Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_04-cv-02037/USCOURTS-casd-3_04-cv-02037-1/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE

COMMISSION,

Plaintiff,

CASE NO. 04-CV-2037 W (LSP)

ORDER APPROVING THE

RECEIVER’S OBJECTIONS

TO TANSY LTD’S AND THE

TANSY INVESTORS’

CLAIMS

v.

LEARN WATERHOUSE, INC.,

RANDALL T. TREADWELL, RICK

D. SLUDER, LARRY C. SATURDAY,

and ARNULFO M. ACOSTA,

Defendants.

On April 13, 2005 this Court granted Thomas F. Lennon’s (“Receiver”)

motion requesting approval of summary proceedings for the administration of claims,

resolution of claim disputes and ancillary actions. As part of that order, the Court

set a claims bar date and ruled that investor claims would only encompass the

principal invested, not any promised return thereon. The claim forms the Receiver

used notified investors of both the claims bar date as well as the fact that their claims

Case 3:04-cv-02037-W-DHB Document 428 Filed 09/14/06 Page 1 of 4
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- 2 - 04-CV-2037W

would be limited to the principal they invested.

On May 9, 2006 the Receiver filed his omnibus claim objections. A number of

investors responded to the Receiver’s claim objections, including Tansy Ltd.

(“Tansy”) and four individuals who had invested in LWI through Tansy: Matthew

Acred, John Hooper, Teresita Soliman and Sharon Tan (collectively “Tansy

Investors”). On July 11, 2006 the Court partially granted the Receiver’s omnibus

claim objections. However, at the Receiver’s suggestion, the Court deferred ruling

on Tansy’s and the Tansy Investors’ claims to allow the Receiver time to further

investigate the claims. The Court ordered the Receiver to submit additional briefing

regarding his investigation into Tansy’s and the Tansy Investors’ claims by no later

than September 8, 2006. 

On September 8, 2006 the Receiver timely submitted additional briefing on

the Tansy’s and Tansy Investors’ claims. The Receiver’s additional investigation has

confirmed that the total amount Tansy invested in LWI was $400,000 and the total

amount distributed to Tansy was $248,000, leaving a money-in, money-out claim

amount of $152,000. The Tansy Investors transferred a total of $520,000 to

Tansy/Levinthal and according to their claim forms did not receive any distributions. 

(Receiver’s Additional Briefing, Ex. B.) 

Additionally, the Receiver’s briefing addressed two concerns this Court

expressed in its July 11, 2006 order. First, in response to the Receiver’s treatment of

the Tansy Investors’ claims as duplicative of Tansy’s claim, the Court noted that “[i]f

all of the money Tansy invested in LWI can be traced directly back to the Tansy

Investors, whether or not all of the Tansy Investors’ money was invested in LWI, the

most equitable result may be to treat Tansy’s claim as duplicative of the Tansy

Investors’ claims rather than the other way around.” The Receiver agrees that the

Court’s proposed treatment of the Tansy claim as duplicative of the Tansy Investors’

claims is appropriate and the Receiver’s counsel has confirmed, through Tany’s vicepresident Malcolm Levinthal, that Tansy has no objection to the Court’s proposed

Case 3:04-cv-02037-W-DHB Document 428 Filed 09/14/06 Page 2 of 4
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1

Mr. Keiter was LWI’s attorney from approximately June 2004 to September or October

2004. As part of his LWI duties, Mr. Keiter processed funds through his attorney trust account

and disbursed investor “returns” at LWI’s direction.

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treatment of Tansy’s claim. (Declaration of Edward Fates, Doc. 418, at ¶ 6.) 

Second, the Receiver has explained to the Court’s satisfaction that he is not treating

LWI Senior Member Representatives (“SMR”) differently than Grande Belgravia

“aggregators” such as Levinthal/Tansy. Nothing in the record before the Court

indicates that either Levinthal or Tansy was an LWI or Grande Belgravia insider. 

Instead, the evidence before the Court strongly suggests that Levinthal/Tansy was

nothing more than a downstream investor recruited by one of LWI’s SMRs, Ray

Fisher/Provident Funding. The Court has reviewed the entirety of Aaron Keiter’s1

deposition transcript and it is clear from Mr. Keiter’s testimony that

Levinthal/Tansy’s relationship with LWI was nothing like that of a true SMR, such

as Ray Fisher/Provident Funding. See generally (Declaration of Jeffrey Patterson, Doc.

419, Ex. A.) Accordingly, the Court concludes that it would be unfair to the other

investors to hold the receivership estate responsible for funds Levinthal/Tansy

allegedly took from the Tansy Investors but did not invest in LWI.

Finally, the Court approves the Receiver’s proposed pro rata treatment of the

Tansy Investors’ claims. The Court finds this to be an equitable way to handle the

Tansy Investors’ claims since there are insufficient funds to make all of the Tansy

Investors whole.

In light of the foregoing, the Court HEREBY ORDERS as follows:

1. Tansy’s claims is disallowed in its entirety as duplicative of the Tansy

Investors’ claims;

2. The Tansy Investors may not seek recovery from the receivership estate

for monies that Tansy did not actually invest in LWI;

3. The Receiver’s proposed claim amounts for the Tansy Investors’ claims

are approved. Matthew Acred’s claim is approved in the amount of $35,081.60. 

Case 3:04-cv-02037-W-DHB Document 428 Filed 09/14/06 Page 3 of 4
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John Hooper’s claim is approved in the amount of $29,229.60. Teresita Soliman’s

claim is approved in the amount of $58,459.20. Sharon Tan’s claim is approved in

the amount of $29,229.60.

IT IS SO ORDERED.

DATED: September 14, 2006

Hon. Thomas J. Whelan

United States District Judge

Case 3:04-cv-02037-W-DHB Document 428 Filed 09/14/06 Page 4 of 4