Ed Okun vs. LandAmerica Exchange Services: Different Situation Same Results?

Due Diligence Warning: I am neither an attorney, tax accountant, nor legal entity of any kind. The information provided is not a call to action nor is it advice on how to handle your financial situation with LandAmerica Exchange Services or any other financial institution. Before entering a 1031 Exchange or any other investment vehicle perform your due diligence investigation.

According to MarketWatch.com article dated November 26, 2008, LandAmerica Financial Group filed for Chapter 11 Bankruptcy protection and will sell 3 of it’s units to FNF.

According to NewsDaily.com “LandAmerica files for chapter 11 bankruptcy protection:

“I am deeply disappointed over the need to file for bankruptcy protection for the LandAmerica holding company and the 1031 company,” Chief Executive Theodore Chandler

Elizabeth Callagnan one of the Ed Okun 1031 Advance ponzi victims points out:

“. . . their (LES customers) 1031 is filing for bankruptcy which means all those exchangers are going to find themselves and their lifesavings mired in the same bankruptcy court hell that the 350 (Train wreck victims nickname for Ed Okun’s ponzi scheme victims) robbed by Okun are now drowning in.”

The following letter was forwarded to me by Elizabeth. It is the alleged letter sent to LES exchange clients regarding their monies. If any other readers, clients of LES, have received the same notice please comment below.

“Dear Valued Customer:

We regret to inform you that, effective November 24, 2008, Land America 1031 Exchange Services Company, Inc. (“LES) is accepting no new customers and is terminating it’s operations. Although the total par value of our 1031 exchange funds exceeds the value of all funds received from our customers, portions of the 1031 funds are invested in ILLIQUID auction rate securities. Our inability to sell or borrow against these securities has precipitated our decision to terminate operations.

Q: Why are 1031 client funds invested in anything without their knowledge? If clients were given the option to provide their 1031 monies for investment into “guaranteed student loans” how many would approve such an investment? Btw what does the term “illiquid” mean?

LES has long invested 1031 deposits only in investment Grade Securities Rated A or stronger, including auction rate securities backed by federally guaranteed student loans. Our goal for the exchange funds has been to maintain the full liquidity necessary to meet customer with-drawl demands. The auction rate securities in our exchange funds, which were sold to us by certain financial institutions, were highly liquid for many years. As has been widely publicized, the auction rate securities market froze earlier this year, and that extenuating circumstance prevents us from liquidating the auction rate securities held in the exchange funds.


Q: Are the 1031 exchange clients made aware of the practice of LES of investing 1031 exchanger monies in auction rate securities market?

We understand that this situation is detrimental to you, and we can only assure you that we have taken every reasonable step possible to avoid the problem, including pursuing numerous liquidity options to no avail. You will be provided soon with details regarding the establishment of a process for submitting claims relating to exchange funds.

This situation involves LES and not any other LandAmerica companies. Specifically, LandAmerica title insurers are highly regulated companies, with legal identities and assets completely separate from LES. These insurers have more than sufficient assets to meet their obligations to policyholder and escrow customers.

Q: Does the sentence ‘These insurers have more than sufficient assets to meet their obligations to policyholder and escrow customers’ guarantee that 1031 exchange clients of LES will have all of their invested monies returned to them in full?

Sincerely,

LANDAMERICA 1031 EXCHANGE SERVICES COMPANY, INC.”


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13 thoughts on “Ed Okun vs. LandAmerica Exchange Services: Different Situation Same Results?

  1. Let me answer your question with two of my own

    1. Do you think I would provide the answer if I knew it?

    2. Do you really care or did you comment to leave the link to your youtube video about your company?

  2. our money was to be in a separate account at SunTrust bank. We have a document to that fact. LandAmerica entered into a contract with us on the 19th of November. On 24th we could not get calls returned from our agent. On Nov. 25th the funds were to be wired back. Wire never arrived, they stole our money.

  3. Hana,

    I am sorry to hear stories like this one as I just spent the better part of 1 1/2 years covering the Ed Okun mess. I would consult someone in the legal profession if it were me. Good luck.

    dean

  4. Dean, you jump on people too fast.

    Hana, Welcome to Bankruptcy hell. If I were to bet, I would say it will come out later that they have been borrowing the funds to run the business. I just read the bankruptcy documents online. Open up a Pacer acct online and pay the .08 per page to read. That is your best way to keep up.

    Dean, I believe “These insurers have more than sufficient assets” is refering to the fact that LandAmerica was also an insurance company for Title. Since they just sold off the Title company and put the exchange company in bankruptcy, my guess is that the money is gone. No insurance, just like Okun and Southwest Exchange Co. All crooks. Sad and likely all the exchange companies co-mingle and bend their own rules with clients money.

  5. YT,

    I jump on people too fast? What is this in reference to specifically? Without context, I have no idea how to answer your challenge.

    The question is NOT whether sufficient funds are available to make good on exchanger’s monies. The real question is will they pay up? What you believe doesn’t matter as much as what I have listened to from Ed Okun victims like Elizabeth.

    I have come to learn that the lack of laws, federal regulations, and morals all contribute to a very dangerous climate. A climate where even the most reputable companies can go south and not pay back their debts.

    If you have some proof then produce it. Otherwise you are blowing smoke in the wind. Seriously I know people want help. If you can provide it STEP TO THE PLATE WITH SOME EVIDENCE.

    dean

  6. 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?

    5) 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.

  7. I am one of the 400 exchangers in the commingled group.

    I thank E. H. Callanan for clarifying that I should not expect to see one dime of my life savings return to me by way of the LES bankruptcy proceedings.

    I have a question for E. H. Callanan: Should I accept that I lost my life savings and not waste additional resources or mental anguish in attempts to recover the money or even in paying any attention whatsoever to the bankruptcy process?

  8. Daniel,

    I have no answer for you. Maybe Elizabeth will answer you here if she sees your comment. I do not know what to do in this situation. I am just passing along information. I am so sorry for your situation and I wish you the best in your decisions.

    dean

  9. Daniel,

    don’t despair!

    a group of us 400 “commingled” are banding together for action.

    please rememer: you have to file a written “Proof of Claim” shortly, even to be considered for any of your $$$ back. ask me, I got our retirement money in this mess. these people are not going to steal my money (The Courts or LandAm!)

  10. Thanks Woody. I did file my claim on LES assets. I also spoke with someone on the creditor’s committee. I contacted my Congress members, the FBI, and my state attorney general. From what everybody has said, including you, it looks to me that any action I might take, such as paying a lawyer to represent me, would be a waste of my time and money. It looks to me that the best course for me, and for you too, is to accept the loss, pay little or no attention to the bankruptcy proceedings, and be happy with whatever percentage of my claim, if any, I get back in the end.

    For what it is worth, I see a vast difference between the Okun and LES cases – I think LES victims stand a much better chance of recovering a percentage of their claim than the Okun victims ever had.

  11. I, too, have a big chunk of change stuck in LES. Now, I know I have to file my proof of claim, but who can afford a lawyer, now? Are there any class action lawsuits going on yet against LES? Hate to give what little I have left to an attorney.

    thanks for anything.
    Cathy

  12. To Daniel Lowe and the other victims of the LandAmerica debacle,

    You have my most heartfelt empathy.
    Having been myself a victim of Ed Okun’s embezzlement of exchangers funds on deposit with the 1031 Tax Group, I truly feel your pain. I’m not an attorney, an accountant, and have no expertise apart from what comes of painful firsthand experience. It was in the hopes of warning other potential exchanger/victims that I started posting on Dean’s List and elsewhere.

    At the end of the day, though, I agree totally with Yaco Tiamo, who has posted here. The entire 1031 industry is superfluous and that aspect of the IRS’ 1031 regulations should be expunged. It is a wildly unregulated industry that answers to no government oversight at any level (apart from some half-hearted oversight incorporated in a couple of recently enacted regs by a handful of states (Nevada, California?) and, as evidenced, by the recent spate of embezzlements or gross mismanagement puts all exchangers at great risk for no good reason. Doing a 1031 isn’t brain surgery. The forms are pretty standard and the process pretty simple, really. Since the IRS has shown no interest in overseeing, licensing, demanding accountability from, providing meaningful insurance for (as the SEC does) or otherwise regulating the industry it created, it should kill it – NOW!

    As to the LandAmerica victims, my (personal, not professional!!) advice in terms of investing in legal help is two-fold and in both cases I would act only collectively (except for those whose funds were held in traceable segregated accounts, who will no doubt make a serious (and perhaps successful) run at retrieving those funds, I see little point in acting individually — certainly not in bankruptcy, a self-funding and self-perpetuating legal and financial train wreck for everyone involved except the court appointed functionaries. (If you want to see the extent to which such a process can drag on ad nauseam with many billable hours just check out the history of the 1031 Tax Group case on either of these sites: http://www.committeeinfo.com/1031/index.htm (the official website for our Creditors Committee) or http://trustee1031taxgroup.com/component/option,com_frontpage/Itemid,1/ (the Trustee’s website).)

    However, I WOULD hire a legal firm (on contingency if you can – since, by definition, you no longer have any money!) to:

    1) GET YOUR CASE OUT OF BANKRUPTCY COURT!! That is a deep dark hole that will suck up every dime of funding available until there’s nothing but dust left. In the 19 months since Ed Okun put the 1031 Tax Group into “bankruptcy” (it was a criminal embezzlement plain and simple now being tried in a US Federal Court in Richmond which was known at the time the bankruptcy was filed in May 07 — the Feds having raided the offices in April 07 — and should never have been accepted as a legitimate bankruptcy to start with!) all of the various court-appointed functionaries have claimed MORE THAN $30 MILLION IN SO-CALLED “ADMINISTRATIVE FEES” and victims have received not one penny of their escrow funds. In fact, in an amazingly brazen and twisted miscarriage of justice, the Bankruptcy Court authorized attorneys for the so-Called “Debtors” (ironically the Dreier firm whose owner embezzled millions in escrow funds himself) to pursue a legal action to retrieve the only escrow funds that Okun himself had not been able to steal and the settlement cozily agreed to by the attorneys on both sides (and approved by the Court) provided for payment as well to the attorneys DEFENDING the bank where those funds were on deposit — the end result of which is that the costs of BOTH SIDES of that court case will be paid by Okun’s victims. (So, to our point of view we were mugged first by Okun and then by the Bankruptcy Court!) The only way to get that Bankruptcy action derailed is to get the Committee itself on board (not easy since the Committee’s attorneys will understandably vehemently argue against the prospect of losing their cash cow), but I’d consider that a first priority.

    2) Get a class action going to pursue all the parties involved, including especially LandAmerica to force them to use the proceeds from the sale of its other two arms to repay the exchange funds it squandered on worthless investments.

    I sincerely hope you are more successful than we’ve been to date in retrieving even a dime of our lifesavings. The key is acting collectively and getting a junkyard dog of an attorney who is willing to work on a contingency (which means you’ll get 25% less than you otherwise might, but most of Okun’s victims would happily settle for that today!). Unfortunately in bankruptcy there is absolutely NO incentive for settling anything quickly. It’s all about billable hours — for attorneys, for management companies, for accounting firms, and all the other hangers-on who can get their licks in. If I were you, I’d follow the lead of the creditors in the Southwest Exchange Case – which happened just a few months prior to our’s and in which there’s been a settlement of $92 million of the $97 million lost (minus the contingency and other costs incurred by the attorney) while WE HAVE NOTHING and dismal prospects ahead.

    You’ve gotten off to a better start than we did, it appears. You have a website (noted above by one of your fellow victims), your Committee seems to communicate with you (our’s has maintained a nearly absolute silence and shares NO information whatsoever for reasons none of us can fathom), and I understand you’re collectively discussing a civil class action which I encourage you to pursue.

    Good luck to you all — sincerely.

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