Important Updates
Those of us working on behalf of the IFC Receivership are keenly aware of the hardships being experienced by investors. The financial loss resulting from the fraud has been exacerbated by economic hard times in the U.S. and Canada. We speak and email regularly with many investors, to the extent that schedules permit. For strategic reasons, we have for a period of months declined to report in detail our actions and intentions to recover and distribute assets for the receivership estate. We now feel able to provide this update to investors.
The Receiver has made recoveries to date totaling $10,312,724. Distributions have been made equal to 40% of those claims approved to date by the Court. Funds currently held by the Receiver include a reserve against the pending claims of a group we refer to as the “Calgary claims”. These are from sub-investors who did not receive the initial notice to file claims because their identities were then unknown. Most of the Calgary claims have now been reviewed, and determination letters have been sent to the reviewed Calgary claimants. To the extent that the claims of additional investors are approved by the Court, they will likewise receive a distribution against their approved claim amounts.
SECOND DISTRIBUTION: The Receiver does intend to make a second distribution from available funds on hand. The second distribution will be much smaller than the first. As a means of leveraging this distribution, the Receiver wishes to make the distribution in conjunction with the settlement of two class actions brought in Canada by certain investors against the lawyers McCandless and Welder, should those settlements occur. If approved by the Court, the idea is to increase the distribution to all investors by counting the class action settlement distributions as IFC distributions to the recipient investors. The Receiver is currently negotiating for information needed with respect to the class actions. Notice of a motion by the Receiver with respect to leveraging the second distribution will be provided to all investors.
As stated above, we believe it inappropriate to provide detailed information regarding collection actions. We have, however, obtained independent judgments in British Columbia against Malcolm Stevenson and Dan Byer which parallel those existing in the U.S. These British Columbian judgments will assist in our collection efforts there, as well as in certain other jurisdictions. You will have also seen a subpoena issued to United Bank, where most investor funds were deposited. We continue to follow up on securing information from United Bank necessary to assess whether a viable cause of action exists against the bank. If such a viable cause is found to exist, we intend to bring it. Collection efforts will continue generally so long as they remain cost effective.
Future distributions after the second will depend upon the continuing success of collection efforts. We cannot at this time predict whether future distributions beyond the second will occur, or what their timing or amounts might be. While we do appreciate the personal financial needs of those injured by the IFC fraud, investors must be realistic in their expectations as to the timing and amount of distributions. The collection efforts we are pursuing all have their complexities. We have no “easy” money to collect. The return made to the IFC investors is already above average for these cases. We nevertheless remain optimistic that we can recover and return additional funds to investors, and are working to do so.
We are often asked about criminal proceedings. The Receivership is not directly involved with criminal prosecutions. I can report that Preston Pinkett is currently serving a prison sentence after pleading guilty. On information and belief, Malcolm Stevenson has left Canada to avoid prosecution.
We look forward to providing investors with further updates as we progress.
November 23, 2010