8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 1 of 9 - Page ID # 213

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UNITED STATES DISTRICT COURT

U.S. DlSTt<ICT COURT

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Case No. 8:15-cv-317

vs.
CALISSIO RESOURCES GROUP, INC.,
a Nevada corporation; ADAM CARTER,
an individual; SIGNATURE STOCK
TRANSFER, INC., a Texas corporation;
and DOES 1-50

PRO SE Interested Shareholder Oscar

Defendants.

Response to Plaintiff's Motion to Appoint a Limited Purpose Receiver

I.

The Receiver in this Case is a Non-Neutral Party that COR is Instructing How to
Act and thus Appointment of the Receiver for COR's Specific Motive and
Intended Purpose Will Directly Result in a Breach of the Receiver's Fiduciary
Duties and Will be Contrary to the Purpose and Duties of a Receiver Grounded
in Law

A corporate receiver is supposed to be a neutral person and a fiduciary to ALL stakeholders

in the corporation's assets. I.e. Interested parties in this litigation - Including the corporation, its
shareholders and the creditors. "As the receiver owes a fiduciary duty, the receiver cannot be
impartial towards the receivership estate and is obligated to advocate to the court what he or she

believes to be the best course of action to protect, preserve, administer, and distribute the
receivership estate's assets" S.E.C. v. Schooler, No. 3:12-CV-2164-GPC-JMA, 2015 WL 1510949,

RECE~VED
OC T 2 6 201~
CLERK
U.S. otSTRtCT COURT
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8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 2 of 9 - Page ID # 214

at *3 (S.D. Cal. Mar. 4, 2015). A receiver acts as an officer of the court, Citibank, N.A. v. Nyland
(CF8) Ltd., 839 F.2d 93, 98 (2nd 1988), and owes a fiduciary duty both to the court and to any
person interested in the estate of which he has been made a receiver. See Sovereign Bank v.
Schwab, No. 03-4625, --- F.3d ----, 2005 WL 1579503, *3 (3rd Cir. July 6, 2005); County of
Oakland by Kuhn v. City ofDetroit, 784 F.Supp. 1275, 1286 (E.D.Mich.1992)
COR is asking the court to go against this very basic and common judicial principle of the
receiver as a fiduciary and officer of the court by specifically "instructing" the receiver to
command the DTCC to unwind the dividend through the post payable adjustment procedure.
What's the point in appointing a receiver if COR is already advocating on behalf of the receiver
and instructing the receiver on what to do? The purpose of a receiver is to advocate for interested
stakeholders not for only one party. COR is only one party that is interested in the assets and

business of the Corporation. The shareholders ... are another party and the receiver in this
case is designed to only look out for COR's interests. This is evident by COR's specific
instructions surrounding the limited purpose of requesting the DTCC to make post payable
adjustments. As a neutral person, the receiver is supposed to "act" in preserving the corporation's
assets as he deems most appropriate. The fact that COR is telling the receiver exactly what to do
(make the post-payable adjustment) means that the receiver is not a neutral and that he is not acting
as a fiduciary in the best interests of all interested stakeholders. On the contrary, the receiver in
this case is only serving the purpose and needs of COR Clearing. The receiver, as a fiduciary, owes
the stakeholders the duties of good faith and loyalty. How can the receiver maintain loyalty and
act in good faith towards the corporation and its shareholders when it is going to follow specific
instructions and motive of COR Clearing? This entire receivership scheme proposed by COR is
unfounded in law. The cases cited by COR and references to the SEC Ponzi schemes are distinct

8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 3 of 9 - Page ID # 215

from this case. In SEC receivership litigation, the receiver truly acts as a fiduciary to the
corporation and to the shareholders because in those cases, the receiver is attempting to mitigate
loss to innocent shareholders and creditors who were frauded by the corporation. In this case, COR
is specifically instructing the receiver (who is supposed to be loyal to the corporation and the
shareholders) to act in COR's best interest, when in reality, the receiver should act in a way he
deems most appropriate to preserve the assets of the corporation to ALL interested parties (not just
COR).
The appointment of a receiver by a federal court may be sought by any person or class
having an interest in property that a statute or one of the general principles of equity authorizes the
court to protect by this remedy. Inasmuch as a receivership may interfere seriously with defendant's
property rights by ousting him or her from control, and sometimes even possession, the party
seeking it must show that he or she has some legally recognized right in that property that
amounts to more than a mere claim against defendant. Piambino v. Bailey, 757 F.2d 1112,
1131 (11th Cir. 1985). The appointment of a receiver is considered to be an extraordinary remedy
that should be employed with the utmost caution and granted only in cases of clear necessity to
protect plaintiffs interests in the property. Kelleam v. Maryland Cas. Co. of Baltimore, Md., 312
U.S. 377, 61 S. Ct. 595, 85 L. Ed. 899 (1941). Factors typically influencing the district court's
exercise of discretion include the existence of a valid claim by the moving party; inadequacy
of legal remedies; lack of a less drastic equitable remedy; and the likelihood that
appointment of a receiver will do more harm than good. Aviation Supply Corp., 999 F.2d at
316-17.
II.

Moving Party Does Not Assert a Valid Claim of Right in the Property it Seeks to
Possess Through Post Payable Adjustment Procedures

8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 4 of 9 - Page ID # 216

COR may have a valid claim against CRGP through the form of a default judgment, but it does
not have a valid legal claim against funds belonging to brokerages and shareholders who will
be the ultimate parties affected by the appointment of a receiver. COR has not shown that
has a legally recognized right in the funds placed in shareholder's brokerage accounts. At best,
COR has speculated that funds in shareholder accounts belong to them. COR has not proven that
shareholders are in possession of their funds. In fact, COR admits that most of the ineligible
dividend proceeds were allocated to CRGP when CRGP purchased shares in its own stock from
COR 's clients Nobilis and Beaufort. If a limited purpose receiver is appointed, funds belonging

to shareholders will be removed from shareholder brokerage accounts and the funds will
inappropriately allocated to COR Clearing, even if those funds never belonged to COR clearing in
the first place. The fact that this non-neutral receiver will be allocating the funds to COR at COR's
direction and instructions is very freighting and this Court should be very cautions about this as it
could set precedent for abusive receivership litigation in future cases. Therefore, irreparable harm
and unjust enrichment is highly likely to occur if a receiver is appointed for the purpose of making
post payable adjustments. Also, the appointment of a receiver is an extraordinary equitable
remedy that is justified in only extreme situations. Aviation Supply Corp. v. R.S.B.I. Aerospace,
Inc., 999 F.2d 314, 316 (8th Cir.1993); Macon Lumber Company v. Bishop and Collins, 229 F.2d

305, 307 (6th Cir.1956). In fact, COR does not even have legal standing to collect funds from
shareholders. That is the precise reason why COR is attempting legal maneuvers (i.e. receivership
strategy) to seek recourse from the shareholders. COR was harmed by CRGP and its executives.
As a publicly traded corporation, COR does not have a valid claim against the innocent
shareholders who received the dividend in good faith. COR is attempting to use and abuse the
appointment of a receiver to pull funds from innocent parties who did not harm it. The legal claim

i #-

8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 5 of 9 - Page ID # 217

here exists as between Creditor COR and Debtor CRGP in the form of a default judgment. Neither
brokerages nor brokerage clients harmed COR. In FACT, COR was responsible for harming itself.
It was COR's own clients Nobilis and Beaufort who converted debt to equity shares in CRGP and

then sold millions of those shares to CRGP. Shouldn' t COR assume the risk of clearing
transactions in an unregulated (OTC) market with clients who do business with "fraudulent"
companies? It was this specific transaction which resulted in the attaching due bills and debit to
COR's account. Again, where are the innocent shareholders and brokerages in this transaction?
They were irrelevant and not involved with this transaction and yet COR wants to pull funds and
be made whole by these innocent parties? Although a valid iegal claim exists as between COR and
CRGP, NONE exists as between COR and brokerage firms and the brokerage firm clients and the
court should strongly consider this factor as it decides whether to appoint a receiver.
Ill.

Inadequacy of Legal Remedies and Lack of a Less Drastic Equitable Remedy

There are several other more appropriate legal remedies and less drastic equitable remedies
that COR clearing could take in order to be made whole and the court should strongly consider
this prong of the analysis.
To begin, COR should seek to limit post payable adjustments to only reverse the transaction
ofNobilis and Beaufort selling CRGP stock to CRGP "affiliates." This would limit recourse from
only those parties who were actively involved in the fraudulent conduct and should result in COR
being made whole. However, what COR wants to do is reverse the entire dividend which would
harm ALL parties, even those who innocently received the dividend proceeds without knowledge
of fraudulent conduct. The method that I propose, would put COR back into the position it was in
before the dividend payout, but COR' s proposed process will result in either COR being unj'ustly

8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 6 of 9 - Page ID # 218

enriched or an extra million dollars floating around that will be unclaimed since CRGP
disappeared.
Second, COR admitted to this court that DTCC had weaknesses that resulted in the inaccurate
dividend payments . .. In its complaint, paragraph 1, "Nature of this Action" plaintiff admits the
error was caused by "a weakness in the dividend payment system of the third- party Depository
Trust Clearing Corporation". (DTCC) (See COR's complaint) Interestingly, DTCC is not a named
defendant. COR could have Sl.led the DTCC for the alleged inaccurate debit to its accounts. In fact,
COR specifically stated in an email to the DTCC (see COR's complaint), that the DTCC will be
solely responsible for any inaccurate debits made to its account. Therefore, suit against DTCC is
one other legal remedy that COR could initiate. It seems as if the the DTCC knows that it is also
to blame and that is why the DTCC is working closely with COR to advise them on the receivership
strategy ... Here, DTCC and COR are both shifting the liability to unsuspecting and innocent
shareholders without taking any sort of responsibility for their negligent actions.
Third, FIN RA approved the special dividend which was more than 500% of the stock price.
Why didn't FINRA question this sooner? Why didn't FIN RA investigate and halt the stock,. sooner?
Why did FINRA unhalt the stock and allow it to trade again? More importantly, why didn't COR
sue FINRA for approving the abnormally large and questionable dividend in the first place?
Fourth, COR's clients Nobilis and Beaufort were the ones who sold stock with "due bills"
attached. Why didn't COR go after its clients for the funds when its clients were the ones who sold
hundreds of millions of shares of stock with due bills attached in an unregulated OTC market
flooded with fraud? Moreover, wouldn' t a clearing firm such as COR seriously question and
investigate the Nobilis and Beaufort transaction before processing it? When COR's clients
converted debt into hundreds of millions of shares of CRGP stock, COR clearing should have

8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 7 of 9 - Page ID # 219

strictly scrutinized this transaction and this would have potentially mitigated any current
loss/damages sustained by the clearing firm.
CONCLUSION

For the above reasons, this court should not appoint a receiver for the purpose of making
post payable adjustments.

o~w~-

-----------------::~-------7---------------

Oscar Whitley .
Interested Shareholder

8:15-cv-00317-LES-FG3 Doc # 33 Filed: 10/26/15 Page 8 of 9 - Page ID # 220

CERTIFICATE OF SERVICE

I hereby certify that on October 21, 2015, I filed the foregoing answer to plaintiffs motion to
appoint a receiver as a pro se interested party.

cc
Michael T. Hilgers
GOBER, HILGERS LAW
FIRM-OMAHA
14301 FNB Parkway
Suite 100
Omaha, NE 68154
(402) 218-2106
Fax: (877) 437-5755
[email protected]

Gail E. Boliver
BOLIVER LAW FIRM
2414 South 2nd Street
Marshalltown, IA 50158
(641) 752-6597
[email protected]

Carrie S. Dolton
GOBER, HILGERS LAW FIRM OMAHA
14301 FNB Parkway
Suite 100
Omaha, NE 68154
(402) 218-2106
Fax: (877) 437-5755
[email protected]

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