AUCTION INFORMATION AND AVAILABLE ITEMS
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INTRODUCTIONS

           On November 12, 2008, the United States District Court for the Western District of North Carolina issued a Consent Order Imposing Permanent Injunctions and Appointing William Walt Pettit, as Receiver in the matter of Securities and Exchange Commission v. Biltmore Financial Group, Inc. and J.V. Huffman.  Mr. Pettit has been appointed a Receiver in other securities-fraud matters and is familiar with the duties of a Receiver and the process to bring this matter to a conclusion. 
For your information, the Receiver has the power and authority, pursuant to the Order and applicable law, as follows:

1. to take custody, control and possession of all records, assets, funds, property, premises and other materials of any kind in the possession of or under control of Defendants Biltmore and Huffman;
   
   
2. to manage, control, operate and maintain the Receiver Estate, to use income, earnings, rents and profits of the Receiver Estate, with full power to sue for, collect, recover, receive and take into possession all goods, chattels, rights, credits, monies, effects, lands, books and records of accounts and other documents, data and materials;
   
   
3. to conduct the business operations of Defendants Biltmore and Huffman and the entities they control, including the collection of rents or continuation and termination of any employment arrangement and all other aspects of any active business operation;
   
   
4. to make such ordinary and necessary payments, distributions, and disbursements as the Receiver deems advisable or proper for the marshaling, maintenance or preservation of the Receiver Estate;
   
   
5. to sell, rent, lease or otherwise hypothecate or dispose of the Receiver Estate;
   
   
6. to contact and negotiate with any creditors of the Receiver Estate for the purpose of compromising or settling any claim, including the surrender of assets to secured creditors;
   
   
7. to receive and collect any and all sums of money due or owing to Defendants Biltmore and Huffman whether the same are now due or shall hereafter become due and payable;
   
   
8. to renew, cancel, terminate, or otherwise adjust any pending lease agreements to which Defendants Biltmore and Huffman may be a party;
   
   
9. to open bank accounts or other depository accounts, in the name of the Receiver on behalf of the Receiver Estate;
   
   
10. to prepare any and all tax returns and related documents regarding the assets and operation of the Receiver Estate;
    
    
11. to take any action which could be taken by the officers, directors, managers, members, partners, trustees or other principals of the Receiver Estate;
    
    
12. to abandon any asset that, in the exercise of his reasonable business judgment, will not provide benefit or value to the Receiver Estate;
    
    
13.  to administer, manage, and direct the marshaling, disbursement and/or transfer of monies or other assets held by third parties that are subject to the asset freeze; and
    
    
14. to open and inspect all mail, to determine the location or identity of assets or the existence and amount of claims.

           Any actions by any creditors and other persons seeking money damages or other relief from the Receiver are stayed. Further, all persons having notice of the Order appointing the Receiver are restrained from doing anything to interfere with the Receiver’s performance of his duties and the administration of the Receiver Estate, and are enjoined from engaging in any self-help, including set-offs, and from filing or prosecuting any actions or proceedings which involve the Receiver or which affect the Receivership Estate, specifically including any proceeding initiated pursuant to the United States Bankruptcy Code.  

CLAIMS

           If you are an investor with a claim to file, please fill out your contact information and provide a brief description of your claim, including transaction dates and amounts invested.  Furthermore, if you have received any distributions from any of the Defendants, please let the Receiver know the amount of the distribution and the date the distribution was made.

CONTACT INFORMATION

Kellam & Pettit, P.A.
2701 Coltsgate Rd, Suite 300
Charlotte, NC  28211
Phone: 704.442.9500
Fax: 704.442.8587
claims@kellampettit.com

CURRENT INITIATIVES

            Presently, the Receiver is attempting to locate all of the real and personal property of the Defendants and take control and possession of the same.  In addition, the Receiver is attempting to verify that all of the property is insured and is obtaining copies of all of the applicable insurance policies.

            Once the Receiver has identified all of the real and personal property of the Defendants, he will attempt to sell the same in such a manner as to obtain the highest possible price for that particular piece of property.  For example, as to tracts of real property, the Receiver, after obtaining Court approval, tends to list the tracts of real property and sell the same through the use of a licensed real estate broker.

            The Receiver anticipates that it will take approximately one (1) month to take control of all the various assets of the Defendants and to identify the same.  Thereafter, it will take a number of months to liquidate and reduce these assets to cash. 

            As Receiver, Mr. Pettit will utilize this website to inform all parties of his efforts and will update the website periodically as events occur that merit such updates.  Furthermore, the Receiver is required to file a Preliminary Report setting forth the identity, location and value of the known assets of the Defendants on or before December 27, 2008.  The Report will be filed on this website and will be available for anyone to review.

            One of the duties of the Receiver will be to review the records of the various investors involved in order to determine the extent of any transfers of property by the Defendants.  Currently, the Receiver is attempting to determine whether any funds have been transferred out of the country, whether the Defendants own any real property located outside the States of North and South Carolina, and whether the Defendants have hidden any cash or other valuable assets.

            Another one of the duties of the Receiver is to perform an accounting of the funds generated as a result of the fraud. This entails reviewing all deposits and transfers of Biltmore Financial Group, LLC. The Receiver is in the process of hiring Ed Bowers, a CPA and certified fraud examiner, to assist him in this regard. Once the Receiver obtains copies of the books and records, he will be in a position to begin this task. This will probably take at least six (6) months to compile the information for the Report.

            UPDATE ON THE RECEIVERSHIP

            Presently, the Receiver has located all of the real and personal property of the Defendants and has taken control and possession of the same.  In addition, the Receiver has verified that all of the property is insured, is paying the insurance premiums, and has obtained copies of all of the applicable insurance policies. The Receiver filed a Second Preliminary Report on March 31, 2009 and its Third Preliminary Report on June 30, 2009.  The Reports are available on this website for anyone to review.

A.        Sale of Vehicles

On April 16, 2009, the Receiver filed his Motion to Sell Personal Property Free and Clear of All Liens, Claims and Encumbrances seeking authority to market certain personal property for private sale.  More specifically, the Receiver sought to sell a (1) Mercedes Benz S65 AMG for $80,000.00, (2) a Mercedes Benz CLK63 AMG for $40,000.00, (3) a Mercedes Benz GL550 for $50,000.00, and (4) an Aston Martin DB9 for $105,000.00 (collectively, the “Vehicles”).  On May 18, 2009, the Court entered an Order authorizing the Receiver to sell the Vehicles by private sale.  The Court also ordered the Receiver to publish a Notice of Sale of the Vehicles containing a description of the property to be sold, the Receiver’s contact information, and the terms and conditions of the Order for at least ten (10) days in a daily newspaper of general circulation in Catawba County and on cars.com or another similar, national, on-line car classified service.  Pursuant to the Order, the Receiver published a Notice of Sale of the Vehicles in the Hickory Daily Record beginning on May 26, 2009 and on cars.com beginning on May 22, 2009, with said Notice of Sale published for at least ten (10) days thereafter.  Due to the delay from the time in which the initial offers to purchase were submitted to the Receiver and the Court’s approval of the same, the buyers of the Vehicles reduced their respective offers to purchase.  However, pursuant to the terms and conditions set forth in the Order, the Receiver was contacted by third parties who offered to purchase the Mercedes Benz S65 AMG for $85,250.00, the Mercedes Benz CLK63 AMG for $41,250.00, and the Mercedes Benz GL 550 for $52,250.00, prices which are at least ten percent (10%) greater than the reduced contract prices of $77,500.00, $37,500.00, and $47,500.00 offered by the initial buyer. The buyer of the Aston Martin DB9 reduced its offer to purchase from $105,000.00 to $100,100.00 but there were no third party bidders.  On June 15, 2009, the Court entered an Order confirming sale of the Vehicles.  The Receiver has consummated the sale of all of the Vehicles, including the Mercedes Benz CLK63 AMG, the Mercedes Benz GL550, and the Aston Martin DB9, and the Mercedes Benz S65 AMG.  

B.        Settlement of Claims  

On June 2, 2009, the Receiver filed his Motion to Approve Compromise and Settlement of Claims for Lots 1045 and 1047 at Ocean Lakes Family Campground, located in Myrtle Beach, S.C.  In his Motion, the Receiver requested that the Court grant him permission to enter into two Settlement Agreements wherein the Receiver agreed to abandon Lot 1045 and Lot 1047 and surrender the lease rights thereto back to Mr. Steven Dupee and Ms. Francis Stewart by renouncing, rejecting, disaffirming or disclaiming the lease agreements entered into by Defendants and Ocean Lakes Family Campground.  In exchange for doing so, Mr. Dupee and Ms. Stewart agreed to release any potential claims they might have against the Receiver Estate and the Defendants and to pay the Receiver the sums of $31,000.00 and $50,000.00, respectively.  On June 18, 2009, the Court entered an Order authorizing the Receiver to enter into and to execute the Settlement Agreements with Mr. Dupee and Ms. Stewart.   The Receiver is currently in the process of consummating the transaction and collecting the $31,000.00 and $50,000.00 from Mr. Dupee and Ms. Stewart.

C.        Disposition of Personal Property 

The Receiver has recovered and taken control of more than 5000 individual items of personal property.  These items include electronic equipment, tools, artwork, furniture, jewelry, construction equipment, personal watercraft, appliances, rolling stock and other tangible chattels.  On June 9, 2009, the Receiver filed his Motion to Approve Public and Private Sales of Personal Property.  On June 15, 2009, an Order was entered authorizing the Receiver to sell, liquidate or otherwise dispose of the personal property included within the Receiver Estate at a public sale (i.e., auction). The Order also authorizes the Receiver to sell some items of personal property, including jewelry and artwork, at private sale either: (a) directly, by the Receiver; or, (b) by engaging a dealer or other sales agent in accordance with the terms of this Order.  The Order gives the Receiver complete discretion to determine how and when such sale shall take place and stipulates that any public sales shall be conducted by auctioneers licensed to render such services.  The Receiver intends to sell numerous items of varying type and value at a public auction to be held simultaneously on-line and on-site at 3400 Wishing Well Lane, Claremont, NC 28610 on Friday and Saturday, August 14 and 15, 2009, though these dates are subject to change.  It must be remembered that although the Receiver is conducting an auction, this does not mean that the amounts initially paid for the items being auctioned can or will be realized. Moreover, there are expenses associated with the selling of these assets.

D.        Employment of Auctioneer

On June 9, 2009, the Receiver filed his Application to Employ Auctioneer for Receiver wherein the Receiver requested permission to retain the firm Gary Boyd Auction and Real Estate and John Garrison Boyd as auctioneer on terms that the Receiver believes are fair and reasonable.  Mr. Boyd is a member of the Auctioneer’s Association of North Carolina (AANC), National Auctioneer’s Association (NAA), and the Certified Appraisers Guild of America (CAGA) and is qualified to handle such matters.  On June 15, 2009, the Court entered an Order authorizing the Receiver to employ Gary Boyd Auction and Real Estate and to pay Gary Boyd Auction and Real Estate such compensation as may be approved by the Court upon Application and Notice.

            The foregoing is an account of the Receiver’s latest undertakings.  If you desire to contact the Receiver, please email him at claims@kellampettit.com.  The Receiver, after obtaining Court approval, will set up a claims process whereby all known investors will be forwarded a copy of a claim form to file with the Receiver’s office.  To date, approximately two hundred seventy-eight (278) claims have been filed by at least three hundred sixty-eight (368) investors through the claims’ process established through the Receiver’s website.  Each claim represents one account held with Biltmore Financial Group, Inc., but in some instances there is more than one investor associated with a single account.