UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

________________ _________________ SECURITIES AND EXCHANGE COMMISSION, Plaintiff - Appellee,

v. MANAGEMENT SOLUTIONS, INC., a Texas corporation; WENDELL A. JACOBSON; ALLEN R. JACOBSON,

Defendants.

------------------------------ ERIC WELLING; PHEASANT WOOD, LLC, Intervenors - Appellants.

and GIL A. MILLER, Receiver - Appellee. No. 19-4090 (D.C. No. 2:11-CV-01165-BSJ) (D. Utah)

________________ _________________ ORDER AND JUDGMENT *

________________ _________________

* After examining the briefs and appella te record, this pa nel has determined unanimously that oral argument would not ma terially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. FILED United States Court of Appeals Tenth Circuit 

### August 19, 2020 Christopher M. Wolpert Clerk of Court2 Before HOLMES , KELLY , and BACHARACH , Circuit Judges.

________________ _________________ In this securities-fraud case, invest ors Eric Welling and Pheasant Wood, LLC, appeal from a district court order that accepted the court-appointed receiver’s final report, terminated the receivership, and closed the case. Exercising jurisd iction under 28 U.S.C. 1291, we affirm.

B ACKGROUND In December 2011, the Securities and Exchange Commission (S EC) filed a civil

enforcement action in federal district cour t, alleging that Wendell and Allen Jacobson were committing “an ongoing offering fraud a nd Ponzi scheme” that had “raised more than $200 million from approximat ely 225 investors.” Aplt. A pp., Vol. II at 398. The Jacobsons operated the scheme “under the umbrella of Management Solutions, Inc. [MSI],” id. at 399, which had the stated goal of identifying, rehabilitating, and reselling multi-family apartment communities, id. at 401. The district court appointe d John Beckstead as receiver and froze the assets of MSI and the Jacobsons. The appointment or der directed Beckstead “to investigate the

manner in which the financial and business a ffairs of the [r]eceivership [d]efendants were

conducted and . . . institute su ch actions and legal proceedi ngs, for the benefit and on behalf of the [r]eceivership [e]state, as the [r]eceiver deems necessary and appropriate.”

Id. at 431. The order granted Beckstea d and his accounting team “reasonable compensation and expense reimbursement fro m the [r]eceivership [e]states,” and it required Beckstead, “[a]t the close of the recei vership,” to “file a final fee application,3 describing in detail the costs and benefits a ssociated with all litigation and other actions pursued by the [r]eceiver during the course of the receivership.” Id. at 435. A year later, in December 2012, MSI and the Jacobsons agreed to the entry of a final judgment exceeding $2 60 million. As part of the judgment, Beckstead acknowledged his ongoing obligation to pursu e fraudulent conduct in future actions against third parties. Welling and Pheasant Wood were two of th e many investors in this case. They

moved to intervene in the receivership based on unpaid lo ans they had made to an entity controlled by Wendell Jacobson. The district court granted the motion, and they joined the case in February 2013. In April 2014, the district court appoin ted Gil Miller as the new receiver, because

Beckstead had decided to retir e. Miller was the senior managing memb er of Rocky Mountain Advisory, LLC, which the district court had, a few weeks earlier, appointed “to provide consulting, investigation, accountin g, and other services to [Beckstead].” Id. at 583; see also id. at 543-44. As the new receiver, Miller moved to amend the appointmen t order to allow monthly interim compensation and reimbursement of expenses. In July 2014, the district court granted Miller’s motion and ordered the submission of “a detailed statement of services rendered and expenses incurred by the [receiver and his team] for the month,” and required that “[a]ny objec tion to the payment of fees or reimbursement of expenses in a [r]equest . . . be filed with the Court and se rved on the [n]o tice [p]arties within ten (10) calendar days.” Miller’s Supp. App., Vol. IV at 1022-23.4 Over the ensuing four years, Miller wo rked to resolve the remaining disputes regarding the receivership estate, includi ng liquidating the re maining receivership properties. In a “Final Application for Co mpensation and Reimbursement of Expenses,” filed in November 2018, Miller sought “appr ov[al] [of] all prior approved fees.” Id. , Vol. XV at 4062, 4072. In th e application, Miller stated th at “[a]ll services and costs were reasonably necessary to the administration of the receivership estate and beneficial at the time the services were rendered,” and that “[t]he SEC ha[d] reviewed and approved all requests.” Id. at 4065. Welling and Pheasant Wo od disagreed and sought an order “disgorg[ing] . . . fees paid to Miller and [Rocky Mountain Advisory],” alleging they had conflicts of interest “based on their engage ment to consult for [a law firm that had represented Wendell Jacobsen and MSI] in connection with the SEC’s investigation of [the Jacobsons], and because they . . . agree[d] to provide expert w itness services for the State of Utah in its prosecution of the Jac obsons.” Aplt. App., Vol. III at 586. The district court denied Welling and Pheasant Wood ’s motion, stating that Miller had carried out his duties as a receiver “in an exemplar y fashion.” Miller’s Supp. App., Vol. XVII

at 4476. In April 2019, Miller filed his “Fin al Report and Motion to Terminate Receivership and Close Action.” Aplt. App., Vol. IV at 906. Therein, he reported the payment of “100% of approved Secured Clai ms in the amount of $213,593,681” and “100% of approved Investor Claims in the amount of $139,578,138.” Id. at 909 (boldface and underline omitte d). Welling and Pheasant W ood objected, complaining that the report lacked “a final cost-benefit an alysis of claims against third parties.” Id. at5 926. The district court held two heari ngs on the matter and denied the objection, 1 stressing that “nobody has raised specific prob lems with any receivership transaction . . . throughout the course of the receivership, including the periodic accounting that occurred and the applications for compensati on that came before the Court.” Id. at 950. Consequently, the district court terminated the receivership and closed the case. Welling and Pheasant Wood now appeal, argu ing that the district court erred by granting Miller’s motion “withou t requiring a detailed cost-b enefit analysis.” Aplt. Opening Br. at 15-16.

D ISCUSSION I. Standard of Review “It is generally recognized that the di strict court has broa d powers and wide

discretion to determine relief in an equity receivership.” SEC v. Vescor Capital Corp. , 599 F.3d 1189, 1194 ( 10th Cir. 2010) (ellipsis and intern al quotation marks omitted). Accordingly, we review the district court’s order terminating the receivership and closing the case for an abuse of that discretion, see SEC v. Scoville , 913 F.3d 1204, 1213 (10th Cir.), cert. denied , 140 S. Ct. 483 (2019), which “o ccurs only when the trial court

bases its decision on an erroneous conclusion of law or where there is no rational basis in

1 At the May 15, 2019 hearing, Welling and Pheasant Wood asked the district court to delay closing the receivership so th ey could “see if ther e is more money out there.” SEC’s Supp. App. at 68. The district court no ted that they had identified “nothing by way of a specific complaint as to a specific transacti on involving a specific event,” id. at 70, and it declared, “[W]e need to bring [the receivership] to an end,” id. at 79.6 the evidence for the ruling,” Utah Licensed Beverage Ass’n v. Leavitt , 256 F.3d 1061, 1065 (10th Cir. 2001) (inter nal quotation marks omitted). II. Cost-Benefit Analysis The crux of Welling and Pheasant Wood’s a ppeal is that Miller and his team were paid too much. They state that Miller a nd his team were paid $38.4 million out of receivership assets but rec overed only $2.6 m illion pursuing “seventy-five claims (including forty-five lawsuits) against third pa rties.” Aplt. Opening Br. at 4. According to Welling and Pheasant Wood, th e district court should have required Miller to submit a cost-benefit analysis justifying his “expensiv e and largely unsuccessful efforts” against third parties, especially “[i]n light of [his] conflict” of interest. Id. at 5. We disagree. Although the district court included the re quirement of a final cost-benefit analysis in its 2011 order appointing a receiver, nothi ng prevented the cour t from terminating the receivership and closing the cas e without having received su ch an analysis. Indeed, a district court has the inherent power “to mana ge [its] own affairs so as to achieve the orderly and expeditious disposition of cases, ” which includes “the power to modify or rescind its orders at any point prior to final judgment in a civil case.” Dietz v. Bouldin , 136 S. Ct. 1885, 1891-92 (2016). As the district court noted in deciding this matter, it was time—after seven years and “3,500 docket entries,” SEC’s Supp. App. at 77—to bring the receivership to a close. The district court explained that Welling an d Pheasant Wood had numerous opportunities throughout the receivership to contest Mille r’s handling of the receivership, but they failed to do so until the very end. In partic ular, just three months after Miller became the7 receiver, the district court ordered Miller to submit monthly comp ensation and expense reports, and it established a process for contemporaneous objections, but Welling and

Pheasant Wood made none. Under these circum stances, we cannot say that the district court abused its discretion in terminating th e receivership and closing the case without receiving a cost-benefit analysis. 2 To the extent Welling and Pheasant Wood contend otherwise based on their view that Miller was a conflicted receiver, 3 we are unpersuaded for two reasons. First, the receiver is not an agent of the parties; rather, he is “an officer or arm of the court[,] . . . appointed to assist the court in protecting and preserving, fo r the benefit of all parties concerned, the properties in the court’s custody.” Crites, Inc., v. Prudential Ins. Co. of

2 Welling and Pheasant Wood point out that the requirement of a cost-benefit analysis was also contained in the SEC’ s Billing Instructions. But they do not indicate how those instructions could have c onfined the district court’s discretion in terminating the receivership. Further, the SEC supported “allowing [Miller and his team] to be paid fully for th e work that they have done and for there to be some closure.” Miller’s Supp. A pp., Vol. XVIII at 4664-65. See SEC v. Byers , 590 F. Supp. 2d 637, 644 (S.D.N.Y. 2008) (observi ng that “in a securities receivership, opposition or acquiescence by the SEC to th e fee application will be given great weight” (brackets and internal quotation marks omitted)).

3 Welling and Pheasant Wood assert that Mi ller had a conflict of interest due to (1) his consulting work for the Jacobsons during the SEC’s investigation; (2) his being designated as an expert witness fo r the state in Utah’s prosecution of the Jacobsons; (3) his accounting work for Beckstead during th e receivership; and (4) his support of Beckstead’s effort to establish the existen ce of a Ponzi scheme. But Welling and Pheasant Wood make no attemp t to show how any of these grounds actually conflicted with Miller’ s duties as receiver for the c ourt. Nor did they ever object to his appointment as receiver. They simply argue on appeal, under the rubric of “conflict of interest,” that Miller’s wo rk before becoming the receiver should have influenced the district court to require a cost-benefit an alysis. We reach only that limited argument.8 Am. , 322 U.S. 408, 414 (1944). And according to the district court, Miller discharged his duties as receiver in an “exemplary fashion, ” recovering “100 cents on the dollar of [Welling and Pheasant Wood’s] qualified claims .” Miller’s Supp. App., Vol. XVII at 4476. Second, Welling and Ph easant Wood do not explain wh y Miller’s work in this case before becoming the receiv er in 2014 necessitated his submission of a cost-benefit analysis in 2019. The district court found no such connection, and we will not upset that determination based on Welling and Pheasant Wood’s mere conj ecture that Miller and his team “squandered or wasted” receivershi p assets, Aplt. Opening Br. at 16. C ONCLUSION We affirm the district court’s judgment. Entered for the Court

Jerome A. Holmes Circuit Judge