999999.0020/6623306.1

LANE POWELL PC

601 SW SECOND AVENUE, SUITE 2100

PORTLAND, OREGON 97204-3158

503.778.2100 FAX: 503.778.2200

PAGE 1 - LIMITED OBJECTION TO STIPULATED ORDER APPOINTING RECEIVER

Milo Petranovich, OSB No. 813376

petranovichm@lanepowell.com

Mary Jo Heston, OSB No. 030438

hestonm@lanepowell.com

LANE POWELL PC

601 SW Second Avenue, Suite 2100

Portland, Oregon 97204-3158

Telephone: 503.778.2114

Neil A. Steiner (pro hac vice pending)

neil.steiner@dechert.com

Brian E. Greer (pro hac vice pending)

brian.greer@dechert.com

DECHERT LLP

1095 Avenue of the Americas

New York, New York 10036

Telephone: 212.698.3500

Facsimile: 212.698.3599

Attorneys for Wells Fargo Securities, LLC 

and Wells Fargo Bank, N.A.

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

vs.

AEQUITAS MANAGEMENT, LLC; 

AEQUITAS HOLDINGS, LLC; AEQUITAS 

COMMERCIAL FINANCE, INC.; 

AEQUITAS CAPITAL MANAGEMENT, 

INC.; AEQUITAS INVESTMENT 

MANAGEMENT, LCC; ROBERT J. 

JESENIK; BRIAN A. OLIVER; and N. 

SCOTT GILLIS,

Defendants.

Case No. 3:16-cv-00438-PK

LIMITED OBJECTION TO STIPULATED 

ORDER APPOINTING RECEIVER

Case 3:16-cv-00438-PK Document 5 Filed 03/11/16 Page 1 of 5
999999.0020/6623306.1

LANE POWELL PC

601 SW SECOND AVENUE, SUITE 2100

PORTLAND, OREGON 97204-3158

503.778.2100 FAX: 503.778.2200

PAGE 2 - LIMITED OBJECTION TO STIPULATED ORDER APPOINTING RECEIVER

Wells Fargo Securities, LLC (“WFS”) and Wells Fargo Bank, N.A. (“WFBNA” and 

together with WFS, collectively, “Well Fargo”), hereby submit their limited objection to the 

Stipulated Order Appointing Receiver (the “Proposed Order”) proposed by Plaintiff Securities 

and Exchange Commission and Defendants Aequitas Management, LLC, Aequitas Holdings, 

LLC, Aequitas Commercial Finance, Inc., Aequitas Capital Management, Inc., Aequitas 

Investment Management, LLC, Robert J. Jesenik, Brian A. Oliver and N. Scott Gillis, and 

respectfully represent as follows:

A. The Wells Fargo Financing.

1. On or about January 12, 2015, Wells Fargo entered into a secured financing 

transaction (the “Secured Financing”) secured by certain self-pay health care receivables 

generated at hospitals around the country (the “Receivables”) that were acquired by CP Funding 

I Trust, a Delaware statutory trust (the “Separate Trust”). Wells Fargo’s loan is secured by all of 

the assets of the Separate Trust which include the Receivables and the proceeds thereof. The 

Separate Trust was established as a special purpose vehicle to be operated separate and apart 

from the management and control of the Defendants and any of their affiliates. The Separate 

Trust’s governing documents expressly provided that the Separate Trust was to be operated 

independently from the Defendants and that there shall be no commingling of the Separate 

Trust’s assets with the assets of the Defendants (the “Separateness Covenants”).

2. The Separate Trust’s governing documents also provide that the 

Certificateholders (CP Funding I Holdings, LLC – a Receiver Entity (as defined below)) shall 

not have legal title to the Receivables and the proceeds thereof. In addition, the Delaware 

Statutory Trust Act (the “DSTA”) states that a Delaware statutory trust (such as the Separate 

Trust) is a separate legal entity and no creditor of a beneficial owner (such as the Defendants) 

has any right to exercise any legal or equitable remedies against the property of the trust 

(see 12 Del. C. Section 3805(b)). Thus, the Proposed Order requests relief with respect to the 

Separate Trust which flatly contradicts express provisions of the DSTA. 

Case 3:16-cv-00438-PK Document 5 Filed 03/11/16 Page 2 of 5
999999.0020/6623306.1

LANE POWELL PC

601 SW SECOND AVENUE, SUITE 2100

PORTLAND, OREGON 97204-3158

503.778.2100 FAX: 503.778.2200

PAGE 3 - LIMITED OBJECTION TO STIPULATED ORDER APPOINTING RECEIVER

3. In reliance upon the Separateness Covenants and the inability of the Defendants 

and their affiliates to claim title to the Receivables and the proceeds thereof, Wells Fargo agreed 

to advance up to $100 million for the purchase of the Receivables. To date, approximately 

$26,000,000 is due and outstanding under the Wells Fargo Financing.

4. In late January 2016, Wells Fargo was informed that for several months various 

Events of Default had occurred and were continuing under the Wells Fargo Financing. On or 

about February 19, 2016, certain of the Defendants, the Separate Trust, and Wells Fargo entered 

into that certain Forbearance Agreement which was subsequently amended on February 26, 2016 

and March 4, 2016. At no time during the negotiation of the Forbearance Agreement did 

Defendants or the Separate Trust disclose to Wells Fargo any of the issues raised in this 

proceeding with respect to the underlying factual allegations.

B. Limited Objection.

1. By Proposed Order submitted on March 10, 2016, Plaintiff and Defendants 

propose to stipulate to the appointment of a receiver for the marshaling and preserving of assets 

of the Defendants. The Proposed Order would subject various subsidiaries and/or majorityowned affiliates of Defendants to the receivership (“Receiver Entity”), and would subject the 

assets of such entities to a freeze until further order of this Court. The Proposed Order would 

further restrain any person with direct or indirect control over the property of a Receivership 

entity from exercising rights with respect to such assets. In so doing, the Proposed Order casts 

an overly broad net and mistakenly seeks to designate the Separate Trust as a Receiver Entity. 

2. For the reasons set forth in more detail above, such designation is prohibited by 

the documents governing the corporate authority of the Separate Trust, as well as the DSTA 

which expressly provides that the Receiver cannot take title to the assets owned by the Separate 

Trust for the benefit of creditors of its beneficial owners.

3. Accordingly, Wells Fargo requests that the Proposed Order be modified as 

follows:

Case 3:16-cv-00438-PK Document 5 Filed 03/11/16 Page 3 of 5
999999.0020/6623306.1

LANE POWELL PC

601 SW SECOND AVENUE, SUITE 2100

PORTLAND, OREGON 97204-3158

503.778.2100 FAX: 503.778.2200

PAGE 4 - LIMITED OBJECTION TO STIPULATED ORDER APPOINTING RECEIVER

 The Proposed Order only should be entered on a preliminary basis with a further 

hearing to be held no later than March 18, 2016. Wells Fargo should have a right 

to file a supplemental objection to entry of a final order by 5:00 PM Pacific Time 

on March 17, 2016.

 The Proposed Order should provide that notwithstanding anything to the contrary

in the Proposed Order, the Receiver shall not be deemed to have legal or equitable 

title to the Receivables or the proceeds thereof.

 The Proposed Order should provide that the Receiver shall not be permitted to use 

any of the Receivables or the proceeds thereof for any purpose pending further 

Order of this Court.

 The Proposed Order should provide that Wells Fargo shall be permitted to 

exercise all of its rights and remedies upon expiration of the Proposed Order 

absent further order of the Court.

 The Proposed Order should provide that Wells Fargo shall be permitted to 

immediately designate a third party servicer unaffiliated with the Defendants as is 

permitted under the Wells Fargo Financing.

4. Absent these modifications, the Proposed Order would do significant and 

irreparable harm to Wells Fargo as the Proposed Order does not take into account the reliance of 

Wells Fargo on the separateness of Separate Trust from the Defendants and does not provide for 

a mechanism to ensure that Wells Fargo is not harmed as a result of its agreement to look only to 

the Receivables and other assets of the Separate Trust. Use of the Receivables and the proceeds 

thereof by the Receiver could not be undone and would irreparably interfere with Wells Fargo’s 

ability to recover the proceeds of its financing. 

5. Wells Fargo expressly reserves its rights to amend or supplement this Limited 

Objection, to introduce evidence at the hearing with respect thereto, and to file additional and 

supplemental objections and pleadings.

Case 3:16-cv-00438-PK Document 5 Filed 03/11/16 Page 4 of 5
999999.0020/6623306.1

LANE POWELL PC

601 SW SECOND AVENUE, SUITE 2100

PORTLAND, OREGON 97204-3158

503.778.2100 FAX: 503.778.2200

PAGE 5 - LIMITED OBJECTION TO STIPULATED ORDER APPOINTING RECEIVER

CONCLUSION

WHEREFORE, Wells Fargo respectfully requests that this Court modify the Proposed 

Order as set forth herein. 

DATED: March 11, 2016

LANE POWELL PC

By s/ Milo Petranovich

Milo Petranovich, OSB No. 813376

Mary Jo Heston, OSB No. 030438

Telephone: 503.778.2100

DECHERT LLP

Neil A. Steiner (pro hac vice pending)

Brian E. Greer (pro hac vice pending)

Telephone: 212.698.3500

Attorneys for Wells Fargo Securities, LLC and

Wells Fargo Bank, N.A.

Case 3:16-cv-00438-PK Document 5 Filed 03/11/16 Page 5 of 5