2987 Clairmont Road
Atlanta, GA 30327
The Receivership has received funds totaling $1,487,500 representing the proceeds of a settlement with Federal Insurance Company for coverage under an errors and omissions insurance policy. The Receiver is preparing a proposed plan of distribution for those funds.
In addition, Angelo Alleca pleaded guilty to two counts of conspiracy to commit mail and wire fraud relating to the Summit Wealth Management funds and Detroit Memorial Partners. Sentencing is set for October.
Under the terms of the Settlement Agreement, the Receivership Estate would receive a significant recovery that would allow the Receiver to file a proposed plan for interim distribution to claimants against the estate. The Receiver believes the proposed Settlement is in the best interests of the Estate and provides a favorable recovery without the burden and large expense of protracted litigation against Federal. The Settlement would also maximize the amount of coverage to be used to pay claims and, significantly, would avoid the wasting of insurance dollars potentially available to claimants to be used instead for payment of defense costs.
The principal features of the Settlement Agreement are: (1) payment by Federal of the total sum of $1,487,500.00 (“Settlement Consideration”) to the Receivership Estate, and (2) the entry of a Bar Order foreclosing future claims under the Policy (“Bar Order”). The settlement is expressly contingent on the development of a bar order mechanism in a form acceptable to Federal (and Court approval of that mechanism) to protect Federal from further claims by those claiming rights under the Policy. The Bar Order is necessary to give effect to the Settlement Agreement, since Federal contends that in the absence of a settlement it could obtain a declaratory judgment of no coverage or limited coverage in an amount less than the Settlement Consideration.
As stated in the Motion and a Memorandum of Law also filed today by the Receiver, the Receiver believes that the Settlement, including the entry of a claims Bar Order, is fair, equitable and reasonable, and in the best interest of the Receivership Estate and its claimants. The Settlement Consideration is an amount representing approximately 49% of the full limits of liability of the insurance policies at issue. The Receiver believes this amount fairly resolves the Estate’s claims.
Please review the documents set forth below -- the Motion and the Exhibits to the Motion, which include the proposed Settlement Agreement, Notice of Bar Order, and Proposed Order, and the Memorandum of Law and all of its exhibits.
Please direct all questions to either the Receiver (firstname.lastname@example.org) or his counsel (email@example.com).
On May 6, 2014 a class action lawsuit was filed by several Summit claimants acting as named plaintiffs against TD Ameritrade and Charles Schwab. This suit relates to the roles of TD Ameritrade and Schwab as custodians of Summit-related fund investments. A copy of the complaint is available here.
Questions about the lawsuit should be directed to:
Badge Humphries, Esq.
MOTLEY RICE LLC
28 Bridgeside Boulevard
Mt. Pleasant, South Carolina 29464