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Liberty Bell Bank v. Rogers

United States District Court, D. New Jersey

August 29, 2018

LIBERTY BELL BANK, Plaintiff,
v.
LUIS G. ROGERS, LEASE GROUP RESOURCES, INC., LGR GROUP, INC., LGR CONSORTIUM, INC., UNIVERSITY COPY SERVICES, KONICA MINOLTA BUSINESS SOLUTIONS, INC., FAX PLUS, INC., OMNI BUSINESS SYSTEMS, INC., and ORIGEN CAPITAL INVESTORS III, LLC, Defendants.

          DOUGLAS F. JOHNSON, CHARLES PATRICK MONTGOMERY, EARP COHN P.C. On behalf of the Receiver.

          JOHAN ALI ASHRAFZADEH-KIAN DANIEL J. DUGAN (pro hac vice) SPECTOR GADON & ROSEN PC, On behalf of Plaintiff Liberty Bell Bank.

          LUIS G. ROGERS Appearing pro se.

          CORINNE SAMLER BRENNAN, FRANK M. CORRELL, JR. (pro hac vice), KLEHR HARRISON HARVEY BRANZBURG LLP, On behalf of Intervenor Branch Banking and Trust Company (successor in interest to Susquehanna Bank).

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This matter involves a fraudulent scheme orchestrated by Defendant Luis G. Rogers through various entities that Rogers controlled, including Lease Group Resources, Inc. (“LGR”), which caused multi-million-dollar losses to Plaintiff and others. The Court appointed a Receiver to oversee the operations of LGR in light of the pervasive fraud.

         Before the Court is the Receiver's Revised Report and Recommendation. The Court largely approves of the Report and Recommendation. Objections to the Report were filed by Liberty Bell Bank (“Liberty Bell”), Branch Banking and Trust Company, successor in interest to Intervenor Susquehanna Bank (“BB&T”), Luis Rogers, and non-party Jeffrey Crompe. The Court addresses these objections below.

         I. Lease No. 4964

         LGR owned certain office equipment, which it leased to customers for revenue. One of Liberty Bell's objections relates to the distribution of proceeds from Lease No. 4964. With respect to this lease, the Receiver recommends the Court find Liberty Bell has a security interest with priority over other creditors in the proceeds attributable solely to the four copiers identified in the Financing Statement it filed: one Canon OCE V6000, two Canon OCE V4000s, and one Canon OCE CS655.[1]The Receiver further recommends the Court find BB&T has a security interest with priority in the proceeds attributable to the other copiers not listed on Liberty Bell's first filed Financing Statement.

         The Receiver's proposed allocation is payment of $64, 063.89 to Liberty Bell and $49, 596.84 to BB&T from the Lease No. 4964 proceeds. These amounts are calculated by allocating income to Liberty Bell from one OCE V6000, two OCE V4000s, and one OCE CS655 and to BB&T from the other copiers covered by the lease. Liberty Bell, however, argues it is entitled to 95.653% of the lease proceeds. BB&T does not take issue with the Receiver's proposed distribution.

         Liberty Bell's objection is largely based on the disparity in the amount loaned to LGR with regard to Lease No. 4964 in comparison to BB&T. According to Liberty Bell, it loaned $570, 258.15, whereas BB&T loaned $18, 000. Liberty Bell argues the Receiver's distribution will give BB&T a windfall and will result in BB&T receiving over twice the amount of its original loan.

         The Court discerns the following. Liberty Bank issued a $570, 258.15 loan to LGR. Four copiers, and only four copiers, were identified as collateral: one OCE V6000, two OCE V4000s, and one OCE CS655. The July 1, 2009 Financing Statement filed by Liberty Bell identified the same four copiers: one OCE V6000, two OCE V4000, and one OCE CS655.[2]

         In July 2010, BB&T loaned $18, 000 to finance one additional copier which was added to Lease No. 4964. The July 8, 2010 Financing Statement filed by BB&T covered, among other things, the “assignment of proceeds” of Newport News Public Schools, “Various Model Copiers, Purchase Order #4964, cost $18, 000.00.” Further, as the Receiver indicates, BB&T entered into a July 25, 2006 Loan and Security Agreement which granted “a first lien and security interest in . . . all leases now existing or hereafter arising from or in connection with the leasing contracts.” Together, the Court concludes these documents give BB&T priority in the copiers not identified in Liberty Bell's Financing Statement and allow BB&T to recover more than the $18, 000 loan.

         Liberty Bell's argument is somewhat misleading. Although it might appear that BB&T is receiving $49, 596.84 on an $18, 000 loan, the issue is not return on that loan but the scope of its security interest related to other financial obligations owed to BB&T. BB&T had a broader security interest than did Liberty Bell, covering not just certain delineated copiers but more broadly the proceeds of the lease as a whole to be applied to other loans extended to Plaintiff by BB&T. The Court concludes the ...


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