Investors waiting to hear a price tag for the case against Los Altos' Small Business Capital Corp. received an initial answer last week.
The receiver and attorney appointed to analyze and administer the seized investment company have incurred $377,791 in fees and expenses and a court hearing on a first, partial application for compensation is scheduled Feb 22.
Interested parties opposing the application for payment have until Thursday (Dec 20) to file complaint.
The receiver, Thomas A. Seaman, has been administering a group of related companies into which 400 investors, many of them from Los Altos, had sunk $42 million in recent years. In investigations like this one, assets from the seized estate are used to pay the court-appointed receiver's fees and expenses.
When the Securities and Exchange Commission froze accounts and seized files at S.B. Capital’s San Antonio Road office in June 2012, its investigators claimed that CEO Mark Feathers had orchestrated a Ponzi-like scheme in which investors were paid returns in excess of profits derived from their investments. SB Capital and two associated funds, Investors Prime Fund and SBC Portfolio Fund, specialized in mortgage lending in partnership with the Small Business Association.
By seizing the business and halting investment operations, the SEC said it aimed to retrieve investor money. A court-appointed receiver began dismantling the business. How much of the $42 million might return to investors – and how much of the salvaged money would go to receiver fees – concerned many of the investors who watched the prosecution begin last summer.
Seaman reports that investors may recoup $11 million in liquid assets and $25.45 million from loans. He also claimed to have increased cash in the receivership estate by almost a million dollars and increased monthly profits from the seized companies, both through firing staff and through addressing “defaults and other issues” with borrowers.
The receiver chose not to follow through on more than $10 million in planned investments.
"Rather than continuing to speculate with investor funds, the goal of the receivership is to preserve and protect receivership estate assets, and, once an orderly claims process has been completed, return as much money as possible to investors," Seaman wrote.
For detailed information about the fee application or filing opposition, see the court filing here. A court hearing is scheduled 9 a.m. Feb. 22 in courtroom 4 on the fifth floor of the United States District Court at 280 S. First Street in San Jose.