DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER,...

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 836178.01/SD LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809) TIM HSU (BAR NO. 279208) ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP 515 South Figueroa Street, Ninth Floor Los Angeles, California 90071-3309 Phone: (213) 622-5555 Fax: (213) 620-8816 E-Mail: [email protected] [email protected] [email protected] Attorneys for Receiver WILLIAM J. HOFFMAN UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. NATIONWIDE AUTOMATED SYSTEMS, INC.; JOEL GILLIS; and EDWARD WISHNER, Defendants, OASIS STUDIO RENTALS, LLC; OASIS STUDIO RENTALS #2, LLC; and OASIS STUDIO RENTALS #3, Relief Defendants. Case No. CV-14-07249-SJO (FFMx) FOURTH INTERIM FEE APPLICATION OF ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP, GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00 a.m. Ctrm: 1 - 2nd Floor Judge: Hon. S. James Otero Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 1 of 84 Page ID #:1613

Transcript of DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER,...

Page 1: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

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836178.01/SD

LAW OFFICES

Allen Matkins Leck Gamble Mallory & Natsis LLP

DAVID R. ZARO (BAR NO. 124334)TED FATES (BAR NO. 227809) TIM HSU (BAR NO. 279208) ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP 515 South Figueroa Street, Ninth Floor Los Angeles, California 90071-3309 Phone: (213) 622-5555 Fax: (213) 620-8816 E-Mail: [email protected]

[email protected] [email protected]

Attorneys for Receiver WILLIAM J. HOFFMAN

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WESTERN DIVISION

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

v. NATIONWIDE AUTOMATED SYSTEMS, INC.; JOEL GILLIS; and EDWARD WISHNER,

Defendants, OASIS STUDIO RENTALS, LLC; OASIS STUDIO RENTALS #2, LLC; and OASIS STUDIO RENTALS #3,

Relief Defendants.

Case No. CV-14-07249-SJO (FFMx) FOURTH INTERIM FEE APPLICATION OF ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP, GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00 a.m. Ctrm: 1 - 2nd Floor Judge: Hon. S. James Otero

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 1 of 84 Page ID #:1613

Page 2: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

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TABLE OF CONTENTS

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

II.  SUMMARY OF TASKS PERFORMED AND COSTS INCURRED ...................................................................................................... 3 

A.  General Receivership ............................................................................. 3 

B.  Asset Investigation ................................................................................. 3 

C.  Reporting ................................................................................................ 5 

D.  Operations & Asset Sales ....................................................................... 5 

E.  Claims and Distributions ........................................................................ 6 

F.  Third Party Recoveries ........................................................................... 6 

G.  Employment/Fees ................................................................................... 7 

H.  Barbara Adler Litigation ........................................................................ 7 

I.  Gerald & Wilma Ehrens ......................................................................... 8 

J.  Marvin & Laurie Tarnol ....................................................................... 10 

K.  Bradley Turell Litigation ..................................................................... 10 

L.  Berwyn Friedman Litigation ................................................................ 11 

M.  Harvey Turell Litigation ...................................................................... 11 

N.  Frances McCaffrey Litigation .............................................................. 12 

O.  William Firestone Litigation ................................................................ 12 

P.  Summary of Expenses .......................................................................... 12 

III.  THE FEES AND COSTS ARE REASONABLE AND SHOULD BE ALLOWED .............................................................................................. 13 

IV.  CONCLUSION .............................................................................................. 15 

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TABLE OF AUTHORITIES

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Cases 

Gaskill v. Gordon, 27 F.3d 248 (7th Cir. 1994) ........................................................................... 13

Imperial 400 Nat'l, Inc. (In re), 432 F.2d 232 (3d Cir. 1970) .......................................................................... 14

SEC v. Elliot, 953 F.2d 1560 (11th Cir. 1992) ..................................................................... 13

SEC v. W.L. Moody & Co., Bankers (Unincorporated), 374 F.Supp. 465 (S.D. Tex. 1974) ................................................................ 14

United States v. Code Prods. Corp., 362 F. 2d 669 (3d Cir. 1966) ......................................................................... 13

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Allen Matkins Leck Gamble Mallory & Natsis LLP ("Allen Matkins"), general

counsel to William Hoffman ("Receiver"), the Court-appointed permanent receiver

for Defendant Nationwide Automated Systems, Inc. ("NASI"), Relief Defendants

Oasis Studio Rentals, LLC, Oasis Studio Rentals #2, LLC, and Oasis Studio

Rentals #3, LLC ("Relief Defendants"), and their subsidiaries and affiliates, hereby

submits this fourth interim application for approval and payment of fees and

reimbursement of expenses ("Application"). This Application covers the period from

July 1, 2015, through September 30, 2015 ("Fourth Application Period"), and seeks

interim approval of $120,108.60 in fees and $14,085.13 in expenses, and an order

authorizing the Receiver to pay, on an interim basis, 80% of fees incurred

($96,086.88) and 100% of expenses incurred. As it has since the beginning of the

receivership, Allen Matkins has discounted its customary hourly rates by 10%.

I. INTRODUCTION

This equity receivership involves a large and complex Ponzi scheme that is the

subject of the Complaint filed by the Securities and Exchange Commission

("Commission"). The Receiver was appointed on a temporary basis on

September 30, 2014, and on a permanent basis on October 29, 2014.

The appointment orders confer broad duties, responsibilities, and powers on

the Receiver which are designed to allow him to secure, preserve, and protect the

assets of the Receivership Entities, investigate and recover sums transferred to third

parties, conduct a forensic accounting and analysis of the Receivership Entities'

financial transactions, review and analyze investor claims, and maximize the amount

ultimately available for distribution to investors. The appointment orders also

authorize the Receiver to engage counsel to assist him in the performance of his

duties. The Receiver promptly determined that experienced, qualified counsel was

critical due to the size and complexity of the receivership estate. Accordingly, the

Receiver engaged Allen Matkins to assist with urgent legal issues facing the

receivership estate and the firm immediately began work, including assisting with the

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takeover of the companies and securing their assets. The Court approved the

Receiver's proposal to file reports and fee applications on a quarterly basis. Dkt.

No. 47. The Court also approved Allen Matkins' First, Second, and Third Interim

Fee Applications, authorizing payment of 80% of fees incurred and 100% of costs

incurred. Dkt. Nos. 72, 79, 95.

This fee application should be read in conjunction with the Receiver's Fifth

Interim Report ("Fifth Report"), which describes in detail the Receiver's activities

during the Fourth Application Period. So as to avoid repetition, references are made

to relevant portions of the Fifth Report in the below descriptions of Allen Matkins'

work.

This Application seeks interim approval of $120,108.60 in fees for a total of

255 hours worked and payment on an interim basis of 80% of that amount, or

$96,086.88. The work performed is described task-by-task on Exhibit A and is

broken down into the following categories:

Category Hours Amount General Receivership 9.9 4,811.40Asset Investigation 95.5 43,231.95Reporting 4.3 2,089.80Operations & Asset Sales 0.2 97.20Claims & Distributions 3.1 1,672.65Third Party Recoveries 52.6 26,834.85Employment/Fees 4.0 1,944.00Barbara Adler Litigation 9.3 4,648.95Gerald & Wilma Ehrens Litigation 33.2 14,287.95Marvin & Laurie Tarnol Litigation 23.0 10,763.10Bradley Turell Litigation 1.8 874.80Berwyn Friedman Litigation 8.5 4,131.00Harvey Turell Litigation 8.0 3,888.00Frances McCaffrey Litigation 1.0 486.00William Firestone Litigation 0.6 346.95Totals 255.00 $120,108.60

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Allen Matkins' fees for the Fourth Application Period increased from the prior

period ($67,638.75) due to work on the clawback actions listed above, each of which

is discussed further below. The Receiver's pursuit of clawback claims has been very

successful to date, generating $2,869,374.60 in recoveries.

Allen Matkins has worked diligently and efficiently to assist the Receiver with

urgent legal issues facing the receivership estate. The firm has assisted the Receiver

in carrying out his Court-ordered duties and should be compensated on an interim

basis for its work.

II. SUMMARY OF TASKS PERFORMED AND COSTS INCURRED

A. General Receivership

Allen Matkins' work in the General Receivership category involved

communications with counsel for Defendant Joel Gillis and the Assistant United

States Attorneys working on the related criminal case. Allen Matkins advised and

assisted the Receiver regarding the production of documents and information to the

Assistant United States Attorneys and counsel for Gillis and Wishner in response to

their respective requests. Allen Matkins assisted in making arrangements for Gillis

and Wishner to visit the Receiver's offices to review voluminous investor files.

Finally, the firm advised the Receiver regarding the engagement of a CPA firm to

assist in preparing tax returns for the Receivership Entities. The reasonable and

necessary fees for work in this category total $4,811.40.

B. Asset Investigation

Allen Matkins' time in this category focused on assisting in the Receiver's

investigation and recovery of receivership assets. In particular, during the Fourth

Application Period, Allen Matkins issued 47 subpoenas to various financial

institutions, witnesses (entities and individuals), and other third parties to obtain

documents necessary to the Receiver's investigation and accounting. Allen Matkins

followed up and handled direct communications with the recipients of subpoenas as

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necessary and appropriate to ensure their compliance. The firm also maintains a

tracking log of subpoenas issued and records received.

During the Fourth Application Period, the Receiver's investigation and

document gathering efforts focused largely on the Oasis entities. Very little

information about the Oasis entities' assets or operations was provided by Defendants

or Relief Defendants. For the most part, the Receiver and Allen Matkins have had to

gather records from scratch, review and analyze bank statements and other

documents, and interview witnesses to ascertain the assets and operations of the

Oasis entities, as well as investments, loans, and other transfers made from Oasis

accounts. Due to the large number of entities, individuals, and vehicles associated

with Oasis, and the lack of record-keeping by the companies, the investigation and

document gathering work continues to take time.

During the prior application period, the Receiver learned that prior to the

receivership, Oasis had transferred funds to Lisa Freede Design, LLC ("LFD"), a

settlement had been reached between LFD and Wishner, and LFD had been making

payments to Wishner pursuant to the settlement. Allen Matkins assisted the Receiver

in contacting Wishner's counsel and securing Wishner's agreement to (a) turn over

the settlement payments to the Receiver and (b) instruct LFD to make all future

settlement payments directly to the Receiver. A total of $12,000 was recovered, with

payments of $1,500 due from LFD each month. During the Fourth Application

Period, Allen Matkins has followed up with counsel for LFD on several occasions

regarding late payments.

During the deposition of Robert Keller taken in March 2015, it was learned

that Robert Keller had taken vehicles previously being managed by Oasis and

continued managing them under the name Fiji Rentals. Allen Matkins assisted the

Receiver in communications with Robert Keller and Fiji Rentals and in attempts to

resolve the matter. Although Keller and Fiji Rentals initially agreed to turn over the

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rental income from the vehicles, they ultimately failed to do so and the Receiver now

intends to seek relief from the Court.

Finally, Allen Matkins assisted in gathering documents and information

regarding Studios Maui Productions, LLC ("Studios Maui"). After the manager of

Studios Maui, Branscombe Richmond ("Richmond"), failed to respond to repeated

attempts by the Receiver and Allen Matkins to contact him and secure the assets of

Studios Maui, Allen Matkins assisted the Receiver in drafting and filing a motion to

confirm Studios Maui's status as an affiliated entity, and therefore with the scope of

the receivership, as well as an order directing Richmond to turn over all assets, bank

accounts, and records of Studios Maui. Dkt. No. 93. The motion was granted on

September 15, 2015. Dkt. No. 97. The reasonable and necessary fees for work in

this category total $43,231.95.

C. Reporting

Allen Matkins' work in this category during the Fourth Application Period

focused on preparing the Receiver's Fourth Interim Report and Recommendations

("Fourth Report"). Dkt. No. 73. The Fourth Report, filed on August 3, 2015,

provided a detailed summary of the Receiver's activities during the second quarter of

2015, including receipts and disbursements for the receivership estate during that

period. Allen Matkins also assisted in discussing the Fourth Report with counsel for

the Securities and Exchange Commission ("Commission") and in responding to the

Commission's questions. The reasonable and necessary fees for work in this

category total $2,089.80.

D. Operations & Asset Sales

Allen Matkins advised the Receiver regarding issues relating to ATM

operations and the potential sale of the ATM business. The reasonable and necessary

fees for work in this category total $97.20.

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E. Claims and Distributions

During the Fourth Application Period, Allen Matkins responded to direct

inquiries from investors and creditors and their counsel regarding the Receiver's

appointment, the effect of the receivership, claims against the receivership estate,

clawback actions, the criminal case against Gillis and Wishner, and related issues.

The reasonable and necessary fees for work in this category total $1,672.65.

F. Third Party Recoveries

Allen Matkins' work in this category focused mainly on the pursuit of

clawback claims pursuant to the order authorizing the Receiver to pursue such claims

and approving procedures related thereto. Dkt. No. 72. The firm advised the

Receiver regarding legal issues relating to clawback claims, the scope of recoverable

transfers, and the statute of limitations and repose for such claims. Allen Matkins

also advised on legal issues unique to certain claims, recovery strategy, and forensic

accounting needed to support clawback claims. Allen Matkins assisted with demand

letters, financial hardship applications, and communications with counsel for various

investors who received profits ("Net Winners"), including finalizing settlements with

certain Net Winners pursuant to the Court-approved settlement procedures.1 The

success of the Receiver and Allen Matkins' work on clawback claims is already

evident as more than $2.8 million has been recovered in clawback settlements to

date.

In instances where Net Winners have not accepted the Court-approved

settlement offer (70% of each Net Winner's profit amount or 75% if paid in

12 monthly installments), Allen Matkins has prepared Complaints and related papers

1 It should be noted that Allen Matkins' work on Clawback Claims does not

duplicate or overlap with work performed by the Receiver and his staff. Allen Matkins' role is to prepare legal documents, advise on legal issues and strategy, communicate with counsel for Net Winners who contact the firm directly, and handle litigation in the event Net Winners do not accept the Court-approved settlement offer. The Receiver and his staff perform necessary accounting and analysis, prepare and track demand letters, handle direct communications with Net Winners, and finalize settlements with Net Winners who do not have counsel.

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to commence clawback actions. These clawback actions each have their own billing

category and are discussed further below.

Initially, the Court declined to relate the first three clawback actions (Barbara

Adler, Gerald & Wilma Ehrens, and Marvin & Laurie Tarnol) to this action. Allen

Matkins assisted the Receiver in preparing a motion for relief from the orders

declining to relate the actions. Dkt. No. 81. The motion was granted and the three

actions are now related to this action. Dkt. No. 89. Relating the actions has

promoted the orderly and efficient administration of these three, as well as

subsequent clawback actions.

Allen Matkins also assisted the Receiver in investigating claims against other

third parties who may have assisted in NASI's fraudulent activities. The Receiver's

investigation and evaluation of such claims is ongoing. The reasonable and

necessary fees for work in this category total $26,834.85.

G. Employment/Fees

Although fee applications are a necessary component of federal equity

receiverships, neither the Receiver nor his professionals charge for time spent

preparing their own detailed applications. Allen Matkins assisted the Receiver in

preparing his Third Interim Fee Application as well as in discussing the fee

applications with counsel for the Commission. The reasonable and necessary fees

for work in this category total $1,944.00.

H. Barbara Adler Litigation

Barbara Adler did not accept the Court-approved settlement offer included in

the demand letter sent to her on May 20, 2015. Accordingly, Allen Matkins assisted

the Receiver in preparing a Complaint and related papers, which were filed on

July 29, 2015, commencing Related Case No. 15-CV-05737-SJO-FFM ("Adler

Clawback Action").

Ms. Adler submitted a Financial Hardship Application ("FHA") and

supporting documents to the Receiver on August 18, 2015. In light of the FHA, the

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Receiver and Ms. Alder, through their respective counsel, stipulated to extend

Ms. Adler's deadline to respond to the Complaint while the Receiver reviewed her

financial documentation. Dkt. Nos. 16, 17. The Court approved the joint stipulation

and extended Ms. Adler's deadline to respond to the Complaint by 60 days. Dkt.

No. 18.

Recently, the Receiver and Ms. Adler agreed to the terms of a settlement

agreement, subject to Court approval. In light of the settlement, the parties again

sought to extend Ms. Adler's deadline to respond to the Complaint, pending Court

approval. Dkt. Nos. 20, 22. The Court granted the request, extending her deadline to

respond to December 24, 2015. Dkt. Nos. 23, 24. The reasonable and necessary fees

in this category total $4,648.95.

I. Gerald & Wilma Ehrens

Gerald & Wilma Ehrens did not accept the Court-approved settlement offer

included in the demand letter sent to them on May 20, 2015. Accordingly, Allen

Matkins assisted the Receiver in preparing a Complaint and related papers, which

were filed on July 29, 2015, commencing Related Case No. 15-CV-05747-SJO-FFM

("Ehrens Clawback Action").

As noted above, the Court initially declined to relate the Ehrens Clawback

Action to this action. As a result, on August 20, 2015, Judge Andre Birotte issued an

order dismissing the Complaint for lack of subject matter jurisdiction and granting

the Receiver leave to amend the Complaint by August 31, 2015. As discussed above,

the Receiver filed a motion in this case seeking relief from the orders declining to

relate the first three clawback actions, which was granted. In the meantime, the

Receiver sought an extension of the deadline to file an amended complaint in the

Ehrens Clawback Action, which Judge Birotte granted. After this Court issued the

order relating the actions, the Receiver filed a request to vacate Judge Birotte's order

dismissing the complaint for lack of subject matter jurisdiction, which this Court

granted.

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During this time, the Receiver had made extensive efforts to serve Gerald and

Wilma Ehrens and the entities they control via personal service, mail with

acknowledgement of receipt, and e-mail.2 Other than with respect to Amgest, Ltd.

("Amgest"), these efforts were unsuccessful and the reports from the process server

strongly indicated the Ehrens were intentionally evading service. The Receiver was

able to accomplish proper service on Amgest via another officer of the entity at a

different address. Amgest did not respond to the Complaint and its default has now

been entered.

Accordingly, Allen Matkins assisted the Receiver in preparing a motion for

authority to serve the Ehrens, as well as defendants Riviera Investments, L.P.

("Riviera") and First Abby Corporation ("First Abby"), via publication, which

motion was filed on September 29, 2015, and granted on October 27, 2015. On

October 30, 2015, Allen Matkins received notice that Gerald and Wilma Ehrens filed

bankruptcy in the District of Nevada. Accordingly, Allen Matkins assisted the

Receiver in preparing a notice of the bankruptcy, which was filed on November 2,

2015.

Once the service by publication as to Riviera and First Abby is complete, the

Receiver will seek entry of their defaults and default judgments against Amgest,

Riviera, and First Abby. The Receiver will simultaneously assert a claim in the

Ehrens' Chapter 13 bankruptcy case and take other actions as necessary to protect the

receivership estate's rights to recover through the bankruptcy.

The reasonable and necessary fees for work on this matter during the Fourth

Application Period total $14,287.95.

2 A substantial portion of the costs for Service of Process – Clawback Actions

listed in Subsection P below are for attempts to serve the Ehrens, who refused to answer the door when home and actively evaded service.

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J. Marvin & Laurie Tarnol

Marvin and Laurie Tarnol (along with their entity LMKT Corporation) did not

accept the Court-approved settlement offer included in the demand letter sent to them

on May 11, 2015. Accordingly, Allen Matkins assisted the Receiver in preparing a

Complaint and related papers, which were filed on July 29, 2015, commencing

Related Case No. 15-CV-05755-SJO-FFM ("Tarnol Clawback Action").

The Tarnols engaged counsel, who contacted counsel for the Receiver and

stated that they intended to object to the constructive trust and unjust enrichment

causes of action in the Complaint. Allen Matkins analyzed the law on these claims

and agreed to amend the Complaint to seek a constructive trust remedy, but not to

assert it as an independent claim. Allen Matkins assisted in preparing a First

Amended Complaint with that change, but keeping unjust enrichment as an

independent claim.

The Tarnols were not satisfied by the amendment and filed a motion to dismiss

the unjust enrichment cause of action in the First Amended Complaint. Allen

Matkins assisted the Receiver in opposing the motion, which was granted. The Court

then gave the Tarnols until October 26, 2015, to file their answer. The Tarnols filed

their answer on October 26, 2015. The Court then issued a scheduling order setting

dates and deadlines in the case, including setting a Scheduling Conference on

December 28, 2015.

The reasonable and necessary fees for work on this matter during the Fourth

Application Period total $10,763.10.

K. Bradley Turell Litigation

Bradley and Laurel Turell did not accept the Court-approved settlement offer

included in the demand letter sent to them on June 15, 2015. Accordingly, Allen

Matkins assisted the Receiver in preparing a Complaint and related papers, which

were filed on September 1, 2015, commencing Related Case No. 15-CV-06700-SJO-

FFM. Bradley and Laurel Turell have since filed an answer pro se and submitted an

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FHA to the Receiver. The FHA showed assets sufficient to repay the full profit

amount Bradley and Laurel Turell received and therefore was declined. The Court

has issued a scheduling order setting dates and deadlines in the case, including

setting a Scheduling Conference on November 23, 2015. The reasonable and

necessary fees for work on this matter total $874.80.

L. Berwyn Friedman Litigation

Berwyn Friedman did not accept the Court-approved settlement offer included

in the demand letter sent to him on June 3, 2015. Accordingly, Allen Matkins

assisted the Receiver in preparing a Complaint and related papers, which were filed

on September 1, 2015, commencing Related Case No. 15-CV-06714-SJO-FFM.

Mr. Friedman engaged counsel, who contacted Allen Matkins about his

financial condition. Mr. Friedman then submitted an FHA to the Receiver. Allen

Matkins assisted the Receiver in gathering various documents missing from

Mr. Friedman's FHA through his counsel. Once the FHA was complete, the

Receiver and Mr. Friedman stipulated to an extension of his deadline to respond to

the Complaint. The Court approved the stipulation and extended Mr. Friedman's

deadline to respond to December 7, 2015. The reasonable and necessary fees for

work on this matter total $4,131.00.

M. Harvey Turell Litigation

Harvey and Linda Turell did not accept the Court-approved settlement offer

included in the demand letter sent to them on June 15, 2015. Accordingly, Allen

Matkins assisted the Receiver in preparing a Complaint and related papers, which

were filed on September 1, 2015, commencing Related Case No. 15-CV-06720-SJO-

FFM.

The Turells engaged counsel, who contacted Allen Matkins about their

financial condition. The Turells then submitted an FHA to the Receiver. Allen

Matkins assisted the Receiver in gathering various documents missing from the

Turell's FHA through their counsel. Once the FHA was complete, the Receiver and

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the Turells stipulated to an extension of their deadline to respond to the Complaint.

The Court approved the stipulation and extended the Turell's deadline to respond to

November 30, 2015. The reasonable and necessary fees for work on this matter total

$3,888.00.

N. Frances McCaffrey Litigation

A demand letter was sent to Frances McCaffrey on August 5, 2015. During

the Fourth Application Period, Allen Matkins advised the Receiver regarding issues

raised by McCaffrey relating to the calculation of her profit amount. The reasonable

and necessary fees for work on this matter total $486.00.

On October 6, 2015, the Receiver filed a Complaint and related papers against

Ms. McCaffrey, commencing Related Case No. 15-CV-07843-SJO-FFM.

Ms. McCaffrey then engaged counsel and submitted an FHA to the Receiver. The

Receiver continues to gather financial documents supporting her FHA from

Ms. McCaffrey, through her counsel. Her deadline to respond to the Complaint is

currently set for November 13.

O. William Firestone Litigation

A demand letter was sent to William Firestone on August 5, 2015. During the

Fourth Application Period, Allen Matkins advised the Receiver regarding issues

raised by Firestone relating to the calculation of his profit amount. The reasonable

and necessary fees for work on this matter total $346.95.

On October 30, 2015, the Receiver filed a Complaint and related papers

against Mr. Firestone, commencing Related Case No. 15-CV-08498-SJO-FFM.

P. Summary of Expenses

Allen Matkins requests the Court approve reimbursement of $14,085.13 in

out-of-pocket costs. The itemization of such expenses is summarized below by

category. The majority of expenses incurred relate to the service of the 47 subpoenas

issued by Allen Matkins to assist the Receiver in obtaining necessary records, as well

as filing fees and service of process fees for the six clawback actions commenced

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during the Fourth Application Period. The total for costs incurred by Allen Matkins

is $14,085.13 and is broken down by category as follows:

Category Total Legal Research / PACER fees 1,918.80Messenger fees (court messenger/FedEx) 578.65Service of Process – Subpoenas 3,912.85Service of Process – Clawback Actions 3,100.25Duplication/Faxes/Postage 1,822.12Court Filing Fees 2,400.00Subpoena Document Production Costs 352.46TOTAL $14,085.13

III. THE FEES AND COSTS ARE REASONABLE

AND SHOULD BE ALLOWED

"As a general rule, the expenses and fees of a receivership are a charge upon

the property administered." Gaskill v. Gordon, 27 F.3d 248, 251 (7th Cir. 1994).

These expenses include the fees and expenses of the Receiver and his professionals,

including Allen Matkins. Decisions regarding the timing and amount of an award of

fees and costs to the Receiver and his Professionals are committed to the sound

discretion of the Court. See SEC v. Elliot, 953 F.2d 1560, 1577 (11th Cir. 1992).

In allowing fees, a court should consider "the time, labor and skill required,

but not necessarily that actually expended, in the proper performance of the duties

imposed by the court upon the receiver[], the fair value of such time, labor and skill

measured by conservative business standards, the degree of activity, integrity and

dispatch with which the work is conducted and the result obtained." United States v.

Code Prods. Corp., 362 F. 2d 669, 673 (3d Cir. 1966) (internal quotation marks

omitted). In practical terms, receiver and professional compensation thus ultimately

rests upon the result of an equitable, multi-factor balancing test involving the

"economy of administration, the burden that the estate may be able to bear, the

amount of time required, although not necessarily expended, and the overall value of

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the services to the estate." In re Imperial 400 Nat'l, Inc., 432 F.2d 232, 237 (3d Cir.

1970). Regardless of how this balancing test is formulated, no single factor is

determinative and "a reasonable fee is based [upon] all circumstances surrounding

the receivership." SEC v. W.L. Moody & Co., Bankers (Unincorporated),

374 F.Supp. 465, 480 (S.D. Tex. 1974).

As a preliminary matter, the TRO and Preliminary Injunction Order confer on

the Receiver substantial duties and powers, including to conduct such investigation

and discovery as is necessary to locate and account for all receivership assets, take

such action as is necessary and appropriate to assume control over and preserve

receivership assets, and employ attorneys and others to investigate and, where

appropriate, institute, pursue, and prosecute all claims and causes of action of

whatever kind and nature. See Dkt. No. 17 (TRO, Part XIII); Dkt. No. 42

(Preliminary Injunction Order, Part XII). The Receiver promptly determined that

experienced, qualified counsel was necessary due to the size and complexity of the

receivership estate. The Court approved the Receiver's proposal to file interim

reports and fee applications on a quarterly basis. Dkt. No. 47.

Allen Matkins has submitted a detailed fee application which describes the

nature of the services rendered and the identity and billing rate of each individual

performing each task. See Exhibit A. Allen Matkins has endeavored to staff matters

as efficiently as possible while remaining cognizant of the complexity of issues

presented. The request for fees is based on Allen Matkins' customary billing rates

charged for comparable services provided in other matters, less a 10% discount. In

addition, Allen Matkins did not charge for 3.1 hours ($1,506.60) of work during the

Fourth Application Period.

The work performed by Allen Matkins was essential to carrying out the

Receiver's Court-ordered duties. The Receiver and Allen Matkins have worked

diligently since the Receiver's appointment to (a) investigate, secure, and protect the

assets of the receivership estate, (b) preserve and maintain the limited revenue stream

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from the ATM business, (c) investigate transfers to third parties and potential claims

related thereto, (d) inform the Court and the parties of the Receiver activities,

(e) make recommendations for the efficient and effective administration of the

receivership, and (f) efficiently disseminate information to investors and respond to

frequently asked questions. It should be noted that Allen Matkins' work does not

duplicate or overlap with work performed by David Wallace, the General Counsel of

the Receiver's company, Trigild, Inc. Mr. Wallace has handled legal issues relating

to NASI's operations, including the ATM business, the servicers, other vendors, and

insurance issues.

Allen Matkins seeks payment of only 80% of fees incurred on an interim basis

in recognition of the fact that its work in assisting the Receiver is ongoing. Payment

of the proposed 20% holdback will be sought at the conclusion of the receivership.

Allen Matkins' fees are fair and reasonable and should be approved and paid on an

interim basis.

IV. CONCLUSION

Allen Matkins therefore respectfully requests this Court enter an Order:

1. Approving Allen Matkins' fees, on an interim basis, of $120,108.60;

2. Authorizing and directing the Receiver to pay 80% of approved fees, or

$96,086.88, from the assets of the Receivership Entities;

3. Approving Allen Matkins' costs in the amount of $14,085.13, and

authorizing and directing the Receiver to reimburse such costs in full; and

4. For such other and further relief as the Court deems appropriate.

Dated: December 9, 2015 ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP

By: /s/ Ted Fates TED FATES Attorneys for Receiver WILLIAM J. HOFFMAN

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EXHIBIT A Exhibit APage 16

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Exhibit APage 17

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Exhibit APage 18

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Exhibit APage 19

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Exhibit APage 20

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Exhibit APage 21

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Exhibit APage 22

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Exhibit APage 23

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Exhibit APage 24

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Exhibit APage 25

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Exhibit APage 26

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Exhibit APage 27

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Exhibit APage 28

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Exhibit APage 29

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Exhibit APage 30

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Exhibit APage 31

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Exhibit APage 32

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Exhibit APage 33

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Exhibit APage 34

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Exhibit APage 35

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Exhibit APage 36

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Exhibit APage 37

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Exhibit APage 38

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Exhibit APage 39

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Exhibit APage 40

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Exhibit APage 41

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Exhibit APage 42

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Exhibit APage 43

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Exhibit APage 44

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Exhibit APage 45

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Exhibit APage 46

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Exhibit APage 47

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Exhibit APage 48

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Exhibit APage 49

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 52 of 84 Page ID #:1664

Page 53: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 50

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 53 of 84 Page ID #:1665

Page 54: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 51

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 54 of 84 Page ID #:1666

Page 55: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 52

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 55 of 84 Page ID #:1667

Page 56: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 53

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 56 of 84 Page ID #:1668

Page 57: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 54

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 57 of 84 Page ID #:1669

Page 58: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 55

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 58 of 84 Page ID #:1670

Page 59: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 56

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 59 of 84 Page ID #:1671

Page 60: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 57

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 60 of 84 Page ID #:1672

Page 61: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 58

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 61 of 84 Page ID #:1673

Page 62: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 59

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 62 of 84 Page ID #:1674

Page 63: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 60

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 63 of 84 Page ID #:1675

Page 64: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 61

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 64 of 84 Page ID #:1676

Page 65: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 62

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 65 of 84 Page ID #:1677

Page 66: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 63

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 66 of 84 Page ID #:1678

Page 67: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 64

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 67 of 84 Page ID #:1679

Page 68: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 65

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 68 of 84 Page ID #:1680

Page 69: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 66

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 69 of 84 Page ID #:1681

Page 70: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 67

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 70 of 84 Page ID #:1682

Page 71: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 68

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 71 of 84 Page ID #:1683

Page 72: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 69

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 72 of 84 Page ID #:1684

Page 73: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 70

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 73 of 84 Page ID #:1685

Page 74: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 71

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 74 of 84 Page ID #:1686

Page 75: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 72

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 75 of 84 Page ID #:1687

Page 76: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 73

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 76 of 84 Page ID #:1688

Page 77: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 74

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 77 of 84 Page ID #:1689

Page 78: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 75

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 78 of 84 Page ID #:1690

Page 79: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 76

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 79 of 84 Page ID #:1691

Page 80: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 77

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 80 of 84 Page ID #:1692

Page 81: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 78

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 81 of 84 Page ID #:1693

Page 82: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 79

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 82 of 84 Page ID #:1694

Page 83: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 80

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 83 of 84 Page ID #:1695

Page 84: DAVID R. ZARO (BAR NO. 124334) TED FATES (BAR NO. 227809 ... · GENERAL COUNSEL TO THE RECEIVER, FOR PAYMENT OF FEES AND REIMBURSEMENT OF EXPENSES Date: January 11, 2016 Time: 10:00

Exhibit APage 81

Case 2:14-cv-07249-SJO-FFM Document 102 Filed 12/09/15 Page 84 of 84 Page ID #:1696