ProphetMax Receivership

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GENERAL INFORMATION

Update 11/04/14:

Dear Investors,

The Receiver would like to update you on a few recent, positive developments related to the ProphetMax Fraud and provide an anticipated timeline moving forward.

On 6/25, the Receiver posted an application by the Liquidator to the Supreme Court of Queensland providing analysis as to why, in the Liquidator’s view, Australia’s proportionate liability scheme should be applied to investors.  As discussed in Receiver’s 6/25 update, if proportionate liability was applied to investors it would have reduced investors’ recovery significantly.  The Liquidator’s application can be viewed [here]

After the Liquidator’s application was filed, the Receiver, CFTC and SEC made multiple communications to the Liquidator and Supreme Court of Queensland in an attempt to prevent the court from holding investors proportionately liable for the ProphetMax Fraud and so protect their recovery.  The SEC hired Australian counsel to further represent its views on these issues.  The Australian Securities and Investments Commission also intervened in the proceedings, and took the position that proportionate liability should not apply to investors.  On September 5, 2014, Justice Byrne ruled that investors would not be held proportionately liable for the ProphetMax Fraud, which will increase the investors’ recovery from the Australian liquidation.  Justice Byrne’s order can be viewed [here].

Since Justice Byrne’s ruling, the Receiver has learned that the Liquidator currently plans to conduct a distribution to investors prior to the end of 2014.  In connection with the Liquidator’s distribution, please see the Liquidator’s Report to Creditors dated October 31, 2014, available [here].  In the report, the Liquidator discusses Judge Byrne’s recent order, upcoming distribution plans, and instructions regarding proof of claims.  It is the Receiver’s understanding that the Liquidator must receive all proofs of claim on or before November 20, 2014 in order for the claims to be considered.  If you wish to enter a proof of claim with the Liquidator, please ensure that you have done so by that date.  Please contact Jennifer Huynh with Hall Chadwick, rather than the Receiver, should you have any questions regarding the Liquidator’s distribution.  Unfortunately, the Receiver has no detailed information regarding the Liquidator’s distribution or whether the Liquidator has received any individual investor’s proof of claim.

Finally, the Receiver is aware that technical issues caused intermittent inability to access this website in recent weeks.  While the technical issues have been resolved, the Receiver sincerely apologizes if any investor recently attempted to visit the site while it was down.  As always, please feel free to contact the Receiver via email at receiver@prophetmaxreceivership.com with any questions. 

Sincerely,

Guy M. Hohmann

Receiver for the ProphetMax Receivership Estate


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06/25/14: 

The Liquidator has asked the Receiver to post his most recent application to the Australian court (the “Application”), in which he requests the court’s input on issues related to an interim distribution of the funds in his possession, including: (1) whether investors are owed reimbursement for the entire amount of their membership fees; (2) to what extent Australia’s proportionate liability scheme should be applied to reduce IIC’s liability (and amounts to be repaid) to investors; and (3) the proper way to provide notice to investors regarding amounts to be paid to them.  The Application can be found in our Court Papers page as well as here:  link to the "Application".

Please feel free to reach out to the Receiver with general questions about the Application - however, as the Receiver was not involved in the drafting of the Application nor the Australian proceedings, the Liquidator will best be able to answer any questions you may have. 

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Update 03/24/14:

We have recently been receiving questions regarding the Liquidator of Investment Intelligence Corporation, including how he can be contacted.  Below is a helpful excerpt from the U.S. Commodity Futures Trading Commission’s and U.S. Securities and Exchange Commission’s Joint Status Update to the Victims of the ProphetMax Fraud, filed with the court and posted on our website in September: 

Status of Related Proceedings in Australia
 At the request of the Agencies, ASIC provided the following update on the status of related proceedings in Australia:


“ASIC has been investigating Investment Intelligence Corporation and Senen Pousa and on 26 July 2012, ASIC obtained interim orders, by consent, in the Queensland Supreme Court over $3,092,799 held by St George Bank and $313,136 held by American Express Australia in the accounts of Investment Intelligence. ASIC subsequently sought order from the Court to have Investment Intelligence wound up, but prior to the trial of the proceeding, on 31 May 2013, Mr. Pousa appointed Blair Pleash and Richard Albarran of Hall Chadwick as administrators of Investment Intelligence.

On 7 June 2013 ASIC filed an application to have the administration terminated and PricewaterhouseCoopers appointed as provisional liquidators of Investment Intelligence. On 12 June 2013 the Court made orders that the administration be terminated and that Mr. Pleash of Hall Chadwick be appointed as a provisional liquidator of Investment Intelligence. Hall Chadwick were subsequently appointed as liquidators of Investment Intelligence on 19 June 2013 after a creditor had Investment Intelligence wound up on the grounds of insolvency. Investment Intelligence Corporation Pty Ltd Creditors of Investment Intelligence Corporation Pty Ltd should contact Hall Chadwick [http://www.hallchadwick.com.au/media-releases/investment- intelligence-corporation-pty-ltd]. ASIC's investigation is continuing.”

Though the Agencies cannot provide you with legal advice, all victims should consider submitting their claims for return of their misappropriated funds to the Australian liquidator.  This will help ensure that your losses are properly recorded and considered in the Australian proceedings

See U.S. Commodity Futures Trading Commission’s and U.S. Securities and Exchange Commission’s Joint Status Update to the Victims of the ProphetMax Fraud, pages 5-6.   The letter from the agencies also included the Australian Liquidator’s July 24, 2013 letter and claim form in its Exhibit “A.”  Although the Receiver cannot provide legal advice, he has also suggested that investors submit their claims to the Australian Liquidator and continues to do so.  Any questions specific to the Liquidator’s receipt of claims should be directed to the Liquidator at the link provided by ASIC above.


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Update 03/11/14:


Investors,

We would like to give you a brief update regarding the Receiver’s efforts throughout the past few months and his plans moving forward.  As you may recall, the Receiver was beginning preparations for a distribution last summer.  Around that time the Liquidator was appointed in Australia, which raised certain questions including how best to go about the Receiver’s and Liquidator’s claims processes and distributions.  Since his appointment the Receiver has been working with the Liquidator to reduce duplication of efforts where possible, and it was our hope that the Liquidator and Receiver would be able to conduct a joint distribution, thereby reducing the costs associated with the claims approval process and distribution itself.  However, it is our understanding at this point that the laws applicable to the Liquidator will prevent him from participating in our claims and distribution processes. 

Nevertheless, the United States Commodity Futures Trading Commission (“CFTC”) has been working with the National Futures Association (“NFA”), which will most likely conduct the distribution(s) to investors at no charge.  At this stage the Receiver is prepared to move the Court to approve a claims approval and distribution process, and sincerely hopes to be able to conduct a distribution in the near future.  However, an important outstanding matter remains involving funds held by an entity overseas, which the Liquidator and Receiver both believe should be remitted to their respective estates.  The Receiver most recently proposed the funds be split 50/50 with the Liquidator, and received a counteroffer of a 90/10 split in favor of the Liquidator.  Not only does the Receiver view the Liquidator’s counteroffer to be unreasonable, he also has concerns that such a split would constitute a violation of his fiduciary duties given that the Liquidator represents a more broad group of constituents than the Receiver.  The Receiver has been working diligently with the Liquidator and also the CFTC, Securities Exchange Commission, and directly with the entity holding the funds to resolve the matter, but may be required to institute litigation against the entity to recover the funds.  The Receiver and Hohmann, Taube & Summers have opened a separate matter dedicated to recovery of the funds, and the Receiver and his counsel have discounted their rates by 50% for fees incurred pursuing that litigation.  It is the Receiver’s goal to obtain resolution regarding the funds prior to conducting a distribution in the event the Receiver obtains additional funds for the Receivership Estate, as he hopes to conduct only one distribution. 

As a related matter, the Receiver would like to clarify that the Liquidator and Receiver are in fact engaging in separate claims approval and distribution processes.  Therefore, investors should anticipate providing the Receiver with information in addition to and separately from any information sent to the Liquidator.  The Receiver will let investors know when, where, and what to send his team as the time for a distribution nears, but nothing is needed at this time.

Thank you for your patience, and as always, please feel free to contact us if you have any questions.  We will continue to update our website and Facebook page with any significant updates, and ask that you monitor the website regularly in the coming months as the Receiver begins to prepare for a distribution.

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12/13/13 Update:

Please see the links below to documents recently received from the IIC Liquidator in Australia.  The links consist of: (1) a notice of the Liquidator’s meeting of creditors, to be webcast from Brisbane, Australia next Thursday, December 19 at 10:00 am (various local date and time conversions are listed in the notice); (2) an appointment of proxy form for voting purposes; (3) a formal proof of debt or claim form; and (4) a committee of inspection nomination form

It is our understanding that investors must submit the Formal Proof of Debt or Claim form to IIC@hallchadwick.com.au at least 24 hours before the creditors’ meeting to be eligible to vote on any resolutions raised in the meeting.  It is also our understanding that investors will be given additional time to submit the form for determination of individual losses and claim amounts in the Australian proceedings, but we continue to suggest that investors submit their proof of claim form to the Liquidator as soon as possible, and list all losses (including ProphetMax membership fees and investment amounts that have not been returned).  To the extent you have specific questions regarding the voting process, appointment of proxy form, committee of inspection nomination form, or proof of debt or claim form, we recommend you direct those questions to the Liquidator.  The Liquidator has suggested that all questions, either related to the forms or general questions to be addressed during the creditors’ meeting, should be sent to iicmeeting191213@hallchadwick.com.au at least 24 hours before the creditor's meeting.  All forms other than the Formal Proof of Debt of Claim form should also be sent to iicmeeting191213@hallchadwick.com.au.

It is our understanding that investors must register at the following link to participate in or view the webcast:  http://events.knowledgevision.com/staging/MELB_HALL_CHADWICK.html.  Also, it is our understanding that in addition to submitting proofs of claim, investors must register at the following link to be eligible to vote: https://www.polleverywhere.com/register?p=2m5rx-1jtd&pg=ED8pHGy.  The Liquidator has posted both links on the left-hand side of his website: http://www.hallchadwick.com.au/iic

We have received a number of messages from investors that they have not received a response from the Liquidator to questions related to proving claims and/or filling out the proof of debt or claim form; the Receiver will request that the Liquidator address this issue in the creditors’ meeting, and again suggests that any specific questions are sent to the Liquidator prior to the creditors’ meeting.

Sincerely,

Guy Hohmann,

Receiver for the ProphetMax Receivership Estate

Links:   (1) a notice of the Liquidator’s meeting of creditors, to be webcast from Brisbane, Australia next Thursday, December 19 at 10:00 am (various local date and time conversions are listed in the notice); 
(2)
 an appointment of proxy form for voting purposes;
(3) 
a formal proof of debt or claim form; and
(4) 
a committee of inspection nomination form

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On September 18, 2012, the U.S. Commodity Futures Trading Commission filed a complaint in the United States District Court for the Western District of Texas, Austin Division, against Senen Pousa, Investment Intelligence Corporation, dba ProphetMax Managed FX, Joel Friant, Michael Dillard, and Elevation Group, Inc. The Commission’s complaint alleges violations of federal commodities laws relating to a fraudulent scheme that solicited clients to provide Investment Intelligence Corporation with discretionary authority to engage in leveraged foreign currency transactions on their behalf with IB Capital FX, LLC, an offshore counterparty purportedly operating from offices in New Zealand.

 To view a copy of the complaint, click here. 

Also on September 18, 2012, the Commission filed a Motion for Ex Parte Restraining Order, Order for a Temporary Receiver, and Order to Show Cause Re: Preliminary Injunction in this same lawsuit. In response to the Commission’s complaint and motion, the court entered a Statutory Restraining Order (“Order”) on September 18, 2012 to freeze certain assets and appoint Guy Hohmann as the Receiver for all the assets and records of Senen Pousa, Investment Intelligence Corporation, dba ProphetMax Managed FX and Joel Friant (“Defendants”), including the assets and records of Defendants’ affiliates or subsidiaries. (Collectively, Defendants and their assets and records as described above are referred to as the “ProphetMax Receivership Estate”.)

The court’s Order includes prohibitions and directives on a variety of matters concerning the ProphetMax Receivership Estate. For example, the Order includes the following general provisions:

  • The Receiver is directed to, among other things, take exclusive custody, control, and possession of all funds, property, and other assets (“Assets”) in the ProphetMax Receivership Estate, and to preserve, hold, and manage such Assets to preserve their value and prevent loss, damage or injury to Defendants’ customers or clients.
  • Defendants and their agents are restrained and enjoined from transferring, selling, dissipating, or otherwise disposing of any Assets.
  • Financial institutions are directed to prohibit Defendants or any other person from transferring, selling, dissipating, or otherwise disposing of any Assets. Financial institutions are also directed to assist the Receiver and cooperate in his efforts to identify and obtain such Assets.
  • Defendants and all other persons or entities are generally prohibited from taking any legal or other action to establish or enforce any claim, right, or interest in the name of Defendants, the Receiver or his agents, or any Asset.
  • Defendants and all other persons or entities who receive notice of the SRO are restrained and enjoined from directly destroying, mutilating, erasing, altering, concealing or disposing of, in any manner, directly or indirectly, any  documents that relate to the business practices or business or personal finances of the Defendant.
  • Receiver and representatives are immediately allowed to inspect the books, records and other documents of the Defendants and their agents including, but no limited to, electronically stored data, tape recordings and computer discs.
  • Defendants and their agents, servants, employees, attorneys, and person in active concert or participation with them who receive notice of the SRO shall fully cooperate with the Commission to locate and provide to the Receiver all books and records of Defendants, wherever situated.

The Order also contains a substantial number of other prohibitions and directives concerning the ProphetMax Receivership Estate. To view a copy of the Order, click here

On September 18, 2012, the court also entered a Consent Order of Permanent Injunction and Other Statutory and Equitable Relief Against Defendants Michael Dillard and Elevation Group, Inc. (“Consent Order”). To view a copy of the Consent Order, click here

Additional information will be posted on this website as it becomes available.

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