Utsick Creditors Shown The Money

Creditors, who invested in companies associated with promoter Jack Utsick that were sued in 2006 by the Securities and Exchange Commission, may soon receive checks to reimburse at least some of those funds.

Michael Goldberg, receiver for Utsick, Robert and Donna Yeager, The Entertainment Group Fund and other related companies, filed a motion in U.S. District Court in Miami Dec. 10 requesting authorization to make an initial distribution to creditors with undisputed claims. The filing also asked for a hearing to resolve those claims still under dispute.

The court last year authorized Goldberg to establish a “rising tide” method of repaying creditors in the case, in which the SEC accused Utsick and the Yeagers of essentially operating a Ponzi scheme that it claimed defrauded some 3,300 investors of more than $300 million between 1998 and 2005.

The “rising tide” calculation generally means that once claims are resolved, creditors may receive a prorated share of their investment, less any withdrawals of prior profit taken before the companies went into receivership. In this case, the prorated share is about 14 percent of the total undisputed investments.

According to the most recent filing, 2,924 claims totaling approximately $300 million were filed by investors. Of those, Goldberg reports he was able to reconcile 2,727 and sought authorization from the court to distribute $21.3 million for undisputed claims in the first of what will likely be several distributions.

Of those with undisputed claims, 11 individuals invested more than $1 million – the highest topping the list at almost $2.38 million – representing just more than $17 million of the total. Of those, five will receive nothing from the disbursement, presumably because they have already received profits exceeding the “rising tide” prorated limit. Goldberg noted in his filing that some of the investors have been in business for as many as 20 years.

Richard Kraut, an attorney for Utsick, told Pollstar that although Utsick continues to dispute some claims made by the SEC in its case against him, the dispute will have no effect on the distribution and “Jack is pleased that investors will start to get some of their money back.”

A hearing date on the motion to authorize disbursement had not been set at press time.