United States District Court, D. Maryland
Richard D. Bennett United States District Judge.
September 11, 2018, a grand jury in the District of Maryland
returned an indictment charging Defendants Kevin B. Merrill
("Merrill"), Jay B. Ledford ("Ledford"),
and Cameron Jezierski ("Jezierski") with numerous
counts, including wire fraud, identity theft, and
money-laundering. See United States v. Kevin B. Merrill,
et at, Criminal No. RDB-18-0465 (ECF No. 1, unsealed on
September 18, 2018, ECF No. 12.)
September 13, 2018, the Securities and Exchange Commission
("SEC") filed a Complaint (ECF No. 1) alleging that
Merrill, Ledford, and Jezierski (collectively, the
"Defendants") raised more than $345 million from
over 230 investors to purportedly purchase consumer debt
portfolios. The SEC alleges, that from at least 2013 to die
present, the Defendants operated a Ponzi-like scheme that
involved, among other things, securities offerings "rife
with misrepresentations," fake debt, forged signatures,
fabricated wire transfers, the movement of millions of
dollars into personal accounts, and an elaborate scheme
wherein Defendants offered and sold investments in the same
debt and/or debt portfolios, to multiple victims. (Compl.,
ECF No. 1 at ¶ 1.) Of the $345 million, more than $90
million was invested by over 200 individual investors,
approximately $52 million by family offices, and nearly $203
million by feeder funds. (Id. at ¶ 2.)
Court appointed a temporary Receiver, Gregory S. Milligan
("Milligan" or "the Receiver"), on the
same day the SEC Hied its Complaint. (ECF No. 11.) On October
4, 2018, this Court entered a Preliminary Injunction Order
continuing the appointment of the Receiver. (ECF No. 28.) On
October 25, 2018, this Court permitted the Government to
intervene and stayed the proceedings in this case. (ECF No.
Receivership Order charged the Receiver with responsibility
for acquiring control and possession of the Receivership
Estate and performing all acts necessary to conserve, manage,
and preserve the Receivership Estate. (ECF No. 11 at ¶
8.B). In accordance with the Receivership Order, the Receiver
utilizes the services of his firm, Harney Management
Partners, LLC ("Harney"), and hired Husch Blackwell
LLP ("Husch Blackwell") as counsel in this case.
(ECF No. 11 at ¶¶ 2, 62; ECF No. 62 at ¶ 49.)
Receivership Order directs that "[t]hroughout the
pendency of the receivership, the Receiver and Retained
Personnel shall apply to the Court for compensation and
expense reimbursement from the Receivership Estate."
(ECF No. 11 at ¶ 64; ECF No. 62 at ¶ 65.) Pursuant
to that Order, the Receiver has filed Receiver's Motion
for Approval of Third Interim Fee Application of Harney
Management Partners, LLC (ECF No. 159); and Receiver's
Motion for Approval of Third Interim Fee Application of Husch
Blackwell LLP (ECF No. 160). This Court has reviewed the
motions and related materials and finds no hearing necessary.
See Local Rule 105.6 (D. Md. 2018). For the reasons
that follow, this Court shall GRANT the Receiver's
motions and approves payment of the requested fees.
this Court's Receivership Order (ECF No. 11) and First
Amended Receivership Order (ECF No. 62), the Receiver has the
authority to take possession of all assets for the estates of
the Receivership Parties, which includes Defendants and
affiliated entities (three individuals and thirty-one named
entities). Understandably, the task is a complex one, and the
Receivership is large. The Ponzi scheme included the
Defendants misappropriating millions of dollars and
purchasing items such as a $368, 000 Ferrari, a $330, 000
seven-carat diamond ring, a $168, 000 23-carat diamond
bracelet, at least 25 high-end automobiles, $5.5 million
toward the purchase of a house in Naples, Florida, $500, 000
for an interest in a Gulfstream private jet, $350, 000 on a
boat, and more. (ECF No. 50 at ¶ 4.) The Receiver has
made significant progress in acquiring physical control of
all operations, and locating, securing, and evaluating the
Receivership Assets. (See, e.g., Mots., ECF Nos. 70,
71, 118, 119.) Standardized Fund Accounting Reports and
Receiver's Status Reports have been filed. (See
ECF Nos. 54, 99, 111, 138.)
Receiver and Hamey commenced services on September 13, 2018,
and pursuant to its agreement with the SEC, they charged a
discounted hourly rate for the professionals working on this
matter. (See ECF Nos. 70, 118.) On June 7, 2019,
this Court granted the Receiver's Motions for Approval of
the First and Second Interim Fee Applications of Harney and
Husch Blackwell, respectively. (ECF No. 151). As to Harney,
this Court approved payment in the amount of $357, 908.89 for
work performed between September 13, 2018 and October 31,
2018, and approved payment in the amount of $301, 292.71 for
work performed between November 1, 2018 and December 31,
2018. (Id. at 6.) As to Husch Blackwell, this Court
approved payment in the amount of $184, 169.83 for work
performed between September 13, 2018 and October 31, 2018,
and approved payment in the amount of $254, 017.68 for work
performed between November 1, 2018 and December 31, 2018.
receiver appointed by a court who reasonably and diligently
discharges his duties is entitled to be fairly compensated
for services rendered and expenses incurred." S.E.C.
v. Byers, 590 F.Supp.2d 637, 644 (S.D.N.Y. 2008). The
entitlement to reasonable compensation extends to the
professionals employed by the receiver. See Drilling
& Exploration Corp. v. Webster, 69 F.2d 416, 418
(9th Cir. 1934). "The award of fees in a receivership is
entrusted to the discretion of the district court."
Commodity Futures Trading Comm'n v. Am. Metals Exch.
Corp., 991 F.2d 71, 79 (3d Cir.1993) (citing S.E.C
v. Capital Counsellors, Inc., 512 F.2d 654, 658 (2d Cir.
determining the reasonableness of fees in Securities Act
receiverships, a court generally considers "the
complexity of problems faced, the benefit to the receivership
estate, the quality of work performed, and the time records
presented." S.E.C. v. Fifth Ape. Coach Lines,
Inc., 364 F.Supp. 1220, 1222 (S.D.N.Y. 1973).
"Opposition or acquiescence by the S.E.C. to the fee
application will be given great weight." Id.
fees requested in the third interim fee ...