FAQs — Credit Nation Capital Receivership

Frequently Asked Questions

What exactly are the defendants accused of?
Please see the Court’s order and opinion dated April 25, 2016. The SEC alleges that James A. Torchia and his affiliated entities, including Credit Nation Capital, LLC and American Motor Credit, LLC, among others, sold promissory notes and fractional interests in life settlement agreements in violation of federal securities laws and that he operated a Ponzi scheme and misused funds raised from investors.

What does a Receiver do?
A Receiver is appointed by the Court to protect the assets of the corporation (or limited liability company) for the benefit of its creditors and/or investors. The Receiver evaluates and manages the affairs of the receivership companies and secures the return of as much investor money as possible. The Receiver investigates how the defendants raised money and how they spent the money raised. If the Receiver determines that the defendants used investor money to buy assets, the Receiver can potentially seize and sell the acquired assets. If the Receiver discovers that a third party wrongfully received investor money, the Receiver will demand return of that money and file a lawsuit if necessary to secure return of the money. At the same time, the Receiver will seek to reduce the liabilities of the receivership companies by reducing or eliminating payroll, negotiating with vendors, and otherwise reducing the costs associated with the receivership companies. If the Receiver is ultimately successful in preserving assets for the creditors, he or she will develop and propose a plan for returning funds to the creditor and/or investors.

Will investors get their money back?
It is too early to tell, but the Receiver's goal is to find and secure as much as possible for ultimate return to the investors. It is highly unlikely that investors will receive their entire principal investment.

When will the investors get any of their money back?
Assuming success in recovering enough assets to make a distribution, the investors probably will not receive any of their money for several months, at a minimum. The Receiver is mindful that lack of access to these funds creates a hardship for many investors. For that reason the Receiver and his team are working as fast and efficiently as possible to identify and recover assets.

Will the defendants in the SEC's case face criminal prosecution?
The United States Attorney's Office will have to make that decision. The Receiver has no knowledge about whether the criminal authorities are interested in the case.

Is it the Receiver’s intention to “fire sale” all of the assets?
No. It is the Receiver’s intention to get the highest value possible for the assets. In some cases, particularly where the current market value is low in comparison to the death benefit, this may mean retaining life settlement policies, and paying their premiums, until maturity. In others, it may make more sense to sell the asset now in order to avoid future expenses and the uncertainty of maturity dates. The Receiver will evaluate each policy separately in order to determine the appropriate action with respect to each.