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DEFENDANTS COMPREHENSIVE CARE OF OAKLAND, LP’S AND COMPREHENSIVE CARE OF CALIFORNIA, LLC’S

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Yosef Peretz (SBN 209288)

yperetz@peretzlaw.com

Sumy Kim (SBN 290082)

skim@peretzlaw.com 

PERETZ & ASSOCIATES

22 Battery Street, Suite 200

San Francisco, CA 94111

Telephone: 415.732.3777

Facsimile: 415.732.3791

Attorneys for Defendants COMPREHENSIVE CARE OF OAKLAND, L.P.

And COMPREHENSIVE CARE OF CALIFORNIA, LLC

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff,

Plaintiff,

vs.

SAN FRANCISCO REGIONAL CENTER, 

LLC; THOMAS HENDERSON; 

CALIFORNIA GOLD MEDAL, L.P.; 

CALLSOCKET, L.P.; CALLSOCKET II, 

L.P.; CALLSOCKET III, L.P.; 

COMPREHENSIVE CARE OF 

OAKLAND, L.P.; NA3PL, L.P.; WEST 

OAKLAND PLAZA, L.P.; 

CALLSOCKET, LLC; CALLSOCKET II, 

LLC; CALLSOCKET III, LLC; 

COMPREHENSIVE CARE OF 

CALIFORNIA, LLC; IMMEDIA, LLC; 

and NORTH AMERICA 3PL, LLC.

 Defendants.

CALLSOCKET HOLDING COMPANY, 

LLC; CALLSOCKET III HOLDING 

COMPANY, LLC; CENTRAL 

CALIFORNIA FARMS, LLC; 

BERKELEY HEALTH CARE 

DYNAMICS, LLC; and JL GATEWAY, 

LLC.

Relief Defendants.

Defendants.

Civil Case No. 3:17-cv-00223-RS

DEFENDANTS COMPREHENSIVE 

CARE OF OAKLAND, LP’S AND 

COMPREHENSIVE CARE OF 

CALIFORNIA, LLC’S OPPOSITION TO 

PLAINTIFF’S MOTION FOR 

PRELIMINARY INJUNCTION AND 

FOR APPOINTMENT OF RECEIVER

Date: March 2, 2017

Time: 1:30 p.m.

Courtroom: 3 - 17th Floor

Judge: Hon. Richard Seeborg

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TABLE OF CONTENTS

I. INTRODUCTION..................................................................................................................... 1

II. FACTUAL BACKGROUND ................................................................................................... 3

A. The Business Plan to Purchase and Operate a Nursing Home and the Formation of 

CCOO and CCOC......................................................................................................................... 3

B. Henderson Had Exclusive Control and Responsibilities over CCOO’s EB-5 Investors 

and the Investment Funds.............................................................................................................. 4

C. Ma Purchased Bay Area Health Care Center, Remodeled It and Re-open It as a New 

Nursing Home ............................................................................................................................... 6

D. Ma’s Efforts in Opening a Subacute Care Unit and Converting BAHCC into a Subacute 

Facility........................................................................................................................................... 7

E. Defendants’ Success is a Poster Child as to the Intent of the EB-5 Program..................... 8

F. Ma Recently Discovered the Henderson’s Fraudulent Conduct and Immediately Took 

Actions to Address Them.............................................................................................................. 8

G. The Current Status of the EB-5 Program Investors of CCOO ......................................... 10

H. The Continued Successful Operation of Defendants is Vital to Protect the Interest of 

CCOO’s EB-5 Investors.............................................................................................................. 11

III. LEGAL ARGUMENT ......................................................................................................... 12

A. The Court Should Not Appoint a Receivership over CCOO and CCOC............................. 12

1. The SEC Fails to Show Fraud or Wrongdoing by Defendants..................................... 12

2. The SEC Fails to Show Mismanagement or any Imminent Danger to the CCOO 

Business................................................................................................................................... 14

3. Defendants and the Limited Partners Will Be Irreparably Harmed If a Receivership is 

placed over Defendants........................................................................................................... 15

4. In Balance, the Current Receivership in the Young Case Sufficiently Protects the 

Limited Partners...................................................................................................................... 18

B. The Young Case Should Not Be Stayed........................................................................... 19

1. The Enjoining of the Young Case Receivership and Staying the State Case Does Not 

Protect All of the Investors...................................................................................................... 19

2. The Wencke I and II Case Is Not Applicable Here....................................................... 20

3. The SEC Has Not Made Showing to Grant an Injunction Enjoining the Receiver and 

the Young Case ....................................................................................................................... 20

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C. There are No Facts to Warrant a Preliminary Injunction against Defendants.................. 21

IV. CONCLUSION .................................................................................................................... 22

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TABLE OF AUTHORITIES

Cases

Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc. 999 F.2d 314 (8th Cir. 1993) ............................ 11

Fid. Bank v. Key Hotels of Brewton, LLC, No. 15- 0031-WS-M, 2015 U.S. Dist. LEXIS 48055 

(S.D. Ala. Apr. 13, 2015) ............................................................................................................ 15

In re Cedant Corp. Securities Litigation, 109 F.Supp.2d 225 (D.N.J. 2000) ................................. 13

In re Cylink Securities Litigation, 178 F.Supp.2d 1077 (N.D. Cal. 2001)...................................... 13

Limbright v. Hofmeister, No. 5:09-cv-107-KSF, 2012 U.S. Dist. LEXIS 163360 (E.D. Ky. Nov. 

15, 2012)...................................................................................................................................... 14

Negrete v, Allianz Life Ins. Co. of North America, 523 F.3d 1091 (9th Cir. 2008) ......................... 20

New York Life Ins. Co. v. Watt West Inv. Corp., 755 F.Supp. 287 (E.D. Cal. 1991)...................... 12

PNC Bank, N.A. v. Presbyterian Ret. Corp., No. 14- 0461-WS-C, 2014 U.S. Dist. LEXIS 159724 

(S.D. Ala. Nov. 13, 2014) ........................................................................................................... 15

Securities and Exchange Commission v. Goble, No. 11-12059, 2012 WL 1918819 (11th Cir. 

2012)............................................................................................................................................ 21

Securities and Exchange Commission v. United Fin. Grp. Inc., 474 F.2d 354, 358 (9th Cir. 

1973.)........................................................................................................................................... 12

Securities and Exchange Commission v. United Fin. Grp.. Inc., 474 F.2d 354, 358 (9th Cir. 

1973.)........................................................................................................................................... 21

Securities and Exchange Commission v. Bonastia, 614 F.2d 908 (3rd Cir. 1980) .......................... 20

Securities and Exchange Commission v. Keller Corporation, 323 F.2d 397 (7th Cir. 1963)......... 14

Securities and Exchange Commission v. Wencke, 577 F.2d 619 (9th Cir. 1978) ............................ 19

Securities and Exchange Commission v. Wencke, 622 F.2d 1363 (9

th Cir. 1980) .......................... 20

View Crest Garden Apartments, Inc. v. U.S., 281 F.2d 844 (9th Cir. 1960).................................... 12

Statutes

15 U.S.C. s 77t(b)............................................................................................................................ 20

15 U.S.C. ss 78u .............................................................................................................................. 20

42 U.S. Code §1395 ........................................................................................................................ 15

California Corporations Code § 15904.08 ...................................................................................... 18

Other Authorities

12 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus ........................................ 2, 11, 12

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13 James Wm. Moore, et al., Moore’s Federal Practice ................................................................ 12

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I. INTRODUCTION

Defendant COMPREHENSIVE CARE OF OAKLAND, LP (“CCOO”) and its general 

partner Defendant COMPREHENSIVE CARE OF CALIFORNIA, LLC (“CCOC”) (collectively, 

“Defendants”) were the first participants in an EB-5 Immigrant Investor Program of Defendants 

THOMAS HENDERSON (“Henderson”) and SAN FRANCISCO REGIONAL CENTER, LLC 

(“SFRC”) (collectively, the “Henderson Defendants”). After 8 years of hard work, Defendants 

became a EB-5 program success story, responsible for creating dozens of full-time and long 

serving jobs, advancing the goals of their immigrant investors, and becoming a profitable 

business. 

It all begun in 2009 when Henderson scouted Shirley Ma (“Ma”) and proposed a 

partnership where he would help her find EB-5 investors so that she could develop a business 

plan to purchase a nursing home and grow it to become a subacute nursing facility. Based on 

their respective skill set and experience, the parties decided that Henderson would handle all 

aspects of the EB-5 program and manage the funds obtained from the overseas investors. Ma, in 

turn, agreed to be responsible for the acquisition, operation, development and day-to-day 

management of the nursing facility. 

In 2010-2011 Henderson recruited foreign investors for CCOO (the “Limited Partners”) to 

execute Ma’s business plan and received EB-5 funds from these Limited Partners. Ma, on her 

part, located and acquired a failing nursing facility on the brink of losing its license and begun 

with the long and complex process to grow and upgrade the facility. By 2013, the nursing home 

was completely renovated and converted to be certified as a sub-acute care facility earning the 

highest rating available for a skilled nursing in California. Presently, Defendants employ 160 

full-time employees and generated $13.5 million in revenue as of 2016. 

At no time did Ma have access, visibility or authority to the EB-5 investment funds. 

Similarly, the Henderson Defendants had no say, interest or authority over the management or the 

operation of the facility. The relationship between the parties was limited in that Ma would make 

request for funds and Henderson provide them to her. By the end of 2013, Ma was informed that 

she had exhausted all the EB-5 funds available to CCOO, and from that point on, she funded the 

business through operating income and a $2 million loan taken for the business that Ma 

personally guaranteed. 

In the fall of 2015, Defendants learned that the Henderson Defendants were in litigation 

with a business partner who had a similar business deal as Henderson and Ma, named Alan 

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Young (the “Young Case”). Through this litigation, Defendants were shocked to discover that the

Henderson Defendants misappropriated approximately $4.7 million of Defendants’ EB-5 

investment funds. Upon this discovery, Defendants took immediate steps to secure their business. 

Ma bought Henderson of CCOC and she is now its sole owner. Defendant then filed a derivative 

Cross-Complaint against the Henderson Defendants in the Young Case to recover the investors’

funds misappropriated by them. Defendants are also in the process of certifying CCOC as a 

regional center for CCOO in order to secure the completion of its EB-5 program for the benefit of 

the Limited Partners. 

It was only after the Young Case has been pending for nearly two years with an appointed 

receiver that gathered substantial amounts of funds misappropriated by the Henderson Defendants 

that the SEC filed this instant case. Through the present Motion, the SEC now requests (1) the 

appointment of a receivership, (2) injunctive relief in enjoining the receivership in the Young 

Case and staying the Young Case entirely, (3) injunctive relief to enjoin Defendants from 

violating any federal securities laws, selling any security and destroying documents. Defendants 

respectfully request that each of the relief sought by the SEC be denied.

In determining whether a receiver should be appointed, courts often consider a variety of

factors, such as: (1) whether the defendant engaged in fraudulent conduct, (2) whether an 

imminent danger of loss of property exists, and (3) harm to the plaintiff if the request for a 

receivership is denied in comparison to the harm to the opposing party. Solis v. Matheson, 563 

F.3d 425, 438 (9th Cir. 2009). None of these factors apply to Defendants because (1) Defendants 

did not engage in fraudulent conduct but were victims of fraud, (2) there is no imminent danger or 

evidence of mismanagement of the business as CCOO nursing facility is profitable, growing and 

flourishing, (3) a receivership will cause substantial harm to the Defendants and ultimately the 

Limited Partners whom the SEC seeks to protect — CCOO is a the risk of losing its major 

contracts and its license with the State of California if a receivership is appointed over the 

business. As the appointment of a Receiver will fatally detriment Defendants and the Limited 

Partners it seeks to protect, Defendants respectfully request that Defendants be excluded from any 

order for a receivership.

As to the remaining injunction requests, the SEC cannot make a proper showing of prima 

facie case of previous violation and federal securities law and a reasonable likelihood the wrong 

will be repeated sufficient as required by law to grant an injunction. Defendants have not 

previously violated any federal securities law. Additionally, there is no likelihood of the wrong 

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being repeated because the Henderson Defendants’ assets have all be placed in a receivership in 

the Young Case and Defendants. Therefore, both injunctive reliefs requested by the SEC must be 

denied.

As to the request to enjoin the Young Case receiver and stay the case, this request must be 

denied because the SEC failed to provide any applicable legal authority to allow for such an 

order. Furthermore, such a stay would only harm all the parties involved, including the EB-5 

investors who require a swift resolution while their visa applications are pending.

Finally, although Defendants have no intention of violating any laws, selling any security 

nor destroying any documents, SEC has not made a showing of any fact to warrant such an 

injunction against Defendants. Despite this fact, Defendants would not be opposed to stipulating 

to such an order from the Court. 

Based on further arguments presented herein, Defendants respectfully request the Court to 

deny the SEC’s Motion as to the Defendants.

II. FACTUAL BACKGROUND

A. The Business Plan to Purchase and Operate a Nursing Home and the 

Formation of CCOO and CCOC 

In the fall of 2009, Henderson approached Ma and told her that he had an idea with a 

potential to access a large number of investors who were interested in the EB-5 Immigrant 

Investor Program, but that he did not have a business plan that would meet the job creation 

criteria under that program. [Declaration of Shirley Ma in Support of Opposition to Motion for a 

Receivership (“Ma Decl.) at ¶4.] Ma had no knowledge or relationship to Henderson before she 

was introduced to him during that fall. [Id. at ¶5.] At that time, Ma had no knowledge nor 

experience with an EB-5 Immigrant Investor Program time, but she had over 25 year of 

experience in the nursing home industry and had been employed as the administrator of a large 

nursing facility in Alameda for 21 years. [Id. at ¶6.] During her successful career in nursing 

homes, Ma acquired the skills, knowledge and expertise to develop and operate a unit for patients 

in need of subacute care that was part of the nursing home facility she operated in Alameda. [Id.

at ¶7.]

Ma was interested in advancing her career in the nursing homes and become an owner of a 

facility so she agreed to develop a business plan whereby she will use the EB-5 immigrant 

investor program to purchase an existing nursing home facility in the East Bay and use her skills 

to upgrade the facility, grow the business and create jobs. [Id. at ¶8.] In particular, Ma realized 

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that the EB-5 Immigrant Investor Program fit well with her plans — she was interested in forming 

a new subacute care unit in the nursing home that would be purchased, which in turn would create 

many new jobs because the operation of such a unit is very labor intensive. [Id. at ¶9.] 

The parties then agreed to be equal partners in the business with the understanding that 

each one of them would have a different set of responsibilities based on their skill-set and 

expertise. [Id. at ¶10.] The parties agreed that Ma would operate, develop, grow and manage the 

day-to-day operations of the nursing facility, while Henderson would handle the corporate 

formation, deal with the attorneys and federal government about the EB-5 Immigrant Investor 

Program, prepare and sign the offering materials that would be provided to the investors, and

manage the funds obtained from the overseas investors. [Id. at ¶11.] 

On September 10, 2010, Henderson formed CCOC as a limited liability company, and 

each party — Ma and Henderson — was to be provided 50% ownership of CCOC. [Id. at ¶12.] 

Ma took her 50% membership interest in CCOC in her own name, but Henderson insisted that his 

ownership interest in CCOC be placed under a separate entity rather than in his name personally, 

which he would end up calling SFRC. [Id. at ¶13.]

Henderson then informed Ma that he would form a partnership between CCOC and the 

foreign EB-5 investors called CCOO. [Id. at ¶14.] Henderson explained that CCOC would be 

named as the general partner of CCOO and that the EB-5 program investors would be considered 

limited partners in CCOO. [Id.] By September 14, 2010, Henderson formed SFRC and CCOO. 

[Id. at ¶15.] On October 1, 2010, SFRC and Ma entered into an Operating Agreement to operate 

CCOC. [Id. at ¶16.; A copy of the Operating Agreement is attached to the Ma Decl. at ¶17 as 

Exhibit “1”.]

B. Henderson Had Exclusive Control and Responsibilities over CCOO’s EB-5 

Investors and the Investment Funds

Upon information and belief, CCOO was Henderson’s first business that used the EB-5 

Immigrant Investor Program. [Id. at ¶17.] In discussions that took place during the time 

Henderson and Ma formed their relationship and put together their business plan, Henderson 

informed Ma that he would try to solicit twenty (20) EB-5 investors for the nursing home 

business. [Id. at ¶18.] Henderson also advised Ma that each investor will provide $500,000 in 

funds for the business, but that there would be various fees and expenses payable to SFRC, such 

as marketing and operating expenses to identify and solicit the investors as well as agency fees to 

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the individuals who would find them. [Id. at ¶19.] As such, Ma had no knowledge as to how 

much of the $500,000 would ultimately be paid to Defendants.

As agreed by the parties, Henderson was fully responsible to bringing and managing the 

EB-5 investors’ monies, and for that purpose he along with the Henderson Defendants opened and 

maintained bank accounts for those investment funds. [Id. at ¶20.] Throughout the entire time 

the Henderson Defendants managed the EB-5 investors’ monies for CCOO, neither Ma nor any 

other person at Defendants except for Henderson had signatory authority, access or visibility of 

the funds that were provided by the EB-5 investors of CCOO. [Id. at ¶21.] In particular, Ma 

never had access to the bank accounts in which EB-5 investors’ monies for CCOO were 

deposited, she had never seen any bank statements for those accounts, and up until the end of 

2016 she had never seen any accounting records for those monies.1 [Id. at ¶22.] 

As the parties hoped for, through 2010 and 2011, Henderson indeed recruited twenty (20) 

EB-5 investors for CCOO and he had informed Ma about recruiting those investors. [Id. at ¶24.] 

Upon securing the investment, each of these investors signed a Limited Partnership Agreement 

for CCOO (the “Partnership Agreement”) where CCOC was named as the “General Partner” of 

CCOO and the individual investors were designated as “Limited Partners”. [Id. at ¶25; A 

redacted copy of the Partnership Agreement is attached to Ma Decl. at ¶25 as Exhibit “2”.] 

As for the infusion of funds to the business, at the very beginning, Ma used her own funds 

to operate the business because CCOO was the first EB-5 Immigrant Investor Program used by 

Henderson and the investors’ money was not yet available. [Id. at ¶26.] Later, from November

2011 through most of 2013, Henderson would provide funds to the Defendants to operate the 

business that was in a growing mode and frequently needed an infusion of funds. [Id. at ¶27.] 

At the end of 2013, Defendants sought additional investment funds from Henderson given 

the rising costs of operations, recent construction and the large investment necessary for 

establishing a subacute-care unit at the facility. [Id. at ¶28.] However, for the first time, 

Henderson told Ma that all of the EB-5 investment monies for CCOO were already given to 

CCOO and that he can no longer provide Defendants with any additional funds. [Id. at ¶29.] Ma 

took Henderson as his word and since she had no access to the investments funds, the bank 

accounts or the accounting for those monies, she no longer asked for funds to operate the 

business. [Id. at ¶30.] 

 

1 Until very recently, Henderson was also the only person that had a relationship and the 

communications with the EB-5 investors of CCOO. [Id. at ¶23.]

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Because Henderson represented to Ma that there are no investors’ funds for CCOO, in 

January 29, 2014, CCOO took a $2,000,000 loan that Ma personally guaranteed in order to 

continue with growing the business and maintaining its operations. [Id. at ¶31; a true and correct 

copy of the relevant pages of the loan agreement is attached to Ma Decl. at ¶31 as Exhibit “3”.] 

C. Ma Purchased Bay Area Health Care Center, Remodeled It and Re-open It as 

a New Nursing Home 

While Henderson was exclusively responsible for the investment side of the nursing home 

business, Ma was the one fully responsible for operation and development of the actual business. 

[Id. at ¶32.] In that regard, Henderson Defendants, and particularly Henderson, were never 

provided access nor signatory powers to Defendants financials or bank accounts and were never 

involved in the management or day-to-day operations of the facility. [Id. at ¶33.]

1. In or around early 2010, Ma took the first steps to bring the business plan into fruition by 

locating a nursing home formerly named Oakland Springs Care Center, renamed by Ma to Bay 

Area Health Care Center (“BAHCC”), in Oakland, California. [Id. at ¶34.] At the time, BAHCC 

was a failing nursing home located in a dilapidated facility and was on the brink of losing its 

Skilled Nursing Facility (“SNF”) license issued by the Department of Health and Human Services 

of the State of California (“DHHS”). BAHCC was then rated 1-Star out of the 5-Star ranking of 

the Quality Rating System of the Centers of Medicare & Medicaid Services of DHHS. [Id. at 

¶35.] In order to purchase the facility, Ma had to go through a very rigorous application process 

with DHHS in order to ensure that the new potential licensee is equipped to run such a facility. 

[Id. at ¶36.] Based on Ma’s impeccable record, her over twenty-five years of experience in the 

healthcare industry, her experience in the industry and her twenty-one (21) year record as an 

administrator of large health care facility in Alameda, CA, the DHHS approved the application 

for change of ownership to CCOO as a licensee based on the declaration that Ma would be the 

operator. [Id. at ¶37.] 

Due to the poor state of the facility, starting November 2011, Ma proceeded to make 

extensive renovations to the interior, including but not limited to, fixtures and equipment. [Id. at 

¶38.] The remodel included the purchase of high quality hospital beds to replace outdated handcranked beds, new centralized heating and cooling systems were installed, the electrical and 

mechanical systems were replaced and upgraded to be in compliance building codes and to be in 

compliance with the requirements for subacute units. Insulation of the ventilator alarm system 

were installed and new equipment was purchased to accommodate subacute care necessities. [Id.] 

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The entire renovation of the facility was expensive, took nearly two years to complete and cost 

approximately $1.7 million. [Id.] 

Additionally, upon starting the operation of BAHCC, Ma discovered that many of the 

patients at the BAHCC facility were improperly placed there as it pertained to the level of care the 

patients needed. [Id. at ¶39.] As such, through Ma’s directive, Defendants evaluated each 

patient, transferred some of them to the appropriate facility so they could receive the appropriate 

type of care, retained the properly placed patients and admitted new patients to fill the new 

vacancies. [Id.] Needless to say, the Henderson Defendants had no involvement in any aspect of 

the upgrades made to the BAHCC facility at that time. [Id. at ¶40.] 

D. Ma’s Efforts in Opening a Subacute Care Unit and Converting BAHCC into a 

Subacute Facility

In November 2011, Ma also began implementing her plan to convert the BAHCC facility 

to a certified subacute care facility. [Id. at ¶41.] The certification into DHHS’ subacute program 

would allow BAHCC to service more medically fragile patients and patients who require special 

services, such as inhalation therapy, tracheotomy care, intravenous tube feeding, and complex 

wound management care. [Id.] Ma’s plan for this conversion was based on the fact that there 

was no subacute care facility in Oakland and the higher level of care would provide greater 

potential of revenue for Defendants. [Id.] Ultimately, the establishment of a certified subacute 

care unit at BAHCC was a two year process because of the need to follow through rigorous 

DHHS requirements. Through Ma’s efforts in obtaining quality staff, BAHCC became certified 

as a sub-acute care facility in November 2013. [Id.] 

During the successful conversion process, Defendants built a professional and capable 

team at BAHCC that has now reached 160-full time employees. [Id. at ¶42.] The positions 

created by Defendants are long-term employment positions that are not expected to disappear 

once the EB-5 Immigrant Investor Program at BAHCC achieves its goals. [Id..] Further, most of 

these full-time positions provide a career path for the employees to advance in the healthcare 

industry. [Id.] 

BAHCC is currently the only subacute care facility in Oakland, and there continues be a 

large demand for licensed subacute beds. [Id. at ¶43.] In addition, the quality of BAHCC as a 

subacute care facility is now well known in the industry as acute hospitals presently have the 

confidence to refer their high acuity patients for placements at that facility. [Id. at ¶44.] 

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Consequently, the number of subacute patients at BAHCC have grown to now constitute 37 out of 

the 79 patients in BAHCC today. [Id. at ¶45.] 

E. Defendants’ Success is a Poster Child as to the Intent of the EB-5 Program

Ultimately, BAHCC, which was on the brink of collapse 6 years ago, has now been 

revived into a thriving business that made $13,678,778 in revenue in 2016. [Id. at ¶46.] From a 

once 1-Star institution, it is now rated a 5-Star facility with DHHS and with projections of 

continued growth in staff and revenue with plans to continue expanding the facility’s subacute 

bed capacity. [Id. at ¶46.] The restructuring of BAHCC created not only a high-quality care 

facility, but improved the neighborhood, created jobs, and created new opportunity for skilled 

nurses.2 [Id.] This was all made possible through the EB-5 Immigrant Investor Program, which 

provided Defendants the opportunity to receive funding to implement a well throughout business 

plan that could not have succeeded without someone of Ma’s experience driving it. [Id.] 

F. Ma Recently Discovered the Henderson’s Fraudulent Conduct and 

Immediately Took Actions to Address Them

At the end of 2011, Henderson informed Ma that he was purchasing the Tribune Building 

in Oakland. [Id. at ¶48.] When Ma asked if the purchase of the Tribune Building was an EB-5 

project, Henderson claimed it was a personal investment which he was purchasing through a

private lender. [Id.] 

In or around end of 2014 or early 2015, Ma was informed by a Henderson Defendants 

agent that Henderson recruited four (4) additional investors designated for CCOO’s EB-5 

Immigrant Investor Program, increasing the total number of CCOO’s investors to twenty four 

(24). [Id. at ¶49.] Henderson did not inform Ma of this addition, but rather told agents of the 

Henderson Defendants to keep this as a secret from Ma. [Id.] Defendants never saw the money 

provided by these 4 new investors and to date have no idea when and how Henderson Defendants 

received those funds. [Id.] 

In the fall of 2015, Henderson informed Ma that he was in litigation with another EB-5 

program business partner, Alan Young. [Id. at ¶50.] However, Henderson reassured Ma that it 

would have no effect on Defendants even though Ma became increasingly concerned about 

 

2 For instance, BAHCC is now paving a new road in the industry as it is in the process of 

implementing a new service to provide dialysis treatment for the subacute patients. [Id. at ¶47.] 

This will be the first of its kind in Northern California; and it will serve to provide care for 

patients who would otherwise be required to remain in acute hospital, save cost for Medicare and 

MediCal and create higher paying job in the skilled nursing arena. [Id.] 

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Henderson’s conduct. [Id.] Despite Henderson’s representations, in May 2016, Defendants were 

named as defendants in the Young Case. [Id. at ¶51.] Ma only found out about this development 

from Henderson later because Henderson was still listed as the agent of service of process for the 

Defendants. [Id.] Upon notifying Ma, Henderson again reassured her that Defendants had 

nothing to do with the allegations and Mr. Young was only naming every business Henderson had 

ever been linked to in order to further harass and embarrass him. [Id. at ¶52.] Finally, Henderson

told Ma that he would be covering all legal representation of Defendants in this case, and that she 

had nothing to worry about. [Id. at ¶53.]

Through the litigation of the Young Case, around July 22, 2016, Ma was surprised to learn 

that deposit of $1,840,000 was used for the purchase of the Tribune Building originated from 

CCOO’s foreign investment funds and that the legal title of the Tribune Building was taken under 

another entity controlled by Henderson Defendants. [Id. at ¶54.] Ma immediately confronted 

Henderson on the matter, and was told by him that there was a promissory note for CCOO on the 

funds used and Defendants would be paid back in full. [Id.] Up until that time, Ma was never 

informed of that promissory note and have not seen it to date. [Id.] Ma does not believe that this 

promissory note ever existed. [Id.] 

The revelation about the large investment in the Tribune Building caused Ma to 

completely lose her trust in Henderson and the Henderson Defendants and by September 2016, 

Ma purchased Henderson’s share at CCOC (which was formally owned by SFRC) in order to 

shield and protect Defendants from the Henderson Defendants’ malfeasance and fraudulent 

conduct. [Id. at ¶55.] Ma is thus the sole member and owner of CCOC. [Id.] 

At that point, Defendants began to suspect that the fraudulent conduct by the Henderson 

Defendants did not extend to the purchase of the Tribune Building, and began to independently 

and forensically research into Defendants’ bookkeeping and accounting to discover any 

misconduct or misappropriation of monies by tracing the total investment capital Defendants 

received from the Henderson Defendants since its inception. [Id. at ¶56.] 

In early November 2016, Defendants discovered for the first time that the Henderson 

Defendants converted additional investors’ funds they had been holding in trust for CCOO 

beyond the purchase of the Tribune Building. [Id. at ¶57.] Defendants further realized that the 

Henderson Defendants had spent substantial amounts of CCOO’s EB-5 investment money for the 

purpose of funding other business ventures and/or purchasing of real estate. [Id.] Upon this 

discovery, Defendants immediately sought separate litigation counsel than the one provided to 

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them by Henderson and filed a Cross-Complaint against Henderson Defendants.3 [Id. at ¶58.] At 

this time, Ma believes $4.7 million of Defendants’ EB-5 investment funds were misappropriated 

by Henderson Defendants, aligned with SEC’s allegations. [Id. at ¶59.]

Defendants also hired outside immigration counsel who specialized in the EB-5 Immigrant 

Investor Program in an effort to protect the interested of all the limited partners of CCOO. 

[Declaration of Jason Wolf (“Wolf Decl.”) at ¶¶4 and 6.] As part of this effort, Defendants are 

currently seeking a new regional center designated by USCIS to replace SFRC’s role in their EB5 business plan in the case that the United States Immigration and Naturalization Services 

(“USCIS”) terminates SFRC as an EB-5 regional center. [Id. at ¶12; Ma Decl. at ¶60.] 

G. The Current Status of the EB-5 Program Investors of CCOO

The EB-5 Immigrant Investor Program is administered by the USCIS and requires each 

applicant to invest at least $500,000 and to create jobs for at least 10 U.S. workers. [Wolf Decl. 

at ¶7.] When applying under the EB-5 Immigrant Investor Program, the foreign investor must 

initially show that he or she is willing and able to meet the investment and job creation 

requirements of the EB-5 Immigrant Investor Program. [Id.] Upon initial approval, the USCIS 

grants the foreign investor and family (spouse and minor unmarried children) Conditional 

Permanent Residence (“CPR status”). [Id.] Two years after receiving CPR Status, the foreign 

investor must show he or she in fact did meet the investment and job creation requirements of the 

EB-5 Immigrant Investor Program [Id.] Upon satisfaction of these requirements, the USCIS will 

grant the foreign investor Lawful Permanent Residence (“LPR Status”) and the immigration 

process is completed. [Id.] If a person holding CPR Status does not satisfy the requirements for 

LPR Status, the USCIS will terminate CPR Status and institute removal proceedings, to deport the 

foreign investor from the United States. [Id.] 

However, if an EB-5 investment is placed in affiliation with an EB-5 Regional Center, 

such as SFRC, the creation of at least 10 jobs per investor may be evidenced with an Economic 

Impact Report (“EIR”) showing the calculation of both direct and indirect jobs. [Id. at ¶¶9-11.] 

Based on Defendants’ affiliation with a regional center, SFRC has provided an EIR to the USCIS 

 

3 On January 18, 2017, Defendants filed a Cross-Complaint against the Henderson Defendants in 

the Young Case for fraud, breach of fiduciary duties and other claims. [a true and correct copy of 

the Cross-Complaint is attached to the Request for Judicial Notice (“RJN”) as Exhibit “A”.] This 

action was brought as a derivative suit on behalf of CCOO’s investors. [Id.] As early as on 

November 29, 2016, Defendants attempted to file the Cross-Complaint in an Ex parte Application

but their request was denied at that time, mandating that they file a motion for leave to file the 

Cross-Complaint. [Declaration of Yosef Peretz (“Peretz Decl”) at ¶4.] Immediately after this 

Motion for Leave was granted, Defendants proceeded to file the Cross-Complaint. [Id.]

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showing the calculation of both direct and indirect jobs due to Defendants, and estimates that a 

total of more than 240 jobs will be created by Defendants, when Defendants directly employs 185 

full-time workers. [Id. at ¶13.] 

At this time, Defendants are informed and believe all of the twenty-four (24) Limited 

Partners are physically located in the United States and have all either begun or completed the 

immigration process. [Id. at ¶¶5, 14.] Eleven (11) of these twenty-four (24) Limited Partners

have already received their permanent green cards. [Id. at ¶15.] Nine (9) of these Limited 

Partners’ have completed their two-year conditional residency period and their applications for 

permanent green cards are currently pending at this time. [Id. at ¶16(a).] The four (4) remaining 

Limited Partners, who joined the EB-5 program with Defendants in late 2014, have not yet filed 

their applications for permanent green cards as they still completing their two-year conditional 

permanent residency period. [Id. at ¶16(b).] Defendants are informed and believe the earliest the 

last of this group of Limited Partners can file their application is October 2018. [Id.] 

H. The Continued Successful Operation of Defendants is Vital to Protect the 

Interest of CCOO’s EB-5 Investors

Although the three groups of CCOO’s Limited Partners are in unique situations from each 

other, the continued success of Defendants is vital to the interest of each of the twenty-four (24) 

Limited Partners. [Id. at ¶16(b).] First, the highest priority for the eleven (11) Limited Partners

who have completed the immigration process is likely to secure the return of as much of their 

investment and ultimately seek a buy out their ownership share of Defendants. [Id. at ¶16(b).] 

The Court should take note that recently 9 out of these 11 Limited Partners requested to be bought 

out from CCOO. [Ma Decl. ¶61.]

The remaining thirteen (13) Limited Partners have even a greater stake in the continued 

successful operation of Defendants as their immigration status and their investment depends on it. 

For instance, in order for their applications for permanent visas to be approved, the remaining 

thirteen (13) Limited Partners will require Defendants to reach 185 full time employees. [Wolf 

Decl. at ¶¶17-19.] Fortunately, under Ma’s management of BAHCC and based on the 

maintenance of job growth and increase in census numbers, Defendants are currently scheduled to 

reach 185 full-time employees by June 2018, and Defendants are projected to continue to 

experiencing increases to their revenue and value as a business. [Ma Decl. at ¶62; Wolf Decl. at 

¶18.]

//

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III. LEGAL ARGUMENT 

A. The Court Should Not Appoint a Receivership over CCOO and CCOC

Under federal law, appointing a “receiver is an extraordinary equitable remedy,” which 

should be applied with caution. Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc. 999 F.2d 314, 

316 (8th Cir. 1993); see also 12 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus

(“Wright, Miller & Marcus”) §2983, at 24 (2d ed. 1997). There is “no precise formula for 

determining when a receiver may be appointed.” Aviation Supply Corp., supra, 999 F.2d at 316. 

Rather, federal courts consider a variety of factors in making this determination, including, but 

not limited to, for example: (1) “whether [the party] seeking the appointment has a valid claim”; 

(2) “whether there is fraudulent conduct or the probability of fraudulent conduct,” by the 

defendant; (3) whether the property is in imminent danger of “being lost, concealed, injured, 

diminished in value, or squandered”; (4) whether legal remedies are inadequate; (5) whether the 

harm to plaintiff by denial of the appointment would outweigh injury to the party opposing 

appointment; (6) “the plaintiff’s probable success in the action and the possibility of irreparable 

injury to plaintiff’s interest in the property”; and, (7) “whether [the] plaintiff’s interests sought to 

be protected will in fact be well-served by receivership.” 13 James Wm. Moore, et al., Moore’s 

Federal Practice (“Moore’s”), § 66.04[2][b] (3d ed. 2008); New York Life Ins. Co. v. Watt West 

Inv. Corp., 755 F.Supp. 287, 292 (E.D. Cal. 1991) citing 12 Wright, Miller & Marcus § 2983. See 

also View Crest Garden Apartments, Inc. v. U.S., 281 F.2d 844, 847 (9th Cir. 1960).

While the Court has broad discretionary and equitable powers order a receiver, the Court’s 

priority is to protect the innocent Limited Partners from further harm. Defendants believe such an 

appointment would cause substantial harm to the Limited Partners in direct contrast to the SEC’s 

intent while preserving the status quo of Defendants’ operations is more likely to protect the 

Limited Partners’ interest in both getting a financial return of their cash investment and 

successfully complete the immigration process through the EB-5 Immigrant Investor Program.

1. The SEC Fails to Show Fraud or Wrongdoing by Defendants

The SEC’ Motion should be denied as it pertains to Defendants because the SEC has made 

no showing as to any existence of “fraud and mismanagement” by Defendants. SEC v. United 

Fin. Grp. Inc., 474 F.2d 354, 358 (9th Cir. 1973.) Nor could it, as Defendants themselves never

mismanaged or fraudulently used any of the funds transferred to them by Henderson. [Ma Decl. 

at ¶63.] Rather, Defendants were victims of Henderson Defendants’ scheme to 

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misappropriate the EB-5 investment monies. For instance, Defendants never had access to or 

authority over any of the EB-5 funds held in trust by Henderson Defendants nor the bank 

accounts where it was kept. [Ma Decl. at ¶64.] Second, all EB-5 monies received by Defendants 

were used to further their business plan they provided to the USCIS. [Ma Decl. at ¶65.] Finally, 

Defendants did not know of or authorize the misappropriation of funds by Henderson. [Ma Decl. 

at ¶66.] As such, the fraudulent conduct alleged by the SEC was never committed nor authorized 

by Defendants in their capacity. 

To this, SEC’s sole argument is that Henderson’s wrongful conduct should be imputed on 

Defendants on the basis of respondeat superior and vicarious liability because Henderson was a 

general partner and controlled the limited partnerships. [Motion at pp. 24-25.] This argument 

fails for two reasons: First, Henderson never had any control over Defendants. Second, this an 

oversimplification of the law as they applied to the situation at hand. Of note is that the cases 

cited by the SEC merely restate the general principle of vicarious liability and respondeat 

superior for corporations without analyzing the application of both theories over Defendants. 

This is because both theories do not apply here.

As for control over Defendants, Henderson Defendants never had any control of, access to

or authority over the operation and management of BAHCC. [Ma Decl. at ¶67.] In that regard, 

Henderson Defendants were never provided access nor signatory powers to Defendants financials 

or bank accounts. [Id.] This separation of control was mutual as Ma or Defendants lack any 

control over the Henderson Defendants and CCOO’s Limited Partners’ monies. [Ma Decl. at 

¶33.] Furthermore, Henderson was removed as a partner of Defendants in September 2016, and 

therefore he retains no control over Defendants at the present time. [Ma Decl. at ¶68.] 

Therefore, SEC fails to show any facts that support control of the Henderson Defendants of 

Defendants.

Second, the principles of vicarious liability and respondeat superior do not apply here. In 

the one case cited in the SEC’s moving papers, the court actually provides that one can only 

impute liability to the corporation “when the officer’s fraudulent conduct was (1) in the course of 

his employment, and (2) for the benefit of the corporation...” In re Cylink Securities Litigation, 

178 F.Supp.2d 1077, 1088 (N.D. Cal. 2001) quoting In re Cedant Corp. Securities Litigation, 109 

F.Supp.2d 225, 233 (D.N.J. 2000). Here, Henderson’s theft and misappropriation of Defendants’

EB-5 funds was neither in the course of his contract with Defendants nor for the benefit of 

Defendants. For instance, Section 4.5 of CCOC’s operating agreement required Henderson to act 

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in good faith and in a manner in the best interest of Defendants. [Ma Decl. at ¶16 as Exhibit “1”.] 

Similarly, Section X (A) and (G) to CCOO’s LP Agreement also required Henderson to “receive, 

invest and expend Capital Contributions...in furtherance of the Partnership’s business” in good 

faith and in the best interest of the Partnership and its Partners. [Ma Decl. at ¶25 as Exhibit “2”.] 

In direct breach of these provisions, Henderson did not act in the course of his duties and stole the 

money to benefit himself. 

Defendants’ position is aligned with the “controlling person” provision in Section 20(a) of 

the 1934 Securities Exchange Act, which provides that “[e]very person who, directly or 

indirectly, controls persons liable under any section of the 1934 Act shall likewise be liable unless 

the controlling person acted in good faith and did not directly or indirectly induce” the violation. 

Again, Defendants never had control over the Henderson Defendants nor the monies they stole, so 

no theory of liability should be asserted against Defendants. Rather, as provided extensively 

above, Defendants were victims of the same fraud, and took all possible steps to recover the 

damage caused to Defendants and the Limited Partners by the Henderson Defendants. As 

examples, Defendants have filed a Cross-Complaint the against Henderson Defendants in the 

Young Case, obtained new litigation counsel, retained new immigration counsel, and actively 

seek to designate a new regional center instead of SFRC. [Ma Decl. at ¶¶58, 60; Wolf Decl at 

¶6.] 

2. The SEC Fails to Show Mismanagement or any Imminent Danger to

the CCOO Business 

The Seventh Circuit stated in Securities and Exchange Commission v. Keller Corporation, 

323 F.2d 397, 403 (7th Cir. 1963) that:

The prima facie showing of fraud and mismanagement, absent insolvency, is 

enough to call into play the equitable powers of the court. It is hardly conceivable 

that the trial court should have permitted those who were enjoined from 

fraudulent misconduct to continue in control of (the corporate defendant’s) affairs 

for the benefit of those shown to have been defrauded. In such cases the 

appointment of a trustee-receiver becomes a necessary implementation of 

injunctive relief.

While this is the law, there has been no showing by the SEC as to any facts implicating 

Defendants of any kind of mismanagement because this is not the case with Defendants. Despite 

the fraudulent conduct by the Henderson Defendants, Defendants are the poster child of the EB-5 

Immigrant Investor Program. Through EB-5 investment funds, Ma was provided an opportunity 

to purchase a run-down facility on the brink of closure, implement a business plan, and turn the 

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facility to a flourishing business that has create new jobs for the residents in the Bay Area. 

Outside of the stain of the two pending cases, Defendants are well managed, on a path to meeting 

its job commitments to the Limited Partners and hope to provide a return on their investments to 

them. 

3. Defendants and the Limited Partners Will Be Irreparably Harmed If a 

Receivership is placed over Defendants

Most importantly, the appointment of a receivership over Defendants will not actually 

“rectify [Henderson] Defendants fraud” of the Limited Partners’ investment as alleged by the 

SEC, but rather place them further at risk due to the irreparable harm it may cause. [Motion at p. 

28.] As such, the Court must deny the SEC’s request for a receivership as to Defendants. See

Limbright v. Hofmeister, No. 5:09-cv-107-KSF, 2012 U.S. Dist. LEXIS 163360 at *10-11 (E.D. 

Ky. Nov. 15, 2012) (denying motion to appoint receiver because of risk of mismanagement of 

specialized business and the cost to bring the receiver “up to speed”). Sitting in equity, the Court 

has the discretion to avoid these risks, especially where they do not enhance existing protections. 

See Fid. Bank v. Key Hotels of Brewton, LLC, No. 15- 0031-WS-M, 2015 U.S. Dist. LEXIS 

48055 at *12-13 (S.D. Ala. Apr. 13, 2015) (denying motion to appoint receiver over hotel in the 

midst of renovations and franchise and financing negotiations because “appointing a receiver now 

could be catastrophic” since it would “almost certainly undermine (and perhaps even negate) 

[defendant’s] attempts to restore the Hotel and to make [plaintiff] whole,” and a forced sale would 

not benefit investors). The courts are further instructed to not take the extraordinary step of 

appointing a receiver in situations where a receiver would “accomplish more harm than good.” 

PNC Bank, N.A. v. Presbyterian Ret. Corp., No. 14- 0461-WS-C, 2014 U.S. Dist. LEXIS 159724 

at *38-39 n.24 (S.D. Ala. Nov. 13, 2014) (denying motion to appoint receiver absent evidence of 

mismanagement, or that the defendant could not pay routine operating costs, and given the high 

cost of managing the property under receivership and the risk that a receiver would “alienat[e], 

distract[], or discourag[e] employees”).

i. A Receivership Will Put at Risk Defendants’ Operating License

with DHHS

Federal law requires every SNF to be licensed to operate. 42 U.S. Code §1395i-3(d)(2). 

In California, the licensing of BAHCC relies heavily on the identification of the operator of the 

facility. [Ma Decl. at ¶37.] As provided above, the licensing of Defendants was predicated on 

Ma’s experience in the industry. As such, the transfer of Defendants to a receivership to someone 

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without any experience in skilled nursing care runs a risk of losing BAHCC’s license. For 

instance, the SEC seeks to appoint the Young Case’s appointed receiver, Susan L. Uecker, as the 

receiver. While Defendants do not dispute that Ms. Uecker is a well-respected receiver and 

completely suitable to serve as a receiver in this case, it would not be appropriate to place her as a 

receiver over BAHCC, which required special skills and a specific license for operations. The 

closest resemblance to Defendants in Ms. Uekcer’s previous receiverships, is the case of 

Paracelsus v. Doctors Hospital of Oakland; however, Ms. Uekcer’s receivership was limited to 

the collection of accounts receivable for the hospital. [Exhibit 50 to the Declaration of Thomas 

Eme] Despite Ms. Uekcer’s competence as a receiver to a wide range of businesses, Ms. Uecker 

simply does not have the experience, license or knowledge necessary to operate a subacute unit in 

a nursing facility. [Id.] 

ii. The Appointment of a Receivership May Terminate Defendants’

Contracts with Their Major Providers

Defendants currently are in contract with Kaiser, MediCal and MediCare to service its 

members who need skilled nursing facility services. [Ma Decl. at ¶69.] Specifically as to Kaiser, 

sixty percent (60%) of Defendants’ current patients are Kaiser members and these patients 

generated $3,008,140 of Defendants’ revenue in 2016. [Id.]

Article 4.2.2.9 of Defendants’ contract with Kaiser specifically provides that the 

assignment of a receivership would terminate the contract. [A true and correct copy of the 

relevant pages of the Agreement is attached to Ma Decl. at ¶70 as Exhibit “4”.] As subacute 

patients from Kaiser make up nearly half of the Defendants’ current patients, this would clearly 

cause a great detriment to Defendants, those Limited Partners seeking a return on their 

investments and those Limited Partners who still have not obtained a permanent visa as 

Defendants would not be able to maintain the number of full-time staff should the Kaiser contact 

be terminated.

Similarly, a receivership on Defendants is likely to be considered a change of “managing 

control” as it pertains to Defendants’ contract with MediCare. [Ma Decl. at ¶71.] Therefore, the 

appointment of a receivership creates a risk of termination of this contract as well. [A true and 

correct copy of the relevant pages of the Medicare application is attached to Ma Decl. at ¶71 as 

Exhibit “5”.] MediCare patients generated $2,051,413 in revenue for Defendants in 2016. [Id.] 

As such, the loss of Defendants contract with MediCare would also devastate Defendants’

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DEFENDANTS COMPREHENSIVE CARE OF OAKLAND, LP AND COMPREHENSIVE CARE OF CALIFORNIA, LLC OPPOSITION TO 

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financials and staffing and in turn may put the Limited Partners investment and immigration 

status at peril. 

Finally, a receivership also puts at risk Defendants’ contract with MediCal. [Ma Decl. at 

¶72.] In the agreement between the parties, provision 36 provides that the contract is not 

assignable. [A true and correct copy of the relevant pages of the MediCal Agreement is attached 

to Ma Decl. at ¶72 as Exhibit “6”.] Furthermore, provision 25(c) provides that the contract may 

be temporarily suspended if Defendants are under investigation for fraud. [Id.] Although 

Defendants have committed no wrongdoing, an appointment of a receivership may trigger 

MediCal’s suspension of the contract because of the application of the above provisions. At this 

time, MediCal patients made of $5,713,611 of 2016’s revenue for Defendants. [Id.] Defendants 

cannot sustain as a business or keep it employment of its staff should any of the contracts be 

suspended or terminated due to the receivership. [Id.] 

iii. Receivership Will Constitute a Default on Defendants’ Loans

The terms of a loan taken by Defendants on January 29, 2014 for $2,000,000 provides that 

the appointment of a receiver would constitute as an event of default and that the lender may 

declare the entire balance immediately due. [A true and correct copy of the relevant pages of the 

Agreement is attached to Ma Decl. at ¶31 as Exhibit “3”.] Defendants do not have the present 

funds to repay all of the loan at this time. [Id. at ¶73.] A default of that loan is likely to cause a 

financial crisis that will risk the Limited Partners’ investment in the business. [Id.]

In addition to the above, a receivership is likely to make it more difficult for Defendants to 

obtain lines of credit from banks and vendors. 

iv. Defendants May Risk Losing its Participation Subacute Program

Entirely

The criteria and standards provided by DHHS require the following for a Sub-Acute 

facility to operate: (1) it must be licensed, (2) certified as a long-term care Medicare and MediCal provider, (3) employ professional staff with the ability to provide care to subacute patients 

either by experience or demonstrated competence. 

Currently, Defendants are licensed as a Freestanding and Skilled Nursing Facility. Ma is 

the operator for Defendants due to her impeccable track record in the industry for over twentyfive (25) years. [Ma Decl. at ¶37.] Ma has also been responsible for the certification of 

Defendants as long-term care Medicare and Medi-Cal providers. [Id. at ¶74.] The changes of 

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DEFENDANTS COMPREHENSIVE CARE OF OAKLAND, LP AND COMPREHENSIVE CARE OF CALIFORNIA, LLC OPPOSITION TO 

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management to Defendants may affect all these factors and may risk decertification of Defendants 

as a subacute facility. 

As previously mentioned, Defendants are the only subacute facility in Oakland, the only 

subacute facility that takes MediCal in the East Bay and 37 of Defendants’ 72 patients are 

subacute patients. [Id. at ¶45.] The loss of this certification would be devastating to not only 

Defendants and the Limited Partners, but to the patients as well. 

In addition, the decertification of Defendants subacute status will require Defendants to 

downsize its staff causing risk to many of the Limited Partners’ immigration status and CCOO’s 

ability to meet the 185 full-time employees by mid-next year. [Id. at ¶62.] Finally, Ma is 

currently in the process of converting Defendants to be able to provide dialysis treatment for the 

subacute patients. [Id. at ¶47.] This would not be possible under a receivership and will 

definitely not happen if Defendants become decertified. 

Because SEC’s motion for an appointment of a receiver creates unnecessary risks to 

Defendants’ business, patients and Limited Partners while accomplishing nothing, Defendants 

respectfully requests that the SEC’s Motion for Receivership as it pertains to Defendants be 

denied.

4. In Balance, the Current Receivership in the Young Case Sufficiently 

Protects the Limited Partners 

The sole argument of the SEC as to appointing a receivership over Defendants’ business is 

that the Limited Partners may not be sufficiently protected under the receivership of the Young 

Case because the receiver therein has no explicit obligation to Defendants or the Limited Partners. 

[Motion at p. 30.] This also is a misunderstanding of Defendants’ standing in the Young Case. 

First, again, there is no showing of fraud, mismanagement or risk of loss of assets by Defendants 

to warrant a receivership over Defendants in this instant case.

Second, CCOO’s money from the Limited Partners were kept in SFRC accounts managed 

by Henderson, and they are all under a receivership in the Young Case. As the Henderson 

Defendants were the culprit to the fraudulent conduct, a receivership is already in place to protect 

the Limited Partners from further abuse of those investment funds.

Third, the receivership in the Young Case is sufficient to protect the interests of the 

Limited Partners because the Order Confirming Appointment of Receiver in the Young Case is a 

neutral one, with a fiduciary duty to all the parties in the action. [A copy of the Order is attached 

to the RJN as Exhibit “C”.] Specifically, para. 13 of said order provides: 

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DEFENDANTS COMPREHENSIVE CARE OF OAKLAND, LP AND COMPREHENSIVE CARE OF CALIFORNIA, LLC OPPOSITION TO 

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Monies coming into possession of the Receiver pursuant to her operation of the 

business thereto, and not expended for any of the purposes herein authorized, 

shall be held by said Receiver, subject to such orders as this Court may 

hereinafter issue as to their disposition, and shall be held by the Receiver in 

interest bearing accounts.”

As such, the distribution of receivership assets will be subject to the order of the Court

upon the disposition of the Young Case, and not upon the whims of the receiver as the SEC 

implies. As Defendants filed a Cross-Complaint in the Young Case, they have preserved their 

rights over the receivership assets. Notably, Defendants already participated in the mediation 

between all interested parties in the Young Case on January 25, 2017. [Peretz Decl. at ¶5.]

Finally, Defendants have a fiduciary duty to the Limited Partners and intend to vigorously 

litigate the Cross-Complaint in the Young Case to recover as much of CCOO’s assets as possible. 

As the sole member and manager of CCOC, which is the General Manger of CCOO, both 

California Corporations Code § 15904.08 and the LP Agreement place on Ma the duties to act in 

the best interest of the Limited Partners and Defendants. [Ma Decl. at ¶75; See also Section X(G) 

to CCOO’s LP Agreement, Ma Decl. at ¶25 as Exhibit “2”.] Ma has all the intentions to live up 

to her statutory and contractual obligations toward the Limited Partners. [Ma Decl. at ¶76] As 

such, the receivership in the Young Case is sufficient to protect the Limited Partners.

B. The Young Case Should Not Be Stayed

Within the SEC’s request for a receivership, the SEC also seeks an order to enjoin the 

Young Case receivership and stay the Young Case based on the argument that it is necessary to 

protect all of the investors that were defrauded and a unified receivership would promote the 

primary purpose of equity receiverships. [Motion at pp. 29-31.] However, this would be entirely 

inappropriate for several reasons.

1. The Enjoining of the Young Case Receivership and Staying the State 

Case Does Not Protect All of the Investors

The stay of the Young Case would not “protect all of the investors” as alleged by the SEC 

[Motion at p. 30.] Despite some overlap as to the material facts and some of the parties, the 

Young Case and the SEC’s case are clearly different in its causes of action and parties. [A copy 

of the Second Amended Complaint by Alan Young is attached to the RJN as Exhibit “C”.] For 

example, SEC’s case is alleged against a select few entities associated with Henderson 

Defendants, while the Young Case involves all known Henderson Entities. [Id.] The Young 

Case was also first filed, has been pending since July 22, 2015, is in an advanced stage of 

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DEFENDANTS COMPREHENSIVE CARE OF OAKLAND, LP AND COMPREHENSIVE CARE OF CALIFORNIA, LLC OPPOSITION TO 

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discovery and is set for trial for September this year. [Peretz Decl. at ¶6.] The Young Case 

involves two cross-complaints, including the one filed by Defendants as a derivative suit for the 

Limited Partners. [Id.] 

The stay of the Young Case will clearly harm Defendants and its Limited Partners as its 

claims against Henderson Defendants are not part of the SEC case and it ultimately halts any 

recovery indefinitely. As Defendants and its Limited Partners would be best served with the 

timely adjudication of the Young Case, Defendants respectfully requests that the Court deny the 

SEC’s request for stay.

2. The Wencke I and II Case Is Not Applicable Here

While the SEC cites the Wencke I case to argue that the federal court may enjoin a state 

receiver, the facts in Wencke I are not analogous to this case. [Motion at p. 32.] Although the 

Court in Wencke I held that the federal court had jurisdiction to enjoin the state court, the SEC 

failed to provide the distinguishing facts of the case. Securities and Exchange Commission v. 

Wencke, 577 F.2d 619, 623 (9th Cir. 1978) (“Wencke I”). The Court in Wencke I found it 

necessary to appoint a federal receiver and enjoin the state receiver because the state receiver was 

the wrongdoer himself. Id. at 621. Therein, Wencke was the state receiver of the asset at issue, 

and was using his status as “a protective cloak for Wencke to throw over his continued looting”. 

Id. at 622. Clearly, this is not the case here. All of Henderson Defendants’ assets ascertainable 

that was attributed to his misappropriation of the EB-5 investments are in a court-appointed 

neutral receivership in the Young Case. 

In that same regard, the stay of the state case by the federal court in Wencke II must be 

analyzed with the facts. The Court held that the “state proceeding was simply another device to 

cover Wencke’s fraud and the federal receiver was necessary to prevent further violations of 

federal securities laws and protect public investors”. Securities and Exchange Commission v. 

Wencke, 622 F.2d 1363, 1368 (“Wencke II”). Here, that is clearly not the case. The Young Case 

is legitimate civil action, which has been pending for nearly two (2) years, and is currently set for

trial by the fall of this year. 

Therefore, Wencke I and II cannot be appropriately applied here.

3. The SEC Has Not Made Showing to Grant an Injunction Enjoining the 

Receiver and the Young Case

The SEC has not made sufficient showing to grant an injunction to enjoin the Young Case 

receiver and stay the case. In considering the stay of a state case, the Court in Wencke II reasoned

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that a stay of the state court action is appropriate: “(W)henever it appears to the Commission that 

any person is engaged or is about to engage in acts or practices” which violate the securities laws. 

See 15 U.S.C. s 77t(b) (Securities Act of 1933); 15 U.S.C. ss 78u(d) & (e) (Securities Exchange 

Act of 1934). Wencke II at p. 1368-1369. This is aligned with the congressional intent of 15

U.S.C. §78u, which provides authority for the SEC to seek injunctions. Specifically, case law has 

previously interpreted 15 U.S.C. §78u as a deterrence to stop the violator from committing future 

infractions. Securities and Exchange Commission v. Bonastia, 614 F.2d 908, 912 (3rd Cir. 1980). 

Here, the SEC has made no showing that Defendants or any of the parties to the Young 

Case are engaged or about to be engage in acts or practices that violate the securities laws. As 

such, SEC has not made sufficient showing to grant any injunction at this time.

Finally, case law provides that a stay of a state action should be invoked when federal 

injunctive relief is necessary to prevent state court from so interfering with federal court’s 

consideration or disposition of case as to seriously impair federal court’s flexibility and authority 

to decide that case. Negrete v, Allianz Life Ins. Co. of North America, 523 F.3d 1091, 1101-1102 

(9th Cir. 2008). The Court is to construe doubts about the permissibility of an injunction “in favor 

of permitting the state courts to proceed in an orderly fashion to finally determine the 

controversy”, and “the mere fact that a state court may reach a conclusion that differs from what a 

federal court would prefer does not change the result.” Id. 

The SEC has made no showing that the continued litigation of the Young Case would 

interfere with the federal’s court’s consideration or disposition of case as to seriously impair the 

federal court’s flexibility and authority to decide this case. As such, the request should be denied.

C. There are No Facts to Warrant a Preliminary Injunction against Defendants 

As provided by SEC’s moving papers, only “upon proper showing” of prima facie case of 

previous violation and federal securities law and a reasonable likelihood the wrong will be 

repeated can the Court grant injunctive relief. [Motion at p. 21.] 

Here, SEC has not made a showing of either of these elements as it pertains to Defendants; 

and therefore, should be denied. First, as provided above, the SEC has made no showing as to 

any existence of “fraud and mismanagement” by Defendants. SEC v. United Fin. Grp.. Inc., 474 

F.2d 354, 358 (9th Cir. 1973.) Second, there is no risk that the wrong will be repeated by 

Defendants. Henderson Defendants, who were the wrongdoers, has never had control or access to 

Defendants’ operation or management of the facility. [Ma Decl. at ¶¶21-22.] Most importantly, 

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Henderson was never provided any signatory authority over Defendants accounts, and Henderson 

sold his interest in CCOC to Ma on September 2016. [Id. at ¶33.]

As to the specific relief requested, the SEC’s request that Defendants be enjoined from 

violating federal securities laws is superfluous, improper and in violation of FRCP 65(d)(1). See 

SEC v. Goble, No. 11-12059, 2012 WL 1918819 (11th Cir. May 29, 2012). Despite this, 

Defendants have not and have no intention to violating any federal securities laws. [Id. at ¶77.] 

Defendants also do not intend to participate in the issuance, offer, or sale of any security of any 

entity controlled by, or under joint control with, any of them. [Id. at ¶78.] Finally, Defendants 

will not be destroying any documents. [Id. at ¶79.] Notably, Defendants already provided a nonspoliation letter to the SEC upon their request, despite it being Defendants’ policy to shred all 

patient files within seven (7) years. [A copy of the letter and excerpts of the policy is attached to 

Peretz Decl. at ¶7 as Exhibit “A”.]

IV. CONCLUSION

As provided above, it is clear that the interest of the Limited Partners includes not only the 

value of their investment, but also (and perhaps more importantly) the status of their EB-5 visa 

applications. Accordingly, in contrast to the typical receivers appointed in SEC matters who are 

tasked solely with preserving assets of the receivership, a receiver appointed in this action should 

work to promote both financial and non-financial goals. However, the imposition of a 

receivership on Defendants will be only be at an enormous and unnecessary cost to Defendants, 

cause irreparable harm to Defendants’ business and result in the exact opposite intent of the SEC

in protecting its Limited Partners. 

Similarly, the SEC’s motions for preliminary injunctions are not warranted. In particular, 

the request to enjoin the Young Case receiver and stay the action and will only serve to further 

harm Defendants and its’ limited partners, delaying recovery for an indefinite period of time.

Based on the arguments presented above, Defendants respectfully request the Court to 

deny the SEC’s Motion in its entirety.

Dated: February 9, 2017 PERETZ & ASSOCIATES

By: /s/Yosef Peretz 

 Yosef Peretz

 Sumy Kim

Attorneys for Defendants 

COMPREHENSIVE CARE OF 

OAKLAND, L.P. and COMPREHENSIVE 

CARE OF CALIFORNIA, LLC

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