…and so it begins

Has anyone ever played the carnival game Whack-A-Mole?

Now is the time to test your hand at the game.  As you know, Ng apologists are popping up out of the woodwork everywhere.  We’ve seen it on this blog, we’ve seen it on the Google group and we’ve heard rumors of Walter Ng Pearl Tom gearing up to send hand-written letters to investors in an effort to persuade them to accept the plan we should outright reject.

Over the next few weeks, Elliott Abrams and Ms. Tom will be joined by other shills, ambushing us with misinformation about the impending vote.  Members of the Ng hand-selected creditor’s committee represented by Ng-selected attorneys will tell you to vote for the plan.  Don’t be bamboozled by their shenanigans.  Simply pick up the mallet and take a theoretical whack at the mole.

Then send your ballot to AlixPartners.  Vote to “REJECT” the Plan.

 

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81 thoughts on “…and so it begins

  1. Off to mail my NO vote having encouraged everyone I know to do the same. SHOULD THEY BE MAILED REGISTERED MAIL, RETURN RECEIPT REQUESTED? I think I will mail mine in this method.

    • ServeItCold, I sent mine via email yesterday and received a response this afternoon indicating that my ballot had been received. John may know what is best, though I would think your method is likely the most foolproof and verifiable.

  2. John – as i keep asking please point out the misinformation which you claim i am spreading and at the same time how about addressing your “facts” which i have called you upon. Instead you post cute pictures and a bunch of hyperbola playing to the emotions of investors who have suffered severe losses and whose best hope of any recovery is through the plan. This is the usual response where you have nothing. Can you focus on the issures and articulate with specifics how defeating the plan improves the return for investors?

    • Mr. Abrams go back and read “no means No” postings by Monaquesque, May 23, 2012 @ 3:50 pm and Equitatus post of May 24, 2012 (wish someone would post it here under Elliott’s request…please) “The Committee” with the exception of Dixon Collins (really trustworthy person ) was hand picked by the criminals themselves…two people left the committee, one writing a letter to the Judge that something stinks in Denmark and basically could not be part of it all. From my point of view…i have NO FAITH IN THE COMMITTEE. I equate Walter’s committee to that of a murderer choosing a jury of his family and friends.

      • I have read Mr. Abrams post soliciting “Yes” votes for the proposed plan.

        I disagree with many of his statements, which I believe are misleading to you the Investors, the voters.

        By way of background, I tried the McGuire case against Bruce Horwitz last summer.

        Mr. Abrams has not tried a case for or against R.E. Loans, its affiliates or its insiders, or anyone else related to the R.E. Loans and Mortgage Fund ’08 Ponzi scheme fraud.

        If you were at my closing argument in the McGuire case, for example, you know that I proved that Wells Fargo and Greenberg Traurig included the Exchange Agreement as part of the line of credit, which was negotiated in June and July 2007, long before you were asked to vote in October 2007.

        Mr. Abrams has not disproved this fact and he has not proved anything to anybody.

        If you were at my closing argument in the McGuire case, you know that I proved that the Exchange Agreement was “a done deal” because Wells Fargo and Greenberg Traurig included the Exchange Agreement as part of the line of credit, which was negotiated in June and July 2007, long before you were asked to vote in October 2007.

        Mr. Abrams has not disproved this fact and he has not proved anything to anybody.

        If you were at my closing argument in the McGuire case, you know that I proved that Wells Fargo and Greenberg Traurig intentionally “threw all the Investors under the bus” by including the Exchange Agreement in the line of credit agreement, placing the Investors in second position behind Wells Fargo, a subordination which was negotiated in June and July 2007, long before you were asked to vote.

        Mr. Abrams has not disproved this fact and he has not proved anything to anybody.

        As a result of the evidence that I presented to the jury in the McGuire case, and my closing argument, the jury found Bruce Horwitz guilty of breach of fiduciary duty and fraud, 12-0 for each fraud question.

        Mr. Abrams has not disproved this fact and he has not proved anything to a jury or anyone else.

        The facts that I used in the McGuire case are some of the facts that Diamond McCarthy can use against Wells Fargo if the case is converted to Chapter 7 in order to obtain equitable subrogation against Wells fargo, that is, putting Wells Fargo behind you, the Investor, and getting all of the money R.E. Loans paid to Wells Fargo during the line of credit paid back to the estate for you.

        Did Mr. Abrams explain that to you?

        The bottom line is this:

        In representing the McGuires, I put my money where my mouth is.

        In posting to this blog, Mr. Abrams put his mouth where his money is.

        ——————————————————————————————————

        In case anyone missed it, I posted the following on May 20:
        Due to certain rules against solicitation without Court approval, this is all that I can say:
        I am an attorney licensed to practice law in California. I represent several R.E. Loans and Mortgage Fund ’08 investors. I am familiar with the operation of R.E. Loans and Mortgage Fund ’08. I have reconstructed the Ponzi-like transactions between the two funds. I have read the proposed plan of reorganization and the accompanying documents. I have tested Exhibit B, the net cash out transfers after the Exchange Agreement, and determined that, in my opinion, it is not accurate, not reliable and misleading. In my judgment, based upon all of the above, the proposed plan of reorganization does not provide investors in the two funds treatment consistent with their legal entitlement. I further believe that rejection of the proposed plan would most likely lead to a result more favorable to the investors as a whole. I am therefore urging all of my clients to reject the proposed plan.

        • I attended the McGuire trial. Your presentation and knowledge was/is stunning. Each investor should be forced to read what you have posted above…most still do not have a clue the level of fraud and deceit they have suffered and will continue to suffer. Thank you Mr. Brower

    • First, I have the greatest respect for Mr. Abrams as a lawyer with a good education, a distinguished career. However all points of view need to be heard in this debate. We can disagree without being disagreeable. No one will be shouted down.

      Let’s look at the history of the Wells Fargo Trade Off.

      THE COMMITTEE FIRST RECOMMENDED YOU TRADE YOUR RIGHTS AGAINST WELLS FARGO FOR $3,000,000 0R LESS IN THE SECOND AMENDED PLAN

      Mr. Abrams you were wrong to recommend and endorsed the Second Amended Joint Plan (Docket 777). You recommended that noteholders grant a blanket release (giving up all their rights) to Wells Fargo for $3,000.000.

      Oh sure, Wells Fargo retain a lien on any money coming into the estate from lawsuits against third parties, like the Ng’s or their accountants as an offset in the amount of $1,500,000.

      That meant it was even a worse deal. The noteholders were trading off all rights against Wells Fargo for $1,500,000.

      Mr. Abrams you were also wrong, in asserting it was the CLASS ACTIONS CLAIMS that were being settled not those of the individual noteholders claims against Wells Fargo.

      The Plan also provides for a purely voluntary release of claims against the Wells
      Fargo Group, by Holders of Class 8 Claims (Docket 777 page 2)

      http://equitatus.files.wordpress.com/2012/05/2nd-amended-plan.pdf

      Nowhere in the document does it say that it were the class action claims that were being settle as you claim in your posting.

      THE COMMITTEE NOW RECOMMENDS YOU TRADE YOUR RIGHTS AGAINSTWELLS FARGO FOR NOTHING WITH THE SPECTOR OF HAVING THE ESTATE IDEMINFY WELLS FARGO IN THE FOURTH AMENDED PLAN

      Mr. Abrams you have joined the Estate (REL et al) and Wells Fargo in the Fourth Amended Plan (Docket 845) in recommending something worse than the Second Amended Plan, a relinquishment all the estates rights against Wells Fargo. The Wells Fargo Release in set out on page 18 of the Plan (Docket 845) by its terms it releases Wells Fargo from Everything. (Paragraph too large to post here read it here:

      http://equitatus.files.wordpress.com/2012/05/4th-amended-plan.pdf

      Furthermore, aside from the complete Release which the Estate (REL et al) gave Wells Fargo (agreed to by the Creditors Committee) you have allowed them to reserve their right to seek indemnification for legal fees and costs they might incur defending the individual and class actions.

      I respectfully submit the Committee has achieved nothing but a complete capitulation of
      the noteholders rights to the total benefit of Wells Fargo.

      POINT NUMBER 1) ABRAMS POSTING

      You stated:
      If you believe that in exchange for retaining the “estate’s right to sue Wells Fargo (the noteholders retain their individual rights to sue WFB under the plan) the noteholders are better off 1) giving up any possible recovery from the assets;

      I partially agree with you here, the noteholders retain their individual rights to sue WFB under the plan). That is what is being done in the individual actions filed in Contra Costa and the Class Action in Alameda County.

      How would retaining the “estate’s” right to sue Wells Fargo be “giving up any possible recovery from the assets”? This seems a quantum leap in logic. How and under what scenario are the noteholders giving up any possible recovery from the assets? Seems to me if the plan fails the noteholders would be in the same position they were in before it was proposed. Are you really saying that if we don’t give Wells Fargo this that they will work to take away the noteholders right? Or see to it the noteholders get nothing?

      If the Plan fails all the noteholder will be moved into Class 5 Claims, Unsecured Creditors. I have found no exhibit filed in connection with the Plan to tell me who these creditors are and what is the extent of their claim. The only reference I can find is contained in the First Disclosure Statement at page 22 describing the Class 5 Claims as;

      Classes REL 6, REF 5 and CS 5 consist of all General Unsecured Claims against R.E. Loans, R.E. Future and Capital Salvage, respectively, including without limitation all Noteholders’ Unsecured Deficiency Claims. The Debtors believe there are only de minimis

      Mr. Abrams do you believe that if the Plan fails that Wells Fargo, REL or another creditor will move to immediately liquidate everything in a fire sale and there will be less that the 10% promised here? How much less? Personally I don’t believe the 10%.is even real. Even if the plan is approved the Macinak will deliver 5% and claim they did a good job as long as they can shield Wells Fargo, Greenberg and the Ng’s from any liability. Hasn’t that been the Plan all along?

      POINT NUMBER 2) ABRAMS POSTING

      2) running the risk that the “claims” would be subordinated (stand behind in priority of payment) to over $65,000,000 of unsecured claims;

      How can your statement here be reconciled with previous descriptions of General Unsecured Claims as de minmis?

      Since you are privy to all the inside facts who are these $65,000,000 in unsecured claims. Are referring to MF08’s claim?

      POINT NUMBER 3) ABRAMS POSTING

      subjecting the 1000+ noteholders who received distributions after the reorganization to having to defend themselves against lawsuits by the Chapter 7 trustee to recover those distributions rather than receiving the clawback protection proposed in the plan;

      We have beaten this horse to death in the initial blog postings and discussions. You know as I do that any claw back plan will be carefully watched by the Judge with an opportunity to defend right to keep the money.

      Under the Plan if you got all your money out like some of Walters buddies did you are basically immune.

      The 3rd Amended Plan called for even a sweeter deal on those who got all of their money out which might be subject to “claw back”. This clause is in the 4th Amended Disclosure Red Line at page 34 section 7. Liquidating Trustee (c) lets any noteholder that got a complete return of all their money to settle a “clawback” with the Trustee by a onetime cash payment of 5% on the distribution.

      http://equitatus.files.wordpress.com/2012/05/4th-amended-disclosure-redline.pdf

      That means if you were one of the 16 Walter favorites and got out over a million dollars you would pay $50,000.00. This arguably could apply to all the noteholders who got disbursements for the Well Fargo loan when it was initially received and disbursed to friends and family. See Did REL Park Money?

      https://barkinvestors.wordpress.com/2011/02/28/did-re-loans-park-money/

      Again I ask Mr. Abrams why should the 108 people who got between $200,000.00 and over $1,000,000.00 get to keep that if it is legally something they have to return but for the largess of the Committee and REL?

      Mr. Abrams, The way I read Exhibit B is you got $ 331.000.00 from your two trusts. This means if you get an deduction of 50% against what is owed to you in your account,( $989,839,00) less what you withdrew ( $331,000) then you are owed a balance of $658,839.00.

      If REL is right and on $65,000,000 is available for distribution in 2015 and your pro rata share would be calculated as ($650,000,000) The Fund, divided into( $658,839) owed your account. This would give you your pro rata percentage which is.001%.

      Your share of the fund would be calculated as .001% x 65,000,000 = $65,884.00 your share of the 65 million dollar fund. Your final distribution would be taxed x 50% = $32,941.00 .

      You get penalized $32,941.00 against the $331,000.00 distribution you got. Not bad, you settled a $331,000.00 against you for a little less than 10%. I am sure the thousands of remaining investors wish they could do the same.

      I believe settlement of the claw back only “Makes Some Animals More Equal Than Others”

      For the MAJORITY of noteholders giving up the claw back is a bad deal. Taking a pass on collecting $120,000,000.00 which would go back into the fund to be added to the $65,000,000 creates a larger fund of which EVERYONE gets their FAIR SHARE.

      • Thank you so much for this timely post and the time it took from your life to help illuminate under the rocks…and for your brilliant mind.

    • You are a tool who has only the selfish purpose of protecting your own personal ass from claw back liability. How dumb do you think we are/ Don’t answer that question. It would hurt my feelings.

        • That, unfortunately, is just who I do mean. As is clear from both the DSI chart and the Brower analysis of the DSI chart, the Noteholder Committee has pulled a fast one at the last moment by suddenly negotiating immunity from $120 million dollars in clear liability for mr. Abrams and folks like him. Mr. Abrams is a practicing bankruptcy lawyer, not a well respected one, but still someone with a relevant education. All he is doing is protecting himself both by voting his own economic interest on the Noteholders Committee and then reaching out personally to investors to go beyond the authorized communications by the Bankruptcy Court and trying to engage the 99% with lies. The lies are that waiving $120 million in assets is a good deal for the 99%. That is a BIG lie, not a small one. He should be ashamed.

    • In my twice-repeated blog post, I have stated: “I have reconstructed the Ponzi-like transactions between the two funds.”

      Readers of this blog, and readers of the papers that I have filed in the various bankruptcy cases, already know most of these facts. These facts are true and, as I explain below, important in your decision to accept or reject the reorganization plan.

      Here are the fundamental facts concerning my reconstruction of the Ponzi-like transactions between the two funds.

      The MF ’08 – R.E. Loans Ponzi scheme started in early December 2007 when the first investments were made in MF ’08. Those MF ’08 investments were transferred to B-4 Partners and then to R.E. Loans, traceable, dollar for dollar. In that one month of December 2007, MF ’08 transferred more than $11,000,000 from MF ’08 through B-4 Partners to R.E. Loans.

      This Ponzi scheme was kept secret from Wells Fargo and from you, the Investors. MF ’08 investors had no reason to suspect that their money was going to R.E. Loans. R.E. Loans investors had no reason to suspect that R.E. Loans was, and had been, illiquid and that the mangers, Walter Ng and Bruce Horwitz, were running a Ponzi scheme to maintain the “illusion of liquidity” for R.E. Loans.

      Initially, Wells Fargo did not know, but Wells Fargo discovered the Ponzi scheme in early February 2008.

      The transfers from MF ’08 to R.E. Loans were defaults under the revolving line of credit agreement and Wells Fargo had the legal right to declare a default. By declaring a default, Wells Fargo could have shut down the line of credit, giving up the fees and charges that it was making on the loan.

      Instead of declaring the default and shutting down R.E. Loans, however, Wells Fargo worked with Greenberg Traurig to keep R.E. Loans afloat, that is, maintaining the “illusion of liquidity” by covering up the Ponzi scheme. Wells Fargo and Greenberg Traurig negotiated a “solution” for the Ponzi scheme problem.

      By the time their “solution” to the Ponzi scheme problem was agreed to (in March 2008), the Ponzi scheme transfers from MF ’08 to R.E. Loans had surpassed $39,000,000.

      To cover up this significant amount of Ponzi scheme transfers, the Wells Fargo – Greenberg Traurig “solution” originally envisioned that R.E. Loans would “sell” the Austin Val Verde loan, the Peachtree Properties loan and the T&J Development loan to MF ‘08. The “solution” changed the name or character of the transfers from MF ’08 to R.E. Loans. It really wasn’t a Ponzi scheme; the $39,000,000 was just MF ’08 buying three loans from R.E. Loans.

      Walter Ng kyboshed that original “solution” because he had promised Austin Val Verde to Len Epstein and his group, California Capital. (I think the Austin Val Verde transaction was discussed previously on this blog.) In order to complete the three-loan package, Alligator Bay was substituted for Austin Val Verde and the new “solution” for the problem consisted of the “sale” of Peachtree Properties, T&J Development and Alligator Bay.

      In order to accomplish all of this, Wells Fargo agreed to reassign those three loans from its collateral back to R.E. Loans. Transferring them back to R.E. Loans enabled R.E. Loans to transfer the three loans, or “sell” them, to MF ’08.

      Wells Fargo also agreed to backdate the transfers to make the “sales” look legitimate. Backdating the transfers made Wells Fargo an active participant in the cover up of the MF ’08 Ponzi scheme. In turn, R.E. Loans backdated the “sales” to MF ’08.

      There was, however, one significant problem to complete the “solution.” The three loans would be sold at par, but the total amount of money transferred in the Ponzi scheme was not enough to cover the total cost of the “sale.” The “sale” of the three loans at par was $40,220,000, but the Ponzi scheme transfers only totaled $39,423,435.77. To solve this significant problem, Wells Fargo agreed with Greenberg Traurig that MF ’08 would transfer an additional $796,564.23 as part of the Ponzi scheme thereby ensuring that the amount of money transferred in the Ponzi scheme equaled the total cost of the “sale.” The parties agreed that the additional money would be transferred from MF ’08 to R.E. Loans on or before April 1, 2008.

      The last transfer in the MF ’08 – R.E. Loans Ponzi scheme, the additional $796,564.23, was not actually booked into an R.E. Loans account until April 21, 2008.

      Here’s the rub. Everyone knew that these three loans were in default and that the market value of each of the three loans was well below par, that is, less than the face value of the loans. It appears that no one involved cared that the “solution” made MF ’08 grossly overpay for the loans.

      Why are these facts important to you, the voter? MF ’08 has filed a $66,226,496 claim in the R.E. Loans case. If the case is converted to Chapter 7, Diamond McCarthy, the litigation counsel, will be allowed to pursue Wells Fargo and argue that, on these facts, Wells Fargo should pay the $66,226,496 to MF ’08, not you. Keep in mind that but for Wells Fargo agreeing to the “solution” with Greenberg Traurig to cover up the Ponzi scheme, and the apparent lack of independent representation for MF ‘08, the “sale” of the properties at par would never have occurred.

      In the proposed plan, as I understand it, MF ’08 gets approximately $5,000,000 from you and a claim for $66,226,496 less than the value of all the properties transferred from R.E. Loans to MF ’08. All of that is your money. Since these “sales” to MF ’08 exist solely as a result of Wells Fargo’s misconduct, why are you, the Investors, paying everything and Wells Fargo paying absolutely nothing?

      Frankly, in my opinion, this part of the proposed reorganization plan is very unfair.

      This is a set of fundamental facts weighing strongly in favor of rejecting the proposed plan and in support of conversion to Chapter 7. Rejecting the proposed plan will allow litigation counsel to do their job and sue Wells Fargo.

      • I should have added that the $66,226,496 claim includes the $40,220,000 Ponzi scheme. The rest of the MF ’08 claim involves other dishonest schemes that Walter Ng and Bruce Horwitz used to transfer an additional $26,000,000 from MF ’08 to R.E. Loans after the Ponzi scheme was discovered and “solved” with the three-loan “sale.” Those additional schemes are not discussed in this post. They, however, do not change my analysis or my opinion that a Chapter 7 conversion would open the door for litigation counsel to do their job.

      • It sounds like MF08 has a strong case against the bank. I have a couple of questions regarding WFF issues:
        1. Why isn’t the MF08 trustee already suing the bank?
        2. The REL class action is pursuing the bank for aiding and abetting; does Diamond McCarthy feel the REL estate has a claim against the bank too? What is it? Issues that I have read about, that the WFF line of credit was taken on without our knowledge and approval; that our interests were subordinated in July 2007 without our consent, seem like class action claims too. Is there an REL estate claim against the bank?

        • In response to your questions:

          1. The MF ’08 liquidating trustee is getting up to speed. I met with Mr. Brinkman, who was in charge before the plan was confirmed, and he had the entire MF ’08 side of the story but no part of the R.E. Loans side of the story. Without both sides of the story, it is virtually impossible to reconstruct the Ponzi scheme. The liquidating trustee will obtain all the facts and then determine, using a cost/benefit analysis, if it is worth suing Wells Fargo. The fundamental facts that I posted earlier are simple, straightforward and true. The cost of litigation might be low and the benefit to the MF ’08 investors substantial.

          2. There is a fine line between the claims available to the class action plaintiffs and the claims available to the R.E. Loans estate. Recently Judge Houser, the R.E. Loans bankruptcy judge in Dallas, ruled that the class action plaintiffs’ Second Amended Complaint against Wells Fargo and Greenberg Traurig did not cross the line and authorized the class action case to proceed in Alameda County. It is my understanding that there was a deadline for the Committee counsel, Diamond McCarthy, to file a Complaint against Wells Fargo on behalf of the R.E. Loans estate. The Complaint was not filed so that case is dead unless the plan is not confirmed. If so, Diamond McCarthy will have 10 days to file. The theory of the R.E. Loans estate case against Wells fargo is confidential, protected by the attorney client privilege. We can make an educated guess about the theory of the case based upon usual claims in a case like this, for example, equitable subrogation forcing Wells Fargo out of first position, but that would still be a guess.

        • Claim is for indemnity for $66 million claim against REL by MF 08, which $66 million claim Wells Fargo aided and abetted then existing management of REL in causing REL to incur same by way of their Ponzi-scheme fraud on MF 08 which Ponzi-scheme became known to Wells Fargo but was intentionally not stopped by Wells Fargo’s immediately declaring a default on the REL line of credit as of February 2008.

    • Calling Mr. Abrams a liar is not name calling as truth is a defense. Also, Mr. Abrams is violating the law by soliciting yes votes. He sent the Noteholder Committee letter out, which had court approval. His doing more is not allowed, and he knows it.

        • For that you need a lawyer to complain to the bankruptcy judge as the Noteholder’s Committee will undoubtedly do to try and silence you.

          • Mr. Robie, this may help you understand what you can do (tell the truth) and what Mr. Abrams cannot do (tell lies that go even further beyond the Committee lies):

            The court has reviewed applicable case law and concurs generally . . . that [11 U.S.C.] § 1125 does not prohibit solicitation of rejections of a plan [without prior bankruptcy court approval] once a disclosure statement has been approved [and disseminated].
            . . .
            The court also agrees that a prior restraint on speech—even commercial speech—would ordinarily be offensive to the First Amendment of the Constitution.
            . . .
            Solicitation of rejections of a plan of reorganization through the use of misleading or counterfactual materials [however] is commercial speech not entitled to First Amendment protection and does not constitute good faith solicitation within the meaning of [11 U.S.C.] § 1125(e).

            Excerpt from In re Mirant, 334 B.R. 787, 792-94 (N.D. Tex 2005) (all non-statutory citations omitted).

    • We have all been injured by the Ng Crime Syndicate and do not drink the cool aid of the hand picked Official Committee that has messed up this pile of dung and done a rotten job. Go back and read the postings of Brower and Equitatus who are most likely the only two who truly know the intestines of this deceit and case…please I urge you as one that has lost nearly two million dollars…don’t let them lure you with their lies.

      • In its post, the Committee challenges my statement: “In my judgment, based upon all of the above, the proposed plan of reorganization does not provide investors in the two funds treatment consistent with their legal entitlement. I further believe that rejection of the proposed plan would most likely lead to a result more favorable to the investors as a whole.”

        The central question is this: Will the investors as a whole recover more under the proposed plan, which liquidates the portfolio of loans slowly over 3-4 years, compared to a conversion to Chapter 7, maintaining the estate’s right to sue Wells Fargo and the trustee’s right to claw back?

        The data concerning recovery under the proposed plan’s slow liquidation of the portfolio is in the disclosure statement. You should have received a copy in the mail.

        Under the proposed plan, the plan proponents estimate that the net recovery in 2015 will between $36.4 million and $63.6 million. (Disclosure Statement, page 84.) Using $800 million as the total investment in R.E. Loans, this will give each investor a net future recovery between 4.6 cents and 8 cents on the dollar.

        The Disclosure Statement makes it clear that this recovery under the proposed plan is not guaranteed. There is also a realistic recovery of 0 cents on your dollar. (Disclosure Statement, page 84-85.)

        I know that some investors have stated that they are tired of revictimization and they want this nightmare to be over this year. To get a speedy recovery, they intend to vote to accept the proposed plan. But the proposed plan is not speedy; it envisions payments to investors, if any, in 2015 (or 2016).

        I cannot find any information in the Disclosure Statement concerning the projected net recovery if the case is converted to Chapter 7, maintaining the estate’s right to sue Wells Fargo and the trustee’s right to claw back. The section entitled, “Alternatives to Confirmation of the Plan,” on page 94 is silent about the potential value of the Wells Fargo litigation and the potential value of the claw back.

        I have previously posted my view that the potential value of the Wells Fargo litigation should not be looked at in isolation. The class action against Wells Fargo is pending in Alameda County. By my count, there are four law firms prosecuting the class action case for the investors. Based upon the facts that I previously posted here, Mortgage Fund ’08 has a good case against Wells Fargo for covering up the $40 million plus Ponzi scheme. A third case, by the estate, would put Wells Fargo in a tough position.

        The combined potential value of the litigation against Wells Fargo would approach $1 billion.

        The potential for claw back, increasing the recovery for all investors, is not large compared to recovery from litigation against Wells Fargo. The Committee’s statement that there are more than 1,000 investors that would be pursued by a trustee for claw back is a gross exaggeration.

        The problem with an analysis of the potential value of claw back is Exhibit B. I have previously posted my reconstruction for the claw back related to the Committee members’ withdrawals, which was provided to the Bankruptcy Court by DSI. I concluded that Exhibit B is not reliable, not accurate and misleading.

        I have reconstructed other accounts, confirming, in my view, that Exhibit B is essentially worthless. I believe that the person who prepared Exhibit B did understand the mathematics of claw back.

        I moved to California in 1968 to teach mathematics at the College Preparatory School in Oakland. Any student in any of my Freshman Algebra classes could have done a better job.

        I have read the Committee’s posts to this blog. Nothing in those posts change my opinion: “In my judgment, based upon all of the above, the proposed plan of reorganization does not provide investors in the two funds treatment consistent with their legal entitlement. I further believe that rejection of the proposed plan would most likely lead to a result more favorable to the investors as a whole.”

        • Mr. Brower—

          A few points in response:

          First, why do you think Noteholders would receive distributions faster in litigation with Wells Fargo than through liquidation of the real estate? Commercial litigation can easily take two years to go to trial, and any appeal will extend for years beyond that. Conversely, the Plan requires Wells Fargo to be paid by September 2013, after which further proceeds from the real estate can be distributed to Noteholders and other creditors.

          Second, you are correct that projected recoveries on the real estate are uncertain; however, so are potential recoveries on the Wells Fargo litigation. What happens to Noteholders if the chapter 7 trustee sues Wells Fargo and is unsuccessful, or elects to compromise those claims for a nominal sum? Have you done an assessment of the validity of the real estate protections compared to the likelihood of success on the Wells Fargo litigation? As you know, the Committee has taken discovery against Wells Fargo and its advisors have performed a detailed analysis of potential claims and causes of action the estate could pursue against Wells Fargo.

          Third, under what legal theory do you believe Wells Fargo could be held liable for the entire amount of investors losses such that Wells Fargo’s exposure could reach as high as $1 billion (particularly considering most investors were already fully invested in RE Loans prior to Wells Fargo’s involvement)?

          I would be glad to discuss these points with you in more detail; however, I do not believe it would be appropriate to discuss details of potential litigation with Wells Fargo (particularly the third point above) in a public forum that is probably monitored closely by Wells Fargo. However, I would welcome your phone call to discuss these points further.

          Regards,

          Michael P. Cooley

          • Here are a few facts Mr. Cooley is not anxious to address:
            1. Akin Gump represents Wells Fargo and the Official Committee of Noteholders and has never addressed how it can ethically advise the Noteholders to release Wells Fargo in light of this conflict. The conflict itself was never mentioned to the Official Committee of Noteholders but was of sufficient concern to Akin Gump it asked for a received an internal ethics opinion saying it could have both clients at the same time.
            Akin Gump has refused to make any further disclosure of the nature of its conflict under Rule 2014, Rules of Bankruptcy Procedure, despite multiple requests that it do so.
            2. Jeff Krause was once a partner in Akin Gump and was the head of Akin Gump’s West Coast bankruptcy practice. That connection is how Akin Gump was first recommended to act for the Ad Hoc Committee of Noteholders. Jeff Krause, who just left Stutman Treister & Glatt is/was the attorney for REL at a time when it was controlled by the Ngs and then stayed on as the attorney for the Debtors.
            3. Neither Akin Gump nor Stutman Treister can/will likely be paid any money for their post-petition legal services if no Plan is confirmed.
            4. None of Akin Gump nor Stutman Treister have made any attempt to explain why the $120 million in claw backs is supposedly uncollectible. The truth is many folks got literally millions of dollars put right back in their 401k plans and there is no reason to think they then went out and lost their money again in some other
            witless scheme.
            5. The Official Committee of Noteholders got a full and fair opportunity to make their case to each Noteholder for why a “yes” vote was the correct way to vote, and that letter from the Official Committee of Noteholders was then vetted by the bankruptcy court and sent out. Now suddenly, because Akin Gump sees that the lies and half-truths it put in the letter are not convincing anyone, Akin Gump is desperately trying to salvage its legal fees by having Mr. Cooley, the junior partner (not Mr. Gibbs, the senior partner) resort to blogging to tell additional lies and half truths the bankruptcy judge would never have approved to try and get Akin Gump paid. Mr. Gibbs and Mr. Cooley are fighting to stay employed, i.e., they worry they will lose their jobs if they lose their fee in this case. They are not objective and their “advice” is not worth the blog it is written on.

          • Well, at least we all know they are fixated on our blog. First the “Official Committee of Noteholders” came on and posted a couple extremely disorganized posts that didn’t make much sense, trying to go toe to toe with Equitatus and Mr. Brower. That was more fun than watching my dog try to catch flies. Then their savior comes on with “As counsel to the Committee, my firm is fully aware of the responses posted to this public forum by the Committee, and we were fully involved in preparing the responses and confirming the accuracy of the statements contained in them. The Committee’s responses on this blog were approved by the Committee in accordance with its bylaws, and it is our view that those responses are in full compliance with the requirements imposed by the Bankruptcy Code and other applicable law.” The only thing that accomplished was getting the creditors committee off the hook. If Mr. Cooley and his firm actually participated in the preparation of those posts they should be embarrassed, and they know it. Then Mr. Cooley decides it’s time to try another strategy and start all over ” where I can reply to it in pieces?” That went over like a bad hair day…

            Oh, and then there was his part about “extending the olive branch.” He can extend the whole darn tree but it won’t do any good at this late date. Save the olives for their martinis that they are going to need.

            One more thing, as mentioned by Mr. Cooley: “in a public forum that is probably monitored closely by Wells Fargo.” If Wells Fargo joins in the chat, maybe Mr. Stumpf himself would stop by and say hi. (I posted some non-flattering articles about them earlier.) After that, the only one missing would be Jimmie Weissenberger and crew. I’m sure Jimmie has seen his job/money/life-as-he-knows-it flash in front of his face more than once. He may need to spend some of our $560/hour updating his resume. The Ng apologists aren’t much different than the Ngs themselves posting. Drinking too much kool aid can cause delusions and forgetfulness though, so they probably won’t be back. I apologize if I have left out anyone from their “Dream Team.”

          • Actually, I’ll be glad to address those points, Mr. Blank. Most, if not all of them, have been addressed before.

            1. This was one of Bill McGrane’s theories, and a simple check would show it to be unfounded. To be clear, we do not represent Wells Fargo; the concept of an “internal ethics opinion” is a figment of Mr. McGrane’s imagination. Akin Gump has an indirect “connection” to Wells Fargo in that it represents an entity that serves as special servicer for a commercial mortgage back securities trust of which Wells Fargo is the trustee. The existence of that “connection” to Wells Fargo was disclosed to the Court in Akin Gump’s retention application, and was disclosed to the Committee at the outset of the case when we made it clear that Akin Gump has no conflict that would prevent it from suing Wells Fargo.

            2. True, but what relevance is it? Attorneys, like other people, change firms not infrequently.

            3. Also true. Frankly, that’s a risk that bankruptcy professionals face in many cases. The fact that we face that risk in this case is not unusual. If you think we would engage in unethical conduct on that basis (or any basis, for that matter), you do not know us.

            4. The Committee has previously explained its position on the merits of the clawback claims, including in its court-approved solicitation letter. To summarize:

            Over 1,000 Noteholders received distributions from RE Loans. Of those, 824 received distributions in excess of $10,000. As Mr. Brower notes in his May 26 post, “R.E. Loans investors had no reason to suspect that R.E. Loans was, and had been, illiquid.” It is our belief that the vast majority of the 1,000 Noteholders who received distributions did so innocently.

            Regardless, the Committee believes that claims to avoid and recover pre-bankruptcy distributions as fraudulent transfers (other than those paid to actual insiders) would be difficult to prove and collect. Somewhat oversimplified, a fraudulent transfer must be both “for less than reasonably equivalent value” and made at a time the company was insolvent.

            * First, if the Noteholders hold valid notes against RE Loans (and we believe they do), then the case law says that any distribution paid in partial satisfaction of the obligation created by that note is “reasonably equivalent value” and, therefore, not a fraudulent transfer.

            * Second, if the Noteholders’ notes are avoided and disallowed and the Noteholders are restored to their former states as equity holders, then RE Loans may be rendered technically solvent again (because $810 million in Noteholder debt will have been eliminated). Again, no fraudulent transfer.

            * Alternatively, if you view the distributions as “improper” distributions made in violation of the California LLC Act (which is McGrane’s theory), California law protects a member from having to return an improper distribution if the member had no actual knowledge of facts indicating its impropriety. It is our belief that the vast majority of investors (other than insiders) were likely wholly ignorant of RE Loans’ true financial condition. Therefore, we believe this is a losing argument, too.

            * Finally, even if you assume that a trustee could successfully obtain judgment against a Noteholder, many of the Noteholders who received distributions have no means to repay the money. Many Noteholders withdrew money at regular intervals for living expenses or other designate purposes. A judgment is worthless if the person against whom it is obtained has no assets to pay it.

            5. This makes no sense. You acknowledge the Committee’s letter was vetted by the bankruptcy court, but then argue that it’s full of “lies and half-truths.” Are you suggesting the Court is somehow complicit in these alleged lies? Consider this: If the letter was presented to the Court for review and approval (and it was), doesn’t it seem more likely that the Committee’s letter is in fact truthful? As for my statements on this blog, if you check, I think you’ll find their entirely consistent with the statements made in the Committee’s court-approved letter to Noteholders.

            Your comments seem largely premised on the notion that I and my firm, and other professionals in this case, are unethical and interested only in serving our own interests. That is a tragically jaded view, and one for which you will find no support. Your anger at what the Ngs have done to you is both warranted and understandable. Your ad hominem attacks against people you don’t know, however, are not.

            I hope you will join us for the Noteholder call on Monday afternoon.

            Regards,

            Michael P. Cooley

          • Mr. Cooley,
            Investments in REL were not due untl 2012. A few investors seem to have made a run on the fund in early 2007 (leading to the WFF loan in the first place) and continued to withdraw vast sums until REL stopped distributing in 2008.
            If Barney Ng’s 2010 letter and Doc 779 are correct, it appears 3 investor families took in excess of $30 million from REL. Excluding insiders Horwitz and the Ngs, the same documents show a dozen investors collectively taking another $30 million.
            The Plan’s provision for a 5% clawback of closed accounts is both laughable and offensive to people like my husband who was not even allowed his full RMD in 2008.
            The Plan you and the committee helped construct ties the hands of any trustee willing to pursue wealthy investors who received a return of their principal when many of us were denied the interest on ours.
            Please do not equate interest payments or RMD distributions with those massive withdrawals of principal made by major players with an inside track. While 824 investors may have gotten more than $10,000 each, it would appear that a couple dozen got in excess of $60 million in 2007-08 (approximately $32 million of it after 11/1/2007).
            Powerful investors ravaged REL and left the rest of us holding the bag. The Plan does not remedy this situation; perhaps a Chapter 7 trustee can.

          • The Committee’s letter was approved by the bankruptcy court only because no one apparently bothered to object to it. Not because the bankruptcy court was somehow complicit in its content. Stop wrapping yourself in the flag Mr. Cooley as It fools no one.

            The lies and half truths in that letter include the fact the letter made no effort to explain the prejudice/conflict of interest the majority of the voting members of the Committee had in negotiating the very late coming claw back waiver, i.e., that they were themselves on the wrong end of millions of dollars in potential liability for claw backs and did not want a Liquidating Trustee to have even the possibility of coming after them for that money.

            You are telling additional lies by suggesting the Committee doesn’t think claw back liability is real. REL was insolvent on 11/1/2007, which is why claw back liability exists. Insolvency is apparent because REL’s assets had their value greatly overstated in the 11/1/2007 financial statements plus there was not enough money left to redeem/service the $750,000,000 in debt created on 11/1/2007 anyway. Which is why MF 08’s money was almost immediately taken from those new MF 08 investors and used to pay REL investors in classic Ponzi scheme fashion.

            Also, if claw back liability adds nothing to the asset base available to the REL estate to pay creditors then a Liquidating Trustee will not pursue it. But, giving the lie to your theory that claw back liability is not real, that’s not good enough for the Committee.

            No, the Committee exists, as things turn out, for only one purpose. To protect its insider members and their families and friends, who are all afraid they may have to give something back. Dixon Collins has sat through all the meetings and he voted no on the Plan for just that reason.

            The folks who were just victims get nothing while the insiders get to keep everything. That is the essence of your so-called Plan, Mr. Cooley. And, as you admit, you need to get your Plan confirmed or you don’t get paid and maybe then you get to “change firms not infrequently.” Or work out of your garage in this job market.

            I don’t need to know a rat to smell a rat. And you are a rat the size of a Shetland Pony. Ad hominem, that’s Latin isn’t it? What is the Latin for big rat? Ratus Shetlanis?

          • I want to address the relationship between Wells Fargo and Akin Gump separately from the above.

            First, whatever else is true, Akin Gump disclosed an attorney-client relationship between itself and Wells Fargo Capital Finance, LLC when it applied to be employed by the bankruptcy court. That is the exact same Wells entity which made a loan to REL.

            When DSI made an issue out of the fact the elaborate pitch materials Akin Gump used to get the Committee to hire it made no mention of the connection between Wells Fargo Capital Finance LLC and Akin Gump, Akin Gump threatened to sue the by then resigned Committee member who had made the pitch materials public. Ask Deb Kurtin about how she felt about being threatened by Akin Gump.

            DSI then asked Akin Gump to file a Rule 2014 supplement giving more details about the nature of its connection to Wells Fargo Capital Finance. Akin Gump refused. And Akin Gump still refuses.

            It is all very well and good to go out on the internet and post a blog that says something like the fact Akin Gump got an internal ethics opinion to justify its dual representation of Wells Fargo Capital Finance and the Committee is a figment of someone’s imagination. You are not under oath when you do this.

            It is quite another thing to file a pleading subject to Rule 7011 and say what Mr. Cooley just said on the internet. That you can get in trouble for when you lie.

            Here is my main point.

            Akin Gump was so conflicted vis a vis Wells Fargo Capital Finance it went out and hired a whole different law firm, Diamond McCarthy, to investigate Wells Fargo Capital Finance. That law firm, being honest, recommended that the Debtor’s estate sue Wells Fargo Capital Finance.

            Recognizing this would mean Chapter 7, which would also mean the claw back liability would come crashing down on the majority of the voting members of the Committee who face millions of dollars in such claw back liability, Diamond McCarthy’s recommendation to sue was ignored by the Committee. The Committee instead voted to give Wells Fargo Capital Finance a full release. Such a broad release, by the way, that Wells will predictably use it to try and beat up the class action plaintiffs as well.

            All of this is corrupt. It is selling out the victims in order to protect the insiders who knew enough to get out of Dodge while the getting was good. Akin Gump is part of this and its refusal to file a Rule 2014 supplement proves that fact as much as anything else does.

            Akin Gump is not worth listening to. That is the real bottom line here.

          • VOTE NO EVERYONE AND SPREAD THE VERBAL WORD TO THOSE THAT DO NOT SEE OR USE THIS FORUM.

          • Michael P. Cooley, Akin Gump, Official Committee of Noteholders:

            Wow Mr. Cooley, you’re out there taking the heat for your pals all by your lonesome, on a blog no less, where you are not welcome and have .0001% chance of changing anyone’s mind. It’s not only what you say but what you DON’T say that expunges any credibility you might have had that sinks your ship. Let’s see if you are just as friendly AFTER the vote, if y’all don’t implode. Too little too late. Period.

            Regards,

            Rose Mary

          • The following fee applications for January 1, 2012 through April 30, 2012, were filed in the R.E. Loans Bankruptcy case on last Thursday, May 31, 2012.

            The documents are posted on the Informational Website. They are nos. 893 – 898.

            https://www.reloansllc-info.com/CourtFilings.aspx

            You can download them and read them for yourself.

            The R.E. Loans’ attorneys and consultants have requested fees and expenses as follows:

            Stutman, lead counsel in LA: $1,445,516.74
            Gardere, co-counsel in Dallas: $371,734.23
            Hines, litigation counsel in Costa Mesa: $290,381.36
            Mackinac, Restructuring Consultants: $1,621,456.23

            The Committee attorneys and consultants have requested fees and expenses as follows:

            Akin Gump, lead counsel in Dallas: $1,145,309.86
            FTI, financial consultants: $404,284.07

            Total, three-month fees and expenses: $5,278,682.49

          • “Total, three-month fees and expenses: $5,278,682.49″

            Jan. 1 through April 30 = 4 months.

            Still a barrel full of money.

          • Pigs at the troth courtesy of Walte Ng & company, Master Criminals. VOTE NO.

          • AlixPartners, I presume. If someone has the info at the ready, please feel free to share.
            Sent on the Sprint® Now Network from my BlackBerry®

          • MF 08 Investor – According to Michael Cooley, the MF ’08 plan was already voted on and accepted. Sounds like if you didn’t receive your ballot, you’re not alone. Shenanigans. That’s why we can’t trust these votes despite the fact that they are being controlled by an alleged third party. I wish I could say this is unbelievable, but it’s not. After the exchange agreement vote, nothing is unbelievable.

          • The MF08 case is an entirely separate case. Another law firm represented the company in bankruptcy, and an entirely separate committee of MF08 investors served as the official committee in that case.

            Michael Cooley

          • I never received a ballot (or two) as I have 2 MF 08 accounts worth approx 1% of the total of MF08. Is there a place I can read about the settlement?

          • MF08 Investor–

            If you email me at mcooley@akingump.com, I’ll be glad to send you a copy of the RE Loans plan and disclosure statement, which describe the settlement reached between MF08 and RE Loans.

            Michael Cooley

          • REPOST

            A paltry $25 mil?? Better than $.05 on the dollar. VOTE NO!! DON’T LET THEM SPIN YOU ON THE PHONE. This blog has rebutted every argument they have made, and then some, in writing. Anybody can “say” anything on a phone. It doesn’t make it true. They have well prepared their carefully crafted answers.

            http://www.buffalonews.com/city/police-courts/courts/article859714.ece

            Rose Mary
            June 4, 2012 at 11:00 am
            Reply

      • Michael P. Cooley,

        Your post was addressed to Equitatus, but I would like to comment as I wrote the first email to you. Thank you for responding. With the VOTE date quickly approaching us, it is distrustful and insincere that you, in representation of your firm, and the committee magically appear to ‘help’ us understand once again. I am an investor who has lost everything, much more than money; a FACT you and the committee cannot possibly grasp, obviously. If you could, and had the investors best interests in mind from the beginning,
        you would never have agreed to this “Plan,” let alone endorse it. Many HUNDREDS of investors are in the same position and worse. The committee threw us under the bus long ago. Many of us were crushed, injured and broken. They left us there to bleed to death. Never even threw us a bandaid. Some of our investors have literally passed from this life. Therefore, many of us are not interested in having “productive” discussions with you or the committee. Save it for the court room. I am not surprised that you have asked for a “fresh post removed from the confusion of the replies on this one.” We are not confused—are you? This seems to me you are asking us to dust under the rug all of our posts and information that is clearly relevant to the investors, and start “fresh” so we can focus on what YOU have to say. Won’t work. If you want discussions with the investors, start your own blog and anyone with questions to you or the committee can go there. If it were not for OUR blog, we would have never heard a peep out of you or the committee. You and the committee thought you had it in the bag up until the last several days that our blog has reached a fever pitch. I can’t even come up with an adjective for your duplicity that at contains more than four letters. Trust is not bought with dollars; it is earned. Tick Tock Tick Tock….

        Best Regards,

        Rose Mary

        OFFICIAL INVESTOR

          • Follow up:

            GMI Ratings Governance Issue | Wells Fargo & Company
            GMI Ratings | May 30, 2012, 4:56 PM | 10 |

            Read more: http://www3.gmiratings.com/2012/05/gmi-ratings-governance-issue-wells-fargo-company/?utm_source=rss&utm_medium=rss&utm_campaign=gmi-ratings-governance-issue-wells-fargo-company#ixzz1wP9pC4rd

            The recent lawsuits against Wells Fargo are one red flag among various others that contribute to an F on the firm’s corporate governance. Its financial statements reflect an AGR score of 6, indicating higher risk than 94% of companies. That’s an improvement from an AGR of 1 in June 2010.

            CEO Stumpf said on Wells Fargo’s website that the firm’s progress on its “vision and values” has not been perfect. He also said companies are made up of human beings. They make mistakes, admit them, learn from them, and then keep moving forward with even more understanding. “We learn just as much from failure (perhaps more) as we do from success,” he said.

            Given that exemplary attitude, it’s interesting that Wells Fargo continues to deny the allegations Memphis and Shelby made. The company could indeed be innocent, but by settling and avoiding a protracted set of questions, they gave up their golden opportunity to learn whether the court also agrees.

            Region: North America
            Industry: Financials
            Sector: Banks
            Market Cap: $ 177,006.7mm (Large Cap)

            ESG Rating: F
            AGR: Very Aggressive (6)

            Read more posts on GMI Ratings »

    • I was confused on what it means to have my comment yellow lined with “Your comment is awaiting moderation” I also find it interesting that some members complain when the posts try to explain the other side. I thought the purpose of a BLOG was to facilitate dialogue,and to help each individual investor make a decision based on the facts of our terrible situation.

      • Richard – We’re trying to expose the truth behind the scams. We’re tying to maximize our return. We are opinionated and on this issue of accept vs. reject we’ve made our position extremely clear. We believe the best hope for OUR future is to reject the plan. If you want to undermine the recovery efforts of the 99% extoll the virtues of the Ngs, Bruce, the Creditor’s Committee, Akin Gump, Wells Fargo, Greenberg Traurig, Mary Anne Lerch, or anyone else who you believe to be above-board, feel free to start your own blog, where you are entitled to as many of your own opinions as you like.

  3. After intially posting Mr. Brower’s comments, on

    http://equitatus.wordpress.com/2012/05/20/all-animals-are-equal-but-some-animals-are-more-equal-than-others/

    I did some more research on the creditors committee and found that Sherratt Riecher didn’t just get the $295,500.00 distribution as reported in Exhibit 3 Hugh Ray Declaration.

    A company he controls, MCG Investments

    http://equitatus.files.wordpress.com/2012/05/mcg-investments.pdf

    MCG got $1,59,937,37.

    http://equitatus.files.wordpress.com/2012/05/pages-from-exhibits-to-2nd-amended-disclosure-higlighted.pdf

  4. FROM THE OFFICIAL COMMITTEE OF NOTEHOLDERS:

    Equitatus’s misunderstanding of the Plan is stunning. Equitatus—if you truly want to help Noteholders to understand the Plan, please contact counsel for the Committee directly to discuss these issues. Otherwise, your insistence on continuing to mislead Noteholders can only be viewed as deliberate.

    To answer investor questions about the plan and related materials, and to clear up any remaining confusion about the relative benefits to Noteholders of supporting the Plan and the consequences for Noteholders if the Plan is not approved by the Court, the Committee invites all Noteholders to participate in a telephonic conference on June 4, 2011 at 1:00pm PT. You will receive a letter in the mail shortly with the particulars on how to participate in the call and submit questions to the Committee and its advisors.

    The balance of this post is intended to respond to some of the more egregious statements made on the blog in the last several days.

    IN RESPONSE TO EQUITATUS’S REPLY (May 25, 2012)

    CLAIM: “THE COMMITTEE FIRST RECOMMENDED YOU TRADE YOUR RIGHTS AGAINST WELLS FARGO FOR $3,000,000 0R LESS IN THE SECOND AMENDED PLAN.”

    FACT. The Committee never endorsed the earlier versions of the Plan. Respectfully, anyone who says differently is misinformed or lying. In fact, from the start, the Committee vigorously and vocally opposed the proposed $3 million (really $1.5 million) payment in exchange for a release of individual Noteholder claims against Wells Fargo, and it was ultimately take out of the Plan.

    There are TWO types of claims against Wells Fargo: claims that the NOTEHOLDERS can assert against Wells Fargo, and claims that RE LOANS can assert against Wells Fargo. The former are being pursued in the pending class action and in certain individual lawsuits, and can NOT be released absent the direct consent of each Noteholder. The latter (the claims of RE Loans) have always been proposed to be released under the Plan in exchange for Wells Fargo’s willingness to extend necessary financing to confirm a plan in this case.

    Unfortunately, there is no third option that would permit us to both confirm a plan and preserve the Debtors’ claims against Wells Fargo. The only way we could “have our cake and eat it, too” would be to find a new lender to replace Wells Fargo. Then—and only then—could we preserve both the real estate and the Wells Fargo claims AND insulate Noteholders from further litigation. The Committee worked for months to find a new lender to replace Wells Fargo, and was ultimately unsuccessful.

    As a result, the choices are:

    (1) The Plan is approved and Wells Fargo is released, but the real estate value is preserved and ALL Noteholders are insulated from further litigation by DSI, MF08 and the Liquidating Trustee, OR

    (2) The Plan fails and a chapter 7 trustee may (or may not) sue Wells Fargo, but the real estate value is lost and ALL Noteholders face exposure to being sued by DSI, MF08, and the Liquidating Trustee.

    CLAIM: “Nowhere in the document does it say that it were the class action claims that were being settle as you claim in your posting.”

    FACT: Actually, it does. On page 16 of the Second Amended Plan [Docket No. 777], the “Voluntary Third-Party Release” is defined as “the release of the Wells Fargo Group by any HOLDER OF A CLAIM.” That means Noteholders. Compare that to the “Wells Fargo Release” later on the same page, in which it is the Debtors who release Wells Fargo. Two different releases.

    CLAIM: “I respectfully submit the Committee has achieved nothing but a complete capitulation of
the noteholders rights to the total benefit of Wells Fargo.”

    FACT: Equitatus is entitled to his opinion, but his opinion does not mesh with the facts. By endorsing the Plan, the Committee would (i) preserve class action claims against Wells Fargo and all other litigation against all other “bad actors,” (ii) preserve the value of the real estate, and (iii) insulate Noteholders from the very real threat of being individually sued by DSI, MF08 or the Liquidating Trustee. The price of that was the release of the Debtors’ claims against Wells Fargo.

    QUESTION: “This seems a quantum leap in logic. How and under what scenario are the noteholders giving up any possible recovery from the assets? ”

    ANSWER: If the plan fails and the case converts to chapter 7, a trustee will be appointed. By statute, that trustee has no authority to operate the business, and no money to operate it. Therefore, his most likely course (in our counsel’s experience) will be to immediately sell the assets, resulting in substantially lower sale prices than would be achieved otherwise. The fact that the real estate will sell for substantially less means Noteholders will have given up any recovery in those assets.

    CLAIM: “If the Plan fails all the noteholder will be moved into Class 5 Claims, Unsecured Creditors.“

    FACT: This is false. If the Plan fails, the Noteholders will continue to be holders of secured notes junior to Wells Fargo, but senior to general unsecured creditors. However, the Noteholders will be exposed to potential litigation from the chapter 7 trustee, who will have the right to challenge the Noteholder claims as DSI has done. In chapter 7, the committee will not exist to defend the Noteholders, and the Noteholders will have to hire their own lawyers to defend themselves. If the trustee prevails, Noteholders could be subordinated to all unsecured creditors and paid—if at all—only after all other creditors have been paid in full.

    QUESTION: “Mr. Abrams do you believe that if the Plan fails that Wells Fargo, REL or another creditor will move to immediately liquidate everything in a fire sale and there will be less that the 10% promised here?”

    ANSWER: That is exactly what is likely to occur. Plus, Noteholders will face the risk of litigation from the trustee and MF08.

    QUESTION: “Since you are privy to all the inside facts who are these $65,000,000 in unsecured claims. Are referring to MF08’s claim?”

    ANSWER: Yes. The MF08 claim makes up the vast majority of that total. DSI also asserts a claim in the amount of nearly $1 million and climbing. The remaining unsecured claims are small.

    CLAIM: “You know as I do that any claw back plan will be carefully watched by the Judge with an opportunity to defend right to keep the money.”

    FACT: This is a baseless assumption. While Noteholders who are sued for the recovery of old distributions will have the right to defend themselves, in a chapter 7 they will have to hire attorneys at their own cost to defend themselves. Moreover, these claims will be asserted in the bankruptcy court in Texas, not California. Whether the Plan is approved or not, clawback claims against “bad actors” such as the Ng family are preserved. As for the 1,000 noteholders who received distributions, their only guarantee of protection against litigation is if the Plan is approved.

    CLAIM: “Taking a pass on collecting $120,000,000.00 which would go back into the fund to be added to the $65,000,000 creates a larger fund of which EVERYONE gets their FAIR SHARE.”

    FACT: That assumes that the $120 million could actually be collected. The Committee’s assessment is that the likelihood that a trustee could successfully clawback funds from Noteholders (other than the “bad actor” insiders) is very low. As a result, we believe that very little would actually be recovered and added to “the fund.” However, that will not save Noteholders from the expense of hiring lawyers to defend themselves. This is in large part why the Committee formulated and endorsed the compromise of clawback claims.

    DO NOT VOTE YOUR CLAIM BASED ON FALSE OR MISLEADING STATEMENTS. Consider the facts. Consider what will happen if the Plan fails. We encourage all Noteholders to carefully review the materials they received, attend the Committee’s upcoming conference call, and send in their ballots.

    • The fact these folks are now going beyond their court approved letter and making these statements without even telling the 99% about the multi-million dollar exposure for claw backs their majority has shows how worried they are that, now that the truth is staring everyone in the face, they (the Noteholders’ Committee) is going to lose this election. Who does the Noteholders’ Committee really speak for? No one but themselves.

      • Yea, I agree with the others here stating this “official comm of noteholder” all of sudden decides to chime in after all these months…highly suspicious!! Now you decide to “defend” the Ng’s and their cohorts, you’re all crooks in my books! I think in fact, this official comm of noteholder” is most likely with the legal team against the investors! But keep up your dirty work because in the end, the investors will prevail! I’m not even an investor but have been following this blog for sometime.

        VOTE “NO” EVERYONE! REJECT THE PLAN! CHANGE YOUR VOTE IF YOU PICKED “YES” TO “NO, NO, NO”. YOU HAVE THE TIME, USE IT WISELY AND QUICKLY!

      • I have emailed this letter to the Creditors Committee legal firm, followed by copies of their posts.

        Michael P. Cooley

        AKIN GUMP STRAUSS HAUER & FELD LLP

        1700 Pacific Avenue | Suite 4100 | Dallas, TX 75201-4624 | USA | Direct: +1 214.969.2723 | Internal: 12723
        Fax: +1 214.969.4343 | Mobile: +1 214.497.9584 | mcooley@akingump.com | akingump.com | Bio

        Mr. Cooley,

        As representing Counsel, please advise the R.E. Loans Creditors Committee to STOP soliciting “YES” votes on our blog https://barkinvestors.wordpress.com/. If they felt it so necessary to inform us of their upcoming telephonic conference they could have done so and ended there. Their group criticism of our professionals and ourselves is totally inappropriate and not welcome on our forum. We would appreciate it if you could have them control themselves, and stay within the confines of the law. Perhaps to amuse them, take them on a field trip to see some of our nations Federal Prisons.

        Sincerely,

        Rose Mary

        OFFICIAL INVESTOR

        • To Rose Mary (and the other RE Loans investors on this blog):

          My firm is counsel to the Official Committee of Noteholders of R.E. Loans, LLC. The Committee was formed by the United States Trustee (a component of the Department of Justice) to represent the interests of Noteholders in the R.E. Loans chapter 11 case.

          As counsel to the Committee, my firm is fully aware of the responses posted to this public forum by the Committee, and we were fully involved in preparing the responses and confirming the accuracy of the statements contained in them. The Committee’s responses on this blog were approved by the Committee in accordance with its bylaws, and it is our view that those responses are in full compliance with the requirements imposed by the Bankruptcy Code and other applicable law.

          Regards,

          Michael P. Cooley
          Counsel to the Official Committee of Noteholders

          • Dear Mr.Cooley,

            It is so nice to have someone close to the noteholders money who answers back publically all these years, bravo ! Thanks for stepping up to the plate.

            First, I am not trying to persuade noteholders to vote for or against the plan. I am merely exercising my right to free speech and fair public comment in order to foster discussion and interject humor in a tragic situation.

            I for one want to give you and Mr. Abrams or any other committee member equal time and discuss these issues in a civil and productive way.

            The majority of noteholders have not been privy to all of the discussion between you and REL’s attorneys. Nor have they been able to attend court hearings in the case due to the fact REL, and Wells Fargo conspired to file the bankruptcy in Texas to avoid closer scrutiny by the noteholders who predominantly live in the San Francisco Bay Area.

            This doesn’t engender trust. What have you been doing to create trust between the committee and the noteholders making everyone sign secrecy agreements, driving several members off the committee?

            Why hold your cards tight to your chest and ask the noteholder to “just trust me”

            Your almost total lack of communication with the noteholders and taking them for granted has contributed a great degree to the overall mistrust evidence in these conversations.

            Calling people liars and accusing them of intentionally misleading people will not carry the day. Would you be allowed to do that in a courtroom?

            I for one will admit it if I am wrong, as I have done so below.

            “THE COMMITTEE FIRST RECOMMENDED YOU TRADE YOUR RIGHTS AGAINST WELLS FARGO FOR $3,000,000 0R LESS IN THE SECOND AMENDED PLAN”

            This may have been an assumption on my part. I assumed that before any plan was run up the flag pole by REL counsel that they would have discussed it with you, and that you would have told him that such a provision was a “non starter”.

            I have noted your filing of an objection to the plan in docket 579 which indicates that you were engaged in discussions with the debtor and that there continued to be discussions.

            But why spend all the noteholders money on attorney’s fees on 4 different versions of a plan each of which gives away rights against Wells Fargo and let the claw back violators keep their millions?

            Wouldn’t the time and money been better spent getting the parties together in a room and agreeing on a plan? You were always on the defensive and never really challenge REL or DSI by drawing a line in the sand. You just fell back an punted. Each time saying this is as good as they will give us.

            Thank you for the discussion on noteholders individual rights against Wells Fargo and the funds rights against Wells Fargo. I think that people now understand that the class action and individual actions are pursuing the former and that you are recommending giving up the latter.

            CLAIM: “Nowhere in the document does it say that it were the class action claims that were being settle as you claim in your posting.”

            You are right I was wrong. I also note that the Class Action attorneys that filed a written objection to this part of the Plan, docket 671 with a suggested letter to the noteholders which explains a lot more than the committee ever has.

            CLAIM: “I respectfully submit the Committee has achieved nothing but a complete capitulation of
the noteholders rights to the total benefit of Wells Fargo.”

            FACT: … By endorsing the Plan, the Committee would (i) preserve class action claims against Wells Fargo and all other litigation against all other “bad actors,” (ii) preserve the value of the real estate, and (iii) insulate Noteholders from the very real threat of being individually sued by DSI, MF08 or the Liquidating Trustee. The price of that was the release of the Debtors’ claims against Wells Fargo.

            REXAMINATION: (i) The Plan cannot preserve or take away the individual rights noteholders have against Wells Fargo. They are outside of what the Bankruptcy court has power over. They are California State law claims. You did nothing to preserve the class claims and are doing nothing but helping give away the estates claims against Wells Fargo. (ii) preserve the value of the real estate that won’t be worth much more over the relatively short life of the plan. However the professionals will increase their own wealth while servicing the property. (iii) Fear. DSI is a paper tiger. Seems to me that both judges in Texas and California have got McGrane’s number. What has he been successful at besides stirring the pot?

            MF08? Did they get value for their security interest in REL.? Please read Robert Brower’s analysis of MF08 claim.

            CLAIM: “If the Plan fails all the noteholder will be moved into Class 5 Claims, Unsecured Creditors.“

            FACT: This is false. If the Plan fails, the Noteholders will continue to be holders of secured notes junior to Wells Fargo, but senior to general unsecured creditors. However, the Noteholders will be exposed to potential litigation from the chapter 7 trustee, who will have the right to challenge the Noteholder claims as DSI has done
            . In chapter 7, the committee will not exist to defend the Noteholders, and the Noteholders will have to hire their own lawyers to defend themselves. If the trustee prevails, Noteholders could be subordinated to all unsecured creditors and paid—if at all—only after all other creditors have been paid in full.

            REXAMINATION

            Page 26 of the Plan states in part;

            Subordination Alternative Will Apply if REL Class 8 Rejects the Plan

            (d) If REL Class 8 votes to reject the Plan, then the Debtors shall seek
            to subordinate the Allowed REL Class 8 Claims (including the Noteholder Claims) to all Class 5 General Unsecured Claims.

            How you can accurately predict what a chapter 7 trustee will do. Why hasn’t the creditors committee stood up to DSI and challenge his actions against the noteholders?

            QUESTION: “Since you are privy to all the inside facts who are these $65,000,000 in unsecured claims. Are referring to MF08’s claim?”

            ANSWER: Yes. The MF08 claim makes up the vast majority of that total. DSI also asserts a claim in the amount of nearly $1 million and climbing. The remaining unsecured claims are small…

            REXAMINATION: Thank you for the answer. DSI’s claim seems small potatoes. $1mil.
            Robert Brower has examined the strength of MFO8 claim in relation to Wells Fargo. It bears repeating here;

            By Robert Brower
            “Why are these facts important to you, the voter? MF ’08 has filed a $66,226,496 claim in the R.E. Loans case. If the case is converted to Chapter 7, Diamond McCarthy, the litigation counsel, will be allowed to pursue Wells Fargo and argue that, on these facts, Wells Fargo should pay the $66,226,496 to MF ’08, not you. Keep in mind that but for Wells Fargo agreeing to the “solution” with Greenberg Traurig to cover up the Ponzi scheme, and the apparent lack of independent representation for MF ‘08, the “sale” of the properties at par would never have occurred.

            In the proposed plan, as I understand it, MF ’08 gets approximately $5,000,000 from you and a claim for $66,226,496 less than the value of all the properties transferred from R.E. Loans to MF ’08. All of that is your money. Since these “sales” to MF ’08 exist solely as a result of Wells Fargo’s misconduct, why are you, the Investors, paying everything and Wells Fargo paying absolutely nothing?

            Frankly, in my opinion, this part of the proposed reorganization plan is very unfair.

            This is a set of fundamental facts weighing strongly in favor of rejecting the proposed plan and in support of conversion to Chapter 7. Rejecting the proposed plan will allow litigation counsel to do their job and sue Wells Fargo.”

            –Robert Brower

            CLAIM: “You know as I do that any claw back plan will be carefully watched by the Judge with an opportunity to defend right to keep the money.”

            FACT: This is a baseless assumption. While Noteholders who are sued for the recovery of old distributions will have the right to defend themselves, in a chapter 7 they will have to hire attorneys at their own cost to defend themselves. Moreover, these claims will be asserted in the bankruptcy court in Texas, not California.

            REXAMINATION: I don’t know why you or Mr. Abrams haven’t yet addressed the real issue which is who this plan favors. First, how about the conflict of interest which committee members have who are able to retain and avoid a “claw back”

            See: http://equitatus.wordpress.com/2012/05/20/all-animals-are-equal-but-some-animals-are-more-equal-than-others/
            Abrams, Fong, Blue, Reicher, Rapp have a $5,000,000.00 conflict of interest. There were 824 not a 1,000 noteholders as you suggest, right?

            All questionable disbursements totaled 113 million dollars, not including the favored family bunch who got their money from the loan funding date to the restructuring date.

            .308 people got disbursement between 100K$ and over 1 million dollars. A very small minority 10% benefit greatly by this plan. If I was them I would vote for it. But what about the other 90% who got little or no disbursements?

            Please address the issue of a conflict of interests having the committee members support the claw back as structured.

            Please address the inequity in the plan which allows 308 people to keep millions and give back very little.

            Please address the scope of the money damages that the estate and noteholders have against Wells Fargo that you are giving up.

            Please indicate what advise Diamond McCarthy gave the committee on the suit against Wells Fargo.

            Good luck on the conference call. Remember control the conversation.

            Will it be recorded and transcribed?

            Lets continue the dialog.

    • FROM AN OFFICIAL NOTEHOLDER

      Oy vey.

      ” your insistence on continuing to mislead Noteholders can only be viewed as deliberate.”
      Is that a threat?

      “and to clear up any remaining confusion about the relative benefits to Noteholders of supporting the Plan”
      The only confusion here is whether or not this is soliciting for a yes vote, and confusion in your own heads how else you are going to spin us so you can keep your “insider” money.

      “and the consequences for Noteholders if the Plan is not approved by the Court,”
      Stop the fear mongering.

      “Wells Fargo’s willingness to extend necessary financing to confirm a plan in this case”
      How thoughtful.

      “could we preserve both the real estate,” ” but the real estate value is preserved,”(now that a mighty big BUT), “preserve the value of the real estate,” “The fact that the real estate will sell for substantially less”

      I am not going to copy every time you said this bunk. Do you think if you say it enough times we will believe it? I don’t care WHAT the real estate is worth. There will be nothing left for us as you well know. Wells Fargo is in first place.

      “(1) The Plan is approved and Wells Fargo is released,”
      Do you really think we would vote to let these crooks off the hook? You underestimate us, again.

      “and ALL Noteholders are insulated from further litigation by DSI, MF08 and the Liquidating Trustee,”
      Stop the fear mongering.

      “(2) The Plan fails and a chapter 7 trustee may (or may not) sue Wells Fargo”
      We will take our chances.

      “Equitatus is entitled to his opinion”
      Then retract your statement above in the first paragraph stating he is deliberately misleading us.

      ” and all other litigation against all other “bad actors,”
      When you point a finger at someone else, there are 3 more point back at yourself. Get it?

      “If the Plan fails, the Noteholders will continue to be holders of secured notes junior to Wells Fargo”
      If the Plan passes the Noteholders will STILL be junior to Wells Fargo. Trying to pull a fast one here?

      “In chapter 7, the committee will not exist to defend the Noteholders,”
      And good riddance!

      “Noteholders could be subordinated to all unsecured creditors and paid—if at all—only after all other creditors have been paid in full.”
      Stop the fear mongering.

      “Noteholders will face the risk of litigation from the trustee and MF08.”
      Stop the fear mongering.

      “these claims will be asserted in the bankruptcy court in Texas, not California.”
      Whose fault is that?? YOU did not do your due diligence and sat on your thumbs until it was too late. Had you done your job the REL bk would have been brought back to CA. Whose side were you really on? Another feather in your cap. Stop the fear mongering.

      FACT: That assumes that the $120 million could actually be collected. The Committee’s assessment is that the likelihood that a trustee could successfully clawback funds from Noteholders (other than the “bad actor” insiders) is very low”
      You are not “good actors.” You might want to rethink this.

      “While Noteholders who are sued for the recovery of old distributions will have the right to defend themselves, in a chapter 7 they will have to hire attorneys at their own cost to defend themselves.” “As for the 1,000 noteholders who received distributions, their only guarantee of protection against litigation is if the Plan is approved”

      As in, YOU want protection against litigation to save your own arse. Cute how you call them “old distributions.” You can afford your defense at your own cost. Some of you are high up on the “big money list. Sheesh.

      As a result, we believe that very little would actually be recovered and added to “the fund.”
      Were you drinking when you wrote this? Take a real good look at that insider payout list again.

      We have been over this stuff with a microscope 100 times. Go away. Your efforts are futile. Stay off our blog. Solicit your “yes” votes somewhere else.

      P.S. You quoted Robert Brower, but didn’t name him. Leave him alone too. You don’t deserve utter a word he has said out of your lying mouths.

      GO AWAY, for God’s sake. There will be a few Ng apologists participting in your telephonic conference. I am sending copies of your posts to your legal team. They need to be aware. Just want to make sure they stand by what you are saying.

  5. Equitatus–

    Thank you for your posting last night. You appear to be extending an olive branch, which I accept. All we’re looking for is a productive discussion, based in fact and law, designed to help Noteholders understand what faces them in the coming vote. I would like to respond to some of your questions, but it may be easier to do so in a fresh post, removed from the confusion of the replies in this one. Could you transfer your reply to a fresh post, where I can reply to it in pieces?

    Also, we have information for Noteholders on how to access Monday’s conference call, which I would like to post to this blog, if possible. Please contact me at mcooley@akingump.com or 214-969-2723 to discuss how we can best present this information to help the Noteholders.

    Regards,

    Michael P. Cooley

  6. The advantage of Chapter 7 and a Trustee is that you have wrestled management away from the bad guys and onto someone neutral who is compensated based upon distributions to creditors. The Trustee can do just as the Plan proposes, or something different, and may have alternative sources of recovery that the current regime does not wish to pursue.

    Little downside at this point IMO.

  7. Still have not received any ballot or info in the mail despite having 2 MF 08 accounts. Does anyone know who I need to contact to get my packets?

  8. Looking at these documents i see no phone number for Alix Partners, LLP, 2010 Cedar Springs Road, Suite1100, Dallas, Texas 75201 . EMAIL TO: reloansballots@alixpartners.com and request documents.

    Why not give Michael Cooley is supposed to be working for you/us…call him at 214-969-2723 and ask him where are your voting papers. A vote NOT received is taken as a YES. Don’t let him seduce you…just ask for the documents and vote NO.

    Another person has indicated that he received NO documents…wonder how many they left out…convenient!

  9. If you are an MF08 investor, you would not receive this ballot package. The voting currently going on is with respect to the RE Loans plan, and would have been mailed to Noteholders of RE loans–not Noteholders of MF08. The balloting on MF08’s plan was completed (and the plan was confirmed) a few months ago.

    If, however, you are actually an RE loans Noteholder and did not receive a package, then yes–you should contact AlixPartners at the address noted above.

    Michael Cooley

  10. Can we see the settlement reached between MF08 and RE Loans? Why is it not available so all of the investors can read it?

    • The settlement agreement was filed on June 1 and it is posted on the court documents website. It is document number 907.

      The final version of the settlement agreement recites that $66,226,496 was transferred from MF ’08 to R.E. Loans between December 2007 and August 2008 and that MF ’08 claims that it can sue any investor who obtained a distribution during that time period to get its money back. R.E. Loans claims that the transfers are not traceable to any investor and that, except for insiders, all of the investors have a complete defense to any such lawsuit.

      The settlement gives MF ’08 a general unsecured claim for $66,226,496. This means that MF ’08 will get two claims under the plan. First, MF ’08 will have a pro rata share in the $5,000,000 paid to general unsecured creditors, a Class 5 payment that will precede any payment to the investors. It is estimated that MF ’08 will receive something close to $5,000,000. Second, MF ’08 will have a Class 8 claim of $66,226,496, payable pro rata when, and if, the investors receive any payment.

      In addition, MF ’08 will have a seat on the trust oversight committee of the Liquidating Trust.

      What does this mean to you? If you received a distribution between December 2007 and August 2008, you will not be asked to give it back to MF ’08 or give it back to R.E. Loans as a claw back. For example, Tyler and Elizabeth Hofinga, Bruce Horwitz’s friends and neighbors, will not have to worry about giving back any of the $630,000 that they withdrew in August 2008. If you did not receive a distribution during that time frame, your pro rata recovery as a member of Class 8 will be reduced because the pool is enlarged by the MF ’08 claim.

      You can confirm my view of the settlement agreement by downloading and reading documents 905 and 907.

      • Mr. Brower (and Mr. Cooley)
        I have 2 questions.
        1. I thought the claim of MF08 was going to be reduced by the value of the assets it got from REL. Did that change?
        2. I see a “modified” fourth amended plan was also filed June 1 (Doc 905). What was “modified” in that filing from the plan document we were mailed in May?

        • Question No. 1: Yes, that has changed. The MF ’08 claim will not be reduced by the value of the assets it received from R.E. Loans.

          Question No. 2: I do not have a red line copy of the plan indicating the changes, but it appears to me that the modification reflects the change in the MF ’08 settlement agreement.

          • Regarding Question No. 2, document 906 is a red line version. There are some important changes concerning reservation of rights against Insiders, the refusal to have Insiders claims “deemed” Allowed, and other matters.

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