Securities and Exchange Commission v. Beasley et al, No. 2:2022cv00612 - Document 330 (D. Nev. 2022)
Court Description: ORDER Granting 325 Stipulation and [Proposed] Order Authorizing Release of Funds From Accounts at U.S. Bank National Association and U.S. Bancorp Investments, Inc. re 207 Order. Signed by Judge Cristina D. Silva on 10/12/2022. (Copies have been distributed pursuant to the NEF - YAW)
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Securities and Exchange Commission v. Beasley et al Doc. 330 Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 1 of 7 1 Jarrod L. Rickard, Bar No. 10203 jlr@skrlawyers.com Katie L. Cannata, Bar No. 14848 2 klc@skrlawyers.com 3 SEMENZA KIRCHER RICKARD 10161 Park Run Drive, Suite 150 4 Las Vegas, Nevada 89145 Telephone: (702) 835-6803 5 Facsimile: (702) 920-8669 6 David R. Zaro (admitted pro hac vice) dzaro@allenmatkins.com Joshua A. del Castillo (admitted pro hac vice) 7 jdelcastillo@allenmatkins.com 8 Matthew D. Pham (admitted pro hac vice) mpham@allenmatkins.com ALLEN MATKINS LECK GAMBLE 9 MALLORY & NATSIS LLP 10 865 South Figueroa Street, Suite 2800 Los Angeles, California 90017-2543 11 Telephone: (213) 622-5555 Facsimile: (213) 620-8816 12 Attorneys for Receiver Geoff Winkler 13 Kara B. Hendricks, Bar No. 07743 hendricksk@gtlaw.com Jason K. Hicks, Bar No. 13149 hicksja@gtlaw.com Kyle A. Ewing, Bar No. 014051 ewingk@gtlaw.com GREENBERG TRAURIG, LLP 10845 Griffith Peak Drive, Suite 600 Las Vegas, Nevada 89135 Telephone: (702) 792-3773 Facsimile: (702) 792-9002 14 UNITED STATES DISTRICT COURT 15 DISTRICT OF NEVADA 16 17 SECURITIES AND EXCHANGE COMMISSION, 18 Plaintiff, 19 vs. 20 MATTHEW WADE BEASLEY, et al., 21 Defendants, 22 THE JUDD IRREVOCABLE TRUST, et al., 23 Relief Defendants. 24 Case No. 2:22-cv-00612-CDS-EJY STIPULATION AND ORDER AUTHORIZING RELEASE OF FUNDS FROM ACCOUNTS AT U.S. BANK NATIONAL ASSOCIATION AND U.S. BANCORP INVESTMENTS, INC. 25 26 / / / 27 / / / 28 / / / LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 Dockets.Justia.com Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 2 of 7 STIPULATION AND ORDER 1 2 The following Stipulation and [Proposed] Order Regarding Release of Funds From Accounts 3 at U.S. Bank National Association and U.S. Bancorp Investments, Inc. (the "Stipulation") is made 4 by and between: (1) Geoff Winkler (the "Receiver"), the Court-appointed receiver in the above5 entitled action; (2) the plaintiff Securities and Exchange Commission (the "Commission"); (3) U.S. 6 Bank National Association ("U.S. Bank"); and (4) U.S. Bancorp Investments, Inc. ("USBI"), by and 7 through their respective counsel of record, and with respect to the following facts. 8 A. On December 21, 2005, Matthew Wade Beasley (a defendant in the above-entitled 9 action), as borrower, entered into a Reserve Line Agreement with U.S. Bank (the "Reserve Line 10 Agreement") in connection with a deposit account ending in xx7143 (the "Reserve Line Account"). 11 U.S. Bank maintains, and the Receiver does not dispute, that the Reserve Line Agreement provides 12 U.S. Bank with a security interest in the Reserve Line Account. 13 B. On April 21, 2020, Jeffrey Jason Judd (a defendant in the above-entitled action) and 14 Jennifer Rowland Judd, as borrowers, entered into a U.S. Bank Private Select Home Equity 15 Creditline Agreement for the loan ending in xx6338 (the "HELOC"), in the principal amount of 16 $857,000.00. The HELOC is secured by, at least, a Deed of Trust on the real property located at 17 21371 Estepa Cir, Huntington Beach, California 92648 (the "Property"), dated April 21, 2020, and 18 recorded in the Official Records of Orange County, California as instrument number 19 2020000220930. Pursuant to the HELOC agreement, U.S. Bank further claims a right of setoff 20 against "all accounts" maintained at U.S. Bank by the HELOC borrowers; 21 C. On January 29, 2021, Jeffrey Jason Judd and Jennifer Rowland Judd, as borrowers, 22 executed a Promissory Note in favor of U.S. Bank, as lender, in the principal amount of 23 $2,110,650.00 and in connection with the loan ending in xx3466 (the "Loan"). The Loan was 24 secured by, at least: (1) a Consumer Pledge Agreement dated January 29, 2021 for the USBI account 25 ending in xx8309, maintained in the name of the Judd Family Trust (the "Pledged Account"); (2) a 26 Control Agreement for the Pledged Account dated January 29, 2021 and identifying the Judd Family 27 Trust as the pledgor; and (3) a Consumer Guaranty, also dated January 29, 2021 and executed in 28 favor of U.S. Bank by the Judd Family Trust; LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 -2- Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 3 of 7 1 D. U.S. Bank maintains, and the Receiver does not dispute, that U.S. Bank has perfected 2 security interests in the Property and the Pledged Account; 3 E. On April 13, 2022, this Court entered its Temporary Restraining Order and Orders: 4 (1) Freezing Assets; (2) Requiring Accountings; (3) Prohibiting the Destruction of Documents; and 5 (4) Granting Expedited Discovery; and (5) to Show Cause re Preliminary Injunction (the "TRO") 6 [ECF No. 3], which, among other things, imposed a freeze upon certain bank accounts, including 7 bank accounts held by or maintained in the name of defendant Jeffrey Jason Judd and the Judd 8 Family Trust (the "Judd Accounts") and Matthew Wade Beasley (the "Beasley Accounts"); 9 F. On April 21, 2022, this Court entered its Order Entering Preliminary Injunction, 10 Asset Freeze, and Other Equitable Relief (the "PI") [ECF No. 56] which, among other things, 11 continued the freeze as to the Judd Accounts and the Beasley Accounts; 12 G. The Receiver was appointed on June 3, 2022 pursuant to this Court's Order 13 Appointing Receiver [ECF No. 88], amended on July 28, 2022 [ECF No. 207] (collectively, the 14 "Appointment Order"); 15 H. Among other things, the Appointment Order required the turnover of certain funds 16 to the Receiver, including funds held in the Judd Accounts and the Beasley Accounts; 17 I. U.S. Bank and USBI acknowledge and affirm their respective obligations under the 18 Appointment Order to turn over funds maintained in the Judd Accounts, Beasley Accounts, and 19 other accounts subject to the TRO, PI, and Appointment Order, to the Receiver. 20 J. U.S. Bank and USBI filed Certified Statements in the above-entitled action on July 5, 21 2022 and July 1, 2022, respectively [see ECF Nos. 133, 140]. USBI's Certified Statement reflects 22 the balance of the Pledged Account was $3,364,791.12 as of June 10, 2022. U.S. Bank and USBI 23 have maintained, and the Receiver has not disputed, that, because the balance of the Pledged 24 Account are invested, the value of the Pledged Account is subject to market volatility. U.S. Bank's 25 Certified Statement reflects the indebtedness on the Reserve Line Account was $980.10, while the 26 balance of the Reserve Line Account was $2,886.87, as of June 10, 2022; 27 28 LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 -3- Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 4 of 7 1 K. As identified by U.S. Bank and USBI in their Certified Statements, the aggregate 2 balances of the deposit, investment and indebtedness in the Judd Accounts and Beasley Accounts 3 as of June 10, 2022 was approximately $8.65 million; 4 L. U.S. Bank has informed the Receiver that the HELOC and the Loan are in default, 5 incurring interest and fees, including interest at a current combined rate of approximately $176 per 6 day, and with an aggregate outstanding balance of approximately $2,719,531.01, inclusive of 7 accrued interest and fees, as of September 2, 2022; 8 M. Given the current HELOC and Loan defaults and U.S. Bank's security interest in the 9 Property and the Pledged Account, and the fact that each continue to accrue interest and fees, and 10 at U.S. Bank's request, the Receiver and the Commission have agreed that U.S. Bank shall be 11 permitted to apply assets maintained in the Pledged Account to the total outstanding Loan balance, 12 and in order to pay off such balance, in its entirety, and further to apply assets of the Judd Accounts 13 as the Receiver may direct to the total outstanding HELOC indebtedness in order to pay off such 14 balance, in its entirety, and avoid the accrual of additional interest and fees; 15 N. The Receiver and the Commission have agreed that, pursuant to the Reserve Line 16 Agreement, U.S. Bank shall be permitted to apply deposits maintained in the Reserve Line Account 17 to the indebtedness of the Reserve Line Account; 18 O. U.S. Bank and USBI have agreed that, within fourteen (14) days of the payoff of the 19 HELOC, the Loan, and the Reserve Line Account, as contemplated in Recitals M and N, above, 20 USBI shall turn over to the Receiver the remaining balance of the Pledged Account and U.S. Bank 21 shall turn over to the Receiver the remaining balances of the Reserve Line Account, and that U.S. 22 Bank and USBI shall turn over the remaining assets of the Judd Accounts, the Beasley Accounts, 23 and all other accounts maintained by U.S. Bank and USBI that are subject to the TRO, PI, and 24 Appointment Order. As of the date of this Stipulation, U.S. Bank and USBI believe the total amount 25 to be turned over to the Receiver will be approximately $8.5 million; 26 P. In order to facilitate the transfer of invested assets maintained in accounts maintained 27 by U.S. Bank and USBI that are subject to the TRO, PI, and Appointment Order as set forth in 28 LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 -4- Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 5 of 7 1 Paragraph O above, U.S. Bank and USBI have agreed to liquidate any investment assets maintained 2 in those accounts if directed to do so by the Receiver; and 3 Q. U.S. Bank has further agreed that, upon the payoff of the HELOC and the Loan, as 4 contemplated in Recital M, above, it shall fully and completely release its security interest in the 5 Property, although the Property shall remain subject to the asset freeze imposed pursuant to the TRO 6 and PI, and to the turnover provisions of the Appointment Order. STIPULATION AND AGREEMENT 7 8 Accordingly, and in consideration of the facts stated the Recitals above, the Receiver, the 9 Commission, U.S. Bank and USBI hereby stipulate and agree as follows: 10 1. In order to apply the assets maintained in the Pledged Account to the outstanding 11 HELOC and Loan balances, and thereafter to turn over the remaining balance to the Receiver, USBI 12 is authorized to liquidate the investment assets maintained in the Pledged Account; 13 2. USBI is authorized to provide U.S. Bank liquidated funds held in the Pledged 14 Account so that U.S. Bank may apply those funds to the outstanding HELOC and Loan balances, 15 inclusive of accrued interest and fees, in order to pay off such balances, in their entirety; 16 3. U.S. Bank is authorized to pay off the indebtedness of the Reserve Line Account 17 with the deposits of the Reserve Line Account; 18 4. Within fourteen (14) days of its application of: (1) funds held in the Pledged Account 19 to the outstanding HELOC and Loan balances; and (2) the deposits in the Reserve Line Account to 20 the indebtedness in the Reserve Line Account, as provided for herein, U.S. Bank and USBI shall 21 turn over to the Receiver, pursuant to payment instructions to be provided by the Receiver, all funds 22 remaining in the Pledged Account, the Reserve Line Account, the Judd Accounts, the Beasley 23 Accounts, and all other accounts maintained by U.S. Bank USBI that are subject to the TRO, PI, 24 and Appointment Order, including but not limited to the accounts identified in U.S. Bank's and 25 USBI's Certified Statements [ECF Nos. 133 and 140]; 26 5. In order to facilitate the transfer of invested assets maintained in accounts maintained 27 by U.S. Bank and USBI that are subject to the TRO, PI, and Appointment Order as set forth in 28 LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 -5- Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 6 of 7 1 Paragraph 4, above, U.S. Bank and USBI are authorized and directed to liquidate any investment 2 assets maintained in those accounts if directed to do so by the Receiver; and 3 6. Upon the payoff of the HELOC and the Loan, as provided for herein, U.S. Bank shall 4 fully and completely release its security interest in the Property, although the Property shall remain 5 subject to the asset freeze imposed pursuant to the TRO and PI, and to the turnover provisions of 6 the Appointment Order. 7 SO STIPULATED. 8 9 Dated: October 6, 2022 10 SEMENZA KIRCHER RICKARD /s/ Jarrod L. Rickard Jarrod L. Rickard, Bar No. 10203 Katie L. Cannata, Bar No. 14848 10161 Park Run Drive, Suite 150 Las Vegas, Nevada 89145 11 12 13 ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP David R. Zaro (admitted pro hac vice) Joshua A. del Castillo (admitted pro hac vice) Matthew D. Pham (admitted pro hac vice) 865 South Figueroa Street, Suite 2800 Los Angeles, California 90017-2543 14 15 16 17 Attorneys for Receiver Geoff Winkler 18 19 Dated: October 6, 2022 SECURITIES AND EXCHANGE COMMISSION 20 /s/ Tracy Combs Tracy S. Combs, CA Bar No. 298664 Casey R. Fronk, IL Bar No. 6296535 351 South West Temple, Suite 6.100 Salt Lake City, Utah 84101 21 22 23 Attorneys for Plaintiff Securities and Exchange Commission 24 25 26 27 28 LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 -6- Case 2:22-cv-00612-CDS-EJY Document 330 Filed 10/12/22 Page 7 of 7 1 Dated: October 6, 2022 2 SNELL & WILMER L.L.P. 4 /s/ Robert R. Kinas Robert R. Kinas, Bar No. 6019 3883 Howard Hughes Parkway, Suite 1100 Las Vegas, Nevada 89169 5 Attorneys for U.S. Bank National Association 3 6 Dated: October 6, 2022 SNELL & WILMER L.L.P. 7 /s/ Robert R. Kinas Robert R. Kinas, Bar No. 6019 3883 Howard Hughes Parkway, Suite 1100 Las Vegas, Nevada 89169 8 9 10 Attorneys for U.S. Bancorp Investments, Inc. 11 12 IT IS SO ORDERED. 13 14 15 16 Hon. Cristina D. Silva Judge, United States District Court 17 Dated: October 12, 2022 18 19 20 21 22 23 24 25 26 27 28 LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP 4892-1821-3686 1 -7-
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