UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 20-CIV-81205-RAR

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

v.

COMPLETE BUSINESS SOLUTIONS GROUP,

INC. d/b/a PAR FUNDING, et al.,

Defendants.

/

DEFENDANTS’ OBJECTION TO RECEIVER RYAN K. STUMPHAUZER'S 

THIRD APPLICATION FOR ALLOWANCE AND PAYMENT OF 

PROFESSIONALS' FEES AND REIMBURSEMENT OF EXPENSES FOR 

JANUARY 1, 2021-MARCH 31, 2021.

The Defendants respectfully submit this memorandum in support of their objections to the 

Receiver’s Third Application for Allowance and Payment of Professionals’ Fees and Reimbursement 

of Expenses for January 1, 2021 through March 31, 2021 in the amount of $2,322,620.00 to the 

professionals engaged by the Receiver for fees incurred and reimbursement of $57,491.00 in expenses 

for a total payment of $2,380,111.00. (DE 589, p.2). As discussed below, the billing statements 

request reimbursement for expenses that are a blatant waste of the receivership estate’s assets. 

The Applicable Law

There is no dispute that a District Court's power over a receiver is a matter for the District Court's 

discretion. Indeed, a receiver "is a creature of equity" whose powers “are limited by the district judge's 

concept of equity." In re Wiand, No. 8:10-cv-71-T-17MAP, et al., 2012 U.S. Dist. LEXIS 22667, 

2012 WL 611896, at *5 (M.D. Fla. Jan. 4, 2012). A receiver "receives h[er] power and authority 

directly from the court and therefore is subject to the court's directions and orders in the discharge of 

h[er] official duties." SEC v. Elfindepan, S.A., 169 F. Supp. 2d 420, 424 (M.D.N.C. 2001). It is 

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particularly relevant to the instant motion that once appointed, a receiver is a "neutral officer of the 

Court." Sterling v. Stewart, 158 F.3d 1199, 1201 n.2 (11th Cir 1998). Put another way, the receiver 

must be impartial between parties, although that impartiality "does not extend to h[er] relationship 

with the receivership estate" as receivers owe a "'fiduciary duty to the owners of the property under 

h[er] care' and thus must 'protect and preserve' the receivership's assets 'for the benefit of the persons 

ultimately entitled to it.'" SEC v. Schooler, No. 3:12-cv-2164-GPC-JMA, 2015 U.S. Dist. LEXIS 

46870, 2015 WL 1510949, at *3 (S.D. Cal. March 4, 2015) (quoting Sovereign Bank v. Schwab, 414 

F.3d 450, 454 (3d Cir. 2005). As neutral officers of the court, however, receivers must avoid the 

appearance of impropriety or partiality in their actions. Schooler, 2015 U.S. Dist. LEXIS 46870, 2015 

WL 1510949, at *3. See also FTC v. On Point Global LLC, 2020 U.S. Dist. LEXIS 180255, at *11 

(S.D. Florida September 30, 2020).

Courts should scrutinize fee applications to ensure they are reasonable. Hensley v. Eckerhart, 

461 U.S. 424, 433 (1983). Even in the absence of an objection, courts should carefully examine 

Receivers’ fee applications to determine whether the time spent, services performed, hourly rates 

charged, and expenses incurred are justified under the factors set forth in Johnson v. Georgia Highway 

Express, Inc., 488 F.2d 714 (5th Cir. 1974). SEC v. Megafund Corp., 2008 WL 2839998, *2 (N.D. 

Tex. June 24, 2008). The amount of the award, and any reduction in the amount sought, is within the 

discretion of the trial court. See, e.g., United States Football League v. National Football League, 887 

F.2d 408, 415 (2nd Cir. 1989).

Here, the receiver’s billing records show that some of his conduct is wasteful of the estate’s 

assets.

The Receiver is Wasting Receivership Assets

In the time frame allowed for this objection, counsel has been unable to sift through the over 800 

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pages of billing records supplied by the Receiver in support of his bill.1

 However, an example of 

what we believe is the wasteful spending of the receivership’s estate is the inordinate and unnecessary 

amount of billing related to investigator travel and their use of excess manpower. Thus, rather , rthan 

retaining an investigator in the Pennsylvania area where Par Funding and most of the relevant 

witnesses are located, the receiver retained as its investigator HD Investigative Group (HDIG) located 

in Miami, Florida. According to the receiver’s billing records submitted to the Court for approval, on 

January 10, 2021, three HDIG investigators spent six hours for “PA Inv. Trip Prep/Inv. Research.” 

The receivership was billed $1350.00. On January 19, 2021, rather than simply using Zoom or another 

virtual method to conduct it business, three HDIG investigators flew to Pennsylvania for “Prep/Doc 

Review,” and billed for 15 hours of time at a cost of $3375.00. That same day, two HDIG investigators 

interviewed “JK [James Klenk] in PA” for 6 hours and billed the estate $1375.00.2 In sum, HDIG 

billed the estate for 19 hours of investigative work in one day. The following day, January 20, two

HDIG investigators travelled to New York City, New Jersey and back to Pennsylvania to conduct 

interviews. They billed the estate for 13 hours of time at a cost of $2925.00. The use of Zoom would

have eliminated the need for all travel time. On January 21, three HDIG investigators travelled to 

various properties for “Inventory Search/Pics/Locksmith” and billed the estate for 30 hours in a single 

day, at a cost to the estate of $6750.00. On January 22, 2021, the three investigators flew back to 

Florida and charged the estate $2,025 for nine hours of travel time. In total, HDIG charged the 

receivership $$50,905.00 for 226.25 hours of work during the instant billing period (DE 589-7) 

$32,118.00 of which was in the month of January alone, a substantial portion of which was comprised 

of travel and the unnecessary use of multiple investigators.3

1

 We note that during the period covered by this Application, the Receiver and SFSRK billed 926.6 hours. 

Put another way, the Receiver and SFRSK spent over 10 hours a day, seven days a week, for 90 days on this 

matter. This does not include legal work for any other cases the firm is engaged in. 

2 Klenk, who used to work for Par Funding, is now employed by DSI. 

3

Ironically, on January 4, 2021, HDGI used Zoom to speak with the receiver’s office located about 30

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It is inconceivable that this type of profligate spending is consistent with the receiver’s fiduciary 

obligation to “protect and preserve” the estate’s assets. For all of these reasons, the Defendants object 

to the bill as proposed.

Dated: May 28, 2021

Respectfully submitted,

Michael Bachner, Esq.

Bachner & Weiner PC

Co-Counsel for Lisa McElhone

39 Broadway

Suite 1610

New York, NY 10006

(212) 344-7778

mb@bhlaawfrm.com

Michael F. Bachner

MICHAEL BACHNER

Admitted Pro Hac Vice

Alejandro Soto, Esq.

Daniel Fridman, Esq.

Co-Counsel for Joseph LaForte

Fridman Fels & Soto, PLLC

2525 Ponce de Leon Blvd., Suite 750

Coral Gables, FL 33134

(305) 569-7701

asoto@ffslawfirm.com

dfridman@ffslawfirm.com

Alejandro O. Soto

ALEJANDRO O. SOTO

Florida Bar No. 172847

Bettina Schein, Esq.

Attorney for Joseph Cole Barleta

565 Fifth Avenue, 7th Floor

New York, New York 10017

(212) 880-9417

bschein@bettinascheinlaw.com

minutes from their offices (DE 589-10, p.215), but charged the estate for flights to Pennsylvania, New York,

and New Jersey.

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Bettina Schein

BETTINA SCHEIN

Admitted Pro Hac Vice

Andre G. Raikhelson, LLC

301 Yamato Road, Suite 1240

Boca Raton, FL 33431

(954) 895-5566

arlaw@raikhelsonlaw.com

Andre G. Raikhelson

Andre G. Raikhelson Esq.

Bar Number: 123657

Law Offices of Alan S. Futerfas

Attorneys for Lisa McElhone

565 Fifth Avenue, 7th Floor

New York, New York 10017

(212) 684-8400

asfuterfas@futerfaslaw.com

Alan S. Futerfas

ALAN S. FUTERFAS

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6

Admitted Pro Hac Vice

KOPELOWITZ OSTROW

FERGUSON WEISELBERG GILBERT

Attorneys for Joseph W. LaForte

One W. Las Olas Blvd., Suite 500

Fort Lauderdale, Florida 33301

(954) 525-4100

David L. Ferguson

DAVID L. FERGUSON

Florida Bar Number: 0981737

Ferguson@kolawyers.com

SETH D. HAIMOVITCH

Florida Bar Number: 0085939

Haimovitch@kolawyers.com

GRAYROBINSON, P.A.

Attorneys for Lisa McElhone

Joel Hirschhorn, Esq.

333 S.E. 2d Avenue, Suite 3200

Miami, Florida 33131

(305) 416-6880

joel.hirschhorn@gray-robinson.com

Joel Hirschhorn

JOEL HIRSCHHORN

Florida Bar #104573

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