United States District Court, D. New Jersey
DOUGLAS F. JOHNSON, CHARLES PATRICK MONTGOMERY, EARP COHN
P.C. On behalf of the Receiver.
ALI ASHRAFZADEH-KIAN DANIEL J. DUGAN (pro hac vice) SPECTOR
GADON & ROSEN PC, On behalf of Plaintiff Liberty Bell
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
L. HILLMAN, U.S.D.J.
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
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.
Lease No. 4964
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.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.
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.
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.
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.
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.
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 ...