I am waiting for the forensic CPA to give me his report and findings this week. I will be away for one week, during which I will formulate my thinking and start to compose my report and recommendations to the Court. I plan on filing that during August. I will send my report to all known claimants and they may file their agreement or opposition to what I recommend. Judge Ortiz will then make the final decision.
The forensic CPA has examined the accounts at Capital One Bank, including the sub accounts, the accounts and sub accounts at AXOS Bank and the history of the accounts at MVB Bank and a personal bank account for Robert Levenson. He has done this into 2018. It is believed that lapping and commingling started in the MVB Bank, but to go back farther than we have substantially increases the administrative costs of the receivership and not substantially benefit the receivership.
The questions to be answered are: What money has or has not been accounted for in the funds held by the receivership? What funds have been commingled, such that they cannot be clearly identified as belonging to a particular customer? Of commingled funds, how will the funds the receivership is holding be paid?
You have been patient and some of you have been in need of the 20% retained from their money. The work has taken time for many reasons. In November, until the motions to terminate the receivership, I organized the receivership, obtained tax identification numbers, got accounts transferred to the receivership’s control, established a claim procedure, published a notice in the newspaper and made one disbursement from the AXOS Bank account. In November, I was told by the judge to do nothing until the motions to terminate the receivership were heard. In December through March, I focused on disbursing the 80%, although the forensic CPA and my staff started collecting the needed records. There especially were needless delays in obtaining Capital One Bank records. Furthermore, the forensic CPA discovered there was a lack of an accounting system by Blackacre 1031 Exchange Service, LLC that he described as no accounting system and one that had to be built before money was traceable. In tracking money, many bank statements had deposits and withdrawals without naming the customer to whom they relate and these customers or depositors had to be traced. The CPA discovered that deposits (as credits) were moved between the Master/Escrow accounts and sub accounts and sub accounts into the Master/Escrow account out of sequence and without pairing deposits and disbursements (withdrawals). Sometimes credits were posted in the Master/Escrow account and also in a sub account and then disbursements were made from one of these accounts, but money as credits not cleared in one of the accounts. That distorted the bank statements and complicated the tracing. Of continuing interest to me, there was a sub account at Capital One Bank called Blackacre-Interim. That was opened by Mr. Levenson with 5 depositors and $1.975MM. Then some disbursements were made from that sub account for persons other than the 5 depositors and we found at least three instances without deposits from the person to whom disbursements were made!
The forensic CPA has examined the accounts at Capital One Bank, including the sub accounts, the accounts and sub accounts at AXOS Bank and the history of the accounts at MVB Bank and a personal bank account for Robert Levenson. He has done this into 2018. It is believed that lapping and commingling started in the MVB Bank, but to go back farther than we have substantially increases the administrative costs of the receivership and not substantially benefit the receivership.
The questions to be answered are: What money has or has not been accounted for in the funds held by the receivership? What funds have been commingled, such that they cannot be clearly identified as belonging to a particular customer? Of commingled funds, how will the funds the receivership is holding be paid?
You have been patient and some of you have been in need of the 20% retained from their money. The work has taken time for many reasons. In November, until the motions to terminate the receivership, I organized the receivership, obtained tax identification numbers, got accounts transferred to the receivership’s control, established a claim procedure, published a notice in the newspaper and made one disbursement from the AXOS Bank account. In November, I was told by the judge to do nothing until the motions to terminate the receivership were heard. In December through March, I focused on disbursing the 80%, although the forensic CPA and my staff started collecting the needed records. There especially were needless delays in obtaining Capital One Bank records. Furthermore, the forensic CPA discovered there was a lack of an accounting system by Blackacre 1031 Exchange Service, LLC that he described as no accounting system and one that had to be built before money was traceable. In tracking money, many bank statements had deposits and withdrawals without naming the customer to whom they relate and these customers or depositors had to be traced. The CPA discovered that deposits (as credits) were moved between the Master/Escrow accounts and sub accounts and sub accounts into the Master/Escrow account out of sequence and without pairing deposits and disbursements (withdrawals). Sometimes credits were posted in the Master/Escrow account and also in a sub account and then disbursements were made from one of these accounts, but money as credits not cleared in one of the accounts. That distorted the bank statements and complicated the tracing. Of continuing interest to me, there was a sub account at Capital One Bank called Blackacre-Interim. That was opened by Mr. Levenson with 5 depositors and $1.975MM. Then some disbursements were made from that sub account for persons other than the 5 depositors and we found at least three instances without deposits from the person to whom disbursements were made!
