 619-641-1141
dwilson@douglaswilson.com
is pleased to announce
his appointment as
Operating Company Receiver
for San Ramon, a condominium
conversion
Superior Court
Scott M. Sackett and
Marilyn R. Bessey
Fiduciary Management
Technologies, Inc.
Tel: 916-930-9900
Tel: 877-930-9600
scott.sackett@efmt.com
marilyn.bessey@efmt.com
is pleased to announce
the completion of their duties as
Claims Administrator for Kohli vs.
Century Family Inc.
Class Action Lawsuit
Robert C. Greeley
Greeley, Lindsay Consultant Group
Tel: 916-484-4800
RGreeley@Greeley-Group.com
is pleased to announce
the completion of his duties as
Receiver for Chapman v. Jacobsen
Execution of Judgment Sale
Superior Court
San Diego
Superior Court
Los Angeles County
Michael A. Grassmueck
Michael A. Grassmueck
Michael A. Grassmueck
Grassmueck Group
Tel: 213-999-7827
mgrassmueck@grassmueckgroup.com
Grassmueck Group
Grassmueck Group
Tel: 213-999-7827
Tel: 213-999-7827
mgrassmueck@grassmueckgroup.com
mgrassmueck@grassmueckgroup.com
is pleased to announce
his appointments as
San Mateo
is pleased to announce
his appointment as
is pleased to announce
Claims agent and dispersing agent
for Wade Cook Financial
Corporation; the Stock Market
Institute of Learning/Information
Quest Inc; and Lighthouse Books,
Inc. FKA Lighthouse Publishing
Group Inc
Econometrics, The Rhodes Company
Receivership
vs. Terry L. Neal
U.S. Bankruptcy Court
U.S. District Court
U.S. District Court
Robb Evans & Associates
Robb Evans & Associates
LLC
LLC
Robb Evans & Associates
LLC
Tel: 818-768-8100
Tel: 818-768-8100
Tel: 818-768-8100
robb_evans@robbevans.com
robb_evans@robbevans.com
Equity Receiver for Rhodes
et al. an SEC Regulatory
the completion of his duties as
Equity Receiver for SEC
.
Is pleased to announce
its appointment as
Is pleased to announce
its appointment as
Equity Receiver of
Global Marketing Group, Inc et al
Receiver of Real Property
An FTC Regulatory Receivership
In Los Cabos Mexico
U. S. District Court
U. S. District Court
Middle District of Florida
District of Vermont
Page 8 • Spring 2007
robb_evans@robbevans.com
is pleased to announce
its appointment as
Receiver of the assets of
Uniforce International Co., Ltd.
Superior Court
County of Los Angeles
East District
Robert P. Mosier
Robert P. Mosier
Robert P. Mosier
Mosier & Company, Inc.
Tel: 714 432-0800 x222
Mosier & Company, Inc.
Tel: 714 432-0800 x222
Mosier & Company, Inc.
Tel: 714 432-0800 x222
rmosier@mosierco.com
rmosier@mosierco.com
rmosier@mosierco.com
is pleased to announce
his appointment as
is pleased to announce
his appointment as
is pleased to announce
the completion of his duties as
Receiver for PTX Industries, Inc.
To wind down a manufacturing
company
Including the sale of assets for the
benefit of creditors
Receiver for Marina Ranch Market
To secure assets and implement
monetary controls
During a dispute among
shareholders
Receiver for National Financial
Systems, Inc.
An SEC Regulatory Receivership
With a 45% distribution to the
harmed investors
Superior Court of California
County of Los Angeles
Superior Court of California
County of Orange
United States District Court
Los Angeles
David L. Ray
William J. Hoffman
William J. Hoffman
Saltzburg, Ray & Bergman, LLP
Trigild Incorporated
Tel: 858-720-6700
Trigild Incorporated
Tel: 858-720-6700
Bill.hoffman@trigild.com
Bill.hoffman@trigild.com
www.trigild.com
www.trigild.com
is please to announce
his appointment as
is please to announce
Tel: 310-481-6700
dlr@srblaw.com
is please to announce
his appointment as
The Liquidator for Walsh
Moving and Storage
Superior Court
County of Los Angeles
Edythe L. Bronston
Law Offices of Edythe L. Bronston
Tel: 818-528-2893
ebronston@bronstonlaw.com
is please to announce
the completion of her duties as
Receiver for the sale of
a $35 million Beverly Hills Estate
Superior Court
County of Los Angeles
his appointment as
Receiver for Euclid Avenue,
an 18 unit condominium
project in construction
Asset Receiver for
Fusion Oil, Inc. et al
Superior Court
San Diego County
Circuit Court, County of Wayne
Michigan
BECOME A MEMBER OF THE ORGANIZATION CREATED TO SUPPORT AND
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Join the California Receivers Forum and receive the quarterly Receivership News in
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contact information for all area chapters, updates on coming events, and a wealth of
background materials, including ALL past issues of the Receivership News. Recent
issues have featured articles on many topics, including:
• May Management Displaced By a Receiver File a Bankruptcy Petition for the
Entity in Receivership? (Ask the Receiver, Issue 23)
• Selling the Mom and Pop Business – Determining the FMV of a Small
Business in Receivership (Issue 23)
• Using Limited Receivers to Accomplish Limited Tasks (Issue 23)
Contact JBS & Associates at Jsleeper@jbsassociates.ws
to join the California Receivers Forum today!
Spring 2007 • Page 9
Ask the Receiver...
Continued from page 6.
B-1(g)(3) excludes payments made to general trade creditors that
relate to Title 11 or similar cases and acknowledges that a
receivership is similar case. In the Brown case the court was able to
hold that the defrauded investors were not general trade creditors
and, therefore, the exception did not apply. In most cases there is
some general trade debt which a receiver would pay unless, of
course, all the funds are held in constructive trust for defrauded
investors, in which case the estate has no money to pay tax claims.
The final type of receivership case we generally see is a receiver in
aid of execution. Again, however, the receiver is not given a fund,
but is charged in trying to collect a judgment and the tax on any
collection would depend on whether collection of the judgment
would result in income tax to the judgment creditors because the
receiver is simply collecting funds on a judgment for the judgment
creditor’s benefit.
It is also unclear what assets would be included and tax have to be
paid on even if a receivership estate is treated as a Qualified
Settlement Fund. The IRS is apparently taking the position that
the receiver has an obligation to report any income from, among
other things, the sale of receivership assets and that Treasury
Regulation §468B imposes a tax on settlement fund taxable
income.
In the Brown case the court was looking at income tax on “its
earnings” 348 F.3d at 1204 and noted at the end of the case that
the estate’s gain or loss with respect to an asset is the difference
between the value of the asset when the estate received it and the
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Page 10 • Spring 2007
value of the asset when the estate distributed or sold it. Id. at 1219.
Therefore, unless there are assets such as a house, a car, a painting,
which will have a discernable value at the time they are turned
over to the receiver and then can be revalued at the time of sale or
distribution, the only “income” would appear to be interest income
on the funds in the receivership estate. If the receiver is appointed
and simply seizes bank accounts, there would apparently be no
“income” because the value of the asset when the receivership
estate took it would be the same when it was distributed (not
counting interest income). Similarly, in many fraud cases where
the receiver is suing people to recover funds one has to question
what or whether the fact that the receiver’s sued someone to
recover an asset would be income under a QSF.
I am sure we all look forward to hearing more from Chuck on his
efforts to clarify this important issue with the IRS.
Another receivership – tax case that should be of interest is United
States v. George, 420 F.3d 991 (9th Cir. 2005). George was a
receiver for five radio stations. During the course of the
receiverships George was paid interim compensation for his work.
George did not report the payments he received on his personal tax
returns, taking the position that because the interim payments he
received were subject to final approval by the court at the end of
each case, and possible disgorgement, he did not need to report the
payments until that time.
The IRS and the United States Attorney’s Office disagreed and
George was indicted and then convicted of filing false tax returns.
George was sentenced to 15 months imprisonment. George
appealed his conviction and the Ninth Circuit affirmed. The
Ninth Circuit held that because George was a cash-basis taxpayer,
he was required to report any income he received in the year he
received it. The fact that the receiver’s fees were subject to possible
disgorgement and final approval at the time of the receiver’s final
accounting did not remove them from what is called “the claim of
right doctrine”, which looks at the taxpayer’s dominion and control
of the funds he receives.
If the taxpayer treats the funds “as belonging to him” he has to pay
taxes on the funds in the year received. The court did note that if a
receiver had to repay interim fees in a subsequent year he or she
would be entitled to a deduction in the year of repayment.
Q
A
I heard that the Rules of Court changed at the
beginning of the year. Does this have any effect on me
as a receiver?
Not really. What the Judicial Council did was
renumber all the rules. Substantively the rules
relating to receiverships did not change. The court
rules concerning receiverships are now numbered
3.1175-3.1184.
*PETER A. DAVIDSON, with Moldo
Davidson Fraioli Seror & Sestanovich LLP
located in Los Angeles, is a receiver and an
attorney who specializes in representing receivers
in state and federal court.
Peter A. Davidson
New Members Boost the California
Receivers Forum’s Resources and Mission
A steady stream of new members are enhancing the
California Receivers Forum’s ability to elevate receivership
practice and educate those persons and businesses that make up
the receivership community. A few of the recently joining
receivership professionals are:
James H. Baron, Esq. and Gregory Sterling, Esq., both of
whom are affiliated with Receivers Incorporated, a Los Gatos,
California firm specializing in handling a wide variety of
receiverships (and insolvency matters) with special expertise in
real estate-related receiverships. Mr. Baron has more than 35
years’ experience in receiverships and as a financial institutions
executive and is a seasoned expert witness, author, and a past
instructor for the California Continuing Education of the Bar.
Mr. Sterling has a similar depth and breadth of receivership
experience, having served as receiver for real properties in
California, Washington and Arizona, and has also served as
Bankruptcy Trustee. Visit their website at ww.receiversinc.com.
Kathleen D. Hagin, Esq., an attorney with the Orange
County law firm Hershorin & Henry, LLP, a long-time supporter
of the LA/Orange County Chapter of the California Receivers
Forum. Ms Hagin specializes in commercial litigation and
commercial transactions. Hershorin & Henry, LLPhas a broad
civil practic. Ms Hagin may be reached at
kathleenh@hhlawgroup.com.
Robert Gonzales, MBA, Andy Lim and David E. Mitchell,
CPA, all members of Sed Quaere, LP, a firm headquartered in
Camarillo, California that assists medium and large businesses
and the legal profession in electronic discovery and accounting
forensics. Mr. Gonzales, Mr. Mitchell and Mr. Lim all specialize
in the use of electronic tools and functions to support their
clients’ legal and informational goals. Visit their website at
www.mscg.com/sedquaere.
Bryan Glenn, a commercial real estate broker specialist in
the Investment Services Group of the Charles Dunn
Company in West Los Angeles, is looking to increase receiver
representation in his client base of investors, asset managers,
developers and corporate trustees. Visit the website at
www.charlesdunn.com or reach Mr. Glenn at
bglenn@charlesdunn.com.
Transitions, a Long Beach-based business consulting and
management firm specializing in designing non-bankruptcy
solutions for businesses experiencing financial liquidity and
insolvency difficulties. Also a new CRF member is Equitable
Transitions’ President Nigel Hamer, who (like Mr. Haberbush)
offers many years’ experience in assisting businesses in
financially troubled times. Visit the firm’s website at
www.equitabletransitions.com or Mr. Haberbush or
Mr. Hamer at dhaberbush@equitabletransitions.com and
nigel@thehamergroup.com, respectively.
Michael A. Grassmueck is the principal and founder of the
Grassmueck Group, which has a foundation of more than 20
years as bankruptcy court trustee and in state and federal court
receiverships (as well as administering ABC’s and acting as
claims and disbursing agent). Originally operating in
Washington State and Oregon, the group now also has a
downtown Los Angeles office.
Visit the firm at
www.grassmueckgroup.com
or Mr. Grassmueck at
mgrassmueck@magitrustee.com.
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CLAIMSADMINISTRATIONCOSTS
Mary Keshishian is vice president of Carick Management, a
commercial /industrial/retail real property management firm
headquartered in the San Fernando Valley. Ms. Keshishian has
12 years of management experience, specializing in professional
asset management services and multi-family investment
property. Visit the firm website at www.Carick.com or reach Ms
Keshishian at Mary@Carick.com.
&ORMOREINFORMATION
VISITUSAT
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ORCALL
4OLL&REE
David R. Haberbush, Esq., a principal in the law firm
Haberbush Feinberg, is chief executive officer of Equitable
MARILYNBESSEY EFMTCOM
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Spring 2007 • Page 11
THE LIST
AREA
PHONE
WHILE THERE IS NO COURT-APPROVED LIST OF RECEIVERS, THE FOLLOWING IS A
PARTIAL LIST OF RECEIVERS WHO ARE MEMBERS OF THE CALIFORNIA RECEIVERS
FORUM AND HAVE CONTRIBUTED TO THIS PUBLICATION.
E-MAIL AREA
Bay Area
David A. Bradlow
Dennis P. Gemberling
Robert M. Rouse
David A. Summers
415-206-0635
415-434-0135
650-802-1629
925-933-2875
Sacramento Valley
•Marilyn Bessey
Robert C. Greeley
•Beverly N. McFarland
•J. Benjamin McGrew
•Scott Sackett
Kevin J. Whelan
916-930-9900
916-484-4800
916-783-3552
916-482-5100
916-930-9900
916-783-3552
Fresno Area
•
•
PHONE
E-MAIL
Los Angeles/Orange County/Inland Empire
Clifford Bressler
Steve Franson
James S. Lowe II
Hal Kissler
559-298-1089
559-930-8119
559-269-0484
559-435-1756
bradlow@davidbradlow.com
Michael D. Myers
dpg@perrygroup.com • George R. Monte
brouse@wres.com •Robert P. Mosier
davidsummers8@aol.com •David J. Pasternak
• James L. Peerson, Jr.
Theordore G. Phelps
Marilyn.Bessey@eFMT.com
Gary A. Plotkin
rgreeley@greeley-group.com
•David L. Ray
beverlygroup@att.net
Thomas A. Seaman
jbmcgrew@receivertrustee.com
Kevin Singer
Scott.Sackett@eFMT.com
• Steven M.Speier
kwhelan.beverlygroup@att.net
• William E. Turner
David D. Wald
cliffordbressler@earthlink.net •Robert C. Warren III
steve@stevefranson.com •Richard Weissman
jslowe@lemoorenet.com John M. "Jack" Wolfe
hkissler@mancoabbott.com • Adrian Young
Andrew R. Zimbaldi
909-398-4200
mmyers3395@aol.com
626-930-0083
montegr@aol.com
714-432-0800
rmosier@mosierco.com
310-553-1500
djp@paslaw.com
323-954-7575
peergroupcrop@sbcglobal.net
213-629-9211 tphelps@phelpsconsulting.com
818-906-1600
gplotkin@prnlaw.com
310-481-6700
dlr@srblaw.com
949-222-0551
tom@thomasseaman.com
310-552-9064 Kevin@receivershipspecialists.com
949-222-2999
sspeier@squarmilner.com
714-228-9153
wturner145@aol.com
310-979-3850 dwald@waldrealtyadvisors.com
949-585-7660
rob@investorsHQ.com
818-226-5434
rweissman@rwreceiver.com
949-476-2696
jackwolfe@sbcglobal.net
909-945-4586
adrian@delmar1.com
714-751-7858 azimbaldi@aldenmanagement.com
Los Angeles/Orange County/Inland Empire
•Edythe L. Bronston
Robert Crane
James H. Donell
Steve Donell
Robb Evans & Assoc.
Louis A. Frasco
Burdette Garvin
• David A. Gill
818-528-2893
949-646-2903
310-207-8481
310-207-8481
818-768-8100
818-449-5129
909-885-0934
310-277-0077
ebronston@bronstonlaw.com
rcrane6586@aol.com
james.donell@jalmar.com
steve.donell@jalmar.com
robb_evans@robbevans.com
uclabill@yahoo.com
awlbudgarvin@aol.com
dag@dgdk.com
San Diego Area
M. Daniel Close
858-792-6800
858-560-7515
• William J. Hoffman
858-720-6701
• Richard M. Kipperman 619-668-4500
Douglas P. Wilson
619-641-1141
•Martin Goldberg
closeedr@msn.com
marty@cni4you.com
bill.hoffman@trigild.com
rmk@corpmgt.com
dwilson@douglaswilson.com
Ventura County Area
Robert Gonzales
805-445-9182
robert@sedquaere.com
• The bullet indicates those receivers who
The diamond indicates those receivers who
The square indicates those who facilitated the
completed a comprehensive 16-hour course on
completed a comprehensive 16-hour course on
October 2004 Loyola Law School course.
receivership administration and procedures
receivership Administration and procedures
presented at Loyola Law School in April 2000.
presented at Loyola Law School in October 2004.
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#APITAL !SSETS /UR CLIENTS INCLUDE JUDICIAL RECEIVERS INSTITUTIONAL AND ASSETBASED LENDERS GOVERNMENT
AGENCIES BANKRUPTCY TRUSTEES AND THE PRIVATE SECTOR
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4RANZON ,,# WAS FORMED TO BRING TOGETHER INDEPENDENT REGIONAL MEMBER COMPANIES INTO A NATIONAL AUCTION AND ACCELERATED MARKETING GROUP 4HE MEMBER COMPANIES OF 4RANZON
COMBINE THE BENEFITS OF LOCAL MARKET KNOWLEDGE AND THE RESOURCES OF A NATIONAL ORGANIZATION 4HE MEMBER COMPANIES OF 4RANZON ARE INDEPENDENTLY OWNED AND OPERATED
Page 12• Spring 2007
From Banking to Receiverships
Robb Evans’ Serendipitous Journey
from Banking to Receiverships
BY ROBB EVANS*
It has been a long and winding yellow
brick road that has led our firm to where
it is today. We’re proud of our story and
consider it a privilege to be able to tell it
to readers of Receivership News.
Looking back at it now, it’s easy to
pinpoint when the organization was
founded, although it was only years later
that it became clear how momentous to
me, my family and my colleagues a
certain phone call could be. Linda, then
my bride of 30 years, and I were checking
in at the Marriott Waterfront in
Portland, where I was attending a board
meeting of Western Independent
Bankers, when I was paged.
That was in 1991. The biggest news
in the banking and business world that
July was the world wide seizure by
regulators of Bank of Credit and
Commerce International, BCCI. It was
the largest bank failure in history and
held the record as the biggest financial
fraud in history until it was bumped
down the list by Enron.
The call was from Jim Carrig,
General Counsel of the California State
Banking Department, as it was then
called. I knew it had to be something big
for Jim to track me down. I had known
him for years and knew he was not
inclined to make chatty phone calls. His
question was straight forward. “You know
we seized BCCI last week. Can you spend
a few weeks helping us sort it out?” Well,
I was not exactly without things to keep
me occupied, but this was banking and
business history. Without hesitation I
said, “You bet. Lunch next week?” He
replied, “Sooner would be better.” So,
just as soon as the board meeting had
adjourned, we headed back to San
Francisco. We did have lunch. Separate
checks.
To make a long story short, I entered
into a contract with the State Banking
Department to become a Special Deputy
RAFTING IN THE WILDS—Robb Evans shows his outdoorsman side during a recent rafting expedition on the
Salmon River in Idaho while on vacation with colleagues and friends.
Superintendent of Banks. The mission
was to manage the liquidation, in
coordination with over a hundred other
regulatory agencies around the world, of
the “Bank of Crooks and Criminals.”
BCCI had been consolidating before
seizure. Agencies and operations in
Florida, Georgia and Texas had been
closed and rolled into New York and Los
Angeles.
This was a big deal, to say the least.
But it was something that my banking
career had been preparing me for,
however inadequately, for decades. I had
drifted around the world dealing with
troubled and transitional situations for
various banks for my entire career. But
this was unprecedented. My experience
was going to be challenged.
What was planned during the next
few days was the creation of a single
purpose organization to manage a
multiplicity of complex assets and sticky
legal situations around the country. A
similar exercise was going on in New
York. But in New York it was managed
with state employees. The California
Superintendent, Jim Gilleran, decided
this situation would best be handled in
the private sector. A team of bankers,
lawyers and accountants was assembled
to manage the project in the midst of the
firestorm of the savings and loan industry
implosion and real estate melt down.
The plan was to do the job, disband the
organization and move on with life
and/or retirement.
Fast forwarding a number of months,
we were asked by the federal government
to assume responsibility for all of the
non-criminal aspects of the BCCI case in
the United States. We took over
considerable litigation along with the
extensive assets seized by the New York
State Banking Department. I eventually
was named President and sole director of
First American Corporation, the
Washington D.C.
bank holding
company founded by Clark Clifford,
which was secretly and illegally owned by
BCCI.
Continued on page 14...
Spring 2007 • Page 13
Robb Evans...
Continued from page 13.
It was a good fit, a great challenge and a wonderful
opportunity. I had been a workout guy at Bank of America and
been CEO of bank workouts, start ups and turnaround situations
in different parts of the world over the years. My background,
like that of almost all of the professionals recruited for the
project was heavily oriented to both domestic and international
banking.
None of us on the project initially had any thoughts much
beyond the BCCI matter. When Jim Carrig’s several weeks
stretched to several years and we were beginning to cut staff and
button down for the slow slog to completion, a call came in
from counsel for the Securities and Exchange Commission in
Washington DC. “We understand you guys are bankers and you
come very highly recommended by the Department of Justice.
We have a difficult situation with a collapsed pension
management company. That’s sort of bank-like. Would you take
a look at handling it for us?” We took a look and the next thing
I knew, in addition to being Trustee for the United States in
the BCCI matter, I was Receiver of Qualified Pension
Corporation. A few weeks later a similar call came in from the
counsel for the SEC in Los Angeles and before we knew it we
were appointed Successor Receiver of First Pension
Corporation.
We looked around and decided maybe we were not just a
one act show, but were actually a real organization. We have
since handled over a hundred appointments by both Federal
and State courts. Almost all nominations were by regulatory
agencies or banks. We are very proud that every government
agency, law firm or bank that has nominated us for a fiduciary
role, has proposed us in a subsequent case.
We have since incorporated the organization as Robb Evans
& Associates LLC and formed a sister company, REA
Consulting, LLC. The consulting company provides litigation
support and strategic guidance to banks or their clients. I still
refer to the other owners of the firms as “partners” though they
are in fact “Members” of the firm. “Partners” is a clear definition
of our relationship. “Member” can have several meanings.
Fifteen years into this phase of life and business it remains
great fun. It is particularly rewarding because of my eight
partners in this enterprise and the terrific team they have
gathered around us. For a project oriented person this is a great
life, particularly when my partners are pulling the laboring oar
on the projects. The stability of the organization in an
essentially unstable business gives me great comfort. My
partners, Srinivasa Krishnan and Cherrie Eustaquio have,
literally, been with me since day one. Krishnan is one of the
most knowledgeable and competent international bankers I
have ever known. Cherrie keeps me and the office running with
a professionalism that is all too rare in this day and age.
My partner, Kenton Johnson, an associate publisher of this
fine publication who bludgeoned me into writing this, joined
the team when we took on our first receivership. Kent’s prior
career was in banking, including serving as a chief credit officer
and as CEO. Brick Kane, a veteran bank COO, CFO and our
ultimate jack of all trades, now the firm’s Chief Operating
Officer, joined when it looked like the BCCI project was going
to run a decade instead of a few weeks. Anita Jen, our superb
CFO signed up early on when it became very clear that
outsourcing all the accounting work was not going to be
economic. She has assembled a great team of CPAs whose
forensic work is the backbone of our organization.
Jesun Paik joined us based in New York when he retired as
senior banking advisor to the Mitsui empire and Vice Chairman
of Manufactures Bank. Jesun has been my good friend and
confidant since we were both alternate directors of a very
“challenging” bank in Paris over 30 years ago. Earl Lanna, who
joined us half a dozen years ago, became a Member of the firm
on the first of this year. He has a long and distinguished career
as a bank chief credit officer and is based in Phoenix.
In the midst of all of these ex-bankers are two former
government lawyers, who keep quite busy in spite of the fact
that we farm out almost all of our legal work. We have sent
Linda Candler and Val Miller to reeducation camp and we have
them now occasionally thinking like bankers (i.e. logically)
instead of like lawyers. Linda, based in Seattle and on an
airplane, focuses on international asset recovery. She is a former
Assistant U.S. Attorney and a Barrister who practices in British
jurisdictions as well as here. Val runs our Las Vegas office and is
one of the real authorities on multi-level marketing and other
schemes de jour.
Page 14 • Spring 2007
Continued on page 15...
Judge Janavs...
Robb Evans...
Continued from page 7.
Continued from page 14.
With a team like that, not to mention our other talented
colleagues, I have the opportunity to spend most of my golden
years somewhere other than in the office. Actually, I keep my
primary office in Bakersfield where I started at Bank of America in
1961, scammed a farmer’s daughter into marrying me in 1962 and
where scads of family, not the least of which our two grandkids,
live. We decided to return there from the Bay Area when this
business permitted us to live anywhere we wanted. We spend as
much time as we can at our beach home in Cambria.
Looking forward, I see significant opportunities for members of
the California Receivers Forum, in the fiduciary world. So, while I
will edge slowly toward Cambria and a garden there that needs my
attention, I intend to keep in the game to the extent my partners
permit. I am learning how to spell “hedge fund” and “sub-prime.”
“I think the Receivership Forum
is very valuable and worthwhile.
I would assume that people who
are less experienced are learning
a lot...”
RN: What about ex parte appointments? Do you ever grant
such applications?
*Robb Evans is Chief Executive Officer of Robb Evans & Associates LLC and
REA Consulting LLC. He is a director of Beach Business Bank in Manhattan
Beach and BancInsure, an Oklahoma City based insurer of independent banks. He
and his wife of 44 years live in Cambria and Bakersfield. He may be contacted at
robb_evans@robbevans.com
A L B A N Y AT L A N TA B R U S S E L S D E N V E R L O S A N G E L E S N E W YO R K
P H I L A D E L P H I A S A N D I E G O S A N F R A N C I S C O WA S H I N G TO N , D C
JUDGE JANAVS: Ex parte receiver appointments are
extremely rare, in my experience, and are appropriate only in
extreme emergencies. A TRO or appointment of a receiver
without notice of any sort is even more rare.
If you must seek such an appointment, it is better to come to
my court on an even numbered day when I do not have a 9:30
calendar. That gives me more time to spend on the matter
without impacting other cases and attorneys.
RN: Has the manner in which you use receivers changed
since your initial appointment?
JUDGE JANAVS: I don’t think so. It was a drastic remedy
20 years ago and it is still a drastic remedy. There have been no
fundamental changes to receivership law in recent years, and,
perhaps, not for a very long time.
McKenna Long & Aldridge offers a proven track record
in the areas of receivership, bankruptcy, and creditors’ rights.
RN: Do you think the California Receivers Forum is a
worthwhile endeavor? Do you see it contributing to the quality
of receivership practice?
GARY CARIS
213.243.6107 phone
213.243.6330 fax
gcaris@mckennalong.com
JUDGE JANAVS: I think the Receivership Forum is very
valuable and worthwhile. I would assume that people who are
less experienced are learning a lot from the experienced lecturers
at the multi-day seminars held for receivers at Loyola Law
School by the Receivership Forum. No doubt, even the
experienced receivers learn from the experiences of others.
Contact:
444 South Flower Street
Los Angeles, CA 90071
www.mckennalong.com
RN: Thank you very much for your time Judge Janavs
Spring 2007 • Page 15
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