1. What is the status of the Criminal cases against Valley employees (Phillip Lochmiller Jr. and Shawnee Carver)?
The Debtor has no direct involvement in the criminal cases or investigations. However, according to the United States Attorney’s Office District of Colorado:
Phillip Lochmiller Sr. was convicted on July 21, 2011 of one (1) count of money laundering conspiracy, one (1) count of conspiracy, nineteen (19) counts of money laundering, and ten (10) counts of mail fraud. In March, 2012, Phil Sr. was sentenced to 33 years and 8 months in Federal prison and 3 years of supervised release. Phil Sr. is currently incarcerated at MCFP Springfield, Springfield, Missouri.
Phil Lochmiller Jr. pled guilty on November 16, 2010 to conspiracy to commit securities and mail fraud and money laundering. Phil Jr. was sentenced on October 14, 2011 to 8 years in Federal prison and 3 years of supervised release. He was ordered to surrender to FPC Yankton, Yankton, South Dakota on December 6, 2011, and was officially incarcerated at FPC Yankton on December 8, 2011.
Shawnee Carver pled guilty on December 9, 2010 to conspiracy to commit securities and mail fraud. Ms. Carver was sentenced October 14, 2011 to 2 years in Federal prison and 3 years of supervised release. She was ordered to surrender to FCI Victorville Medium II, Victorville, California, on November 16, 2011, and was officially incarcerated at FCI Victorville on November 19, 2011. Ms. Carver was released from Federal prison on August 12, 2013.
2. Why has Valley Mortgage Inc., filed for Bankruptcy?
The primary reason that Valley Mortgage Inc. has entered bankruptcy is the ability of the Bankruptcy Court to promptly sell the assets of the estate, and then resolve disputes over liens and how these proceeds should be allocated among creditors. The Bankruptcy Code provides an oft utilized and well understood procedure for selling these assets free and clear of liens. This is a more efficient process for selling these real estate assets than would have been available in the State court Receivership. The faster these properties can be sold, the lower the administrative costs will be.
3. Are the Lochmillers involved in the Bankruptcy filing?
No. The Lochmillers are not involved in the Bankruptcy filing in any way.
4. What will happen if I failed to file a Proof of Claim form in the Bankruptcy Court?
You will receive nothing from the Bankruptcy estate.
5. Who is Lindquist & Vennum P.L.L.P. and who is John C. Smiley?
John C. Smiley is the lead attorney for Lindquist & Vennum P.L.L.P., Bankruptcy counsel for Valley Mortgage, Inc., Debtor in Possession and the VMI Liquidating Trust.
6. Is the Debtor working with Lindquist & Vennum P.L.L.P.?
Yes. Lindquist & Vennum P.L.L.P. was hired by Rider & Quesenberry, LLP. Rider & Quesenberry continues to manage Valley Mortgage, Inc., as Debtor in Possession and the VMI Liquidating Trust, and Lindquist & Vennum P.L.L.P. is advising Rider & Quesenberry.
7. Why was a Receiver Appointed for the Valley Entities?
Because the Securities Commissioner for the State of Colorado (“Commissioner”), Mr. Lochmiller and the Valley Entities agreed to the appointment.
8. What are your Powers as a Debtor in Possession?
Subject to the Court’s ongoing supervision and approval, they are fairly broad as described in the U.S. Bankruptcy Code and related rules and regulations.
9. How are the Administrative Expenses Paid?
Our expenses, and the costs of accountants, property managers and other law firms employed by the Debtor are, subject to Court supervision, paid as priority claims from the assets of the Debtor's estate prior to Valley Mortgage, Debtor in Possession's Bankruptcy Plan's Effective Date of December 16, 2011. After December 16, 2011, Administrative Expenses will be paid out of the assets of the VMI Liquidating Trust, dated December 16, 2011, as funds are available.
10. Who Supervises You?
The United States Trustee and the Bankruptcy Court.
11. Who can Act or Make Commitments for the Debtor in Possession?
Only our firm and those engaged by us, and sometimes only with Court approval.
12. What are You Doing to Get Our Investments Back for Us?
The Debtor has investigated the status of the various investments and has established a plan to recover as much of it as we can. If necessary, and to the extent the estate’s resources will allow it, we or parties selected by us may pursue litigation claims to collect on investments.
13. Do You or Your Lawyers Represent Creditors or Investors, Individually or Collectively?
No. We are simply the management of the Debtor in Possession through December 15, 2011. As of December 16, 2011, Rider & Quesenberry, LLP is the Trustee of the VMI Liquidating Trust, dated December, 16, 2011. You may benefit from that work; however, we are not your lawyer and our counsel does not act as your lawyer, either. We recommend that you retain your own counsel. We would be happy to speak with your counsel.
14. How Long Will all This Take, and Can We Expect Interim Distributions?
As information develops, we will supplement or update this answer. After the small interim distribution in 2013, we expect to make a larger distribution in 2015. It will depend on our success in avoiding certain transfers made by Valley Mortgage to certain investors, banks and the I.R.S. Avoiding transfers, sometimes referred to as “clawbacks,” is a means of recovering funds that were transferred by VMI to third parties that should be recovered for the benefit of all creditors.
15. What Should We Do to Find and Hire our Own Counsel?
There are hundreds of investors and only a few local firms to undertake this work. The Debtor cannot advise you on these questions in any more detailed or individualized basis. Investors may also find it advisable or necessary to hire lawyers outside the immediate area. We do recommend hiring capable legal and accounting professionals to guide you in these difficult matters.
16. What is the Total of the Outstanding Investor and Creditor Claims? In excess
of $30,000,000. 17. How will the Distribution of Assets be Calculated? The Debtor in Possession has proposed via the Plan
for the Court's approval a claims administration procedure. Investors and creditors were notified of this proposed claims administration
procedure and were given an opportunity to comment or object.
16. What is the Total of the Outstanding Investor and Creditor Claims?
In excess of $30,000,000.
17. How will the Distribution of Assets be Calculated?
The Debtor in Possession has proposed via the Plan for the Court's approval a claims administration procedure. Investors and creditors were notified of this proposed claims administration procedure and were given an opportunity to comment or object.
18. Will the Debtor in Possession and the Trust Pursue Personal Assets of Third Parties?
If the facts and law support claims against the owners or employees of Valley Mortgage, or others, the Debtor in Possession and the Trust will seek to recover personal assets.
19. Can Investors or Other Creditors Begin Their Own Collection Actions or Begin Foreclosure?
Not without further order of the Court that supervises the bankruptcy proceeding. The bankruptcy filing imposes a stay on all collection and foreclosure actions.
20. What Is the Status of the Receiver's “Freeze” of Lochmiller Family Assets?
Soon after the Receiver’s appointment, the Receiver sought and obtained a Temporary Restraining Order against the sale or transfer by certain Lochmiller family members of assets that appeared to have been acquired with the direct or indirect proceeds of investor funds. Notices of Lis Pendens were filed in the counties where these assets were located. A later hearing was held over three days in August and early September of 2009 on the Receiver’s application for a preliminary injunction to maintain the restrictions contained in the Temporary Restraining Order. The Court granted the Receiver’s request for a preliminary injunction on October 19, 2009.
21. How Can We Get Information in the Future?
Check in with this website regularly. We have stopped our big teleconferences due to declining investor interest.
22. I Have Heard That the Debtor Plans to Require Investors to Return Money They’ve Been Paid Over the Past Couple of Years. Is This True?
Depending upon the information received during the claims administration process, the Debtor may seek a return of principal or interest received by investors. However, any such procedure would require Court approval.