Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-02164/USCOURTS-casd-3_12-cv-02164-39/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:0077 Securities Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

LOUIS V. SCHOOLER and FIRST 

FINANCIAL PLANNING 

CORPORATION d/b/a WESTERN 

FINANCIAL PLANNING 

CORPORATION,

Defendants.

Case No. 3:12-cv-02164-GPC-JMA

ORDER APPROVING:

SALE OF HONEY SPRINGS 

PROPERTY AND AUTHORIZING

RECEIVER TO PAY BROKER'S 

COMMISSION

[ECF No. 1430] 

Before the Court is the Receiver’s Motion for Approval of Sale of Honey 

Springs Property and Authority to Pay Broker’s Commissions (“Motion”). ECF No. 

1430. No opposition was filed. Based upon a review of the moving papers and the 

applicable law, the Court GRANTS the Receiver’s motion. 

/ / / /

/ / / / 

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BACKGROUND

A. The SEC Enforcement Action 

On January 21, 2016, the Court granted the SEC’s motion for final judgment 

against Defendant Louis V. Schooler. ECF No. 1170. The SEC had initiated this 

civil action against Defendant Schooler and Western Financial Planning Corporation 

(“Western”) four years earlier, on account of their practice of defrauding investors 

into purchasing unregistered securities. Id. (citing Second Summary Judgment 

Order, ECF No. 1081). To carry out the scheme, Defendant Western bought 

undeveloped real estate, with cash or through financing, and simultaneously formed

one or more General Partnerships (“GPs”) to own the land. First Summary 

Judgment Order, ECF No. 1074 at 10. Western then sold General Partnership units 

to investors and sold the undeveloped real estate to the General Partnerships. Id. at 

10. In total, Western raised approximately $153 million from almost 3,400 

investors through implementing this scheme. Id. 

B. The Decline of the General Partnership Assets

In 2013, the Court-appointed Receiver, Thomas Hebrank, engaged licensed 

appraisers to value the 23 properties owned by the General Partnerships. ECF No. 

203 at 2. Those professionals determined that the land was worth $16,328,000 and 

that the net appraised value (appraised value less outstanding balances on all 

mortgages) of the properties was $12,860,661. Id. The net appraised value 

represented just 8.41% of the total funds that the general partners had invested in the 

land. Id. The Receiver further estimated that, based on the then-current appraised 

values of the land, the average GP investor would suffer an 88.40% loss if the GP 

properties were sold in 2013. Id.

Three years later, soon after final judgment was entered, the Receiver moved 

for authority to conduct an Orderly Sale of the General Partnership Properties 

(“Orderly Sale”). Motion for Orderly Sale, ECF No. 1181-1. In the Motion, the 

Receiver indicated that the aggregate value in the GP accounts had been steadily 

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decreasing while litigation was ongoing. See id. In September 2012, the 

Receivership had assets of $6.6 million. Id. at 1. By the end of 2015, the assets had 

dropped to $3.5 million, and the Receiver had reason to believe that the value of the 

Receivership would continue to drastically decrease through the end of 2016.

1

 This 

decline, he noted, was due to three main factors: (1) 14 of the 23 properties were not 

appreciating in value2; (2) the properties were not worth enough to cover the costs of

the GPs carrying the properties; and (3) low levels of investor contributions to pay 

GP administrator fees, tax preparation fees, property taxes, property insurance 

premiums, and notes owed to Western. See id. at 1-2. In other words, the Receiver 

concluded, because the money being spent to hold the GP properties was 

disproportionately high in relation to the value of the GP’s real estate assets, the 

Receivership was in a steady decline. Id. 

In order to prevent the value of the Receivership from falling into further 

decline, the Receiver proposed that the GP properties be sold in accordance with 

Court-approved orderly sale procedures. Id. The Receiver’s proposal explained that 

the best way to maximize the value of all of the GP assets for the benefit of all 

investors, irrespective of any given investors’ direct property interest, was to initiate 

an orderly sale of the GP properties. Id. The Receiver estimated that the 

Receivership, after conducting sales of the GP properties, Western’s properties and

asset recovery, would be worth $21,804,826. Id. at 16. 

C. The Receiver’s Motion for Orderly Sale

On May 20, 2016, the Court held a hearing on the Receiver’s Motion for 

Orderly Sale, at which time the Court heard from the SEC, Defendant, the Receiver,

and the investor-interveners — that is, those investors who were granted permission 

 

1 The Receiver provided the Court with projections that the Receivership would further decline to 

$1.8 million by the end of 2016. Indeed, the Receiver’s projection has since proved to be 

accurate. The Eighteenth Interim Status Report submitted by the Receiver indicates that the 

Receivership’s current cash balance is $1,546,447. ECF No. 1441 at 20.

2 By way of example, the Receiver notes that the value of these 14 properties in 2016, $3,732,815, 

was about $400,000 less than their value in 2013, $4,137,000. Id. at 2. 

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under Rule 23 to intervene to oppose the Receiver’s Motion. See ECF No. 1298. A 

short time thereafter, on May 25, 2016, the Court approved, in part, the Receiver’s 

Orderly Sale process.3 ECF No. 1304. 

In approving the Orderly Sale, the Court addressed and evaluated the

concerns expressed by the Receiver, the SEC, and myriad investors, all of whom 

held differing positions on whether the Orderly Sale would benefit the Receivership 

estate. See generally ECF Nos. 1181 (Motion for Orderly Sale), 1232 (SEC 

Response), 1234 (Dillon Investors’ Response), 1235 (Graham Investors’ Response); 

see also, e.g., ECF Nos. 1240, 1242, 1244, 1249-1257 (Letters from Investors). The 

Court also took into consideration the recommendations of the investors’ experts, as 

set forth in the Xpera Report. See ECF No. 1304 at 16. The Xpera Report, the 

Court noted, substantially agreed with the Receiver on how to maximize the value of 

the Receivership estate and, for the most part, agreed on the appraised value of the 

various GP properties. Id. As such, the Court directed the Receiver, where feasible, 

to incorporate the recommendations of the Xpera Report into his ultimate sale 

Orderly Sale proposal. Id. at 19. 

On July 22, 2016, the Receiver moved for permission to engage CBRE, a real 

estate brokerage firm, as a consultant in order to weigh the pros and the cons of the 

Xpera Report. ECF No. 1341-1. The Court granted the Receiver’s motion on 

August 30, 2016. ECF No. 1359. CBRE presented its findings on the GP properties 

on October 24, 2016. ECF No. 1419 (filed under seal). On November 22, 2016, the 

Receiver submitted a report evaluating the Xpera Report recommendations. ECF 

No. 1405. The Court reviewed the Receiver’s report and adopted the 

recommendations contained therein on December 12, 2016. ECF No. 1423. 

/ / / /

 

3 The Court directed the Receiver to file a Modified Orderly Sale Process that incorporated the 

public sale process consistent with the requirement of 28 U.S.C. § 2001. ECF No. 1304. The 

Receiver filed a modified proposal on June 8, 2016 (ECF No. 1309) and the Court approved 

the modified proposal on August 30, 2016 (ECF No. 1359). 

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D. Honey Springs Property 

The Receiver valued the Honey Springs property at $68,667 in 2013. ECF 

No. 1405, Ex. A at 9. In 2015, the Broker Opinion Value (BOV) of the property 

was $243,094. Id. Although the Xpera Report did not value the Honey Springs 

property standing alone, it did value the property as one of three parcels, and the 

value that Xpera ascribed to all three properties corresponds to the Receiver’s 

appraisal of all three properties.4 

In October 2016, the Receiver received an offer from Felipi and Ofelia 

Aguilar to purchase the Honey Springs property for $225,000. ECF No. 1430-1 at 

2. In accordance with the Court-approved modified Orderly Sale procedures, see 

generally ECF No. 1309, 1359, the Receiver sent notice of the offer to investors, 

consulted with a broker, and made a counter-offer of $250,000. ECF No. 1430-1 at 

2. The putative purchasers countered at $240,000 and the Receiver accepted. Id.

After executing a purchase agreement, the Receiver laid out a timeline for the 

submission of qualified overbids pursuant to the modified Orderly Sale procedures. 

Id. at 3. On February 7, 2017, Receiver notified the Court that no qualified overbids 

had been received for the Honey Springs property. ECF No. 1442. 

E. Conclusion 

The Court is satisfied that the Receiver has complied with the modified 

Orderly Sale procedures. The Court further observes that the purchase price of 

$240,000 is reasonable in light of the Receiver’s 2015 appraisal of the Honey 

Springs property and the Xpera Report. Accordingly, and given that no opposition 

to the Motion has been filed and that no qualified overbid was received, the Court 

GRANTS Receiver’s motion. 

 

4 The Xpera Report valued the Honey Springs property, along with the Bratton View and Valley 

Vista properties, between $629,878 (a low valuation) and $944,816 (a high valuation). ECF 

No. 1405, Ex. A at 9. The Receiver’s appraisal of Honey Springs, together with Bratton View 

and Valley Vista, totaled $756,548, placing the Receiver’s appraisal within the range proposed 

by Xpera. See id. 

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ORDER

The Receiver's Motion for Approval of Sale of Honey Springs Property and 

Authority to Pay Broker's Commission of Thomas C. Hebrank ("Receiver"), the 

Court-appointed receiver for First Financial Planning Corporation d/b/a Western 

Financial Planning Corporation ("Western"), its subsidiaries and the General 

Partnerships listed in Schedule 1 to the Preliminary Injunction Order entered on 

March 13, 2013 (collectively, "Receivership Entities"), having been reviewed and 

considered by this Court, the Receiver having notified the Court that no qualified 

overbids were received (ECF No. 1442), and for good cause appearing therefore, the 

Court finds as follows:

1. The Motion is granted;

2. The sale of the Property known as the Honey Springs property, as 

described on Exhibit A in the Receiver's Motion ("Property"), by Thomas C. 

Hebrank, as receiver for Honey Springs Partners, to Felipi and Ofelia Aguilar is 

confirmed and approved;

3. The purchase price of $240,000.00 for the Property is confirmed and 

approved;

4. The Receiver is immediately authorized to complete the sale 

transaction, including executing any and all documents as may be necessary and 

appropriate to do so; and

5. The Receiver is authorized to immediately pay, upon closing of the 

sale, a commission of 6% of the final purchase price to broker Real Estate Results.

 IT IS SO ORDERED. 

Dated: March 20, 2017

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