University Times

Pitt and others who invested money with firms associated with disgraced investment fund operators Paul Greenwood and Stephen Walsh will have to wait at least until fall for a federal judge’s decision on a distribution of assets if a receiver’s request for more time to sort out how those assets should be disbursed is approved.

In a June 30 statement filed in New York federal court, receiver Robb Evans & Associates stated it was premature to make a recommendation on distribution of the assets held by Walsh, Greenwood and their affiliated firms (including Westridge Capital Management and WG Trading Company and WG Trading Investors), because its investigation into the defendants’ activities and related legal analysis is continuing.

At press time, the court had not acted on the receiver’s request.

The receiver’s motion would give investors and creditors 45 days to express their views on how the funds in the receivership estate should be disbursed.

Following that period, the Commodity Futures Trading Commission and Securities and Exchange Commission, which filed the federal court actions against the traders, would have 30 days to respond. Then, the receiver would have 30 days to file a proposed distribution plan with the court “with a request that the court set a hearing on the receiver’s motion and giving investors, creditors, the CFTC and SEC, and all other interested parties one last opportunity 14 days prior to the hearing to file a final reply brief.”

Under that timetable, it would be mid-October before the receiver would file its distribution plan with the court.

The receiver noted that it had reviewed submissions from Pitt, Carnegie Mellon and other investors as well as statements filed by the SEC and CFTC. “Even at the early stage of these matters, there are divergent opinions as to how the assets of the estate should be distributed,” the receivers told the court.

In requesting the judge’s approval of the timetable that allows for input from investors and creditors, the receiver noted, “While the receiver understands that all parties may not be satisfied with its proposed distribution plan, all parties will know that the receiver has, as part of this process, fully and fairly considered their views.”

On June 1, Pitt lawyers outlined their argument that $21.25 million in University funds transferred on Feb. 6 should be excluded from the receivership estate and returned to Pitt.

Vice Chancellor for Budget and Controller Arthur G. Ramicone stated at a meeting of the University Senate budget policies committee that the receiver’s preliminary report showed the firm had uncovered assets worth an estimated 60 cents on the dollar.

The exact amount of Pitt money at stake is unclear. In a joint complaint filed Feb. 20 in federal court against the fund operators and their related firms, Pitt sought damages in excess of $65 million and CMU sought damages of more than $49 million.

That lawsuit has been stayed as the CFTC and SEC actions proceed. (See March 5 University Times.)

—Kimberly K. Barlow