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| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
January 13, 2003 Trustee's Report EVERGREEN SECURITY, LTD CASE NO. 01-00533-6B1 TRUSTEE REPORT TO CREDITORS’ COMMITTEE January 13, 2003 Ladies and Gentlemen: My last report to the Committee was October 25, 2002. This report will not repeat my prior reports, which can be found at www.evergreencreditorscommittee.com. Evergreen funds in excess of $5.1 million have been deposited to the bankruptcy accounts since my appointment through December 31, 2002. Four of the six managers of Evergreen have settled for $560,000 in cash, three pieces of real estate and cooperation in other litigation. The cash was received in October. One piece of real estate was sold and closed for $700,000 during December. Two other pieces of real estate with a value of less then $50,000 are still to be sold. Two additional managers have responded to the suit and their trials should be held in 2003. Surety Bank and Trust, Ltd. in the Bahamas is in liquidation. I have filed a claim with the bank's liquidators in the amount of $5.1 million. The liquidators for the bank have estimated Evergreen may receive $4 million to $5 million, upon liquidation. According to the liquidator's counsel, all that remains is Court approval in the Bahamas of the liquidator's plan of liquidation and Evergreen's claim. I prevailed in my turnover action against Intrados in US Bankruptcy Court and have requested a judgment for $35 million against Intrados. Intrados has terminated their US counsel and is not responding to the US case. I have begun litigation in Costa Rica. The Atlantic Portfolio Analytics & Management, Inc. (APAM) suit for $8.5 million continues to be stayed by a motion from the District Attorney for the County of New York. The NYDA has a criminal case against Mr. Huggins and Knight, the principals in APAM, who were arrested in August. The defendants in this case tendered a check to me for $1,539,955.39 during December. I did not accept the check, which was marked "payment in full", because it would have precluded me from continuing to try to collect the balance of the funds from the defendants. This suit is in the discovery stage. The Zylka suit includes twenty-seven defendants, which received part of the $27.7 million taken from Evergreen by William J. Zylka. I have settled with nine of the Zylka corporations, the wife and two daughters of William Zylka for all of their corporate assets, six automobiles and percentages of the proceeds from the sale of their residence and real estate held in a trust for the two daughters. This settlement was approved by the Court in its order of December 6, 2002. One of the Zylka corporations, which was turned over in this settlement owns over 13 million shares of Crystal Graphite Corporation, a Vancouver-based publicly-owned graphite mining company. I have also settled my suit against Crystal Graphite Corporation and filed a motion on November 19, 2002 for its approval. The remaining suits are in settlement discussions or the discovery stage and should be tried next year in Orlando. During July I filed a fraudulent transfer case against Mickey Fouts, a consultant to William J. Zylka, to recover $100,000 in fees paid to him. This suit is in the discovery stage. In May I filed fraudulent transfer suits against seventy-five brokers for in excess of $8 million of commissions. In July I filed a motion to dismiss twenty-eight of these cases due to lack of evidence of payment of the commissions. I will re-file four of these cases and file cases against twenty-six additional brokers in January. I have accepted one settlement offer from a broker for $5,000 and have filed a motion with the Court for approval. The broker test case against Harold James Kime and First American Life and Health Insurance Corporation was held on December 23 and 24. Closing arguments will be scheduled for early 2003. Subsequent to the ruling in the test case, I will ask the Court to order mediation in the other broker suits. Many of the investors provided me information relating to their brokers. This information was extremely helpful in the suits against the brokers. It would be helpful to know who investors made personal contact with, other then their broker and the six managers of Evergreen. If you had direct contact with an employee or representative of Evergreen, please send me their name, address, the time period and a brief description of your contact. During July I filed a malpractice suit against Averett Warmus et al, one of Evergreen's CPA's, for an unspecified amount of damages. The suit is in the discovery stage. During July I filed a suit in the Bahamas against Greg White, Evergreen's owner until 1998, for over $1.4 million in payments to him and other damages in excess of $50 million. This suit is in the discovery stage. During August I filed a malpractice and RICO suit against Windels Marx et al, James Conroy and William J. Zylka for an unspecified amount of damages. Mr. Conroy, the attorney who handled the Zylka transfers, was arrested in May in New York for his part in this. My suit has been removed from Bankruptcy Court and is scheduled for a jury trial in Federal District Court in Orlando in May 2004. This suit is in the discovery stage. Scott Shuker, my bankruptcy counsel, has consulted with Hans Beyer, the Creditors' Committee counsel, about additional suits, which should be filed. These suits, which will be filed this month, will be reported to you in my next report. There were over 3,800 claims filed for over $350 million. I reviewed these claims and have filed objections for over 2,700 claims, which total over $235 million. Many of the objections were for filing duplicate claims, claims filed by trustees without identification of the investor and claims filed with an amount in excess of the amount in Evergreen's records. Notices of my objections were mailed by the Court on September 9 and September 30, 2002 to the address on the Proof of Claim Form. If your claim was filed by a trustee or other representative and it listed their address, the notice was mailed to them. The Court will issue orders approving the objections with no responses and those which have been resolved. Claimants with unresolved objections will be notified of a Court hearing in Orlando about their claims. These hearings should be scheduled during March or April 2003. If you would like to provide me with any information in this case, please mail, fax or e-mail it to me. I have listed my numbers below. You should continue to contact the Creditors’ Committee web site for information in this case. Also many newspapers have carried articles about this case. The largest collection of articles can be found at www.orlandosentinel.com. R. W. (Bill) Cuthill, Jr., CPA, CFE Chapter 11 Trustee Cuthill & Eddy LLP 1031 W. Morse Blvd., Suite 200 Winter Park, Fl 32789-3750 Phone 407-644-7455 Fax 407-628-5277 e-mail rcuthill@cuthilleddy.com |
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| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |