Beware of Profit Connect Receiver – Review Part 2

$9.1 million has been collected by The Profit Connect Receiver.

The declaration was included in the February 7th-filed Second Status Report of the Receiver.

The operations report of the Receiver opens by revealing that COVID-19 struck what remained of Profit Connect in August of last year.

Brent Kovar informed the Temporary Receiver that a Profit Connect employee had tested positive for COVID-19 on August 4, 2021.

With Brent Kovar’s assistance, the Temporary Receiver sent everyone home right away and asked them to be tested so they could return to work with proof of a negative test result.

Following CDC quarantining guidelines was requested for at least six employees who tested positive as well as one member of the Temporary Receiver’s staff.

The premises was thoroughly cleaned and sanitized by a cleaning service that the Temporary Receiver engaged.

The sale of real estate and other assets obtained through Profit Connect has been the main focus of recovery attempts thus far.

The Receiver staged a virtual auction in December and brought in $1.25 million.

Three Can-Am ATVs that sold for $182,750, a 2021 RAM 1500 BigHorn that went for $46,250, a 2021 Ford F650 that went for $86,500, and a sizable quantity of computer hardware that sold for far more than its suggested retail value were some of the most expensive products.

Through the sale of confiscated bitcoin, an extra $4 million was obtained. A $2 million net profit was made in comparison to the acquisition price.

Several real estate assets and interests are still up for sale.

The total equity amount owned by the receivership is $18.5 million, according to a final balance presented by the receiver.

The Receivership has collected $495,00 in fees.

Unfortunately, Profit Connect affiliates are accruing receivership legal costs on top of operational costs.

The Receiver has learned of many lawsuits filed by investors to recover their money before other investors.

One investor made it necessary for the Receiver’s counsel to submit a move to enjoin the investor’s litigation under the All Writs Act after the investor refused to dismiss or stay his action while the receivership was in place.

When the investor got a copy of the motion, he quickly dropped his claim.

Investor Jeffrey Nicholas sued his upline, Troy Sutton, on his behalf.

In a cruel twist of fate, Nicholas’ Profit Connect downline member sued him after he had already filed his complaint.

Another investor action with a similar claim is currently underway in state court in Texas; however, this time, Mr. Nicholas is the defendant.

The receiver’s attorney has spoken with the investor’s attorney and believes the parties will come to an amicable agreement that will benefit the receivership estate.

Additionally, The Receivership is aware of another group of Profit Connect investors’ plans to file a class action lawsuit.

The granted preliminary injunction bars all of these cases. They will either fail or be rejected, but they will incur charges for receivership in the meanwhile.

Other issues include Profit Connect’s “no recognizable accounting books and records” and other parties’ lack of collaboration.

Moving on to clawbacks, William Roshak, the net winner of Profit Connect, has already been the target of a $500,000 lawsuit.

The parties have a settlement conference planned before Magistrate Judge Weksler on March 24, 2022, after the pleadings have been closed and the initial disclosures have been disclosed.

The Receiver issued a caution in the future;

The Receiver anticipates that additional legal action to recover assets that were unlawfully transferred and/or seek compensation for the Profit Connect scam’s losses may be taken based on his ongoing investigation.

The Receiver claims to have “sent thousands of emails and made countless phone calls” to victims of Profit Connect.

Profit Connect encouraged investors to take out liens on property, which is one facet of their investment solicitation tactics that is very unsettling.

The investors who reportedly provided the liens appear to have been promised they could participate in Profit Connect by granting the company a lien on their home for a specific sum, with the sum secured by the lien subsequently being invested in Profit Connect.

The Receiver will ask the court for permission to discharge these liens to the extent that no money changed hands, allowing the title to be entirely retransferred to the homeowners.

On September 29, 2021, a webinar was presented by The Receivership. The gathering was attended by “almost 150 interested persons.”

The Receiver also asserts through the recognized receivership website that it has

gathered about 400 forms that were submitted via the website and contained contact information as well as details about their relationship to Profit Connect.

To refresh the database of records collected from Profit Connect’s internal computer systems, the Receiver is utilizing this information.

There has been no mention of a claims procedure, therefore distribution statistics for the future are unknown.

The SEC identified Profit Connect as a $12 million Ponzi scheme, therefore victim compensation at this point appears potential.

Updated on May 26, 2022 – To pursue his clawback claims, the Receiver has asked for authorization to hire legal representation.

If accepted, such an attorney will be permitted to start a clawback lawsuit against

Allianz Life Insurance Company of North America, Jeff Nicholas, Nicholas Financial, South Towne Enterprises, Inc. of Abilene, Emerald Star Enterprises, Inc., and their insurers, affiliates, agents, tenants, and subsidiaries. Troy Sutton.

Once a complaint is made against the aforementioned parties, I will be able to give complete details if clearance is granted.

Due to a scheduling difficulty, an approval hearing that was originally planned for May 24th has been rescheduled for later today.

Later this week, I’ll return for an update.

Updated on May 30, 2022 – The Receiver’s request to hire legal counsel has been approved by the court.

There is no timetable, but we can probably anticipate clawback lawsuits being brought against the parties mentioned above at some point.

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