SEC v. Walter Ng, et al.
Case No. 13-cv-00895-SC (N.D. Cal.)
On February 28, 2013, the Commission filed a complaint against Walter Ng, Kelly Ng (collectively, the “Ngs”), Bruce Horwitz (“Horwitz”), and The Mortgage Fund, LLC (“Mortgage Fund”), owner and manager of Mortgage Fund ’08 LLC (“MF08”) (collectively, the “Defendants”). The complaint alleged that, from December 2007 to June 2009, the Ngs and Horwitz violated the federal securities laws by luring investors into their real estate fund called MF08 by claiming it was safe and secure and would replicate the success of their earlier real estate fund, R.E. Loans LLC (“R.E. Loans”). In reality, R.E. Loans could no longer make payouts to its investors, so the Ngs funneled millions of dollars from MF08 to prop up R.E. Loans. The Ngs and Horwitz falsely touted both funds' performance in their effort to continue raising money. As a result of this conduct, the Defendants raised more than $85 million from investors primarily living in the San Francisco area. See Complaint.
Walter Ng was not ordered to pay any monetary sanctions, and the remaining Defendants were ordered to pay a total of $5,205,967.00 in disgorgement, prejudgment interest, and civil penalties. The Commission was ordered to hold all funds, together with interest and income earned thereon (collectively, the “Fund”), pending further order of the Court. See Walter Ng’s Final Judgment, Kelly Ng’s Final Judgment, Horwitz’s Final Judgment, and Mortgage Fund’s Final Judgment.
On December 10, 2014, the Commission filed a motion for the creation of fair fund for Horwitz’s payments of totaling $725,342, plus interest earned, and any future funds paid by Kelly Ng or Mortgage Fund (the “Fair Fund”); the appointment of Damasco & Associates LLP, as the Tax Administrator for the Fair Fund; and for transfer of the Fair Fund, after payment of the necessary taxes and expenses of the Tax Administrator, to the Mortgage Fund ’08 Liquidating Trust (“Liquidating Trust”) created by the Joint Chapter 11 Plan in in the In re: Mortgage Fund ’08 LLC, Case No. 11-49803-RLE-11, bankruptcy proceeding so that the Liquidating Trust can distribute the Fair Fund to the MF08 investors harmed as a result of the Defendants’ conduct described in the complaint. See the Commission’s Motion
On February 6, 2015, the Court granted the Commission’s motion and issued an order that established a Fair Fund, appointed Damasco & Associates LLP as the Tax Administrator of the Fair Fund, and transferred funds on deposit with the Commission, after payment of taxes and fees of the Fair Fund, to the Liquidating Trust for distribution to the allowed Class 2 unsecured claimants in accordance with the Joint Chapter 11 Plan. See Order.
For further information regarding these funds, please contact Susan L. Uecker, the Liquidating Trustee in the In re: Mortgage Fund ’08 LLC, Case No. 11-49803-RLE-11 (N.D. Cal.) bankruptcy proceeding:
Susan L. Uecker
100 Pine Street
San Francisco, CA 94111
Telephone Number: 415-362-3440