UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION

Transcription

1 SECURITIES AND EXCHANGE COMMISSION, UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION Plaintiff, v. RICHARD W. DAVIS, JR., Defendant, and CASE NO. 3:16-CV-285-GCM-DCK RECEIVER S MOTION FOR INSTRUCTIONS AS TO PERMISSIBLE INVOLVEMENT OF RICHARD W. DAVIS, JR. IN LIQUIDATING RECEIVERSHIP ESTATE PROPERTY DCG REAL ASSETS, LLC, et al., Relief Defendants. A. Cotten Wright, the Court-appointed receiver (the Receiver ) for the assets of DCG Real Assets, LLC; DCG Commercial Fund I, LLC; H20, LLC; DCG PMG, LLC; DCG PMF, LLC; Finely Limited, LLC; DCG Funds Underwriting, LLC; DCG ABF Management, LLC; DCG Funds Management, LLC; Davis Capital Group, Inc.; Davis Financial, Inc.; DCG Partners, LLC; DCG Real Estate Development, LLC; Huntersville Plaza Phase One, LLC; Huntersville Plaza Phase Two, LLC; North Lake Business Park, LLC; and Richard Davis Enterprises, LLC (collectively, the Receivership Defendants ), through counsel, hereby presents this Receiver s Motion for Instructions as to Permissible Involvement of Richard W. Davis, Jr. in Liquidating Receivership Estate Property (this Motion ), and in support, respectfully represents as follows: BACKGROUND 1. On June 2, 2016, the Securities and Exchange Commission (the SEC ) filed a civil complaint against Richard Wyatt Davis, Jr. as Defendant ( Davis ) and the Receivership Defendants as relief defendants, initiating this case (the SEC Action ). 1 Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 1 of 15

2 2. On June 2, 2016, Davis signed a Consent, which provides in part that: [Davis] agrees to cooperate with the receiver, including, without limitation, by promptly and fully accommodating any request by the receiver for access to or possession, custody or control of any property or items the receiver deems necessary in fulfilling the scope of the receivership, and by not interfering in any respect, directly or indirectly, with the receiver in the performance of his or her duties. Consent at 7 (emphasis added). 3. On June 3, 2016, the Court entered Judgment as to Davis. The Judgment orders in part as follows: IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that Defendant shall comply with all of the undertakings and agreements set forth therein. Judgment, VIII. The Judgment also states, in part that Defendant, for himself and on behalf of the Receivership Entities, is hereby restrained and enjoined from interfering in any respect, directly or indirectly, with the receiver in the performance of his or her duties. Judgment, X (emphasis added). 4. On June 8, 2016, the Court entered an order in the SEC Action imposing a temporary injunction and appointing the Receiver (the Temporary Receivership Order ). On August 5, 2016 and September 22, 2016 the Court entered Default Judgments as to Certain Relief Defendants and Entry of Permanent Receivership (collectively with the Temporary Receivership Order, the Receivership Orders ). 5. The Receivership Orders direct the Receiver to take custody, control and possession of all funds, property and other assets in the possession or control of the Receivership Defendants and to perform all acts necessary to hold, manage and preserve the value of such assets, including real property assets (the Receivership Assets ), for the benefit of the more than 100 investors in various ventures promoted by Davis through the Receivership Defendants. 2 Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 2 of 15

3 6. Among those assets is property titled to H20, LLC in Grayson County, Virginia (the Property ). The Receiver has engaged realtor Brenda Bonk of United Country Collins and Associates to market the Property. 7. On May 9, 2017, Davis sent an to the Receiver stating that he had identified a prospective buyer for the Property and requesting a finder s fee for his services in facilitating a sale. Exhibit A. The Receiver responded that she did not believe that Davis request for a finder s fee was in keeping with the Consent and requesting that Davis put the prospect in touch with Ms. Bonk. Exhibit B. 8. On May 10, 2017, Davis sent an to the Receiver expressing disagreement with the Receiver s interpretation of the Consent, arguing that he is entitled to work. Exhibit C. Davis also stated that, although his prospect had made an appointment to tour the property on May 11, 2017, the prospect was unwilling to do so unless Davis was permitted to participate in the showing. Id. Davis requested specifically that the Receiver contact his probation officer to authorize Davis to show the Property. 1 Id. The Receiver responded to Davis by thanking him for referring a prospective buyer to her realtor while declining to authorize him to participate in showing the Property. Exhibit D. 9. Throughout the pendency of this case, Davis has communicated with the Receiver and her professionals using the address of RDavis@daviscapitalgroup.com. The Receiver and her attorneys have responded to Davis and served copies of pleadings and orders on him through that same address. At this juncture, the Receiver is concerned that Davis may be using an address tagged to a Receivership Defendant to contact and communicate with third parties regarding the Receivership assets or for other communications that third parties may 1 Davis is awaiting trial on criminal charges based on the many of the same facts that gave rise to the Receivership, U.S. v. Davis, 3:16-CR Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 3 of 15

4 interpret as reflecting communications authorized by the Receiver. 10. The Receiver lacks information as to whether Davis is licensed to sell real property in Virginia or any other state. 11. The Receiver lacks information as to whether the terms of Davis pre-trial detention permit him to travel to Virginia or anywhere outside the Western District of North Carolina. RELIEF REQUESTED 12. Through this Motion, the Receiver requests entry of an Order further detailing what role, if any, Davis is permitted to have in Receivership related activities, including the liquidation of Receivership assets, under the terms of the Receivership Orders and the Judgment. BASIS FOR RELIEF 13. This Motion is based on the Receivership Orders which include provisions that the Court shall exercise exclusive jurisdiction and possession of the assets of the Receivership Defendants; enjoin all persons with notice of the Receivership Orders from interfering with the Receiver in the performance of her duties; and retain jurisdiction for all purposes concerning the Receivership. ARGUMENT 14. The best interests of investors must drive each and every task that the Receiver undertakes in this case. Likewise, maximizing the value of the Receivership Estate is not only a goal, it is a Court-mandated responsibility. To the extent that Davis is aware of prospective buyers for Receivership assets, the Receiver will be the grateful recipient of that information. But in the Receiver s view, there is no place for Davis involvement in the marketing or sale of Receivership assets. 4 Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 4 of 15

5 15. This Receivership case was initiated with Davis voluntary consent as set out in the Consent. Judgment has been entered against Davis in this proceeding, and that Judgment restrains and enjoins Davis from interfering with the Receiver s ability to carry out her Courtordered responsibilities. Meanwhile, Davis is awaiting trial on criminal charges related to the actions that precipitated this Receivership case. 16. To the extent that Davis may be using his daviscapitalgroup.com address to communicate with third parties, the Receiver is concerned that such use could be misinterpreted by recipients as a communication made from or on behalf of the Receiver. Davis does not speak for the Receiver. Nor has Davis informed the Receiver as to his contacts with third parties regarding Receivership assets or sought the Receiver s approval to make such contacts. 17. The Receiver views Davis request for a finder s fee and attempt to insert himself in the process of showing the Property to a prospective buyer as interference running counter to Davis agreement to cooperate with the Receiver and not to interfere with her efforts to carry out her duties. 18. Davis has argued to the Receiver that he is entitled to work. The Receiver does not disagree. However, the Receiver maintains that Davis ability to work is not and cannot be centered on or connected with the liquidation of Receivership property. Rather, the Receiver would encourage Davis to turn his sights and ambitions to other endeavors. 19. These arguments aside, the Receiver recognizes that the Court may take a different view of the appropriateness of Davis involvement in liquidating Receivership assets. In that case, the Receiver requests specific instructions from the Court as to what role Davis is to play and what activities he is authorized to engage in on behalf of the Receivership and directing that he coordinate such activities with the Receiver and her professionals. 5 Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 5 of 15

6 WHEREFORE, the Receiver prays that the Court will enter an Order: 1) Directing Davis to immediately cease all use of any addresses associated with the Receivership Defendants; and 2) To the extent that Davis may be or may have been engaged in attempts to market and sell Receivership assets, ordering Davis to turn over to the Receiver copies of any and all communications related to those efforts as well as providing the names and contact information for any prospective buyers that Davis has identified; or, in the alternative, 3) Outlining any Court-approved activities that Davis may undertake in connection with liquidating Receivership assets and directing that Davis coordinate those activities with the Receiver; and 4) Granting such further relief as is just and proper. This is the 11th day of May, /s/a. Cotten Wright A. Cotten Wright (State Bar No ) Grier Furr & Crisp, PA 101 North Tryon Street, Suite 1240 Charlotte, North Carolina Phone: Fax: Attorneys for the Receiver 6 Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 6 of 15

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15 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION CASE NO. 3:16-CV-285 SECURITIES AND EXCHANGE COMMISSION, v. Plaintiff, RICHARD W. DAVIS, JR., CERTIFICATE OF SERVICE and Defendant, DCG REAL ASSETS, LLC, et al., Relief Defendants. The undersigned hereby certifies that copies of the foregoing Motion for Instructions as to Permissible Involvement of Richard W. Davis, Jr. in Liquidating Receivership Estate Property were served by electronic notification on those parties registered with the United States District Court, Western District of North Carolina electronic case filing system to receive notices for this case, as well as on other parties, as noted below. Richard W. Davis, Jr. Via Patrick R. Costello Securities and Exchange Commission Brian S. Cromwell Sarah F. Hutchins Parker Poe Adams & Bernstein LLP Attorneys for DCG Commercial, LLC and DCG Commercial Holdings, LLC Investors in Receivership Defendants Via online publication only This is the 11th day of May, /s/ A. Cotten Wright A. Cotten Wright Grier Furr & Crisp, PA 101 North Tryon Street, Suite 1240 Charlotte, NC Case 3:16-cv GCM Document 111 Filed 05/11/17 Page 15 of 15