SC 13D/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 1 )*

CRYSTAL RIVER CAPITAL, INC.

(Name of Issuer)

Common Shares, par value $0.001 per share

(Title of Class of Securities)

229393301

(CUSIP Number)

Three World Financial Center
200 Vesey Street, 10^th Floor
New York, NY 10281-1010
(212) 549-8400

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

March 17, 2010

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 229393301  Page 2  of  6 

1	NAMES OF REPORTING PERSONS Laurel Canyon Partners, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a)   o
	(b)   o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Nevada
		7	SOLE VOTING POWER
NUMBER OF			1,580,383
SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0
EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,580,383
WITH		10	SHARED DISPOSITIVE POWER
			0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	1,580,383
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	6.34%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	00 (Limited Liability Company)

CUSIP No. 229393301  Page 3  of  6 

1	NAMES OF REPORTING PERSONS Daniel M. Gottlieb
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a)   o
	(b)   o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS)
	PF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	United States
		7	SOLE VOTING POWER
NUMBER OF			1,580,383
SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0
EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,580,383
WITH		10	SHARED DISPOSITIVE POWER
			0
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	1,580,383
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	6.34%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	IN

CUSIP No. 229393301  Page 4  of  6 

     This Amendment No. 1 (this “Amendment”) to Schedule 13D (the “Schedule 13D”) is being filed with the Securities and Exchange Commission with respect to the shares of common stock, par value $0.001 per share (“Common Stock”), of Crystal River Capital, Inc., a Maryland corporation (the “Issuer”). All capitalized terms contained herein but not otherwise defined shall have the meanings ascribed to such terms in the Schedule 13D.

     The Schedule 13D was filed on behalf of Laurel Canyon Partners, LLC, a Nevada limited liability company (“LC Partners”), and Daniel M. Gottlieb, the sole member and manager of LC Partners. LC Partners and Mr. Gottlieb are sometimes referred to collectively herein as the “Reporting Persons.”

     This Amendment is being filed to amend Items 4 and 7 of the Schedule 13D as set forth below:

Item 4. Purpose of Transaction.

     Item 4 of the Schedule 13D is hereby amended to add the following:

     The Reporting Persons indicated in the Schedule 13D their intention to analyze and consider the alternatives available to maximize the value of their holdings in the Issuer, to discuss with other shareholders and interested parties the proposed merger (the “BAM Merger”) of the Issuer with an affiliate of Brookfield Asset Management, Inc. (“BAM”) and, potentially, to pursue an acquisition of the Issuer. The report by the Issuer on March 17, 2010 of the sale of certain of its assets and other transactions set forth in the Issuer’s Form 8-K filed with the SEC on March 17, 2010 (the “Recent Transactions”), especially in light of the involvement of BAM or its affiliates in the transaction, has caused the Reporting Persons to accelerate their consideration of possible alternatives to the BAM Merger.

     On March 17, 2010, Mr. Gottlieb, on behalf of LC Partners, sent a letter (the “LC Partners Letter”) to the Chairman of the Board of Directors of the Issuer, Rodman L. Drake, stating that LC Partners is prepared to offer to acquire the Issuer in a negotiated all-cash offer merger or other cash transaction at a price of $0.75 per share to the Issuer’s shareholders (the “LC Partners Proposal”).

     The LC Partners Letter states that LC Partners is prepared to enter into a merger agreement to acquire the Issuer based on the same, or substantially the same, representations and warranties from the Issuer as contained in the Merger Agreement among the Issuer, BAM and BAM’s subsidiary, provided that LC Partners and its advisors must be satisfied with the information contained in the “Company Letter” referred to in the Merger Agreement relating to the BAM Merger and that the Recent Transactions are entirely fair to the Issuer and do not detract materially from the value of the Issuer’s remaining business or assets.

     In addition, the LC Partners Letter states that LC Partners wishes not to enter into a standstill agreement with the Issuer, because LC Partners desires to maintain the flexibility to exercise its rights as a shareholder to acquire additional Issuer shares and to communicate with other shareholders who may share LC Partners’ view that the price in the proposed BAM Merger significantly undervalues the Issuer. The LC Partners Letter also requests, as described in more detail in the LC Partners Letter, that the Board of Directors of the Issuer waive or suspend certain limitations on share ownership under the Issuer’s Articles of Amendment and Restatement unrelated to the Issuer’s REIT status in order to permit LC Partners to increase its ownership of Common Stock to up to 15% of the outstanding shares of Common Stock.

     The Reporting Persons believe they and the other shareholders of the Issuer need additional information from the Issuer to fully understand and evaluate the Recent Transactions. In light of this development, LC Partners indicated in the LC Partners Letter that the LC Partners Proposal is conditioned upon the Issuer maintaining the status quo — that is, that the Issuer suspend any pending efforts, and not undertake any new efforts, to sell or dispose of any further assets or rights of the Issuer until the Reporting Persons have had an opportunity to meet with the Board of Directors to seek to negotiate the terms of a merger or other transaction along the lines indicated in the LC Partners Letter.

     LC Partners further asks in the LC Partners Letter to meet with the Board of Directors of the Issuer as soon as possible to discuss the LC Partners Proposal.

CUSIP No. 229393301  Page 5  of  6 

     The foregoing description of the LC Partners Letter is a summary only and is qualified in its entirety by reference to the full text of the LC Partners Letter, which is filed as Exhibit 99.2 to this Amendment and is hereby incorporated herein by reference.

     In connection with the activities described above, the Reporting Persons may communicate with, and express their views to, other persons regarding the Issuer, including, without limitation, other shareholders of the Issuer regarding the subject matter of the LC Partners Letter.

Item 7. Materials to be Filed as Exhibits.

     Item 7 of the Initial 13D is hereby amended and restated in its entirety as follows:

     The following documents are included as exhibits to this Amendment No. 1 to Schedule 13D:

99.1	Joint Filing Agreement among Laurel Canyon Partners, LLC and Daniel M. Gottlieb, dated as of March 4, 2010.
99.2	Letter, dated March 17, 2010, to Rodman L. Drake from Laurel Canyon Partners, LLC.

CUSIP No. 229393301  Page 6  of  6 

Signatures

     After reasonable inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: March 17, 2010

Laurel Canyon Partners, LLC
By:	/s/ Daniel M. Gottlieb
	Daniel M. Gottlieb, Manager
/s/ Daniel M. Gottlieb
Daniel M. Gottlieb
In his individual capacity

EX-99.1

Exhibit 99.1

Joint Filing Agreement

     This joint filing agreement is made and entered into as of this 4^th day of March, 2010 by and among Laurel Canyon Partners, LLC, a Nevada limited liability company (“LC Partners”), and Daniel M. Gottlieb, an individual person and the sole member and sole managing member of LC Partners (“Gottlieb”).

     Reference is made to Rule 13d-1(k). LC Partners and Gottlieb hereby agree that the statement on Schedule 13D dated of even date herewith pertaining to Crystal River Capital, Inc., and to which this agreement is attached as an exhibit, is filed on behalf of each of them.

Laurel Canyon Partners, LLC
By:	/s/ Daniel M. Gottlieb
	Daniel M. Gottlieb
Its:	Managing Member
	/s/ Daniel M. Gottlieb
	Daniel M. Gottlieb,
	In his individual capacity

[Remainder of Page Intentionally Blank]

EX-99.2

Exhibit 99.2

Laurel Canyon Partners, LLC
1503 Abbott Kinney
Venice, California 90291

VIA FACSIMILE AND FEDERAL EXPRESS

March 17, 2010

Rodman L. Drake
Chairman of the Board of Directors
Crystal River Capital, Inc.
Three World Financial Center
200 Vesey Street, 10th Floor
New York, New York 10281

     RE:    Proposed Cash Merger

Dear Mr. Drake:

     As I believe you know from my recent filing on Schedule 13D, my company owns 6.34% of the outstanding common stock of Crystal River Capital, Inc. I believe that, at $0.60 per share, the price to be received by Crystal River shareholders in the proposed merger with Brookfield Asset Management, Inc. does not fully value Crystal River, and am prepared to offer to acquire Crystal River in a negotiated all-cash merger or other cash transaction at a price of $0.75 per share to the Crystal River shareholders.

     My interest in a possible transaction with Crystal River previously was communicated by my financial advisor, Craig Tompkins of Marshall & Stevens, to the Independent Committee’s financial advisor, Steve Hentschel of Broadpoint.Gleacher. Mr. Hentschel requested, among other things, that I demonstrate my financial capacity to acquire Crystal River, which I am glad to do on a confidential basis. Accordingly, I have enclosed a copy of a letter from my private banker, Wells Fargo, verifying my current liquid assets.

     I am prepared to enter into a merger agreement to acquire Crystal River based on the same, or substantially the same, representations and warranties from Crystal River as contained in the current merger agreement among Crystal River, Brookfield and Brookfield’s subsidiary. Mr. Hentschel has stated to Mr. Tompkins that any negotiations with Crystal River would need to be premised on my entering into a confidentiality/standstill agreement with Crystal River. As far as a confidentiality agreement is concerned, I am a long-standing shareholder of Crystal River and very familiar with its recent SEC filings. Assuming that there has been no material adverse change that would be reportable by Crystal River in its upcoming Form 10-K to be filed with the SEC, I believe that I need no non-public information from Crystal River in order to finalize a decision to acquire Crystal River (assuming that the information included in its SEC filings is accurate and complete). Before entering into a merger agreement with Crystal River, however, I and my advisors would need to be satisfied with the “Company Letter” referred to in

Rodman L. Drake
March 17, 2010
Page 2 of 3
 

the Brookfield merger agreement, since it presumably contains exceptions and qualifications to Crystal River’s representations and warranties contained in the Brookfield merger agreement.

     With regard to a possible standstill agreement, I wish to maintain the flexibility to exercise my rights as a shareholder to acquire additional Crystal River shares and to communicate with other shareholders who may share my view that the price in the proposed Brookfield merger significantly undervalues Crystal River. In this regard, I am concerned that Crystal River’s Articles of Amendment and Restatement (the “Crystal River Articles”) may create an uneven playing field that disadvantages my company and other shareholders of Crystal River who would oppose the proposed Brookfield merger or may want to work with other shareholders to undertake an alternative transaction. In particular, the definition of “Person” set forth in Section 6.1 of the Crystal River Articles seems to impose greater limitations on ownership than are required to maintain Crystal River’s tax status as an REIT and to be more akin to an anti-takeover device, because it restricts the formation of shareholder “groups” to solicit proxies or to develop possible alternative transactions. Perversely, this means that someone who has no shares in Crystal River has more flexibility to meet with shareholders and to discuss potential structures than do current Crystal River shareholders.

     As I understand it, Board of Directors has the authority to remedy my concern under Section 4.7 of the Crystal River Articles, which provides, in pertinent part, as follows:

The Board of Directors also may determine that compliance with any restriction or limitation on stock ownership and transfers set forth in Article VI is no longer required for REIT qualification.

     Since the Board already has determined to sell Crystal River and recommend that its shareholders approve the Brookfield merger at a price of $0.60 per share, I ask that the Board of Directors promptly:

• Waive or suspend the provisions of Section 6.1 of the Crystal River Articles that would define a “Person” to include any “group” of Crystal River shareholders within the meaning of Section 13(d) under the Securities Exchange Act of 1934, as amended;

• Otherwise limit the application of Article VI of the Crystal River Articles to the absolute minimum required under the Internal Revenue Code in order to preserve Crystal River’s REIT status; and

• Waive the application of Article VI in order to permit my company to increase its ownership of shares of Crystal River to up to 15% of the outstanding shares.

Rodman L. Drake
March 17, 2010
Page 3 of 3
 

     I also am very concerned about the implications to Crystal River and its shareholders of the sale of assets by Crystal River and other transactions announced in Crystal River’s Form 8-K filed with the SEC earlier today, especially in light of the involvement of Brookfield or its affiliates in the transaction. The Form 8-K, for example, does not disclose the details of any competing bids for the assets involved, describe whether any valuations were obtained in connection with the transactions, how the transactions may pertain to the announced merger with Brookfield, or what role, if any, was played by the Special Committee of the Board in connection with the transaction. Before entering into any agreement to acquire Crystal River, I would need to be satisfied that these recent transactions are entirely fair to Crystal River and do not detract materially from the value of its remaining business or assets.

     I also am disappointed that Crystal River did not contact me about its proposal to sell these assets, even after Mr. Tompkins indicated to Mr. Hentschel that I would be interested in exploring a possible transaction. In light of this development, my offer is conditioned upon Crystal River maintaining the status quo — that is, Crystal River will immediately suspend any pending efforts, and not undertake any new efforts, to sell or dispose of any further assets or rights of Crystal River until I have had an opportunity to meet with the Board of Directors to seek to negotiate the terms of the merger or other transaction along the lines indicated in this letter.

     My advisors and I are available to meet with the Board of Directors as soon as possible to discuss my offer. In the meantime, Mr. Tompkins can be reached at 323-443-5480, and would be happy to discuss with you any questions you might have.

     Please share this letter with the members of the Special Committee of independent directors. Thank you for your time and cooperation, and I look forward to the Board’s response to my requests.

Very truly yours,

 

Daniel M. Gottlieb 

Managing Member
Laurel Canyon Partners, LLC. 

cc: Steve Hentschel
S. Craig Tompkins
Jon Tyras (212-549-8310)
John T. Haggerty (617-523-1231)