UPDATE: Receiver files Motion to Approve First Interim Distribution on September 3, 2021

On September 3, 2021, the Receiver filed his Motion to Approve First Interim Distribution seeking Court approval to approve an interim distribution to Investor Claimants with approved claims.  The Receiver requested that the Court approve a 40% initial distribution to those Investor Claimants, which would result in a total distribution of approximately $13.2 million.  A copy of the Motion is here.  If approved, the Receiver intends to have distribution checks mailed out within 10 days of the Court’s Order.  As set forth in the Motion, the distribution checks will be made payable to each Investor Claimant based on the source of investment and will be mailed to the addresses provided by the Investor Claimant on their respective Proof of Claim form.

The Receiver anticipates making one or more future distributions as warranted by the case status and ongoing asset recovery efforts.

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On July 21, 2021, the Court entered an Order granting the Receiver’s Claim Determination Motion in its entirety, including the Objection Procedure.  A copy of the Order is available here.  The Order provided that, among other things, the Receiver will send notice to each Claimant notifying them of the Objection Procedure and that any Claimant that disagrees with the Receiver’s determination of their claim must serve a written response to the Receiver within 30 days of that letter.  The failure to serve a timely response shall permanently waive the Claimant’s right to object to or contest the Receiver’s Claim Determination, claim priority, and plan of distribution, and the final claim amount shall be set as the Allowed Amount determined by the Receiver as set forth in the Exhibits attached to the Claim Determination Motion. 

On July 23, 2021, the Receiver mailed out letters to each Claimant notifying them of the Order and the Objection Procedure, and thus any Claimant that disagrees with the Receiver’s determination of their claim is required to serve a written response to the Receiver so that it is received on or before August 23, 2021. 

Once the Objection Deadline passes, the Receiver intends to seek Court approval to move forward with an interim distribution to all Claimants with approved claims and holding the highest priority.

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On June 18, 2021, the Receiver filed his Unopposed Motion to (i) Approve Determination and Priority of Claims; (ii) Pool Receivership Assets and Liabilities; (iii) Establish Objection Procedure; and (iv) Approve Plan of Distribution (the “Claims Determination Motion”).  A copy of that Motion is available here.

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On November 5, 2020, the Court granted the Receiver’s motion to establish the framework for a claims process, including approval of a Proof of Claim Form, notice and publication requirements, and establishment of a claims bar date.  The Receiver subsequently mailed out proof of claim packets and established a Claim Bar Date of February 15, 2021.

On January 29, 2021, Mark A. Kornfeld, Esq., as Receiver (the “Receiver”), filed his Motion seeking Court approval of the sale of the property located at 152 Tetuan Street, Old San Juan, Puerto Rico, 00901 (the “Property”) and also the ability and associated procedures for interested parties to submit a statutory overbid for the Property pursuant to 28 U.S.C. § 2001(b) (Doc. 174) (the “Motion”). The Court entered an Order granting the Motion on March 24, 2021 (Doc. 206).  On March 31, 2021, the Receiver published a notice of the proposed sale (the “Notice of Sale”) in El Nuevo Dia and the Sarasota Herald Tribune.  See Doc. 209.   The Notice of Sale indicated that any interested party had until April 10, 2021 to submit to the Receiver any bona fide offer to purchase the Property pursuant to 28 U.S.C. § 2001(b), which in relevant part required a minimum bid of at least $2.31 million (i.e., at least 10% higher than the proposed sale price of $2.1 million).

The Receiver received four (4) bona fide offers within ten days after the publication of the Notice of Sale.  See Doc. 222.  Pursuant to Paragraph 8 of the Order, the Receiver exercised his sole discretion and business judgment in evaluating the offers, and he ultimately determined to accept the highest offer of $4.15 million submitted by Propiedades Ceiba, LLC – nearly 100% higher than the highest offer received during the previous marketing period.  On May 11, 2021, the Receiver officially closed on the sale of the Property.  After payment of commissions and other statutory closing costs, the sale represents a net recovery of approximately $4.0 million for the Receivership Estate.

Welcome to the website of Receiver, Mark A. Kornfeld.  On March 6, 2020, Mr. Kornfeld was appointed as Receiver in a civil enforcement action, styled Securities and Exchange Commission v. Kinetic Investment Group, LLC et al., Case No. 8:20-cv-00394-WFJ-SPF in the United States District Court for the Middle District of Florida, Tampa Division.

This website has been created to provide convenient access to information about the Receivership, including important updates and select District Court documents. As the Receiver’s work progresses, additional information will be added to this website, including information regarding a plan of distribution to creditors of any assets that are recovered and all forms required by the District Court for participation as a claimant in the distribution process. If you require further information not contained in this website, you may contact us.

On February 20, 2020, the Securities and Exchange Commission (SEC) filed a civil enforcement action in the United States District Court for the Middle District of Florida against defendants Kinetic Investment Group, LLC and Michael Scott Williams (collectively, defendants). In their Complaint, the SEC alleged that the defendants conducted a fraudulent and unregistered securities offering that raised approximately $39 million from several dozen investors located in Florida and Puerto Rico. As set forth further in the Complaint, the SEC also accused Williams of misappropriating at least $6.3 million through undisclosed loans to himself and entities he controlled.  In addition to the defendants, the Complaint also names six relief defendants that received proceeds of the alleged fraud without any legitimate entitlement to the funds: Kinetic Funds I, LLC; KCL Services, LLC d/b/a Lendacy, Scipio, LLC; LF42, LLC; El Morro Financial Group, LLC; and KIH, Inc. f/k/a Kinetic International, LLC.

The SEC sought various forms of relief against the defendants including an asset freeze and the appointment of a receiver to assist in marshalling assets on behalf of creditors, including injured investors. Defendants opposed this relief.

On March 6, 2020, the Court held a hearing on the SEC’s motions and that same day entered an Order appointing Mark Kornfeld as Receiver over Kinetic Investment Group and all Relief Defendants.  Mr. Kornfeld is an attorney with the Buchanan Ingersoll & Rooney PC law firm and his bio is available here. In the Order Appointing Receiver, the Court directed the Receiver to (i) administer and manage the business affairs, funds, assets, and any other property of the defendants and relief defendants; (ii) marshal and safeguard the assets of the defendants and relief defendants; (iii) investigate the manner in which the affairs of the defendants and relief defendants were conducted and institute such legal proceedings for the benefit of the defendants and relief defendants and their investors and creditors as the Receiver deems necessary; and (iv) take whatever actions are necessary for the protection of the investors. The Receiver intends to fulfill his duties and responsibilities as efficiently and effectively as possible.  The District Court overseeing this Receivership has broad powers and wide discretion to determine the appropriate relief.

The Court subsequently approved the Receiver’s motions to retain various professionals to assist him in his duties, including the Quarles & Brady LLP law firm to serve as his counsel.  Jordan Maglich will be serving as Mr. Kornfeld’s lead counsel.