Federal Trade Commission v. American Financial Benefits Center
- Saundra Armstrong
- 4:18-cv-00806
- U.S. District Court · Northern District of California
- 8
In Federal Trade Commission v. American Financial Benefits Center, Judge Corley approved the receiver’s final report and fees, granted discharge with a limited retirement-plan exception, and ended the receivership.
Thomas W. McNamara, the receiver; his staff and counsel; the corporate defendants’ receivership estate; the Federal Trade Commission; and consumers whose records were held by the corporate defendants.
What happened
In Federal Trade Commission v. American Financial Benefits Center, the court reviewed the receiver’s final report and request to be discharged after the civil case had been resolved and the receiver had completed his main duties. The application was not opposed.
The court approved $50,529.35 in final fees and expenses, authorized a $10,000 reserve for final administrative costs, and ordered $221,881.12 transferred to the Federal Trade Commission. It also approved the receiver’s actions, set rules for retaining and destroying records, and deemed the receivership terminated.
Judge Jacqueline Scott Corley granted the receiver’s discharge, except that he could still approve documents needed for the AFBC 401(k) retirement plan. The court released him and his retained professionals from further receivership duties and liabilities and retained jurisdiction over receivership-related matters.
The detailed version
- Federal Trade Commission v. American Financial Benefits Center · No. 4:18-cv-00806
- Saundra Armstrong
- June 15, 2021
Background
The district court had appointed Thomas W. McNamara as receiver for American Financial Benefits Center, AmeriTech Financial, and Financial Education Benefits Center after granting the Federal Trade Commission’s request for a preliminary injunction. A receiver is a person appointed by a court to control and administer property or business operations during litigation. The court later entered a stipulated permanent injunction and monetary judgment, closed the civil case, and set a deadline to complete the receivership.
McNamara submitted his final report and applied for discharge and approval of his final fees. He stated that he had completed the duties required by the preliminary-injunction order, including securing the corporate defendants’ offices, analyzing their operations, communicating with consumers, liquidating and recovering assets, and considering possible clawback actions. Six participants still had to distribute or roll over funds from the corporate defendants’ 401(k) retirement plan, but the court found that this remaining issue did not prevent discharge.
Final Fee Application
The receiver requested $30,370.50 in fees and $4,044.21 in expenses for himself and his staff, payable to TWM Receiverships Inc., doing business as Regulatory Resolutions. He also requested $16,045.00 in fees and $69.64 in expenses for his counsel, McNamara Smith LLP. The total request was $50,529.35. He additionally requested authorization to retain $10,000 for final administrative costs, including storage and destruction of records and computer hard drives.
The court found the invoices sufficiently detailed and the services necessary to administer the receivership. It concluded that the requested fees and expenses reasonably, rather than excessively, compensated the receiver and his professionals. The court also found the $10,000 reserve appropriate.
Order
The court approved the receiver’s final report and final fee application. It authorized payment of the requested fees and expenses, authorized the $10,000 reserve, and ordered the receiver to transfer $221,881.12 in remaining funds to the Federal Trade Commission within ten days.
The court ordered the receiver to retain the corporate defendants’ business records, electronic media, and computer hard drives for 90 days and then destroy them. Customer records had to be shredded or electronically destroyed so that the information could not be read or reconstructed. Assets not distributed or otherwise administered when the receivership closed were deemed abandoned and could be destroyed or discarded.
The court confirmed and approved McNamara’s disclosed actions as being in the best interests of the receivership estate. Judge Jacqueline Scott Corley granted his application for discharge, with an exception allowing him to approve documents needed for federal or state returns or distributions relating to the AFBC 401(k) retirement plan. After those documents were signed, he would be discharged in full without another court order. The court released and exonerated McNamara and the professionals he retained from further receivership duties, liabilities, and responsibilities, retained jurisdiction over receivership-related matters, and terminated the receivership.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.