Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-01724/USCOURTS-caed-2_07-cv-01724-6/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 12:22 Securities Fraud

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STIPULATED MOTION FOR ORDER AUTHORIZING RECEIVER 

TO EMPLOY NATIONAL VIATICAL, INC.; ORDER 

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BOUTIN DENTINO GIBSON 

DI GIUSTO HODELL INC. 

Chris Gibson, SBN 073353 

Maralee MacDonald, SBN 208699 

555 Capitol Mall, Suite 1500 

Sacramento, CA 95814-4603 

(916) 321-4444 

Attorneys for Receiver 

Michael J. Quilling 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

SACRAMENTO DIVISION 

 

SECURITIES AND EXCHANGE COMMISSION, 

 Plaintiff, 

v. 

SECURE INVESTMENT SERVICES, INC., 

AMERICAN FINANCIAL SERVICES, INC., 

LYNDON GROUP, INC., DONALD F. NEUHAUS, 

and KIMBERLY A. SNOWDEN, 

 Defendants. 

Case No. 2:07-cv-01724 LEW CMK 

STIPULATED MOTION FOR ORDER 

AUTHORIZING RECEIVER TO 

EMPLOY NATIONAL VIATICAL, 

INC.; ORDER 

The parties, at the request of Michael J. Quilling, the Receiver appointed in these 

proceedings, (“Receiver”), respectfully submit this Stipulated Motion for Order Authorizing 

Receiver to Employ National Viatical, Inc. and Order under L.R. 66-232(g). 

BACKGROUND FACTS

1. By Order of August 24, 2007, the Court appointed Michael J. Quilling as 

Temporary Receiver for Secure Investment Services, Inc. (“SIS”), American Financial Services, 

Inc. (“AFS”) and Lyndon Group, Inc. (“LGI”). In that capacity, the Court has authorized and 

charged the Receiver to take complete and exclusive control, possession, and custody of all 

receivership assets. 

2. The Order Appointing Temporary Receiver authorizes the Receiver to employ 

professionals and specialists as needed to preserve and maintain the Receivership Assets in this 

case: 

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Case 2:07-cv-01724-GEB-CMK Document 53 Filed 09/07/07 Page 1 of 4
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STIPULATED MOTION FOR ORDER AUTHORIZING RECEIVER 

TO EMPLOY NATIONAL VIATICAL, INC.; ORDER 

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Given the emergency nature of these proceedings, the Receiver is 

hereby authorized to employ such employees, accountants, and 

attorneys as is necessary and proper for the collection, 

preservation, maintenance and operation of the Receivership 

Assets and Receivership Records and to open bank accounts or 

other depository accounts in the name of the Receiver on behalf of 

the receivership estate. As soon as possible after retaining such 

professionals, the Receiver shall file written applications to 

retroactively approve the employment pursuant to Local Rule 66-

232(g). 

Order Appointing Temporary Receiver [Dkt. No. 27] at ¶ 11. 

3. The receivership estate’s largest single asset is the portfolio of life insurance 

policies owned or otherwise managed by SIS, AFS and/or LGI. There are at least 42 separate 

policies with a combined value of death benefits exceeding $56 million. Maintaining this 

portfolio and monitoring each insurance policy will require a significant amount of 

administrative time and effort. In addition, it requires expertise in both the insurance and viatical 

industries. Properly maintaining each policy in the portfolio is of paramount importance in order 

to maximize returns to the creditors and investors. 

4. Accordingly, the Receiver requests authority under L.R. 66-232(g) to employ 

National Viatical, Inc. (“NVI”) of Woodstock, Georgia, to administer the life insurance portfolio. 

NVI has been in the life settlement and viatical industry since 1999. NVI has extensive 

experience in monitoring and maintaining portfolios similar to the one in this case. Most 

recently the Receiver employed NVI in two other receiverships involving large viatical 

companies, each with portfolios of life insurance policies valued at over $230 million. The 

receiver anticipates that NVI will aid in handling all paperwork related to those policies, 

analyzing the policies to determine their value, obtaining updated medical reports, tracking 

maturities, monitoring premium payment schedules, and all other actions necessary to maintain 

the portfolio. The Receiver believes that employing NVI is in the best interest of the 

receivership estate because NVI has the experience and resources to efficiently and effectively 

monitor and maintain the kind of portfolio at issue in this case. 

5. NVI has agreed to maintain the portfolio for a cost of $50.00 per month for each 

policy plus expenses. The Receiver believes that NVI’s proposed fees are reasonable and seeks 

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STIPULATED MOTION FOR ORDER AUTHORIZING RECEIVER 

TO EMPLOY NATIONAL VIATICAL, INC.; ORDER 

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Court approval to pay that amount on a tentative basis pending the final hearing required under 

L.R. 66-232. 

POINTS AND AUTHORITIES

6. The Order Appointing Temporary Receiver authorizes the Receiver to employ 

and pay professionals and experts for the preservation and maintenance of Receivership Assets. 

It also gives the Receiver broad authority to do whatever is necessary to properly manage those 

assets for the benefit of the investors. On that basis, the Receiver requests authority from this 

Court to immediately retain NVI for the purpose of identifying the premium obligations and 

preventing any of the insurance policies from lapsing. 

7. Federal district courts have broad authority to allow a receiver to expend funds for 

the benefit of the estate. See SEC v. Elliott, 953 F.2d 1560, 1576 (11th Cir. 1992) (“It is 

appropriate and obvious that a receiver will make expenditures to maintain trust property”); see 

also SEC v. Phoenix Telecom, L.L.C., 231 F. Supp. 2d 1223, 1226-1227 (N.D. Ga. 2001) 

(authorizing receiver to pay professional fees to financial consulting firm). As described above, 

the employment of NVI would benefit the receivership estate by helping the Receiver efficiently 

and effectively maintain the life insurance portfolio for the benefit of the investors and creditors. 

8. The Receiver requests an order authorizing him to employ NVI and to 

compensate it consistent with the terms described above. 

STIPULATION

WHEREFORE, THE PARTIES STIPULATE to the entry of an order of this Court 

authorizing the Receiver to employ NVI and to compensate it consistent with the terms described 

above. 

 

 BOUTIN DENTINO GIBSON DI GIUSTO 

 HODELL INC. 

Dated: August 29, 2007 By /s/ Maralee MacDonald

 Maralee MacDonald 

 Attorneys for Receiver 

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STIPULATED MOTION FOR ORDER AUTHORIZING RECEIVER 

TO EMPLOY NATIONAL VIATICAL, INC.; ORDER 

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 SECURITIES EXCHANGE 

 COMMISSION 

Dated: August 29, 2007 By __/s/ John S. Yun(as authorized on August 29, 2007)

 Thomas J. Eme 

 John S. Yun 

Attorneys for Plaintiff Securities 

Exchange Commission 

 KENNY, SNOWDEN & NORINE 

Dated: August 29, 2007 By /s/ Mark Norcross (as authorized on August 29, 2007)

 Mark Norcross 

 Attorneys for Defendants 

 Donald Neuhaus and 

 Kimberly Snowden 

ORDER

IT IS SO ORDERED. 

Dated: September 6, 2007 

 /s/ Ronald S. W. Lew________________

 Honorable Ronald S. W. Lew 

 UNITED STATES DISTRICT COURT JUDGE

 

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