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UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

SECURITIES AND EXCHANGE COMMISSION, ) ) Plaintiff, ) ) v. ) Civil Action No. ) 3:17-cv-00155-VAB ) MARK J. VARACCHI and ) SENTINEL GROWTH FUND ) MANAGEMENT, LLC, ) ) Defendants, ) and ) ) RADAR ALTERNATIVE FUND LP and ) RADAR ALTERNATIVE MASTER FUND SPC, ) ) Relief Defendants. ) )

MOTION FOR ENTRY OF AN ORDER APPROVING SETTLEMENT AGREEMENT BETWEEN THE RECEIVER AND TARAN ASSET MANAGEMENT, LLC, CHRISTOPHER GLEASON, EDMOND W.

TSCHAN III, ROBIN TAXMAN AND MYRON TAXMAN

By this motion (the “Motion”), Jed Horwitt, Esq., in his capacity as the Court-appointed

receiver (the “Receiver”) for Sentinel Growth Fund Management, LLC (“Sentinel”), Radar

Alternative Fund LP (“Radar LP”) and Radar Alternative Master Fund SPC (“Radar SPC” and,

together with Radar LP, collectively, the “Relief Defendants,” and the Relief Defendants together

with Sentinel, collectively, the “Receivership Defendants”), respectfully seeks an Order approving

and authorizing (i) the settlement agreement (the “Settlement Agreement”) entered into between

the Receiver, on the one hand, and Taran Asset Management, LLC (“Taran”), Christopher Gleason

a/k/a Carroll Christopher Gleason a/k/a Carroll C. Gleason a/k/a C. Christopher Gleason (“Mr.

Gleason”), Edmond W. Tschan III (“Mr. Tschan”), individually and on behalf of his qualified

Versatile Investment Program Account at Morgan Stanley, Robin B. Taxman (“Ms. Taxman”),

Case 3:17-cv-00155-VAB Document 103 Filed 04/12/19 of 16

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and Myron Taxman (“Mr. Taxman” and with Taran, Mr. Gleason and Ms. Taxman, sometimes,

collectively, referred to as the “Taran Defendants,” and the Taran Defendants with Mr. Tschan,

sometimes, collectively, referred to herein as the “Settling Defendants”) dated as of March 28,

2019, and attached hereto as Exhibit 1, and (ii) the terms and conditions of the settlement set forth

therein (the “Settlement”).

The plaintiff, Securities and Exchange Commission (the “Commission”), and the

defendants, Mark J. Varacchi (“Varacchi”) and Sentinel, have represented that they have no

objection to the relief requested by this Motion. In support of this requested relief, the Receiver

respectfully represent as follows:

FACTUAL BACKGROUND AND NATURE OF THE PROCEEDINGS

1. On February 2, 2017, the Commission commenced this civil action by filing its

complaint (the “Commission’s Complaint”) against the defendants, Varacchi and the Receivership

Defendants, in the United States District Court for the District of Connecticut. Securities and

Exchange Commission v. Mark J. Varacchi, et al. (Civil Action No.: 3:17-cv-00155-VAB) (the

“SEC Action”).

2. On April 18, 2017, the Commission filed its Assented to Motion for Appointment

of a Receiver (ECF No. 10, the “Motion to Appoint”) seeking the appointment of Jed Horwitt,

Esq. to serve as receiver for the Receivership Defendants.

3. On May 1, 2017, this Court entered the Receivership Order and appointed Jed

Horwitt, Esq., to serve as receiver over the Receivership Estate and the Receivership Assets as

defined therein. (ECF No. 12). “Receivership Assets” and the “Receivership Estate” are defined

interchangeably in the Receivership Order as “all property of whatever kind of Sentinel and the

Relief Defendants…including the Radar Funds’ remaining assets, the Private Investments, and any

additional assets of the Receivership Defendants that may be recovered….” (Id., ¶ 1). “Private


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Investments” are defined as “investments in companies (the “Companies”) that were made in the

name of Sentinel or Varacchi with funds from Sentinel or the other Radar Funds.” (Id. at 2).

4. On February 14, 2018, the District Court entered its Order Reappointing and

Reaffirming Jed Horwitt, Esq., as Receiver (“Reappointment Order”) over the Receivership Estate

and the Receivership Assets, on the identical terms as set forth in the original Receivership Order.

5. Under the terms of the Receivership Order and Reappointment Order, the Receiver

is authorized to assume control of, marshal, pursue, and preserve the Receivership Assets with the

objective of maximizing the recovery of assets, and, to the extent that assets recovered are

inadequate to make defrauded Investors whole, ensuring that the distribution of those assets is as

just and equitable as practicable (id. ¶ 2.), to take custody, control, and possession of all

Receivership Assets and relevant records from the Receivership Defendants (id., ¶ 5. A.), to take

necessary and appropriate actions for the preservation of Receivership Assets or to prevent the

dissipation or concealment of those Assets (id. ¶ 5, C), and to issue subpoenas, bring legal actions,

and pursue, resist, and defend all suits and legal proceedings concerning the Receivership Assets

(id. ¶ 5, D-G).

6. The Receivership Order and Reappointment Order provide that, although leave of

the District Court is required “to resume or commence certain litigation,” the Receiver “is

authorized, empowered, and directed to investigate, prosecute, defend, intervene in or otherwise

participate in, compromise, and/or adjust actions in any state, federal or foreign court or proceeding

of any kind as may in his discretion, and in consultation with the SEC counsel, be advisable or

proper to recover and/or conserve Receivership Assets.” (Id. ¶ 19.)

7. Thus, although the Receiver generally has the authority to enter in to the Settlement

and the Settlement Agreement without any further order from this Court, in this particular instance,

considering the claims and amounts involved, the interests of disclosure to all parties-in-interest


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in this Receivership Proceeding, and the desire for affirmation of the Settlement and Settlement

Agreement, the Receiver by this motion seeks this Court’s specific approval and authorization.

NATURE OF THE PROCEEDINGS AGAINST THE SETTLING DEFENDANTS

8. On April 5, 2016, Gleason caused Taran to sue, among other defendants, Varacchi

in the U.S. District Court for the Northern District of Illinois. The case was captioned Taran Asset

Management, LLC v. Mark Varacchi, et al., Civil Action No.: 1:16-cv-04011 (the “Illinois

Action”).

9. The Complaint filed in the Illinois Action (the “Illinois Complaint”) alleged that

Taran was an “asset management company” for a separate hedge fund, and that Varacchi served

as Taran’s chief operations officer.

10. The Illinois Complaint alleged that between February 2012 and June 2013,

Varacchi and that certain entity, Concept Fund Services, LLC (“Concept”), through the individual,

Jason Rhodes (“Rhodes”), embezzled over $430,000.00 from Taran by coordinating payments to

“Sham Vendors” to pay invoices for services that were never provided to Taran.

11. The Illinois Complaint further alleged that through a series of “ATM transactions,

payroll manipulations and accounting falsifications,” Varacchi embezzled additional amounts

totaling over $550,000.00 from Taran.

12. Thus, the Illinois Complaint asserted that in total, between February 2012 and

December 2013, Varacchi and Concept, through Rhodes, embezzled over $980,000.000 from

Taran.

13. The Illinois Complaint also alleged that on or around April 2013, Taran ceased its

operations.

14. Taran also named Sentinel and Radar LP as defendants in the Illinois Action. Taran

did not claim that Sentinel or Radar LP embezzled any funds from Taran. Rather, Taran made the


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general allegation that “[o]n information and belief, Varacchi and Rhodes used certain funds that

they embezzled from [Taran] to create Sentinel.” No specific dates, amounts or methods of

transfer were alleged.

15. After the commencement of the Illinois Action, on or about April 25, 2016, Taran’s

and Mr. Gleason’s attorney e-mailed Varacchi to solicit an “offer to resolve” the lawsuit and

threatening that “[i]f the parties cannot reach an agreement in principle [within three days] we

hereby reserve our right to forward the [Illinois] Complaint, and its supporting documents, to the

proper authorities.”

16. While Taran’s attorneys had apparently referred to Varacchi’s fraudulent activities

while with Taran, Varacchi immediately became concerned that Taran’s prosecution of its claims

in the Illinois Action would result in the scrutiny of his then current (and undiscovered) scheme

through the Receivership Defendants, and likely reveal their fraudulent nature. This concern was

significantly exacerbated by the threat from Taran’s counsel that they would contact the “proper

authorities” absent a quick settlement of the Illinois Action.

17. In order to perpetuate the Ponzi scheme and continue the fraud operated through

the Receivership Defendants, Varacchi settled the Illinois Action (the “2016 Taran Settlement

Agreement”) within weeks thereafter using funds Sentinel had received from investors Varacchi

had defrauded into investing as part of his Ponzi scheme. The 2016 Taran Settlement Agreement

provided Varacchi with a release of Taran’s and Mr. Gleason’s claims of fraud and embezzlement

based on conduct that he engaged in primarily (if not entirely) prior to the Ponzi scheme he

orchestrated through the Receivership Defendants. The settlement allowed Varacchi to avoid

Taran’s and Mr. Gleason’s scrutiny of the “business” he then operated—later admitted by

Varacchi, in both civil and criminal proceedings, to be a Ponzi scheme. The source of Sentinel’s


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funds used by Varacchi to make this Settlement Payment had been the investments made by

investors defrauded by Varacchi in furtherance of his Ponzi scheme.

18. On May 20, 2016, Varacchi caused Sentinel to transfer $1.1 million to its counsel’s

fiduciary account, who then, at Varacchi’s direction, on June 3, 2016, forwarded $1,080,000 as a

settlement payment (the “Settlement Payment”) to Taran.

19. On November 2, 2017, the Receiver commenced an action Jed Horwitt Esq.,

Receiver v. Taran Asset Management, LLC et al., (Civil Action No.: 3:17-cv-01840-KAD) (the

“Taran Action”) against, inter alia, Taran and Mr. Gleason in the United States District Court for

the District of Connecticut. The Taran Action originally sought to avoid, pursuant to the

Connecticut Uniform Fraudulent Transfer Act, Conn. Gen. Stat. §§ 52-552 et seq. (“CUFTA”),

the Taran 2016 Settlement Agreement entered into by Varacchi, among others, for Varacchi’s own

personal benefit, and, in particular, to avoid and recover the $1,080,000 Settlement Payment paid

by Sentinel to Taran pursuant to the Settlement Agreement.

20. On January 2, 2018, the Receiver filed his first amended complaint to add

allegations seeking to avoid $369,750 in transfers that Varacchi, in furtherance of his Ponzi

scheme, caused Sentinel to make to Taran and/or Mr. Gleason or for their benefit during the period

beginning August 22, 2013 through September 19, 2014 (the “TAM Investment Transfers”). (ECF

No. 12, the “First Amended Complaint”).

21. On February 2, 2018, the Receiver filed his motion to Amend the First Amended

Complaint to add Varacchi as a defendant (ECF No. 23, the “First Motion to Amend”), which the

Court granted on February 5, 2018 (ECF No. 24). The Receiver filed his second amended

complaint on April 13, 2018 (ECF No. 37, the “Second Amended Complaint”).

22. After filing the Taran Action, the Receiver uncovered evidence that appeared to

show that Varacchi had caused Sentinel to pay certain debts incurred by Taran prior to Sentinel’s


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existence and at a time when Varacchi was Taran’s Chief Operating Officer. In total, from October

15, 2013, through November 30, 2016, Varacchi, in furtherance of his Ponzi scheme, apparently

used assets of the Receivership Defendants or caused Sentinel to make a series of transfers to such

creditors of Taran for the benefit of Taran and Mr. Gleason in the aggregate amount of $390,279.88

(the “Taran Debt Transfers”, and together with the Taran Investment Transfers and Settlement

Payment, the “Taran Transfers”).

23. In the course of settlement negotiations, Taran and Mr. Gleason produced

substantial financial records to the Receiver in an effort to demonstrate that collection of a

judgment against these parties was unlikely and impractical. This production included bank

records which demonstrated how the proceeds of the settlement payment Varacchi had caused

Sentinel to pay to Taran were disbursed. The Receiver’s attorneys traced approximately $730,000

of the Settlement Payment proceeds (the “Subsequent Transfers”) to just three parties – Edmond

Tschan, Robin Taxman, and Myron Taxman (together, the “Subsequent Transferee Defendants”).

24. Accordingly, on June 15, 2018, the Receiver’s attorneys filed a motion to amend

the complaint to (i) to add allegations to existing causes of action to recover an additional

$390,279.88 in Taran Debt Transfers, and (ii) to assert a new cause of action against and to join

the Subsequent Transferee Defendants as defendants based on their status as subsequent

transferees pursuant to CUFTA §§ 52-552(b)(i) and (h)(a)(i) (ECF No. 40, the “Second Motion to

Amend”). In total, the Second Motion to Amend and the attached third amended complaint (“Third

Amended Complaint”) increased the total amount claimed in the TAM Action to $1,860,029. The

Court granted the Second Motion to Amend on July 26, 2018 (ECF No. 45), and the Receiver filed

his Third Amended Complaint on August 2, 2018 (ECF No. 47).

25. On September 7, 2018, the Receiver’s attorneys met with Mr. Gleason and his

counsel to discuss the possibility of a global settlement. At the September 7 meeting, Mr. Gleason


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informed the Receiver’s attorneys that the Third Amended Complaint misidentified Mr. Gleason’s

wife (one of the Subsequent Transferee Defendants) as Rachael Taxman, instead of her correct

name, Robin Taxman. Mr. Gleason also explained how the alleged Taran Debt Transfers had not

been on account of any goods or services provided for the benefit of the Taran and Mr. Gleason.

Instead, according to Mr. Gleason, they constitute another fraud by Varacchi upon Sentinel and

the Receivership Defendants.

26. On September 12, 2018, the Receiver’s attorneys amended the Third Amended

Complaint pursuant to Fed. R. Civ. P. 15(a)(1) solely to correct the name of the defendant, as

Robin Taxman. (ECF No. 52, the “Fourth Amended Complaint” or the “Operative Complaint”).

THE RECEIVER’S CLAIMS AGAINST TARAN AND MR. GLEASON

27. As it has since become apparent, Varacchi operated a Ponzi scheme through

Sentinel and Radar, LP from their inception in approximately September of 2013, through its

discovery in approximately December, 2016. “Once it is determined that a Ponzi scheme exists,

all transfers made in furtherance of that Ponzi scheme are presumed to have been made with

fraudulent intent.” Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Secs. LLC, 531 B.R. 439,

471 (Bankr. S.D.N.Y. 2015).

28. Thus, the Receiver contends that the Taran Transfers constitute avoidable

fraudulent transfers pursuant to CUFTA. In his defense, Mr. Gleason responded that the Taran

Transfers were made in good faith and in exchange for reasonably equivalent value. Under

CUFTA, an otherwise avoidable fraudulent transfer may not be avoided if the transfer was made

both in good faith and for reasonably equivalent value. See Conn. Gen. Stat. § 52-552i(a). The

good faith and reasonably equivalent value elements constitute affirmative defenses; the burden of

establishing each is on the party asserting it.

29. Pursuant to Conn. Gen. Stat. § 52-552d(a):


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Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise made otherwise than in the ordinary course of the promisor’s business to furnish support to the debtor or another person. 30. Mr. Gleason provided evidence to the Receiver’s attorneys that, during the time

Varacchi was Taran’s chief operating officer, Varacchi had fraudulently caused Taran to incur

debts for Varacchi’s personal benefit and had misappropriated Taran’s funds by paying fictious

entities (controlled by Varacchi and his associates) for goods and services Taran never received.

Mr. Gleason explained that Varacchi had used the funds he fraudulently obtained from Taran to

start the Receivership Defendants, and that the Settlement Payment corresponded significantly to

the benefit received by the Receivership Defendants from Varacchi’s fraud. The Receiver’s

investigation of Mr. Gleason’s position corroborated that Varacchi had misappropriated funds

from Taran, but the Receiver was unable to confirm or disprove that the funds had been used for

the benefit of the Receivership Defendants.

31. As a result of Varacchi’s fraud upon Taran during the time that he was its COO,

and Varacchi’s fraud in inducing Taran and Mr. Gleason to invest further in Sentinel, Taran and

Mr. Gleason may have held a restitution claim against the Receivership Defendants to the extent

the Receivership Defendants received a benefit as a result of such fraud. Accordingly, the

satisfaction of Taran’s and Mr. Gleason’s restitution claim may have provided “value” in exchange

for the Settlement Payment. See Armstrong v. Collins, 2010 U.S. Dist. LEXIS 28075, at *67-69

(S.D.N.Y. Mar. 24, 2010) (citing, inter alia, Scholes v. Lehmann, 56 F.3d 750, 757 (7th Cir. 1995)).

32. The Receiver has further concluded that there is substantial doubt as to whether

Taran or Mr. Gleason received any benefit from the Taran Debt Transfers.

33. The remaining issue which would be the subject of any litigation against Taran and

Gleason is whether they received the Settlement Payment and the Taran Investment Transfers from

the Relief Defendants in “good faith.” Quantam Sail Design Grp., LLC v. Liberty Enters., No.


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3:03cv281 (WWE), 2004 U.S. Dist. LEXIS 9679, at *6 (D. Conn. Mar. 26, 2004) (“The UFTA

does not define the term good faith; however, Connecticut courts have borrowed from bankruptcy

law where, in order to prove good faith, the transfer must have occurred in an arms-length bargain,

and the transferee must have no intent to, or knowledge of the fact that transaction will, hinder,

delay, or defraud others.”). After investigating this issue fully, including, meeting with Mr.

Gleason, the Receiver believes that there is a significant question as to whether the Settlement

Payment and the Taran Investment Transfers were received by Taran and Mr. Gleason in good

faith.

34. Additionally, the Receiver has concluded that the collection of any potential

judgment against Taran and Mr. Gleason would be extremely challenging. During the course of

settlement negotiations, at the Receiver’s request, Taran and Mr. Gleason provided substantial

documentation evidencing their current financial situation. Such documentation established (i)

how the proceeds of the Settlement Payment had been largely disbursed to Taran’s creditors and

investors, or otherwise dissipated and were no longer available for recovery, and (ii) Taran’s and

Mr. Gleason’s lack of financial resources to pay any judgment.

THE RECEIVER’S CLAIMS AGAINST THE SUBSEQUENT TRANSFEREE DEFENDANTS

35. As discussed above, the Receiver traced $730,000 of the proceeds from the

Settlement Payment to the Subsequent Transferee Defendants. Specifically, Mr. Gleason caused

Taran to transfer:

a. $400,000 to Mr. Tschan’s IRA held at Citibank on June 6, 2016; b. $26,000 in cash withdrawals and checks to Mr. Gleason personally; c. $247,700 to a Bank of America checking account (“BOA 8290”) in the name of

Mr. Gleason and Ms. Taxman jointly; d. $8,500 to a J.P. Morgan Chase joint checking account (“JPMC 4434”) in the name

of Mr. Gleason and Ms. Taxman jointly; and e. $45,000 to Mr. Taxman.

36. As discussed above, the Subsequent Transferee Defendants asserted that the


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Subsequent Transfers were received in good faith and in exchange for reasonable equivalent value,

and were thus not subject to avoidance under CUFTA.

37. The Receiver’s investigation of the Subsequent Transfers received by Mr. Tschan

and Mr. Taxman found that their payments were, in fact, received on account of antecedent debts

owed by Taran which satisfies the definition of “value” under§ 52-552d(a) of CUFTA. However,

as with Mr. Gleason and Taran, the Receiver has substantial doubt about whether Mr. Tschan could

establish his “good faith” at the time he received his payment. Ms. Taxman and Mr. Taxman have

substantiated their good faith in their receipt of the particular Subsequent Transfers they received.

SUMMARY OF MOST SIGNIFICANT SETTLEMENT TERMS

38. As set forth in the Settlement Agreement, Mr. Gleason has agreed to pay the

Receivership Estate $50,000 within 1 year. This debt shall be evidenced by a Promissory Note in

the form appended to the Settlement Agreement as Exhibit A.

39. The $50,000 debt due the Receivership Estate by Mr. Gleason shall be secured by

a mortgage on the residence, 451 Orchard Lane, Highland Park, Lake County, Illinois, 60035, (the

“Residence”) owned by Mr. Gleason and Ms. Taxman. The form of Mortgage Deed and Security

Agreement (the “Settlement Mortgage”) is appended to the Settlement Agreement as Exhibit B.

Ms. Taxman has agreed to undertake the obligation to pay the $50,000 debt solely to secure such

debt by the Settlement Mortgage, and further agreed to execute and deliver the Settlement

Mortgage. The Promissory Note and Settlement Mortgage have been fully executed by Mr.

Gleason and Ms. Taxman, and delivered to the Receiver subject to this Court’s approval of the

Settlement and Settlement Agreement.

40. Mr. Gleason has further agreed to cooperate with the Receiver and the Receiver’s

counsel “to assist them in any matter regarding Varacchi, the Receivership Entities and the

Receivership Assets.”


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41. Mr. Taxman currently holds a second mortgage against the Residence. As

consideration for the settlement of the Receivership Estate’s claims against Mr. Taxman, he has

agreed to subordinate his second mortgage to the Settlement Mortgage. The form of the Mortgage

Subordination Agreement is appended to the Settlement Agreement as Exhibit C.

42. Finally, Mr. Taschan has agreed to cause the payment of $200,000 to be made to

the Receivership Estate from his qualified Versatile Investment Program Account at Morgan

Stanley. The Receiver has received such payment, again, subject to this Court’s approval of the

Settlement and Settlement Agreement.

43. In exchange for the above along with all other terms and conditions set forth in the

Settlement Agreement, the Receiver has agreed to release all claims of the Receivership Estate

against the Settling Defendants.

44. The foregoing is only a summary of the most significant settlement terms set forth

in the Settlement Agreement. The Settlement Agreement itself constitutes the sole and complete

articulation of the parties’ Settlement terms and conditions.

STANDARD FOR APPROVAL OF SETTLEMENTS IN EQUITY RECEIVERSHIPS

45. A district court has broad powers and wide discretion to determine relief in an

equity receivership. Official Comm. Of Unsecured Creditors of WorldCom, Inc. v. SEC, 467 F.3d

73, 81 (2nd Cir. 2006); SEC v. Byers, 637 F. Supp. 2d 166 (S.D.N.Y. 2009); SEC v. Credit

Bancorp, Ltd., 124 F. Supp. 2d 824 (S.D.N.Y. 2000); SEC v. Vescor Capital Corp., 599 F.3d 1189,

1194 (10th Cir. 2010); SEC v. Elliott, 953 F.2d 1560, 1569-70 (11th Cir. 1992). This broad

discretion extends to this Court’s approval of the Settlement Agreement. Lemon v. Kurtzman, 411

U.S. 192, 200, 36 L. Ed. 2d 151, 93 S. Ct. 1463 (1973) ("[I]n shaping equity decrees, [a] trial court

is vested with broad discretionary power; appellate review is correspondingly narrow."); SEC v.

Certain Unknown Purchasers of the Common Stock of and Call Options for the Common Stock of


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Santa Fe Int'l Corp., 817 F.2d 1018, 1020 (2nd Cir. 1987) (citing Lemon v. Kurtzman to determine

that approval of a settlement in an equity receivership is reviewed for abuse of discretion).

46. While there are no federal rules mandating a standard for approval of a settlement

in an equity receivership, (see Gordon v. Dadante, 336 Fed. App’x 540, 545 (6th Cir. 2009)),

courts overseeing such receiverships have approved settlements which affect the recovery and

distribution to creditors of Receivership Estates when the proposed settlement is found to be “fair

and reasonable” and when “such action is prudent in the administration of the assets of the estate.”

SEC v. Wang, 944 F.2d 80, 84 (2nd Cir. 1991); SEC v. Princeton Econ. Int'l Ltd., 99 Civ. 9667

(RO), 99 Civ. 9669 (RO), 2002 U.S. Dist. LEXIS 2059, at *2 (S.D.N.Y. Feb. 5, 2002). Similarly,

courts will approve settlements where the receiver has analyzed the fairness of the proposed

settlement, weighed the benefits and costs of the proposed settlement to the estate, and ultimately

found the proposed settlement to be in the best interests of the estate. SEC v. Credit Bancorp, Ltd.,

99 Civ. 11395 (RWS), 2002 U.S. Dist. LEXIS 14033, at *14 (S.D.N.Y. July 31, 2002).

47. Further, as a general matter, there is a “well-established policy of encouraging

settlements” in all contexts. United States v. Hooker Chem. & Plastics Corp., 776 F.2d 410, 411

(2nd Cir. 1985); see also Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116-17 (public

policy favors settlement); accord Williams v. First Nat’l Bank, 216 U.S. 582, 595 (1910)

(“Compromises of disputed claims are favored by the courts ….”); TBK Partners, Ltd. v. W. Union

Corp., 675 F.2d 456, 461 (2nd Cir. 1982) (noting “the paramount policy of encouraging

settlement”).

APPLICATION TO THE PRESENT CASE

48. The Receiver submits that the terms and conditions of the Settlement Agreement

(appended hereto as Exhibit 1) are fair and reasonable, and the approval of the Settlement is in the

best interest of the Receivership Estate. Accordingly, this Court should approve the Settlement on


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the terms and conditions set forth in the Settlement Agreement because it will bring about a speedy,

just and economical resolution of the Receivership Estate’s claims against the Settling Defendants

without the need for engaging in costly and uncertain litigation.

49. The Receiver has considered the value of the Settlement to the Receivership Estate

and weighed it against the release of the Receivership Estate’s claims against the Settling

Defendants. The Receiver believes that the net benefit to the Receivership Estate will be

substantial. The costs saved by resolving the claims against the Settling Defendants without

resorting to litigation, the release of any claims the Settling Defendants might assert, and the

recovery of $250,000 to the Receivership Estate weigh heavily in favor of approving the

Settlement. The net benefit to the Receivership Estate outweighs the cost of settlement to the Estate

as it will ultimately increase the total assets available for distribution to victims of the fraud and

reduce legal expenses that would otherwise be necessary to pursue the Receiver’s claims.

50. Moreover, any risk that the Receivership Estate has released its claim to recover

money the Settling Defendants received from the Receivership Defendants beyond the transfers

identified in the Taran Action is mitigated by the terms of ⁋ 3 of the Settlement Agreement, which

provide that the Receivership Estate’s release of its claims and causes of action against the Settling

Defendants shall be null and void in the event that Settling Defendant’s affirmative representations

regarding their receipt of transfers beyond the transfers identified in the Taran Action are

discovered to be materially false.

51. The Receivership Order and the Reappointment Order grant the Receiver broad

authority and discretion to negotiate settlements. In the exercise of this discretion, the Receiver

has determined that the Settlement is in the best interests of the Receivership Estate and that the

benefit of the Settlement significantly outweighs any likely benefit that could result from litigating

the action against the Settling Defendants. As discussed above, it is also well within the wide


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discretion granted to this Court in overseeing an equity receivership to approve this Settlement as

it is fair, reasonable, and in the best interests of the Receivership Estate.

52. Accordingly, the Receiver respectfully submits that the Court should approve the

Settlement and approve and authorize the Receiver to enter into the Settlement Agreement.

CONCLUSION

53. For the reasons set forth above, the Receiver respectfully requests that that Motion

be granted, and the terms and conditions of the Settlement Agreement be approved in the form

attached hereto as Exhibit 1, and that this Court authorize the Receiver to enter into the Settlement

Agreement.

Dated this 12th day of April, 2019, at Bridgeport, Connecticut Respectfully submitted,

JED HORWITT, ESQ., RECEIVER /s/ Jed Horwitt Jed Horwitt, Receiver

By: /s/ Stephen M. Kindseth

Stephen M. Kindseth (ct14640) Zeisler & Zeisler, P.C. 10 Middle Street, 15th Floor Bridgeport, CT 06604 Telephone: 203-368-4234 X 245 Facsimile: 203-549-0903 Email: [email protected] [email protected] His Attorneys


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CERTIFICATE OF SERVICE I hereby certify that on April 12, 2019, a copy of the foregoing Motion for Entry of an

Order Approving Settlement Agreement between the Receiver and Taran Asset Management, LLC,

Christopher Gleason, Edmond W. Tschan III, Robin Taxman, and Myron Taxman was filed

electronically and served by mail on anyone unable to accept electronic filing. Notice of this filing

will be sent by e-mail to all parties by operation of the court’s electronic filing system or by mail

to anyone unable to accept electronic filing as indicated on the Notice of Electronic Filing. Parties

may access this filing through the Court’s CM/ECF System or at the Receiver’s website:

http://jedhorwittreceiver.com

/s/ Stephen M. Kindseth Stephen M. Kindseth


Case 3:17-cv-00155-VAB Document 103-1 Filed 04/12/19 Page 1 of 39

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