United States v. CB Surety LLC ( 2024 )

1 PHILLIP A. TALBERT United States Attorney 2 TARA AMIN Assistant United States Attorney 3 501 I Street, Suite 10-100 4 Sacramento, CA 95814 Telephone: (916) 554-2700 5 Facsimile: (916) 554-2900 6 AMANDA N. LISKAMM Director 7 RACHA EL L. DOUD 8 Assistant Director ANDREW K. CRAWFORD 9 FRANCISCO L. UNGER Trial Attorneys 10 Consumer Protection Branch 11 Civil Division U.S. Department of Justice 12 450 5th Street, NW Washington, DC 20530 13 Telephone: (202) 451-7301 Email: andrew.k.crawford@usdoj.gov 14 15 Attorneys for Plaintiff United States of America 16 UNITED STATES DISTRICT COURT 17 EASTERN DISTRICT OF CALIFORNIA 18 United States of America, Civil Case No. 2:23-cv-02812-TLN-DB 19 Plaintiff, PRELIMINARY INJUNCTION WITH 20 ASSET FREEZE, RECEIVER, AND v. OTHER EQUITABLE RELIEF 21 CB SURETY, LLC, et al., 22 23 Defendants. 24 25 26 27 1 On December 1, 2023, the United States of America filed its Complaint for Temporary 2 Restraining Order, Preliminary and Permanent Injunctions, and Other Equitable Relief (the 3 “Complaint”) (ECF No. 1) against Defendants, pursuant to 18 U.S.C. § 1345, based on 4 Defendants’ alleged violations of 18 U.S.C. §§ 1343, 1344, and 1349. 5 On December 6, 2023, the Court issued its Order granting the United States’ Ex Parte 6 Motion for a Temporary Restraining Order (“TRO”) (ECF No. 7) and set a preliminary 7 injunction hearing for December 14, 2023, at 1:30 p.m. At the request of the United States, and 8 based on a showing of good cause, the Court reset the preliminary injunction hearing for January 9 3, 2024, at 10:00 a.m. (ECF No. 19). 10 FINDINGS OF FACT AND STATEMENT OF DECISION 11 The Court, having considered the Complaint, the TRO Application, affidavits, exhibits, 12 and the brief filed in support thereof, and being otherwise advised, finds that: 13 1. This Court has jurisdiction over the subject matter of this case, and there is good 14 cause to believe that it will have jurisdiction over all parties hereto and that venue in this district 15 is proper. 16 2. There is good cause to believe that Defendants have engaged in and are likely to 17 engage in acts or practices that violate 18 U.S.C. §§ 1343, 1344, and 1349, and that the United 18 States is, therefore, likely to prevail on the merits of this action. The evidence submitted with the 19 United States’ Brief (the “Brief” or “Br.”) (ECF No. 2-1), including the Affidavit of Postal 20 Inspector Jason Chung and the exhibits thereto (the “Chung Affidavit”) (ECF No. 2-3), 21 demonstrates that the United States is likely to prove at trial that all Defendants have taken part 22 in a multi-year fraud scheme. Since at least 2017, Defendants have engaged in a two-fold scheme 23 to defraud financial institutions and consumers. See Chung Aff. ¶ 21. First, Defendants launder 24 transactions for their merchant clients by creating sham companies to disguise the true nature of 25 their merchant clients’ fraudulent, illegal, or high-risk activities. See Chung Aff. ¶ 21–29, 46–74, 26 164–167. Second, Defendants use fraudulent chargeback reduction tactics to allow their 27 merchant clients to maintain merchant accounts with member banks of card networks such as 1 Visa and Mastercard. See Chung Aff. ¶ 30–32, 75–81, 160–163. Without these deceptive tactics, 2 these financial institutions likely would not allow Defendants’ merchant clients to use their 3 services to process payments. See Chung Aff. ¶ 69–71, 137–142. Defendants’ ongoing bank and 4 wire fraud scheme is causing significant financial losses to consumers, including via thousands 5 of unauthorized debits against consumers’ payment cards perpetrated by Defendants’ merchant 6 clients. See Chung Aff. ¶ 83. Additionally, financial institutions are being harmed by 7 Defendants’ scheme, including by risking incurring fraudulent chargeback costs and fines as a 8 result of the scheme’s merchant clients’ high-risk or illegal activities. See Chung Aff. ¶¶ 31, 69- 9 71, 80, 139. 10 3. There is good cause to believe that immediate and irreparable harm will result 11 from Defendants’ ongoing violations of 18 U.S.C. §§ 1343, 1344, and 1349 unless they are 12 immediately restrained and enjoined by order of this Court. See Br. at 23, 25 (summarizing 13 evidence establishing likelihood of irreparable harm). 14 4. Good cause exists for freezing the assets of the Corporate Entities and Defendant 15 Eide and Defendant Smith. See 18 U.S.C. § 1345(a)(2)(B)(i) (authorizing the Court to freeze a 16 defendant’s assets where there is evidence that the defendant “is alienating or disposing of 17 property, or intends to alienate or dispose of property, obtained as a result of a banking law 18 violation”); Br. at 25–28; Chung Aff. ¶¶ 146 (demonstrating that assets held by these Defendants 19 are the proceeds of bank fraud). 20 5. Good cause exists for appointing a temporary receiver over the Corporate Entities, 21 as well as any other entity that the Receiver determines is controlled or owned by the Corporate 22 Entities, Defendant Eide, or Defendant Smith, and giving the United States and the Receiver 23 immediate access to CB Surety’s business premises. See 18 U.S.C. § 1345(a)(2)(b)(ii) 24 (authorizing the Court to appoint a receiver); Canada Life Assur. Co. v. LaPeter, 563 F.3d 837, 25 844 (9th Cir. 2009) (discussing the relevant factors in determining whether to appoint a 26 receiver); Br. at 27–28 (summarizing evidence supporting receivership). 27 1 6. Weighing the equities and considering the United States’ likelihood of ultimate 2 success on the merits, a preliminary injunction order is in the public interest. 3 7. This Court has authority to issue this Order pursuant to 18 U.S.C. § 1345 and 4 Federal Rule of Civil Procedure 65. 5 8. No security is required of any agency of the United States for issuance of a 6 preliminary injunction. Federal Rule of Civil Procedure 65(c). 7 DEFINITIONS 8 For the purpose of this Order, the following definitions shall apply: 9 9. “Asset” means any legal or equitable interest in, right to, or claim to, any 10 property, wherever located and by whomever held. 11 10. “CB Surety” means CB Surety LLC, Peak Bakery LLC, Cascades Pointe at 12 Clemson, LLC, and KP Testing, LLC. 13 11. “Corporate Entities” means CB Surety LLC, Peak Bakery LLC, Cascades Pointe 14 at Clemson, LLC, KP Testing, LLC, Motion Media Marketing Inc., SJC Financial Services Inc., 15 Reseller Consultants, Inc., Ambragold, Inc., Think Processing LLC, and Bass Business 16 Consultants. 17 12. “Defendant(s)” means all the individuals and entities named as Defendants in the 18 Complaint, individually, collectively, or in any combination. 19 13. “Document” is synonymous in meaning and equal in scope to the usage of 20 “document” and “electronically stored information” in Federal Rule of Civil Procedure 34(a). 21 14. “Receiver” means the temporary receiver appointed in Section III of this Order 22 and any deputy receivers that shall be named by the temporary receiver. 23 15. “Receivership Entities” means the Corporate Entities, as well as any other entity 24 that the Receiver determines is controlled or owned by the Corporate Entities, Defendants Eide, 25 or Defendant Smith. 26 16. “Receivership Property” means any Assets, wherever located, that are: (1) owned, 27 controlled, or held by or for the benefit of the Receivership Entities, in whole or in part; (2) in 1 the actual or constructive possession of the Receivership Entities; or (3) owned, controlled, or 2 held by, or in the actual or constructive possession of, or otherwise held for the benefit of, any 3 corporation, partnership, trust, or other entity directly or indirectly owned or controlled by the 4 Receivership Entities. 5 ORDER 6 I. PROHIBITED ACTIVITIES 7 IT IS ORDERED that Defendants, Defendants’ officers, agents, employees, contractors, 8 and attorneys, and all other persons in active concert or participation with them, who receive 9 actual notice of this Order by personal service or otherwise, are temporarily restrained and 10 enjoined from: 11 1. Committing or conspiring to commit wire fraud, as defined by 18 U.S.C. §§ 1343 12 and 1349; 13 2. Committing or conspiring to commit bank fraud, as defined by 18 U.S.C. §§ 1344 14 and 1349; 15 3. Charging or debiting any person or entity on behalf of any Corporate Entities or 16 for the purported purchase of any Corporate Entities’ services; 17 4. Debiting funds from consumers’ bank accounts or charging consumers’ payment 18 cards without their prior authorization; 19 5. Incorporating or creating any corporate entity for the purpose of debiting funds 20 from consumers’ bank accounts without their prior authorization; 21 6. Incorporating or creating any corporate entity for the purpose of facilitating 22 payment processing or obtaining merchant accounts; 23 7. Creating, operating, or exercising any control over any business entity, whether 24 newly formed or previously inactive, without first providing the United States with a written 25 statement disclosing: (1) the name of the business entity; (2) the address and telephone number 26 of the business entity; (3) the names of the business entity’s officers, directors, principals, 27 1 managers, and employees; and (4) a detailed description of the business entity’s intended 2 activities; and 3 8. Destroying, deleting, moving, removing or transferring any and all business, 4 financial, accounting, and other records concerning Defendants’ operations and the operations of 5 any other corporate entity owned or controlled, in whole or in part, by Defendants; and failing to 6 create and maintain Documents that, in reasonable detail, accurately, fairly, and completely 7 reflect Defendants’ incomes, disbursements, transactions, and use of Defendants’ Assets. 8 II. ASSET FREEZE 9 IT IS FURTHER ORDERED that, except as otherwise specified herein, the Assets of the 10 Corporate Entities, Receivership Entities, and Defendants Eide and Smith are frozen until further 11 notice of this Court. Accordingly, all persons and entities with direct or indirect control over any 12 of Corporate Entities’, Receivership Entities’, Defendant Eide’s, or Defendant Smith’s Assets, 13 including any financial or brokerage institution, bank, payment processor, business entity, or 14 person, who receives actual notice of this Order (by service or otherwise) shall: 15 1. Hold, preserve, and retain within its control and prohibit the withdrawal, removal, 16 alteration, assignment, transfer, pledge, encumbrance, disbursement, dissipation, relinquishment, 17 conversion, sale, or other disposal of any Asset, as well as all Documents or other property 18 related to such Assets, except by further order of this Court; and 19 2. Deny any person access to any safe deposit box, commercial mail box, or storage 20 facility that is titled in the name of any Corporate Entity, Receivership Entity, Defendant Eide, or 21 Defendant Smith or otherwise subject to access by any Corporate Entity, Receivership Entity, 22 Defendant Eide, or Defendant Smith. 23 IT IS FURTHER ORDERED that the Corporate Entities, Receivership Entities, 24 Defendant Eide, and Defendant Smith, their officers, agents, employees, and attorneys, and all 25 other persons in active concert or participation with any of them, who receive actual notice of 26 this Order (by service or otherwise), are hereby temporarily restrained and enjoined from 27 transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, 1 dissipating, disbursing, assigning, relinquishing, spending, withdrawing, granting a lien or 2 security interest or other interest in, or otherwise disposing of any of a Corporate Entity’s, a 3 Receivership Entity’s, Defendant Eide’s, or Defendant Smith’s Assets. 4 IT IS FURTHER ORDERED that each Corporate Entity, Defendant Eide, and Defendant 5 Smith shall, to the extent they have not already done so, provide to the United States, within 6 seven (7) days of receiving a copy of this Order, a list of all financial or brokerage institutions, 7 banks, or other entities at which they maintain savings, checking, investment, merchant, or other 8 accounts. 9 This Section does not prohibit any transfers to the Receiver required by this Order. 10 III. RECEIVERSHIP 11 A. APPOINTMENT OF A RECEIVER 12 IT IS FURTHER ORDERED that, as set forth in the Temporary Restraining Order (ECF 13 No. 7), Kenneth R. Jones shall serve as a temporary receiver of the Receivership Entities with 14 full powers of an equity receiver. The Receiver shall be solely the agent of this Court in acting as 15 Receiver under this Order. 16 B. RECEIVERSHIP POWERS AND DUTIES 17 IT IS FURTHER ORDERED that the Receiver is directed and authorized to accomplish 18 the following: 19 1. Take exclusive custody, control, and possession of all Receivership Property, and 20 Documents and Assets in the possession, custody, or control of any Receivership Entity, 21 wherever situated, except those assets seized by the United States pursuant to a valid order of a 22 court. The Receiver shall have full power to divert mail, and to sue for, collect, receive, take in 23 possession, hold, and manage all Receivership Property; provided, however, the Receiver shall 24 not attempt to collect any amount from a person if the Receiver believes the person was a victim 25 of the wire or bank fraud scheme alleged in the Complaint in this matter; 26 27 1 2. The Receiver shall also assume control over all of the Receivership Entities’ 2 ongoing business operations, including those in which the Receivership Entities have a 3 controlling interest. With regard to these business operations, the Receiver shall: 4 a. Assume full and exclusive control of the operations of the Receivership 5 Entities, removing, as the Receiver deems necessary or advisable, any 6 director, officer, independent contractor, employee, or agent of the 7 Receivership Entities from control of, management of, or participating in, 8 the business affairs of each of the Receivership Entities; 9 b. Take all steps necessary or desirable to secure the business premises of the 10 Receivership Entities. Such steps may include, but are not limited to, the 11 following as the Receiver deems necessary or advisable: (i) completing a 12 written inventory of all assets; (ii) obtaining pertinent information from all 13 employees and other agents and all accrued and unpaid commissions and 14 compensation of each such employee or agent; (iii) videotaping all 15 portions of the above-referenced business locations; (iv) securing the 16 above-referenced business locations by changing the locks and 17 disconnecting any Internet service or other means of access to the 18 computer or other records maintained at the locations; 19 c. Manage, administer, and conduct the operations of the ongoing legitimate 20 business operations of the Receivership Entities, until further Order of this 21 Court, by performing all incidental acts that the Receiver deems to be 22 advisable or necessary; and 23 d. Choose, engage, and employ attorneys, accountants, appraisers, property 24 managers, and other independent contractors and technical specialists or 25 other professionals (“Professionals”), with regard to the operations of the 26 Receivership Entities and/or support and advice to the Receiver as the 27 1 Receiver deems advisable or necessary in the performance of duties and 2 responsibilities under the authority granted by this Order; 3 3. Defend, compromise, or settle legal actions wherein the Receiver or any of the 4 Receivership Entities is a party commenced prior to or subsequent to this Order with the 5 authorization of this Court. The Receiver may waive attorney-client privilege held by any of the 6 Receivership Entities; 7 4. Issue subpoenas to obtain Documents and records pertaining to the Receivership, 8 and conduct discovery in this action on behalf of the receivership estate; 9 5. Make payments and disbursements from the receivership estate that are necessary 10 or advisable for carrying out the directions of, or exercising the authority granted by, this Order, 11 and to incur, or authorize the making of, such agreements as may be necessary and advisable in 12 discharging its duties as Receiver. The Receiver shall apply to the Court for prior approval of 13 any payment of any debt or obligation incurred by the Receivership Entities prior to the date of 14 entry of this Order, except payments that the Receiver deems necessary or advisable to secure 15 Assets of the Receivership Entities, such as rental payments. The Receiver shall not be required 16 to perform under any contract or lease entered into by the Receivership Entities prior to the date 17 on which he assumes possession of the Receivership Assets; 18 6. Maintain accurate records of all receipts and expenditures incurred as Receiver; 19 7. Coordinate with the United States and Court personnel as needed to ensure that 20 any Assets subject to the terms of this Order are available for criminal restitution, forfeiture, or 21 other legal remedies in proceedings commenced by or on behalf of the United States; 22 8. Cooperate with reasonable requests for information or assistance from any state or 23 federal civil or criminal law enforcement agency; and 24 9. File a status report every 60 days with the Court. 25 The Receiver shall have the power and authority to perform any other act necessary or 26 desirable to accomplish any of the foregoing. 27 C. COOPERATION WITH THE RECEIVER 1 IT IS FURTHER ORDERED that Defendants; Receivership Entities; Defendants’ or 2 Receivership Entities’ officers, agents, employees, attorneys, and all other persons in active 3 concert or participation with any of them; and any other person with possession, custody, or 4 control of Receivership Property or records relating to Receivership Property, or other records 5 relating to the Receivership Entities; who receive actual notice of this Order, shall fully 6 cooperate with and assist the Receiver. This cooperation and assistance shall include, but is not 7 limited to, providing information to the Receiver that the Receiver deems necessary to exercise 8 the authority and discharge the responsibilities of the Receiver under this Order; providing any 9 keys, codes, user names, passwords, and all other means required to access any computers, 10 electronic devices, mobile devices, machines (onsite or remotely), and any cloud account 11 (including specific method to access account) or electronic file in any medium; advising all 12 persons who owe money to any Receivership Entity that all debts should be paid directly to the 13 Receiver; and transferring funds at the Receiver’s direction and producing records related to the 14 Receivership Property and sales of the Receivership Entities. 15 D. TRANSFER OF RECEIVERSHIP PROPERTY TO RECEIVER 16 IT IS FURTHER ORDERED that Defendants and any other person with possession, 17 custody or control of Receivership Property shall, upon notice of this Order by personal service 18 or otherwise, fully cooperate with and assist the Receiver in taking and maintaining possession, 19 custody, or control of the Receivership Property. This shall include, but not be limited to, to the 20 extent they have not already done so, immediately providing, transferring, or delivering to the 21 Receiver possession, custody, and control of: 22 1. All Assets held by or for the benefit of the Receivership Entities; 23 2. All Documents or Assets associated with credits, debits, or charges made on 24 behalf of any Receivership Entity, wherever situated, including reserve funds held by payment 25 processors, credit card processors, merchant banks, acquiring banks, independent sales 26 organizations, third party processors, payment gateways, insurance companies, or other entities; 27 3. All Documents of or pertaining to the Receivership Entities; 1 4. All computers, electronic devices, mobile devices, and machines used to conduct 2 the business of the Receivership Entities; 3 5. All keys, codes, user names, passwords, and all other means of authentication 4 necessary to gain or to secure access to any Assets or Documents of or pertaining to the 5 Receivership Entities, including access to their business premises, means of communication, 6 mobile phones, accounts, computer systems (onsite and remote), electronic data hosts, or other 7 property. 8 Provided that nothing in this Section shall be construed to require the United States or a 9 law enforcement agency to transfer Assets, Receivership Property, or Documents to the Receiver 10 that it has seized pursuant to a valid order of a court. 11 In the event that any person or entity fails to deliver or transfer any Asset, Document, or 12 otherwise fails to comply with any provision of this Section, the Receiver may file an Affidavit 13 of Non-Compliance regarding the failure and a motion seeking compliance or a contempt 14 citation. 15 E. PROVISION OF INFORMATION TO RECEIVER 16 IT IS FURTHER ORDERED that the Defendants shall, to the extent they have not 17 already done so, immediately provide to the Receiver: 18 1. A list of all Assets and accounts of the Receivership Entities, including but not 19 limited to those that are held in any name other than the name of a Receivership Entity, or by any 20 person or entity other than a Receivership Entity; 21 2. A list of all agents, employees, officers, attorneys, contractors, servants and those 22 persons in active concert and participation with the Receivership Entities, or who have been 23 associated or done business with the Receivership Entities; and 24 3. A description of any documents covered by attorney-client privilege or attorney 25 work product, including files where such documents are likely to be located, authors or recipients 26 of such documents, and search terms likely to identify such electronic documents. 27 F. DUTIES OF ASSET HOLDERS AND OTHER THIRD PARTIES 1 IT IS FURTHER ORDERED that any financial or brokerage institution, bank, payment 2 processor, business entity, or person who receives actual notice of this Order (by service or 3 otherwise), who has held the Receivership Entities’ Assets, through an account or otherwise, and 4 to the extent it has not already done so, shall: 5 1. Provide the Receiver, within ten business days of notice of this Order, a statement 6 setting forth: (1) the identification of each such account or Asset; (2) the balance of each such 7 account, or a description of the nature and value of each such Asset; and (3) the identification of 8 any safe deposit box, commercial mail box, or storage facility that is either titled in the name, 9 individually or jointly, of any Receivership Entity, or is otherwise subject to access by any 10 Receivership Entity; 11 2. Upon the Receiver’s request, promptly provide the Receiver with copies of all 12 records or other Documents pertaining to any account covered by this Section or Asset, including 13 originals or copies of account applications, account statements, signature cards, checks, drafts, 14 deposit tickets, transfers to and from the accounts, including wire transfers and wire transfer 15 instructions, all other debit and credit instruments or slips, currency transaction reports, 1099 16 forms, and all logs and records pertaining to safe deposit boxes, commercial mail boxes, and 17 storage facilities; and 18 3. Cooperate with all reasonable requests of the Receiver relating to implementation 19 of this Order, including transferring funds at the Receiver’s direction and producing records 20 related to all accounts owned by each of the Defendants. 21 G. COMPENSATION OF RECEIVER 22 IT IS FURTHER ORDERED that the Receiver and all personnel hired by the Receiver as 23 herein authorized, including counsel to the Receiver and accountants, are entitled to reasonable 24 compensation for the performance of duties pursuant to this Order and for the cost of actual out- 25 of-pocket expenses incurred by them, from the assets now held by or in the possession or control 26 of, or which may be received by, the Receivership Entities. Receiver shall be paid based on an 27 hourly rate, which may be increased annually on notice to the Court at the time that Alvarez and 1 Marsal (“A&M” or the “Receive Firm”) generally increases its rates. Hourly rates for A&M 2 personnel engaged or utilized by the Receiver shall be based on their standard hourly rates. In 3 addition, Receiver shall be reimbursed for all out-of-pocket expenses reasonably incurred in the 4 discharge of its rights and obligations hereunder. 5 Such fees and expenses shall be payable monthly without the requirement of a further 6 order of this Court, provided, however, that the Receiver shall file with the Court and serve on 7 the parties periodic accountings describing the Receiver’s and A&M’s compensation, with the 8 first disclosure filed no more than sixty (60) days after the date of this Order. 9 All fees and expenses of the Receiver (including without limitation the indemnification 10 provisions set forth above) shall constitute a first lien and charge against the Receivership 11 Assets, with priority ahead of all other liens and security interests, including without limitation 12 the liens and security interests of all other persons and entities. 13 IV. ADDITIONAL TERMS AND PROTECTIONS AFFORDED TO THE RECEIVER 14 The Professionals retained by the Receiver may include, without limitation, the 15 Receiver’s employer and/or its affiliates (the “Receiver Firm”). The Receiver is hereby expressly 16 authorized and directed to utilize and retain the services the Receiver Firm, its affiliates and 17 personnel as Professionals (rather than utilizing other similarly situated or available personnel or 18 professional services firms) notwithstanding that (a) the Receiver may benefit (directly or 19 indirectly) from the compensation paid to the Receiver Firm and (b) other persons or entities 20 may be available to provide the same or similar services at similar or more competitive prices. In 21 no event shall the Receiver, Receiver Firm, or their affiliates be subject to a claim of a conflict of 22 interest or breach of fiduciary duty or any other claim arising as a result of the appointment of 23 any such person in accordance with this provision. 24 Receiver shall be authorized on the Receivership Entities’ behalf to cause the Receiver 25 and its agents to be named as an additional insured on any insurance policies covering the 26 Receivership Assets. Receiver may, in its discretion, obtain insurance covering the Receivership 27 Assets, and such insurance expense shall be deemed a normal, ordinary, and necessary operating 1 expense of the Receivership Assets. Receiver may, in its discretion, obtain receivership, 2 fiduciary and/or errors & omissions liability insurance covering the acts and omissions and 3 related claims against the Receiver arising from the Receivership and the cost shall be deemed a 4 normal, ordinary, and necessary operating expense of the Receivership Assets. 5 The Receiver may, in its sole and absolute discretion, resign its position as Receiver by 6 providing not less than thirty (30) days written notice to this Court. The Receiver shall not be 7 required to obtain the approval of this Court prior to resigning as receiver hereunder. 8 The Receiver is authorized to serve with no bond. 9 The liability of the Receiver and the Receiver’s advisors, agents, representatives, 10 employees, affiliates, successors and assigns (including but not limited to the Receiver Firm) 11 (“Exculpation Parties”), for any and all claims, liabilities, damages, fees, costs, expense and 12 charges incurred or arising from their respective acts or omissions in connection with the 13 Receivership Entities, this Order, the receivership established pursuant to this Order, and/or the 14 Receivership Assets (“Related Matters”), shall exist only to the extent that this Court determines 15 by a final and non-appealable judgment that such acts or omissions resulted solely from such 16 person’s bad faith or gross negligence. Any such liability shall be paid as an expense of the 17 receivership when and as incurred. The Receiver shall be fully protected by the Receivership 18 Estate from, any action taken or suffered or omitted by the Receiver in reliance upon the advice 19 of Professionals, attorneys, advisors or others, except for in the case of willful misconduct, gross 20 negligence or fraud of the Receiver as determined by a final order of this Court. Notwithstanding 21 the foregoing, the Receiver shall be under no obligation to consult with others, and the 22 Receiver’s good faith determination not to do so shall not result in the imposition of liability on 23 the Receiver, unless such determination arises from the Receiver’s willful misconduct, gross 24 negligence, or fraud. Persons or entities dealing with the Receiver shall look only to the Receiver 25 Assets to satisfy any liability incurred by the Receiver, and the Receiver (and any affiliated 26 entities or persons, including, without limitation, the Receiver Firm) shall have no personal or 27 individual obligation to satisfy any such liability. The Receiver shall be entitled to obtain such 1 insurance coverage as it may deem reasonable to protect itself and the Exculpation Parties 2 against claims and liability which are covered, or not covered, by the foregoing exculpation, and 3 any premiums or fees for such insurance shall be paid from the Receivership Assets. This 4 paragraph shall survive the termination or resignation of Receiver, and the termination or 5 suspension of the receivership created hereunder. 6 In the event that, at any time whether before or after termination or resignation of the 7 Receiver of this receivership, as a result of or in connection with the Related Matters, any 8 Exculpation Party is required to produce any of its personnel (including former employees) for 9 examination, deposition or other written, recorded or oral presentation, or the Receiver or any 10 other Exculpation Party is required to produce or otherwise review, compile, submit, duplicate, 11 search for, organize or report on any material within such Exculpation Party’s possession or 12 control pursuant to a subpoena or other legal (including administrative) process, the Exculpation 13 Party will be reimbursed from the Receivership Assets for its out of pocket expenses, including 14 the reasonable fees and expenses of its counsel, and will be compensated from the Receivership 15 Assets for the time expended by its personnel based on such personnel’s then current hourly rate. 16 No provision of this Order shall require the Receiver to expend or risk its own funds or 17 otherwise incur any financial liability in the performance of any of its duties as Receiver 18 hereunder, or in the exercise of any of its rights or powers, if the Receiver shall have reasonable 19 grounds for believing that repayment of funds or adequate indemnity or security satisfactory to 20 him against such risk or liability is not reasonably assured to it. 21 This Court shall retain jurisdiction and supervision of all matters concerning the 22 Receiver, the receivership created hereby, and the Receivership Assets. No person or entity may 23 file suit against the Receiver, in its capacity as Receiver, unless otherwise authorized in advance 24 by this Court. Any and all actions against the Receiver which affect the Receiver or the 25 Receivership Assets shall be brought in this Court, and any attempt to collect from any 26 Receivership Assets must be brought in this Court. Any judgment entered against the Receiver 27 shall not be valid unless approved by this Court. The Receiver may apply at any time to the 1 Court, with notice to all other parties appearing in this case, for further instruction and for further 2 power necessary to enable the Receiver to properly fulfill its duties. 3 V. DISTRIBUTION OF ORDER BY DEFENDANTS 4 IT IS FURTHER ORDERED that Defendants shall immediately provide a copy of this 5 Order to each affiliate, successor, assign, member, officer, director, employee, agent, 6 independent contractor, client, attorney, spouse, subsidiary, division, and representative of any 7 Defendant, and shall, within ten (10) days from the date the Defendant receives notice of this 8 Order, provide the United States with a sworn statement that this provision of the Order has been 9 satisfied, which statement shall include the names, physical addresses, phone number, and email 10 addresses of each such person or entity who received a copy of the Order. Furthermore, 11 Defendants shall not take any action that would encourage officers, agents, members, directors, 12 employees, salespersons, independent contractors, attorneys, subsidiaries, affiliates, successors, 13 assigns or other persons or entities in active concert or participation with them, to disregard this 14 Order or believe that they are not bound by its provisions. 15 VI. SERVICE OF THIS ORDER 16 IT IS FURTHER ORDERED that the United States is directed to serve all Defendants 17 who do not receive a copy of this Order via ECF with copies of this Order. 18 With regard to Defendant Bass, the United States may provide notice via email. The 19 United States may also provide notice to other Defendants via email in advance of completing 20 service. 21 VII. DURATION OF THE ORDER 22 IT IS FURTHER ORDERED that this Order shall expire upon entry of final judgement in 23 this case. 24 VIII. RETENTION OF JURISDICTION 25 IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all 26 purposes. 27 1 IT IS SO ORDERED. 2 Dated: January 5, 2024 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27