Cash Flow Financial
UPDATE AS OF 12/01/2019:
On March 10, 2011, the Commodity Futures Trading Commission (“CFTC”) filed a Complaint for Injunctive and Other Equitable Relief and for Civil Penalties Under the Commodity Exchange Act, as amended, 7 U.S.C. §§1-25, against Defendants Alan James Watson, Michael Potts and Cash Flow Financial, LLC (“Defendants”), entitled Commodity Futures Trading Commission v. Alan James Watson, et al., (Case No.: 11-cv-10949, in the United States District Court for the Eastern District of Michigan, the Honorable Lawrence P. Zatkoff presiding). (See Complaint.) The Complaint alleges that from at least November 2007 through the initiation of the suit, Defendants fraudulently solicited and accepted at least $45 million from more than 600 individuals and entities to participate in a commodity pool to trade commodity futures contracts and securities. The CFTC is seeking civil monetary penalties and other equitable relief, including restitution to pool participants.
On March 11, 2011, the Court entered a Statutory Restraining Order (the “SRO”) which, among other things, prohibited the Defendants from transferring their assets and appointed Phillip S. Stenger as temporary Receiver. (See SRO) As Receiver, Mr. Stenger is directed and authorized by the Court to assume full control of all assets of the Defendants and to otherwise manage and administer the assets of the Defendants. To accomplish this directive, the Receiver is continually seeking to secure the return of investor funds from various sources and is considering or is already undertaking legal actions in several instances to facilitate the return of funds. The Receiver is also tasked with the responsibility of handling the processing of investor claims and eventually establishing a plan of distribution to the approved investors.
On January 5, 2012, the Court entered a Consent Order of Permanent Injunction, Civil Monetary Penalty and for Other Equitable Relief against Alan James Watson, in which Mr. Watson was permanently prohibited from offering any further sales of commodities or trading or participating in transactions involving commodity futures; he also agreed to pay full restitution and disgorgement and to pay a civil monetary penalty to the CFTC. Additionally, on July 2, 2012, the CFTC filed a Motion for Summary Judgment against Michael S. Potts requesting that the Court enter an order approving a permanent injunction and trading prohibitions, restitution, disgorgement, and civil monetary penalties against Mr. Potts. On November 19, 2012, the Court entered an order approving the Commission’s unopposed motion and entering a summary judgment against Mr. Potts.
Under the terms of the Court’s Order Approving Objection Procedure entered on June 12, 2013 (a copy of which is available for review under the “Pleadings” tab), any objections to the Receiver’s proposed Investor Claims Procedure were to be filed with the Court by July 26th, 2013. Four (4) objections were received and subsequently reviewed by the Receiver. The Receiver resolved two (2) of these objections which were thereafter withdrawn, leaving two (2) objections for the Court’s review. On January 28, 2014, the Receiver filed his Response to Objections (a copy of which is available for review under the “Pleadings” tab), which addressed the objections submitted and requested that the Court review and resolve these objections and enter an order approving the Investor Claims Procedure. On February 24, 2014, the Court entered its Claims Procedure Adoption Order (a copy of which is available for review under the “Pleadings” tab), which approved and adopted the Investor Claims Procedure and set a claims bar date of May 26, 2014.
On March 3, 2014, the Receiver caused a copy of the approved Claims Procedure Notice to be published in the national edition of USA Today. On March 14, 2014, the Receiver mailed Claims Packets to each of the known investors, including personalized Statement of Claim Forms containing the investor’s Adjusted Net Investment Claim (“ANIC”) to the extent that the Receiver had sufficient information to calculate it. In response to the mailings, 851 investors returned completed Statement of Claim Forms; more than 90.4% of those investors agreed with their ANIC as determined by the Receiver. The claims of 9.4% of the investors who disagreed with their ANIC determination were reviewed and processed in accordance with the terms of the Investor Claims Procedure.
Once the Receiver completed processing all investor claims filed with him, in accordance with the Investor Claims Procedure the Receiver filed a Motion and Memorandum with the Court on December 7, 2015 (copies are available for review under the “Pleadings” tab), seeking entry of an order ratifying the Approved Investor Claimants List and recommending that a distribution fund of USD $6,500,000 (representing a distribution percentage of more than 20.3%) be distributed to the Approved Claimants in the ratio of their ANIC, in accordance with the terms of the Investor Claims Procedure.
On January 4, 2016, the Court entered its First Distribution Order approving and authorizing distribution of an initial distribution fund of USD $6,500,000. On February 8, 2016, the Receiver made the required distributions from the First Distribution Fund to each Approved Claimant.
On August 31, 2018, the Receiver made the second, and final, required distributions to eligible investors.
This matter is now closed. Please note, we cannot provide any tax, legal, estate planning or IRA advice. Please feel free to consult your own attorney or tax consultant should you have any questions related to such issues.
For pertinent Court Reports and other documentation, please continue scrolling on this web page and select the desired hyperlink.
Please continue to keep the Receiver informed of any changes in mailing address, e-mail address, or telephone number so that we have the appropriate contact information on file.
If you have any questions, please feel free to contact this office.
The Receiver’s contact information is as follows:
Phillip S. Stenger, Esq.
Stenger & Stenger, PC
2618 East Paris Ave SE
Grand Rapids, MI 49546
Toll-Free: (877) 512-2483
Telephone: (616) 264-3256
Fax: (616) 940-1192
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