Free Motion for Disbursement of Funds - District Court of Colorado - Colorado

Case 1:01-cv-00645-JLK

Document 150-4

Filed 01/31/2007

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EXHIBIT B SUMMARY OF BILLINGS October 1, 2006 through December 31, 2006

I.

CASE BACKGROUND

On October 26, 2005, the Court appointed Patten, MacPhee & Associates, Inc. of Denver, Colorado (the "Receiver") as a receiver in the civil action brought by the United States Securities and Exchange Commission ("SEC") against Kenneth Roy Weare a/k/a Roy Weaver, J & K Global Marketing Corporation and AAA-Auction.com, Inc. ("Defendants"). According to the Order Appointing Receiver dated October 26, 2005, The Receiver was appointed by the Court to: · Create a contact list for soliciting claims from investors, using an Access database containing approximately 48,415 record lines of historical investor information; Compare an Access database to summaries of deposit items for several bank accounts located in the United States, Luxembourg and Canada listing investors names and identification numbers, in order to make a determination as to which investors made deposits and received monies in order to identify the full group of potential claimants; Devise an efficient and comprehensive method of establishing the current location of the approximately 23,000 investors; Establish a claims procedure by determining the form of notice to be sent to investors and the information to be submitted by investors to establish their claims, the length of time for investors to submit claims and the necessary proof investors must submit to support each claim; Give notice to investors to begin the claims process through email and other communications, including postal mail to investors without valid email addresses, as well as develop the necessary tools, such as a website, for collecting data from potential claimants; Receive claims from investors and evaluate the validity of claims; Prepare a distribution proposal assigning investors a pro rata share of funds collected after costs of the distribution plan have been deducted and submit the distribution proposal to the Court for approval;

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Case 1:01-cv-00645-JLK

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 2 · Give notice to claimants of the process to contest the final distribution plan; and, Administer the distribution of funds from the registry of the Court in coordination with the Clerk's office and prepare any tax forms related to interest earned on the funds to be distributed.

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II.

SCOPE OF ACTIVITIES AND RELATED PROFESSIONAL FEES

This is the Receiver's fifth application for professional fees and expenses. Detailed descriptions of the activities undertaken by the Receiver since its appointment through the end of the period preceding that covered by this fee application are provided in the Receiver's quarterly reports for the calendar quarters ended December 31, 2005, March 31, 2006, June 30, 2006, and September 30, 2006. During the period covered by this fee application the Receiver, among other things: · Met with staff of the SEC to discuss a proposed motion related to claim procedures and specific issues regarding the duration and administration of investors' claims; Conferred with the Receiver's legal counsel regarding the consolidation of J&K Global Marketing Corporation and AAA-Auction.com, Inc., the entity defendants, for purposes of administering the amounts claimed against the receivership estate; Assisted the Receiver's legal counsel in the drafting and submission of the Receiver's Unopposed Motion for Order Determining Assets of J&K Global Marketing Corporation and AAA-Auction.com, Inc. Liable for Obligations of Kenneth Roy Weare. Drafted, revised and submitted for the Court's approval the Receiver's Unopposed Motion to Establish Procedures and Deadline for Filing Claims, to Approve Manner of Notice to Potential Claimants, and to Establish Claims Review Procedures; the Claims Bar Date Notice; and, the Proof of Claim Form ("Motion to Establish Procedures");

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 3 · Pursuant to a request from the Department of Justice, identified investors contained in the database provided to the Receiver by the SEC that were also on a restitution list established as a part of Mr. Weare's plea agreement; Confirmed the completion of a broadcast email sent from the SEC's server in a further attempt to contact potential claimants; After receiving the Court's orders approving the Receiver's motions, as well as the format of the Proof of Claim Form, the Receiver converted the Proof of Claim Form to a format that allowed for the electronic submission of investors' claims. Significant time was spent on establishing data validation rules within the electronic Proof of Claim Form and testing such rules, in order to minimize data input errors by investors; Prepared a Consent to Consolidation Form so that claimants whose claimed amounts are included on another person's Proof of Claim Form may consent to such consolidation; Prepared a document entitled "Guidance on Completing Your Claim Form" in order to assist claimants in completing the Proof of Claim Form. This document was posted at the Receiver's website and mailed to those claimants who had requested notification via postal mail; Updated the Receiver's website to announce the commencement of the period for filing claims by investors, including, among other things, posting the approved Motion to Establish Procedures, Claims Bar Date Notice and Proof of Claim Form. On or about December 22, 2006, sent a broadcast email to investors who had previously registered their current contact information at the Receiver's website, notifying them of the commencement of the period to file claims and encouraging them to complete and submit an electronic Proof of Claim Form; On or about December 22, 2006, mailed paper copies of the approved Motion to Establish Procedures, Claims Bar Date Notice, Proof of Claim Form, and Guidance on Completing your Claim Form to those investors who had previously registered their current contact information at the Receiver's website, but either did not have a current email address or had specifically requested to be contacted via postal mail;

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 4 · Subsequent to the notification of investors regarding commencement of the Claims Period, described above, the Receiver and its staff began responding to questions and issues posed by claimants.

For the three-month period from October 1, 2006 through December 31, 2006, the Receiver requests the payment of its professional fees in the amount of $25,205.00 and the reimbursement of expenses in the amount of $11,426.56. A breakdown, by category, of the Receiver's hourly charges for this fee application and all previous applications follows: Communication and/or Reports to the Court Hours billed in this category relate to the preparation, review, revision and submission of quarterly reports to the Court that present and discuss the Receiver's activities for the quarter. Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 3.0 2.6 0.0 0.0 0.0 0.0 5.6 Fees $750.00 $650.00 $0.00 $0.00 $0.00 $0.00 $1,400.00 Previous Applications Hours 5.5 8.5 0.0 0.0 0.0 0.0 14.0 Fees $1,375.00 $2,125.00 $0.00 $0.00 $0.00 $0.00 $3,500.00

Cumulative Hours 8.5 11.1 0.0 0.0 0.0 0.0 19.6 Fees $2,125.00 $2,775.00 $0.00 $0.00 $0.00 $0.00 $4,900.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 5 Communication and/or Meeting with the SEC Included in the hours billed in this category are meetings and telephone conferences with attorneys and/or other staff at the SEC. These meetings pertain to the SEC's investigation into the fraud engaged in by the Defendants, the SEC's steps in recovering data related to the fraud, and the Receiver gaining an understanding of the work completed by the SEC in conjunction with this matter.

Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 2.9 2.4 0.0 0.0 0.0 0.0 5.3 Fees $725.00 $600.00 $0.00 $0.00 $0.00 $0.00 $1,325.00

Previous Applications Hours 5.5 4.3 0.0 0.0 0.0 0.0 9.8 Fees $1,375.00 $1,075.00 $0.00 $0.00 $0.00 $0.00 $2,450.00

Cumulative Hours 8.4 6.7 0.0 0.0 0.0 0.0 15.1 Fees $2,100.00 $1,675.00 $0.00 $0.00 $0.00 $0.00 $3,775.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 6 Project Planning and Coordination Included in the hours billed in this category are meetings and telephone conferences pertaining to establishing a framework for notifying and collecting information regarding potential claimants. Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 1.0 3.0 0.0 0.0 0.0 0.0 4.0 Fees $250.00 $750.00 $0.00 $0.00 $0.00 $0.00 $1,000.00 Previous Applications Hours 31.9 29.9 3.5 7.7 0.0 0.5 73.5 Fees $7,975.00 $7,475.00 $350.00 $770.00 $0.00 $25.00 $16,595.00

Cumulative Hours 32.9 32.9 3.5 7.7 0.0 0.5 77.5 Fees $8,225.00 $8,225.00 $350.00 $770.00 $0.00 $25.00 $17,595.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 7 Communication and/or Meeting with Counsel for the Receiver Included in the hours billed in this category are meetings and telephone conferences with the Receiver's attorney. These meetings and telephone calls relate to the preparation for procedural motions for the claims process and all relevant court filings required to establish the claims process and procedures. Also included in this category were discussions related to the basis for consolidation of the entity defendants, J&K Global Marketing Corporation and AAA-Auction.com, Inc.. Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $375 $50 Hours 1.50 1.25 0.00 0.00 0.00 2.75 Fees $375.00 $312.50 $0.00 $0.00 $0.00 $687.50 Previous Applications Hours 2.25 2.25 0.00 0.00 0.00 4.50 Fees $562.50 $562.50 $0.00 $0.00 $0.00 $1,125.00

Cumulative Hours 3.75 3.50 0.00 0.00 0.00 7.25 Fees $937.50 $875.00 $0.00 $0.00 $0.00 $1,812.50

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 8 Communication and/or Meeting with Investors Included in the hours billed in this category are review and responses to email questions sent to the Receiver by investors, as well as listening and responding, via email, to voicemails left for the Receiver. Also included in this category are unsolicited phone calls from investors answered by representatives of the Receiver. This category primarily captures time spent locating, soliciting registrations, and updating contact information for potential claimants. Time spent communicating with investors related to their particular claimed amount is recorded in the "Claims Administration" category summarized later in this exhibit. Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $375 $50 Hours 0.00 0.00 44.00 0.00 0.00 44.00 Fees $0.00 $0.00 $4,400.00 $0.00 $0.00 $4,400.00 Previous Applications Hours 12.00 48.80 198.60 0.00 52.80 312.20 Fees $3,000.00 $12,200.00 $19,860.00 $0.00 $2,640.00 $37,700.00

Cumulative Hours 12.00 48.80 242.60 0.00 52.80 356.20 Fees $3,000.00 $12,200.00 $24,260.00 $0.00 $2,640.00 $42,100.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 9 Identification of Investors Appearing on the FBI/DOJ Restitution List This category contains time spent on cross-referencing the restitution list created pursuant to Mr. Weare's plea agreement to the database of potential claimants provided to the Receiver by the SEC. The Department of Justice requested that the Receiver account for any funds disbursed which may reduce the restitution amounts due from Mr. Weare and to report back to them once the final distribution amounts are determined. Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $375 $50 Hours 0.00 0.00 19.70 0.00 1.75 21.45 Fees $0.00 $0.00 $1,970.00 $0.00 $87.50 $2,057.50 Previous Applications Hours 0.00 0.00 0.00 0.00 0.00 0.00 Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Cumulative Hours 0.00 0.00 19.70 0.00 1.75 21.45 Fees $0.00 $0.00 $1,970.00 $0.00 $87.50 $2,057.50

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 10 Website and/or Database Development and Testing Included in the hours billed in this category are meetings and telephone conferences with the website and database developers. These discussions related to the data to be captured from the potential claimant pool, validation of such data, the establishment of user names and passwords of individuals and entities contained in the database seized by the SEC during its investigation. Also included is time spent preparing narrative for the website and designing, formatting and implementation of the screens to be placed on the website. No time was incurred for this activity during the period covered by this fee application.

Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Previous Applications Hours 11.1 18.3 6.6 0.0 0.0 0.0 36.0 Fees $2,775.00 $4,575.00 $660.00 $0.00 $0.00 $0.00 $8,010.00

Cumulative Hours 11.1 18.3 6.6 0.0 0.0 0.0 36.0 Fees $2,775.00 $4,575.00 $660.00 $0.00 $0.00 $0.00 $8,010.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 11 Communications - Miscellaneous Hours billed in this category relate to communications meetings with parties other than counsel and investors, such as vendors or suppliers. No time was incurred for this activity during the period covered by this fee application.

Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Previous Applications Hours 1.2 4.6 0.0 0.3 0.0 0.0 6.1 Fees $300.00 $1,150.00 $0.00 $30.00 $0.00 $0.00 $1,480.00

Cumulative Hours 1.2 4.6 0.0 0.3 0.0 0.0 6.1 Fees $300.00 $1,150.00 $0.00 $30.00 $0.00 $0.00 $1,480.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 12 Database Verification and Analysis ­ Bank Account Activity Hours billed in this category relate to the compilation, verification, and ongoing analysis and modification of an electronic database created from various MS Excel workbooks and spreadsheets prepared by the SEC based on its review and analysis of bank account statements and enclosures by the either seized from the Defendants or directly subpoenaed from the banks. Also included in this category is the review of source documents related to the validation and supplementation of this database. No time was incurred for this activity during the period covered by this fee application.

Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Previous Applications Hours 63.0 0.0 0.0 0.0 0.0 1.3 64.3 Fees $15,750.00 $0.00 $0.00 $0.00 $0.00 $65.00 $15,815.00

Cumulative Hours 63.0 0.0 0.0 0.0 0.0 1.3 64.3 Fees $15,750.00 $0.00 $0.00 $0.00 $0.00 $65.00 $15,815.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 13 Database Verification and Analysis ­ Investor Related Activity Hours billed in this category relate to the verification and ongoing analysis and maintenance of an electronic database seized from the Defendants which contains an accounting of cash deposits and withdrawals as well as contact and identification information of investors. Also included in this category is the review of documents related to the validation and supplementation of this database. No time was incurred for this activity during the period covered by this fee application.

Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Jan L. Loser Leslie A. Patten Carolyn J. Pharis Totals Rate $250 $250 $100 $100 $375 $50 Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fees $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Previous Applications Hours 34.0 9.9 0.0 0.0 0.0 0.0 43.9 Fees $8,500.00 $2,475.00 $0.00 $0.00 $0.00 $0.00 $10,975.00

Cumulative Hours 34.0 9.9 0.0 0.0 0.0 0.0 43.9 Fees $8,500.00 $2,475.00 $0.00 $0.00 $0.00 $0.00 $10,975.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 14 Claims Administration Time included in this category relates to the establishment of the time period and procedures for investors to submit their claims, the procedures to be followed by the Receiver in allowing/disallowing claims and the process for investors to appeal any claims disallowed by the Receiver. Also included is time spent drafting and editing the Receiver's Motion to Establish Procedures, Claims Bar Date Notice and Proof of Claim Form; creating and testing an electronic Proof of Claim Form; developing other documents needed for the claims administration process; updating the Receiver's website to notify investors of the claims process; sending a broadcast email and mailing paper Proof of Claim forms to investors who had provided the Receiver with their current contact information; and, responding to questions from investors regarding the completion and submission of their Proof of Claim Forms. Current Application Biller John Paul Anderson Michael D. Burns Stephanie L. Katz Leslie A. Patten Carolyn J. Pharis Totals Rate Hours Fees Previous Applications Hour s 0.00 0.00 0.00 0.00 0.00 0.00 Fees

Cumulative Hours Fees

$250 $250 $100 $375 $50

49.90 27.20 34.10 0.00 0.50 111.70

$4,100.00 $6,800.00 $3,410.00 $0.00 $25.00 $14,335.00

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00

49.90 27.20 34.10 0.00 0.50 111.70

$4,100.00 $6,800.00 $3,410.00 $0.00 $25.00 $14,335.00

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SEC v. J&K Global Marketing Corp., et al. Exhibit B, Summary of Billings October 1, 2006 through December 31, 2006 Page 15 III. SUMMARY OF PROFESSIONAL FEES The names and hourly rates of all professionals and para-professionals who billed time on this matter is contained at Exhibit A. Attachment 1 contains a summary of professional fees in chronological order by month, and includes detail by biller and by category for the period October 1, 2006 through December 31, 2006. It should be noted that the professional fees in Attachment 1 include 33.5 hours incurred by the Receiver in connection with Claims Administration, but which were billed as no charge ("NC"). IV. SUMMARY OF EXPENSES Attachment 2 contains a detailed listing of expenses by category for the period October 1, 2006 through December 31, 2006. V. CONCLUSION The Receiver believes that the requested fees and expenses are reasonable and necessary to complete the task required and discharge its duties in this matter. The Receiver has charged reasonable rates based upon the customary compensation charged by comparably skilled professionals charged with similar fiduciary duties. Further, the Receiver believes the requested fees and expenses are reasonable and necessary considering the complexity of the financial and accounting issues involved. The Receiver has reviewed the billing statements to ensure that they are reasonable and necessary.