Bulk property sale off in alleged Utah Ponzi scheme
The court-appointed receiver in charge of the Utah company that allegedly may be one of Utah's biggest financial frauds ever has abandoned a plan for one huge sale of properties.
In the face of opposition from some creditors, banks and investors, John Beckstead, the receiver for Fountain Green-based Management Solutions Inc., told a federal judge on Friday that he would come up with another plan to liquidate the properties that are spread over multiple states.
Beckstead said there was a need to sell the properties quickly and that the bulk-sale process had incurred problems.
"We have come to the conclusion it needs to be abandoned," Beckstead told U.S. District Judge Bruce Jenkins, who is presiding over the case.
The Securities and Exchange Commission sued Management Solutions and owners Wendell and Allen Jacobson in December 2011, alleging it had been operated as a Ponzi scheme as it purchased apartment and commercial properties. It took in around $200 million from 225 investors.
The defendants' attorney, however, has denied it was a Ponzi scheme, a fraud in which monies from new investors go to pay earlier investors to make it appear a company is profitable. There also are enough assets to repay investors and creditors, the attorney claims.
But it is how to get those assets back into the hands of investors that has been a point of dispute.
Greg Houle, an attorney for an investors group, said they were pleased Beckstead had abandoned the bulk-sale plan that they believed would have fetched far less for them than if the properties were marketed separately.
The group plans a motion asking Jenkins to allow investors to take over the properties and wait until the market improves before selling them.
Beckstead told the judge he hoped to have a new plan in a few weeks.