UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF FLORIDA 

CASE NO. 20-CIV-21964-CMA 

SECURITIES AND EXCHANGE COMMISSION, 

 

 Plaintiff, 

v. 

TCA FUND MANAGEMENT GROUP CORP., 

et al., 

 Defendants. 

_________________________________________/ 

RECEIVER’S MOTION FOR APPROVAL OF 

DISTRIBUTION PLAN AND FIRST INTERIM DISTRIBUTION

Jonathan Perlman, Esq. 

Florida Bar No. 773328 

jperlman@gjb-law.com 

Receiver for the Receivership Entities 

-andGENOVESE JOBLOVE & BATTISTA, P.A. 

100 Southeast 2nd Street, 44th Floor 

Miami, FL 33131 

Tel: (305) 349-2300 

John H. Genovese 

Florida Bar No. 280852 

jgenovese@gjb-law.com 

Paul J. Battista 

Florida Bar No. 884162 

pbattista@gjb-law.com 

Attorneys for Jonathan E. Perlman, Esq., 

Receiver for the Receivership Entities 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 1 of 43
i 

TABLE OF CONTENTS 

I. Introduction ............................................................................................................... 1

II. The TCA Receivership ............................................................................................. 3

A. Background ........................................................................................................... 6

B. The Receivership Entities ...................................................................................... 3

1. Receivership Defendants ................................................................................... 4

2. Relief Defendants .............................................................................................. 4

3. Additional Receivership Entities ....................................................................... 6

III. Legal Standard .......................................................................................................... 6

A. The Framework for a Plan of Distribution .......................................................... 13

B. Methods of Distribution ...................................................................................... 15

C. Calculation of Distribution .................................................................................. 18

IV. The Distribution Plan .............................................................................................. 20

A. Methodology ....................................................................................................... 20

B. Receivership Assets ............................................................................................. 21

1. Cash ................................................................................................................. 21

2. Non-Cash Assets.............................................................................................. 22

C. Potential Claimants ............................................................................................. 24

1. Investors........................................................................................................... 24

2. Subscription Claimants .................................................................................... 29

3. Redemption Claimants .................................................................................... 32

4. Receivership Administrative Claims ............................................................... 32

5. Trade Creditors ................................................................................................ 33

D. Means of Implementation .................................................................................... 33

1. Investors........................................................................................................... 34

2. Subordinated Investor Claimants..................................................................... 35

3. Subscription Claimants .................................................................................... 35

4. Redemption Claimants .................................................................................... 36

5. Receivership Administrative Claims ............................................................... 36

6. Trade Creditors ................................................................................................ 36

V. Notes and Qualifications ......................................................................................... 37

VI. Notice of the Hearing on 

this Motion Should be Deemed Appropriate and Sufficient. .................................. 38

VII. Conclusion .............................................................................................................. 40

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 2 of 43
1 

Jonathan E. Perlman, as court-appointed Receiver (the “Receiver”) over the Receivership 

Defendants TCA Fund Management Group Corp. (“FMGC”) and TCA Global Credit Fund GP, 

Ltd. (“GP”) (FMGC and GP are hereinafter referred to collectively as “Defendants”), Relief 

Defendants TCA Global Credit Fund, LP (“Feeder Fund LP”), TCA Global Credit Fund, Ltd. 

(“Feeder Fund Ltd.,” and with Feeder Fund LP, “Feeder Funds”), and TCA Global Credit Master 

Fund, LP (the “Master Fund”) (Master Fund, together with Feeder Funds, are the “Funds”), and 

Receivership Entity TCA Global Lending Corp. (“Lending Corp”) (Defendants, the Funds, and 

Global Lending are hereinafter referred to collectively as the “Receivership Entities”), pursuant to 

this Court’s order appointing the Receiver [ECF No. 5], respectfully submits his proposed 

Distribution Plan (the “ Rising Tide Plan” or “Plan”) for Court Approval and order authorizing an 

interim distribution under his plan. 

I. Introduction 

The Receiver conducted an investigation of the pre-Receivership activities, which 

confirmed the allegations by Plaintiff Securities and Exchange Commission (“SEC”) in its 

Complaint and motion for appointment of Receiver. Specifically, the Receiver determined that 

certain officers, directors, and employees for the Receivership Entities engaged in a scheme that 

involved misrepresentations to investors, over-stated valuations of assets, and misappropriated 

funds, all of which had the impact of harming the Receivership Entities to the detriment of the 

investors and ultimately rendering the Receivership Entities insolvent. 

Because of the vast discrepancy between the stated value of the assets at the start of the 

Receivership and their true value, claimants cannot be made whole from the available assets. 

Accordingly, the Receiver faces a difficult decision on how best to allocate the available assets 

amongst the claimants. Mindful of the principle that “equality is equity,” Cunningham v. Brown, 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 3 of 43
2 

265 U.S. 1 (1924), the Receiver evaluated the different possible approaches for distribution to 

attain the greatest equity in this case. After careful consideration and deliberation, the Receiver 

proposes a distribution methodology that is based upon an equitable pro rata methodology called 

Rising Tide. 

The Receiver’s Plan proposes an initial distribution (“Initial Distribution”) of 

approximately $55 million, representing approximately 83% of the Receivership’s current cash 

balance, to eligible investors and subscribers who have complied with this Court’s order of March 

9, 2021 to provide certain information to receive distributions. The Receiver estimates that under 

the proposed Plan, eligible investors will receive approximately 25% of the dollars invested upon 

completion of the First Interim Distribution, from a combination of pre-receivership returns and 

the First Interim Distribution. In other words, following completion of the Initial Distribution, no 

unsubordinated investor will have out-of-pocket losses greater than 75% of the cash that they 

invested in the Receivership Entities on an aggregate basis. 

To assist the Court and interested parties in evaluating the Distribution Plan, the Receiver 

analyzed the claims under the two most common equitable pro rata distribution models (Rising 

Tide and Net Investment). The results of this analysis show that the vast majority of investors fare 

best under the Rising Tide method. Since the Receiver’s analysis shows that the vast majority of 

TCA investors/subscribers with allowed claims will receive a greater distribution under the Rising 

Tide methodology and the facts and circumstances of this case support the use of the Rising Tide 

method, the Receiver concluded that this is the most equitable methodology for distribution in this 

case to investors and subscribers. 

The Receiver and his professionals endeavored to reconstruct the Receivership’s financial 

dealings to determine the most equitable treatment for investor-victims. The most expansive 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 4 of 43
3 

undertaking of this process required the Receiver to dialogue with approximately 72 financial 

institution nominees—many of which were located outside the United States—in order to 

determine the actual net losses of each actual beneficial owner who invested through nominees, 

almost all of whom were previously unidentifiable. This undertaking was necessary in order to 

assure that distributions made to one investor through a nominee did not prejudice the rights of 

another investor who invested through the same nominee and to ensure each investor receives a 

distribution on account of his/her actual losses. As a result of these efforts, the Receiver is able to 

propose a transparent distribution scheme that affords each beneficial owner the right to receive a 

distribution based on the percentage of his/her actual investment loss. In certain instances, 

nominees were either unwilling or unable to provide information sufficient to permit the Receiver 

to calculate the losses of the actual beneficial owners. In those instances, the Receiver proposes 

subordinating the right of those investors to receive a distribution to those investors, which, 

through nominees or independently, provided a full accounting of their dealings with the 

Receivership Entities. 

To the extent the Receiver is successful in obtaining future litigation and asset recoveries, 

and converts such assets to cash, he will seek Court approval for additional interim distributions 

consistent with the rising tide methodology proposed in this Plan. 

II. The TCA Receivership 

A. The Receivership Entities 

The structure of the funds here is a typical “Master/Feeder” structure. Feeder Fund LP and 

Feeder Fund Ltd. raised money from investors and “fed” that money to the Master Fund, which, 

in turn, provided financing to small- and medium-sized businesses. Pursuant to an investment 

management agreement, FMGC, as investment adviser/manager to the Funds, received a monthly 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 5 of 43
4 

management fee payable in advance on the first day of each month calculated as a stated percentage 

of the Funds’ reported NAV. Pursuant to a master agreement, GP, the general partner of Master 

Fund and Feeder Fund LP with discretion to manage their affairs, was compensated by receiving 

“performance allocations” equal to 20-25% of “realized and/or unrealized net profits.” 

1. Receivership Defendants 

a) TCA Fund Management Group Corp. (“FMGC”) 

FMGC is a Florida corporation formed in June 2011 and headquartered in Aventura, 

Florida. FMGC had other offices in New York, New York, Las Vegas, Nevada, and London, 

England. Since August 13, 2014, FMCG is the commission-registered investment advisor for the 

Funds. 

b) TCA Global Credit Fund, Ltd. (“GP”) 

GP is registered as a Cayman Islands exempted company formed in January 2010. GP is 

the general partner of Feeder Fund LP and Master Fund. 

2. Relief Defendants 

a) TCA Global Credit Fund, LP (“Feeder Fund LP”) 

Feeder Fund LP is a Cayman Islands exempted limited partnership formed in March 2010. 

Feeder Fund LP engaged in investment activities as an unregistered private investment fund. 

Feeder Fund LP is the smaller of the two feeder funds and was used as a vehicle for primarily U.S.-

based investors to invest in the Master Fund. Feeder Fund LP invested its partners’ monies directly 

into the Master Fund. 

b) TCA Global Credit Fund, Ltd. (“Feeder Fund Ltd.”) 

Feeder Fund Ltd. is a Cayman Islands exempted company formed in March 2010. Feeder 

Fund Ltd. engaged in investment activities as an unregistered private investment fund. This is the 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 6 of 43
5 

larger of the two feeder funds that used primarily as a vehicle for non-U.S.-based investors to 

invest in the Master Fund.1 

On May 13, 2020, two days after this Court appointed Mr. Perlman as Receiver over the 

Receivership Entities, including Feeder Fund Ltd., the Grand Court of the Cayman Islands 

appointed Ms. Eleanor Fisher and Ms. Tammy Fu, both of EY Cayman Ltd., as joint official 

liquidators (“JOLs”) over Receivership Entity Feeder Fund Ltd. only. The appointment of the JOLs 

created a concurrent Cayman-recognized fiduciary for Feeder Fund, Ltd. alone. 

On February 16, 2021, the JOLs filed a Verified Petition for Recognition of Foreign 

Proceeding and Motion for Order Granting Related Relief Pursuant to 11 U.S.C. §§ 1515, 1517, 

and 1520 (the “Chapter 15 Petition”) seeking recognition of the Winding Up Proceeding as a 

foreign main or nonmain proceeding under Chapter 15 of the Bankruptcy Code. [Case No. 21-

11513-RAM, ECF No. 1]. The Receiver and JOLs agreed to recognition of the Winding Up 

Proceeding as a foreign nonmain proceeding for limited purposes set forth in an Agreed Order 

Granting Recognition of Foreign Nonmain Proceeding and Certain Related Relief (the “Agreed 

Recognition Order”), and they also agreed to jointly move to withdraw the reference of the Chapter 

15 Case to this Court. [ECF Nos. 7, 8]. On June 4, 2021, the Court entered the Withdrawal Order 

and the Agreed Recognition Order. [Id.].2

 

c) TCA Global Credit Fund Master Fund, LP (“Master Fund”) 

Master Fund is a Cayman Islands exempted limited partnership formed in March 2010. 

 

1

 For an understanding of how Feeder Fund Ltd.’s funds flowed to Master Fund, see the description 

of TCA Global Lending Corp below. 

2

 For additional information concerning the JOLs and the Agreed Recognition Order, please refer to the Joint Status Report of Receiver and Joint Official Liquidators of LTD Feeder Fund [ECF 

No. 154]. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 7 of 43
6 

Master Fund serves as the master fund in the master/feeder structure for the Feeder Funds. The 

Master Fund provided financing to small- and medium-sized enterprises. The Master Fund is the 

sole or majority owner of over 60 borrower entities known as Special Purpose Vehicles or SPVs. 

3. Additional Receivership Entities 

a) TCA Global Lending Corp. (“Lending Corp.”) 

Lending Corp is a Nevada corporation formed in 2015. Its purpose is to act as a “tax 

blocker” that would reduce or eliminate the obligation to file U.S. tax returns and pay taxes on 

U.S. business interests and income of Master Fund, for the benefit of foreign investors who 

invested through the Feeder Fund Ltd. To achieve its purpose, Lending Corp. was inserted as an 

on-shore entity between Feeder Fund Ltd. and Master Fund. In so doing, taxes on the income of 

Feeder Fund Ltd. were reduced. According to the Receivership Entities’ 2018 tax returns, the flow 

of funds in relation to Lending Corp. was as follows: Feeder Fund Ltd. invested its shareholders’ 

funds directly into Lending Corp., which invested those funds into the Master Fund. The Master 

Fund invested the funds from Lending Corp. into SPVs and as loans to various entities. 

B. Background 

On May 11, 2020, the Securities and Exchange Commission (“SEC”) filed a Complaint for 

Injunctive and Other Relief [ECF No. 1] (the “Complaint”) in the United States District Court for 

the Southern District of Florida (the “Court”) against Defendants FMGC and GP, and Relief 

Defendants Feeder Fund LP, Feeder Fund Ltd., and the Master Fund. The SEC also filed an 

Expedited Motion for Appointment of Receiver (the “Motion for Appointment”). [ECF No. 3]. 

The Complaint alleges that Defendants engaged in deceptive conduct in violation of 

Section 17(a) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77q(a), Section 

10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and 15 U.S.C. § 78j(b), 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 8 of 43
7 

Exchange Act Rules 10b-5, 17 C.F.R § 240.10b-5; and FMGC violated Sections 206(1), (2), and 

(4), and 207 of the Investment Advisers Act of 1940 (the “Advisers Act”), 15 U.S.C. §§ 80b-6(1), 

80(b)-6(4), and 80b-7, and Advisers Act Rules 206(4)-7 and 206(4)-8, 17 C.F.R. §§ 275.206(4)-7, 

275.206(4)-8. [ECF No. 1 at ¶ 9]. 

The Complaint illustrated the details of the fraudulent activities among certain officers, 

directors, and employees for the Defendants. The Feeder Funds would raise money from investors 

and “feed” that money to the Master Fund, who in turn, provided financing and investment banking 

services to small- and medium-sized businesses. [Id. at ¶ 2]. FMGC, the investment adviser to the 

Funds, would then receive compensation based on the Funds’ reported assets (the “NAV”). [Id.]. 

GP, the general partner of Master Fund and Feeder Fund LP, would receive compensation based 

on the reported profitability of Master Fund. [Id.]. 

The Complaint alleged that since 2010 and continuing through at least November 2019, 

certain officers, directors, and employees caused FMGC to fraudulently engaged in two different 

revenue recognition practices that artificially inflated the Master Fund’s revenue and the Funds’ 

NAV. [Id. at ¶ 3]. The first practice involved the Master Fund’s lending business, where, at an 

early stage of the loan process, the prospective borrower and the Master Fund signed a term sheet 

outlining the terms of the loan, including the amount of fees the borrower would pay the Master 

Fund when the loan transactions were consummated. [Id. at ¶ 4]. As alleged by the SEC, FMGC 

caused the Master Fund to recognize these prospective loan fees as revenue upon execution of the 

non-binding term sheet (as opposed to at the closing of the loan or upon payment) without regard 

to whether the borrower had the ability to pay such fees. In many cases, loans did not close, and 

no fees were earned or paid. Recognizing this loan fee revenue at the time of term sheet execution 

artificially increased the Master Fund’s profits and the NAV, which remained inflated until the fee 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 9 of 43
8 

revenue was actually earned (in the case of loans that eventually closed) or removed from the 

books (in the case of loans that never closed). [Id.]. 

The second revenue recognition method involved agreements for the Master Fund to 

provide investment banking services. Starting in or about the latter half of 2016 and continuing 

through the Funds’ last published NAV dated November 2019, the Master Fund solicited 

companies to enter into agreements (“IB Agreements”), which provided for the company to pay 

the Master Fund an investment banking fee ranging from hundreds of thousands to millions of 

dollars. [Id. at ¶ 5]. Certain officers, directors, and employees of FMGC caused the Master Fund 

to recognize these investment banking fees as revenue at the time the agreement was signed, even 

though these companies (a) lacked the financial wherewithal to pay these fees unless the Master 

Fund was successful in obtaining financing for the company, which rarely occurred, and (b) 

received little to no investment banking services from Master Fund. [Id.]. 

As a result, certain officers, directors, and employees for the Defendants caused the Funds 

to report to investors that the Funds were profitable every month, with an ever-increasing NAV. 

[Id. at ¶ 6]. In fact, the booking of loan fees at the time of term sheet execution artificially inflated 

the NAV—at some points in time by as much as $29 million. [Id.]. The booking of investment 

banking revenue at the time of agreement execution inflated the NAV by at least $130 million as 

of November 2019. [Id.]. Investors received the inflated performance and NAV values, and forms 

(“Forms ADV”) that FMGC filed with the SEC included the inflated asset values. [Id. at ¶ 7]. 

Armed with these practices, the Defendants raised in excess of $500 million from investors. 

The Receivership Entities did not contest these allegations. Rather, they stipulated to entry 

of a judgment against them for Permanent Injunction and Other Relief and not to contest or deny 

the Complaint’s allegations. [ECF No. 6 and Exhibit 1 thereto]. The Court entered the stipulated 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 10 of 43
9 

Judgment against Defendants that same day [ECF No. 7] along with an order granting the 

Unopposed Expedited Motion for Appointment of Receiver [ECF No. 5] (the “Appointment 

Order”). The Appointment Order appointed Jonathan E. Perlman, Esq., a shareholder at the law 

firm Genovese, Joblove & Battista, P.A. (“GJB”), as permanent Receiver over the Receivership 

Entities, granting him “full and exclusive power, duty and authority to: administer and manage the 

business affairs, funds, assets . . . and any other property of the Receivership Entities, marshal and 

safeguard all of their assets. . . .” [ECF No. 5 at ¶¶ 1, 7, and 16-17]. 

The Receiver thereafter moved to confirm and/or expand the Receivership to include 

Lending Corp. and the Court granted the motion on May 18, 2020. nunc pro tunc. [ECF Nos. 15, 

16]. 

Since his appointment, the Receiver and his professionals conducted an investigation into 

the pre-Receivership business activities of the Receivership Entities as well as the sources and uses 

of cash for the Receivership Entities. The Receiver’s investigation confirmed the material 

allegations of fraud and misrepresentations of certain individuals as set forth in the SEC’s 

Complaint and Defendants’ consent Final Judgment.3

 

Multiple sources confirmed a history of making misrepresentations to investors as to its 

assets and financial performance, including a review and forensic analysis of books, records and 

accounts, and interviews of remaining and former employees (collectively the “TCA Employees”). 

TCA Employees confirmed details regarding the second revenue scheme involving 

investment banking services. The IB Agreements required clients to execute uniformly required 

 

3

 For additional information concerning the Receivership, interested parties should consult the Receiver’s 

interim reports [ECF Nos. 48, 70, 108, 141 and 163]. The interim reports and other key pleadings are available 

for download from the Receiver’s website: https://tcafundreceivership.com/

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 11 of 43
10 

the client to pay an IB Fee or Advisory Fee to Master Fund that was “earned upon execution” of 

the agreement, in consideration for certain services Master Fund claimed TCA would provide the 

company. 

TCA Employees stated that the IB Agreements were improper “fee vehicles” from their 

inception. Investment banking fees were a way to book revenue without ever providing a service. 

These agreements were merely pieces of paper with no viable work-product to back them up. The 

Receivership Entities provided very little to no investment banking services with the exception of 

four or five cases. Although TCA’s Former Chief Portfolio Manager would on occasion document 

a “scope of work,” typically no work would be performed. In fact, TCA often had no employees 

with the experience, knowledge or licensing to provide such investment-banking services. Thus, 

where Master Fund had “scopes of work” and perhaps invoices, these scopes of work and invoices 

were fraudulent, and virtually none of these fees have been (or could have been) collected. 

In reality, the IB Agreements were illusory assets that TCA reported on its monthly NAV 

calculations. TCA Employees stated that many of the counter-parties were distressed or start-ups 

companies whose principals were willing to sign IB Agreements stating that they would 

immediately make payments, when instead the understanding with TCA was that no payments 

would ever be due and payable unless TCA obtained financing acceptable to them in the future. 

Moreover, these companies did not have the ability to pay these fees absent future financing. 

According to the former chief lending officer, it was very rare that TCA could ever obtain debt, 

capital, or other financing for any such distressed client, since it was self-evident to any 

investor/lender that that they were unable to service the required financing. Since approximately 

less than 5% of term sheets were funded, TCA’s Balance Sheet showed a large volume of 

investment banking “fee receivables” that Master Fund recognized as earned upon execution. In 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 12 of 43
11 

other words, Master Fund generated these IB Agreements that resulted in “booked income” to 

offset the skyrocketing losses from loan defaults and continue to show positive returns to investors. 

It is beyond reasonable dispute that certain officers, directors, and employees of TCA 

inflated the TCA Funds’ monthly NAV from at least January 2016 until the Receiver was 

appointed by recording overstated or non-existent IB/Advisory contracts and fees. The Receiver’s 

forensic expert Yip Associates’ analysis confirmed as much. For example, from January 2016 to 

December 2019, TCA reported that the IB/Advisory Fee balance due to Master Fund increased by 

$71.3 million from $63.4 million to $134.7 million. This increase, however, resulted from $349.3 

million in new IB/Advisory Fees due from borrowers and $278 million in reductions. The 

reductions, rather than be on account of receipt of payment of IB/Advisory Fees were almost all 

non-cash reductions for write-offs relating to reversal of fees. Specifically, 96.6% totaling $268.5 

million was for non-cash reductions. Only 3.4% totaling $9.5 million was for payments actually 

received. 

The Receiver’s conclusions are also consistent with, and fully supported by, stipulated 

orders resolving administrative and cease-and-desist proceedings brought by the SEC against 

Robert Press, TCA’s founder, former owner, Chief Executive Officer and director; Steven Rosen, 

TCA’s former Chief Accounting Officer and Chief Financial Officer, Donna Silverman, TCA’s 

former Chief Portfolio Manager, and Michael Vernon, TCA’s former Director of Credit and 

Operations, Chief Operating Officer and Senior Analyst. 

The administrative orders contain numerous factual findings , including the following: 

TCA inflated the NAV and performance of the Master Fund by recording non-binding transactions 

and overstated investment banking fees on the funds’ books and records. From inception through 

December 2016, Master Fund recorded as revenue unearned accrued interest and fees associated 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 13 of 43
12 

with non-binding term sheets financing deals on the date borrower companies signed. Once 

recorded, the interest and fees were also recorded as assets of the Master Fund in the form of 

receivables, and were counted as part of the calculation of the Master Fund’s monthly NAV, which 

also artificially inflated the NAV of each of the feeder funds. Each month Master Fund decided 

which deals to record on the books and which of the previously recorded term sheet only deals that 

had not closed to remove. Even though term sheet deals had not closed, and in many instances did 

not lead to consummated transactions, year after year, TCA continued to record these deals as 

revenue and include them as assets in the valuation information used to calculate the NAV. 

After the SEC began to investigate Defendants’ practice of recognizing loan fees as 

revenue prior to loan funding, TCA stopped that practice (by January 1, 2017) and Master Fund 

began its practice of improperly recording as revenue investment banking service fees that were 

uncollectible. From January 2016 to January 2019, Master Fund recognized revenue from 

investment banking fees upon execution of the IB Agreements, despite the fact that the fees were 

uncollectable. 

Robert Press’ administrative order also included findings that on at least 14 separate 

occasions he waived monthly management and performance fees that the TCA funds owed to TCA 

or TCA-GP, without disclosing the waivers, in order to mislead investors into believing that TCA’s 

investment strategies were the reason for the Funds’ positive performance. 

With respect to Mr. Press, the Receiver has asked that he submit to for deposition where 

his testimony will be taken under oath. Counsel for Mr. Press has informed the Receiver’s counsel 

that any such deposition, Mr. Press will be invoking his Fifth Amendment privilege to all 

questions. The Receiver views this as also supportive of the Receiver’s findings above. 

III. Legal Standard 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 14 of 43
13 

A. The Framework for a Plan of Distribution 

“A district court has broad powers and wide discretion to determine relief in an equity 

receivership.” SEC v. Quiros, 966 F.3d 1195, 1199 (11th Cir. 2020) (internal quotation marks 

omitted) (a “complicated receivership proceeding” where “[m]any collateral cases sprung from the 

SEC action”). “This discretion derives from the inherent powers granted an equity court to fashion 

relief,” SEC v. Wells Fargo Bank, N.A., 848 F.3d 1339, 1344 (11th Cir. 2017), and the fact that 

“most receiverships involve multiple parties and complex transactions,” SEC v. EB5 Asset 

Manager, LLC, No. 15-62323-CIV, 2016 WL 11486857, at *3 (S.D. Fla. Dec. 8, 2016). 

Based on these broad powers, a district court is “obligated to devise an equitable system of 

distribution with the goal of treating each victim of the investment fairly and as nearly equal as 

possible.” EB5 Asset Manager, LLC, 2016 WL 11486857, at *3; see also SEC v. HKW Trading 

LLC, No. 8:05-CV-1076-T-24-TB, 2009 WL 2499146, at *5 (M.D. Fla. Aug. 14, 2009) (“Court[s] 

. . . must make sure that the distribution of the limited funds in the estate is fair, just, and 

reasonable.”).4

 

Stated differently, a receiver “has the authority to classify claims sensibly,” SEC v. Pension 

Fund of Am. L.C., 377 F. App’x 957, 962 (11th Cir. 2010), and, if needed, “subordinate the claims 

of certain investors to ensure equal treatment,” SEC v. Wealth Mgmt. LLC, 628 F.3d 323, 333 (7th 

Cir. 2010). For example, a receiver may subordinate the claims of those who bear some 

responsibility for furthering the fraudulent scheme. See SEC v. Forte, No. 2:02-CV-39, 2012 WL 

 

4 Recently, the Eleventh Circuit, adopting the approach of three other circuits, held that “the district 

court’s order approving the receiver’s distribution plan is appealable as a collateral order.” 

Torchia, 922 F.3d at 1315. As such, “a district court’s decisions relating to the choice of a 

distribution plan for the receivership are reviewed for abuse of discretion.” EB5 Asset Manager, 

LLC, 2016 WL 11486857, at *3 (citing Elliot, 953 F.2d at 1569-70).

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 15 of 43
14 

1719145, at *3 (E.D. Pa. May 16, 2012) (“Those Investors who, by their reckless behavior, 

furthered Forte’s Ponzi scheme plainly are not ‘innocent’ and so are not entitled to the same relief 

as truly innocent Investors.”); SEC v. Byers, 637 F. Supp. 2d 166, 184 (S.D.N.Y. 2009) (“The 

Receiver’s proposal to treat differently those involved in the fraudulent scheme when distributions 

are being made is eminently reasonable and is supported by caselaw.”); SEC v. Enter. Trust Co., 

No. 08 Civ. 1260, 2008 WL 4534154, at *3 (N.D. Ill. October 7, 2008) (“Disqualifying those who 

took the business over the edge is the most common feature, and the least contested aspect, of 

distribution plans.”). 

Further, the Court also has the power to subordinate the claims of general creditors to the 

claims of defrauded investors, even if the result would be to deny general creditors any 

compensation at all. See SEC v. Great White Marine & Recreation, Inc., 428 F.3d 553, 556 (5th 

Cir. 2005) (holding that court did not abuse its discretion in approving receiver’s plan to “grant[] 

priority to equity holders over creditors in distribution”); HKW Trading LLC, 2009 WL 2499146, 

at *3 (“Payment to claimants whose property was unlawfully taken from them is given a higher 

priority than payment to the general creditors.”); see also Kathy B. Phelps, Handling Claims in 

Ponzi Scheme Bankruptcy and Receivership Cases, 42 Golden Gate U. L. Rev. 567, 572-73 (2012). 

This may also include an outright denial of a claim by an interested party. See Pension Fund of 

Am. L.C., 377 F. App’x at 962-63 (holding that the district court did not abuse its discretion when 

it precluded former sales agent from recovering more than eight million dollars in unpaid 

commissions from company’s receivership estate, following SEC’s investigation of company, 

since sales agent had contributed to company’s perpetration of fraud on its customers by recruiting 

investors who ultimately were victimized by scheme and suffered losses). 

A receiver’s objective, therefore, is to “determine how and to whom the money will be 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 16 of 43
15 

distributed.” Id. (internal quotation marks omitted). In the end, the distribution plan should strive 

to “grant fair relief to as many investors as possible,” SEC v. Torchia, 922 F.3d 1307, 1311 (11th 

Cir. 2019), while doing so “in a logical way,” Pension Fund of Am. L.C., 377 F. App’x at 962 

(internal quotation marks omitted).5

 

Indeed, “[t]here are no set rules or specific plan terms or means of implementation that 

govern distribution plans in federal equity receiverships.” SEC v. Sunwest Mgmt., Inc., No. CIV. 

09-6056-HO, 2009 WL 3245879, at *8 (D. Or. Oct. 2, 2009). A distribution plan should include 

the “identity of the investors,” “the amounts of their purported claims,” and “what percentage of 

the assets of the receivership estate is to be distributed to each of the investors.” EB5 Asset 

Manager, 2016 WL 11486857, at *4. In summary, so long as a distribution plan is fair and 

reasonable, it should be approved. This is especially true where “funds are limited, [and] hard 

choices must be made.” Official Comm. of Unsecured Creditors of WorldCom, Inc. v. SEC, 467 

F.3d 73, 84 (2d Cir. 2006).6

B. Methods of Distribution 

“Receivership cases . . . often involve the issue of whether to use a pro rata distribution or 

a tracing method when determining the appropriate form of relief for defrauded investors’ claims.” 

HKW Trading LLC, 2009 WL 2499146, at *5 (citing SEC v. Elliott, 953 F.2d 1560, 1569-70 (11th 

 

5

 A receiver who has chosen a plan of distribution is not bound to stay committed to that plan for the 

remainder of the receivership. The receiver, in fact, can “change[] his position” or “use[] a different 

methodology” as permitted by the extensive discretion given to him by the district court. Commodity 

Futures Trading Comm’n v. Eustace, No. CIV.A. 05-2973, 2008 WL 471574, at *4 n.8, *6 (E.D. Pa. Feb. 

19, 2008). 

6

 A receiver’s authority to distribute assets may include the authority to liquidate assets. Depending on the 

circumstances, a district court’s equitable authority may “extend[] to approving a liquidation of the 

receivership estate.” Byers, 637 F. Supp. 2d at 176. Accordingly, a distribution plan may also include a 

liquidation plan. See id. at 175-76. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 17 of 43
16 

Cir. 1992)); see also Byers, 637 F. Supp. 2d at 176 (recognizing that distribution can also be made 

based on “level of risk,” timing of investment,” or “some other factor”). 

Notwithstanding a receiver’s available alternatives for distributions, “case law . . . is quite 

clear that pro rata distributions are the most fair and most favored in receivership cases.” Byers, 

637 F. Supp. 2d at 176. Indeed, “[t]racing . . . has been almost universally rejected by courts as 

inequitable.” Id. at 177 (citing Elliott, 953 F.2d at 1569); see also id. (noting that tracing is 

“difficult, time-consuming, and expensive”). Indeed, even if it is possible for a receiver to employ 

tracing, a district court will not abuse its discretion “by disallowing tracing.” Elliot, 953 F.2d at 

1569 (disallowing tracing because it would allow a defrauded investor to recoup his entire 

investment, which would elevate his position over that of similarly situated victims and cause an 

inequitable result); see also SEC v. Forex Asset Mgmt. LLC, 242 F.3d 325, 331 (5th Cir. 2001) 

(finding that the district court did not abuse its discretion in approving a pro rata distribution plan 

even though the party’s assets were held by a fraudster in a segregated account); United States v. 

Durham, 86 F.3d 70, 73 (5th Cir. 1996) (holding that the district court did not err in approving a 

pro rata distribution plan despite the fact that the majority of funds were traceable to one victim). 

Courts have set forth two factors that must be satisfied to approve a pro rata distribution. 

First, investors’ funds must have been commingled. SEC v. Credit Bancorp, Ltd., 290 F.3d 80, 88-

89 (2d Cir. 2002). The evidence of commingling does not necessarily have to be “systematic.” 

Eustace, 2008 WL 471574, at *7. “A substantial body of case law concerning distributions through 

federal equity receiverships supports equitable pooling of the assets of receivership entities in order 

to enable pro rata distributions to investors. . . .” Sunwest Mgmt., Inc., 2009 WL 3245879, at *10. 

In certain cases, courts may ignore the separate identities of entities. Byers, 637 F. Supp. 

2d at 180-81; see also Commodity Futures Trading Comm’n v. Topworth Int’l, Ltd., 205 F.3d 1107, 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 18 of 43
17 

1110 (9th Cir. 1999) (treating entities as one fund); Sunwest Mgmt., Inc., 2009 WL 3245879, at 

*8-10 (holding that receivership entities were to be considered a single fund for distribution 

purposes due to extensive commingling of funds); SEC v. AmeriFirst Funding, Inc., No. 

CIV.A.3:07-CV-1188-D, 2008 WL 919546, at *4 (N.D. Tex. Mar. 13, 2008) (finding a pooled 

distribution was equitable). 

The major characteristics of a master-feeder structure are: (1) the master fund and 

each of the feeder funds is organized as a separate legal entity; (2) each feeder fund 

generally invests all of its investable assets in the master fund; (3) interests in the 

master fund are sold privately to one or more feeder funds and the interests in the 

feeder funds are, in turn, sold privately to investors; (4) the portfolio management, 

fund accounting and custody functions of a traditional unregistered fund are 

performed at the master fund level; and (5) the distribution, shareholder servicing 

and administration functions of a traditional unregistered fund are performed at the 

feeder fund level. 

Darla M. Fera, ¶ 1115 Special Structures (2016). Here, the investor funds were raised and 

deployed through a master-feeder structure that supports treating investors in separate feeder funds 

equally. Based on the structure of the master-feeder structure in this case, which caused a 

comingling of assets, the first requirement for a pro rata distribution is satisfied. 

Second, the victims/investors must be similarly situated “with respect to their relationship 

to the defrauders.” Credit Bancorp, Ltd., 290 F.3d at 88-89. So, “where a victim seeking 

preferential treatment cannot materially distinguish his situation from that of other victims, a pro 

rata distribution is recognized as the most equitable solution.” SEC v. Alleca, No. 1:12-CV-3261-

WSD, 2017 WL 5494434, at *3 (N.D. Ga. Nov. 16, 2017). As such, in pro rata distributions, 

“investors generally occupy the same legal position as other investors.” EB5 Asset Manager, 2016 

WL 11486857, at *4 (dividing property and cash into 17 separate parcels of equal value based on 

independent third party appraisals where each of the parcels was randomly assigned to each 

defrauded investor pursuant to a blind lottery process that was overseen by the district court). Here, 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 19 of 43
18 

the Receiver’s investigation found that the investors were similarly situated. As such, a pro rata 

distribution is the most equitable approach and the approach the receiver should use in this case. 

C. Calculation of Distribution 

A receiver must also select the “method[] of calculating the pro rata distribution.” Byers, 

637 F. Supp. 2d at 181. First, the receiver “could simply ignore any distribution investors received, 

and base his calculation on the amount of the gross investment.” Id. This solution is inequitable if 

there are a large number of investors who have already received distributions. Id. Second, the 

receiver, with permission from the court, can demand the investors repay all the distributions they 

received and then, using the collected funds, make a distribution based on each investor’s actual 

investment. Id. This approach is problematic if the respective investor has already spent the money 

or otherwise no longer has the money. This means of distribution can also be costly if the investor 

does not want to part ways with his money and the receiver is forced to resort to litigation to 

reclaim the money. Id. These two methods are used sparingly. 

As a third alternative, the Receiver could employ the “rising tide” method. Id. “Under this 

allocation method . . . [t]he Receiver will deduct the amount of a claimant’s pre-receivership 

disbursements after calculating the claimant’s pro rata share of any distribution.” SEC v. Detroit 

Mem’l Partners, LLC, No. 1:13-CV-1817-WSD, 2016 WL 6595942, at *3 (N.D. Ga. Nov. 8, 

2016). “If the result is negative—meaning that the claimant has already received pre-receivership 

disbursements in excess of his or her calculated pro rata share of a distribution—that claimant will 

not participate in that distribution, although he or she may participate in later distributions.” Id.

“This method recognizes that claimants have already recovered differing percentages of their 

investment, and seeks to achieve an equal total percentage recovery for all claimants.” Id. “The 

basic goal [of the rising tide allocation] is to equalize recovery for victims regardless of whether 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 20 of 43
19 

the recovery comes before or after the commencement of the [receivership].” Michael L. Martinez, 

The Ebb of Rising-Tide Distributions in Ponzi Scheme Bankruptcies, 35 Am. Bankr. Inst. J. 16 

(June 2016). “Rising tide appears to be the method most commonly used (and judicially approved) 

for apportioning receivership assets.” SEC v. Huber, 702 F.3d 903, 906 (7th Cir. 2012). 

Last, the receiver could implement the net loss or net investment method. Byers, 637 F. 

Supp. 2d at 171. “Under this approach, any cash distributions received prior to the SEC’s filing of 

this suit would be subtracted from the total amount invested and that would be the starting point 

for the pro rata distribution.” Id. Although not used with the same regularity as the rising tide 

method, courts “sometimes use[]” the net loss method. Huber, 702 F.3d at 906. “The net loss 

approach is . . . attractive . . . when under rising tide a large number of investors . . . would receive 

nothing.” Id. at 907. “The more investors in a Ponzi scheme there are who would receive nothing 

under rising tide and might therefore have difficulty paying their future expenses, the more likely 

the net loss method is to maximize the overall utility of the investors.” Id. 

In SEC v. Huber, the court articulately described the differences between the rising tide 

and net loss methods: 

[I]magine that three investors lose money in a Ponzi scheme. A invested 

$150,000 and withdrew $60,000 before the scheme collapsed, so his net loss was 

$90,000. B invested $150,000 but withdrew only $30,000; his net loss was 

$120,000. C invested $150,000 and withdrew nothing, so lost $150,000. Suppose 

the receiver gets hold of $60,000 in assets of the Ponzi scheme—one-sixth of the 

total loss of $360,000 incurred by the three investors ($90,000 + $120,000 + 

$150,000). We’ll call these recovered assets “receivership assets.” Under the net 

loss method each investor would receive a sixth of his loss, so A would receive 

$15,000, B $20,000, and C $25,000 . . . . 

Under the rising tide method, withdrawals are considered part of the 

distribution received by an investor and so are subtracted from the amount of the 

receivership assets to which he would be entitled had there been no withdrawals. 

(When there are no withdrawals, rising tide yields the same distribution of 

receivership assets as net loss.) In our example, the total of withdrawn plus 

receivership assets is $150,000 ($60,000 + $30,000 + $0 [the withdrawals] + 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 21 of 43
20 

$60,000 [the receivership assets]), but there is only the $60,000 in such assets to 

distribute. A, having been deemed (as a consequence of the rising tide approach) to 

have “recovered” $60,000 before the collapse of the Ponzi scheme, is entitled to 

nothing from the receiver, as otherwise the remaining sum of withdrawals and 

receivership assets—a total of $90,000 ($30,000 in withdrawals, all by B, and 

$60,000 in receiver-ship assets)—would be insufficient to bring the remaining 

investors up to anywhere near A’s level. For remember that under the net loss 

method each investor would have received the same fraction of receivership assets 

as his fraction of the loss, and thus A would have received $15,000, B $20,000, and 

C $25,000. The result, since under the rising tide method withdrawals are treated 

as compensation, is that A would have been “compensated” to the tune of $75,000 

($60,000 withdrawn + $15,000 in receiver assets), B $50,000 ($30,000 + $20,000), 

and C $25,000 (the balance of receiver assets, C having had no withdrawals). 

For the “tide” to raise B and C as close to A as possible, B has to receive 

$15,000 in receiver assets, for a total “recovery” of $45,000, and C the remaining 

receiver assets, giving him $45,000 too. The division of withdrawals plus receiver 

assets is then 60–45–45, . . . versus 75–50–25 under the net loss method. 

702 F.3d at 904-06. In fact, in at least one instance in the Southern District of Florida, a Court has 

rejected a receiver’s proposal to utilize the net loss method and instead required the receiver to 

utilize the rising tide method. See S.E.C. v. Elm, Case No. 15-cv-60082-WPD at ECF No. 218 (S. 

D. Fla. May 14, 2019) (“Unlike the net loss method, the rising tide method aims to provide the 

same proportionate recovery of invested funds to all of the fraud victims regardless of whether 

they recovered some funds during the scheme.”). 

IV. The Distribution Plan 

A. Methodology 

After weighing the facts and circumstances of this case, the Receiver finds, and 

recommends, as this Court found in Elm that “a rising tide method is the most equitable means of 

distributing the Receivership funds to the Claimants.” 

The Receiver identified investor-victims that were recruited to make investments through 

Feeder Fund LTD and Feeder Fund LP. The Feeder Funds, in turn, transferred investor funds 

ultimately to the Master Fund, which in turn deployed the monies without regard to or accounting 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 22 of 43
21 

for the origin of the investment. The Master Fund, in turn, provided liquidity to the Feeder Funds 

as was necessary for each to satisfy redemption requests or otherwise conduct their affairs. 

At this time, the Receiver has sufficient cash assets to propose an initial distribution under 

the rising tide to equalize distributions among unsubordinated net losers at a minimum return of 

25% by distributing $55,452,651 upon approval of the Plan and subject to the terms and conditions 

cert forth herein. 

The Initial Distribution represents a distribution to investors of 83% of the Receivership 

Estate’s current cash. Additionally, the Initial Distribution guarantees that no unsubordinated 

investor will suffer actual cash losses that exceed 75% of their investment on a cash basis. Finally, 

the Initial Distribution will permit the Receiver to retain sufficient cash to (i) continue operating 

the Receivership for purposes of maximizing the value of the Receivership’s significant non-cash 

assets; (ii) equalize distributions to subordinated net loser claimants in the future should 

circumstances warrant; and (iii) propose future interim distributions as cash becomes available to 

further “raise the tide” under the proposed rising tide distribution. 

B. Receivership Assets 

1. Cash 

At the time of the Receiver’s appointment, the Receivership Entities’ combined U.S. bank 

accounts had a total balance of $287,683. As a result of the Receiver’s successful recoveries of 

monies, sale of non-cash assets, as well as institution and resolution of litigation matters, the 

Receivership Entities’ bank accounts at Axos Bank currently has a combined balance of 

$67,008,922. The Receivership’s income and expenses through February 14, 2022 are reflected in 

the schedule attached as Exhibit A. The Initial Distribution of $55,452,651 will leave the 

Receivership Estate a cash balance of $11,466,271. See [ECF No. 206 at §VI(A) (“Receiver’s 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 23 of 43
22 

Seventh Quarterly Status Report”)]. 

2. Non-Cash Assets 

a) Special Purpose Vehicles 

The Receivership’s most valuable assets include businesses that the Master Fund owns 

(typically as 100% member/manager) through SPVs. The Master Fund often began its relationship 

with these businesses by providing secured debt financings. When the borrower failed to meet its 

obligations, the Master Fund filed suit and ultimately executed an Article 9 UCC foreclosure sale 

of the borrower’s assets and transferred those assets to a newly formed entity owned by Master 

Fund that would resume operations. The Master Fund’s investments were funded by the Feeder 

Funds, but without regard to whether funds were invested by investors or were invested by a 

particular feeder fund. See id. at §VI(B). 

In May 2021, the Receiver closed on the sale of TCA Microgrid Energy LLC's assets as 

approved by the Court (also known as “Pivot Energy”). Id. at §III(D). The Receivership Estate 

received $52 million in net proceeds from the sale, which are included within the cash assets the 

Receiver proposed to distribute under the terms of this Plan. The Receiver anticipates distributing 

cash generated from the liquidation of the remaining SPVs through future interim distributions 

made under the proposed Rising Tide Plan. 

b) Loan Portfolio 

The Receivership Entities’ prospectuses, annual financial audits, and monthly and other 

reports listed performing loans as among the Receivership Entities’ most valuable assets. As 

explained in the Receiver’s Quarterly Status Reports, however, the Receiver and his professionals 

discovered that there were only two performing loans, and two others that were paying regularly, 

but far less than the monthly amount due under their loan agreements. Id. at §III(D). 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 24 of 43
23 

The Receiver has sought to maximize the value of the loan portfolio by prosecuting 

collection actions against borrowers indebted to the Receivership Estate where appropriate. The 

Receiver determined that it is advisable to market and sell the balance of the Receivership’s loan 

portfolio, which has a face value exceeding $110 million. The Receiver anticipates distributing 

cash generated from the liquidation of the loan portfolio through future interim distributions made 

under the proposed rising tide plan. 

c) Third Party Litigation Claims 

The Receiver and his counsel are in the process of identifying and asserting litigation 

claims against third parties that are liable to the Receivership Estate. Id. at §III(K). The proceeds 

from any recovery obtained through litigating will be made available for distribution in future 

interim and final distributions. The Receiver anticipates distributing cash recovered from litigation 

claims through future interim distributions made under the proposed Rising Tide Plan. 

d) Administrative Order Settlement Proceeds 

On September 30, 2021, the SEC reached a settlement with certain of TCA’s former 

officers and directors. See Order Instituting Administrative and Cease-And-Desist Proceedings, 

Pursuant to Section 8a of the Securities Act of 1933, Section 21C of the Securities Exchange Act 

of 1934, Sections 203(F) and 203(K) of the Investment Advisers Act of 1940, and Section 9(B) of 

the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-And-Desist Order, Administrate (the “SEC Settlement”) before the Securities and Exchange 

Commission (Administrative Proceeding File No. 3 – 20610). 

The SEC Settlement contemplates that Robert Press will pay $5,457,294 and Donna 

Silverman will pay $50,000 to the Receivership Estate over a course of 12 months (the “SEC 

Settlement Funds”). The Receiver anticipates distributing cash recovered from the SEC Settlement 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 25 of 43
24 

through future interim distributions made under the proposed Rising Tide Plan. 

C. Potential Claimants 

1. Investors 

The Receiver identified 1,461 investors in the Receivership Entities that collectively 

invested $1,161,425,343 through the Feeder Funds since their inception. In turn, investors 

withdrew $859,765,182, resulting in total net losses of $301,660,161 (in all instances the Receiver 

disregards fictitious profits generated from both alleged capital appreciation and reinvestment of 

unrealized gains)7

. 

a) Net Winners 

The Receiver identified 568 investors that withdrew from the Feeder Funds more cash than 

invested on an aggregate cash basis (“Net Winners”). The Net Winners collectively invested 

$485,907,849 in subscriptions and withdrew $563,602,432 in redemptions, resulting in an 

aggregate net cash gain of $77,694,583. A schedule detailing the aggregate cash transactions of 

each Net Winner is attached as Exhibit B. The Rising Tide Plan does not propose making 

distributions to Net Winners.8 

b) Unsubordinated Net Losers 

 

7

 As a general rule, investors in a receivership are not entitled to false or fictitious profits. Fictitious profits 

represent the purported appreciation in an investment from purported investment activities as reflected in 

account statements, contracts, and/or verbal statements to investors. Fictitious profits are only on “paper” 

because the investors associated with those accounts did not ask for distributions of those purported profits 

and did not receive any money purportedly representing those fictitious profits. CFTC v. Equity Fin. Grp., 

LLC, 2005 WL 2143975, *23 (D.N.J. 2005) (“[R]ecognizing profits or other earnings in claims for 

distribution would be to the detriment of later investors and would therefore be inequitable.”) 

8

 The Receiver, together with his counsel and forensic advisors, is in the process of analyzing the legal and 

economic viability of potential avoidance/claw-back claims against Net Winners. The Receiver reserves 

the right to bring an appropriate action against Net Winners at a later date, and does not waive the right to 

do so by filing this Plan. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 26 of 43
25 

The Receiver has further identified 893 investors that invested more cash in the Feeder 

Funds than they withdrew on an aggregate basis (“Net Losers”). The Net Losers collectively 

invested $675,517,494 in subscriptions and withdrew $296,162,750 in redemptions, resulting in 

an aggregate cash loss of $379,354,744. 

For the reasons set forth below, the Receiver proposes subordinating for distribution 

purposes the potential claims of 46 net losers that collectively invested $189,539,333 in 

subscriptions and withdrew $140,407,957 in redemptions, resulting in an aggregate cash loss of 

$49,131,376 (the “Subordinated Net Losers”). 

The remaining Net Losers represent 847 investors that supplied the Receiver with sufficient 

information to determine the nature and extent of their transactions with the Feeder Funds. This 

category of Net Loser represent investments of $485,978,161 in subscriptions and withdrawals of 

$155,754,793 in redemptions, reflecting net losses in the aggregate amount of $330,223,368 (the 

“Unsubordinated Net Losers”). 

The Rising Tide Plan proposes to pay the Initial Distribution of $$55,452,651 on a pro-rata 

basis to 670 Net Losers that have each received a return equal to or less than 25% of their aggregate 

cash investment. The first allowed investors to receive a distribution will be those who did not 

receive any payments from the Receivership Entities. Such investors will receive distributions 

until they have received a percentage return equal to the percentage return of the investors with 

the lowest non-zero percentage return. Thereafter, investors who did not receive any payments 

from the Receivership Entities, together with the investors with the lowest non-zero percentage 

return, will receive distributions until they have received a percentage return equal to the 

percentage return of investors with the second-lowest non-zero percentage return. This method 

will be followed until distribution funds are exhausted or until all allowed investors have received 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 27 of 43
26 

a 100% return, whichever occurs first. 

A schedule detailing the aggregate cash transactions of each Net Loser, together with the 

proposed Initial Distribution to each Unsubordinated Net Loser, is attached as Exhibit C. The 

Rising Tide Plan, will result in 510 Net Loser investors that have not received any redemption or 

distribution on account of their investment each receiving a distribution equal to 25% of their 

actual cash loss, reflecting a total allocation of $34,565,114 of the Initial Distribution. 

Additionally, the Initial Distribution also provides for 160 investors to receive a pro-rata 

distribution on account of their aggregate cash losses that will reduce their actual cash loss to a 

minimum of 75% of their investment. In other words, these investors’ redemptions will be 

equalized to 25% of their aggregate cash losses, reflecting a total allocation of $20,887,537 of their 

Initial Distribution. In summary, after the Initial Distribution is made, no Unsubordinated Net 

Loser will have suffered losses of more than 75% of the cash each invested on an aggregate basis. 

c) Subordinated Net Losers 

On March 8, 2021, the Receiver filed a Motion to Compel Financial Institutions to Disclose 

the Investment Details of Beneficial Owners. [ECF No. 118] (the “Motion to Disclose”). The 

Motion to Disclose requested the Court order all nominees acting on behalf of ultimate beneficial 

owners to within thirty (30) days (i) disclose the identity of the beneficial owner of each investment 

and/or subscription they facilitated in the Feeder Funds as of January 21, 2020; (ii) provide the 

Receiver with transaction history (inclusive of dates and amounts) sufficient to determine how 

much cash each beneficial owner transferred to and received from the Feeder Funds (or any other 

Receivership Entity); and (iii) provide the Receiver with the know your customer and anti-money 

laundering due diligence (documents and information) maintained for each beneficial owner in 

order to permit the Receiver to confirm that he may lawfully transfer funds to each beneficial 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 28 of 43
27 

owner. [Motion to Disclose at ¶ 11]. 

The Motion to Disclose was necessary because the books and records of the Receivership 

Entities indicated that a significant number of transactions involving investors were made through 

intermediary financial institutions acting as nominees for beneficial owners of investments in the 

Feeder Funds. Often, single nominees acted on account of more than one beneficial owner. 

The Receiver’s professionals identified 72 potential nominees that collectively invested 

over 779 million and withdrew over 554 million from the Receivership Entities broken down as 

follows: 

Currency Investments Withdrawals Net Amount 

USD $638,751,694 (472,532,825) $166,218,869 

EUR 39,891,886 (28,513,465) €11,378,421 

GBP 82,147,950 (50,489,606) £31,658,343 

CHF 19,110,022 (2,704,686) ₣16,405,336 

779,901,551 (554,240,581) 225,660,969 

The pre-receivership books and records only permitted the Receiver to reconcile accounts 

maintained by nominees in the aggregate—leaving the Receiver with an inability to determine the 

nature and extent of an individual investor’s losses or gains if that individual investor routed their 

investments and/or subscriptions through a nominee. As a result, the Receiver was unable to verify 

how much cash was received or distributed to each beneficial owner that invested through a 

nominee relative to other investors and/or subscribers. 

The limitations presented by the Receivership Entities’ books and records required the 

Receiver to either (i) request the Court compel the nominees to disclose the identity and investment 

details of the beneficial owners; or (ii) seek the disallowance or subordination of distributions to 

nominees whose beneficial owners would otherwise be entitled to receive a distribution through 

this Plan. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 29 of 43
28 

On March 9, 2021, the Court granted the Motion to Disclose. The Receiver served a copy 

of the Motion to Disclose and the Order Granting the Motion to Disclose on all nominees by 

Federal Express and e-mail, each where such information as available from Receivership records. 

The Receiver also published the Motion to Disclose and Order Granting Motion to Disclose to all 

investors that had contacted the Receiver or his professionals since its inception as well as on the 

Receiver’s website. The Receiver’s professionals spent significant amounts of time 

communicating with both nominees and ultimate beneficial owners to provide the Receiver with 

the information necessary to evaluate their potential entitlement to a distribution under this Plan. 

The Receiver provided ample notice to all nominees that their failure to provide the 

Receiver with the requested information could result in the disallowance or subordination of their 

distribution under this Plan.9

 The Receiver was successful in obtaining the cooperation of most 

nominees and beneficial owners. In several instances, nominees advised that they were precluded 

from providing the requested information under their agreements with investors, the prevailing 

laws in their jurisdictions, or both. In such instances, the Receiver provided the nominees with the 

opportunity to have their ultimate beneficial owners directly supply the required information to the 

Receiver’s professionals, and some did so. 

The Receiver prioritized obtaining the information necessary to formulate this Plan and 

was successful in doing so in many respects. Notwithstanding, the Receiver was unable to obtain 

 

9

 “Equitable subordination does not deal with the existence or non-existence of the debt, but rather 

involves the question of order of payment.” In re Lockwood, 14 B.R. 374, 380-81 (Bankr. E.D.N.Y. 

1981). “The fundamental aim of equitable subordination is ‘to undo or offset any inequality in the 

claim position of a creditor that will produce injustice or unfairness to other creditors . . . .’” Id. 

(quoting In re Westgate-California Corp., 642 F.2d 1174, 1177 (9th Cir. 1981)). “Subordination 

is an equitable power and is therefore governed by equitable principles.” Westgate-California 

Corp., 642 F.2d at 1177. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 30 of 43
29 

complete information from 46 potential claimants which resulted in the subordination of potential 

net loser distributions a set forth below: 

 Four nominees failed to respond to the Motion to Disclose in any respect. The 

transactions at issue represent $7,624,217 in subscriptions and $4,114,341 in 

redemptions, reflecting net losses in the amount of $3,509,876 that have been 

subordinated for purposes of distribution under the Rising Tide Plan. 

 Seven nominees provided deficient productions that resulted in the Receiver’s 

professionals being unable to reconcile the identity of the ultimate beneficial 

owners or their transactions with the Feeder Funds. The transactions at issue 

represent $16,440,670 in subscriptions and $10,651,917 in redemptions, reflecting 

net losses in the amount of $5,788,753 that have been subordinated for purposes of 

distribution under the Rising Tide Plan. 

 35 nominees failed to provide sufficient information as to permit the Receivers’ 

professionals to reconcile all of the transactions involving their ultimate beneficial 

owners. As a result, the Rising Tide Plan subordinates those transactions that could 

not be assigned to a particular beneficial owner because the nominee’s records were 

deficient. The transactions at issue represent $165,474,447 in subscriptions and 

$125,641,700 in redemptions, reflecting net losses of $39,832,747 that have been 

subordinated for purposes of distribution under the Rising Tide Plan. 

If the Subordinated Net Loser claims had not been subordinated under the Rising Tide Plan, 

the Receiver would have been able to equalize their distribution with that of the other net losers 

by distributing an additional $917,478. In other words, the cost of “catching up” the Subordinated 

Net Losers to the Unsubordinated Net Losers at a minimum recovery of 25% of the investor’s net 

cash investment is modest in relation to the Initial Distribution. The Receiver may consider 

proposing (at a later date and on a case by case basis), an appropriate catch-up payment to any 

investor who belatedly provides the Receiver with the information necessary to administer their 

respective claim on the same basis as other investors. 

2. Unpaid Subscribers 

Unpaid Subscribers refers to investors who paid subscription monies to Feeder Fund Ltd. 

but claim that they did not receive value for the subscription payments and that their funds remain 

held in trust by the Receivership Entities. There were 31 Unpaid Subscribers that made deposits 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 31 of 43
30 

into the Feeder Fund Ltd. accounts at Butterfield-Guernsey Bank between the period of December 

6, 2019 through February 3, 2020 summarized as follows: 

Account Currency Count Amount 

BG USD U.S. Dollars 23 $6,756,230 

BG EUR Euros 7 €876,016 

BG GBP British Pound 1 £55,370 

Total 31 

Yip Associates analyzed the Feeder Fund Ltd. accounts at Butterfield-Guernsey Bank in 

which Unpaid Subscriber funds were deposited and determined that funds from the various parties 

were commingled within the accounts and used to redeem other investors. Therefore, in order to 

allocate the remaining refund balance to the Unpaid Subscribers, the Receiver considered the 

following tracing methodologies: 

 The FIFO (First in First Out) method presumes that funds are disbursed in the order 

in which they were received. The first funds received are the first funds disbursed. 

Therefore, the balance in the accounts is attributable to the latest funds received 

from the Unpaid Subscribers and other sources. 

 The LIFO (Last in First Out) method presumes that funds are disbursed by the most 

recently deposited funds. The last funds received are the first funds disbursed. 

Therefore, the balance in the accounts is attributable to the earlier funds received 

from the Unpaid Subscribers and other sources. 

 The Pro Rata method assigns relative percentages to each source of Unpaid 

Subscriber funds and other sources of funds and then allocates withdrawals based 

on these percentages. 

 The LIBR (Lowest Intermediate Balance Rule) method assumes that the bank 

account balance is allocated to funds from other sources before disbursing Unpaid 

Subscriber funds. Only when the balance of funds from other sources are depleted, 

are Unpaid Subscriber funds disbursed. 

As mentioned, the bank accounts were commingled, therefore, in order to determine the 

amount of remaining funds for each Unpaid Subscriber, the funds must be traced. The FIFO, LIFO, 

Pro Rata, and LIBR tracing methods were considered. LIBR was determined to be inappropriate 

in this situation. Yip Associates determined that using the LIBR method is not appropriate in this scenario 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 32 of 43
31 

because there are many different sources of Unpaid Subscriber funds, which need to be treated separately. 

Under LIBR, the balance of funds from the other sources would be depleted first and then the Unpaid 

Subscriber funds would be depleted. However, there are several sources of Unpaid Subscriber funds 

comingled within the remaining account balance after the funds from other sources are depleted resulting 

in the need to have each source of Unpaid Subscriber funds allocated by applying an additional method of 

tracing (i.e. FIFO, LIFO, or Pro Rata). Below is a table summarizing the results, in aggregate by 

account, for the three tracing methods the Receiver considered. 

Account Currency 

Unpaid 

Subscriber 

Deposit Total

FIFO Method 

Remaining Funds

LIFO Method 

Remaining 

Funds 

Pro Rata 

Method 

Remaining 

Funds 

BG USD U.S. Dollars $6,756,230 $355,166 $347,250 $352,051

BG EUR Euros €876,016 €175,000 €174,686 €179,865 

BG GBP British Pound £55,370 £6,532 - £5,217 

While the amounts in total shown in the summary table above are similar, the amount of 

remaining funds differed considerably for each Unpaid Subscriber depending on which method 

was used. A schedule describing the summary results of the FIFO, LIFO, and Pro Rata tracing for 

each alleged Unpaid Subscriber is attached as Exhibit D. The Receiver proposes to distribute 

traceable funds according to the pro rata method (the “Traceable Funds”), which will benefit the 

greatest number of so-called Subscriber Claimants.10 In each instance, the investors that would 

otherwise receive Traceable Funds are Unsubordinated Net Losers that will participate in the Initial 

Distribution proposed under the Rising Tide Plan. The proposed rising tide plan does not otherwise 

grant a priority distribution to any Subscription Claimant, except as to the proceeds of the 

Traceable Funds.11 

 

10 An equity receiver has discretion to fashion a distribution plan or method that maximizes the number of 

investors who receive a distribution. See Huber, 702 F.3d at 907. 

11 A constructive trust may only be imposed on specific or identifiable property or property that can be 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 33 of 43
32 

3. Redemption Claimants 

As of December 11, 2020, the Feeder Funds had received requests from fund investors to 

redeem approximately 5,300 shares representing an aggregate cash value of $44,201,902 

(“Redemption Claims”). A schedule of the Redemption Claims is attached as Exhibit E. The 

Receiver has been advised that the Redemption Claims are afforded priority under Cayman Law 

and that the JOLs believe that they would be required by Cayman law to grant the Redemption 

Claims a priority in the distribution of receivership assets. The Receiver has not identified any 

basis under United States law to compel an inequitable result that would in effect prioritize 

claimants that sought to liquidate their [highly over stated ] positions from the Feeder Funds to the 

detriment of other investors. Additionally, prioritizing Redemption Claims could potentially 

require the Receiver to disburse funds to Net Winners and/or Net Losers in a manner that is 

inconsistent with the equities of the Rising Tide Plan. Accordingly, the Receiver does not propose 

creating a special class of Redemption Claimants distinct from the treatment under the proposed 

Rising Tide Plan. 

4. Receivership Administrative Claims 

To date, the Court has approved $6,827,172.30 in professional fees and $112,449.32 in 

out-of-pocket costs incurred by the Receiver’s professionals. The Receiver has made 

disbursements $5,449,737.06 in professional fees and $112,449.32 in out-of-pocket costs, 

representing 80% of professional fees and 100% of out-of-pocket costs. The Receivership remains 

 

clearly traced to the business owner. In Small Bus. Admin. v. Echevarria, 864 F. Supp. 1254 (S.D. Fla. 

1994) (“A constructive trust may be imposed only where the res is specific, identifiable property or can be 

clearly traced in assets of the defendant which are claimed by the party seeking relief, and may not be 

imposed on defendant's general assets.” (emphasis added) (citing Finkelstein v. Southeast Bank, N.A., 490 

So. 2d 976, 983 (Fla. Dist. Ct. App. 1986); Landers v. Sherwin, 261 So. 2d 542 (Fla. Dist. Ct. App. 1972); 

Trend Setter Villas v. Villas on The Green, Inc., 569 So. 2d 766 (Fla. Dist. Ct. App. 1990))). 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 34 of 43
33 

responsible for payment of $1,310,661.71 in professional fee holdbacks (20% of fees) that have 

been approved by the Court but not yet disbursed. See Receiver’s Interim Omnibus Applications 

for Allowance and Payment of Professional Fees and Reimbursement of Expenses [ECF Nos. 55, 

73, 111, 142, 171, 191, 206] and the Court’s Orders granting same [ECE Nos. 56, 74, 112, 143, 

172, 192, 207]. Additionally, the Receivership incurs approximately $2,500 to $5,000 in monthly 

operational expenses that are paid by the Receiver without the need for additional Court approval 

under the terms of the Receivership Order. 

5. Trade Creditors 

The Receiver has identified approximately 27 trade creditors that claim to have provided 

goods and services to either the Receivership Entities or SPVs. These trade claimants include (i) 

pre-receivership vendors and service providers; (ii) former landlords; (iii) professionals retained 

by SPVs and Receivership Entities prior to the Receiver’s appointment; and (iv) former employees 

asserting claims for unpaid compensation or damages. 

The Receiver estimates that known trade creditor claims will not exceed $3 million. A 

schedule of all known trade creditors is attached as Exhibit F. At this time, the Receiver does not 

propose making a distribution to trade creditors. The Receivership Estate has sufficient funds to 

address bona fide trade creditor/vendor claims. The Receiver will endeavor to negotiate trade 

creditor claims independently, and may propose a distribution to trade creditors at a later date.12

D. Means of Implementation 

 

12 There is no requirement that all claimants be treated in the same manner; rather, fairness only requires 

that similarly situated claimants should be treated alike. See, e.g. ̧ Quilling v. Trade Partners, Inc., No. 

1:03-CV-236, 2006 WL 3694629, at *1 (W.D. Mich. 2006) (distinguishing between fraud victims and 

general creditors); Byers, 637 F. Supp. 2d at 184 (“The Receiver’s proposal to treat differently those 

involved in the fraudulent scheme when distributions are being made is eminently reasonable and is 

supported by caselaw.”). 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 35 of 43
34 

1. Investors 

Upon approval of the Plan, the Receiver will require that each Unsubordinated Net Loser 

entitled to receive an Initial Distribution under the Rising Tide Plan submit a certificate sworn 

under oath (“Certificate”) that attests to the following representations: 

 The Unsubordinated Net Loser owns the claim against the Receivership 

Entity and has not transferred, pledged, hypothecated, or in any way 

encumbered the right to receive a distribution; 

 The proposed Interim Distribution reflects an accurate accounting of the 

cash invested and withdrawn by the Unsubordinated Net Loser from the 

Feeder Funds; 

 The Unsubordinated Net Loser has not received any collateral source 

recovery13 on account of their investment; 

 The Unsubordinated Net Loser provides the receiver with ACH/wire 

transfer instructions and know your customer and anti-money laundering 

due diligence sufficient to permit the Receiver to confirm that he may 

lawfully transfer funds to the Unsubordinated Net Loser together with such 

additional information as may be required for the Receiver to comply with 

the Bank Secrecy Act; and 

 The Unsubordinated Net Loser certifies that they are not a nominee, or 

otherwise related to or acting on behalf of an Insider.14

 

13A “collateral source recovery” is defined as the gross amount (i) of cash and non-cash assets received by, 

available to, received for the benefit of, applied to the indebtedness of, or anticipated to be received by, 

available to, received for the benefit of, or applied to the indebtedness of (whether made or to be made 

directly or indirectly to such holder or any agent, attorney, or other third party associated with the holder) 

on account of or in any way related to such Investor’s loss directly or indirectly relating to the Receivership 

Entities from all parties and sources, including, without limitation, any payments made or to be made to the 

Investor by any party other than the Receiver, including to the extent applicable from (i) the JOL’s of Feeder 

Fund LTD; and (ii) any third-party litigation recovery. Collateral Source Recoveries do not include any tax 

benefit from a theft loss deduction taken in accordance with the Internal Revenue Code, or other tax benefits 

received by an Investor, in either case as a result of losses in connection with the Feeder Funds. 

14 For purposes of the Plan, an “Insider” is defined to include Robert Press, Alysia Prior, Alyce Schreiber, 

Bernard Sumner, Matthew Luciano, Bruce Wookey, Tara Antal, Donna Silverman, Michael Vernon, and 

Steven Rosen. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 36 of 43
35 

The Receiver will send a Certificate to each Unsubordinated Net Loser qualified to receive 

an Initial Distribution within thirty (30) days of the approval of this Plan. The Receiver will request 

that each Unsubordinated Net Loser return the executed Certificate within thirty (30) days of 

receipt by the Unsubordinated Net Loser. Upon receipt of the Certificate,15 the Receiver will 

authorize the transfer of the Initial Distribution contemplated by the Rising Tide Plan. 

2. Subordinated Investor Claimants 

The Receiver does not propose a distribution to Subordinated Net Losers at this time. In 

the event that future distributions made under the Rising Tide Plan result in all Unsubordinated 

Net Losers receiving a return equal to at least 100% of the cash they invested through the Feeder 

Funds, the Receiver will propose by separate application to the Court a process for making 

distributions to Subordinated Net Losers and/or their beneficiates. 

3. Subscription Claimants 

Upon approval of the Plan, the Receiver proposes distributing the Traceable Funds to the 

Subscription Claimants on a pro rata basis the manner set forth in Exhibits D. Any distribution 

received by a Subscription Claimant of Traceable Funds shall be applied as a distribution made to 

the Subscription Claimant and will reduce the Claimant’s net loss under the Rising Tide Plan. All 

Subscription Claimants shall be required to execute a Certificate in the same form as required from 

the Unsubordinated Net Losers receiving an Initial Distribution. The proposed Rising Tide Plan 

does not otherwise grant a priority distribution to any Subscription Claimant, except as to the 

proceeds of the Traceable Funds. 

 

15 For administrative convenience, the Receiver may provide authorization to Axos Bank (the 

Receivership’s financial institution) on a periodic basis. Any funds due to an investor who does not return 

a duly authorized Certificate may be deemed forfeited and made available for distribution to other investors, 

but only after the Receiver has filed a motion seeking authority to do so. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 37 of 43
36 

4. Redemption Claimants 

The Receiver does not propose granting priority to Redemption Claimants. The Receiver 

proposes that distributions to Redemption Claimants be made in a manner otherwise consistent 

with the Rising Tide Plan. 

5. Receivership Administrative Claims 

The Receiver proposes to continue paying administrative expenses to professionals 

employed by the Receivership Estates in the ordinary course of business, subject to a 20% 

holdback and Court approval of interim and final fee applications. Accordingly, the proposed 

Interim Distribution under the Rising Tide Plan will not be impacted by the payment of 

Receivership Administrative claims. Moreover, the Receiver’s proposed Initial Distribution 

reserves sufficient cash for the Receivership to continue operations as it maximizes the value of 

its remaining assets, and as a result, increases the pool of cash available for distribution at a later 

date under the Rising Tide Plan. 

6. Trade Creditors 

The Receiver will retain sufficient cash after the Initial Distribution to address trade 

creditor claims, (“Trade Creditor Reserve”). Each trade creditor will be served with a copy of this 

Plan. The Receiver and his professionals are in the process of evaluating and negotiating trade 

creditor claims. The Receiver will seek court approval to pay trade creditors from the Trade 

Creditor Reserve when this process is complete. Accordingly, the proposed Interim Distribution 

under the Rising Tide Plan will not be impacted by the potential adjustment of trade creditor claims 

at a later date. Additionally, the trade creditors will not be prejudiced by the payment of the Initial 

Distribution because the Receivership retains sufficient cash to address their claims at later dates 

should it be determined that it is appropriate to pay trade creditor claims from funds that are 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 38 of 43
37 

otherwise available to satisfy investors. 

V. Notes and Qualifications 

The information compiled to prepare the Rising Tide Plan was obtained from the following 

prime sources: 

 Trades Export provided by former fund administrator, Circle Partners, on June 23, 

2021 ("Trades Export"). 

 Subscription Contract Notes and Redemption Contract Notes provided by Circle 

Partners. 

 Bank statements and supporting documents produced to date by financial 

institutions. 

 Ultimate beneficial owner records provided by either investor nominees or directly 

from the ultimate beneficial owners. 

 Currency conversion rates obtained from https://excelrates.com/. 

The Rising Tide Plan is conditioned by the following assumptions: 

 The distribution analysis is based on the distribution amount needed to bring 

investors to a total recovery of at least 25% under the Rising Tide Method. The 

same distribution amounts have been used to calculate the Net Investment (Pro 

Rata) Method. 

 Some investments were made using different currencies including Euros, Swiss 

Francs, and Great British Pounds. The net investment losses were converted to US 

Dollars for purposes of this distribution analysis using conversion rates as of the 

date of the Receiver’s appointment on May 11, 2020 (source: 

https://excelrates.com/). 

 The Trades Export includes transfer activity between investors and switch activity 

between currencies. Yip Associates has reconciled these transfers and switches and 

eliminated any gains records at the time of each transfer and switch. To the extent 

that Yip Associates was unable to reconcile the transfers and switches based on the 

information received to date, the claims have been subordinated. The transfer and 

switch activity are included in the subscription, redemption, and net investment 

amounts used to calculate the distribution. 

 Yip Associates has reconciled the Trades Export transactions to bank records 

received to date as well as ultimate beneficial owner records produced by Nominees 

to date. To the extent that the ultimate beneficial owner was not identified through 

the documents produced by Nominees the claims have been subordinated. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 39 of 43
38 

 The distribution analysis includes investments made into Feeder Fund Ltd. and 

Feeder Fund LP on a combined basis. 

 The Net Investment Method uses a pro rata percentage to calculate the distribution 

allocation to each investor. All investors would participate in a Net Investment 

Method distribution. The distribution as a percentage of the net investment amount 

would be the same for every investor who is eligible to participate in the 

distribution. In the Rising Tide Method, first, the investors’ percentage of loss is 

determined. Then, the distribution is calculated first to those investors with the 

largest percentage of loss until either all creditors reach the same percentage of loss 

or the funds available for distribution are depleted. 

IRS CIRCULAR 230 NOTICE: TO ENSURE COMPLIANCE WITH IRS CIRCULAR 

230, INVESTORS, CREDITORS AND PARTIES-IN-INTEREST ARE HEREBY NOTIFIED 

THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES CONTAINED OR REFERRED 

TO IN THIS DOCUMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT 

BE USED, BY INVESTORS, CREDITORS AND PARTIES-IN-INTEREST FOR THE 

PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE 

INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION 

WITH THE RECEIVER’S REQUEST FOR APPROVAL OF THE DISTRIBUTION PLAN 

ONLY; AND (C) INVESTORS, CREDITORS AND PARTIES-IN-INTEREST SHOULD SEEK 

ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT 

TAX ADVISOR. 

THIS PLAN WAS NOT FILED WITH THE SECURITIES AND EXCHANGE 

COMMISSION OR ANY STATE AUTHORITY AND NEITHER THE SECURITIES AND 

EXCHANGE COMMISSION NOR ANY STATE AUTHORITY HAS PASSED UPON THE

UPON THE MERITS OF THE PLAN. NEITHER THIS PLAN NOR THE DISCLOSURES 

CONTAINED WITHIN IT CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION 

OF AN OFFER TO BUY SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH 

OFFER OR SOLICITATION IS NOT AUTHORIZED. 

THIS DOCUMENT MAY CONTAIN “FORWARD LOOKING STATEMENTS” 

WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 

1995. SUCH STATEMENTS CONSIST OF ANY STATEMENT OTHER THAN A 

RECITATION OF HISTORICAL FACT AND CAN BE IDENTIFIED BY THE USE OF 

FORWARD-LOOKING TERMINOLOGY SUCH AS “MAY,” “EXPECT,” “ANTICIPATE,” 

“ESTIMATE” OR “CONTINUE” OR THE NEGATIVE THEREOF OR OTHER VARIATIONS 

THEREON OR COMPARABLE TERMINOLOGY. THE READER IS CAUTIONED THAT 

ALL FORWARD-LOOKING STATEMENTS ARE NECESSARILY SPECULATIVE AND 

THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL 

EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE REFERRED TO IN 

SUCH FORWARD-LOOKING STATEMENTS. 

VI. Notice of this Motion Should be Deemed Appropriate and Sufficient. 

The Receiver will post this Motion and any corresponding notice of hearing, briefing 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 40 of 43
39 

schedule, or response deadline that may be imposed by the Court on the Receiver’s website 

(https://tcafundreceivership.com/). The Receiver will also direct his counsel to email the foregoing 

to all investors that (i) received the Motion to Disclose; (ii) were registered with Circle Partners; 

or (iii) that have otherwise communicated with the Receiver in response to the Motion to Disclose. 

Additionally, the Receiver will serve the foregoing by U.S. Mail and e-mail to the known noninvestor creditors of the Receivership Entities. 

The Receiver requests that the Court approve this form of notice as reasonable, appropriate, 

and the most cost-effective means of providing notice of the hearing under the circumstances, since 

there exceeds approximately 1,400 investors both in the United States and overseas, and to the 

extent necessary, to approve the notice given as reasonable, limited notice appropriate under the 

circumstances and in the interests of time and cost. This Court, as a court of equity supervising the 

receivership estate, may make appropriate administrative orders governing the receivership, 

including limitations on, and changes in, notice and other procedures. See Fed. R. Civ. P. 5(a) and 

(c) (authorizing the court to modify service procedures when numerous defendants are involved in 

litigation). Orders limiting notice when the Bankruptcy Code or Rules would otherwise require 

notice to all creditors are routinely granted in bankruptcy cases to promote the expeditious and 

economical administration of bankruptcy estates. See In re Basil St. Partners, LLC, 477 B.R. 856, 

866 (Bankr. M.D. Fla. 2012) (noting the “underlying policy that certain bankruptcy cases, by 

necessity, [] be handled expeditiously,” and “provid[ing] flexibility . . . .” (citing 11 U.S.C. § 

102(1)(A) (defining the phrase “after notice and a hearing” to mean “after such notice as is 

appropriate in the particular circumstances, and such opportunity for hearing as is appropriate in 

the particular circumstances”)); see also In re First Alliance Mortg. Co., 269 B.R. 428, 442 (C.D. 

Cal. 2001) (referencing in dicta the bankruptcy court’s order limiting notice issued in that case). 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 41 of 43
40 

VII. Conclusion 

WHEREFORE, the Receiver respectfully requests that the Court grant the Motion and all 

relief requested therein. 

Dated: February 28, 2022 

 Miami, Florida 

 Respectfully Submitted, 

Jonathan Perlman, Esq. 

Florida Bar No. 773328 

jperlman@gjb-law.com 

Receiver for the Receivership Entities 

-andGENOVESE JOBLOVE & BATTISTA, P.A. 

100 Southeast 2nd Street, 44th Floor 

Miami, FL 33131 

Tel: (305) 349-2300 

Greg Garno 

John H. Genovese 

Florida Bar No. 280852 

jgenovese@gjb-law.com 

Paul J. Battista 

Florida Bar No. 884162 

pbattista@gjb-law.com 

Attorneys for Jonathan E. Perlman, Esq., 

Receiver for the Receivership Entities 

S.D. Fla. L.R. 7.1(A)(3) CERTIFICATE OF CONFERENCE 

Undersigned counsel certifies that he conferred with counsel for the SEC via phone and 

email regarding the requested relief and is authorized to represent that the SEC has no objection 

to the relief sought herein. Undersigned counsel certifies that he also conferred with counsel for 

the JOLs, who indicated that they will be filing a response to the Motion. 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 42 of 43
41 

CERTIFICATE OF SERVICE 

I certify that a copy of the foregoing was served via CM/ECF Notification and/or U.S. Mail 

to all parties and notification of such filing to all CM/ECF participants in this case on the 28th day 

of February, 2022. In addition, proper, timely, adequate, and sufficient notice of the Motion was 

provided via email to the investors, stakeholders, and/or interested parties’ email addresses listed 

in Exhibit G and via email and/or U.S. mail to all known non-investor creditors listed in Exhibit 

H. 

/s/ Gregory M. Garno______________ 

Attorney 

[12455-001/3476748/3] 

Case 1:20-cv-21964-CMA Document 208 Entered on FLSD Docket 02/28/2022 Page 43 of 43