HICKORY Victims of the J.V. Huffman Ponzi scheme have been told that payments from the liquidated seized assets and property will be ready to distribute by the end of the first quarter 2013.
Yeah, thats what we were told before, said Brenda Sigmon, one of the victims of the 17-year scheme uncovered in 2008. First, it was the end of October, and then the end of December, and now the end of the first quarter next year. We (the victims) dont have any faith in this receivership at all. Were getting scammed again.
J.V. Huffman was arrested on Nov. 7, 2008, and pleaded guilty to 14 counts of obtaining property by false pretenses and 14 counts of securities fraud. More than 500 people gave him $25 million to invest over 17 years, according to the Securities and Exchange Commissions complaint. Huffman spent it on homes, cars, art, jewelry and lavish vacations.
Those who have submitted claims that are verified may receive between 10 cents and 15 cents on the dollar, meaning someone who can verify a loss of $15,000 could receive between $1,500 and $2,250, according to Walt Pettit, attorney appointed as receiver for the Huffman estate.
This is not news to the victims, said Sigmon.
Pettits job is to liquidate assets in the quickest manner for the most possible money and to make sure the victims receive compensation in such a way that everyone walks away being treated equally unfairly, he said.
Pettit is handling the receivership to obtain possession of all of Huffmans holdings, property, cash, assets and liabilities, as well as those of his company, Biltmore Financial Group. While property has been sold and cash seized, no victims have received money yet.
Some of the difficulties and delays have to do with property not bringing high enough offers to satisfy federal Judge Richard Voorhees. Pettit explained that by law, a receiver does not have the authority to make a judgment regarding claims or payments for services made out of the receivership. That falls to Voorhees.
The victims dont care if things are sold at a loss, Sigmon said. We just want this thing to be over with.
Because the Receivership is approaching the four-year mark, the Staff would like to have a fuller understanding of the activities of the Receivership and the work that remains to be done, wrote Robert Gordon, senior trial counsel with the SEC in a letter dated June 15, 2012.
The letter further outlined that the commission needed a list of what tasks remained to be completed, an estimate of completion dates, an estimate of the number of hours Pettit and other lawyers have worked, an explanation why tasks were not completed, and a timetable to submit a proposed distribution plan to the court. The deadline was June 22, according to the letter.
Pettit responded to Gordons request in a letter dated July 3, providing expenditures from the receivership.
Pettit reported that a total of $327,856.61 in approved costs already have come out of the receivership. A total of $228,127.79 went to Kellam & Pettit, P.A., as well as Rogers Townsend & Thomas, P.C., for attorneys fees and expenses. Accountants fees and expenses amounting to $58,125.82, were paid to Middleswarth, Bowers and Company, CPA. A total of $41,603.00 was paid to Gary Boyd Auction and Real Estate for real estate commissions and expense.
Pettits current firm, Hutchens, Senter, Kellam & Pettit, P.A., published legal notices in the Hickory Daily Record on Oct. 15 and Oct. 22 of this year announcing that claims against the receivership must be received on or before Nov. 5. Pettit said he would consider claims received after that date but urged claimants not to delay and to get documents to his firm quickly.
I had hoped to have everything concluded by the end of December, said Pettit, but had to push it back.
Part of the problem, according to Pettit, was that the state seized books and records for both Huffman and his company. We only received them about 18 months ago, he said.
The other problem was the economy, and Pettit wanted to see whether it would rebound so property could be sold for closer to its purchased value, and not at a large loss, he said.
Still another challenge is that Pettits law firm, Kellam & Pettit, was bought out by Rogers Townsend & Thomas. Pettit and a few other attorneys left Rogers to form Hutchens, Senter, Kellam & Pettit. That, according to Brenda Sigmon, was confusing and unnerving.
Some property remains to be liquidated. A collection of artwork, jewelry and a piece of incorrectly zoned property still await action. The jewelry has a value of between $88,000 and $90,000, said Pettit. He has not received an offer for more than $40,000.
Im not going to sell it for less than half the value, said Pettit.
The art collection, appraised at $1 million according to documentation from Huffman, contains 5 percent to 8 percent work of any value, according to Pettit. It includes work from Pablo Picasso, Salvador Dali and Rembrandt van Rijn.
Pettit also plans to auction the contents of a furniture store.
Pettit bills his services as receiver at $240 an hour, he said. Three other lawyers in the firm work on the receivership at a lesser charge, he said. His firms charges are about 50 to 60 percent of normal legal fee charges, he said.
More charges are anticipated for the time period since the last interim report through the final distribution.
Theres not going to be anything left to distribute if things keep going the way they are, said Gary Sigmon, Brendas husband.