One West Financial Services
Janet Mortenson, Receiver
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Janet Mortenson, Receiver
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CLAIMS UPDATE AS OF JUNE 7, 2005 Some claimants gave their money to an intermediary to deposit with One West. The Receiver’s review of claims indicates that one of the intermediaries failed to turn over to One West some of the funds he had received from investors. The Receiver has asked the receivership court to set a date for a hearing at which the intermediary will be questioned concerning what happened to the money he received but did not deposit with One West. Unfortunately, it is necessary for the Receiver to have a complete and accurate picture of all funds deposited with One West and all funds withdrawn from One West before she can recommend a distribution plan to the court. CLAIMS UPDATE On January 31, 2005, the receivership court entered an order making the One West receivership permanent and appointing Janet Mortenson as the permanent receiver. The effect of this order is that the court will authorize the Receiver to distribute the funds she has recovered once the court has resolved disputed claims. The Receiver is continuing to attempt to resolve disputed claims in which the claimant made a good-faith error in reporting the funds invested or the funds returned by One West prior to the receivership. There are other claims that appear to involve fraud. The Receiver will contest those claims, which will require the court’s resolution. The court has notified the Receiver that its available time is limited, and hearings will be scheduled as the court’s schedule permits. The Receiver is not able to predict the date on which all contested claims will be resolved because it appears that multiple hearings will be required and the court, not the Receiver, determines the dates on which those hearings will occur.
In other developments, the receivership court entered an order that permanently enjoins Lanny Lown from selling securities and requires him to make $14,000,000 in restitution to defrauded One West investors. Since the Receiver has already seized all known assets purchased with One West investors’ funds and since Mr. Lown is serving a life sentence and has filed a sworn affidavit stating that he is indigent, the Receiver does not anticipate that any additional funds will be recovered as a result of the court’s order. If for some reason Mr. Lown acquires money in the future, such as through an inheritance, the Receiver and the Attorney General’s office could file suit to claim those funds on behalf of One West investors.
On March 21, 2005, the receivership court conducted a hearing on six pieces of jewelry the Receiver seized at the outset of the receivership. Michael Sulewski, Mr. Lown’s former roommate, claimed that these items were his property. The court ordered that the jewelry is property of the receivership estate and the Receiver may sell it for the benefit of investors.
The Receiver regrets that she is unable to respond individually to investors’ inquiries, but frequently asked questions will be answered from time to time on this web site. Court sets September 27, 2004 deadline for filing claims Proof of Claim FormInstructionsReceivership Update Before any distribution of funds can occur in this case, the receivership court must enter a permanent injunction against One West in the lawsuit the Attorney General filed. The trial of this matter was scheduled to occur on September 7, 2004 but the court has notified us that the trial will not occur until at least October 2004. Judge Dietz, the judge who oversees the One West receivership, will be conducting the much-publicized Texas school financing trial during September and therefore he will not have time available to conduct the One West trial. The court’s trial schedule is completely outside the control of the Receiver and the Attorney General’s office. More information will be posted as it becomes available. LOWN SENTENCED TO LIFE IN PRISON On February 16, 2004 State District Judge Michael Wilkinson sentenced Lanny Lown to life in prison and ordered him to pay a $10,000 fine and make $14,000,000 in restitution to defrauded One West investors. Mr. Lown will begin serving his sentence immediately. The fine and the restitution order are largely symbolic, since the Receiver has already seized all funds in Mr. Lown’s bank accounts and all of his other known assets. In pronouncing the sentence, Judge Wilkinson commented on the large number of letters he had received from investors. The Receiver and the District Attorney’s office investigated the source of funds used to pay Ray Bass, Mr. Lown’s criminal attorney. Janie Philmon, Mr. Lown’s mother, testified under oath that the money used to pay Mr. Bass’ fee came from a $20,000 withdrawal she made from a retirement account she held with her former employer, Marriott Corporation. While not identifying Ms. Philmon as the person who paid him, Mr. Bass confirmed to the District Attorney’s office that the money used to pay him came from sources other than One West investors’ funds. JEWELRY AND FURS TO BE AUCTIONED ON DECEMBER 7, 2003
RESULTS OF NOVEMBER 12 HEARING ON JEWELRY AND FURS On November 12, 2003 State District Judge Paul Davis conducted a hearing on the Receiver’s motion for authority to sell the jewelry and furs she has seized. Michael Sulewski, former roommate of Lanny Lown, appeared at the hearing. Mr. Sulewski claimed a right to thirteen jewelry items and requested that the court order the Receiver to turn over those items to him. The court denied Mr. Sulewski’s request as to seven of the items and ordered that it will hold additional hearings concerning the ownership of the remaining six items Mr. Sulewski claims (numbers 25, 43, 55, 68, 109, and 113 on the list of jewelry). The court directed the Receiver to maintain possession of the six disputed items until the court enters additional orders. As to all other jewelry items, the court directed that the Receiver may sell them. The court ordered that the Receiver may sell all of the furs she has seized. The Receiver will conduct a sale in December of the jewelry and furs that the court authorized the Receiver to sell. She will post information regarding the sale on the receivership web site when she has completed her arrangements.
COURT TO HOLD HEARING ON OWNERSHIP OF JEWELRY AND FURS The Receiver has taken possession of over one hundred pieces of jewelry and six fur coats. Click here for a complete list of the jewelry and the furs. The persons from whom the Receiver seized the jewelry and furs represented to the Receiver that the items were purchased with One West funds. In some cases, the Receiver has been unable to locate invoices for the original purchases of these items. Consequently, the Receiver has filed a motion asking the court to enter an order finding that the receivership owns each of these items so that the Receiver can sell them for the benefit of defrauded investors. The court will hold a hearing on the Receiver’s request on November 12, 2003 at 2:00 p.m. If the court finds that the receivership owns the jewelry and furs, the Receiver will post information on the receivership web site concerning the location, date and time at which the jewelry and furs will be offered for sale. If you believe the Receiver is holding any fur or jewelry item that belongs to you, you must appear at the hearing with evidence supporting your ownership. Judge Dietz, the state district judge who oversees the One West receivership, has announced that the hearing regarding jewelry and furs will be placed on the Travis County district court’s central docket, which means that Judge Dietz will not necessarily be the judge who conducts the hearing. To find out the courtroom to which the hearing has been assigned, go to Room 435 of the Travis County Courthouse, 1000 Guadalupe Street, Austin, TX at 2:00 p.m. on November 12, 2003 and announce that you are present for a hearing in State of Texas v. Lanny Blake Lown et al., Cause No. GV 301057. If you have any questions about the Receiver’s motion, please call the Receiver’s attorney, Michael Shaunessy, at (512) 542-9600. Court Announces Lown’s Criminal Trial Will Be Rescheduled The Harris County Criminal District Court has announced that Lanny Lown’s trial will not occur on October 6, 2003. The court has not yet set a new trial date. Meanwhile, Lown remains in jail with his bond set at $700,000. More information will be posted as it becomes available. Contents Of Lown’s And Franz’s Former Residences To Be Sold Following the sale of the contents of One West’s offices (see below), the Receiver has scheduled sales of items in the former residences of Lanny Lown and Lori Franz that were purchased with One West investors’ funds. Items from the office that remain unsold will be included in the sale at Lown’s former residence. Please see www.estatesalemanagement.com for full details regarding the sales.
Contents
Of One West’s Offices To Be Sold
On September
18, 19, And 20 The Receiver
has obtained court orders permitting her to sell the contents of One West’s
office as well as all items purchased with One West investors’ funds that are
currently located in Lanny Lown’s and Lori Franz’s former residences. The
Receiver has engaged Estate Sale Management, a leading estate sale firm, to
conduct these sales. The contents
of One West’s offices will be sold on September 18, 19, and 20, and the
contents of the Lown and Franz houses will be sold the following week.
Please see Estate Sale Management’s web site at
www.estatesalemanagement.com
for full details concerning the sales. First State Bank of
Huntsville, the primary lender to Lanny Lown, declared all three of its loans to
Lown in default. Under a
court-approved settlement between the Receiver and the Bank, the Bank is now the
sole owner of Lown’s former residence at 4151 Bissonnet in West University
Place. The Bank intends to list
this property for sale as soon as the Receiver’s sale of the house’s
contents has concluded. In the
settlement, the Receiver received Lown’s former Houston townhouse free and
clear of the Bank’s liens as well as a portion of the proceeds from the sale
of a vacant lot in Houston that Lown had purchased.
With court approval, the Receiver recently sold the Lown townhouse,
completely furnished, and therefore its
contents will not be part of the upcoming sale.
Additionally, the court approved the Receiver’s sale of the vacant lot. The Receiver has deposited the proceeds of all sales into
interest bearing accounts, where they will remain until the court issues orders
concerning a distribution. The receivership
also owns Lori Franz’s former residence in Bellaire and her former townhouse
in Houston. The Receiver has listed
both of these properties for sale, but it is likely that the lender will
foreclose on the townhouse soon. The
Receiver has not received an offer for either the Franz townhouse or the
Bellaire residence that comes close
to paying off the first liens on the properties.
The contents of these properties that were purchased with One West’s
investors’ funds will be combined at 4527 Pin Oak in Bellaire and sold in the
Receiver’s upcoming sale. Again,
please see
www.estatesalemanagement.com for details concerning these sales.
INTERNAL
REVENUE SERVICE INFORMATION The Texas Attorney General’s Office has talked with the Internal Revenue Service about the One West case. Investors who wish to discuss their individual tax situations with the IRS may call the IRS’s Abusive Schemes Hotline at (713) 209-4062. Please be aware that neither the Attorney General’s Office nor the Receiver can provide individual tax advice to investors; each investor should consult his or her own tax adviser. Update as of September 9, 2003: Several investors have reported that they have not received assistance when they called the aforementioned IRS telephone number. The Receiver continues to recommend that each investor consult his or her own tax adviser concerning tax-related matters.
District Attorney Letter of July 15, 2003 and Supplemental Questionnaire RECEIVERSHIP RECOVERS RETAINER PAID TO LOWN’S FORMER CRIMINAL ATTORNEYWhen Lanny Lown was first arrested, prior to the Receiver’s appointment, he engaged a criminal lawyer, Joe Bailey. Mr. Lown paid Mr. Bailey a retainer of $105,000, which was derived from One West investor funds. Later Mr. Bailey resigned as Mr. Lown’s attorney. When the Receiver was appointed, she learned of the retainer payment to Mr. Bailey and demanded that he turn over the retainer payment to her. Mr. Bailey supplied the Receiver with copies of his invoices indicating that his firm had already incurred approximately $25,000 in fees in representing Mr. Lown. Rather than litigate with Mr. Bailey’s firm, which would have been expensive and time-consuming, the Receiver offered to accept $95,000 if it was turned over immediately. Mr. Bailey’s firm accepted the offer and wrote a check to the Receiver for $95,000, which has been deposited in the receivership bank account and will be part of the funds available for distribution to investors. The Receiver has also demanded that Mr. Lown’s current attorney, Anthony Fisch, turn over the retainer he received through Lanny Lown’s mother. The Receiver alleges that these funds were also derived from One West investors’ deposits. Mr. Fisch has refused to return his retainer. The Receiver anticipates that the court will become involved in this matter. CRIMINAL COURT RULES THAT LOWN’S BAIL BOND MONEY SHOULD GO TO THE RECEIVERSHIP A Harris County criminal court recently conducted a hearing concerning what should be done with the $90,000 remaining from Lanny Lown’s original bail bond. Based on the Receiver’s testimony at the hearing and at the request of the Harris County District Attorney’s Office, State District Judge Mike Wilkinson ruled that the $90,000 should be turned over to the receivership for the benefit of defrauded One West investors. Mr. Lown’s attorney has filed a notice of appeal with the Court of Criminal Appeals. Meanwhile, Mr. Lown remains in jail; his current bail has been set at $700,000. COURT RULES THAT RECEIVER OWNS ONE WEST’S ATTORNEY-CLIENT AND ACCOUNTANT-CLIENT PRIVILEGES On June 11, 2003 the receivership court ruled that the Receiver owns One West’s attorney-client and accountant-client privileges. This ruling is significant because it means that the Receiver can fully review the files of any attorney or accountant who advised One West. These files may contain information that could lead to the recovery of additional assets. The Receiver urges anyone who knows the name of any former One West accountants or attorneys to e-mail that information to her at receiver@onewestreceivership.com.
Letters to InvestorsThese are recent communications relating to One West Financial Services and the related court actions.
Media Coverage of One West Receivership
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Send mail to
claims@onewestreceivership.com .
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COURT ENTERS
ORDER ON DISTRIBUTION
