Victim distribution plan filed by USFIA Receiver
USFIA victims are one step closer to distribution payments, following the Receiver’s filed plan of distribution.
The USFIA Receiver’s plan was filed on December 7th, the day after BehindMLM reported $45.2 million in USFIA victim claims had been approved.
As per the Receiver’s memorandum supporting the proposed plan, there is an estimated $65 million to be distributed to USFIA victims with allowed claims.
On the surface this looks like a 100% recovery with surplus, however once Amkey/Vecast and Apollo REIT claims are factored in, the total allowed claims amount is $80.7 million.
Amkey/Vecast and Apollo REIT were part of the fraudulent entities Steve Chen ran along with USFIA.
Investor funds were commingled between Chen’s various scams, dating back to 2004. As per forensic accounting however, only claims pertaining to investment made after January 2010 are eligible for processing.
This is due to ‘all of the money recovered for distribution is tied to investments made and assets acquired after January 2010.’
Turns out that by the time BehindMLM reviewed USFIA in 2015, Chen had already been defrauding investors for over a decade.
Another interesting tidbit is that after USFIA was shut down, Chen and his associates went on to launch ALCoin and Lucky Coin (I believe these were targeted at mainland China investors as reload scams).
Both of these Ponzi schemes failed but seeing as they’re not Receivership entities, claims from victims of the schemes are disallowed.
Other disallowed claims of note include:
- Kim R Holland – USFIA insider who hosted company events, rejected $8000 claim
- Mo Chen – One of Steve Chen’s sons and an obvious USFIA insider, rejected $413,531 claim
- Steamfront Investment Group – a USFIA insider filed a claim on behalf of what is now a Receivership entity, rejected $2.07 million dollar claim
- Ally Investors – a USFIA insider filed a claim on behalf of one of Chen’s scam companies, rejected $3.03 million dollar claim
The Receiver’s proposed plan also provides an update on the ongoing potential USFIA tax liabilities.
The Receiver must wait for the Internal Revenue Service (“IRS”) and the Franchise Tax Board (“FTB”) to review the tax returns and determine their respective positions before the outcome is certain and distributions can be made.
The Receiver states
if the IRS and FTB accept the returns as filed, there should be little to no income tax liability from those returns.
However, the Receiver cannot assume that the taxing authorities will agree with the Receiver’s tax positions and accept the returns as filed.
In addition, there may be other income tax issues beyond the returns filed by the Receiver, including issues arising out of returns filed by Mr. Chen or other entities Chen formed or which are otherwise associated with the fraudulent scheme.
Unfortunately there doesn’t appear to be a timeline on how long the IRS and FTB reviews will take.
Pending resolution of USFIA’s potential tax liabilities and court approval of the Receiver’s proposed distribution plan, stay tuned…