Nations Warranty and JW&P Consulting
Case FAQs
Q: What exactly are the defendants accused of?
A: The best way to answer that question is to review the SEC’s complaint. (PDF 648 KB)
Q: Will the defendants in the SEC’s case face criminal prosecution?
A: The United States Attorneys Office will have to make that decision. The Receiver has no knowledge about whether the criminal authorities are interested in the case.
Q: What does a Receiver do?
A: The Receiver is appointed by the Court. He sorts out the affairs of the receivership companies and secures return of as much investor money as possible. To that end, the Receiver investigates how the defendants raised money and how they spent the money raised. If the Receiver determines that the defendants used investor money to buy an asset (e.g., real estate, artwork, vehicles, etc.), the Receiver can seize and sell the asset to bring more cash into the receivership estate. If the Receiver discovers that a third party wrongfully received investor money, the Receiver will demand return of that money and file a lawsuit if necessary to secure return of the money. At the same time, the Receiver will seek to reduce the liabilities of the receivership companies by reducing or eliminating payroll, negotiating with vendors, and otherwise reducing the costs associated with the receivership companies. If the Receiver successfully brings enough assets back into the Receivership estate, he will recommend a plan for paying money back to investors.
Q: Will investors get their money back?
A: It is too early to tell, but the Receiver’s goal is to find and secure as much as possible for ultimate return to investors. It is highly unlikely that investors will receive their entire principal investment. The Receiver will do everything possible to maximize what he is able to return to approved claimants.
Q: When will the investors get any of their money back?
A: Assuming success in recovering enough assets to make a distribution, the investors will not receive any of their money for several months at the earliest. The Receiver is mindful that lack of access to these funds creates a hardship for many investors. For that reason the Receiver and his team are working as fast and efficiently as possible to identify and recover assets.
Q: What are the tax consequences of this development?
A: Each investor should contact his or her accountant or tax attorney for advice on how to deal with this development at tax time. The Receiver will keep investors posted on important facts bearing upon the case, but he cannot give tax advice.
Q: What experience does the Receiver have in cases like this?
A: Pat Huddleston was an Enforcement Branch Chief at the SEC. During his time there he investigated several fraudulent offerings as well as insider trading, broker dealer fraud, and market manipulation cases. He has spent the 11 years since returning to private practice representing the interests of defrauded investors. Huddleston is currently Receiver in two other SEC case involving a nationwide prime bank fraud headquartered in South Carolina, and a worldwide hedge fund fraud in which he has successfully frozen $4.5 million located in Swiss bank accounts. In addition, Huddleston is Receiver in a case commenced by the Federal Trade Commission involving a large telemarketing operation.
Q: What will happen to the information I sent to Nations Warranty?
A: The Receiver arrived at the offices of Nations Warranty less than two hours after his appointment and secured all investor files. At the end of the case, the Receiver will either return those files to investors or dispose of them in a way that ensures they do not fall into the hands of anyone else.