SAN DIEGO — The former receiver of Silver Saddle Ranch, Regulatory Resolutions, filed a motion in a San Diego court on Feb. 8 with the goal to distribute reparations to investors of the ranch and Galileo Project.
According to the receiver, the court will hear the motion on March 19 at 9 a.m.
San Diego Superior Court Judge Joel R. Wohlfeil approved the ranch’s sale in November, more than a year after the state slapped Silver Saddle Ranch owners and other people with an injunction and civil suit on allegations of fraud. The ranch was sold for $2.1 million, while 1,020 acres of the Galileo Project are set to be sold for additional $900,000 to the same buyer at a future date.
The proceeds of the ranch’s sale will first go toward recouping the receiver’s costs of administering the project since November 2019. The remaining amount will hep start paybacks to investors, though the receiver has in the past claimed the Silver Saddle Ranch was not directly linked to the sale of surrounding Project land.
According to an Oct. 2019 news release from the California Department of Business Oversight (now the Department of Financial Protection and Innovation), Silver Saddle Ranch was used as central stage for the sale of desert land in California City’s Second Community. The state alleged that developer Thomas Maney and others persuaded more than 2,000 investors fractional investments of desert land for up to $30,000 per individual.
The DBO news release cited Maney as "the central figure in a scheme that violated state securities laws and targeted Filipino, Chinese and Spanish-speaking communities with high-pressure sales tactics and false promises" between 2011 and 2019.
The state estimated the alleged scheme cost investors $30 million. An injunction was granted Oct. 1, 2019, that shut down Silver Saddle Ranch, prevented further land sales and froze all related assets.
Since Regulatory Resolutions was appointed regulator in Nov. 2019, the company spent hundreds of thousands to maintain the property. In May 2020, the company received the court's permission to begin marketing it for sale, citing that it represented its largest single asset.
In its Feb. 8 motion, the regulator noted that "due to the limited assets in the Receivership Estate’s possession, none of the investors will be made whole, but the Receiver’s intent is to do what he can to distribute the funds he has acquired on an expedited basis."
Instead it proposes a pro rata distribution method to refund the investors. Refunds would involve calculating each investor's claim and diving it by the aggregate amount of all investor claims to get a pro rata figure, and then multiplied by the amount available for distribution.
"For example, assume that Investor A’s claim is $30,000, Investor B’s claim is $50,000, and aggregate investor claims of $1,000,000," the motion states. "In that scenario, Investor A’s pro rata share is 3% and Investor B’s pro rata share is 5%. If $100,000 is distributed, then Investor A would get $3,000 and Investor B would get $5,000."
After the receiver finalizes the investors' claims, the the final amount would be determined and divided for distribution.
"The Receiver submits that in this case, as in the cited cases, a pro rata distribution is the most equitable means of dividing the Receivership Estate’s limited assets among investors," the motion states.