Robert Stinson, Jr., et al.
On June 29, 2010, the SEC obtained an order granting a temporary restraining order, asset freeze and other emergency relief against Robert Stinson, Jr. and several entities he controlled. According to the SEC complaint, Stinson and his co-defendants perpetrated an offering fraud and Ponzi scheme in which at least $16 million was raised from more than 140 investors. See https://www.sec.gov/litigation/complaints/2010/comp21584.pdf. The Court also froze the assets of five named relief defendants - Susan L. Stinson, Christine A. Stinson, Michael G. Stinson, Laura Marable and First Commonwealth Service Company.
On September 13, 2010, upon the SEC's motion, the Court established a Receivership Estate and appointed Kamian Schwartzman as Receiver.
By opinion entered on June 20, 2011, and amended order and permanent injunction entered on June 22, 2011, the Court granted the SEC's motion for partial summary judgment, finding that the Defendants violated Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act, Rule 10b-5. On July 1, 2013, the Court entered a revised final judgment against all defendants and relief defendants, ordering the Defendants to pay disgorgement of 14,051,246, and prejudgment interest of $472,726, for a total obligation of $14,523,972.
The Receiver does not expect any further significant collections and has indicated to the Court his intent to wind down the Receivership Estate. By fee petition filed on October 31, 2014, the Receiver asked the Court to award as fees the net balance of the Estate (approximately $423,000). (See Docket Nos. 321 and 322, Receiver's Final Fee Application and Final Status Report.) Later, the Receiver proposed to the Court payment of (approximately) one-third of the net Estate to investors through a "tier" vs. pro-rata approach, with the remainder of the net Estate going to the Receiver as fees. (See Docket No. 330, Receiver's Reply and Letter.) The SEC opposed the Receiver's proposals, alternatively proposing that the net Estate be divided equally between defrauded investors and the Receiver. (See Docket Nos. 324, 329, and 331, Commission Response and Alternative Proposal, Supplemental Memo, and Supplement Memorandum Addressing the Receiver's Proposed Methodology.)
By Order and Memorandum entered on January 8, 2015, the Court accepted the SEC's alternative proposal and ordered a distribution to investors of half of the net Receivership Estate. (See Docket Nos.332 and 333, Memorandum and Order). On January 13, 2015, the Court entered an Order Extending Time and to Show Cause (See Docket No. 334, Order to Show Cause), directing the SEC to submit a distribution plan to the Court by February 27, 2015, and setting procedures by the SEC is to provide notice of the proposed distribution to Investors and interested parties.
On or about January 12, 2015, the SEC sent a letter to all known investors seeking objections to the proposed distribution. On February 27, the SEC filed a final distribution plan (the "Plan"), memorandum, and proposed Order for consideration by the Court. On March 10, the SEC filed an Amended Plan ("Amended Plan"), memorandum, and proposed Order, amending the Plan to add a paragraph, as further explained in the memorandum. The revised distribution schedule attached to both the Plan and the Amended Plan has been adjusted to reflect Estate accretions, and revisions based on documented objections. In anticipation of a distribution, the schedule has further been adjusted to separate investor IRA accounts from their individual accounts. The SEC anticipates that the distributions reflected on the revised schedule will continue to until the filing of a final distribution schedule with the Court.
Related Criminal Proceedings
On November 4, 2010, federal criminal authorities indicted Stinson in a related criminal action, charging him with five counts of wire fraud, four counts of mail fraud, nine counts of money laundering, one count of bank fraud, three counts of filing false tax returns, two counts of obstruction of justice, and two counts of making false statements to federal agents. See USA v. Stinson, 2:10-cr-00724 (E.D. Pa.) (MMB). On August 15, 2011, Stinson pled guilty to all 26 counts of the indictment. By revised judgment filed on December 16, 2013, the Honorable Michael M. Baylson sentenced R. Stinson to 324 months in prison and ordered Stinson to pay full restitution to his victims.