UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION Legal notice about a class action settlement involving the America s MHT Medical Home Team program. A court authorized this notice. This is not a solicitation from a lawyer. A proposed settlement has been reached with Ascentium Capital LLC, Univest Capital, Inc., and Cliff McKenzie in a class-action lawsuit about the America s MHT Medical Home Team program and whether physicians were defrauded, resulting in financial losses and debts. The settlement will mean that those listed as guarantors of MHT-related debt owed to Ascentium Capital and Univest will be released from such guaranties and will agree to pay lower amounts. The settlement will also pay money to those listed as MHT-related guarantors of Balboa Capital. A personalized summary notice letter lists the benefits for each guarantor. If you are included in the settlement, your legal rights will be affected whether you act, or don t act. Read this notice carefully. YOUR RIGHTS AND OPTIONS: DO NOTHING ASK TO BE EXCLUDED OBJECT GO TO A HEARING Receive the benefits listed in your letter and described in this notice. Give up rights to sue Ascentium Capital, Univest, or Cliff McKenzie. Keep rights to sue America s MHT, Balboa Capital, and Scott Postle. Get no benefits. Keep rights to sue any of the defendants. Write to the Court about why it should reject the settlement. Ask to speak in Court about an objection. These rights and options and the deadlines to exercise them are explained in this notice. Benefits will be provided if the Court in charge of this case decides to approve the settlement, and after any appeals are resolved. Please be patient. Several defendants have not agreed to settle the class action: Balboa Capital Corporation, America s MHT, Inc., and Scott Postle. The settlement does not affect your rights against them. Outstanding MHT-related guaranty obligations to Balboa Capital are not affected.
BASIC INFORMATION...3 1. Why was this notice issued?...3 2. What is a class action?...3 3. Who are the Defendants and Plaintiffs?...3 4. What is this class action about?...3 5. Which Defendants agreed to settle and why?...3 6. Which Defendants have not agreed to settle?...3 WHO IS IN THE SETTLEMENT...3 7. How do I know if I am part of the settlement?...3 8. Who is in Subclass One?...4 9. Who is in Subclass Two?...4 10. Who is in Subclass Three?...4 11. Who is in Subclass Four?...4 12. Are there exceptions to being included?...4 THE SETTLEMENT BENEFITS WHAT YOU GET...4 13. What does the settlement provide?...4 14. How much MHT-related debt will I agree to repay?...4 15. What are the modified repayment terms?...5 16. How do I get the settlement benefits?...5 17. When will I get my settlement benefits?...5 18. What else do I get?...5 19. What do I give in exchange for settlement benefits?...5 EXCLUDING YOURSELF FROM THE SETTLEMENT...5 20. How do I get out of the settlement?...5 21. If I don t exclude myself, can I sue for the same thing later?...6 22. If I exclude myself, will I get benefits from this settlement?...6 THE LAWYERS REPRESENTING YOU...6 23. Do I have a lawyer in this case?...6 24. How will the lawyers be paid?...6 OBJECTING TO THE SETTLEMENT...6 25. How do I ask the Court to reject the settlement?...6 26. What s the difference between objecting and asking to be excluded?...7 THE COURT S FAIRNESS HEARING...7 27. When and where will the Court decide whether to approve the settlement?...7 28. Do I have to come to the hearing?...7 29. May I speak at the hearing?...7 IF YOU DO NOTHING...7 30. What happens if I do nothing at all?...7 GETTING MORE INFORMATION...7 31. How do I get more information about the settlement?...7 Page 2
1. Why was this notice issued? BASIC INFORMATION A federal Court authorized this notice. You have a right to know about your legal rights in a proposed partial settlement of this class action. Chief Judge Barbara M.G. Lynn of the United States District Court for the Northern District of Texas, Dallas Division, is overseeing the case which is known as Melby et al v. America s MHT, Inc., et al, Case No. 3:17-CV-155-M. If the Court approves the settlement, and any appeals are resolved, compensation will be applied and/or distributed. 2. What is a class action? People who sue are called the Plaintiffs, and the people they sue are called the Defendants. In a class action, people called Class Representatives (in this case, Drs. Derek Melby, Danilo Policarpio, David Guillot, and Jaideep Patel) sue on behalf of people (called a Class or Class members ) with similar claims. One court resolves the issues for all Class members, except those who exclude themselves. 3. Who are the Defendants and Plaintiffs? In this class action, the Defendants are Ascentium Capital LLC, America s MHT, Inc. ( MHT ), Balboa Capital Corporation, Cliff McKenzie (a former employee of Ascentium), Scott Postle (a former officer of America s MHT), and Univest Capital, Inc. The Plaintiffs are listed as guarantors of MHT-related debts. 4. What is this class action about? The class action claims that the Defendants defrauded the Plaintiffs causing financial losses and debts. The claims stem from how MHT s Medical Home Team program ( MHT Program ) was marketed, how licenses for MHT were financed, how the MHT Program was operated, and the MHT Program s ultimate failure. The Plaintiffs were listed as having guaranty obligations on the unpaid debts owed to the financial institution Defendants. The Plaintiffs claim to be victims of a fraudulent Ponzi scheme, while the Defendants say the debts and guarantees are valid, and that the MHT Program business simply did not perform as well as hoped. America s MHT filed for bankruptcy in May 2017. 5. Which Defendants agreed to settle and why? The Court did not decide in favor of the Plaintiffs or the Defendants. Instead, some Defendants agreed to settle: Ascentium Capital, Univest Capital, and Cliff McKenzie. They avoid the cost of a trial, and the people affected will get compensation. The settlement does not mean that they did anything wrong. The Class Representatives and their attorneys think the settlement is best for all Class members. 6. Which Defendants have not agreed to settle? The class action will proceed against Balboa Capital, Scott Postle, and America s MHT. The settlement does not affect Class members rights against these Defendants, nor does it affect any obligations Class members may owe to Balboa Capital. WHO IS IN THE SETTLEMENT To see if you can get benefits from this settlement, you first must decide if you are a Class member. Note: The settling Defendants used their best efforts to mail a notice to those included. 7. How do I know if I am part of the settlement? You are a Class member in the settlement if you are currently listed in Ascentium s, Univest s, Balboa s, and/or MHT s books and records (including without limitation MHT s bankruptcy schedules) as a Guarantor and/or as an owner of a Doctor LLC. Doctor LLCs are entities associated with the MHT Program that allegedly owe debts to the financial institution defendants. The Plaintiffs are listed as guarantors of the debts of the Doctor LLCs. The settlement breaks the Class down to four different subclasses, which determine your compensation under the settlement: 3
8. Who is in Subclass One? Subclass One is every Class member who (a) is not a Guarantor of a Univest IPA but (b) is a Guarantor of an Ascentium IPA with (i) a book date of January 1, 2016 or later as stated in Ascentium s books and records, and (ii) a balance outstanding on August 31, 2017. An IPA is an Installment Payment Agreement relating to the MHT Program. 9. Who is in Subclass Two? Subclass Two is every Class member who (a) is a Guarantor of a Univest IPA and (b) is also a Guarantor of an Ascentium IPA with (i) a book date of January 1, 2016 or later as stated in Ascentium s books and records, and (ii) a balance outstanding on August 31, 2017. 10. Who is in Subclass Three? Subclass Three is every Class member who is a Guarantor of an Ascentium IPA with (i) a book date of December 31, 2015 or earlier as stated in Ascentium s books and records, and (ii) a balance outstanding on August 31, 2017. 11. Who is in Subclass Four? Subclass Four is every Class member who is a Balboa Guarantor but not a Univest Guarantor or an Ascentium Guarantor. 12. Are there exceptions to being included? The Class excludes (a) people who opt out (see Par. 20 below); and (b) people who (i) received more than $25,000.00 from MHT (or entities affiliated with MHT) through referral fees and/or compensation not based on the profitability of their Doctor LLC, or (ii) met with Ascentium personnel in April 2015, December 2016, or February 2017 to discuss funding for the MHT Program. THE SETTLEMENT BENEFITS WHAT YOU GET 13. What does the settlement provide? Members of Subclass One, Subclass Two, and Subclass Three will be released from any obligation to guarantee unsatisfied debts of Doctor LLCs owed to Ascentium and/or Univest. Instead, these Class members will agree to pay lower amounts monthly for a fixed term or in a lump sum. Subclass Four members will receive a cash payment from the defendants who have agreed to settle. Any MHT-related obligations and payment terms between members of Subclass Four and Balboa will not be affected. Ascentium will also pay lawyers fees, costs, and expenses (see Par. 24 below) plus administration expenses. The settling Defendants will release Class members from certain claims (see Par. 19 below). A Stipulation of Settlement, available at www.melbymhtsettlement.com, describes all the details. 14. How much MHT-related debt will I agree to repay? Personalized letters were mailed that provide the calculated amounts specific to each Class member. In exchange for being released from guaranteeing unpaid MHT-related debt owed to Ascentium and/or Univest: Members of Subclass One and Subclass Two will owe the lesser of (i) $85,900.50 (75% of the total of all monthly payments due under one Ascentium IPA covering the purchase of one MHT license in 2016: 0.75 x $114,534.00 = $85,900.50) and (ii) 80% of the total of all payments remaining due under the original terms of all Ascentium and Univest IPAs for which such subclass member is listed as a Guarantor. Members of Subclass Three will owe the lesser of (i) $114,534.00 (100% of the total of all monthly payments due under one Ascentium IPA covering the purchase of one MHT license in 2016: 1.00 x $114,534.00 = $114,534.00) and (ii) 80% of the total of all payments remaining due under the original terms of all Ascentium and Univest IPAs for which such subclass member is listed as a Guarantor. Payments to members of Subclass Four shall be equal to $6,500 x (a/b) x (1/c), where a = the total of all payments due under the original terms of all Balboa IPAs for which such member is listed as a Guarantor (collectively, the 4
Member s IPAs ), b = $114,534 (the total of all monthly payments due under one Ascentium IPA covering the purchase of one MHT license in 2016), and c = the total number of persons listed in Balboa s books and records as Guarantor(s) of the Member s IPAs. 15. What are the modified repayment terms? Members of Subclass One and Two must pay the amount described in their personalized letter (which the calculations in Par. 14 dictate) in sixty (60) monthly installments, beginning on the 30 th day after the Effective Date (See Par. 17 below). Members of Subclass Three must pay in forty-eight (48) monthly installments, beginning on the 30 th day after the Effective Date. You will be informed of the Effective Date when that date is known. The settlement also affords a single payment option, whereby Class members, instead of making installment payments, would pay 80% of the amount identified in their personalized letter, on or before the 30 th day after the Effective Date. 16. How do I get the settlement benefits? If you received a notice mailing, you do not need to take any action to receive benefits. The Defendants used best efforts to identify Class members to send a notice in the mail. If you did not receive one, but you believe you are a Class member, call 855-719-5975 as soon as possible. 17. When will I get my settlement benefits? The benefits will be provided after the Effective Date of the settlement. This date could be as soon as 30 days after the Court grants final approval of the settlement, or later the day that any appeals are finally resolved. Judge Lynn will hold the final approval hearing on March 12, 2018 (see the section The Court s Fairness Hearing below). It s always uncertain whether anyone will appeal, and whether appeals can be resolved, which can take time. 18. What else do I get? The Settlement also protects members of Subclass One, Two, and Three from negative credit reports prior to the Effective Date and from attempts to collect the unpaid MHT-related debt, and requires that any lawsuits seeking collection of MHT-related debts against Subclass One, Two and Three will be dismissed. The Stipulation of Settlement explains the details of these provisions. 19. What do I give in exchange for settlement benefits? Class members will release the settling Defendants from claims described carefully in the Stipulation of Settlement, and particularly in sections 15-16, 21, and 23-26 of the Stipulation of Settlement. Class members are also required to dismiss MHT-related lawsuits against the settling Defendants, and to take certain actions to protect the settling Defendants against litigation with non-settling Defendants as described in section 67 of the Stipulation of Settlement. A complete copy of the Stipulation of Settlement can be obtained at www.melbymhtsettlement.com. Talk to Class Counsel (See the section on The Lawyers Representing You below) or your own lawyer if you have questions about these or any other important topics. EXCLUDING YOURSELF FROM THE SETTLEMENT If you don t want settlement benefits, but you want to keep the right to sue the settling Defendants about MHTrelated claims, then you must exclude yourself from ( opt out of ) the Settlement Class. 20. How do I get out of the settlement? To exclude yourself from the settlement, you must send a letter by mail saying that you want to be excluded from the Melby v. America s MHT Settlement Class. Include the case number (No. 3:17-CV-155-M), your full name, address, telephone number, and your signature. You can t exclude yourself on the phone, by email, or at the website. You must mail your request for exclusion postmarked by February 26, 2018 to: America s MHT Settlement Exclusions P.O. Box 2005 Chanhassen, MN 55317-2005 5
21. If I don t exclude myself, can I sue for the same thing later? No. You must exclude yourself to start or continue a lawsuit against the settling Defendants about MHT Programs. Remember, the exclusion deadline is February 26, 2018. 22. If I exclude myself, will I get benefits from this settlement? No. And it is important to understand that if there are other Class members listed as guarantors of the same Doctor LLC that you are listed as a guarantor of, the settling Defendants may seek the full unpaid balance of the Doctor LLC s debt from you, if you opt out and those other listed guarantors do not. 23. Do I have a lawyer in this case? THE LAWYERS REPRESENTING YOU The Court appointed lawyers to represent you and other Class members as Class Counsel : E. Leon Carter and Joshua J. Bennett of Carter Scholer PLLC in Dallas, TX, (telephone 214-550-8188), Paul Crouch of The Crouch Firm PLLC, in Flower Mound, TX, (telephone 817-714-9820), and Robert E. Couhig, Jr. and Donald C. Massey of Couhig Partners, LLC in New Orleans, LA (telephone 504-588-1288). You do not have to pay Class Counsel. If you want to be represented by your own lawyer, and have that lawyer appear in court for you in this case, you may hire one at your own expense. 24. How will the lawyers be paid? Class Counsel will ask the Court to Order the settling Defendants to pay between $2,000,000 and $4,500,000 in attorneys fees, costs and expenses. The settling Defendants will not oppose a request up to the lower amount of fees, costs and expenses indicated above. While the settling Defendants have not agreed to pay fees above the lower amount, Ascentium will pay the fees, expenses, and awards that the Court orders. These payments will not reduce the amount distributed to Class members. Ascentium will also separately pay the costs to administer the settlement. OBJECTING TO THE SETTLEMENT If you object to the settlement, you can ask the Court to reject it. The Court will consider your views. 25. How do I ask the Court to reject the settlement? If you don t want the Court to approve the settlement you must submit a written objection that identifies the case, Melby v. America s MHT and send a copy to Class Counsel as noted below. Be sure to include your full name, address, telephone number, your signature, the specific reasons why you object to the settlement, with legal and factual support for each objection, and indicate whether you or your attorney will appear at the fairness hearing (See the section on the Court s Fairness Hearing below). If you or your attorney will appear at the fairness hearing, also include the following: name, address, bar number and telephone number of your attorney; list of any witnesses you intend to call at the fairness hearing, including the address of each witness and a summary of his or her proposed testimony; and copies of all exhibits you intend to introduce at the fairness hearing. File the objection with the Clerk of the Court at the address below by February 26, 2018: Note: You may send it by mail, but it must be received and filed by the Clerk by this date: COURT Clerk of Court United States District Court 1100 Commerce Street, Room 1452 Dallas, TX 75242 Mail a copy of the objection to Class Counsel at the following address so that it is postmarked by February 26, 2018: CLASS COUNSEL Donald C. Massey Couhig Partners, LLC 1100 Poydras Street, Suite 3250 New Orleans, LA 70162 6
26. What s the difference between objecting and asking to be excluded? Objecting is telling the Court that you oppose approval of the settlement. You cannot object if you exclude yourself (Par. 20-22 above) because the case no longer affects you. THE COURT S FAIRNESS HEARING The Court will hold a hearing to decide whether to approve the settlement. You may attend and you may ask to speak. 27. When and where will the Court decide whether to approve the settlement? The Court scheduled a Fairness Hearing at 9:00 am on March 12, 2018, in Courtroom 1570 of the Earle Cabell Federal Building at 1100 Commerce Street in Dallas, Texas. At this hearing, the Court will consider whether the settlement is fair, reasonable, and adequate. The Judge will also listen to people who have asked to speak about an objection according to Par. 25 above. The Court may also decide how much to award Class Counsel. At or after the hearing, the Court will decide whether to approve the settlement, but exactly when is unknown. The hearing may be moved to another day, time, or location, so check the website below for updates. 28. Do I have to come to the hearing? No. Class Counsel will answer questions that the Judge may have. But, you are welcome to come at your own expense. If you send an objection, you don t have to come to Court to talk about it. If you filed and mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it s not necessary. 29. May I speak at the hearing? If you submitted an objection to the settlement and indicated you want to speak at the Fairness Hearing (See Par. 25), you may do so. You cannot speak at the hearing if you exclude yourself. 30. What happens if I do nothing at all? IF YOU DO NOTHING If you do nothing, you ll receive the benefits described in your personalized notice letter. And, unless you exclude yourself, you won t be able to sue the settling Defendants for MHT-related claims. GETTING MORE INFORMATION 31. How do I get more information about the settlement? This notice summarizes the proposed settlement. More details are in a Stipulation of Settlement, which is available at www.melbymhtsettlement.com. If you have questions, visit the website, or call 855-719-5975 or write to America s MHT Settlement, P.O. Box 2005, Chanhassen, MN 55317-2005. Do not contact the Court. 7