Ed Okun Victim Speaks Out: Victim’s Impact Statement

One of the original victims of Ed Okun’s 1031 TaxGroup embezzlement ponzi scheme speaks out about her Victim’s Impact Statement and her gratitude for.  .  . us. Thank you and may the best possible outcome be realized~

Comment From An Okun Victim

“You said it all in a nutshell, about a nut. Thank you, Dean’s Guide. You’ve been a great resource for we victims of Okun, in that were it not for your website many of us wouldn’t have connected with one another and had each other’s support over the last three years.

Thankfully the US Attorney’s office flew several of us to Virginia to give our Victim’s Impact Statements at Okun’s sentencing hearing, which afforded a few of us the opportunity to meet one another. It haunts many of us to this day wondering how many victims out there may STILL be unaware of what’s transpired. They moved, they’re in retirement facilities, they died, whatever may have happened they were unreachable by the court system and therefore have only known their financial loss without answers.

We’ve yet to realize national press coverage of this horrendous white collar crime committed upon us non-investors, which could so easily happen to anyone else. A heed of warning to anyone considering utilizing the IRS’ 1031 Exchange rule…..don’t.

Again, thank you Dean’s Guide for your coverage!”

Are You Going To Allow Ed Okun To Get Away With This?

Chicago Sun-Times published this deansguide article 2-10-10

Ed Okun the 1031 Tax Group convicted felon is at it again. He now has a website, freeokun.com, that is ranked #1 on page 1 of a Google search for the keywords “Ed Okun.” If you lost your life savings to this man and are not seeing any of your restitution monies, you may want to correct the record. Please tell us your story and refute the idea that Okun is innocent.

Here is the landing page for freeokun.com word for word- are you ready to tell the world it is garbage?

Ed’s Story

Ed Okun was living his dream.  A native born Canadian, he was a self-made, multi-multi millionaire, on a trajectory to reach the Forbes 400. Of course, as a successful businessman, Ed had a full set of executive trappings and “toys” : a couple of corporate jets, a helicopter, a summer home on 30 waterfront acres in New Hampshire, a waterfront home in Miami Beach, along  with a 106’ Broward motor yacht (complete with full-time professional crew).  When his business took him to Indianapolis in 1999, he even sponsored an Indy race car in 2005 which placed 14th in the Indy 500.

Ed’s special talent was recognizing potential opportunities in distressed Real Estate, acquiring title to the property then adding capital and vision.  He thus turned “losers” into “winners”, which he then syndicated to pools of investors to whom he offered and usually provided the necessary operating management services, and earned substantial profits for all (including himself).”

FreeOkun.com: Website Espousing Okun’s Innocense

Acting like a Rhinoceros in a rainstorm, the government proceeded to completely muddy Okun’s business operations by seizing all the records which caused massive transactional defaults in the QI business and destroyed Okun’s outside business as well as stopping the cash flow and refinancing efforts that would have kept all the businesses running smoothly, while the stolen funds were being identified and recovered.”   –Passage from FreeOkun.com

As if things could get any weirder and sadder, a new website espousing Ed Okun 1031 Tax Group scam artist’s innocence and has emerged.  The convicted felon, who was found guilty of bilking aka stealing $160 million in investor funds, was presumed long gone. That is not true if you read this site.

Warning

For those victims who have not read this diatribe, brace yourself for the garbage you are about to read: FreeOkun.com

Okun Sentenced to 100 Years: Guilty on 23 Counts of Fraud

The final chapter is over for the prosecution portion of the Ed Okun 1031 Tax Group rip off. The victims continue to watch their restitution go down the drain but in a show of force Ed Okun, the architect of a $126 million ponzi scheme, was sentenced to 100 years in prison today. Okun’s lawyers were seeking a sentence of 10-15 years. Thankfully Okun’s attorneys had no power in making that sentence a reality.

The Richmond Dispatch Times article.

The article that started it all 1031 Advance Private Exchange Company Missing In Action In Silicon Valley.

Top deansguide Ed Okun articles from the archives:

http://deansguide.wordpress.com/2007/06/20/one-of-the-350-victims-of-ed-okuns-bankrupt-1031-exchange-empire-speaks-outthe-most-compelling-case-yet-for-action-to-be-taken/

http://deansguide.wordpress.com/2009/03/19/okun-juror-speaks-out-okun-guilty-could-face-400-years-deansguide-odyssey-ends/

http://deansguide.wordpress.com/2009/06/23/usa-vs-ed-okun-amended-preliminary-restitution-report/

http://deansguide.wordpress.com/2009/02/14/ed-okun-victim-cautions-landamerica-victims-challenges-government-admonishes-1031-exchange-industry/

http://deansguide.wordpress.com/2008/04/18/mystery-caller-claims-okun-broke-without-representation-gordon-gecko-a-cautionary-tale/

http://deansguide.wordpress.com/2007/06/29/ed-okun-promises-to-make-good-is-this-a-checks-in-the-mail-statement/

Thanks to Leanne Follis for her timely tip to the Okun verdict. Here is Leanne’s comment:

Dean,
Have you seen this?
http://www2.timesdispatch.com/rtd/news/local/article/OKUNGAT04_20090804-142201/283992/

Ed Okun.. sentenced to 100 years!!! Finally, some justice. Now we wait to see Lara Coleman and the
others to rec. their new sentences, what they pled to.

Check it out!!!

from: a former employee

Class Action Court’s Final Approval of Pending Ed Okun Settlements October 7

Notice of disclosure: I am not an attorney nor am I part of the proceedings in this case. Please perform your own due diligence when looking for dates, times, and announcements on the Ed Okun case. If you reference Gearld McHale’s blog (link below) you will find all appropriate information.

The Ed Okun 1031 Tax Group proceedings continue as the restitution news continues to it’s conclusion. Trustee Gerald Mchale’s newsletter #16 contains  the following notice:

“In major procedural areas, the bankruptcy court has set hearings (i) on approval of the disclosure statement for August 13, and (ii) confirmation of the Plan for October 7.  The class action court will hold a hearing on final approval of the pending settlements, and certification of the class for purposes of approving those settlements, on October 7 as well. This will hopefully lead to the ability to make distributions during the calendar year 2009 if these proceedings are successfully concluded.”

Date #1 August 13: Approval of Disclosure Statement

The bankruptcy court has set hearings (i) on approval of the disclosure statement for August 13.

Date #2 October 7: Hearing Final Approval of Pending Settlements

The class action court will hold a hearing on final approval of the pending settlements, and certification of the class for purposes of approving those settlements, on October 7 as well.


USA vs. Ed Okun: Amended Preliminary Restitution Report

bank vault

The 1031 Taxgroup Ed Okun ponzi scheme rip off continues to baffle and frustrate those victims who have endured the worst experience of their financial lives. The continuing saga of restitution took a new turn with a newly amended government preliminary restitution report. If you are a victim of Ed Okun’s 1031 Tax Group fraud, this is a document you should read and familiarize.

Gearld McHale’s Trustee Tax Group Notice

The following is a link to a pdf file for the government’s amended preliminary report as to restitution made available on www.trustee1031taxgroup.com. Please read this document, released on June 9, 2009:

Click on Government’s Amended Preliminary Report as to Restitution follow this link to bottom link click on (orange) “linked hereto is the Order of the criminal court dated June 9,2009″ for the report. Best of luck and our thoughts are with you all.

Okun Juror Speaks Out! Okun Guilty Could Face 400 Years: deansguide Odyssey Ends

FoxBusiness.com published my 500th article on 3-19-09

The following is an amazing comment sent to deansguide from a person claiming to be one of the  Ed Okun jurors in the Ed Okun criminal trial. The often sad and terrible case of Edward Okun has just ended in a courtroom in Richmond, Virginia. The verdict: GUILTY!

Editor’s Note: I became aware of Ed Okun through a title insurance source who tipped me to the fact that a very nasty scandal was about to hit a number of investors in Silicon Valley in April of 2007. That tip led to my participation as one of the leading information sources for the Ed Okun ponzi case. In that time the following ocurred:

  • I met 16 of the original 350 Trainwreck members with Elizabeth Callanan leading the charge of information and a true force behind much of my writing
  • I  consulted with  Mike Maiello Forbes Magazine editor on the case
  • My mystery caller, from Miami, claimed to have inside Okun information (which he did) kept in contact with me throughout the proceedings
  • I was threatened by a powerful New York law firm where one of the principles had a very shady past
  • I was threatened over the phone by an unknown caller who claimed to be “connected”
  • I was approved as one of the only blogs, by the US Attorney’s office in Virginia, to move information forward regarding dates and times. This was the work of my good friend Elizabeth
  • I highlighted 3 Okun victims who lost their life savings and attempted to provide new information
  • I wrote upwards of 70 articles on the Okun case and surrounding path of wreckage in the number of lives effected, savings stolen, and retirements ruined

Okun Guilty

Although the laundry list of charges include, according to the Associated Press story, 23 counts of fraud, money laundering, bulk cash laundering, and making false statements, the following comment really says it best:

Christy Steensma
csteensma@aol.com
67.133.245.6

I served as a juror on the Edward Okun case in the U.S. Eastern District Court of VA. While we (the jury)found him guilty of all charges today 3/19/09, it was hard watching Okun as the verdicts were read. I am now able to see all of the stories that are out there about him and all the damage he has done to so many people. It helps verify that the jury made the right decision based on the evidence we were presented in court. I know that many lives were ruined, but am glad to know that I played a role in stopping him from harming anymore people.

Okun Victim Speaks Out on LandAmerica: 1031 Exchanger’s Warning A Must Read

Due Diligence Warning: The following article is in it’s entirety a comment from a deansguide reader. I am neither an attorney or practicing investment professional. I support the victims of any 1031 exchange debacle yet the following are the opinions and thoughts of Beth Callanan solely and not necessarily supported in it’s entirety by dean guadagni or deansguide–but if you have read this blog you understand my thoughts on the 1031 industry. When considering any investment, always perform your due diligence first and protect yourself at all times.

Important Note: I assume and have seen some evidence that many 1031 exchange companies are viable, honest, and worthy companies. Not all 1031 exchangers or Qualified Intermediaries are suspect. Many people have built their life and reputation in this industry. It is the sleaze bags like Ed Okun that crush the good name of these other hard working business people.

*President elect Obama please pay attention while you are trying to fix Wall Street consider fixing this industry too.

My #1 Question: While reading this incredible comment sent to deansguide consider the one question I have asked but has never been answered. Why are many exchange companies allowed to invest exchanger monies when their sole purpose as a Qualified Intermediary is purportedly to simply execute the process of an exchange?

What is easily the longest, most detailed and greatest comment in the history of this blog, Beth Callanan one of the 350 Ed Okun 1031 Tax Group Victims, provides a MUST READ for any investor currently in a 1031 exchange or anyone consider this instrument.

What you are about to read will shock you, it will sadden you, it will anger you, and it will have your head shaking in disbelief. Normally I edit such long comments. But in this case I want to give Beth’s comment the full benefit. The only editing of this text was to underline, bold, or change font colors to bring out information.

———————————–

Beth Callanan’s comment:

“When will the IRS and the US Department of Justice (which, I understand, oversees bankruptcy courts) step up to the plate and rectify through regulation and reform the ongoing pillaging of innocent 1031 exchange victims first by unscrupulous 1031’s (or hilariously misnamed “qualified” intermediaries) and then by the bankruptcy courts wherein they all seek refuge once they have absconded with (Southwest Exchange, the 1031 Tax Group) or squandered (LandAmerica, the most recent case) the exchange funds entrusted to them? The following excerpts from documents filed in relation to the “bankruptcy” of LandAmerica’s 1031 are all too familiar and the fate of those exchangers all to painfully obvious to those of us who have already been there.

1031 Exchangers should beware:

1) Not to be lulled into assuming that the 1031 business of a corporation or entity whose other functions (title company, insurance, banking) are otherwise subject to federal regulation is also subject to regulation or oversight. Like LandAmerica, the corporate structure is such that the 1031 aspect is sufficiently separated to NOT be subject to such regulation.

2) Not to expect that any so-called “fidelity bonds” (endorsed by the FEA) presented to unsuspecting exchangers as assurance of the security of their funds in the event of “error or ommission” or criminal malfeasance, even where the face value greatly exceeds the amount of their exchange fund deposits, will be available to them to cover any loss of their funds since policies pay the 1031 (and become part of the “estate” in any bankruptcy), not the exchanger, and in any case the insurers will insist that the “per occurrence” terminology refers to the total loss of funds, not just their individual funds. (Since exchangers can’t possibly know the total amount of funds on deposit with the 1031, they can’t possibly know if the face value of coverage is adequate to cover them and, if the funds go to a bankruptcy estate, they can expect that the total will go to cover “administrative fees” of that court in any case.)

3) that even a segregated account may not protect them. While posters to this site have discussed the advisability of insisting that your exchange funds be deposited in a segregated (NEVER COMMINGLED!) account associated with your name and Tax ID number, and suggested that any transfers require the signature of your attorney or a bank officer (to implicate the bank in the liability for any improper transfers), as is clear from LandAmerica’s filings (and the bankruptcy court’s track record in the Okun 1031 embezzlement), the court may nevertheless insist that your exchange funds are property of the bankruptcy estate and thus available to pay its own “adminstrative fees.”)

4) that their funds are deposited in secure bank accounts and not invested at the discretion of the 1031 in any other money making scheme (the supposed benefit of which the exchanger will never see in any case).

5) even deposit in a banking institution is problematic since the FDIC coverage limit, were the bank to go under (an increasingly likely possibility in this economic climate), is $250,000 per depositor. If the 1031 is the “depositor” then any exchange funds in their name are clearly at risk since they’d be expected to have millions on deposit at any given time — and if the exchanger is considered the depositor anything over the FDIC limit is at risk. How does the FEA propose to protect exchangers given that scenario?

6) bankruptcy court will almost certainly guarantee the absolute loss of their funds. Rather than construing exchangers of 1031’s in bankruptcy as victims of negligence, malfeasance or criminal activity or their exchange funds as “held in trust” and therefore exempt from inclusion in debtors’ estates (as the exchange agreements in the case of Okun’s 1031 Tax Group explicitly stated), they have so far relegated exchangers to the status of “unsecured creditors” or investors and thus the last in line to receive any of the funds actually retrieved from the increasing number of 1031 failures.

The bankruptcy process is beyond broken and in need of reform. So far (18 months into it), the costs of Okun’s having put his 1031’s into bankruptcy are $24 million against which less than $2 million has been retrieved from the liquidation of his various “assets.” (The court will claim that it has “retrieved” $10 million, but nearly $8 million of that amount were exchange funds held by a bank in Colorado that Okun had not managed to steal – the costs of the court action to seize those being among the “admin fees” exchangers funds have already been used to partially offset adding the grossest insult to that injury!)

Excerpts from recently filed LandAmerica documents:
(anything in italics are my notes — boldfacing was added by me for emphasis)

From the affadavit of G. WILLIAM EVANS, CHIEF FINANCIAL OFFICER OF LANDAMERICA FINANCIAL GROUP, INC. AND VICE PRESIDENT
OF LANDAMERICA 1031 EXCHANGE SERVICES, INC., IN
SUPPORT OF CHAPTER 11 PETITIONS AND FIRST DAY PLEADINGS

Footnote page 10 (of 17):
3 LES expects that there may be competing claims made against and disputes regarding the Exchange Funds (especially those that have been commingled), including whether such funds constitute property of the estate. LES intends to seek a determination from the Court as to the appropriate characterization of such funds.

(Note to potential exchangers – be sure your funds are in SEGREGATED ACCOUNTS, and not allowed to be commingled, but also note that even those are segregated are not assured protection unless some signature other than the 1031 is required to transfer them — ideally a bank officer’s, so if they are moved improperly the bank’s assets are liable to cover your loss. However, in another cautionary development the outcome of which may put ALL exchange funds at risk, even those in traceable segregated accounts, LES in its bankruptcy petition has apparently already made the claim that even the segregated account funds are their property and not the property of the exchangers (see the Adversary Motion below.) )

(ii) Unregulated Operations (footnote “2″)

(Note: LES, LandAmerica’s 1031, “LES”, appears correctly under “Unregulated Operations”)

(Footnote “2″ reads as follows:
“2. Although not regulated by a State Department of Insurance, many of LandAmerica’s “unregulated” subsidiaries are in fact regulated by different types of State or Federal agencies.”)

Unfortunately, as we’ve all discovered, the 1031 industry is TOTALLY UNREGULATED by any federal government entity, least of all the IRS whose regulations created this monster, and hardly regulated by the few states (Nevada and California?) that have made even a feeble attempt to promulgate regulations that would demand licensing, accountability, transparency, criminal or civil penalties or other meaningful oversight.

9. In addition to underwriting title insurance, LFG subsidiaries provide, among other things, appraisals, home inspections, and warranties for residential real estate transactions and perform specialized services primarily to its national and regional mortgage lending customers, such as real estate tax processing, flood zone determinations, consumer mortgage credit reporting, default management services, and mortgage loan subservicing.

10. LES, one of the Debtors, is one of these subsidiaries. Prior to the Petition Date, LES operated as a “qualified intermediary” under section 1031 of the Internal Revenue Code (the “Tax Code”). Generally, the Tax Code imposes taxes when property is sold or transferred and a gain is realized. Pursuant to section 1031 of the Tax Code, if a taxpayer adheres to certain guidelines, then all or a portion of the gains from the disposition of business or investment property can be deferred or reinvested into a new replacement property. These deferred gains, as well as the gains from the new property, are not taxed unless and until the new property is transferred and fails to qualify for tax deferral. To qualify for such tax deferral, the taxpayer must structure the transaction as an exchange of one property for another of “like kind.” 1031 exchanges typically are facilitated by a qualified intermediary, like LES.

11. During the course of its operations, LES entered into agreements (“Exchange Agreements”) with its customers whereby it would acquire the net proceeds of the sales of relinquished properties (the “Exchange Funds”) in accordance with requirements of the Tax Code in order to facilitate a like-kind exchange. Pursuant to the Exchange Agreement, LES takes sole and exclusive possession, dominion, control and use of all Exchange Funds, including interest, if any, earned on the Exchange Funds until the earlier of the consummation of a like-kind exchange or such other date or event as provided in the Exchange Agreement (as applicable, the “Termination Date”). The Exchange Agreements further provide that a Customer shall have no right, title, or interest in or to the Exchange Funds or any earnings thereon and that a Customer shall have no right, power or option to demand, call for, receive, pledge, borrow or otherwise obtain the benefits of any Exchange Funds, including interest, if any, earned on the Exchange Funds except that the balance of Exchange Funds, if any, held by LES after applying such Exchange Funds in accordance with the Exchange Agreement shall be paid to the Customer on the applicable Termination Date. As of the Petition Date, the Exchange Funds maintained by LES included funds acquired from approximately 450 customers pursuant to separate Exchange Agreements. While not the norm, approximately 50 of the Exchange Agreements (each, a “Segregated Exchange Agreement”) required LES to segregate the applicable Exchange Funds (the “Segregated Exchange Funds”). The remaining approximately 400 Exchange Agreements have no segregation requirement.

Segregated accounts SHOULD be “the norm!”

400 new innocent exchangers are about to enter bankruptcy hell wherein they will find the lifesavings they entrusted to their 1031, to the extent they weren’t already squandered on bad investments by LES, dissipated over months/years of self-perpetuating litigation the real point of which appears to be to tally up billable hours and “administrative fees” of court appointed functionaries to the point that they quickly outstrip any potential recoupment of their exchange funds. Case in point: as of September 2008, nearly 18 months after the 1031 Tax Group (Ed Okun’s grand embezzlement scheme) filed for bankruptcy, his 350 victims have received nothing, the court has retrieved less than $2 million from liquidating Okun’s assets but has toted up and filed claims for $24 million in “administrative fees” and they stand first in line with their hands out before any of Okun’s (or LES’ )victims will receive a dime!)

(ii) LES

16. As of the Petition Date, approximately $138.6 million in Segregated Exchange Funds were maintained in segregated LES accounts. These funds equal or exceed the claims of customers that are a party to one or more Segregated Exchange Agreements. In addition, as of the Petition Date, LES maintained approximately $46 million backed by investments in government treasury bonds and approximately $201.7 million (par value) in auction rate securities. These assets, which represent Exchange Funds acquired from approximately 400 customers (the “Commingled Customers”), are commingled. In the aggregate, Commingled Customers hold claims equal to approximately $191.7 million against LES.

If I’m reading the foregoing accurately, 50 exchangers had deposited $138.6 million with LES in segregated accounts which miraculously LES still has on deposit so they may actually see their funds again if they don’t get sucked into bankruptcy court and that court doesn’t acquiece to LES’ claims that even the segregated accounts are their property, not the exchangers’, as claimed in LES’ bankruptcy petition. In the Okun case, the bankruptcy court actually authorized the attorneys for the Debtors to pursue the exchange funds still held by the Colorado Capital Bank arguing that those funds were the property of the 1031, not the exchangers — some of which have since been used to pay adminstrative fees of the bankruptcy proceeding! The cozy “settlement” negotiated by the debtors attorneys with those of the bank provided for the bank and its attorneys to receive more than $800,000 in fees and an additional quarter million to cover future cost that might arise — all of which will come out of exchangers’ own funds — effectively including the costs of both sides of that litigation! Only in bankruptcy court would this not seem a huge step “Through the Looking Glass”!).

Of the $191.7 million LES owes its other 400 exchangers whose funds were “commingled,, it seems to have on deposit only $46 million (about 24% of what it owes those exchangers) having effectively blown the balance ($145.7 million) on a get rich quick scheme for its own benefit (does anyone seriously believe this investment of exchanger funds was intended to benefit the exchangers as LES will no doubt try to argue? — aka the Okun argument, which his defense attorneys appear poised to make in criminal court — “I was trying to get my clients a better return on their exchange funds, Your Honor…!” — pulleez!) Since those investments effectively have no monetary value today (see their sad, sad tale below), the bankruptcy court functionaries will certainly file motions to seize the $46 million because it represents “commingled accounts” and is thus considered easy pickins with which to pay their administrative fees…
-
Page 8
Since 2002, LES invested a portion of the Exchange Funds transferred to it in investment grade securities rated A or stronger at the time of the investment, including auction rate securities (“ARS’s”) backed by federally guaranteed student loans. An ARS typically is a debt instrument with a long-term nominal maturity for which the interest rate is regularly reset through a dutch auction. Until earlier this year, banks pitched ARS’s to corporations and wealthy individuals as highly-liquid and safe alternatives to cash, and LES’s investment goals on the Exchange Funds were to maintain the full liquidity necessary to meet customer claims.

19. The ARS’s purchased by LES, which were sold to it by certain financial institutions, were highly liquid for many years. Unfortunately, as has been widely publicized, the ARS market froze earlier this year and LES has been unable to liquidate the ARS’s previously purchased at any price near their par value. Indeed, although the aggregate amount of the cash and par value of the ARS’s held by LES exceeds the value of all funds received from LES’s customers, LES’s inability to sell, or borrow against, these securities ultimately precipitated its decision to cease additional customer transactions and terminate operations.

The boldfaced lawyerly-crafted sentence above is one of my favorites — a carefully parsed deliberately obtuse way of saying “Through greed and stupidity, we lost nearly $147 million of exchangers’ funds entrusted to us.” (Not to mention “…and what we didn’t lose, we’re now claiming belongs to us”!)

The following is excerpted from an Adversary Motion filed by Lubexpress, a company, which apparently had $9 million in what it thought was a segregated exchange account with LES that it is trying to get returned (good luck to them…As a non-lawyer myself, but based on the judicial abuse to which we Okun bankruptcy victims have been subjected, seems to me other LES segregated account holders would be well advised to join this motion as a class to minimize their individual costs, lend strength and expedite their own claims. Time is of the essence, you poor things…!):

15. On the Petition Date, counsel for LES stated on the record at the first day hearing
that LES (i) does not intend to consummate the Section 1031 exchanges that are the subject of its executory exchange agreements, and (ii) believes that the funds it is holding in both segregated and commingled bank accounts constitute property of LES’s estate. Further, the Court has entered an order prohibiting LES from, among other things, transferring funds from such bank accounts. These events constitute a breach of the Exchange Agreement.

19. LES is holding the Funds in trust for the Plaintiffs. LES and the Plaintiffs had the
capacity and intent to enter a trust agreement and the Exchange Agreement constitutes such agreement. The relinquished properties first constituted the res of the trust, which were then substituted by the Funds. The Funds are segregated in the Accounts and are clearly identifiable. LES is the trustee and the Plaintiffs are the beneficiaries of the trust.

20. Under the Exchange Agreements, the Plaintiffs and LES affirmatively agreed that
the Funds would be held for the benefit of the Plaintiffs. Section 6(b) of the Exchange
Agreement states that “LES IS ENTERING THIS EXCHANGE AGREEMENT SOLELY FOR THE PURPOSE OF FACILITATING TAXPAYER’S EXCHANGE OF THE RELINQUISHED PROPERTY FOR THE REPLACEMENT PROPERTY.”

21. Section 6(d) of the Exchange Agreement states that “LES shall only be obligated
to act as an intermediary in accordance with the terms and conditions of th[e] Exchange Agreement and shall not be bound by any other contract or agreement, whether or not LES has knowledge of any such contract or agreement or of its terms or conditions.”

22. Section 3(a) of the Exchange Agreement sets forth the requirement that LES hold
the Funds in the Accounts associated with the Plaintiffs’ names and taxpayer identification numbers.

23. Section 3(b) of the Exchange Agreement provides that the Plaintiffs get the
benefit of the accrued interest and assume the responsibility to pay any income tax on the interest.

24. Nothing in the Exchange Agreement confers to LES any beneficial interest in, or
risks associated with ownership of, the properties or the Funds. Rather, the Exchange
Agreement requires LES to accept the relinquished properties, transfer them to the buyers, hold the proceeds for 180 days or less, accept title to the acquired properties, and then transfer them to the Plaintiffs.

25. Section 7 provides that LES’s compensation for this trustee service is limited to a
$1,200 plus reimbursement of expenses. In contrast, the Funds exceed $9 million.

26. By reason of the foregoing, the Plaintiffs seek a declaratory judgment under
section 541 of the Bankruptcy Code that LES is holding the Funds in trust for the Plaintiffs and are thus not property of LES’s estate.

If I had any money left with which to bet (no longer a temptation thanks to Ed Okun and the Bankruptcy Court of New York’s Eastern District), I’d lay odds that the bankruptcy court will deny the motion since by LES’ own admission, the lion’s share ($138.6 million) of the exchange funds it currently holds are in those segregated accounts (plus a pitiable 24% ($46 million) of what it owes the poor exchangers whose funds were “commingled.”) Since bankruptcy court is a self-financing enterprise, all the court appointed functionaries will fight valiantly to make sure that $138.6 million is construed as assets of the “estate” and available to pay their salaries and expenses over the next several years thus fully insulating them from the nation’s current economic woes while plunging the innocent exchangers, whose funds they rightfully are, into financial ruin.

Investor’s Warning: Ed Okun, FEA, Bonding & Insurance Still Major Barrier To Entry

Reuters.com published this deansguide article on 11-8-08

When deansguide readers have important comments that effect and provoke the thought process on a particular issue–we listen. When the comment comes from a very reliable source, a trusted confidant, and someone very close to a “situation”–we listen. And when that person is Elizabeth Callanan, one of the ‘experts’ following the Ed Okun 1031 Tax Group debacle–we stand back and give her the floor.

Standards of Due Diligence

Elizabeth Callanan’s comment (11-9-08) and indictment of the 1031 industry’s lack of due diligence standards, the FEA’s less than honest assessment of their own insurance policies, and investor’s lack of investigation (electing to avoid massive taxes by choosing a 1031 exchange) is a cautionary warning-before you even think about this industry you must read this information.

—————————————————

“I’m very interested in learning how prospective 1031 exchangers can “look at the longevity of ownership, management, and employees as well as bonding and insurance and experience.” In the case at least of the 1031’s quietly acquired by Ed Okun, who then proceeded to plunder the exchange funds held by each of them to acquire other 1031’s and finance his lavish lifestyle, nearly all of them had been in business for decades. The fact that the owners, in some cases known personally to exchangers over a long history of 1031 transactions, did not publicize or share with their client base the fact that they’d sold out to Okun and, in fact, remained on board in their former roles and capacities, along with their staffs, appears to have been part of a deliberate strategy (perhaps even a condition of the sale?) to hide from exchangers that any transfer of ownership had occurred. Where/how would a potential exchanger learn that ownership had changed? To what agency (federal, state, local) must a 1031 report its ownership. What requirements are there that demand that such information be published. What regulations or reporting exist governing the behavior and conduct of 1031’s at any level?

As to insurance, what should a prospective 1031 client look for in an insurance policy provided by a 1031? The fidelity bonds provided to customers of those acquired by Okun gave false assurances of coverage in the millions, but in fact, like the fidelity bond offered by the Federation of Exchange Accomodators (according to their website), “Q: How does the policy limit under the FEA Fidelity Bond apply to claims?
A: The policy limit applies on a “per occurrence” basis, meaning each separate loss event or series of related loss events has the full benefit of the policy limit. Losses are usually considered related, i.e. a single occurrence, if they arise out of the same set of circumstances. The limit does not apply per customer, per transaction or per account.” While exchangers to whom these Fidelity Bonds are routinely presented as some kind of assurance regarding the security of the funds held by the 1031 would reasonably interpret their transaction as the “per occurrence” covered by the bond value, FEA’s FAQ’s attempt to limit that coverage to each incident and insurers in the case of Okun are already attempting to construe him and his ongoing series of embezzlements from multiple 1031’s he acquired over time as a single occurrence. Since collectively he embezzled $150 plus million, these bonds are wholly inadequate in terms of providing any kind of security to exchangers. So, what should exchangers be demanding to see from prospective 1031’s they’re considering in order to assure themselves the 1031 is in fact a “safe harbor” and their funds will in fact not be absconded with? What regulations is the FEA promoting at any governmental level that would ensure the security of exchanger funds, the integrity of 1031’s, their owners and staff, and what penalties (criminal, financial, etc.) are they proposing in the event there is criminal activity?” –Elizabeth Callanan

Ed Okun Attempting Appeal For Freedom November 5: Victim Instructions Here

Newsflash: Ed Okun is attempting a final bid for his freedom with a renewed appeal for release. The news came from original Ed Okun “Train Wreck Victim” Elizabeth Callanet. This is an outrageous and disturbing turn of events that every victim should be aware is happening. Elizabeth’s request is in accordance with deansguide’s approval as one of the only sites certified to deliver important information to the victims of these heinous crimes. The following is Elizabeth’s message in it’s entirety:

——————————————————–

“Okun’s renewed appeal for release pending his criminal trial in Jan will be heard in Richmond this Wed, Nov 5, at 1:30pm (New courthouse address: 701E. Broad St. 7th Floor). If any victims plan to attend they should let Kim Ulmet, the Victims’ Assistance Specialist ( contact information provided below). She’s very helpful and informative about the players and the proceedings and will ensure victim’s get to the right courtroom and/or know if the hearing has been delayed, relocated, etc.

In addition, several of Okun’s victims are asking the Court to permit telephonic participation (i.e. a service that would permit Okun/Coleman’s victims around the country to listen to the criminal proceedings by phone) since, thanks to them(Okun-Coleman), none of the them (victims) can afford to actually travel there! Any victims having interest in listening to the trial by phone (there is a cost, but it applies only to the length of time during which one listens, and one could listen to some or all of just some sessions and not others), they should write to the court asking that they approve of using that service (a first for this court jurisdiction).

Write, FAX or email letters to Kim at the address below and she will make sure they get forwarded to the appropriate office:”

Kim Ulmet, Victim/Witness Specialist
United States Attorney’s Office
600 E. Main Street
Suite 1800
Richmond, VA 23219
Fax (804) 771-2316
email: kimberly.Ulmet@usdoj.gov

Very Important Notice to Okun Victims Regarding Your Address:

“On a final note, 1031 victims are receiving in the mail copies of a proposed settlement between the Trustee (McHale) and Cordell. Any victims who have not received it, should write to McHale, the Trustee at jerrym@trustee1031taxgroup.com , to let him know that he ( and perhaps the bankruptcy court) don’t have your address/or your correct address. To ensure the Bankruptcy court has your correct information, also write to:”

Kathleen Farrell-Willoughby
Clerk, U.S. Bankruptcy Court
One Bowling Green
New York, NY 10004-1408

“It is vitally important they have your contact information if and when there is any kind of of settlement (we shouldn’t all hold our breaths!) and to receive these updates in the interim. Many of the court documents are available on the Trustee’s website at:”

http://trustee1031taxgroup.com

A big thank you to Elizabeth for her announcement. Our hopes and prayers are with all the victims for some good news in these tough times!