in the united states district court for the ...selectassetreceiver.com/docs/204 - motion to...

RECEIVER’S UNOPPOSED MOTION TO APPROVE MODIFICATION AND EXTENSION OF SETTLEMENT AGREEMENT WITH RICHARD C. GASAWAY AND HIS RELATED ENTITIES - PAGE 1 OF 7

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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF, vs. BRIAN A. BJORK, THE ESTATE OF JOEL DAVID SALINAS, J. DAVID GROUP OF COMPANIES, INC., J. DAVID FINANCIAL GROUP, LP, SELECT ASSET MANAGEMENT, LLC, SELECT ASSET CAPITAL MANAGEMENT, LLC, SELECT ASSET FUND I, LLC, AND SELECT ASSET PRIME INDEX FUND, LLC, DEFENDANTS.

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CIVIL ACTION NO. 4:11 CV - 02830

RECEIVER’S UNOPPOSED MOTION TO APPROVE MODIFICATION AND EXTENSION

OF SETTLEMENT AGREEMENT WITH RICHARD C. GASAWAY AND HIS RELATED ENTITIES

TO THE HONORABLE KEITH P. ELLISON, UNITED STATES DISTRICT COURT:

Receiver, Steven A. Harr (“Receiver”), files this Unopposed Motion to Approve Modification

and Extension of Settlement Agreement with Richard C. Gasaway and His Related Entities (the

“Motion”). In support for approval of the Motion, the Receiver respectfully provides the

following:

I. BACKGROUND FACTS

1. On August 1, 2011, the Securities and Exchange Commission commenced this

action in the United States District Court for the Southern District of Texas against the

Case 4:11-cv-02830 Document 204 Filed in TXSD on 02/27/15 of 6


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Receivership Entities1 alleging, among other things, that Defendants violated several securities

laws.

2. Gasaway Properties, L.P. (“Properties”), is a borrower from Select Asset Prime

Fund LLC (“Prime Fund”) and Select Asset Management LLC (“SAM”). Richard C. Gasaway

a/k/a Dick Gasaway a/k/a RC Gasaway a/k/a Richard Charles Gasaway, individually is a

guarantor of Properties indebtedness to Prime Fund and SAM. Properties, R. Gasaway,

Gasaway Properties, Inc., Gasaway Venture Corp., and Gulfvalve Corp. are or have been

investors in one or more of the Defendants. Collectively, all Gasaway-related entities referred

to in this Motion are referred to as “Gasaway.”

3. On September 11, 2013, the Receiver and Gasaway executed a Settlement and

Release Agreement (the “Settlement”) resolving an ongoing dispute relating to two outstanding

loans issued by the Receivership Entities to Gasaway. A true and correct copy of the Settlement

is attached hereto as Exhibit “A”. While Gasaway lacked the liquid funds to pay the $215,000.00

owed under the Settlement, it granted the Receiver a lien in certain real estate that it promised

to sell no later than December 31, 2014 to fund the Settlement.

4. On September 16, 2013, the Receiver filed his Motion for Approval of Compromise

and Settlement Agreement with Richard C. Gasaway and his Related Entities (the “Original Motion”)

[Dkt. No. 153]. On September 27, 2013, this Court granted the Original Motion in its entirety

[Dkt. No. 159].

5. As of the date of this Motion, the subject real estate has not been sold and the

Settlement has not been funded. Under the terms of the settlement, the Receiver was to take

1 Brian A. Bjork, The Estate of Joel David Salinas, J. David Group of Companies, Inc., J. David Financial Group, LP, Select Asset Management, LLC, Select Capital Management, LLC, Select Asset Fund I, LLC, and Select Asset Prime Index Fund, LLC (collectively, the “Receivership Entities”)



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control of the sale process for the real estate from January 1, 2015 through June 30, 2015 and if

the real estate was not sold at that point, the Receiver would then have the right to foreclose on

the property and take possession. After the Settlement, the Receiver and Gasaway learned that

the finalized plans of the Texas Department of Transportation for construction of what is known

as the Grand Parkway will include the subject real estate, and thus at some point the real estate

will be condemned. As such, it is a certainty that the land will be purchased by the State of

Texas, but the process for the purchase is slow. As well, with the land being subject to the

state’s condemnation process, the ability to sell it is essentially non-existent.

6. The Receiver and Gassaway have discussed the matter and determined that an

extension to December 31, 2015 of Gassaway’s right to sell the real estate under the terms of the

Settlement is in the best interest of the estate. Gassaway is a victim of the Salinas fraud and the

land being used to fund the settlement likely has equity value above the amount due under the

Settlement. In considering his options between foreclosure and the extension discussed herein,

the Receiver believes it is in the best interest of the Receivership Estate and in fairness to

Gassaway as a victim to give him additional time to sell the real estate, pay the Settlement and

obtain any equity value over the amount needed to fund the Settlement.

7. Subject to court approval and based on the foregoing, on February 13, 2015, the

Receiver and Gasaway entered into the First Modification and Extension Agreement

(“Extension Agreement”) which is attached hereto as Exhibit “B”. Pursuant to the Extension

Agreement, Gasaway will be given until December 31, 2015 to sell the subject real estate.

Should it not sell, the Receiver will then have the right to foreclose on the subject real estate as

authorized by the Settlement or present other alternatives to this Court for approval.



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8. This Court previously approved the Settlement. With this Motion, the Receiver

respectfully requests that the Court approve the Extension Agreement.

III. REQUEST FOR

APPROVAL OF THE EXTENSION AGREEMENT

9. In receiverships, federal courts have broad equitable powers enabling them to

fashion appropriate ancillary remedies necessary to grant full relief.2 With this Motion, the

Receiver respectfully requests that this Court apply its broad equitable authority to modify the

previously accepted Settlement with the Extension Agreement.

10. Gasaway’s performance under the Settlement will add $215,000.00 to the

Receivership Estate. While Gasaway has thus far failed to perform, there are reasons beyond

his control and the Receiver believes this matter will be resolved by December 31, 2015.

Moreover, if Gasaway is unable to sell the real estate or otherwise pay the amount due under

the Settlement, the Receiver will still have the right to foreclose on the subject property. As

described in the Receiver’s Tenth Interim Report, it is believed that other matters in the estate

that will take at least until December 31, 2015 to resolve and thus the Receiver believes waiting

for such funds until December 31, 2015 is both reasonable and will not incur any additional

expense to the estate.

11. The Receiver believes the approval of the Extension Agreement is in the best

interests of the Receivership Estate. The Receiver requests the Court grant this Motion by

signing the appropriate Order accompanying this motion.

2 See SEC v. Safety Fin. Serv., Inc., 674 F.2d 369, 372 (5th Cir. 1982); SEC v. Manor Nursing Ctrs., 458 F.2d 1082, 1103-04 (2d. Cir. 1972).



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12. The Securities and Exchange Commission, as Plaintiff in this matter, has no

objection to the relief sough in this Motion. Gasaway joins the Receiver in the request for the

relief stated herein.

IV. CONCLUSION

WHEREFORE, the Receiver prays that the Court enter an Order in the form submitted

with this Motion, or for substantially the same relief in such form as the Court may find just and

proper.

DATED: February 27, 2015 Respectfully submitted,

By: /s/ Steven A. Harr Steven A. Harr Texas Bar No. 09035600 MUNSCH HARDT KOPF & HARR, PC 700 Milam, Suite 2700 Houston, Texas 77002 (713) 222-1470 (telephone) (713) 222-4047 (telecopy) E-Mail: [email protected]

ATTORNEY IN CHARGE FOR RECEIVER

OF COUNSEL: MUNSCH HARDT KOPF & HARR, PC 700 Milam, Suite 2700 Houston, Texas 77002-2732 Sameer S. Karim SDTX Bar No. 24076476 700 Milam, Suite 2700 Houston, Texas 77002-2732 Tel: (713) 222-4050 Fax: (713) 222-5850



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CERTIFICATE OF CONFERENCE

On February __, 2015, I conferred with Tim McCole and he stated that the Securities and Exchange Commission and the Commission is not opposed to the relief sought in this motion.

/s/ Sameer S. Karim x Sameer S. Karim

CERTIFICATE OF SERVICE

I certify that a copy of the foregoing was filed electronically with the Clerk via the CM/ECF system. Notice of this filing will be sent to all parties by operation of the Court’s electronic filing system.

Houston, Texas, this 27th Day of February 2015.

/s/ Sameer S. Karim x Sameer S. Karim


EXHIBIT A

Case 4:11-cv-02830 Document 204-1 Filed in TXSD on 02/27/15 Page 1 of 10

EXHIBIT B


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