General Information and Documents for Secure Investment Services, Inc. and American Financial Services, Inc.

INVESTOR UPDATE (Updated 02-24-2015)

The Receiver filed his Final Report and Proposed Distribution (Exhibit 1 - Exhibit 2 - Exhibit 3 - Exhibit 4). During the course of these proceedings, the Receiver was able to keep the policies in force, pay premiums, and collect the death benefits and sale proceeds from the portfolio of insurance policies for more than six years. The result was a net balance of $341,661.27 available for distribution to the defrauded investors. The final distribution schedule can be viewed here.

The Court entered an Order on February 24, 2015, approving the Final Report and Proposed Distribution Plan. That order authorizes the final distribution of $341,661.27 to the 752 allowed claimants. That distribution will be the final distribution in this case.

INVESTOR UPDATE (Updated 12-12-2013)

The receivership estate has nearly exhausted its line of credit and is unable to pay the premiums required to keep the policies in force. Rather than abandon the policies, the Receiver filed a Motion to Approve Bid and Sale Procedures on August 29, 2013, asking the Court to approve his plan for soliciting competing bids and presenting his final recommendation to the Court for approval. The Court entered an Order on October 1, 2013, approving those procedures.

The highest bid offered to purchase the remaining policies was for $5 million. The Receiver then filed a Motion for Final Approval of Sale. On November 26, 2013, the Court entered its Order Approving Final Sale, which authorized the Receiver to: (1) sell the receivership estate’s interests in the remaining policies; (2) accept Lexington Settlements’ offer to purchase those interests for $5 million; and (3) enter into any agreements or conduct any transactions in his discretion that are necessary to close that sale without seeking further approval from the Court. The Receiver will prepare a purchase and sale agreement with Lexington Settlements and proceed with closing the sale.

INVESTOR UPDATE (Updated 05-22-2013)

On May 16, 2013, the Court entered its Order granting the Receiver's Motion for Authorization to Surrender the SIL-I Policy. That order authorizes the Receiver to surrender the SIL-I policy to the insurance carrier in exchange for its cash surrender value of approximately $301,475.16. He believes that decision is in the estate's best interest after taking into account the insured’s age, current medical condition, and the projected length of time the Receiver would likely have to pay premiums.

INVESTOR UPDATE (Updated 12-08-2012)

The Receiver has filed an Interim Report for the Period Ended October 31, 2012, which details the status of the insurance policies in his possession, the receivership estate's finances, and the progress made in handling investor claims.

As explained more fully in that report, the Receiver took over a portfolio of 47 insurance policies when he was appointed and obtained a $4 million line of credit from Sovereign Bank to pay the premiums needed to keep those policies in force. His goal from the beginning was to minimize expenses and maximize returns for the receivership estate.

The Receiver conducts periodic reviews to determine the best course of action for each policy. For many policies, it may be preferable to pay the premiums until the policy matures (i.e., until the insured dies) so the receivership estate can collect the death benefit. Other policies may have to be sold or abandoned. Each decision is guided by the insureds' age, the insureds' relative health, and the funds available to pay premiums.

Eleven of the receivership estate's policies matured and paid death benefits totaling $7,567,700.85. The Receiver used those death benefits to pay down the line of credit owed to Sovereign Bank. The Receiver also abandoned four other policies that were severe financial burdens and sold them for a total of $60,001.19.

He is still managing 33 policies in which the receivership estate has death benefit interests totaling $30,757,378.20. While the Receiver desires to keep all policies in force, his ability to do so is limited by his ability to pay premiums. As of October 31, 2012, the Receiver can only borrow another $962,795.49 on his line of credit from Sovereign Bank but expects that more than $1.5 million will be needed to pay premiums on all policies for the next 12 months.

The best strategy is to continue paying premiums as long as the Receiver has the ability to do it in hopes that some of the policies with large death benefits will mature. The Receiver will continue filing notices with the Court and posting updates on this website as he makes those decisions.

INVESTOR UPDATE (Updated 12-08-2012)

The U.S. Attorney for the Eastern District of Virginia has issued a Press Release announcing that Minor Vargas has been sentenced to more than 60 years in prison for carrying out a half-billion-dollar scheme to sell fraudulent bonds through Provident Capital Indemnity (PCI) Ltd. Donald Neuhaus purchased numerous bonds from PCI using investor funds and assured investors that those bonds guaranteed payment on their life settlement investments if the viator lived beyond their life expectancy. Those bonds proved to be non-existent and merely part of Mr. Vargas's fraudulent scheme.

INVESTOR UPDATE (Updated 12-08-2012)

The U.S. Attorney has signed a Plea Agreement with Kimberly Snowden in which she agreed to plead guilty to money laundering. The Plea Agreement incorporates the Court's order in the SEC receivership action requiring Snowden to pay $627,621.77 in restitution.

INVESTOR UPDATE (Updated 01-04-2012)

The Receiver has filed an Interim Report for the Period Ended October 31, 2011, which details the status of the insurance policies in his possession, the receivership estate's finances, and the progress made in handling investor claims.

INVESTOR UPDATE (Updated 11-28-2011)

The Receiver has learned that some investors in this case received letters from the United States Postal Inspection Service in late November 2011. Those letters indicated that the recipient could be a possible victim of alleged mail fraud. They were referring to the criminal case United States v. Provident Capital Indemnity, Case No. 3:11-cr-14 in the United States District Court for the Eastern District of Virginia filed in January 2011.

In that case, the U.S. Government alleges that Provident Capital Indemnity ("PCI") engaged in conspiracy, mail fraud, wire fraud, and money laundering. Those letters were only supposed to be sent to investors in Secure Investment Services Inc., American Financial Services Inc., and Lyndon Group Inc. who invested in policies backed by PCI bonds. Unfortunately, the United States Postal Inspection Service erroneously sent some of those letters to individuals who should not have received them.

To be clear, only those who invested in policies backed by PCI bonds are considered possible victims of the alleged mail fraud in United States v. Provident Capital Indemnity, Case No. 3:11-cr-14 (E.D. Va.). If you invested in another policy that did not have a PCI bond, you are not considered a possible victim of the alleged mail fraud in that case and should ignore the letter.

The following policies were backed by PCI bonds:

CLA-H
BAU-R&L
BER-E&B
KEU-P

(To protect their identities, the Receiver is identifying the insureds by the first three letters of their last name and the first letter of their first names--e.g., a policy on John and Mary Smith would be the SMI-J&M policy.)

INVESTOR UPDATE (Updated 01-07-2010)

Throughout this case the Receiver has been managing the portfolio of insurance policies with a goal to maximize returns to the receivership estate. As part of that process, he periodically reviews each policy to determine whether it makes financial sense to keep the policy in force or let it lapse. So far he has been able to pay premiums on all policies from a line of credit. This case, however, is now at a critical juncture. The Receiver desires to keep all policies in force but his ability to do so is limited by the receivership estate's assets and line of credit. Although some policies have matured, they did not generate enough death benefits to continue paying premiums for all policies through the foreseeable future. The Receiver , therefore, has decided to keep in force the most promising and cost-effective policies and let the most expensive policies lapse.

On July 2, 2010, he filed a Motion to Abandon the PER-T&E and MAN-S Policies. Since the receivership estate owns a 100% interest in both those policies, this does not impact any group of investors more than another. From a financial viewpoint, the Receiver thinks it makes sense to abandon these two policies. The bottom line is the Receiver would not have enough money to keep paying premiums until those two insureds are projected to die without putting at risk the ability to pay premiums on all the other policies. On July 28, 2010, the Court entered its Order authorizing the Receiver to abandon those two policies.

On January 6, 2011, the Receiver filed his Motion to Abandon the BIE-F&L Policy. Like the PER-T&E and MAN-S policies, the Receiver believes it does not make financial sense to continue paying premiums for the BIE-F&L policy given the amount of those premiums and the age of the insureds.

INVESTOR UPDATE (Updated 01-07-2011)

The Receiver has taken action to correct favorable treatment that SIS gave to investors in the RIC-J(1) and RIC-J(2) policies to the detriment of other investors. SIS told investors in the RIC-J(1) and RIC-J(2) policies that those policies were backed by bonds that would pay the death benefit on a certain date, even if the insured did not die as projected by the Life Expectancy report. In reality, SIS did not purchase any bonds for those two policies. When the insured lived beyond his or her life expectancy, SIS diverted money that other investors paid for investments in other policies and used that money to fund a "partial bond recovery" to investors in the RIC-J(1) and RIC-J(2) policies. As a result, those investors have already recovered 45% of their original investment. To address that injustice, the Reciever filed a Motion to Allow and Subordinate "A" Claims of those investors in the RIC-J(1) and RIC-J(2) policies. The Reciever's motion would allow those investors to file claims and have them approved as "A" claims, but would not pay any distributions to them until other investors recovered 45% of their original investments. The Court entered an Order granting that motion on December 16, 2010.

INVESTOR UPDATE (Updated 01-07-2011) - The Receiver continues to review claim forms and submit claims to the Court for approval. When the Court approves an investor's claim, that investor is eligible to receive a distribution from the receivership estate. The following steps, however, must be completed before the estate is distributed to investors: (1) the Receiver must review every investor claim, (2) the Receiver must recommend that the court either approve or deny each of them, (3) the Court must enter an order approving or denying each of them, (4) the Receiver must submit a final distribution plan, and (5) the Court must approve a final distribution plan. Right now, the Receiver is in the process of completing steps 1 and 2.

INVESTOR UPDATE (04-06-2010) - The Receiver has prepared a list of Frequently Asked Questions with answers about the receivership proceedings, the portfolio of insurance policies, and the distribution to investors.

INVESTOR UPDATE (11-12-2009) - The Court has entered its Final Judgment against Defendant Kimberly Snowden. It adopts the findings made in its Order awarding summary judgment to the SEC on May 26, 2009. The Court found that Snowden violated the anti-fraud and registration provisions of federal securities laws. Among other things, it found that "Snowden knew the investors’ funds were being misused yet she continued to misrepresent the truth to investors." It also ordered her to disgorge a total of $627,621.77 that she received from the fraudulent investment scheme.

If you wish to read more about the SEC's allegations against Kimberly Snowden and the other defendants in this case, you may read its Memorandum of Points and Authorities, its Statement of Facts, the Declaration of Thomas J. Eme (Exhibits 1-3 - Exhibits 4-7 - Exhibit 8 - Exhibit 9-14 - Exhibit 14 cont'd - Exhibits 15-24), and the Declaration of Milo Segner (Exhibits 1-11 - Exhibits 12-16 - Exhibits 17-27 - Exhibits 28-29). Those pleadings and the supporting exhibits explain in detail each act of wrongdoing committed by Donald Neuhaus, Kimberly Snowden, and the investment companies in this case.

The SEC filed its Status Report stating that all of its claims against Defendants have been resolved and the case only remains open so the Receiver can process investor claims, liquidate assets, and ultimately distribute those asset to investors with approved claims.

INVESTOR UPDATE (09-18-2009) - The SEC has filed a Status Report describing the remedies that it may pursue in this case. Consistent with its recommendation, the SEC filed a Stipulation asking to dismiss its claims against Defendants Secure Investment Services Inc., American Financial Services Inc., and Lyndon Group Inc. The Court entered an Order dismissing the SEC's claims against those defendants on September 16, 2009. Since those entities are now in receivership, there is no reason for the SEC to pursue claims against them. Their assets are being collected and will be distributed to defrauded investors who have an allowed claim consistent with the Court approved claim procedure.

INVESTOR UPDATE (11-10-2008) - The Receiver has filed an Interim Report explaining the current status of the insurance policies and other receivership estate assets.

INVESTOR UPDATE (01-10-2008) - The Court entered its Judgment against SIS, AFS, and LGI that permanently prohibits those entities, along with their officers and agents, from offering or selling securities to the public.

INVESTOR UPDATE (12-05-2007) - The Receiver has filed a Statement of Fact of Death notifying the Court that Donald Neuhaus has died during these proceedings.

INVESTOR UPDATE (12-03-2007) - On December 3, 2007, the Court entered its Stipulated Order Appointing an Examiner in these proceedings. The Examiner is a court-appointed officer who represents the interests of the investors as a whole. Appointing an Examiner will ensure that the investors' interests are being advocated at all times during these proceedings and that the Receiver is accountable to the investors for all decisions he makes with resepect to receivership estate assets. Additional information is available from the Examiner's website (www.sisexaminer.com).

INVESTOR UPDATE (10-30-2007) - On October 29, 2007, the Court entered its Order approving the Receiver's claim procedure plan. All known investors will receive an Investor Claim Form along with a cover letter explaining the claims process in this case. An investor claim may be disallowed if the Investor Claim Form is not returned within 60 days. As Investor Claim Forms are completed and returned, the Receiver will assign each of them a sequential claim number to identify that claim in these proceedings. Investors will receive a post card notifying them of their claim number.

INVESTOR UPDATE (08-30-2007) - The United States Attorney for the Eastern District of California has indicted Donald F. Neuhaus, Kimberly A. Snowden, and several others for their role in selling policies through Secure Investment Services and American Financial Services. Click here to view a copy of the indictment.

Criminal Charges against the Defendants

On August 22, 2007, the United States Attorney filed an Indictment against Donald F. Neuhaus, Kimberly Snowden, and several others who participated in the fraudulent investment scheme by selling policies or issuing non-existent bonds.

The U.S. Attorney signed a Plea Agreement with Kimberly Snowden in which she agreed to plead guilty to money laundering. The Plea Agreement incorporates the Court's order in the SEC receivership action requiring Snowden to pay $627,621.77 in restitution.

Lawsuit by the SEC and Appointment of Receiver

On August 23, 2007, the United States Securities and Exchange Commission ("SEC") filed a Complaint against Secure Investment Services, Inc., American Financial Services, Inc., Lyndon Group, Inc., Donald F. Neuhaus, and Kimberly A. Snowden alleging violation of the federal securities laws. On that same day, SEC filed its Application for Temporary Restraining Order and Order to Show Cause and Memorandum of Points and Authorities in Support.

The Court then entered the Order Appointing Temporary Receiver and Temporary Restraining Order and Order to Show Cause. As a result of those Orders, all of the Defendants' assets were frozen. In addition, Michael J. Quilling was appointed Receiver for Secure Investment Services, Inc. ("SIS"), American Financial Services, Inc. ("AFS"), and Lyndon Group, Inc ("LGI"). That temporary appointment was converted into a permanent Order Appointing Receiver on October 31, 2007.

On November 9, 2007, Donald Neuhaus filed his Answer denying liability for his actions and requesting a jury trial. Neuhaus died soon after that and the Receiver filed a Statement of Death notifying the Court.

On Novmber 11, 2007, Kimberly Snowden filed her Answer denying liability for her actions and requesting a jury trial.

On January 8, 2008, SIS, AFS, and LGI filed their Consent to have a Judgment of Permanent Injunctive Relief entered against them in these proceedings. On January 10, 2008, the Court entered its Judgment of Permanent Injunctive Relief that prohibits SIS, AFS, LGI, and their officers and agents from offering or selling securities to the public.

On September 17, 2008, the Reciever filed his Motion to Expand Receivership to Include Cash For Life Trust. Cash For Life Trust is a separate entity through which Donald F. Neuhaus held ownership of one particular insurance policy. The Court entered an Order appointing Michael J. Quilling as Receiver for Cash For Life on October 15, 2008.

On October 3, 2008, the SEC filed its Motion for Voluntary Dismissal of its claims against the estate of the deceased Donald F. Neuhaus. Among other things, the SEC believes that Neuhaus already transferred all of his significant assets to the Receiver as part of their Compromise and Settlement Agreement and that a judgment against Neuhaus could not be collected. The Court entered an Order on November 6, 2008, dismissing the SEC's claims against Neuhaus' estate.

On February 4, 2009, the SEC filed its Motion for Summary Judgment asking the Court to enter judgment against Kimberly Snowden for violating securities laws. The SEC believes the undisputed facts show that Snowden defrauded investors with false and misleading statements, misused investor funds, and offered and sold unregistered securities. It asks for an order directing Snowden to disgorge $574,518.45 plus pre-judgment interest in the amount of $53,103.32. In support of its motion, the SEC filed numerous pleadings that investors may find interesting. These include a Memorandum or Points and Authorities, a Statement of Facts, the Declaration of Thomas J. Eme (Exhibits 1-3 - Exhibits 4-7 - Exhibit 8 - Exhibit 9-14 - Exhibit 14 cont'd - Exhibits 15-24), and the Declaration of Milo Segner (Exhibits 1-11 - Exhibits 12-16 - Exhibits 17-27 - Exhibits 28-29). Those pleadings and the supporting exhibits explain in detail each act of wrongdoing committed by Donald Neuhaus, Kimberly Snowden, and the investment companies in this case.

On May 26, 2009, the Court entered an Order awarding summary judgment to the SEC against Defendant Kimberly Snowden for her role in managing these fraudulent investment companies. The Court found that Snowden violated the anti-fraud and registration provisions of federal securities laws. Among other things, it found that "Snowden knew the investors’ funds were being misused yet she continued to misrepresent the truth to investors." It also ordered her to disgorge a total of $627,621.77 that she received from the fraudulent investment scheme.

The SEC then filed a Stipulation dismissing its claims against Defendants Secure Investment Services Inc., American Financial Services Inc., and Lyndon Group Inc. The Court entered an Order dismissing the SEC's claims against those defendants on September 16, 2009. Since those entities are now in receivership, there is no reason for the SEC to pursue claims against them. Their assets are being collected and will be distributed to defrauded investors who have an allowed claim consistent with the Court approved claim procedure.

The Court entered a Stipulation and Order Regarding Defendant Snowden's Disgorgement on August 23, 2011. That Order reflected a $12,366.32 credit to be applied to the judgment against Snowden for $627,621.77.

The Receiver filed an Interim Report for the Period Ended October 31, 2011.

The Receiver has filed an Interim Report for the Period Ended October 31, 2012, which details the status of the insurance policies in his possession, the receivership estate's finances, and the progress made in handling investor claims.

The Receiver filed a Final Report and Proposed Distribution (Exhibit 1 - Exhibit 2 - Exhibit 3 - Exhibit 4) on January 29, 2015. During the course of these proceedings, the Receiver was able to keep the policies in force, pay premiums, and collect the death benefits and sale proceeds from the portfolio of insurance policies for more than six years. The result was a net balance of $341,661.27 available for distribution to the defrauded investors. The schedule of proposed distributions can be viewed here. The Court entered an Order on February 24, 2015, approving the Final Report and Proposed Distribution Plan. That order authorizes the final distribution of $341,661.27 to the 752 allowed claimants. That distribution will be the final distribution in this case.

Appointment of Examiner and Activities with Respect to Investor Claims

On October 25, 2007, the Receiver filed a Stipulated Motion to Approve Claim Procedure Plan and Claim Form. On October 29, 2007, the Court entered its Order approving the Receiver's plan.

On November 28, 2007, the Receiver filed his Stipulated Motion to Appoint an Examiner in these proceedings. The Examiner is a court-appointed officer who represents the interests of the investors as a whole. Appointing an Examiner will ensure that the investors' interests are being advocated at all times during these proceedings. On December 3, 2007, the Court entered its Stipulated Order Appointing Examiner.

On January 2, 2008, the Receiver filed his First Motion to Allow "A" Claims. That motion addressed 41 claims with a total net claim amount of $1,441,155.00. On February 5, 2008, the Court entered its Order Granting the Receiver's First Motion to Allow "A" Claims.

The Receiver is still in the process of receiving, verifying, and approving other claims submitted in this case. Those claims will be addressed in future motions submitted to the Court on a quarterly basis for allowance or disallowance.

On October 3, 2008, the Katsuren Family Trust filed a Motion for Limited Intervention and Return of Funds. That motion alleges that Elke Katsuren's $200,000 investment is not part of the pooled receivership estate assets. The Katsuren Family Trust claims that this Court entered its Freeze Order before SIS had access to those funds. It also claims that Elke Katsuren rescinded her investment contract with SIS within 10 days of sending the money. On October 24, 2008, the Court entered a Stipulation and Order to return funds to the Katsuren Family Trust.

On February 6, 2009, Gordon Harvey and the Harvey Family Trust filed a Motion for Limited Intervention and Return of Funds and a Memorandum of Points and Authorities. That motion alleges that the Harvey Family Trust's $200,000 investment is not part of the pooled receivership estate assets. Its situation is identical to the Katsuren Family Trust's because the Court entered the Freeze Order before SIS had access to funds from the Harvey Family Trust. It also rescinded its investment contract within 10 days of sending those funds to SIS. The SEC filed its Opposition to the motion because, among other things, Harvey's check was deposited into SIS's account before the SEC froze its assets. Harvey filed a Reply on March 2, 2009. The Court entered an Order on March 26, 2009, that denied Harvey's motion for not being filed in a timely manner.

On July 29, 2009, the Receiver filed his Second Motion to Allow "A" Claims. That motion addressed 123 claims with a total net claim amount of $4,893,405.76. On September 2, 2009, the Court entered its Order Granting the Receiver's Second Motion to Allow "A" Claims.

On October 8, 2009, the Receiver filed his Third Motion to Allow "A" Claims. That motion addressed 159 claims with a total net claim amount of $5,980,206.69. On November 5, 2009, the Court entered its Order Granting the Receiver's Third Motion to Allow "A" Claims.

The Receiver filed his Fourth Motion to Allow "A" Claims that addressed 81 claims with a total net claim amount of $2,855,931.15. On February 4, 2010, the Court entered its Order Granting the Receiver's Fourth Motion to Allow "A" Claims.

The Receiver filed his Fifth Motion to Allow "A" Claims that addressed 79 claims with a total net claim amount of $3,485,577.72. On May 12, 2010, the Court entered its Order Granting the Receiver's Fifth Motion to Allow "A" Claims.

The Receiver filed his Motion to Adjust "A" Claims that addressed 91 claims with a total net claim amount of $2,828,364.94. On June 18, 2010, the Court entered its Order Granting the Receiver's Motion to Adjust "A" Claims.

The Receiver filed his Sixth Motion to Allow "A" Claims (Exhibit 1) that addressed 65 claims with a total net claim amount of $2,018,613.14. On August 13, 2010, the Court entered its Order Granting the Receiver's Sixth Motion to Allow "A" Claims.

The Receiver filed his Second Motion to Adjust "A" Claims (Exhibit 1) that addressed 22 claims with a total net claim amount of $436,990.00. The Receiver filed the motion to adjust claims that were overstated and to deny claims not properly attributed to the receivership estate. On August 13, 2010, the Court entered its Order Granting the Receiver's Second Motion to Adjust "A" Claims.

The Reciever filed his Motion to Allow and Subordinate "A" Claims of investors in the RIC-J(1) and RIC-J(2) policies. The Since those investors already received a 45% return on their original investment, the Receiver recommends allowing them to file claims and have them approved as "A" claims, but not paying any distributions to them until other investors recover 45% of their original investments. The Court entered its Order Granting the Receiver's Motion to Allow and Subordinate "A" Claims.

The Receiver filed his Seventh Motion to Allow "A" Claims (Exhibit 1) that addressed 22 claims with a total net claim amount of $794,757.41. The Court entered its Order Granting the Receiver's Seventh Motion to Allow "A" Claims.

The Receiver filed his Fourth Motion to Adjust / Disallow "A" Claims (Exhibit 1) that addressed 20 claims with a total net claim amount of $30,000.00. The Receiver filed the motion to adjust claims that were overstated and to deny claims filed by Kimberly Snowden's relatives or not properly attributed to the receivership estate. The Court entered its Order Granting the Receiver's Fourth Motion to Adjust / Disallow "A" Claims.

The Receiver filed his Eighth Motion to Allow "A" Claims (Exhibit 1) that addressed 32 claims with a total net claim amount of $1,534,205.92. The Court entered its Order Granting the Receiver's Eighth Motion to Allow "A" Claims.

The Receiver filed his Fifth Motion to Adjust / Disallow "A" Claims (Exhibit 1) that addressed 4 claims with a total net claim amount of $60,000. The motion would deny the claims filed by Robert Koppel. The Court entered its Order Granting the Receiver's Fifth Motion to Disallow "A" Claims.

On January 28, 2015, the Examiner filed his Final Fee Application and Motion to Discharge.

Findings of the Receiver

On May 8, 2008, the Receiver filed his Interim Report for the Period Ended April 30, 2008.

On October 21, 2008, the Receiver filed his Interim Report for the Period Ended September 30, 2008. The Court entered its Order approving that report on December 10, 2008.

On December 7, 2009, the Receiver filed his Interim Report for the Period Ended October 31, 2009. The Court entered its Order approving that report on December 10, 2008.

The Receiver filed an Interim Report for the Period Ended October 31, 2010. On December 16, 2010, the Court filed an Order approving the report.

The Receiver filed an Interim Report for the Period Ended October 31, 2011.

The Receiver filed an Interim Report for the Period Ended October 31, 2012, which details the status of the insurance policies in his possession, the receivership estate's finances, and the progress made in handling investor claims.

The Receiver filed a Motion to Approve Bid and Sale Procedures on August 28, 2013, which asks the Court to approve his plan for soliciting bids to purchase the remaining policies and the proposed timeframe to present his final recommendation to the Court for approval. The Court entered an Order on October 1, 2013, approving those procedures. The bidding process resulted in a high bid of $5 million, and the Receiver filed a Motion for Final Approval of Sale. On November 26, 2013, the Court entered its Order Approving Final Sale. It authorized the Receiver: (1) to sell the receivership estate’s interests in the remaining policies; (2) to accept Lexington Settlements’ offer to purchase those interests for $5 million; and (3) to enter into any agreements or conduct any transactions in his discretion that are necessary to close that sale without seeking further approval from the Court. The Receiver will prepare a purchase and sale agreement with Lexington Settlements and proceed with closing the sale.

The Receiver filed a Final Report and Proposed Distribution (Exhibit 1 - Exhibit 2 - Exhibit 3 - Exhibit 4) on January 29, 2015. During the course of these proceedings, the Receiver was able to keep the policies in force, pay premiums, and collect the death benefits and sale proceeds from the portfolio of insurance policies for more than six years. The result was a net balance of $341,661.27 available for distribution to the defrauded investors. The schedule of proposed distributions can be viewed here. The Court entered an Order on February 24, 2015, approving the Final Report and Proposed Distribution Plan. That order authorizes the final distribution of $341,661.27 to the 752 allowed claimants. That distribution will be the final distribution in this case.

Appointment of Professionals to Represent the Receivership Estate

On August 29, 2007, the Receiver filed a Stipulated Motion to Employ Quilling Selander Cummiskey & Lownds, P.C. ("QSCL") as legal counsel. The Receiver believes that hiring QSCL is in the receivership estate's best interests given the firm's experience in handling other receiverships involving large viatical companies with insurance policy portfolios valued in the hundreds of millions of dollars. On September 7, 2007, the Court entered its Order authorizing the Receiver to employ QSCL.

On August 29, 2007, the Receiver filed a Stipulated Motion to Employ Boutin Detino Gibson Di Giusto Hodell Inc. as local counsel. The Receiver believes that this is in the receivership estate's best interests given the firm's extensive practice in the federal court for the Eastern District of California. On September 7, 2007, the Court entered its Order authorizing the Receiver to employ Boutin Detino Gibson Di Giusto Hodell Inc.

On November 30, 2007, the Receiver filed a Stipulated Motion to Employ Litzler, Segner, Shaw & McKenney, LLP ("LSSM") as his accountants. The Receiver believes that hiring LSSM is in this receivership estate's best interests given LSSM's extensive experience in forensic accounting for federal equitable receiverships. Furthermore, LSSM has already served as an expert witness in this case for the Securities & Exchange Commission and is already familiar with accounts and underlying transactions in these proceedings. On December 10, 2007, the Court entered its Order authorizing the Receiver to employ LSSM.

Receiver's Activities with Respect to the Portfolio of Insurance Policies

The Receivership Estate's largest single asset is the portfolio of life insurance policies owned or otherwise managed by SIS, AFS, and LGI. There are at least 42 separate policies with a combined value of death benefits exceeding $56 million. Those policies, however, carry an annual premium load of at least $1.7 million. By the time the Receiver was appointed, SIS, AFS, and LGI only had approximately $65,000.00 in their combined bank accounts available to pay premiums.

On August 29, 2007, the Receiver filed a Stipulated Motion to Employ National Viatical, Inc. ("NVI") to manage and monitor the portfolio of life insurance policies held by SIS, AFS, and LGI. The Receiver believes that hiring NVI is in the receivership estate's best interests because NVI has extensive expertise in both the insurance and viatical field and has successfully managed large portfolios in other receivership cases. In the first week of this receivership, NVI and the Receiver identified and saved two policies scheduled to lapse for non-payment. On September 7, 2007, the Court entered its Order authorizing the Receiver to employ NVI.

In order to maximize the return to investors and prevent any policies from lapsing, the Receiver filed his Stipulated Motion to Obtain Interim Bank Financing on August 29, 2007. Bank financing gives the Receiver a line of credit from which to pay policy premiums and other administrative expenses as they become due. The immediate need for these funds is underscored by the fact that SIS, AFS, and LGI do not have enough cash in their bank accounts to carry the premiums. On September 7, 2007, the Court entered its Order authorizing the Receiver to obtain bank financing. On February 21, 2008, the Receiver filed his Unopposed Motion to Approve Bank Financing, which would increase the available line of credit to $3 million. This increase would guarantee that the Receiver has enough cash available to pay all premiums due for the 2008 calendar year. On March 14, 2008, the Court entered its Order authorizing the increase in bank financing. The Court entered another Order on February 26, 2009, which increased the bank financing to $4 million and ensures that the Receiver can pay all premiums through 2009 without risk of any lapsing.

On August 29, 2007, the Reciever also filed his Stipulated Motion to Pool Assets for the common benefit of the receivership estate's investors and creditors. This is consistent with the controlling law in the Ninth Circuit and most other districts in the United States. Pooling receivership assets prevents a situation where some investors obtain a recovery while others do not based on the sheer luck of how Defendants handled their funds. Instead, pooled assets would be treated as one fund to be distributed pro rata to each investor with an approved claim. On September 7, 2007, the Court entered its Order authorizing the Receiver to pool receivership estate assets.

On May 30, 2008, the Receiver filed the following motions: (1) Motion for Authorization to Abandon the BIE-F&L Policy; (2) Motion for Authorization to Abandon the KIL-D Policy; (3) Motion for Authorization to Abandon the SHO-I(1) Policy; (4) Motion for Authorization to Abandon the SLE-K(1) Policy; (5) Motion for Authorization to Abandon the SLE-K(2) Policy; and (6) Motion for Authorization to Abandon the SLE-K(3) Policy. On June 12, 208, the Receiver filed his Request for Evidentiary Hearing and Extended Argument for this motions.

On June 11, 2008, the Reciever filed the following motions: (1) Motion for Authorization to Abandon the ARM-A Policy; (2) Motion for Authorization to Abandon the BAU-R&L(1) Policy; (3) Motion for Authorization to Abandon the BER-E&B(1) Policy; (4) Motion for Authorization to Abandon the BER-E&B(2) Policy; (5) Motion for Authorization to Abandon the FOW-S(1) Policy; (6) Motion for Authorization to Abandon the QUI-W(1) Policy; and (7) Motion for Authorization to Abandon the QUI-W(2) Policy. On June 12, 208, the Receiver filed his Request for Evidentiary Hearing and Extended Argument for this motions.

On June 26, 2008, the Examiner filed his Statement and Brief Regarding Motions to Abandon Policies (Affidavit).

On July 28, 2008, the Court entered its Order authorizing the Receiver to abandon the following policies: (1) the BIE-F&L policy; (2) the SHO-I(1) policy; (3) the KIL-D policy; (4) the SLE-K(1) policy; (5) the SLE-K(2) policy; (6) the SLE-K(3) policy; (7) the ARM-A policy; (8) the BAU-R&L(1) policy; (9) the BER-E&B(1) policy; (10) the BER-E&B(2) policy; (11) the FOW-S(1) policy; (12) the QUI-W(1) policy; and (13) the QUI-W(2) policy. That order authorizes the Reciever to abandon his fractional interest in those policies at his discretion rather than continue to pay premiums on them.

On July 17, 2008, the Reciever filed his Motion to Transfer Donald Neuhaus' Interest in Numerous Insurance Policies to the Receiver. On August 12, 2008, the Receiver filed notice that the motion was unopposed and the Court entered an Order granting the motion.

On January 27, 2009, the Receiver filed his Second Motion to Transfer Neuhaus' Interest in Numerous Insurance Policies to the Receiver. The Court entered its Order to approve those transfers on February 27, 2009.

On February 4, 2009, the Receiver filed his Third Motion to Transfer Interests in Insurance Policy to the Receiver. The Court entered its Order to approve those transfers on February 27, 2009.

The Receiver filed a Motion to Approve Bid and Sale Procedures on August 28, 2013, which asked the Court to approve his plan for soliciting bids to sell the remaining policies and the proposed timeframe to present a final recommendation to the Court for approval. The Court entered an Order on October 1, 2013, approving those procedures. The bidding process resulted in a high bid of $5 million, and the Receiver filed a Motion for Final Approval of Sale. The Examiner filed a Response Brief on November 11, 2013, supporting the Motion for Final Approval of Sale.

On November 26, 2013, the Court entered an Order Approving Final Sale, which authorized the Receiver to: (1) to sell the receivership estate’s interests in the remaining policies; (2) to accept Lexington Settlements’ offer to purchase those interests for $5 million; and (3) to enter into any agreements or conduct any transactions in his discretion that are necessary to close that sale without seeking further approval from the Court. The Receiver will proceed with finalizing the purchase and sale agreement with Lexington Settlements and closing the sale.

     Information Relating to the BIE-F&L Policy

On January 6, 2011, the Receiver filed his Motion to Abandon the BIE-F&L Policy. Again, the Receiver believes it does not make financial sense to continue paying premiums for the BIE-F&L policy given the amount of those premiums and the age of the insureds. The Court entered its Order authorizing the Receiver to abandon that policy.

     Information Relating to the FOW-S(1) Policy

The individual insured by the FOW-S(1) policy has died and the policy has matured. The FOW-S(1) policy is wholly owned by the receivership estate and the insurance provider paid a total death benefit of $1,506,233.45 to the Receiver. That amount is now pooled with all other receivership estate assets for distribution to all investors who filed an approved claim against the estate.

     Information Relating to the FOW-S(2) Policy

The individual insured by the FOW-S(2) policy has died and the policy has matured. The FOW-S(2) poilcy is a multiple-owner policy with 29 individuals listed as the the owners and beneficiaries of record. The Receiver had just begun to send transfer forms to those investors because the insurance company only recently determined that it was a multiple-owner policy rather than a policy wholly owned by the receivership estate. When it matured, the Receiver had paid $80,700.00 in premiums on behalf of the other fractional owners. Furthermore, receivership records indicate that one owner did not pay for his interest in the policy. The Receiver, therefore, filed a Motion to Compel Payment of Death Beneefits to the Receiver so he could recover the $80,700.00 spent for premiums, recover the fractional ownership interest that one owner did not pay for, and distribute the remaining amounts due to the other owners of record. He also filed a Notice of Communication Received from Investors and the Examiner filed a Notice of Investor Responses and a Second Notice of Investor Responses. The Court entered an Order granting that motion on May 22, 2009. The insurance provider has since paid a total death benefit of $1,508,506.57 to the Receiver and he will be distrubting the death benefits in the near future to owners listed in this policy.

     Information Relating to the PER-T&E and MAN-S Policies

On July 2, 2010, he filed a Motion asking for permission to let the PER-T&E and MAN-S policies lapse. The bottom line is the Receiver would not have enough money to keep paying premiums until those two insureds are projected to die without putting at risk the ability to pay premiums on all the other policies. On July 28, 2010, the Court entered its Order authorizing the Receiver to abandon those two policies.

     Information Relating to the RIC-J(1) Policy

On November 15, 2010, the Reciever filed his Motion to Allow and Subordinate "A" Claims of investors in the RIC-J(1) and RIC-J(2) policies. The Since those investors already received a 45% return on their original investment, the Receiver recommends allowing them to file claims and have them approved as "A" claims, but not paying any distributions to them until other investors recover 45% of their original investments.

On July 11, 2011, the Court entered an Agreed Order compelling David Green and Monica Zukrow to repay their share of premiums due for the fictitious bond payments they received from SIS.

     Information Relating to the RIC-J(2) Policy

On November 15, 2010, the Reciever filed his Motion to Allow and Subordinate "A" Claims of investors in the RIC-J(1) and RIC-J(2) policies. The Since those investors already received a 45% return on their original investment, the Receiver recommends allowing them to file claims and have them approved as "A" claims, but not paying any distributions to them until other investors recover 45% of their original investments.

     Information Relating to the SHU-A&H(1) Policy

The Receiver filed his Fourth Motion to Transfer Interests that directs the insurance provider to accept investors' voluntary transfer forms without the written consent of all other owners in this policy. The Court entered its Order granting that motion on June 19, 2009.

     Information Relating to the SIL-I Policy

On May 16, 2013, the Court entered its Order granting the Receiver's Motion for Authorization to Surrender the SIL-I Policy. That order authorizes the Receiver to surrender the SIL-I policy to the insurance carrier in exchange for its cash surrender value of approximately $301,475.16. He believes that decision is in the estate's best interest after taking into account the insured’s age, current medical condition, and the projected length of time the Receiver would likely have to pay premiums.

     Information Relating to the WIL-E&C Policy

On August 26, 2009, the Receiver filed his Motion to Compel Transfer of Ownership Interests from LPG Investments and WED Marketing. The Receiver has determined that those entities are alter egos for David Goldenberg, who supplied many of the fraudulent bonds that Donald Neuhuas used to run his fraudulent investment scheme. Neither entity paid for its interest in this policy. Rather, it appears that Mr. Neuhaus assigned those interests as compensation to Mr. Goldenberg. The Receiver contends that neither LPG Investments nor WED Markting have a legitimate claim to keep their interests. The Court entered its Order granting that motion on September 25, 2009.

Developments Related to Donald Neuhaus and Kimberly Snowden

On October 25, 2007, Donald Neuhaus and Kimberly Snowden joined the Receiver in filing a Stipulated and Unopposed Order Authorizing the Receiver's Entry into Compromise and Settlement Agreement. That agreement permits the Receiver to take control of the Defendants' vehicle, home, and their portfolio of at least 14 insurance policies while the Court evaluates the parties' competing claims to those assets. In the meantime, the Receiver has the right to maintain or sell those assets as dictated by the receivership estate's best interests. On October 29, 2007, the Court entered its Order approving the agreement.

On October 31, 2007, Donald Neuhaus and Kimberly Snowden entered into a Stipulation to Enter Agreed Order Appointing Receiver. Donald Neuhaus also entered into a Stipulation Regarding the Preliminary Injunction that same day.

On November 9, 2007, Donald Neuhaus filed his Answer denying liability for his actions and requesting a jury trial. On December 5, 2007, the Receiver filed a Statement of Fact of Death notifying the Court that Donald Neuhaus had died during these proceedings. On February 29, 2008, the SEC filed a Motion to Substitute Successor to Defendant Donald Neuhaus, which would have Linda Neuhaus serve as the successor and representative for Donald Neuhaus on behalf of his estate. On March 25, 2008, the Court entered an Order of Substitution granting that motion.

On Novmber 11, 2007, Kimberly Snowden filed her Answer denying liability for her actions and requesting a jury trial.

On July 8, 2008, the Reciever filed a Statement of Fact of Death giving notice that Linda Neuhaus, the substitute successor to Defendant Donald Neuhaus, had died.

On October 3, 2008, the SEC filed its Motion for Voluntary Dismissal of its claims against the estate of the deceased Donald F. Neuhaus. Among other things, the SEC believes that Neuhaus already transferred all of his significant assets to the Receiver as part of their Compromise and Settlement Agreement and that a judgment against Neuhaus could not be collected.

On February 4, 2009, the SEC filed its Motion for Summary Judgment asking the Court to enter judgment against Kimberly Snowden for violating securities laws. The SEC believes the undisputed facts show that Snowden defrauded investors with false and misleading statements, misused investor funds, and offered and sold unregistered securities. It asks for an order directing Snowden to disgorge $574,518.45 plus pre-judgment interest in the amount of $53,103.32. In support of its motion, the SEC filed numerous pleadings that investors may find interesting. These include a Memorandum or Points and Authorities, a Statement of Facts, the Declaration of Thomas J. Eme (Exhibits 1-3 - Exhibits 4-7 - Exhibit 8 - Exhibit 9-14 - Exhibit 14 cont'd - Exhibits 15-24), and the Declaration of Milo Segner (Exhibits 1-11 - Exhibits 12-16 - Exhibits 17-27 - Exhibits 28-29). Those pleadings and the supporting exhibits explain in detail each act of wrongdoing committed by Donald Neuhaus, Kimberly Snowden, and the investment companies in this case.

On October 30, 2009, the SEC and Ms. Snowden filed a joint Stipulation for judgment against her and a disgorgement order in the amount of $627,621.77. The Court entered its Final Judgment against Ms. Snowden on November 6, 2009.

The Court entered a Stipulation and Order Regarding Defendant Snowden's Disgorgement on August 23, 2011. That Order reflected a $12,366.32 credit to be applied to the judgment against Snowden for $627,621.77.

Receivership Estate Expenses

On February 21, 2008, the Receiver filed his First Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered an Order allowing those fees on March 25, 2008.

On February 21, 2008, the Receiver filed his First Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered an Order allowing those fees on March 25, 2008.

On May 15, 2008, the Receiver filed his Second Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses.

On May 15, 2008, the Receiver filed his Second Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel.

On July 9, 2008, the Examiner filed his First Interim Fee Application. The Court entered an Order approving those fees on September 8, 2008.

On July 14, 2008, the Receiver filed his Stipulated Motion to Authorize Receiver to Employ Facio Abogados. The Receiver will employ Facio Abogados, which is located in Costa Rica, to help investigate and file claims for payment with the bonding company Provident Capital Indemnity, which is located there. The Court entered its Order granting that motion on July 22, 2008.

On September 17, 2008, the Receiver filed his Third Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion on October 15, 2008.

On September 17, 2008, the Reciever filed his Third Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on October 15, 2008.

On November 21, 2008, the Examiner filed his Second Interim Fee Application. The Court entered its Order granting that motion on January 20, 2009.

On December 31, 2008, the Reciever filed his Fourth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on February 4, 2009.

On December 31, 2008, the Receiver filed his Fourth Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion on February 4, 2009.

On March 6, 2009, the Examiner filed his Third Interim Fee Application. The Court entered its Order granting that motion on March 25, 2009.

On April 16, 2009, the Receiver filed his Fifth Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion on May 18, 2009.

On April 16, 2009, the Reciever filed his Fifth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on June 2, 2009.

On July 13, 2009, the Reciever filed his Sixth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on August 11, 2009.

On November 13, 2009, the Reciever filed his Seventh Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on December 18, 2009.

On November 13, 2009, the Receiver filed his Sixth Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion on December 18, 2009.

On April 5, 2010, the Reciever filed his Eighth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on May 12, 2010.

On July 14, 2010, the Reciever filed his Ninth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on August 13, 2010.

On July 14, 2010, the Reciever filed his Seventh Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion on August 13, 2010.

On August 19, 2010, the Reciever filed his Tenth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion on November 22, 2010.

On August 19, 2010, the Reciever filed his Eigth Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion on November 22, 2010.

On November 19, 2010, the Examiner filed his Fourth Interim Fee Application. The Court entered its Order granting that motion on December 16, 2010.

On June 1, 2011, the Reciever filed his Eleventh Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On July 19, 2011, the Reciever filed his Ninth Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion.

On August 25, 2011, the Reciever filed his Twelfth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On January 19, 2012, the Reciever filed his Thirteenth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On January 19, 2012, the Reciever filed his Tenth Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion.

On February 29, 2012, the Examiner filed his Fifth Interim Fee Application. The Court entered its Order granting that motion.

On October 18, 2012, the Receiver filed his Eleventh Interim Application to Allow and Pay (1) Receiver's Fees and Expenses and (2) Attorneys Fees and Expenses. The Court entered its Order granting that motion.

On October 18, 2012, the Receiver filed his Fourteenth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On November 15, 2013, the Receiver filed his Fifteenth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On October 2, 2014, the Receiver filed his Sixteenth Interim Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On January 28, 2015, the Examiner filed his Final Fee Application and Motion to Discharge. The Court entered its Order granting that motion.

On January 29, 2015, the Receiver filed his Final Application to Allow and Pay Attorney's Fees and Expenses of Local Counsel. The Court entered its Order granting that motion.

On January 29, 2015, the Receiver filed his Final Application to Allow and Pay Accountant's Fees and Expenses. The Court entered its Order granting that motion.

On January 29, 2015, the Receiver filed his Final Application to Allow and Pay (1) Receiver's Fees and Expnses and (2) Attorney's Fees and Expenses. The Court entered its Order granting that motion.

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