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| Forms and Instructions - Recent Status - Chapter 11 Trustee Reports - Creditor's Comm. Updates - Contact Information |
October 17, 2003 Trustee's Report EVERGREEN SECURITY, LTD CASE NO. 01-00533-6B1 TRUSTEE REPORT TO CREDITORS' COMMITTEE October 17, 2003 Ladies and Gentlemen: My last report to the Committee was July 9, 2003. This report will not repeat my prior reports, which can be found at www.evergreencreditorscommittee.com. The following table outlines the status of the litigation at September 30, 2003:
The broker test case against Harold James Kime and First American Life and Health Insurance Corporation resulted in judgements against the defendants for over $192,000. The defendants have filed an appeal, which has not been scheduled to be heard by the Appeals Court. The Court ordered mediation in 37 pending broker cases. The mediations began in September and are scheduled to be completed in January 2004. The broker cases dismissed were primarily due to not having documentation for the payment of commissions to the brokers. The Zylka et al defendants, which are pending, include individuals and businesses who received part of the $27.7 million taken from Evergreen by William J. Zylka and James P. Conroy. Mr. Zylka pleaded guilty and Mr. Conroy was convicted in New York for their parts in the funds taken. Mr. Conroy has appealed his conviction. These suits are in various stages of discovery and should be tried during 2004. The “Other” suits include suits against law firms, accounting firms, investment advisory firms, custodians, trustees, consultants, directors and the initial owner of Evergreen. Also included is a suit against Mr. Zylka, Mr. Conroy and his law firm, which is being heard in Federal District Court. These “Other” suits are in various stages of discovery and will be tried in 2004. Evergreen funds in excess of $5.8 million have been deposited to the bankruptcy accounts since my appointment through September 30, 2003. Additional funds will be obtained through the sale of assets recovered from: the liquidation of Surety Bank, the sale of stock, real estate and personal property from the settlement with the Zylka family members, and the sale of two lots in North Carolina recovered from one of the managers. The pending litigation, however, will provide the most significant source of recovery for Evergreen. I have requested all professionals file fee applications with the Court in order to keep track of the administrative costs in the case. Most professionals have filed their applications during this quarter. The remainder should be filed and heard during the fourth quarter. The claims objection process has nearly been completed. Most of the claim objections have been resolved, with the exceptions of one trustee who will not identify its underlying investors and a few individual claims. Hearings to resolve these objections will be heard during the fourth quarter. I have previously advised the Committee that I will file a motion for preliminary distribution to creditors after the claims objection process is complete and I have recovered $10 million. The liquidation of Surety Bank is the largest pending settlement. The liquidators of Surety have projected a recovery to Evergreen of up to $4 million. This liquidation is still working its way through the Courts in Nassau and time projections by the liquidators have previously been unreliable. Other pending settlements with funds in escrow and the Surety liquidation should be enough to file a motion for preliminary distribution. I am unable to make a time projection of when I will file this motion due to the uncertainty of the Surety liquidation timing and the final resolution of claim objections. Anthony Micciche, an Evergreen broker, was sentenced on July 15, 2003 to fifteen months in federal prison, thirty-six months probation and was ordered to make restitution of $1.275 million. I have obtained a judgment against Mr. Micciche of over $476,000. Thomas S. Spencer passed away of natural causes on September 12, 2003. Mr. Spencer previously settled with Evergreen. The criminal trial for Anthony Huggins and John M. Knight is scheduled to begin on December 1, 2003 in New York. Mr. Huggins and Mr. Knight were arrested on charges of grand larceny and other charges for taking $6.5 million from the Evergreen securities portfolio they were managing. 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 contact information 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 341 N. Maitland Ave., Suite 210 Maitland, Fl 32751 Phone 407-644-3781 ext. 235 Fax 407-644-3943 e-mail rcuthill@msn.com |
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| Official Committee of Unsecured Creditors for Evergreen Security, Ltd. |