Free Response to Motion - District Court of Arizona - Arizona

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BRIAN A. HATCH

PLLC

3904 E. FAIRBROOK MESA, ARIZONA 85205 TELEPHONE: (480) 654-9922 FACSIMILE: (480) 654-3313 E-MAIL: [email protected] BRIAN A. HATCH, SBN 13864 ATTORNEY FOR BARRY T. JORDAN

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA ) ) ) Plaintiff, ) ) vs. ) ) ) Ronald Stephen Holt; and International Funding ) Association, ) Defendants, ) ) ) and ) ) Annette Holt; American Assets Limited Trust; ) Leonora Street Trust; Dover Childrens Trust; ) Clarendon Avenue Holding Trust; Dublin Holding ) Trust; Jeffery Williams (aka Jeffrey Williams); ) Mari Ann Alston; Pacific Central Asset ) ) Management; and American Benefit Card ) Services, Inc. ) ) Defendants Solely for ) Purposes of Equitable Relief ) _________________________________________ Securities and Exchange Commission,

Cause No.: CV 03-1825 PHX PGR

RESPONSE TO PETITION NO. 24 REGARDING PROPERTY LOCATED AT 10620 NORTH 84TH STREET, SCOTTSDALE, ARIZONA AND MOTION TO RELEASE PROPERTY

(Oral Argument Requested)

Comes now Respondent Barry T. Jordan, through his counsel undersigned and responds to Petition No. 24 in the above captioned action, and moves the Court for an Order releasing the 84th Street Property from the receivership, all as set forth in the Motion to Release Property filed herein.

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RESPONSE TO PETITION NO. 24

1.

Regarding the allegations of paragraph 1, Respondent admits that American Assets

Limited Trust ("AALT") was placed in receivership and may have been the trustee of various trusts, which such trusts may have held properties acquired with investor funds. Respondent is without sufficient knowledge or information to form a belief as to the remaining allegations of paragraph 1, and therefore denies the same. 2. Regarding the allegations of paragraph 2, Respondent admits that the real property

identified as the 84th Street Property bears the address and legal description indicated, and denies the remaining allegations of paragraph 2. 3. Regarding the allegations of paragraph 3, Respondent admits that the 84th Street

Property was acquired by the East Maricopa Holding Trust ("EMHT") and that the Warranty Deed lists AALT as the trustee of the EMHT. Respondent affirmatively alleges that the Warranty Deed is inaccurate and incorrectly lists the beneficiary of the EMHT as AALT. Respondent affirmatively alleges that the true beneficiary of the EMHT was, and has been, the Roger Mills Trust. Respondent denies the remaining allegations of paragraph 3. Respondent incorporates by this reference Exhibits A and B as attached to Petition No. 24. 4. Regarding the allegations of paragraph 4, Respondent admits that the Receiver

recorded a Notice of Lis Pendens encumbering the 84th Street Property, and denies the remaining allegations of paragraph 4. 5. Regarding the allegations of paragraph 5, Respondent admits the general allegations

and affirmatively alleges that he has continued making the required monthly payment to the Sellers. 6. Regarding the allegations of paragraph 6, Respondent admits that he provided the

Receiver with a copy of the EMHT document, that Exhibit B is a true and accurate copy of the same, and that the document speaks for itself. Respondent is without sufficient

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knowledge or information to form a belief as to the remaining allegations of paragraph 6, and therefore denies the same. 7. Regarding the allegations of paragraph 7, Respondent admits that the beneficiary of

the EMHT is the Roger Mills Trust. Respondent is without sufficient knowledge or information to form a belief as to the remaining allegations of paragraph 7, and therefore denies the same. 8. Regarding the allegations of paragraph 8, Respondent is without sufficient

knowledge or information to form a belief as to the allegations of paragraph 8, and therefore denies the same. 9. Regarding the allegations of paragraph 9, Respondent affirmatively alleges that no

IFA Investor Funds have been used for the acquisition or maintenance of the 84th Street Property. Respondent is without sufficient knowledge or information to form a belief as to the remaining allegations, and therefore denies the same. 10. Regarding the allegations of paragraph 10, Respondent affirmatively alleges that

such are immaterial, and therefore denies the same. 11. Regarding the allegations of paragraph 11, Respondent affirmatively alleges that

such are immaterial, and therefore denies the same. 12. Regarding the allegations of paragraph 12, Respondent affirmatively alleges that

such are immaterial, and therefore denies the same. 13. Regarding the allegations of paragraph 13, Respondent affirmatively alleges that

the allegations require no response. WHEREFORE, having responded fully to the allegations of Petition No. 24, Respondent Barry T. Jordan respectfully requests that the Court deny the relief requested by the Receiver therein, and that the Court grant Respondent the relief requested in the following Motion to Release Property.

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MOTION TO RELEASE PROPERTY MEMORANDUM OF POINTS AND AUTHORITIES I. The 84th Street Property is not a Receivership Asset. As indicated by the Receiver in Petition No. 24 (the "Petition"), American Assets Limited Trust ("AALT") was placed in receivership because it purportedly served as the trustee of various trusts that held properties acquired with investor funds. The Receiver subsequently learned that the Warranty Deed conveying the 84th Street Property to the East Maricopa Holding Trust ("EMHT") contained a material misstatement, and had incorrectly named AALT as the trust beneficiary. As evidenced by the EMHT document provided to the Receiver, the true beneficiary is the Roger Mills Trust ("RMT"). Importantly, neither the EMHT nor the RMT holds properties acquired with IFA investor funds, and neither has any other connection to the receivership. Because the RMT holds the equitable title interest to the 84th Street Property, AALT holds only bare legal title. Such legal title is insufficient to grant the Receiver any right to deal with the 84th Street Property as a receivership asset. It is axiomatic that the trustee of a trust has a fiduciary duty of loyalty to the beneficiary and to act solely in the interest of the beneficiary. In the instant case, that duty is fundamentally at odds with the duties of the Receiver as enumerated in the Order Appointing Receiver dated September 18, 2003 (the "Order"). As is typical, the Order imposes on the Receiver the duty to collect, possess, and preserve the enumerated Receivership Assets. It is clearly not intended that the Receiver be granted or assume the fiduciary duties of a trustee for the benefit a third-party trust entity with no connection to the receivership estate. This principle is best illustrated by reviewing the history of the Receiver's actual dealings with the 84th Street Property. In the three years since the receivership was imposed, the Receiver has taken no action whatsoever consistent with the Order or otherwise, to collect, possess or preserve the 84th Street Property. The Receiver has made no payments on the indebtedness, has not arranged for insurance or made any

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payment of premium, has not performed any maintenance or upkeep, has not attempted to lease the Property, and has taken no other action demonstrating any interest of the receivership in the Property or the performance of any trustee obligation. Except for creating a cloud on title by filing a Notice of Lis Pendens, the Receiver has instead been content with status quo. The Respondent is in possession of the Property, is the source of funds for its purchase, and has performed all the actions incident to ownership including payment of the indebtedness, securing and paying for the insurance, and performing all maintenance and upkeep. Indeed, the Receiver admits that Respondent is the source of funds, is acting as the beneficial owner of the Property, and that no IFA investor funds have been used for the acquisition or maintenance of the Property. Given the facts, the 84th Street Property cannot be declared a Receivership Asset. II. The Proper Remedy is to Release the Property from the Receivership. Notwithstanding the unorthodox method by which title to the 84th Street Property is held, the issues presented still center on the use and control of Respondent's home. The Receiver has gone to great (and unnecessary) lengths to portray Respondent in a negative light. A significant portion of the allegations in the Petition bear no relevance whatsoever to a determination of the Receiver's duty respecting the Property, and seem to be directed instead to exposing Respondent's legal foibles, real or imagined. Such allegations bear not at all on whether the 84th Street Property may be treated as a Receivership Asset. The relief requested in the Petition in section one of the Prayer not only recognizes Respondent's interest in the Property, but attempts to exploit such interest for the benefit of another set of derivative third-parties. Inexplicably, the Petition contains no allegations or other support that would show these derivative parties have made any claim against the receivership or the Property; that the Receiver is acting in his capacity as trustee or has the authority to leapfrog over Respondent's beneficial interest and instead act on behalf of the

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derivative parties named; or that the Receiver and this Court have any jurisdiction to consider and decide the legal interests of said derivative parties. In like fashion, the relief requested in section two of the Prayer lacks support in the underlying allegations of the Petition. Such relief is in direct conflict with that requested in section one of the Prayer. While inconsistent pleading is certainly allowed under the Rules of Civil Procedure, it is inconceivable that the Receiver would admit no connection between the Property and the investor's funds, acknowledge Respondent as the source of funds and holder of the beneficial title interest, and then seek to extinguish any interest of Respondent. III. Conclusion. This Court has broad discretion in dealing with the case here presented. Respondent recognizes that there are issues of fact which are critical to the Court's determination of this case which have not been presented or decided. Given the requirements of due process, Respondent believes that an evidentiary hearing is necessary to a decision on the issues presented. WHEREFORE, Respondent Barry T. Jordan respectfully requests this Court set an evidentiary hearing and that the Court thereafter enter an Order releasing the 84th Street Property from the receivership, removing the Notice of Lis Pendens, and approving a substitute trustee for the East Maricopa Holding Trust.

Respectfully submitted this 12th day of October, 2006.

BRIAN A. HATCH PLLC s/Brian A. Hatch By: Brian A. Hatch, Attorney for Respondent Barry T. Jordan

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PROOF OF SERVICE This is to certify that on this 12th day of October, 2006, the foregoing document was electronically transmitted to the Clerk's Office using the CM/ECF System for filing, and that

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a Notice of Electronic Filing was transmitted to the CM/ECF registrants on the attached Master Service List; and that a copy of the foregoing document was served by first class mail on the 13th day of October, 2006 on those persons listed below, and on those persons listed on the attached Master Service List who are not registered participants of the CM/ECF System.

Noily Cope 5128 E. Whitton Avenue Phoenix, AZ 85018 John Fries Ryley Carlock & Applewhite, P.A. 101 N. First Ave., Suite 2700 Phoenix, Arizona 85003 Attorney for Maureen Gaughan

s/Brian A. Hatch Brian A. Hatch

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MASTER SERVICE LIST SEC vs. Ronald Stephen Holt, et al. United States District Court for the District of Arizona CV 03-1825 PHX FJM

Lawrence J. Warfield International Funding 14555 North Scottsdale Road, #340 Scottsdale, AZ 85254 Receiver Patrick M. Murphy Guittilla & Murphy, P.C. 4150 West Northern Avenue Phoenix, Arizona 85051 Registered CM/ECF: [email protected] Counsel for Receiver Marshall M. Gandy Securities and Exchange Commission 801 Cherry Street, Suite 1900 Fort Worth, Texas 76102 Registered CM/ECF: [email protected] Counsel for SEC Merwin D. Grant Grant & Vaughn, P.C. 6225 North 24th Street Suite 125 Phoenix, Arizona 85016 Registered CM/ECF: [email protected] Attorney for Relief Defendant Annette Holt

Ronald Stephen Holt and International Funding, Leonora Street Trust, Dover Children's Trust, Clarendon Avenue Holding Trust, Dublin Holding Trust, Pacific Central Asset Management, American Benefit Card Services, Inc., Ronald Stephen Holt Central Arizona Detention Center Detainee Ronald Holt 82642008 1155 N. Pinal Parkway Florence, Arizona 85232 Robert L. Stanford Jeffery Williams aka Jeffrey Williams 8415 W. Alex Avenue Peoria, Arizona 85382 Relief Defendant American Assets Limited Trust c/o Registered Agent Michael Bloomquist 4410 W. Union Hills #7-233 Glendale, Arizona 85308 Relief Defendant Mari Ann Alston 305 Nordina Street Redlands, California 92373 Relief Defendant

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James Vaughn 100 South Antietam Place Tucson, Arizona 85710 Suzanne Ingold Burch & Cracchiolo, P.A. 702 E. Osborn Road #200 P.O. Box 16882 Phoenix, Arizona 85014-5281 Timothy J. Mulreany Commodity Futures Trading Commission Division of Enforcement 1155 21st Street, N.W. Washington, D.C. 20581 Thomas M. Connelly 2425 East Camelback Road Suite 880 Phoenix, Arizona 85016-4208 Michael S. Reeves Attorney at Law 1212 E. Osborn Phoenix, Arizona 85014-5533 Registered CM/ECF: [email protected] Attorney for Defendant Ronald S. Holt

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