FREQUENTLY ASKED QUESTIONS
What is a Receiver?
A receiver is an individual appointed by a court, in this case the
United States District Court for the Northern District of California, San Jose
Division, to serve as a neutral party to assume control over businesses and
assets that are the subject of litigation. As noted below, the Receiver reports solely to
the District Court. In this case, the
Securities and Exchange Commission ("SEC") has filed a complaint
alleging that SB Capital, Investors Prime Fund, SBC Portfolio Fund, and Mark
Feathers violated federal securities laws.
The Receiver was appointed pursuant to the June 26, 2012, Temporary Restraining Order (“TRO”), and the July 10, 2012, Preliminary Injunction ("PI"), both which
can be found in the Case Documents section of this website.
the Receiver work for?
The Receiver is a neutral and independent party. The Receiver reports directly to the District
Court. The Receiver does not work
for the SEC or any other party. The
Receiver's duties include (a) investigating the business, operations and
assets of SB Capital, Investors Prime Fund, SBC Portfolio Fund, and their
subsidiaries and affiliates ("Receivership Entities"),
(b) preserving and protecting the assets of the Receivership Entities, and
(c) providing reports and recommendations to the Court.
Why was the Receiver Appointed?
In this case, the SEC is the plaintiff, and Small Business Capital
Corp., Mark Feathers, Investors Prime Fund, LLC, and SBC Portfolio Fund, LLC
are defendants. The SEC has alleged that
the defendants have engaged in acts, practices and courses of business that violate
federal securities laws. The SEC’s
complaint (which is also available on this website) alleges that the defendants
have made material misrepresentations regarding the Funds’ lending and other
activities. No final determination has
been made with respect to the allegations.
Based on these allegations, the Receiver was put in place by the Court
to preserve the existing assets while the litigation is pending. As Receiver, Mr. Seaman has been put in
control of the businesses and all of their assets. The TRO and PI call for the Receiver to
marshal assets and perform all acts necessary or advisable to preserve their
Business Capital still in business?
The TRO and PI authorize the Receiver to operate the businesses as
he deems necessary and appropriate. However,
at this point, no new investments are being accepted and no new loans are being
funded. A small group of key employees have
been retained to service the existing loan portfolio, maintain the books and
records, and assist in selling and/or pooling recently funded loans. The remaining employees have been terminated.
the status of SBC Senior Commercial Mortgage Fund?
SBC Senior Commercial Mortgage Fund is a
newer fund established by SB Capital. Although it is not named as a
defendant, it is included as one of the Receivership Entities because it is an
affiliate, and the TRO and PI both include subsidiaries and affiliates as
happen to my investment?
The Receiver is in the process of investigating and evaluating the
assets and liabilities of the Funds. The
Receiver has seized approximately $10 million in cash, and there appear to be
valid, secured and guaranteed small business loans held by the Funds. At this time, however, the Receiver has not
determined the value of the assets in the Funds relative to the amounts
invested in them. It is too soon to know
how much investors will recover. The
Receiver will make a recommendation to the Court related to distributions once
he has completed the tasks outlined in the TRO and PI.
I receive payments?
The Court has not authorized the Receiver to make distributions to
investors or anyone else. Until such
time as the Court authorizes distributions to be made, no payments will be made
to investors. The Receiver's
investigation takes time. Additionally,
before any distributions will be made, the Court must determine the proper
amount of investor claims and approve a plan for distributing receivership
assets. The Receiver respectfully
requests that investors be patient. The
Receiver will complete his work as quickly as possible.
Can I attend the hearings?
You are not required to attend, but all hearings are open to the
public. The dates and times for the
hearings will be included in the documents filed with the Court and posted on
the website. The courthouse is located
at: Robert F. Peckham Federal Building,
280 South 1st Street, San Jose, CA 95113
Can I write off my loss, if
The Receiver cannot give tax or other legal advice. You should consult with your accountant or tax
Should I file a lawsuit against SB Capital?
As part of the TRO and PI, the Court entered a stay prohibiting
litigation against the Receivership Entities.
The stay allows the Receiver and the Court to focus on completing their
work such that all investors are treated evenly and fairly, and distributions
can be made as soon as possible.
How do I contact the Receiver?
If you have questions or concerns, you should write the Receiver
at the following address: 3 Park Plaza, Suite 550, Irvine, CA 92614. You may also communicate via email through
this website. The Receiver's telephone
number for this matter is 949-222-0305. This
website will also be updated regularly to reflect significant receivership events.
The best way to stay informed is to
periodically check the website.