company afloat absent the revenues generated through the illegal sale of unregistered securities. According to the SEC's as-yet-undisputed allegations, the ILN has $ 500 million worth of obligations to investors, but has only $ 4 million in liquid assets, $ 5 million in real property, and tax lien certificates for property worth $ 75 million in assessed value. The Court is concerned that if the ILN's assets do not remain frozen, there may be little left for distribution to the investors if this case ultimately results in a permanent injunction and disgorgement. Accordingly, the Court will continue the asset freeze with respect to ILN's assets. The Court will, however, lift the freeze on the personal assets of defendants Ford and Mundey. The Court has thus far been presented with no evidence of improper diversion of assets or secreting of assets by the individual defendants. Unless and until the SEC produces such evidence, defendants Ford and Mundey shall be entitled to access to their personal assets.
Because of the draconian nature of the relief ordered in this case, the Court will refrain from appointing a receiver at this time. Instead, the Court will leave the disbursement agent in place for 30 days, or until further Order of this Court, so that defendants may review this ruling and exercise their rights to appeal, if they choose. The disbursement agent shall have the powers set forth in the temporary restraining order. In addition, he shall have the authority to make payments to legitimate creditors who are not part of the ILN family.
By accompanying Order, the SEC is directed to submit a proposed Order consistent with the terms outlined in this Memorandum Opinion. Defendants will then have the opportunity to comment on the proposed Order. Until the Court's final ruling on the Order, the temporary restraining order shall remain in effect, except with respect to the individual defendants' personal assets.
ORDER - July 18, 1991, Filed
In accordance with the Memorandum Opinion issued herewith and for the reasons stated therein, it is this 18th day of July, 1991,
ORDERED that the SEC shall, by 4:30 p.m., July 19, 1991, file with the Court and serve on defendants by hand, a proposed Order consistent with the terms set forth by the Court in the Memorandum Opinion issued herewith; and it is
FURTHER ORDERED that defendants shall, by 4:30 p.m. July 22, 1991, file with the Court and serve on the SEC by hand, any objections or comments to the proposed Order; and it is
FURTHER ORDERED that counsel for all parties shall meet and propose, by July 23, 1991 a plan for a speedy resolution of this case by a trial on the merits within approximately 60 to 90 days; and it is
FURTHER ORDERED that there shall be a status conference in this case on July 24, 1991, at 1:30 p.m., in Courtroom 9, for the purpose of scheduling the final phase of this case; and it is
FURTHER ORDERED that, pending the issuance of a final Preliminary Injunction Order, the Temporary Restraining Order shall remain in effect in this case, except that the freeze shall be and hereby is lifted with respect to the individual defendants' personal assets.