$45.2 million in USFIA victim claims allowed
The USFIA Receiver has allowed victim claims totaling $45.2 million.
As at November 9th, $15.3 million in claims and an additional $11.1 million in duplicate claims have been disallowed.
The figures were provided by the Receiver in his Twentieth Interim Report, spanning the second quarter of 2020.
Across related entities tied to USFIA founder Steve Chen (right), $80.4 million in claims have been allowed.
The Receiver has determined $53.7 million in claims have been disallowed.
As of June 30th, 2020, the USFIA Receivership is sitting on $63.8 million.
Looking forward, the Receiver writes he
is preparing a motion to approve the Receiver’s objections to claims and establish a Plan of Distribution.
With respect to USFIA’s ongoing tax issues (detailed in our previous report);
Now that the Receiver’s Forensic Accounting Report has been filed, that accounting is being used to prepare income tax returns for the pre-receiver tax periods.
It appears that the Receivership Entities could have significant potential income tax liabilities.
The Receiver could be personally liable to the IRS if he makes a distribution to investors without first resolving the outstanding federal tax liabilities.
The Receiver believes any tax claim of the IRS and Franchise Tax Board should be equitably subordinated to all investor claims.
The Receiver has therefore made contact with the IRS and Franchise Tax Board in order to establish communications and hopefully obtain the taxing agencies consent to subordination of their claims until all investors are paid in full.
There was a similar situation between the IRS and TelexFree Trustee, potentially putting victim claims at risk.
That was eventually resolved with the IRS drastically reducing their $429 million dollar claim, allowing victim distributions to go ahead.
I’d imagine a similar resolution will occur with USFIA but can’t say for sure. I’ll continue to monitor the case docket for updates.