Update from the Receiver:

January 13, 2009

Court Enters Order Prohibiting Distributions to Reeves Defendants

On January 13, 2009, the U.S. District Court for the Southern District of Indiana granted the Receiver's Motion to Prohibit Distributions to Reeves Defendants and Joint Account Holders. The Court's Order prohibits any bondholder distributions based on accounts held individually or jointly with their spouses by the Defendants Vaughn A. Reeves, Sr., Vaughn A. Reeves, Jr., Jonathan Christopher Reeves and Joshua Craig Reeves. A copy of the Court's Order may be viewed here.

Court Grants Receiver's Motion for Authorization to Make Initial Distribution to Investors in Category B Bonds and Bond Funds

On January 9, 2009, the U.S. District Court for the Southern District of Indiana granted the Receiver's motion for authorization to make an initial disbursement of $10 million of pooled funds to investors in the Category B bond issues and the Churchmen's Bond Funds. A copy of the Court's Order may be viewed here. It is anticipated that the payments will be sent to investors in mid-February.

Receiver Seeks Authorization to Make Distributions to Investors in the Thirty Category A Bond Issues That Have Been Paid Off in Full

On November 14, 2008, the Receiver filed a petition seeking authorization to make distributions to investors in the thirty Category A bond issues that have been paid off in full.   A copy of the motion may be viewed here.

In addition to requesting authorization to make a distribution of funds, the petition also requests the court to amend the formula for allocating the Receivership administrative and professional fees per Category A bond issuer so that all bondholders will be treated in a fair and consistent manner.

Important Information Regarding Proposed Trade Creditor Claims Procedure

On June 24, 2008, the Receiver filed a Motion to Adopt Trade Creditor Claims Procedure in the United States District Court for the Southern District of Indiana.  Copies of the motion  and the proposed trade creditor claims procedure are being sent to all known trade creditors and bond issuers.

Interested parties will have an opportunity to object to the trade creditor claims process proposed by the Receiver.  The U.S. District Court entered an Order Implementing Objection Procedure for Receiver’s Motion to Adopt Trade Creditor Claims Procedure.  Under the terms of the Court’s order, interested parties have until August 8, 2008 to submit any objections to the proposed trade creditor claims process. 

Notice of Filing of Proposed Trade Creditor Claims Procedure and Opportunity for Objections

Order Implementing Objection Procedure for Trade Creditor Claims Procedure

Proposed Trade Creditor Claims Procedure

Investor Claims Forms Have Been Mailed

In accordance with an order entered by the U.S. District Court, statement of claim forms, containing each investor’s Adjusted Net Investor Claim (ANIC), were mailed to investors in the Category B bond issues and the Churchmen’s Bond Funds on June 27, 2008.  You may view information about the investor claims procedure by clicking on the following links:

Order Adopting Investor Claims Procedure

Investor Claims Procedure

Sample Statement of Claim Form

Summary of Investor Claim Procedure

Letter to Investors Regarding Claim Process

U.S. District Court Enters Order of Disgorgement Against the Reeves Defendants

On May 6, 2008, the U.S. District Court ordered disgorgement against the Reeves Defendants in the following amounts: $2,862,191 against Vaughn Reeves, $1,806,105 against Chip Reeves, $905,930 against Chris Reeves, and $429,405 against Josh Reeves. The court ordered the Reeves to pay prejudgment interest based on the rate of interest used by the IRS for the underpayment of federal income tax and calculated from the last month in which each Reeves defendant received ill-gotten gains through the date that a partial final judgment is entered. Additionally, the court ordered a third-tier civil monetary penalty to be assessed against each Reeves defendant in the amount of $120,000. Pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the court determined there is no just reason for delay and that a partial final judgment should be entered as to these obligations and penalties. The court specifically requested that the SEC calculate prejudgment interest and tender a suitable form of partial final judgment as soon as practicable. A copy of the Court’s Order of Disgorgement may be viewed here.

Bradley W. Skolnik