Klein & Associates

Updates: Descriptions of Recent Developments

January 7, 2014: The Court today signed an order concluding the receivership estate. As part of the order, the court approved distribution of $46,803.77 to a group of victims, approved payment of partial attorney fees and receiver fees, and terminated the receivership. The distribution payments will be sent out in the near future. A copy of the order can be found here.

December 16, 2013: The Receiver filed a report and motion with the Court today. The combined motion and report summarizes developments in the case since December 31, 2012 and asks the Court for approval to: i) make a small distribution to 37 investors who received no properties or funds from Art Intellect, ii) grant a reduced fee application to the Receiver and his counsel, and iii) close the receivership. A copy of the report/motion can be found here. Closing Motion Exhibits A B C D E

December 6, 2013: The Court today approved the tentative settlement between the Receiver and Chase Bank. The Receiver will now implement that settlement. A copy of the Court order can be found here.

November 6, 2013: The Receiver today filed a motion seeking Court approval of a settlement agreement with Chase Bank. A copy of the motion can be found here.

September 11, 2013: The Court today entered a final judgment against Laura Roser in the SEC’s enforcement action. Roser consented to the injunction. A copy of the judgment of permanent injunction can be found here.

July 25, 2013: Pat Brody was sentenced today on his guilty pleas to felony securities fraud charges. The judge accepted the plea agreement between the government and Mr. Brody and ordered Mr. Brody to be incarcerated for 41 months, followed by 36 months of supervised probation. The judge imposed special conditions that will apply to the probation, including not having any financial accounts without the knowledge of his probation officer, not being self-employed, not working for any business that involves real estate or investments, and notifying any employer of his criminal conviction. Restitution of $331,075.36 was ordered to be paid by Mr. Brody to the victims. During the time of incarceration, Brody must pay at least $25 per month in restitution. After release, he must pay at least $250 per month.

June 15, 2013: An auction of vehicles and home furnishings owned by Laura Roser and Art Intellect will be held on Saturday, June 22, 2013. Here is a link to information about the auction. Investors and others are invited to come to the auction.

May 22, 2013: The U.S. Securities and Exchange Commission today entered an order barring Patrick Brody from any association with a broker-dealer, investment adviser, or other businesses associated with the securities industry. The order was entered by default after Brody failed to defend himself against the SEC’s allegations. A copy of the order can be found here.

May 20, 2013: The Court today entered an order approving Laura Roser’s agreement to transfer the home, its furnishings, and two vehicles to the Receivership. The Receiver will engage an auctioneer to sell the vehicles and contents of the home. A copy of the Court’s order can be found here.

May 17, 2013: Laura Roser has delivered to the Receiver title to the two vehicles she owns, a quitclaim deed to her home, and an agreement to allow the furnishings in the home to be sold. While the loan on the home is greater than its current value, the Receiver has found payments to Chase Bank that can be challenged. The Receiver filed a motion with the Court seeking approval of the agreement regarding the assets. A copy of the motion can be found here. The agreement with Ms. Roser can be found here. If the motion is approved, the Receiver plans to auction the assets.

March 6, 2013: The Court today issued a 50-page order granting summary judgment to the SEC. In the Order, the Court finds that Patrick Brody and Laura Roser violated the federal securities laws. The Court permanently enjoined them from future violations of the law and ordered them to disgorge $1.5 million. A copy of the order can be found here.

January 7, 2013: The Receiver today filed the Sixth Status report on developments in the case for the period from July 1, 2012 to December 31, 2012. A copy of the report can be found here.

October 31, 2012: A grand jury criminal indictment was issued today charging Pat Brody and Laura Roser with nine felonies. These include one count of conspiracy to commit mail and wire fraud, six counts of mail and wire fraud, and two counts of money laundering. A copy of the criminal charges can be found here.

August 21, 2012: The Receiver today (belatedly) filed the quarterly status report with the Court for the period ending June 30, 2012. A copy can be found here.

April 23, 2012: The Court today entered an order approving the settlement with BMW Financial Services.

April 17, 2012: The Court today entered an order regarding Laura Roser’s custody for contempt.

April 13, 2012: The Securities and Exchange Commission today filed a motion for summary judgment, asking the Court to find that adequate proof has been demonstrated that Roser and Brody violated the securities laws so a trial is not necessary. A copy of the motion is attached. The SEC also filed a 72-page memorandum in support of its motion and 23 exhibits. If the motion is granted, it will conclude the case. If the court determines that significant facts are in dispute, a trial date will be set.

April 13, 2012: Roser filed a notice of appeal of the Court’s order sending her to jail for contempt of court.

April 13, 2012: The Court held a hearing today to consider whether Laura Roser had purged herself of contempt. Ms. Roser had surrendered herself to the U.S. Marshal’s office prior to the hearing, pursuant to Court order. At the hearing, the Court ruled that she had not purged herself of contempt and ordered her to remain in custody until she had provided sufficient affidavits and supporting documents to demonstrate compliance with the Court’s earlier orders.

April 12, 2012: The Receiver filed today a copy of the status report for the first quarter of 2012. The report cites one settlement and notes that the Receiver’s primary activities relate to court proceedings and assisting government agencies.

April 3, 2012: The Court today issued an order requiring Laura Roser to surrender to the US Marshal’s office to be incarcerated for her continuing contempt of the Court’s order.

February 13, 2012: The Court denied a motion by Brody and Roser to allow an appeal of the order finding Roser in contempt of court. The ruling says that because no sanctions have been imposed, any appeal of that order is premature.

February 2, 2012: The Court today approved a second interim fee payment of $40,000.00 to the Receiver and his counsel. This is part of the fee application previously granted by the Court.

January 23, 2012: The Receiver today filed his third quarterly status report with the court. The Receiver also filed an application for a second interim award of fees for the Receiver and his attorney.

December 19, 2011: The Court signed an order affirming her prior ruling denying the motion by Roser and Brody to remove the Receiver. A copy of the order can be found here.

December 15, 2011: The Court approved a settlement between the Receiver and the LDS Church, to recover Mason Hill funds that were improperly contributed to the church.

Defendents Patrick M Brody and Laura Roser have petitioned for permission to appeal the preliminary Injunction Order. They are arguing that the investments were not securities.

December 9, 2011: The Receiver has reached an agreement with the LDS church and has filed a motion for the approval of settlement.

November 15, 2011: The Receiver has submitted a Special Interim Report to update The Court and investors on the progress of the Receivership.