1

2

J

4

5

6

7

8

9

10

1l

12

13

t4

15

T6

T7

18

I9

20

21

22

23

24

25

26

27

28

J

J

ñs O 'o ê37

"." ä

ãñü (! -. .g .98

c qñ

o:o øo .

o_! ol:E

OO !

c

(.)

3

009589.0024\485 50ó2.6 3 : 1 7-CV-00223 -RS

Elizabeth Berke-Dreyfuss (Bar No. 114651)

WENDEL, ROSEN, BLACK & DEAN LLP

I 1 I 1 Broadway, 24'n Floor

Oakland, California 94607 -4036

Telephone: (510) 834-6600

Fax: (510) 834-1928

Email : edreyfuss@wendel.com

Attorneys for Susan L. Uecker, Receiver

LTNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

Case No. 3 : 17-CV-00223-RS SECURITIES AND EXCHANGE

COMMISSION,

Plaintiff,

-andCALLSOCKET HOLDING COMPANY, LLC;

CALLSOCKET III HOLDING COMPANY'

LLC; BE,RKELEY HEALTHCARE

nvÑevtcS, LLC; CENTRAL CALIFORNIA

FARMS, LLC; ANd JL GATEV/AY, LLC,

Relief Defendants'

RECEIVER'S MOTION FOR ORDER

AUTHORIZING CLOSING CALLSOCKET II, L.P

CALL CENTER

RECEIVER'S MOTION FOR ORDER

AUTHORIZING CLOSING OF

CALLSOCKET II, L.P. CALL CENTER

VS

SAN FRANCISCO RE,GIONAL CENTER, LLC;

THOMAS M. 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.; V/EST

OAKLAND PLAZA, L.P.; CALLSOCKET,

LLC; CALLSOCKET II, LLC; CALISOCKET

il, LLC; COMPREHENSIVE CARE OF

cÁlmonNlA, LLC; IMMEDIA, LLC; and

NORTH AMERICA 3PL, LLC,

Defendants,

Date:

Time:

Place:

Judge

October 26,2017

1:30 p.m.

450 Golden Gate Ave.

17th Floor, Ctrm. 3

San Francisco, CA 94102

The Hon. Richard Seeborg

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 1 of 15
1

2

J

4

J

J

c

(!

o

C)

ø

o

(!

d)

j

0)

o

t

j

c) þ

c

0)

=

ß:

¡o

!ËYO@

:s

o

5

6

7

8

9

10

11

l2

13

t4

15

t6

T7

18

19

20

2l

22

23

24

25

26

27

28

009589.0024\4855062.6 3:17-CV-00223-RS

Susan L. Uecker, the duly appointed receiver (the "Receiver") for Defendants San

Francisco Regional Center, LLC; California Gold Medal, L.P.; CallSocket, L.P.; CallSocket II,

L.P.; CallSocket III L.P.; NA3PL, L.P.; V/est Oakland Plaza, L.P.; Callsocket, LLC; CallSocket

II, LLC; Callsocket III, LLC; Immedia, LLC; Comprehensive Care of California, LLC;

Comprehensive Care of Oakland, L.P.; and North America 3PL, LLC; and Relief Defendants

CallSocket Holding Company, LLC; CallSocket III Holding Company, LLC; Central California

Farmso LLC; JL Gateway, LLC; and Berkeley Healthcare Dynamics, LLC (collectively the

"Receivership Entities"), will and does hereby move the above-captioned Court on October 26,

Z0l7,at 1:30 p.m. (or as soon thereafter as the Court may hear) for an order with respect to the

Receiver's Motion for Order Authorizing Closing of Callsocket II, L.P. ("CallSocket II") Call

Center ("Motion").

The Receiver's Motion is brought pursuant to provisions of the Order Appointing Receiver

and Monitor ("Appointment Order"), fl 38. (Docket No. 100) and the Court's general equitable

powers over equity receiverships and the Receiver's business judgment.

The Receiver's Motion is supported by the following Memorandum and the declarations of

Susan L. Uecker, and James Yang and the exhibits, and Request for Judicial Notice, and the

proposed form of order granting this Motion attached hereto as Exhibit A, filed herewith.

MEMORANDUM IN SUPPORT OF MOTION

I. INTRODUCTION

The Receiver has been grappling with the future operations of the CallSocket II call center

since she was the Receiver in the State Court Action.l The call center was losing approximately

$122,000 when the State Court placed a hiring freeze on the call center operations. Shortly before

the Securities and Exchange Commission ("SEC") commenced this action, the State Court

intended to consider alternative proposals for the operation of the call center. In the intervening

I young v. Henderson et al., Çur-. No..RG15778891, pending before the Superior Court

State oTCalifornia, County of Alameda.

of the

RECEIVER'S MOTION FOR ORDER

AUTHOzuZING CLOSING CALLSOCKET II' L.P

CALL CENTER

2

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 2 of 15
I

2

J

4

5

6

7

J

J

c-ÑH9bg

"ð.È ãk;

:>: co::

c!ã

o Yo Øo .

o-9 d-ã-: 

= (¡)o þ

c

6)

=

26

27

28

009589.0024\48550ó2.ó

8

9

10

11

t2

13

t4

15

t6

t7

18

19

nine months, the Receiver has concluded that rather than pursuing continuing operations, the call

center should be closed. Uecker Decl"']f 2'

ThismatterwasinitiallybroughtbeforetheCourtpursuanttoacomplaintfiledonJanuary

17,2017,by the SEC alleging that the named Defendants had exploited a federal EB-5 visa

program by defrauding investors seeking to invest in the job creation pfogram' eaffr a return on

their investments and obtain a permanent U'S

(Docket No' l)'

visa as a way towards United States residency'

on January 20,20|7,the SE,C filed a motion seeking, among other things, an otdet

appointingareceiverovertheentityDefendantsandReliefDefendants.(DocketNo.l0).

TheCourtenteredtheorderGrantingMotionforPreliminarylnjunctionandtoAppointa

Receiver on March 23,20|T,pursuant to which the Court, among other things, appointed Susan L.

uecker as Receiver over most of the entities and Monitor over four entities. Thereafter, the

Receiver was appointed receiver over the remaining four entities. (Docket Nos' 96' 100, 171)'

PursuanttotheprovisionsoftheAppointmentorder,onJune26,20IT,theReceiverfiled

her Recovery Plan. (Appointment order, tf 49, Docket No' 185)' That plan addressed crucial

issues with respect to the Received Entities and whether investors have a realistic opportunity to

securs their immigration benefits through the EB-5 program given that' as alleged in the sEC's

complaint,investorfundshavebeendivertedand/orcomingled,andtheprobabilitythatSan

Francisco Regional center, LLc (,,sFRc,,) will rose its regional center status from the usclS' In

bringing this Motion, the Receiver has relied on the recommendations made by her special

immigration counsel (Robert c. Divine, of Baker Donelson) with respect to the impact of the loss

of the regional center status on the investors in callsocket II as welr her business judgment in

determining the appropriate actions to be taken with respect to the Callsocket II call center'

II. LEGAL AUTHORITY

A.DistrictCourtPowerToAdministerTheReceivership.

Adistrictcourt,spoweftoadministeranequityreceivershipisextremelybroad.SECv'

Hardy,803 F.2d 1034, 1037 (9th Cir. 1986); SEC v' Forex Asset Management,LLC,2LzF,3d

325 , 331 (5th Cir' 2001 ); SEC v, Basic Energy & Affiliated Resources , 273 F ,3d 657 , 668 (6th Cir.

RECEIVER,S MOTION FOR ORDER . 

3 :17-CV.OO223-RS

iuirlózuziNc cl-ostl'tc cALLSocKET II' L'P'

20

2l

22

¿3

24

25

CALL CENTER

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 3 of 15
1

2

a

J

4

5

6

7

8

9

10

11

12

13

T4

15

16

I7

18

(!

J

J

Ës O-o

"ð:È v?: oñ"' 6 -' .g c0gË

c 9ã o Yo a@ -

o_! ü:E

Oo E

c

o

3

19

2I

22

23

20

24

25

26

27

28

009589.0024\4855062.6

3:17-CV-00223-RS

2001); SEC v. Elliot,g53F.2d 1560, 1566 (1lth Cir. 1992); SEC v. LVang,944F.2d 80, 85 (2dCir

1ee1).

The ooprimary purpose of equity receiverships is to promote orderly and efficient

administration of the estate by the district court for the benefit of creditors." Hardy, 803 F.2d at

1038. The Ninth Circuit has explained:

A district court's power to supervise an equity receiv_ership and to

determine the appropriate action to be takèn in the administration of

the receivership^ is extremely broad. The district court has broad

powers and wide discretion-to determine the appropriate re_lief.in an

èquity receivership. The basis for this broad deference to the district

.ourt'. supervisory role in equity receiverships arises out of the fact

that most ieceiverships involve multiple parties and complex

transactions.

SEC v. Capitat Consultants,LLC,3gT F.3d733,738 (9th Cir, 2005) (citations omitted);

see also, )FTC v. Tooworth Int'1., Ltd.,205 F.3d rl07 , 

1 1 15 (9th Cir. 1999) ("This court affords

,broad deference' to the court's supervisory role, and owe generally uphold reasonable procedures

instituted by the district court that serve th[e] purpose' of orderly and effrcient administration of

the receivership for the benefit of creditors."). Accordingly, this Court has broad equitable powers

and discretion in formulating procedures, schedules and guidelines for administration of the estate,

and shbuld authorize the Receiver's actions as proposed in her Motion'

B. Deference To The Receiver's Business Judgment'

In the estate administration context, courts are deferential to the business judgment of

bankruptcy trustees, receivers, and similar estate custodians. See, e.g., Bennett v' Williams,892

F .2d g22, g24 (gftcir. l ggg) ("[w]e are deferential to the business management decisions of a

bankruptcy trustee."); Southwestern Media, Inc. v. Rau,708F.2d419,425 (gth Cir. 1983) ("The

decision concerning the form of festate administration] rested with the business judgment of the

trustee."); In re Thinking Machines Corp., 182 B.R. 365,368 (D. Mass. 1995) ("The application of

the business judgment rule and the high degree of deference usually afforded purely economic

decisions of trustees, makes court refusal unlikely.") (rev'd on other grounds, In re Thinking

Machines Corp., 67 F .3d 1021 (1st Cir. 1995))

RECEIVER'S MOTION FOR ORDER

AUTHORIZING CLOSING CALLSOCKET II, L.P

CALL CENTER

4

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 4 of 15
1

2

J

4

5

6

7

8

È

J

J

ÑHO -o o3Y

"ö: ã

;ñå ñ -.q

c0g:

co; o9ò ø@o-p tr-k-:; Oo o

c

c)

=

9

10

11

T2

13

T4

15

16

17

18

t9

20

21

22

23

24

25

26

27

28

009589.0024\485 50ó2.6 3 : I 7-CV-O0223 -RS

The Receiver has determined, in her business judgment, as set forth in gteafer detail below

,ha'Î'ïhe c ar I s' cke"' 

:T i: îïiÏ,x,î ii::i: Ïäi-1ii i ;, mi,, i. n ;

o Due to the extensive comingling of funds, it would be ine-quitable to use the

Receivership Funds to continue to operate the call center because in the

absence of á completed forensic accõunting, it is impossible to determine if

the proceeds of the sale of the real estate pieviously owned by CallSocket II

actuãlly belong to the CallSocket II investors;

o The Receiver offered to sell the call center to the CallSocket II investors, or

zugeested investors recapilalize the call center with an additional

iníãstment, and the inveitors declined;

o The Receiver contacted a third party lender to obtain financing for the call

center, and the third party lender declined; and

o The call center can be closed without harming the CallSocket II investors.

Uecker Decl. fl 3.

III. PROPOSED ACTION

The Receiver bases her proposed action for CallSocket II on the Recovery Plan (Docket

No. 1g5) and the Declaration of Robert C. Divine filed in Support of the Recovery Plan ("Divine

Decl., Exhibit 1, Recovery Plan, Docket No. 185), and incorporates both the Recovery Plan and

Mr. Divine's declaration.

A. The Investors in Callsocket II Should Not Be Harmed From By The Closing

Of The Call Center

1. The Background of callsocket II and the call center

The Call Socket II Business Plan provided for the use of EB-5 funds in the amount of $15

million from 3 0 investor to develop a the call center that operated twenty-four hours a day , seven

days a week, located on four floors of 519 17th Street (Dufwin Building), Oakland' CA.

(Recovery plan, p. 28:9-17,DocketNo. 185). In20l6,The Dufwin Building was sold. The State

Court ordered a hiring freezeand so employees have not been hired since the move to the Dufwin

Building in the falt of 2016 and attrition has left the call center with only a dozen or so employees

(Recovery Plan, p. 29:13-17, Docket No. 185)'

RECEIVER'S MOTION FOR ORDER 5

AUTHORIZING CLOSING CALLSOCKET II, L.P'

CALL CENTER

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 5 of 15
2

J

4

5

È

J

J

a, (5H

O Lo

"ð:ã õñ; o;.I cogË

c 9ã

o Øø Yo

.

or:E

Oo c

c

0)

=

6

7

8

9

10

11

t2

13

l4

15

t6

r7

18

I9

20

21

22

23

24

25

26

27

28

009589.0024\485 50ó2.ó

3 : l7-CV-00223 -RS

2. 

Iiî::lsl¡tatus - r-s26 and I-82e Status And Risks For callsocket II

Special immigration counsel to the Receiver outlined the immigration status and risks for

the CallSocket II investors in the Recovery Plan:

fC]allsocket II, L.P. ("CS II") was both the Enterprise invested in and the JCE.

ää ðñÁi*L oífering iocuments wg1e_ggile vague about the business plan and

arrangements, but a"r.sponr. Lo a USCÍS lt"S*{ for evidence" app^a191tly. used^

i¿èrii?ãäv foi àtt invesiors reflected that_SFRC p.larye.d to operate CallSocket, LP,

CS lt, uná CS ru . . . as one business with commingled accounts and operations' . .

(Recovery Plan, Exhibit 1, Divine Decl., fl 51, Docket No' 185)'

The RFE response's cover memorandum boldly.acknowle_clges that $100,000 of the

Dufwin Towèrs purchase was provided from Callsocket, L.P., and states:

SFRC has transferred capital from its two Callsocket projecls. to its

own ãccounts to develop and pay the expenses of all three of its

Calliôcket projects. CiltSoct<ei LP, Cállsocket II, LP, CS II (sic),

and CallSodt .í ttt, LP are three phases of the same project: the

development and operation of customer contact centers ln the bay

utru. îh.y share the same senior managemenl, sqgre business 

.

model, same name, same affiliate struciure with SFRC, although

ifi.V âi" i. ptarate limited partnerships located in separate buildings

in Oakland.

(Recovery Plan, Exhibit 1, Divine Decl., fl 51, Docket No' 185)'

A declaration of Tom Henderson in the RFE response includes this statement at

paragraPh 8:

As the check registers also demonstrate, SFRC has withdrawn

cãpital from cailsocket, Lp and callsocket II, lP_fqr sfnÇio_

pütrfrã* tfre *I. Magn{t" Þ"il{ng o"}9þllof CallSocket III, LLC,

*nirn ó*rr itln truit for CallSoðket III, LP and other owners. The

p;t;ú;" ;irhis building completes the real estate purchases for all

three Cattsocket projecls. Fuñds are now being raised for 

,

CallSocket III, LÞ. Once acquired these funds will be used to repay

tft. ottt"iCallSocket limited þartnerships. The CallSocket gloup

will then U. futty funded andwill complete its business development

and hiring.

(Recovery Plan, Exhibit 1, Divine Decl', fl 51, Docket No' 185)'

Apparently USCIS approved the CS II Investors' I-526 petitions after reviewing the

RFE ResPonse.

(Recovery Plan, Exhibit 1, Divine Decl., fl 52, Docket No' 185)'

RECEIVER'S MOTION FOR ORDER

AUTHORIZING CLOSING CALLSOCKET II, L.P

CALL CENTER

6

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 6 of 15
1

2

J

4

5

6

7

8

9

10

11

t2

13

T4

15

r6

t7

18

I9

0-

J

J

ãs O -o

ø:ã YïA

(5-.!

c d; o9ö Ø@o_o ø:_E

Oo E

c

0)

=

20

24

2l

22

23

25

26

27

28

009589.0024\4855062.6 3:17-CV-00223-RS

29 EB-s investors subscribed to the offering and obtainedl-526 approvals. Some

of those approvals were as early as Fgþruary of .2014, and ' . . at least some of the

in,,.rtotr häve been admitted a! conditionai residents and maybe even have reached

the end of their sustainment period. . . . . A chart provided by James Y_ung refl^ects

tiat all but two CS II investors have been admitted as conditional residents, 10 CS

II investors have fîled I-829, one is due to file I-829 on June 28, and the rest are

due to file I-829 in Novemb,er 2017 or beyond. Therefore, all but two investors are

immune to effects of regional center termination and new material changes to the

business plan, but mostleed to sustain their investment for more time, and many

for substantially more time.

(Recovery Plan, Exhibit 1, Divine Decl., fl 53, Docket No. 185)'

[I]n December of 2016 thg pryj9ct papers submitted with an I-829 claimed creation

åÌOl¿it..t jobÀ for a total i,f iOO ôirê,ct and indirect jobs...USCIS.may-find a basis

io õnuif.ngdthe direct jobs. I do not know how many creditable directfrll-time

jobs wereît"ut"d in CS II before joþs weq1l9¡t. I am told by the Receiver that

"only about a dozen employees remain at CS II'

(Recovery Plan, Exhibit 1, Divine Decl., fl 54, Docket No' 185)'

The overwhelming maiority of CS II investors who already were.admitted as

ðonditionuf i"Sã.ñtr *uy ótui- all direct and indirect jobs.even if the regional 

-

center U"ro-.r ièrminatäd. The few who have not beèn admitted mighJ suffer Iii6 revocatton based on regional center termination, tailure. to.sustain the

investment (particuf arty in Ïight of commingling and diversion), and material

.ttungà in thô credibilify of tñe plan to reach the necessary level of job creation.

(Recovery Plan, Exhibit 1, Divine Decl., fl 55, Docket No' 185)'

I am unaware of the extent to which capital of CS II was diverted from CS II. The

Receiver 

"ould 

rotrrider above strategiès concerning diversion and commingl^ilg.

This issue.óui¿indep"ndently give r-ise to I-526 revocations and prevenfl-829

approvals.

(Recovery Plan, Exhibit 1, Divine Decl., fl 56, Docket No' 185)'

For investors who had been admitted as conditional residents-already, the

Receiver,s .ioring ¿o* of CS II operations might not be independently fatal to the

investors' i--i-gåtión pursuits if the Receiver ñere able to usé proceeds from sale

ol Uui i¿in g r io iã- é rtuU I'i sh call center ope¡atiols.. 

. 

Givgn thq purporte.d

irtðt¿.p.ti¿"*t"¡tÈ operations of thê three CallSockets, ilis not clear whether

ñü;;äi.á "ùå"dy 

6röattsocket, l-.1. and CS lI and then lost would be counted

ä;h;;g;¿.d-ir Üsõisìnatysis oîjob.creation for CS II in a resurgence of call

center oprruiionr.-USCiS coúld.utgút that newly created joþ: .,?*?l ::"nt ?EVin

without ruUtra.iingltte previously õreate!_and lost (and ciedited) call c^enter jobs.

lnvestors.oulã urËu. ittTopporitê. uscls could uÀe the liquidation of callsocket

"rr.i, ipã.tið"iutríih" sàle'of the Duffwin Building) as a basis for denial of some

investors, urräñir'g iftãittt. liquidation occurred beTore the jobs were created that

would be credited for those investors'

RECEIVER'S MOTION FOR ORDER 7

AUTHORIZING CLOSING CALLSOCKET II, L'P

CALL CENTER

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 7 of 15
1

2

J

4

5

6

7

8

9

10

11

I2

13

14

15

t6

t7

18

ù

J

J

Fs O-o

"-'ã v? !

oN"' o;9

c o; oeò øú .

o_! ol:E

Oô Þ

c

c)

=

19

20

2l

22

z)

24

25

26

27

009589.0024\48550ó2.6

28

3 : 1 7-CV-00223 -RS

(Recovery Plan, Exhibit 1, Divine Decl', !J 57, Docket No. 185).

In summary, CS II presents probably the "closest call" whether the overwhelming

majority of ínvestois have a meaninþful chance to retain immigration benefits.

Some dquidated assets are availablelo re-deploy in the original þYtï.:t plan for a

call centèr. Given the commingling, it might not be clear which NCEs' investors

should have the opportunity to use ihe assets available to the Receiver. . . . .

USCIS could chot¡3e many grounds, discussed above, to deny those petitions, and .

, , the chances of success árðwell below 50%. The interest of the investors in

prriring immigration benefits at lhe risk of.losing any liquidation interest and

ultimate" return-sho u I d b e so I i c ited and considered.

(Recover Report, Exhibit 1, Divine Decl., ']f 58, Docket No. 185)'

The Receiver has also obtained the most current immigration status information fot the29

Callsocket II investors from their immigration counsel, James Yang, of Pegasus Law Group.

According to Mr, yang, he confirms that at least2T of the 29 EB-5 investors in CallSocket II.

have received conditional green cards. Of the two remaining EB-5 investors in Callsocket II, one

has notified him that she does not wish to continue the EB-5 ptocess and has withdrawn her

immigrant visa application. The other EB-5 investor has obtained her immigrant visa and plans to

be admitted into the U.S. as a conditional green card holder in the near future. In addition, Mr.

yang, has submitted to USCIS the I-829 Petitions for 14 of the 29EB-5 investors in CallSocket II

who are eligible to file !-g2g petitions. The remaining EB-5 investors are awaiting for the opening

of their respective 90-day filing window to file their I-829 Petitions. See, Declaration of James

Yang, filed concurrently herewith.

Based on the Receiver's immigration counsel's recommendation, the Receiver believes

that the Callsocket II call center can be closed without harming the CallSocket II investors. First,

as noted by both the Receiver's and investors' immigration counsel, the overwhelming majority of

Callsocket II investors that have already been admitted as conditional residents, and according to

the Receiver,s immigration counsel, would be immune from the effects of closing the call center.

Second, as suggested by the Receiver's immigration counsel, the Receiver undertook two months

of communicating with the CallSocket II investors to determine their interest in pursuing the

continued operation of the call center and concluded, as described below, the investors are not

interested in pursuing the continuing operation of the call center. Uecker Decl. tf 4.

RECEIVER'S MOTION FOR ORDER

AUTHOzuZING CLOSING CALLSOCKET II, L.P

CALL CENTER

8

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 8 of 15
1

2

a

J

4

5

6

7

8

J

J

Ës O-a

.ð:3

ãñ; o;.I cngÈ

-ù E

c qã

o go Øû -

o_þ A:i

OO

E

c

o

=

9

10

11

t2

13

t4

15

t6

I7

18

T9

20

2t

22

23

24

25

26

27

28

009589.0024\4855062.6 3: 17-CV-00223-RS

B. The Receiver Should Be Authorized To Close The Call Center Because

Investors Are Not Interested In Purchasing or Recapitalizing The Call Center;

Conventional Lending Is Not Possible; And The Call Center Is Operating At A

Significant Loss, Making A Sale Impossible

1. The Receiver Should Be Authorized To Close The Call Center Because

älfitðffi:ors 

Are Not Interested In Purchasing Or Recapitalizing The

Over the past two months, the Receiver has been communicating with the CallSocket II

investors to determine whether they would be interested in recapitalizing CallSocket II for the

purpose of continuing to operate the call center, and create new jobs for investors to satisfy their I5261I-829 requirements. During the State Court Action, the Receiver had received a prior

proposal from Akila Digita, the present consultant of the call center to operate the call center,

create the required number ofjobs through 2019, for an investment of $2.15 million. On July 10,

and again on July 26,Z0I7,the Receiver sent letters to all of the investors in CallSocket II asking

if they would be interested in committing to a new investment in the call center; 3 or 4 of the 29

investors responded that they would not. Thereafter, the Receiver was contacted by Millstein &

Associates and Klasko Immigration Law Partners, L.P., immigration counsel for approximately 2I

Callsocket II investors. On August9,2017,the Receiver made a proposal to counsel for the

investors that the investors provide new capital in a sufficient amount to fund the $2.15 million, or

purchase the general partner's interest in Callsocket II and purchase the assets ofthe call center

and continue to operate the call center outside of the receivership. Although counsel for the

CallSocket II investors indicated that they would be responding to the Receiver with a proposal, in

the five or six weeks following the Receiver's proposal, they did not respond. Uecker Decl., tf 5.

Finally, on September 15, 2017, immigration counsel for the CallSocket II investors

advised the Receiver that the investors wished the call center to remain open using the existing

funds from the sale of the Dufwin Building, but given the opposition of the Receiver to the use of

Receivership Funds to operate the call center, and given the investors were unable to raise $2.15

million in additional capital to run the call center, and did not have the ability to run the call

center, the investors did not oppose the closing of the call center. Uecker Decl., tf 6.

RECEIVER'S MOTION FOR ORDER

AUTHOzuZING CLOSING CALLSOCKET II' L'P

CALL CENTER

9

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 9 of 15
2

J

4

5

6

7

8

oJ

)

Ës 0-o

":ããñ; o;.!

c0g5

C G? o9ö Øû -

o_o 0r:E

OO E

c

(!)

3

9

10

11

t2

13

t4

15

T6

I7

18

t9

20

2l

22

23

24

25

26

27

28

009589.0024\48550ó2.6 10 3:17-CV-00223-RS

Immigration counsel for the investors advised the Receiver that the investors wished to

recover their capital from the Receivership Estates (rather than invest new money), and then

redeploy their capital into a new EB-5 project that would create the necessary number ofjobs.

Counsel for the investors advised the Receiver that the new project would be a more traditional

regional center EB-5 project that relies primarily on job creation from construction, instead of

operation of a call center. Ultimately, the investors were not interested in continuing the

operation of the call center' Uecker Decl., fl 7.

Nor can the Receiver recommend funding the future operations of the Callsocket II call

center from existing Receivership Funds. Callsocket II held title to two parcels of real estate,

1750 Broadway and the 519 lTth Street (Dufwin Building), Oakland, California, each of which

were sold during the State Court Action, As set forth in the in the Recovery Plan, based on the

Tate Tracin g,2 it appears that the 1750 Broadway Property (which was held in the name of

CallSocket II) was purchased with over $1.6 million in funds belonging to Callsocket, L.P., and

over $1.0 million in funds belonging to SFRC. According to the Tate Tracing, Dufwin Building

was purchased with funds from Callsocket II. However, according the Declaration of Ellen chen

in Support of the Securities and Exchange Commission's Motion for Preliminary Injunction and

Appointment of Receiver (Docket No. 19) ("Chen Decl."), the funds for the purchase of the

Dufwin Building came from CallSocket, L.P. (Recovery Report, Docket No. 185, p: 30:3-6; Chen

Decl,, n 37-40. In the absence of a fult forensic accounting3 there is no assurance that the proceeds

of either the 1750 Broadway or the Dufwin Building held in the name of Callsocket II were funds

that are actually owned by CallSocket II, attributable to Callsocket II investors or the proceeds of

CallSocket II investors. The Receiver believes that using Receivership Funds that are not solely

owned by CallSocket II investors to fund the call center operations would be to the detriment of

the investors of the other EB-5 entities. Uecker Decl', fl 8'

2 Tracing of funds prepared by Marvin Tate CPA in the State Court Action ("Tate Tracing")

3 On Jrly 2I,2017,the Court entered an order authorizing the Receiver to expend receivership

funds on a forensic accounting by the estate's accountant, Bachecki Crom & Co', LLP (Docket

No. 198), but that accounting may not be completed for a number of months'

RECEIVER'S MOTION FOR ORDER

AUTHOzuZING CLOSING CALLSOCKET II, L'P

CALL CENTER

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 10 of 15
1

2

J

4

5

6

7

8

ù

J

J

c- (EH

Oso

"ð:È õkx o;! cogð

C N; ogö @@ -

o_þ ü:F

Oo c

c

0)

3

9

10

l1

I2

13

I4

15

16

t7

18

I9

20

21

22

23

24

25

26

27

28

009s89.0024\4855062.6 11 3:17-CV-O0223-RS

Given the investors lack of support, including financial support, for the CallSocket II call

center, the Receiver should be authorized to close the call center.

2, The Receiver Should Be Authorized To Close The Call Center Because

Conventional Funding Is Not Available To Operate The Call Center

The Receiver contacted Community Bank of the Bay ("CBB"), and enquired whether CBB

would provide funding to the call center. The Receiver provided CBB with an income statement,

which showed that since the commencement of operations in April of 2016 to June 2017 , 

the call

center lost over $ 1 .8 million. CBB's response was whether there was a balance sheet, or given the

loss rate, the borrower could demonstrate its ability to meet such a cash burn, or, at the minimum,

offer collateral to provide comfort to the lender. The Receiver responded that there was no

balance sheet, and limited personal property collateral such as computers, office furniture' which

would not have sufficient value to provide comfort to the lender. Given the loss rate of the call

center, CBB declined to offer any funding given the lack of collateral. Uecker Decl., fl 9.

Because conventional financing is unavailable, the Receiver should be authorized to close

the Callsocket II call center.

3. The Receiver Should Be Authorized To Close The Call Center Because

It Is Not A Salable Business

The Receiver has over 25 years' experience in evaluating businesses for sale. As stated

above since the commencement of operations, in Aprit 2016 to June 2017 , 

the call center lost over

$1.g million. From January 2017 toAugust 2017,the call center lost $1.013 million. The call

center has no real asset base to speak of. It has offrce furniture, and computers, nothing of

significant value. The lease has no value because it is a month to month lease at market rate'

$25,000 per month, The call center has no ongoing customer contracts since all of its contracts

were obtained through the current manager, Akila Digital. Based on the Receiver's business

judgment, the call center has insuffrcient value to sell as a going concern business. In declining to

offer financing, CBB suggested that the Receiver offer to sell the call center to a competitor. The

Receiver has already explored that option. The call center is operated by potential competitor and

the only viable purchaser, the current manager, Akila Digital. The Receiver has on several

RECEIVER'S MOTION FOR ORDER

AUTHOzuZING CLOSING CALLSOCKET II, L.P'

CALL CENTER

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 11 of 15
1

2

J

4.

5

6

7

8

(L

J

J

Ës O -o

"ð:3 rï1oN"' o;.8 c0sã

cqõ qi Yo

ø@ .

o_Þ ø:Ë

Oo õg

(¡)

3

9

10

11

12

13

t4

15

t6

17

18

19

20

2T

22

23

24

25

26

27

28

009589.0024\485 50ó2.6 T2 3:17-CV-00223-RS

occasions offered to sell the call center operations to Akila Digital and each time Akila Digital has

refused. Uecker Decl., fl 10.

Because the CallSocket II call center is not a saleable business in the Receiver's business

judgment, and the only potential purchaser has refused any purchase opportunities, the Receiver

should be authorized to close the call center operations

IV. CONCLUSION

All but one of the callSocket II investors have already immigrated to the united states,

received their conditional green cards, and should therefore be immune to the effects of closing the

call center operations. The majority of callsocket II investors do not support either recapitalizing

or purchasing the call center, and instead seek to redeploy whatever capital they receive into a

different more traditional EB-5 project. The call center has lost over $1.0 million since the

beginning of the year, and $ 1 . B million in the last 1 8 months. Given the issues of comingling of

funds, the Receiveï cannot recommend continuing to operate the call center with Receivership

Funds. Neither conventional financing nor a sale of the call center is feasible. For all of those, the

Receiver should be authorized to close the CallSocket II call center pursuant to her authority under

the Appointment Order (DocketNo. 100), !i38'

DATED: Seprember 26,2017 WENDEL, ROSEN, BLACK & DEAN LLP

By: /s/ Elizabeth Berke-Dre fuss

Elizabeth Berke-DreYfuss

Attorneys for Susan L. Uecker, Receiver

RECEIVER'S MOTION FOR ORDER

AUTHORIZING CLOSING CALLSOCKET II, L.P

CALL CENTER

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 12 of 15
EXHIBIT A

009589.0024\486358 L I

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 13 of 15
L

J

J

Ês 0 so

"ðT Þ

ùñå o;E c0gÈ

c ñ= oeò oo ,

o_þ ø:i

õðÞ

c

c)

3

I

2

J

4

5

6

7

8

9

10

11

t2

13

T4

15

I6

T1

18

t9

20

2t

22

23

24

25

26

27

28

009589.0024\486175 1.4 ORDER GRANTING RECEIVER'S MOTION 3:17-CV-00223-RS

Elizabeth Berke-Dreyfuss (Bar No. 1 I 465 1 )

WENDEL, ROSEN, BLACK & DEAN LLP

1 1 1 1 Broadway, 24tn Floor

Oakland, California 9 4607 -403 6

Telephone: (5 10) 834-6600

Fax: (510) 834-1928

Email: edreyfuss@wendel.com

Attorneys for Susan L. Uecker, Receiver

LINITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

SECURITIES AND EXCHANGE Case No. 3 : 1 7-CV-00223-RS

COMMISSION,

Plaintifl

Defendants,

-andCALLSOCKET HOLDING COMPANY, LLC;

CALLSOCKET III HOLDING COMPANY,

LLC; BERKELEY HEALTHCARE

DYNAMICS, LLC; CENTRAL CALIFORNIA

FARMS, LLC; ANd JL GATEV/AY, LLC,

Relief Defendants.

IPROPOSEDI ORDER GRANTING

RNCNTVNR'S MOTION FOR ORDER

AUTHORIZING CLOSING OF'

CALLSOCKET II, L.P. CALL CENTER

vs.

SAN FRANCISCO REGIONAL CENTER, LLC;

THOMAS M. 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,

Date:

Time:

Place:

October 26,2017

1:30 p.m.

450 Golden Gate Ave.,

17th Floor, Ctrm. 3

San Francisco, CA 94102

Judge: The Hon, Richard Seeborg

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 14 of 15
À

J

J

ñs O !Ò Õ3Y *: ã

ãï s

ñ! -ËE

c 6; oeò Øû .

o_E d:-E

Oo Ð

c

c)

3

1

2

3

4

5

6

7

8

9

10

11

T2

13

T4

t5

I6

T7

18

T9

20

2I

22

23

24

25

26

27

28

009589.0024\4861?5 1.4 ORDER GRANTING RECEIVER'S MOTION 2

3:17-CV-00223-RS

The Motion for Order for Authorizing Closing of Callsocket II, L.P. Call Center

("Motion"), filed by Susan L. Uecker, Receiver for Defendants San Francisco Regional Center,

LLC; California Gold Medal, L.P,; CallSocket, L.P.; CallSocket II, L.P.; CallSocket III, L.P.;

NA3PL, L.P.; West Oakland Plaza, L.P.; CallSocket, LLC; CallSocket II, LLC; CallSocket III,

LLC; Immedia, LLC; and Relief Defendants, CallSocket Holding Company, LLC; CallSocket III

Holding Company, LLC; Central California Farms, LLC; JL Gateway, LLC; and Berkeley

Healthcare Dynamics, LLC, came on for hearing before the Court pursuant to an order shortening

time, on October 5,2017 , at 1 :30 p.m. Receiver was represented by counsel ,Elizabeth BerkeDreyfuss, Esq,, of Wendel, Rosen, Black & Dean LLP, and such other appearances were made as

were noted in the record. The Court has considered the evidence submitted by the Receiver in

support of the Motion. Oral argument was heard on the Motion and based thereon, and good

cause shown:

IT IS HEREBY ORDERED:

1. Any objections to the Motion, if not withdrawn, are overuled;

2. The Receiver is authorizedto close the CallSocket II, L.P. call center pursuant to

the provisions of Order Appointing Receiver and Monitor, (Docket No. 100), fl 38'

3. The Receiver is authorizedto take such actions as may be necessary and

appropriate to winding down and closing CallSocket II, L.P. call center without further order of

the Court.

DATED: 20r7

HON. RICHARD SEEBORG

United States District Judge

Case 3:17-cv-00223-RS Document 229 Filed 09/26/17 Page 15 of 15