In Summary, Our Efforts in Plein Thus Far

As many of you are aware, the financial scam perpetrated by the Pleins was extensive and involved hundreds of victims.  In addition to the hundred plus investors, there were dozens of tenants and hundreds of unpaid creditors.  Most of the properties were poorly maintained and there were constant emergent situations  that required application by the Trustee in Order to get repairs approved.  There have been approximately 1,000 filings docketed with the Bankruptcy Court in this matter, and we have forty-two claimants, which means we have received over 42,000 mailings in this case in addition to the thousands of e-mails that have been sent and the countless phone calls.

We have worked diligently with all parties involved, most often with the law firm representing the Trustee, to resolve each and every issue involving each and every client and property.  Jim has had to devote a substantial amount of this practice to working on the Plein matter.  We have been to Court several times, met with numerous state and federal agencies and prosecutors, as well as many members of the Press.  Our efforts were largely responsible for the Arizona Corporation Commission filing a $20 million judgment against the Pleins in the event any funds surface after the BK is over.  We also litigated an adversary proceeding in the Bankruptcy Court with the result that none of our client’s claims will be discharged in the BK.
Early on the Trustee made the determination that the first properties that would be resolved were those properties that were uninsurable due to various hazardous conditions.  Other priorities were afforded to properties where there were tenant problems.  We have worked with the Trustee over the past twenty months to handle the liquidation of the over 100 properties involved in the Bankruptcy.
We initially tried to reach our own determination of what the status was of the various titles and liens and we did start to conduct our own title reviews on some of the properties; however, once we learned that Trustee’s Counsel was conducting title searches on each property, there was no reason to duplicate the effort because it was clear early on that many of the Deeds of Trust our client’s possessed were not recorded, or had been discharged, which meant they were unsecured and would not receive payment.  Under the terms of our retainer, the client would be responsible for case costs, and it did not make sense to incur a charge that was unnecessary, since the Trustee was already obtaining the searches.  We will note that we have not charged these costs back to any of our clients.  In fact, the only compensation we received for the first year was a $2,500 retainer, which we since have reimbursed back to the clients that provided the retainer.

This case has progressed on the Trustee’s timeline, not ours, and we have dealt with each property as the trustee has “put them on the block”.  So far, the case has been moving slowly, but smoothly, but most recently the Trustee has decided to get out of the property management business and to abandon the remaining properties. As to the first lien status, virtually all of our clients were led to believe that they were in first position, As it turned out, a vast majority of them were not, and most of the valid first liens were followed by subordinate liens that required negotiation or foreclosure in order to obtain the property.

We have made extraordinary efforts to protect our client’s interest and to obtain whatever funds were available.  Since we accepted clients on a contingency basis, and thus far we have done the best job we can to maximize the recovery for all of our clients.  We realize that there is nothing that we can say or write that will make many of you pleased with the situation;  your family is a crime victim, along with other 100 other families. We are doing the best we can to maximize any recoveries for any of our clients in this bankruptcy matter. The trustee made the determination early on that creditors with unrecorded liens would not receive payments from the sale of the individual properties, and creditors with priority liens were more likely to recover than creditors with secondary, tertiary, or other junior liens. Operating under these guidelines, we have done the best we can to recover money whenever possible and negotiate the best outcome for our clients.

After the properties are all taken care of, the trustee will move on to dealing with safety deposit claims from tenants. We are unsure how the trustee plans to tackle this issue, but will keep everyone apprised of the trustee’s decisions as they become clear. There are still a few properties in the bankruptcy and clients with liens on those properties that we are trying to help. In many other cases, Mr. Plein told clients that he had recorded their first position liens, but ended up not recording the liens at all. In those cases we are still hoping that the creditors with unsecured liens will receive some payment, albeit nominal, at the close of the estate when the final accounting is complete. As always, we will try to keep everyone updated as the case further progresses. Thank you for your continued courtesy and cooperation with our firm.


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