Questions for the Receiver?

The best way to communicate with the Receiver is by email at info@mak1receiver.com.

MAK 1 Enterprises Group LLC Servicing

RECEIVER’S UPDATE – NOVEMBER 22, 2013 - RECEIVER HAS IMPLEMENTED FIFTH AND FINAL DISTRIBUTION

The Receiver has now implemented a final distribution to all investors with approved claims. The total amount of this distribution is $333,903 and represents 2.15% of each approved claim. This brings total distributions to a total of $4.25 million, representing a 27% recovery. This is consistent with our projection early in the receivership of a potential investor recovery of 15-30% of overall investor losses of $15.3 million.

Click here to see a copy of the memorandum that accompanied each check.

The work of this receivership is now done. We will now proceed to file a Final Account and Report and an application for discharge of the Receiver and approval of the final fee application. Please send any questions you may have to info@mak1receiver.com or call the Receiver’s office in San Diego at 619-696-9200.

RECEIVER’S UPDATE – October 4, 2013

The receivership is continuing to wind down its operations and to collect payments from any final settled clawback cases where investors were subject to a payment plan. 

The Receiver projects that this wind down will be completed before year end 2013.  Upon submission of a final report, the Receiver will seek Court approval to make a final distribution to investors of all remaining net assets – that distribution is estimated at 2% of approved claims.  We will post further updates as to the exact timing of such a final distribution.

RECEIVER’S UPDATE – May 30, 2013

The receivership is winding down its operations and is continuing to collect payments from settled clawback cases where investors were subject to a payment plan.  The underlying cases brought by the SEC and the CFTC have been resolved with Judgments against all Defendants and the Court has closed those cases, preserving jurisdiction, as needed, to complete the receivership.
The Receiver expects to wind down the receivership by the end of 2013 with one final distribution to investors, which is estimated at approximately 2% of approved claims which would bring the total recovery by investors to 27%.

RECEIVER’S UPDATE – NOVEMBER 19, 2012 – FOURTH DISTRIBUTION TO INVESTORS HAS BEEN MAILED; RECEIVER’S INTERIM REPORT

The Receiver has implemented a fourth distribution to investors totaling $660,000. Checks were mailed November 15, 2012. This represents another 4.25% payment against total approved losses of $15 million and brings total distributions to $3.9 million representing a 25.25% recovery to date. We are continuing to collect payments from a small number of settled clawback cases where investors were subject to a payment plan. We anticipate making a further distribution, as clawback payments are completed, in the Fourth Quarter of 2013. This future distribution will most likely not exceed another 1-2% of approved claims.

On November 20, 2012, the Receiver filed an Interim Report with the Court summarizing the current status of the receivership. Click here to read that report.

RECEIVER'S UPDATE - JANUARY 15, 2012 - RECEIVER HAS APPROVED A SECOND INTERIM DISTRIBUTION

The Receiver has approved a second interim distribution equal to 6% of the approved claims. This distribution will total $931,824, with each investor receiving a payment equal to 6% of their approved claim. The distribution will be implemented before the end of January 2012. This distribution will bring the total distribution to $2,484,866, representing 16% of approved claims.

Please contact us if you have had a change of address.  

RECEIVER’S UPDATE – MAY 1, 2012 – THIRD DISTRIBUTION TO INVESTORS APPROVED FOR MAY, 2012

A third interim distribution totaling $750,000 will be made during May, 2012.  This represents another 5% payment against total approved losses of $15 million and will bring total distributions to $3,261,386 representing a 21% recovery to date.  We are continuing to collect payments from settled clawback cases where investors were subject to a payment plan.  We will make further distributions as funds are available.  At the latest, we will make a further distribution in November, 2012, when a $400,000 settlement vests and will be available.

RECEIVER'S UPDATE - JANUARY 15, 2012 - RECEIVER HAS APPROVED A SECOND INTERIM DISTRIBUTION

The Receiver has approved a second interim distribution equal to 6% of the approved claims. This distribution will total $931,824, with each investor receiving a payment equal to 6% of their approved claim. The distribution will be implemented before the end of January 2012. This distribution will bring the total distribution to $2,484,866, representing 16% of approved claims.

Please contact us if you have had a change of address.  

RECEIVER’S UPDATE – DECEMBER 12, 2011

We have now settled with or secured default judgments against the majority of defendants in the clawback cases against investors who received profits from MAK 1. In one case, two defendants are the subject of a pending motion for summary judgment. In the other case, three defendants are the subject of pending applications for default judgments, with another likely to be sought due to a default on a settlement. Another four defendants are awaiting confirmation of formal service of process – in these situations service was delayed because the defendants were domiciled outside the U.S. or could not easily be located within the U.S.

We currently have cash funds on deposit of $1,879,368.70 following the earlier distribution of $1.5 million. We have additional contractual commitments from clawback defendants who have settled totaling $2,045,311.72, which will be paid pursuant to payment schedules set forth in the settlement agreements.

The receivership will implement a second interim distribution to all investors with approved loss claims in January, 2012.

RECEIVER'S UPDATE - OCTOBER 7, 2011 - RECEIVER HAS IMPLEMENTED FIRST INTERIM DISTRIBUTION TO INVESTORS

The Receiver has today dispatched checks representing the first interim distribution to investors with approved claims. This distribution totals $1.5 million and is paid out in equal pro rata shares of 10% on each claim. No formal objections were submitted to the Receiver as to the Preliminary Schedule of Claims and no formal objections were filed with the court or the Receiver as to the Final Schedule of Claims. Hence the Receiver's Final Schedule is approved. We did receive a variety of informal questions and request for clarification, all of which were resolved satisfactorily.

RECEIVER'S UPDATE - SEPTEMBER 16, 2011 - RECEIVER'S FINAL RECOMMENDATIONS RE CLAIMS

The Receiver has today filed Final Recommendations re: Claims. Click here to read the Receiver's notice which also confirms the remaining procedures for completion of the claims process.  Click here to read the Final Schedule of Claims - for this website posting we are listing only by first name and last initial to protect privacy over the internet. 

RECEIVER'S UPDATE – AUGUST 9, 2011 – COURT HAS ENTERED ORDER APPROVING INTERIM DISTRIBUTION AND CLAIMS PROCEDURES

By an Order filed August 8, 2011, the Court has granted the Joint Motion of the Receiver, the SEC, the CFTC, and the California Department of Corporations for approval of an interim distribution and procedures for final claims determination.

To read a copy of the Order, click here.  To read a copy of the form of notice letter, which will be sent to all investors, click here.  To read the Receiver's Preliminary Schedule of Investor Claims, click here.  For privacy reasons, that schedule is sorted by first name and last initial.  Each investor will also receive an individual notice with their full loss calculation.  If you are confused by the Preliminary Schedule or have other questions, please call the Receiver's office at 619-696-9200 or email us at info@mak1receiver.com.

Here is a brief summary of the procedures approved by the Court:

1. The Receiver will post the Preliminary Schedule of investor loss calculations on the Receiver's website and send individual notices to each investor.  (Notices with this information have previously been sent by the Receiver to investors and any issues brought to the Receiver's attention have been informally reviewed and resolved.)

2. Investors may object to the Receiver's calculation by sending written objections by certified or registered mail to the Receiver's office.  Effective August 15, 2011, the Receiver's new address is 655 West Broadway, Suite 1600, San Diego, CA 92101.  This procedure may seem burdensome, but it is really designed to protect investors as it creates a formal confirmation of delivery.  In addition, investors may call the Receiver's office at 619-696-9200 or email us at info@mak1receiver.com to work out any issues with our staff. 

3. The Receiver will accept written objections up to Friday, September 9, 2011.  The deadline in the Order is August 15, 2011, but we will ask the Court to extend that – our Motion with the August 15, 2011 deadline was filed July 19, 2011, but the Court did not actually enter its Order until August 8, 2011, which made that deadline obsolete.

4. The Receiver will file Final Recommendations by September 16, 2011.  The date in the Order is August 20, 2011, but we will also ask the Court to extend that to September 16, 2011.  Investors may object to the Final Recommendations by following the procedures in paragraph 6 of the Order.

RECEIVER'S UPDATE - JULY 26, 2011 - DOES ATTORNEY PHILIP GREER HAVE INFORMATION ABOUT OTHER ASSETS?

The receiver's office has received several inquiries in the past week from investors who have been contacted by agents of attorney Phillip Greer, including David Merritt who is a former employee of Mak 1 and Mohit Khana. Mr. Merritt and other Greer agents apparently claim to have information concerning "$10s of millions of assets" that the receiver has not located and are soliciting funds from Mak1 investors to pursue these assets. Mr. Greer, as counsel, and Mr. Merritt, as a Declarant, in a case filed in Orange County, California, made similar claims more than one year ago. At that time, the United States District Court in San Diego which appointed the Receiver found Mr. Greer to be in contempt of court and ordered him to pay $5,600 in sanctions to the receivership. See Greer Order to Show Cause re Contempt and Greer Order re Contempt.

Mr. Greer was also expressly ordered by the Court to immediately provide all evidence to the receiver which substantiated these claims of other assets. It has been more than one year since Mr. Greer was ordered by the Court to substantiate these claims. He has not provided any additional substantiating evidence. Mr. Merritt has likewise not provided any substantiating evidence. Other than making arrangements to pay his Court-ordered contempt fine, Mr. Greer has not contacted the receiver's office. Mr. Merritt, who claims to be in possession of useful direct evidence that would be helpful to investors, has never contacted the receiver's office. Accordingly, investors should carefully examine the claims made by Mr. Merritt or Mr. Greer or others working with them about missing assets. These claims are apparently being made now in an effort to persuade investors to contribute funds to retain Mr. Greer.

Based upon the reports we have received, at least one investor has been told that David Merritt is in possession of the Mak 1 computers which were removed from the offices shortly before the receiver was appointed. The absence of these computers required the receivership to entirely rebuild the investor database from subpoenaed bank records, an expensive endeavor that could have been avoided had these computers been made available to the receivership. If any investor has information that David Merritt is in possession of the Mak 1 computers, please contact the receiver's office immediately. These computers are receivership property. We intend to provide the information to the Court as soon as possible.

Investors with questions about these issues should please contact the receiver's office in San Diego at 619-696-9200 or send an email to info@mak1receiver.com

Receiver's Update – July 19, 2011 Change in the Receiver and Law Firm

We appreciate that some investors may be confused by the change in Receiver and the name of the Receiver's law firm. In order to clear up any such confusion, we clarify both events here.

The original Receiver, Charles La Bella, appointed in August 2009, returned to government service in October, 2010 and was, therefore, not available to continue as Receiver. By an Order filed November 1, 2010, the Court substituted Thomas W. McNamara, Mr. La Bella's law partner, as Receiver.

The law firm of La Bella & McNamara served as counsel to the Receiver from the outset. Effective November 12, 2010, the lawyers at La Bella & McNamara, including Mr. McNamara as the Receiver, joined the national law firm Ballard Spahr. This was in effect just a name change, not a change in counsel.

As required by the initial Orders that appointed a Receiver, Mr. McNamara as Receiver shall continue to report directly to, and be accountable to, the Court and all payments to professional service providers, including Ballard Spahr, shall be subject to Court approval.

Receiver's Update – July 19, 2011 – Receiver and Plaintiffs file Joint Motion for Approval of Interim Distribution and Procedures for Final Determination of Claims

The Receiver today filed a Joint Motion, joined by the SEC, the CFTC and the California Department of Corporations as Plaintiffs in the two cases filed against MAK 1, for approval of an interim distribution to investors of $1.5 million and approval of procedures for the final determination of claims.

Once the Motion is approved, we will post the entire Order on this website – that will lay out all the procedures. In essence, the Receiver will be posting his Preliminary Schedule of Investor Claims and sending out individual notices to all investors with losses. Investors will then have an opportunity to object if they disagree with the Receiver's calculations of their losses Once the court has made a final determination of losses, we will proceed with an interim distribution. Further interim distributions will follow as we continue to collect funds.

Receiver's Update – July 19, 2011 – Receiver files Third Interim Report

The Receiver has today filed a Third Interim Report which updates the Court as to the financial condition of the receivership and the Receiver's current appraisal of the prospects for an investor recovery. To read the report click here.

In summary, the receivership now has cash funds on deposit of $2.3 million. $405,000 of that amount, however, is contingent and does not vest until November, 2012. Another $2.35 million is contractually committed in settlements with clawback defendants. We continue to project an ultimate recovery of 15-30% of the overall investor losses of $15.7 million.

RECEIVER'S UPDATE – MARCH 3, 2011 – SECOND INTERIM REPORT

The Receiver has today filed a Second Interim Report (click here to read) which provides an update of receivership activities with a focus on the “Prospects for Making Investors Whole”. The First Interim Report, also available on this website, set forth the details of the MAK 1 operation and the Receiver's efforts to reconstruct the financial records of MAK 1.
Here is a capsule summary of the key points presented in the Second Interim Report:

RECEIVER'S UPDATE – NOVEMBER 23, 2010 – MOHIT KHANNA SENTENCED TO 41 MONTHS IN FEDERAL PRISON

Mak 1's principal, Mohit Khanna, was sentenced to 41 months in federal prison by U.S. District Court Judge Larry Burns on November 15, 2010.  Mr. Khanna was also ordered to make restitution of $15,901,724.44 to 145 identified victims who suffered losses through Mak 1.  Khanna has no assets.  Funds recovered by the Receiver and distributed to investors will be credited to that restitution amount.

This sentence was imposed on the crimes Khanna pled guilty to in July, 2010 - one court of conspiracy to commit mail and wire fraud and one count of filing a false tax return.  The specific sentence was 41 months on the mail and wire fraud count and 36 months on the tax count with the 36 months to run "concurrent" with the 41 months.

We do not yet know which federal facility he will be assigned to by the Bureau of Prisons.  Investors with an interest in tracking his whereabouts can go to the Inmate Locator at www.bop.gov.

To read the Judgment in a Criminal Case filed November 15, 2010, click here.

RECEIVER'S UPDATE – OCTOBER 20, 2010 – CLAWBACK CLAIMS

On August 23, 2010, we filed a formal Complaint in the District Court to recover the profits of MAK 1 investors who had received profits. Based on the work product of our forensic accounting team, we identified approximately 50 MAK 1 investors and/or referral sources who received profits and/or commissions totaling $8.6 million. Beginning in March 2010, we placed profit recipients on notice of the Receiver's claim to return these profits and/or commissions. We were able to resolve some claims before filing suit. To read the Complaint, click here. The Receiver remains committed to seek settlements of these claims, but as necessary we will pursue formal litigation on those claims we are unable to settle.

The premise of the rule permitting Receivers to recover profits and referral fees is that the pain suffered by the fraud should be shared by all investors, not just the unlucky ones who lost money. See Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008). Unless the Defendants' principal is sought, these avoidance statutes are "strict liability" statutes, which do not require proof of wrongdoing or bad faith on the part of the defendant. Recoverability of these transfers will turn on the facts of each case. The factors will include when the payment was made, the circumstances surrounding the payment, and whether the defendant has assets to pay an avoidance judgment.

RECEIVER'S UPDATE – JUNE 17, 2010 – MOHIT KHANNA ENTERS GUILTY PLEA

Mohit Khanna today entered a plea of guilty to 2 criminal charges – one for conspiracy to commit mail and wire fraud and one for filing a false tax return - in connection with his operation of Mak1 Enterprises. The plea was entered before U.S. Magistrate Louisa Porter in San Diego federal court.

Click here to read the Criminal Information filed against Khanna on June 17, 2010.

Khanna was not taken into custody.  He will remain free until formal Sentencing which has been set for September 27, 2010 before U.S. District Court Judge Burns.  The maximum penalty Khanna faces for Count 1 is 5 years imprisonment, a $250,000 fine and supervised release for no more than 3 years.  As for Count 2, the maximum penalty Khanna faces is 3 years imprisonment, a $250,000 fine, the cost of prosecution and supervised release for no more than 3 years.  As a part of his plea, Khanna is also subject to a restitution order of $15,148,938.41 which is the current calculation of net investor losses.

Khanna's travel has been restricted to the Southern District of California, the D.C. metro area and Virginia.  Khanna must report all of his travel to Pre-Trial Services.   

RECEIVER'S UPDATE - APRIL 9, 2010 - RECEIVER FILES FIRST INTERIM REPORT

The Receiver has filed his First Interim Report which provides a summary of what transpired within MAK 1 and provides an indication of the prospects for an investor recovery. Click here to read the First Interim Report.

We repeat below key paragraphs from the First Interim Report:

"There remain some unanswered questions, but our investigation has yielded a rough reconstruction of MAK 1's finances from July 2007 until the Receivership. During this period, approximately 210 investors deposited approximately $35 million in to MAK 1. Those funds evaporated quickly—$27.1 million in investor distributions (as illusory gains, interest, or return of capital); $3.8 million in commissions paid to referral sources, some of whom were also investors; $3.1 million to or for the benefit of Khanna and his family; and the balance of approximately $1 million to cover "operating expenses."

"We estimate investor losses at between $14 and 15 million. Given the Defendants' lack of assets, the primary source of funds for an investor recovery will be disgorgement claims to recover profits and/or commissions paid to investors and third party referrers ("clawback claims") and claims against a limited number of service providers ..."

"...one of the duties of a Receiver in a ponzi scheme situation like MAK 1 is to identify investors who may have received "profits". Profits are defined as distributions above the amount of actual capital investment. The law authorizes the Receiver to recover those profits back from investors. These returned profits are then added to the pool of funds for later distribution, on a pro rata basis, to those investors who did lose money. See Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008)."

"Based on the work product of our forensic accounting, we have now identified 70 MAK 1 investors and/or referral sources who received profits and/or commissions totaling $9.1 million...We have now placed all of these recipients on notice of the Receiver's claim to return these profits and/or commissions, have commenced the necessary procedures to bring formal avoidance actions, and have initiated settlement discussions with a number of these targets."

Another development is the issuance on February 11, 2010 of a Contempt Order as to MAK 1 attorney Gustav Bujkovsky.  The Court ruled that Bujkovsky had violated the Court's August 18, 2009 Order freezing MAK 1 assets when he later transferred MAK 1 funds out of his trust account.  Bujkovsky did voluntarily deliver $200,000 from that account to the Receiver, but the Court ordered him to turn over an additional $209,508.12 by February 19, 2010 and pay a $500 per day fine until he complies.  Click here to read the February 11, 2010 Contempt Order.  Bujkovsky has since filed a Motion for Reconsideration on the grounds that he does not have the funds needed to comply with the Order and that such inability to pay precludes a contempt order.  The Receiver has opposed the Motion for Reconsideration, which remains pending.


RECEIVER'S UPDATE - NOVEMBER 5, 2009

The most recent developments include the following:


RECEIVER'S UPDATE - SEPTEMBER 9, 2009 - COURT ENTERS PRELIMINARY INJUNCTIONS; RECEIVER FILES PRELIMINARY REPORT

After a hearing on September 3, 2009, the Court entered Preliminary Injunctions in both the SEC Action and the CFTC Action. Those Preliminary Injunctions incorporate the terms of the Temporary Restraining Orders, entered August 18, 2009, and appointed Charles La Bella of La Bella & McNamara as Receiver. Click here for the Preliminary Injunction in the CFTC Action. Click here for the Preliminary Injunction in the SEC Action.

The Receiver has today filed the Preliminary Report of Receiver. Click here for the Preliminary Report in the CFTC Action. Click here for the Preliminary Report in the SEC Action. This Preliminary Report provides an overall update as to the current status of the receivership.

On September 3, 2009, the Court also conducted a hearing on its Order to Show Cause as to whether Mohit Khanna should be held in Contempt of Court. No final ruling was made and a further hearing on the issue was set for September 24, 2009.


The law firm of La Bella & McNamara, LLP has been appointed as Temporary Receiver over the business assets and operations of MAK 1 Enterprises Group, LLC ("MAK 1") based in San Diego, CA.

The Temporary Receiver has established this website as a vehicle to provide information to MAK 1 investors as to the status of the company and the legal proceedings against it and the possibilities for any recovery of their investment. We will place regular updates on this website. You may communicate with the Receiver and its staff by way of email at info@mak1receiver.com.

The Temporary Receiver was appointed in two cases filed in federal court in San Diego, CA. Cases were filed by the Securities & Exchange Commission ("SEC"); SEC v. MAK 1 Enterprises, et al., Case No. 09cv1784 BEN (CAB), and the U.S. Commodity Futures Trading Commission ("CFTC") and the California Corporations Commissioner; CFTC v. MAK 1 Enterprises Group, et al. Case No. 09cv1783 BEN (CAB). In addition to MAK 1, the cases names MAK 1's principal, Mohit Khanna, as a defendant and the SEC case names as Relief Defendants First Opportunities Management Group and Sharanjit Khanna. Both cases assert claims for securities fraud and other violations in the conduct of its investment business.

Click here to read the August 18, 2009 Order in the SEC case which appoints the Temporary Receiver. Click here for the CFTC Order. The court has set August 31, 2009 at 4pm as the time for the hearing on whether a Preliminary Injunction should be issued and whether the Temporary Receiver should be appointed Permanent Receiver.

Related Documents