Free Motion for Order - District Court of Colorado - Colorado

Case 1:04-cv-00354-WDM-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CASE NO. 04-CV-0354-WDM-BNB SECURITIES AND EXCHANGE COMMISSION Plaintiff vs. KELSEY L. GARMAN, KOINONIA INCOME ACCOUNT, KOINONIA INVESTMENT CLUB II, KOINONIA 100/200 CLUB AND KOINONIA KINGDOM CLUB Defendants

RECEIVER'S TWELFTH APPLICATION FOR APPROVAL OF PAYMENT OF RECEIVER'S FEES AND EXPENSES FOR THE PERIOD FROM JANUARY 1, 2007 THROUGH MARCH 31, 2007

John Paul Anderson, Receiver, by and through its counsel, The Jobin Law Firm, P.C., applies to the Court for approval of payment of the Receiver's fees in the amount of $11,592.00 and expenses in the amount of $10,194.04 the period from January 1, 2007 through March 31, 2007 ("Twelfth Application"). In support of this Twelfth Application, the Receiver states as follows: 1. On February 28, 2004, the Securities and Exchange Commission ("SEC") filed its

complaint against the defendants in this case and sought the appointment of a receiver. On March 2, 2004, the Court granted the SEC's request that a receiver be appointed and issued its Order of Preliminary Injunction and Other Relief ("Order of Preliminary Injunction") pursuant to which John Paul Anderson was appointed Receiver of this receivership estate. A copy of the Order of

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Preliminary Injunction is in the Court's file and is incorporated by reference. 2. On May 25, 2004, the Court authorized the Receiver to pay 100% of his fees at the

rate of $180 per hour and his expenses incurred in the amount of $15,000 per month. In addition, the Court directed the Receiver to file on July 15, 2004, for the four month period ending June 30, 2004, an application in which the Receiver sets forth in detail the services he has provided to the receivership, the hours spent and expenses he has incurred and paid during the preceding four month period. The Court also directed the Receiver to file successive applications for each three month period thereafter. 3. Following is a summary of the Receiver's Fees and Expenses which have been

approved by the Court throughout the pendency of this case. Fee Application First Application Second Application Third Application Fourth Application Fifth Application Sixth Application Seventh Application Eighth Application Ninth Application Tenth Application Eleventh Application Total Period 2/26/04 - 6/30/06 7/1/04 - 9/30/04 10/1/04 - 12/31/04 1/1/05 - 3/31/05 4/1/05 - 6/30/05 7/1/05 - 9/30/05 10/1/05 - 12/31/05 1/1/06 - 3/31/06 4/1/06 - 6/30/06 7/1/06 - 9/30/06 10/1/06 - 12/31/06 2/26/04 - 12/31/06 Fees Approved $62,262.00 $55,926.00 $24,174.00 $15,183.00 $18,774.00 $13,572.00 $3,969.00 $5,148.00 $9,882.00 $4,410.00 702.00 $214,002.00 Expenses Approved $35,470.67 $11,124.00 $23,563.39 $17,504.80 $12,358.01 $38,194.58 $8,458.51 $6,146.24 $13,183.89 $5,627.96 2,971.93 $174,603.62

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4.

The Receiver reports that during the pendency of this receivership estate through

March 31, 2007, the assets have earned interest in the amount of $494,605. 5. In this Twelfth Application, the Receiver seeks approval of payment of the Receiver's

fees in the amount of $11,592.00 and expenses in the amount of $10,194.04 for the period January 1, 2007 through March 31, 2007. 6. The Receiver has no agreement or understanding of any kind or nature with any other

person to share any compensation received for services rendered in or in connection with this case. The Receiver does not hold any and has not held during the pendency of these proceedings any interest adverse to the estate. 7. In support of this Twelfth Application, the Receiver attaches the following: Exhibit A - List of Navigant Consulting, Inc.'s employees and their respective billing rates. Exhibit B - Summary of Billings which includes Attachments 1, 2, 3, 4, 5 and 6. The Summary of Billings sets forth an historical statement concerning the case and the professional services rendered by the Receiver to the estate and the expenses he has incurred during the period January 1, 2007 through March 31, 2007. The services rendered, hours expended and expenses incurred by category and amount are set forth in Exhibit B in detail. During the period of time covered in this Twelfth Application, the Receiver expended a total of 64.4 hours and incurred fees in the amount of $11,592.00. The Receiver incurred expenses in the amount of $10,194.04. Included in these expenses are fees and costs paid to: Christine Jobin, Esq., the Receiver's legal counsel, in the amount of $1,623.38, and to Greenstone Lick & Associates, P.C.

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for accounting services in the amount of $7,700.00. Attachment 1 to Exhibit B sets forth in detail and in chronological order the time entries by timekeeper and also includes a summary by category of the services rendered and fees incurred. Attachment 2 to Exhibit B sets forth in detail the expenses incurred. Attachment 3 to Exhibit B sets forth detailed billing statements by month for all services rendered by Navigant Consulting, Inc.. ("NCI") by timekeeper and by narrative description of services rendered for the relevant time. The Receiver commenced his employment with NCI in February 2007. Each person who has performed services in these matters has kept daily time records for the services performed and the charges being described thereon, all of which are set forth in Attachment 3. All work performed for the estate has been billed on an hourly basis. The Receiver has taken special care to ensure that duplication of time and services rendered has not occurred. To the extent that employees of NCI, other than the Receiver, have rendered services to the receivership estate, these services are characterized as expenses. Attachment 4 to Exhibit B sets forth detailed billing statements by month for all services rendered by Patten MacPhee & Associates, Inc. ("PMA") by timekeeper and by narrative description of services rendered for the relevant time. Each person who has performed services in these matters has kept daily time records for the services performed and the charges being described thereon, all of which are set forth in Attachment 4. All work performed for the estate has been billed on an hourly basis. The Receiver has taken special care to ensure that duplication of time and services rendered has not occurred. To the extent that employees of PMA, other than the Receiver, have rendered services to the receivership estate, these services are characterized as expenses. Attachment 5 to Exhibit B sets forth the billing statements for the Receiver's counsel. The statements include detailed narratives of legal services performed by Ms. Jobin by date and amount of time. The expenses incurred by counsel are also identified by amount and type of expense. Attachment 6 to Exhibit B is the statements for services rendered by Greenstone Lick & Associates, P.C. 8. During the period covered by this Twelfth Application, the Receiver and his

accountants Greenstone Lick & Associates, P.C. prepared and filed in early April the 2006

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partnership federal and state tax returns for Koinonia Investment Club II. Greenstone Lick & Associates, P.C. also prepared Form K-1's for the partners which the Receiver distributed to the investors for inclusion in their individual tax returns. The Receiver spent significant time providing the accountants with the information necessary to prepare and file the tax returns. The Receiver also spent significant time responding to investors' questions concerning issues related to the tax returns and Form K-1's. In addition, the Receiver was successful in recovering $15,313 from The World Emerging Market Umbrella Fund PLC in Dublin, Ireland where Kelsey Garman had placed funds for investment through Parable Investments, Limited. Unfortunately, JF Funds Limited, Hong Kong aka JF Asset Management, where Kelsey Garman also had placed funds for investment, has not yet released the funds to the Receiver, despite his submission of adequate documentation in support of his request for the funds. As of this date, the Receiver estimates the funds at JF Funds Limited have a value of approximately $52,000. Given this estimate, the Receiver is reluctant to abandon the funds absent a compelling reason that abandonment is in the best interest of the receivership estate. The Receiver anticipates submitting additional documentation to JF Funds Limited in the next week with the expectation that the matter will be resolved without litigation. 9. The Receiver anticipates that he will file a final report in early May, 2007. The report

will set forth a proposed final distribution to the investors as well as expenses to be incurred in connection with the final administrative matters to close this estate. The Receiver will propose that all funds in the estate be distributed in 2007 to preclude the necessity of preparing and filing tax returns after 2007. The Receiver will have the accountants prepare in 2007 the information necessary for the 2007 tax returns. The 2007 tax returns will be filed in early 2008 when the tax 5

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forms are made available by the Internal Revenue Service. The expenses incurred in connection with the 2007 tax returns will be included in the final report so that the receivership estate can be closed administratively in 2007 with only the final act of preparing and submitting the 2007 tax return forms remaining to be completed in 2008. 10. The Receiver believes that all of the services rendered to date and expenses incurred

have been necessary and reasonable, in light of the scope of the transactions, number of investors and length of time during which Kelsey Garman operated the Koinonia Investment Clubs, and the results obtained by the Receiver since his appointment on March 2, 2004. WHEREFORE, the Receiver respectfully requests this Court to enter its order approving this Twelfth Application for approval of payment of the Receiver's fees in the amount of $11,592.00 and expenses in the amount of $10,194.04 for the period from January 1, 2007 through March 31, 2007, and for such other and further relief as this Court deems just and proper. DATED this 16th day of April, 2007.

s/Christine J. Jobin Christine J. Jobin, Esq. #12335 The Jobin Law Firm, P.C. 1900 Grant Street Suite 815 Denver, Colorado 80203 Telephone: (303) 839-1390 FAX: (303) 839-1113 E-mail: [email protected] Attorney for the Receiver, John Paul Anderson

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on this 16th day of April, 2007, I electronically filed the foregoing RECEIVER'S TWELFTH APPLICATION FOR APPROVAL OF PAYMENT OF RECEIVER'S FEES AND EXPENSES FOR THE PERIOD FROM JANUARY 1, 2007 THROUGH MARCH 31, 2007 with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: [email protected] [email protected] [email protected] [email protected] [email protected] s/Christine J. Jobin Christine J. Jobin, Esq. #12335 Attorney for Receiver, John Paul Anderson The Jobin Law Firm, P.C. 1900 Grant Street Suite 815 Denver, Colorado 80203 Telephone: (303) 839-1390 FAX: (303) 839-1113 E-mail: [email protected]

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