Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_19-cv-01628/USCOURTS-casd-3_19-cv-01628-6/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:0078m(a) Securities Exchange Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

GINA CHAMPION-CAIN AND ANI 

DEVELOPMENT, LLC,

Defendants, and

AMERICAN NATIONAL 

INVESTMENT, INC.,

Relief Defendant.

Case No.: 3:19-cv-1628-LAB-AHG

ORDER ESTABLISHING UNIFORM 

PROPERTY SALE PROCEDURES

I. BACKGROUND

On August 28, 2019, the Securities and Exchange Commission (“SEC”) brought 

this action against Defendants ANI Development, LLC (“ANI Development”) and Gina 

Champion-Cain and Relief Defendant American National Investments, Inc. (“ANI Inc.”), 

alleging violations of federal securities laws based on a purportedly fraudulent liquor 

license loan scheme. ECF No. 1. Along with the Complaint, the SEC filed a Joint 

Motion and Stipulated Request seeking a preliminary injunction, appointment of a 

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permanent Receiver, and other related relief (ECF No. 2), which the Court granted on 

September 3, 2019. ECF No. 6 (“the Appointment Order”). In the Appointment Order, 

the Court established an equity receivership, appointing Krista Freitag as Receiver of 

ANI Development and ANI Inc. and authorizing her to take control over all funds and 

assets owned, managed, or in the possession or control of the receivership entities. See id.

at 14-16. The Receiver was granted full power over all premises owned, leased, occupied, 

or otherwise controlled by the receivership entities. Id. at 14.

On December 10, 2019, Chief Judge Burns granted the parties’ Joint Motion (ECF 

No. 156) to give limited consent to the undersigned to hear and directly decide all 

motions filed in this action to approve sales of receivership assets. ECF No. 160. 

Pursuant to that grant of authority, on December 11, 2019, the undersigned ordered the

Receiver to file proposed Property Sale Procedures to govern all future sales of 

receivership assets and all ancillary relief sought in connection therewith, for the purpose 

of streamlining the property sale process. ECF No. 164. The Receiver filed her proposed 

Property Sale Procedures on January 3, 2020. ECF No. 195.

The Court permitted objections to the Receiver’s proposal to be filed by January 

10, 2020. ECF No. 164. While no formal objections were filed, interested non-party 

creditor CalPrivate Bank filed a Response to the Receiver’s proposal (ECF No. 205), 

asking that the Sale Procedures include a provision that all property sales are subject to 

CalPrivate Bank’s claim of a priority security interest.1 CalPrivate Bank seeks such a 

provision in the interest of efficiency, to avoid having to repeatedly file responses to each 

proposed sale to preserve its claim. Id. at 2.

 

1 CalPrivate Bank’s claim of a priority security interest arises from a $5 million 

commercial loan it made to ANI License Fund, LLC in September 2015, which was later 

increased to $12.5 million. ECF No. 205 at 4 (citing ECF No. 31-1, Sowers Decl.). 

According to CalPrivate Bank, the loan is secured by agreements between CalPrivate 

Bank and ANI License Fund, LLC and Defendant ANI Development LLC, which grant 

CalPrivate Bank security interests in all their assets. Id.

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Having reviewed the Receiver’s proposal and CalPrivate Bank’s response, the 

Court hereby ORDERS as follows:

II. LEGAL STANDARD

“[I]t is a recognized principle of law that the district court has broad powers and 

wide discretion to determine the appropriate relief in an equity receivership.” SEC v. 

Lincoln Thrift Ass’n, 577 F.2d 600, 606 (9th Cir. 1978). As part of its wide discretion, the 

district court sitting in equity and having custody and control of property “has power to 

order a sale of the same in its discretion. The power of sale necessarily follows the power 

to take control of and to preserve property[.]” SEC v. Am. Capital Investments, Inc., 98 

F.3d 1133, 1144 (9th Cir. 1996), abrogated on other grounds by Steel Co. v. Citizens for a 

Better Env’t, 523 U.S. 83, 93-94 (1998) (quoting 2 Ralph E. Clark, Treatise on Law & 

Practice of Receivers § 482 (3d ed. 1992)). If the court approves an equitable receiver’s 

proposed property sale, the sale “does not . . . purport to convey ‘legal’ title, but rather 

‘good,’ equitable title enforced by an injunction against suit.” Id. (citing 2 Clark, Treatise 

on Law & Practice of Receivers, §§ 342, 344, 482(a), 487, 489, 491). 

“The power of a district court to impose a receivership or grant other forms of 

ancillary relief does not in the first instance depend on a statutory grant of power from the 

securities laws. Rather, the authority derives from the inherent power of a court of equity 

to fashion effective relief.” SEC v. Wencke, 622 F.2d 1363, 1369 (9th Cir. 1980). 

Nonetheless, federal statutes do provide some authority and guidance for courts overseeing 

equity receiverships. In particular, 28 U.S.C. §§ 2001 and 2002 set forth procedural and 

notice requirements for the sale of real property in the possession of a court-appointed 

receiver, while § 2004 governs the sale of personal property.

Pursuant to 28 U.S.C. § 2001(a), realty in the possession of an appointed receiver is 

subject to a public sale process, “upon such terms and conditions as the court directs.”2

 

2 28 U.S.C. § 2001 also provides for a private sale process under subsection (b), but the 

Court’s uniform sale procedures established herein do not anticipate or provide for private 

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Thus, the statute lends great discretion to the Court to direct the terms and conditions of 

the sale. 28 U.S.C. § 2002 creates an additional notice requirement, mandating that prior 

to the sale of any realty in the possession of a court-appointed receiver, notice must be 

published once a week for at least four weeks in at least one newspaper regularly issued 

and of general circulation in the county, state, or judicial district where the realty is located. 

These safeguards of notice and opportunity to submit overbids help to ensure that the sale 

is able to fetch the best price possible, which is consistent with the principle that “a primary 

purpose of equity receiverships is to promote orderly and efficient administration of the 

estate by the district court for the benefit of creditors.” SEC v. Hardy, 803 F.2d 1034, 1038 

(9th Cir. 1986).

As for the sale of personal property, 28 U.S.C. § 2004 also lends the Court great 

discretion in directing sales of personalty, requiring such sales to comply with § 2001 

“unless the court orders otherwise.” The notice requirement of § 2002 governing realty 

sales by the receiver does not apply to sales of personalty. 

III. UNIFORM SALE PROCEDURES GOVERNING SALES OF 

RECEIVERSHIP ASSETS

Because sales of realty and sales of personalty are subject to different requirements,

the Court will issue separate uniform procedures for each type of sale.

A. SALES OF REAL PROPERTY

For all sales of real property included in the receivership estate:

(1) The Receiver must list each property with qualified, licensed real estate 

brokers to market the property to potential buyers. In the proposal, the 

Receiver states that she interviews and assesses multiple brokers before 

determining the listing broker. ECF No. 195 at 2 n.1. The Receiver must 

 

sales. If the Receiver wishes to pursue a private sale of any realty, the Receiver must seek 

give notice to all interested parties and seek a hearing on any such motion to do so in 

accordance with § 2001(b). 

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continue considering at least two brokers before choosing the listing broker 

with respect to each proposed property sale, except if the Receiver has 

previously worked with the same broker to sell receivership property or 

otherwise obtains an excusal of this requirement by the Court. 

(2)As she has done thus far, the Receiver must follow the publication of notice 

and public auction requirements of 28 U.S.C. §§ 2001-2002. Specifically, 

the Court adopts the Receiver’s following proposal for compliance with 

these statutes: 

a. For residential properties, after (1) an offer is received, negotiated 

and determined to be in the best interests of the receivership estate, 

(2) the buyer’s ability to complete the transaction is verified, (3) a 

purchase and sale agreement is signed and earnest money deposited 

into escrow, and (4) the purchaser has removed all contingencies 

(thereby putting their earnest money deposit at risk if they fail to 

complete the transaction3

), the Receiver will file a noticed motion 

seeking Court approval of the sale, subject to overbid. The Receiver 

will publish notice of the sale in a newspaper of general circulation 

in the area in which the property is located for four consecutive 

weeks. The notice will state the deadline and requirements for 

submitting a qualified overbid.

b. For commercial properties, the Court approves the Receiver’s 

proposal that the process may vary slightly from residential 

properties by including a “Call for Offers” date. As is customary in 

commercial transactions, upon execution of a confidentiality 

agreement and access agreement, the broker will make available 

 

3 If the buyer is unable to close because they fail to win the auction or the Court does not 

approve the sale, the buyer’s earnest money deposit will be returned to them.

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certain due diligence materials (including a form purchase and sale 

agreement) for buyer review. Depending on the marketing prospects 

of the property, the Receiver, in consultation with the broker, may 

set a “Call for Offers” date or may wait for offers to be received 

(similar to the marketing process for a residential property). In a Call 

for Offers scenario, once (1) prospective purchasers have completed 

their due diligence and removed all contingencies (thereby putting 

their earnest money deposit at risk if they fail to complete the 

transaction4

), (2) the buyer’s ability to complete the transaction is 

verified, and (3) purchase and sale agreements have been submitted 

for review prior to the Call for Offers deadline, the Receiver will 

review all submitted agreements and select the highest and best 

offer. Thereafter, the Receiver will notify all prospective buyers of 

the highest and best offer, will qualify prospective overbidders (as 

applicable), and upon deposit of the earnest money into escrow by 

the proposed buyer, the Receiver will file a noticed motion seeking 

Court approval of the sale, subject to overbid. The Receiver will 

publish notice of the sale in a newspaper of general circulation in 

the area in which the property is located for four consecutive weeks. 

The notice will state the deadline and requirements for submitting a 

qualified overbid. If, instead of a Call for Offers deadline, the 

Receiver determines, in consultation with the broker, that it would 

be better to wait for offers, the process will be materially similar to 

the residential sale process, except that commercial property 

customary confidentiality agreements and access agreements will 

 

4 If the buyer is unable to close because they fail to win the auction or the Court does not 

approve the sale, the buyer’s earnest money deposit will be returned to them.

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still be required before due diligence information is made available 

to prospective buyers.

c. In all real property sale scenarios, if a qualified overbid is received 

on or before the published deadline and the proposed buyer (with 

highest and best offer) is prepared to continue to bid, the Receiver 

will (1) give notice to the Court that an auction will be conducted, 

and (2) invite all qualified bidders to said auction. Such invitation 

and notice to the Court will include auction instructions for the 

qualified bidders. At the conclusion of the auction, the Receiver will 

file a notice of the highest/winning (and if applicable, backup)5 bid, 

along with an amended proposed order seeking approval of the sale 

to the highest/winning (and if applicable, backup) bidder. If no 

qualified overbids are received on or before the published deadline, 

the Receiver will advise the Court and seek approval of the sale to 

the original proposed buyer.

(3) In all noticed sale motions for real property, the Receiver must include a 

detailed breakdown of the Receiver’s proposed distribution of the sale 

proceeds, except that the Receiver need not propose an exact estimate of 

reasonable and customary costs of sale, such as escrow fees, title 

insurance, and recording fees. If the Receiver is unable to provide a 

specific dollar figure for any portion of the proposed distribution other than 

the costs just described, the notice must explain why a specific proposal 

for that portion of the distribution cannot be made. The proposed 

 

5 If multiple qualified overbids are received, the Receiver will ask the Court to approve the 

highest/winning bid and the next highest/backup bid such that if the highest/winning bidder 

fails to close the sale, the Receiver may proceed to close the sale with the backup bidder 

without delay. 

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distribution must account for every creditor known to the Receiver to have 

a claim of a secured interest in the real property at issue, and must certify 

that Receiver or her counsel have conferred—or attempted to confer—with 

any such creditor prior to filing the noticed motion. If conferral attempts 

were unsuccessful, the Receiver must explain what steps she took to confer 

with such known creditors. The Court will consider waiving the conferral

requirement on a case-by-case basis where expedited approval of a given 

sale is needed and prior conferral is impracticable, but the Receiver must 

file a separate motion seeking such waiver. Creditors (or anyone claiming 

an interest in the property at issue) will be permitted a minimum of seven 

days to object to any motion seeking such waiver.6

(4)With respect to all sales of real property, the Receiver must provide a full 

accounting of sale costs once the sale is complete for the Court to take into 

consideration in approving future real property sales.

Insofar as the uniform sale procedures set forth herein differ from those proposed by 

the Receiver, the Court will offer additional clarity. First, with respect to all noticed sale 

motions, the Receiver proposed a requirement to seek authority to pay the commission for 

the real estate broker (including the buyer’s broker) from the sale proceeds. While the Court 

will not prohibit the Receiver from seeking such authority in noticed sale motions, the 

Court will not require it in its uniform procedures in light of the Court’s December 5, 2019 

Order Authorizing Hiring of Agents and Brokers. See ECF No. 153 (“[T]he Receiver is 

authorized to hire brokers, auctioneers, and similar agents to list, market, and . . . to sell 

such property as she is otherwise authorized to sell. In other words, to the extent the 

Receiver is authorized to sell property, the Court authorizes her to pay the expenses of 

 

6 This waiver process applies only to the conferral requirement, not the requirement that 

the Receiver provide a proposed distribution in every motion for sale of realty.

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selling it.”). Rather, the Receiver may simply include the broker’s commission in her

proposed distribution of sale proceeds. 

Second, as noted above, non-party creditor CalPrivate Bank requested that the Court 

include in its established sales procedures a provision that all property sales are subject to 

CalPrivate Bank’s claim of a priority security interest. ECF No. 205. The Court declines to 

carve out a specific protection for CalPrivate Bank’s claim over the claims of all other 

interested non-parties to this action. However, the Court acknowledges and is sensitive to 

CalPrivate Bank’s desire for efficiency and eliminating the need for CalPrivate Bank (or 

any other creditor) to file responses or objections to noticed sale motions for the purpose 

of preserving its claims. Indeed, the Court has already resolved two realty sale motions 

filed by the Receiver to which interested non-parties initially filed some form of opposition, 

only for such opposition to be withdrawn after conferral between counsel for the Receiver 

and counsel for the responding non-parties confirmed that the interest at issue would be 

protected. See ECF Nos. 84, 124, 132 (concerning the sale of the 4205 Lamont Street 

property); ECF Nos. 100, 131, 141 (concerning the sale of the 1617 Thomas Avenue 

property). The Court’s dual requirements of a proposed distribution of sale proceeds and 

conferral with non-parties known to the Receiver as having a claim of a secured interest in 

a given real property prior to the Receiver’s filing of the motion should cut down on 

unnecessary motion practice. Further, these requirements should result in fewer opposed 

(or seemingly opposed) sale motions, thus permitting the Court to issue quicker rulings. 

B. SALES OF PERSONAL PROPERTY

The Court adopts the Receiver’s proposed personalty sale procedures in full, as 

follows:

As an initial matter, the Court will not require the Receiver to file a noticed motion 

seeking approval of sales of personal property within the receivership estate. The 

requirements of 28 U.S.C. § 2001 are hereby WAIVED pursuant to the Court’s discretion 

set forth in 28 U.S.C. § 2002. However, the Receiver must report on the outcome of all 

personal property sales in her quarterly interim reports.

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The Receiver must follow standard auction procedures through one or more licensed 

auctioneers for sales of personal property and is granted authority to complete such sales. 

As noted above, the Court has already authorized the Receiver to engage auctioneers to sell 

receivership assets. ECF No. 153. Sales of liquor licenses must be approved by the 

California Department of Alcoholic Beverage Control (“ABC”). For liquor licenses that 

are sold to third parties not associated with former restaurant locations, the Receiver is 

authorized to use AAA Liquor License Consulting (“ALLC”) to assist in marketing the 

licenses and negotiating sales. The Court authorizes ALLC to receive the industry standard 

of a 10% commission, to be paid by the buyers.

IV. CONCLUSION

For the reasons explained above, the Receiver’s proposed sale procedures are 

ADOPTED IN PART and REJECTED IN PART. All future sales of receivership assets 

by the Receiver in this action must comply with the Uniform Property Sale Procedures 

established herein, unless excused by order of the Court. If the Receiver seeks relief from 

any of these requirements in a noticed motion, the Court will afford all interested parties 

and non-parties an opportunity to be heard on such motion prior to ruling.

IT IS SO ORDERED.

Dated: January 22, 2020

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