Receiver’s first report

The receiver has issued his first report and you can read it at the receiver’s site.  The report starts off by saying that due to the short length of time and the volume of information to digest, the report is a preliminary and the contents may change a lot.  Let me break down a few juicy tidbits:

• Ed & Joel consented to the Preliminary Injunction.  This means that the restraining order has basically become permanent and that the court date for Monday is cancelled, since there’s no need for it now.
• Joel admitted that most of the ATMs sold weren’t real and the serial numbers made up. He said that he came up with the list of locations by combing the yellow pages and calling the location to see if they had an ATM there.
• While we all know that Joel can’t honestly claim ignorance, this document points out that because Ed could sign checks, did the tax returns and was also the registered agent of those Oasis Studio Rentals companies (the ones who received loans from NASI for large sums), he can’t claim it either.
• The receiver and the FBI showed up at NASI’s office on October 1st – the receiver to take over and the FBI to execute a search warrant. Joel was there with his lawyer when they arrived but didn’t stay.  The receiver also showed up at Ed’s office and took all NASI related documents.  They ended up with 92 boxes of documents, three computers from NASI’s office (along with drive images of those computers) and drive images of the two computers at Ed’s office.  This amounts to over 56,500 documents.
• Joel and Ed suck at bookkeeping.  I mean really suck.  They didn’t use an accounting software, a database of investors, didn’t keep their bank statements or other bank records, and didn’t have the usual financial reports like a Profit & Loss or a Balance Sheet.  This makes it much harder on the receiver since he now has to rebuild the books.
• When the receiver tried to freeze the bank accounts, he learned that all the accounts had been closed and moved to another bank.  When the accounts were frozen, there was over $461k in NASI’s account and only $46k in the various other accounts, some of which are personal.  So, only about half a million in total between it all.
• There are a total of 239 real ATMs, but two of the ATM locations have pulled the ATMs (because they didn’t receive their payments) so there’s only 237 ATMs left in operation.  The ATMs that were pulled are being held by the company who services them.
• The receiver initially thought that there were only two companies servicing those ATMs, but a third one turned up.  One servicer deducted $25k from the September payment for a pre-existing agreement and the receiver is rightfully demanding documentation.
• The ATMs currently bring in between $90k and $150k and the receiver would like to keep them running so they can sell off the legitimate ATM business.
• The receiver can run the ATM business from his office so he’d like to close NASI’s office to save money on rent.
• Joel tried to assert his 5th Amendment rights and refused to cooperate until given a plea agreement, but seemed to cave in pretty quick after the receiver’s lawyer talked to his lawyer.  He then cooperated with the receiver’s office to locate things on the computer such as the investor lists and the templates used to create those lists.
• NASI appears to have provided the employees with “pool counsel” and this lawyer told the receiver that the employees are asserting their 5th Amendment rights and won’t talk to the receiver until they get immunity.
• On November 1st, the receiver sent a letter to 2,450 investors.  Only 375 have filled out the online questionnaire to date.  I imagine that number will go up now that the letter has come out.
• The receiver has received 360 phone messages and 480 emails.
• NASI loaned money to a company called Fuel Doctor (Quatloos discussed this…somewhere… in that monster NASI thread).  It’s a company that sells a bogus fuel additive which claims it increases your MPG.  The receiver is looking into whether or not this company can be considered NASI-affiliated.  If it’s determined that it’s NASI-affiliated, then the receivership can suck up their funds too.
• The receiver is not hopeful that a decent recovery will be possible based on NASI’s current financial state.  There’s only $461 in NASI funds and the office equipment is worth less than $10k.  This means that the receivership will likely have to try to go after anyone they can, including Ed & Joel personally, affiliated entities (like the Oasis Rentals companies and possibly Fuel Doctor), assholes who aided the scam, and clawbacks.