RECEIVERSHIPS: National Note of Utah, LC

WAYNE KLEIN, RECEIVER FOR
National Note of Utah, LC

10 Exchange Place, 502
Salt Lake City, UT 84111
(801) 456-4591

This site contains updates and filings related to the National Note of Utah Receivership. Updates are posted chronologically with the relevant links. This information is summarized quarterly by the Receiver in a status update to the court. The latest quarterly report can be found here

Claims Process
Property Auction and Sale Notices

Current (2015) Events

May 18, 2015: Sale of Property. The Court approved the sale of Almond Heights lot #25 for $34,000. Because the property is subject to a recorded deed of trust, the sales proceeds will be maintained in the Receivership’s real estate holding account until disputes over the trust deed are resolved. A copy of the order can be found here.

May 14, 2015: Settlement Agreement Approved. After holding a hearing, the Court approved a revised settlement agreement with Reed Larsen. Under the revised agreement, Larsen will a) pay $25,000 by the end of 2015, b) sign confessions of judgment in the amount of $500,000 for Larsen and other companies he controlled in favor of the receivership, c) prepare written summaries of several types of business and investment activities conducted by National Note, d) provide information regarding overseas transfers and assets and sources of income of Palmer, e) provide truthful testimony to the Receiver or law enforcement agencies in their investigations, and f) waive any claims he might assert against the Receivership or assets recovered by the Receiver. A copy of the order approving the settlement can be found here.

May 11, 2015: Summary Judgment Order. A judge entered partial summary judgment in favor of the Receiver in a clawback action he filed against Hong Shiek Chung. The judge found that it was not disputed that National Note was operated as a Ponzi scheme. The order finds that Chung did not dispute receiving $3,525 in excess payments. The judge said that because Chung does dispute the other $12,500 in overpayments alleged by the Receiver, the trial will be limited to the amount of excess payments Chung received. A copy of the order can be found here.

May 11, 2015: ABI Lawsuit Amended. The Court today granted the Receiver’s motion to amend the lawsuit that seeks a declaration that assignments of beneficial interests in receivership property are not valid. The order allows the Receiver to include in the lawsuit two additional defendants who were discovered as holding ABIs after the original lawsuit was filed: Vetco, Inc., and Denise Lewis. A copy of the order can be found here.

May 1, 2015: ABI Summary Judgment Motions. The Receiver today filed motions for summary judgment against 9 persons holding assignments of beneficial interest in receivership property. The motions ask the court to declare these ABIs void. The motions filed today are against:

  • Laurie and Michael Vertner (link here);
  • Jeffrey Todd Heaton (link here);
  • Larry Adams (link here);
  • Kimberly Brasher (link here);
  • Jaqueline and Stephen Christensen (link here);
  • Ronald Crossman (link here);
  • Lila Frandsen (link here);
  • Kristine Olson (link here);
  • MaryLou Williams (link here);

April 29, 2015: Summary Judgment Motion Filed. The Receiver filed a motion for summary judgment in his lawsuit against Sawtell Capital and the estate of Michael D. Memmott. The motion asks the Court to determine that the facts are not in dispute and that Sawtell has not repaid $170,000 in loans received from National Note and that Memmott had personally guaranteed repayment of the loan. With interest, the amount still owed on the loan is now $278,948. A copy of the motion and the Receiver’s declaration in support of the motion can be found here.

April 29, 2015: Hearing to Consider Creation of Claims Process. The Court has set a hearing for May 14, 2015 at 10:00 to consider the Receiver’s motion to begin the claims process. If the Court approves the Receiver’s motion, the Receiver will send notice of the claims process to potential claimants and begin accepting claims.

April 17, 2015: Summary Judgment Motions Filed The Receiver filed seven motions for summary judgment against the following:

  • JPS/MKS Partners, Ltd. The motion seeks judgment in the amount of $40,906.85 (link here);
  • Kim LaValley. The motion seeks judgment in the amount of $11,914.49 (link here);
  • Russ Wirtala. The motion seeks judgment in the amount of $78,807.41 (link here);
  • Karen (Thomas) Witkamp. The motion seeks judgment in the amount of$90,592.31 (link here);
  • Sano Investment Group. The motion seeks judgment in the amount of $18,173.68 (link here);
  • Eric Bawden. The motion seeks judgment in the amount of $24,943.97 (link here);
  • Fred Myer. The motion seeks judgment in the amount of $10,798.86 (link here).

April 17, 2015: Release of Property Sales Proceeds. The Court today entered an order releasing $1.7 million from the real estate reserve account to the receivership operating account. These are proceeds from the sales of real estate where the receiver has obtained releases of assignments of beneficial interest that make some or all of the sales proceeds unencumbered. As other releases or judgments are obtained, more money currently being held in the real estate reserve account can be moved to the operating account and available for later distribution to investors. A copy of the order can be found here.

April 15, 2015: Hearing Date on Property Sale. The Court today approved the language to be published in the newspaper inviting higher offers for Almond Heights Lot #25 in Toquerville, Utah. The Court set a hearing for May 14, 2015 at 1:20 to determine whether to approve the sale. A copy of the order can be found here.

April 14, 2015: Property Sale Motion. The Receiver filed a motion today seeking approval to sell Almond Heights lot #25 for $34,000, the amount of the appraised value. A copy of the motion can be found here.

April 13, 2015: Agreement on Expressway Due Diligence. The Receiver filed a motion today seeking Court approval of an agreement between the Receiver and a potential buyer of the Expressway land in Spanish Fork, Utah. The motion explains that the land contains a former unregulated landfill and wetlands, which may limit development potential of the land. The Receiver is asking the Court for approval of an agreement by which a potential buyer will conduct due diligence on the property with an eye toward buying the land. A copy of the motion can be found here. The Receiver’s declaration and exhibits supporting the motion can be found here.

April 1, 2015: Results of Property Auctions. The Receiver filed with the Court notices of the results of the auctions held for four properties in Minnesota. Copies of the notices can be found here, here, here, and here.

March 31, 2015: Summary Judgment Motion Filed. The Receiver filed a motion for summary judgment against Joe and Catherine Lovato. The motion asks the court to grant judgment to the Receiver in the amount of $47,558.57. A copy of the motion can be found here.

March 31, 2015: Fees to Special Counsel. The Court entered an order today approving the payment of $35,371.94 in fees and expenses to Manning Curtis Bradshaw and Bednar for ten months of work suing multiple credit card companies and obtaining settlements with the credit card companies. A copy of the order can be found here.

March 25, 2015: Property Sale Approval. The Court today issued an order approving the sale of Almond Heights Lot #10 for $36,000. A copy of the order can be found here.

March 24, 2015: Lawsuit Filed. The Receiver filed a lawsuit today against David and Lisa Barton seeking the invalidation of a deed of trust they hold on a property previously sold by the Receivership. The lawsuit alleges that Barton loaned money for the purchase of the property and was repaid the full amount of the loan plus interest but has not released the deed of trust. A copy of the lawsuit can be found here.

March 20, 2015: The Court entered an order requiring Terry Stallman to provide responses to discovery requested by the Receiver by April 3, 2015. The Court agreed to allow the Receiver to recover his attorneys’ fees in making this motion. A copy of the order can be found here.

March 19, 2015: The Court today entered default judgment in favor of the receiver and against Jeff Baclet in the amount of $5,221.92. A copy of the order can be found here.

March 11, 2015: The Receiver today filed a motion seeking permission to transfer $1.7 million from the Receivership’s Real Estate account to the operating account, where the funds would be available for distribution to investors as part of a claims process. The motion argues that this amount is in excess of what is needed to satisfy claims based on disputed deeds of trust and assignments of beneficial interest even if those deeds of trust and ABIs were valid. A copy of the motion can be found here.

March 9, 2015: An administrative law judge at the Securities and Exchange Commission issued an initial decision today finding that Julie Palmer Martin violated the federal securities laws in her activities in behalf of National Note. This ruling concludes an administrative enforcement action brought by the SEC against Ms. Martin. The judge’s decision finds that National Note was operating as a Ponzi scheme from 1995 through 2012 and that Ms. Martin played a key role in perpetuating National Note’s Ponzi scheme. The judge specifically found that Martin illegally sold unregistered securities, illegally acted as an unregistered broker, and willfully violated antifraud laws. The decision finds that Martin’s violations were egregious and that she had a direct intent to defraud investors. The judge imposed the following sanctions: i) Martin is barred from any involvement in the securities industry, ii) Martin is ordered to cease and desist from any future violations of the securities laws, iii) she is ordered to disgorge $329,000 in commissions she was paid by National Note, and iv) she must pay a civil penalty in the amount of $1,050,000. Martin can petition for review of this initial decision. A copy of the decision can be found here.

March 5, 2015: The Court today approved nine settlement agreements entered into by the Receiver. These nine settlements will result in $494,000 coming into the Receivership Estate as well as the release of an ABI and deed of trust. Pursuant to one settlement, the Receiver will pay out $64,000, but will be able to release $226,000 in net proceeds from the prior sale of a property. A copy of the court’s order can be found here.

March 4, 2015: The Court entered an order today denying Wayne Palmer’s motion to unfreeze receivership assets to pay his attorneys’ fees and expert witness fees. A copy of the order can be found here.

March 2, 2015: The Receiver filed a motion today asking the Court to approve nine settlement agreements reached in January and February. These settlement agreements will bring $494,098.88 into the Receivership Estate as well as release an assignment of beneficial interest and a deed of trust. The deed of trust release will result in $226,374.07 in net proceeds from the sale of the Bandanna Cabin being released from the real estate holding account. A copy of the motion can be found here.

February 27, 2015: The Receiver filed a motion today asking the Court for approval to begin a claims process for the Receivership. Under the Receiver’s proposal, all persons wanting to assert a claim against Receivership assets would need to submit a claim before a certain deadline (called the Claim Bar Date). Any claims filed after that date will not qualify for consideration. (The Claim Bar Date has not yet been determined.) Claims would have to be made using the Proof of Claim form approved by the Court. The motion proposes a method for giving notice to potential claimants and for publishing notice of the claims process in newspapers and on the Receivership website. The motion also describes the process the Receiver will use in receiving and evaluating claims and requires that he prepare a report to the Court summarizing the results of his review of all claims submitted before the claim deadline. A copy of the Receiver’s motion can be found here. Investors should not complete the draft Proof of Claim form that is included in this motion. Until the Court has approved the Proof of Claim form and procedures for dealing with claims, the Receiver will not accept any claims.

February 26, 2015: The Receiver filed his status report today for the period October 1, 2014 to December 31, 2014. A copy of the report can be found here.

February 26, 2015: A law firm that represented the Receiver in two lawsuits against credit card companies filed its application for fees and expenses. Those lawsuits were concluded with settlement payments by the two credit card companies. The fee application can be found here.

February 24, 2015: The Court today signed an order setting a schedule for the trial on the SEC’s lawsuit against Wayne Palmer. Under the scheduling order, all discovery, including expert reports and depositions of experts, must be completed by July 29, 2015 and a pre-trial hearing will be held on August 21, 2015 to either set a date for the beginning of trial or determine whether the Court can dispose of the case on summary judgment. A copy of the scheduling order can be found here.

February 20, 2015: The Court today entered default judgments against 13 persons holding assignments of beneficial interest in receivership property. The judgments declare these ABIs void. Two of these defaults will result in the release of funds from the real estate holding account to the operating account. The orders entered today are against:

  • Robert Licciardo (link here);
  • Javier DelCarpio (link here);
  • Paul Martin (link here);
  • Summer Froehlich (link here);
  • Mark Cardone (link here);
  • Jon Baird (link here);
  • Lisa Cardone (link here);
  • Julie Palmer (link here);
  • Sheldon Heaton (link here);
  • Leslie Proffit (link here);
  • Audrey Licciardo (link here);
  • National Note of California (link here);
  • Susan Loring (link here).

February 20, 2015: The court granted two additional default judgments to the Receiver against holders of assignments of beneficial interest. A judgment against Dan Maddock invalidated two ABIs granted in his name. A copy of this order can be found here. A judgment against H. Coleman Scheuller invalided three ABIs granted in his name. A copy of the Scheuller order can be found here.

February 20, 2015: The Court today entered a default order declaring that the ABI held by Chad Palmer on the Ogden office building is void. A copy of the order can be found here.

February 17, 2015: The Court entered an order consolidating three lawsuits filed by the Receiver seeking a ruling that ABIs are not valid liens on receivership property. The judge overseeing the receivership activities will now handle all these lawsuits. A copy of the order can be found here.

February 17, 2015: The Court approved publication of notice of the planned sale of Almond Heights lot #10 and set a hearing for March 19, 2015 at 1:30 p.m. Additional bids are invited within ten days of the notice being published in the newspaper. A copy of the court order can be found here.

February 11, 2015: The Receiver filed a motion today seeking approval to sell Lot #10 in the Almond Heights subdivision in Toquerville, UT. The Receiver has an offer for $36,000. Higher offers are invited. A copy of the motion can be found here.

February 9, 2015: The Court today approved the sale of a fourth industrial property in Byron, Minnesota, subject to an auction at which bidders can submit higher offers. The initial offer received for the property is $235,000. Any other buyers wanting to submit a higher bid must prequalify by March 5, 2014. If additional bidders qualify, the auction will be held March 12, 2015. A copy of the Court’s order can be found here.

February 5, 2015: The Receiver filed a motion today seeking permission to conduct an auction for the sale of an industrial lot in Byron, Minnesota. The auction will be to determine whether any other bidders are willing to offer more than the $235,000 bid submitted to the Receiver. A copy of the motion can be found here.

February 3, 2015: A judge today entered default judgment against Ethan Jack Wilson, declaring his ABI on property in the Autumn Ridge subdivision “void, invalid, and of no legal effect.” A copy of the judgment can be found here.

January 30, 2015: The Court today signed an order granting the Receiver’s motion to abandon interest in Wayne Palmer’s residence. This followed a motion by Chase Bank to intervene in the Receivership action so the bank could foreclose on the home. Based on information provided to the Court by Chase Bank, the Receiver determined there was no equity in the home so there was no reason to keep the property in the Receivership Estate or oppose Chase’s efforts to foreclose on the home. A copy of the order can be found here.

January 29, 2015: The Receiver filed a report with the Court summarizing the progress of his efforts to obtain ABI releases. The report explains that 106 of the ABIs that are at issue in a lawsuit filed in August 2014 have been released or are in the process of being declared invalid. Holders of another 24 of these ABIs require some additional litigation. There is a final group of eight ABI holders where the Receiver intends to move them from lawsuits previously filed over to the omnibus lawsuit pending in the Receivership Court that is addressing the validity of the ABIs. A copy of the report can be found here.

January 28, 2015: The court today entered default judgment against Roxanne Wilson, invalidating the $17,163.70 assignment of benefit she had been given on the Autumn Ridge property in Eagle Mountain, Utah. A copy of the judgment can be found here.

January 26, 2015: The Receiver filed a report with the Court today detailing how $1.8 million of funds currently held in the real estate holding account exceed the amounts subject to claims by holders of trust deeds and assignments of beneficial interest. The report indicates that the Receiver intends to transfer that amount to the operating account after 20 days. A copy of the notice and report can be found here.

January 23, 2015: The Securities and Exchange Commission and the Receiver filed notices with the Court, opposing the Motion by Wayne Palmer to use assets in the Receivership Estate to pay attorneys and experts to defend him in the civil lawsuit brought by the SEC. The SEC’s opposition can be found here and the Receiver’s opposition can be found here.

January 23, 2015: The Court issued two additional default judgments today against ABI holders. These defaults are against the Holgate Family Trust and Vetco, Inc., for ABIs on the Autumn Ridge property. The Holgate order can be found here and the Vetco order can be found here.

January 21, 2015: The Court today entered default judgments against six individuals in the litigation by the Receiver seeking invalidation of ABIs. The judgments rule that these ABIs are void, invalid, and of no legal effect. The judgments are against R’Lene Hogan (found here), James Edgar Moss (found here), Pauline Moss (found here), Cherry Ann Redd (found here), Tor Meier (found here), and Jamie Heaton (found here).

January 9, 2015: The Court has approved publication of notice of three planned auctions of property in Minnesota. The orders relate to the following three properties: i) a 4.3 acre lot (lot 2, block 2) which order is linked here, ii) a 3.6 acre lot (lot 2 block 1) which order is linked here, and iii) a 5.1 acre lot (lot 5 block 1) which order is linked here. The Receiver has set an auction date of February 12, 2015. Any bidders that want to submit higher bids must pre-qualify to bid by February 5, 2015. The court orders approving the sales at auction and approving the bid auction procedures for two of the lots can be found here and here.

January 7, 2015: The Receiver filed a motion today seeking permission to conduct an auction to sell the property at 1419 Voll Drive in Byron, Minnesota. The Receiver has received an offer of $235,000.00 for the property and intends to conduct an auction to determine whether any higher offers are made for the property. A copy of the motion can be found here.

January 6, 2015: New attorneys for Wayne Palmer filed a motion today asking the Court to release assets from the Receivership Estate to pay his newly-hired attorneys, to hire expert witnesses, and to pay litigation costs. A copy of Palmer’s motion can be found here.

January 5, 2015: The Court today entered default judgment against David Flynn. The judgment declares his $55,805.26 assignment of beneficial interest in Expressway Business Park “void, invalid, and of no legal effect.” A copy of the judgment can be found here.