Respondent`s Objection to Receiver`s Motion for Authority to Sell

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORID A
SECURITIES & EXCHANGE COMMISSIO N
Plaintiff,
I
V.
!AN 2(7 200 6
.LARENCE MADDOX
ULFRK U .S . DIST
. UT .
S=_~ . ; .)f FLA
. FT . LAUD .
MICHAEL LAUER, LANCER MANAGEMENT
GROUP, LLC, and LANCER MANAGE MENT
GROUP II, LLC,
Defendants.
Case No . 03-80612-CIV-MARRA/VITUNAC ~ /
and
LANCER OFFSHORE, INC.,
LANCER PARTNERS, LP .,
OMNIFUND, LTD., LSPV, LLC ,
Relief Defendants .
In re :
Lancer Partners L.P., Chapter 11 Cas e
Debtor . Case No : 04-8021 1 -CIV-MARRA/VITUNA C
Respondent' s Objection to Receiver's Motion For Authority to Sell 1990
Mercedes-Benz C- 11-05 Racecar on Behalf of CLR Associates LLC Free
and Clear of All Liens, Claims, Encumbrances and Interests and
Respondent 's Motion to Stay Sale Consideration of CLR's Assets
Pending the Final Resolution of the Principle Litigation Between th e
SEC and Responden t
Introduction
The Respondent Michael Lauer respectfully requests that the Court deny the
Receiver the authority to sell the CLR Associates' ("CLR") assets at this time, and grant
the Respondent's Motion to Stay such sale consideration until after the resolution of the
principle SEC v. Lancer litigation . The Court should grant the Respondent's Motion for
the following reasons : (1) Any involuntary and permanently damaging divestment of the
Respondent's personal assets prior to adjudication of the Respondent's liability in the
1
underlying SEC litigation is untimely and an abrogation of due process ; (2) Even in the
unlikely event that the SEC were to eventually prevail on the merits of its complaint
against the Respondent, the evidence shows that the CLR's principle asset - the C-11
historic racecar - was acquired with funds that demonstrably predate the SEC-complaintalleged wrongdoing. Therefore, it is improbable that the C-11 would be subject to any
potential disgorgement consideration ; (3) Sale of an un-restored and incomplete C-l I
historic racecar - particularly through the ill-conceived channels favored by the Receiver
- would generate substantially lesser value than a restored C-11 . Therefore, if permitted
to proceed, the sale strategy proposed by the Receiver would cause irreparable harm to
the CLR's beneficiaries ; (4) The auctioneer selected by the Receiver is remarkable only
in its obvious lack of expertise to maximize sale value on a unique and a high-ticket
collector-item such as the C-1 1 ; (5) Contrary to the Receiver's misleading representation,
the CLR Associates is not free of liabilities and claims ; (6) A stay in the sale of the C-11
until the resolution of the SEC's claims against the Respondent would not prejudice the
receivership entities, as the value of this collector-item is likely to continue to appreciate
into foreseeable future, as it has heretofore . Moreover, contrary to the Receiver's
representation, the costs associated with maintenance and insurance of the C-11 during its
restoration would be negligible and inconsequential .
1.
Receiver-Proposed Sale of C-11 is Untimely and Premature as There
Has Been No Adjudication Regarding Respondent's Liability
The Receiver was appointed by the Court - pursuant to the SEC's ex parte
pleading - for the purpose of marshalling the receivership-estate's assets and
preservation of status quo, until the final resolution of the litigation between the SEC
and the Respondent Michael Lauer .
The attorney Carl F . Schoeppl of Schoeppl & Burke, P .A ., who represented the Respondent during the
December 6, 2005 court-hearing has been provisionally retained by the Respondent Lauer to represent him
in connection with the Motion to Modify Asset Freeze, a civil contempt hearing, and possibly a motion
seeking to modify the provisions of the Preliminary Injunction Order so as to unfreeze certain of the
Respondent's assets in order to permit him to pay reasonable attorney's fees and costs necessary to
adequately defend himself both in this action and numerous other actions initiated by the Receiver that are
pending before this Court . Consequently, the Respondent submits the instant Motion pro se .
2
Positively , the Receiver was not appointed to the purpose of liquidating the
Lancer operations and/or to perm anently harm the Respondent 's personal assets,
before any adjudication in the underlying case , as such pre-trial punishment of the
Respondent would constitute an u tter obliteration of the fundamental p rinciples in
which the American judicial system is grounded . The Respondent - who retains his
constitutionally guaranteed presumption of innocence - has denied any wrongdoing
and continues to look forward to his due day-in -court and the eventual exoneration .
Subsequent to the ent ry of the Respondent-vindicating final judgment, the
Respondent expects to reclaim control of his personal properties , which he
accumulated during his quarter -of-century-long professional career in the financial
community . The Respondent would reasonably expect and an ticipate that the
Receiver exercised utmost care over the assets he was m andated by the Court to
safeguard during the pendency of the litigation and that no undue damage would be
inflicted on its values .
The Receiver -proposed , clearly value -damaging sale of the CLR's principle
asset - the C-I I histo ric racecar - prior to the final adjudication in the underlying
litigation ( and contrary to its owner's wishes ), would plainly short-circuit the
Respondent ' s due-process rights . Such untimely sale would perm anently deny the
Respondent access to this one -of-a-kind and steadily value-appreciating property,
while irreversibly damaging its current worth; all before any adjudication in the
principle litigation .
Therefore, the Respondent would suffer irreparable economic harm from the
Receiver - proposed sale of the C- 11, even if he were to be exonerated in the
underlying SEC litigation . The Court itself has shown sensitivi ty to the issue of
premature/preajudicative judgments , including during the December 6, 2005 Status
Hearing. Specifically , the Court, in addressing the SEC ' s and the Receiver's
attorneys , stated in part:
"I guess one reason why I held up on that w as I was wondering what if
you go forward on the SEC complaint and you do not prevail ? How does
that affect the whole receivership and agreeing on behalf of those entities
to consent to a judgment? ..."
3
11.
C-11 Would be an Unlikely Source of Disgorgement Funds Even if
The SEC Were to Prevail on Merit s
Even if the SEC were to ultimately prevail on the merits of its complaint,
which in essence alleged securities fraud - commencing sometime in March of 2000 the CLR owned C-11 asset would not be subject to the disgorgement relief requested
by the SEC, as the evidence shows it was purchased with the Respondent's funds that
clearly predate the alleged wrongdoing .
Specifically, the exhibit I (SFT Bank statement) shows that funds of $1
million were transferred to the SFT Bank on January 14, 2000 . Additionally, the SFT
statement explicitly annotates the source of the funds as being :
"REF PART PAYMENT OF 1999 INCENTIVE FEE TO LANCER
MANAGEMENT GROUP ."
Hence, as the 1999-originating funds plainly predate the SEC-complaint's
alleged wrongdoing . they could not have been causally-connected to the alleged
wrongful acts. Additionally, the attached exhibit 2 - Pricewaterhouse unqualified
audit for the year 1999 - verified that the independent auditor has reviewed the
Fund's 1999 financials and approved the incentive fee payments to the investment
manager . The PwC continues to stand by its audit work for the Lancer Funds, and,
the auditor was not charged with any wrongdoing by the SEC .
Further, the Exhibit 3 shows the Respondent's actual investment into CLR,
which demonstrably originated from the audit-verified "1999 Partial Incentive-fee"
payment . Finally, the attached exhibit 4 depicts the actual check written by the thenmanager of CLR - Clayton Cunningham - to finalize the purchase of the C- 11 .
III.
Sale of Unrestored and Incomplete C-11 Would Generate
Si¢nificantly Suboptimal Proceeds For the CLR Beneficiarie s
Although the Receiver does not present any third-party expert justification for his
decision to sell an incomplete and unrestored C-11 - and clearly he has no "in-house"
expertise in historic racecar investments - any party with even rudimentary knowledge of
the vintage racecar collector market would confirm that a complete and fully restored
historic racecar is worth vastly more than a disassembled and a piecemeal collection o f
4
parts - to which the Receiver has reduced the C-11 in its current state . In the
Respondent's October 20, 2005 letter to the Receiver (attached as exhibit 5), the
Respondent - among other things - has outlined the recommended course of action to
maximize the value of the asset. Specifically , the respondent advised the Receiver that
the C-1I restoration should be completed by the highly qualified organization that was
well-along in carrying out the task, which once accomplished, would have significantly
enhanced the value of the C-11 (the Receiver never replied to the Respondent's
communication) .
The Receiver' s specious suggestion that part s are not available to complete the
restoration of the C-11, because "Mercedes stopped building the C-1I in 1989" is
preposterous. Any informed collector of vintage cars knows that if one-of-the-kind
components are not available from the o riginal manufacturer , they could be procured in
the seconda ry market or simply remanufactured by an expert restoration conce rn. In case
of the C-11, parts are available to a qualified restorer - such as the one who was in the
process of completing the rebuilding of the C-I I's - from all three sources cited .
Additionally , even if the cost of restoration of the C-11 exceeds $ 100,000 - as
suggested by the Receiver - the ultimate incremental resale value gained from such expert
refurbishment would be in m any multiples of the likely restoration cost . While the
Respondent's original investment into C-11 - some six years - ago was approximately
$950,000, its current value in a restored state is likely to be between $1 .5 million to $2.5
million . Even the Receiver in his prior pleadings argued that the C-11 was worth "at
least $1 .5 million," while the SEC 's attorney was fond of citing one appraisal that
claimed a fully restored C-I l value figure of $5 million . Although some unique historic
Mercedes racecars have sold for more th an $10 million (one histo ric Mercedes racecar W 163 - is currently offered at an asking price of $12,000,000 .00), all such collectoritems were in a perfectly restored condition p rior to the sale .
Therefore, as outlined in the exhibit 5 (Respondent's October 25, 2005 letter to
the Receiver ), the C-l l 's restoration - which was well advanced - should be completed
by the organization that has heretofore oversaw its restoration, so as to maximize its
value , regardless of what the eventual , post-adjudicative disposition vis-a-vis CLR ma y
be.
5
IV.
Receiver- selected Auctioneer Is Remarkably Unqua lified to Optimize
Value For C-1 1
The Receiver's selection of Bid4Assets, Inc . to sell the C-1 l further illuminates
on the Receiver's fundamental lack of understanding of the vintage car collector markets
and its individual participants . A review of the Bid4Assets auctioneer's customary
selling items reveals no expertise or even consistency in selling multi-million dollar
assets such as a one-of-a-kind historic collector racecar . Therefore, the Receiver-selected
auctioneer likely lacks access and visibility among the audience that would constitute the
most likely C-11 buying public . The Respondent, who has been involved in the
historic/vintage collector-car markets for the past quarter-of-a-century would have never
conceived of searching for worthwhile vintage-car investment opportunities on the
Bid4Assets, Inc . (nor has he ever heard of Bid4assets mentioned among the collector-car
investor-community), as plainly this auctioneer's area of strength appears in commoditytype, low priced items, which appeal to opportunistic common-merchandise bargain
hunters .
Furthermore, should there be a need at some point in the future to sell the restored
C-11, the Respondent and several other qualified parties, could generate substantially
higher proceeds than what was purportedly offered by the Receiver's "Purchaser,*" or
whatever might be generated by the Bid4Asset, Inc . This Respondent-assisted sale,
through more appropriate marketing channels for the asset under consideration, would
also likely not entail the costly 7% commission that the Receiver is generously proposing
to pay to Bid4Assets, Inc ., out of the CLR- beneficiaries' coffers .
While the Receiver averred in his Motion that he has previously used the
Bid4assets auctioneer to sell receivership's assets, therefore the "Court was familiar"
with the party, the Receiver fails to disclose the disastrous results achieved by the same
Receiver-selector auctioneer . Specifically, the Receiver sold through the Bid4Assets a
* Mr . Hsu - the Receiver's "Purchaser" - is a noted historic racecar collector who was likely behind the
Receiver's efforts to add the CLR to the receivership estates - more than two years after the
commencement of the case - so that he could opportunistically appropriate the asset from the rightful
CLR's beneficiaries at the fraction of its true value; relying largely on the Receiver's inexperience in the
vintage car collector market.
6
fully equipped Cessna 172 aircraft - in a practically new condition - for nearly a third
below its true market value . The Cessna, which plainly was much less of an
extraordinary item (therefore more easily understood to typical auction buyers) than the
one-of-a-kind C-11, was originally purchased for approximately $175,000 .00 (and
modified with state-of-the-art instrumentation) . Nevertheless, the Receiver-selected
auctioneer was unable to attract a buyer who was willing (or able) to pay more than
approximately $120,000 .00 for this nearly new aircraft .
Another purported Receiver-arranged "auction" was even more devastating to the
receivership estates and resulted in an irrefutably verifiable permanent losses to the
Lancer's estates measured in multiples of tens of millions of dollars . The Respondent
discusses the Receiver's sham "auction" and the resultant sale of one of the Funds'
largest equity positions in the attached exhibit 6 . It is apparent that in the "auction"
reviewed in the said exhibit, the Receiver mislead the Court about the nature of the
purported transaction, its intermediaries (unrevealed criminal convicts), its participants
(undisclosed company insiders) and the true values of assets involved . The record
conclusively shows that the loss to the Lancer estates pursuant to the Receiver's phony
"auction" was well over $50 million, while the receivership-administering parties
pocketed over $250,000.00 in fees and commissions on this transaction alone .
V.
Receiver' s Representation to the Court That There Are No Claims on
CLR Assets is Plainly Fals e
Although the Receiver's in his Motion to Authorize the sale of C-I1 claims that
the CLR is free of claims, encumbrances and liabilities that assertion is verifiably false .
The C-11 was undergoing substantial restoration . The Restorer - Rocketsports Racing (see exhibit 7) who was well along in completing the restoration, has incurred substantial
costs in both parts and labor, which he credited against the CLR's assets . While the
Respondent was unable to compensate the Restorer for his ongoing restoration because of
the asset freeze against the Respondent since July of 2003, the C-I1 served as the d e
facto CLR's collateral that would have guaranteed payment to the Restorer for his
incurred costs . Therefore, the Restorer has a valid claim on the CLR's assets for the
work completed and thus far not reimbursed . It should be emphasized that unless th e
7
same Restorer completes the rebuilding of the C-11, much of his heretofore C-l 1 relatedefforts would have been for naught .
VI.
Stay In Sale of CLR's Assets Would Not Prejudice the Receivership
Estates .
Aside from the fact that the government's agents forceful seizure and prejudicial
non-consented divestment of the unadjudicated Respondent's personal property subverts
due process, the receivership estates themselves would not be prejudiced by the stay of
the sale of the C-11, until the final adjudication of the principle case . If the Respondent
prevails in his defenses against the SEC's more than two-and-a-half year old allegations,
the SEC-requested receivership will be terminated and any consideration of the C-I1 sale
will be moot . If however, the SEC prevails, and assuming that for some unfathomable
reason (given that the C-11 was purchased with "prior" assets) it is determined that the C11 should be part of the disgorgement equation, the future value - of the then likely fully
restored C-11 - would be vastly higher ; which would only advantage the CLR's
beneficiaries.
Furthermore, the Respondent also hereby incorporates arguments to be advanced
by his attorney in various Motions to Stay that will be filed in the receivership actions
currently pending against the Respondent, as the causes for stay of the receivership
actions are also in large part germane to the instant matter .
In Conclusion , the Respondent has presented sufficient good cause for the
Court to stay the sale of the C-11 until such time that the SEC v . Lancer/Lauer litigation
is adjudicated . The legal standard for consideration of a Stay Motion overwhelmingly
militates for granting the Respondent's request in this instance . While no extraordinary
circumstances have been presented by the Receiver to proceed with the sale of th e
unrestored and incomplete C-I 1 historic racecar at this time, it is readily apparent from
available evidence that : a) The Respondent - applying for the Stay relief - will be
irreparably injured absent a stay ; b) the Stay will not harm the party interested in
proceeding, and indeed, will likely result in a higher long-term value of the underlying
asset (see exhibit 8- Business Week article entitled "Car Collecting Burning Rubber") ;
8
and c ) the public interest (CLR beneficiaries ') also lies with a Stay of the Receiverproposed sale, as regardless of who the eventual beneficiaries of CLR will be, they will
certainly be adv antaged by an optimal price gained of the restored C-11 .
Wherefore , the Court should Deny the Receiver's Motion for Authority to Sell
the C-11 and Grant the Respondent's Motion to Stay such sale, for the reasons set forth
above. '1
Respectfully submitted ,
January 25, 2006
i
Michael Laue , to sc
1
Direct evidence reveals that the Receiver a ttempted to mislead the Court by submitting an untrue
representation in his Motion for Autho ri ty to Sell C-1 1, which falsely alleged that the Respondent
attempted to hide the fact that he was the majority owner of the CLR Associates Partnership . As
evidenced by the attached exhibit 8 , the existence of the CLR Associates was plainly disclosed to the thenSEC's counsel , short ly after the fi ling of the SEC ' s complaint in July of 2003 , an d not fewer than five
times ! Specifically , the Statement of Financial Condition of Michael Lauer forwarded to the then-SEC's
attorney in this case - Kerry A . Zinn - on or about July 25 , 2003 , by the then Respondent ' s att o rn eys
(Litm an, Asche & Gioiella, LLP,), explicitly lists CLR numerous times , including via the attached CLR
Partnership ' s tax-related documents . The Receiver in bad faith relies on one p ri vate partnership
ownership summa ry prepared by the Responder ' s then -accountants Hal Zoref CPA - that inadvert ently
omitted th e CLR from one of its lists . The omission was clearly inadvertent, as the same organ ization
prepared the Respondent ' s Statement of Fin an cial Condition that were submitted to the SEC, which
explicitly cite CLR numerous times .
9
Exhibit 1
Schonegatweg Oost 44
P.O . Box 707, Curacao
Netherl ands Antilles .
Website : www.sftbank.com
BANK N.V.
Tel . : (599 9) 732 2900
Fax: (599 9 ) 732 2902
Tclex : 3394 CBCBK NA
E-mail : info@ sftbank .com
STATEMENT OF ACCOUN T
V
Date : FEB 1 2000
Statement no 9
Account type - Current Account
Currency - US Dollar
Account no - 0011-446670-001
Previous balanc e
New balanc e
Book Value
Date Date
2AUG99
X00 ~)
9JANOO
19JANOO
19JANOO
19JANOO
19JAN00
IFEBDO
Particulars
Previous balance
Payment Received
SFT000114H000249
F/0 MICHAEL LAUER
B/O LANCER OFFSHORE
REF PART PAYMENT OF 1999 INCENTIV E
FEE TO LANCER MANAGEMENT GROUP
Transfer wade
SFT000119H000087
TO FIRST COASTAL BANK . C A
ACCT . 001-01101 4
F/0 CUNNINGHAM RACING INC .
Transfer Commission
SFT000119H00008 7
Transfer Commission
SFTCOO119H000087
Omzet belasting
SFTCOO119H000087
Omzet belasting
SFT000119H000087
New Balance
Debit
Page
10 .866 .65 Date :
2AUG99
860 .693 .57 Date :
1FEBOO
1
Credit
Balanc e
1 .000 .000 .00
10 .866 .6 5
1 .010 .866 .6 5
50 .000 .00
60 .866 .6 5
150 .00
860 .716 .6 5
14 .84
860 .701 .81
0 .74
860 .701 .07
7 .50
860 . 693 .5 7
CREDIT BALANCE
860 .693 .5 7
Please make sure that your SFT Oulck Cash card is stored in a safe place . separately from your pin-number .
In case of theft or loss please inform the bank immediately in order to minimize possible losses .
L-034-001746
Exhibit 2
PWCWXERHOL)SECCOPEP,S 13
Lancer
offshore, Inc.
British Virg' Islands
1999
L-045 0004 r5 n n n A
•
PRICEVVATERJ-IOUSECWPERS •
Contents
I
Board of Directors and Service Providers
3
2
2. 1
Report
Report from the investment manager
5
6
2 .2
Independent auditor's report
7
3
3.1
Financial Statements
Statement of assets and liabi lities as of December 31, 1999
(expressed in U.S . Dollars)
Statement of operations for the year ended December 31, 199 9
(expressed in U.S. Dollars)
8
3.2
3 .3
9
10
11
3 .4
Statement of changes in net assets for the year ended December 31, 1999 an d
December 31, 1998 (expressed in U .S . Dollars)
Statement of cash flows for the year ended December 31, 1999
3 .5
(expressed in U .S. Dollars)
Notes to the financial statements for the year ended December 31, 1999
12
13
•
•
Lancer Offshore, Ina
2
L-045-000456
1 -fl45-000458
•
PfflCEWATEWXJSfC00PERS 8
j lulianapkin 3B
1 P.O . Boot 360
1 wlknw d
To the Directors and Shareholders of
Lancer Offshore, Inc.
British Virgin Islands
Curacao, Netherlands Aiiiiks
Telephone +599(9) 4300000
Facsimile +599(9) 461 111 8
Relerencenumber
67 .5406.0/000312
2.2 Independent auditor' s report
We have audited the accompanying statement of assets and liabilities of Lancer Offshore,
Inc. (the "Fund") as of December 31, 1999, and the related statements of operations, cash
flows and changes in net assets for the year ended December 31, 1999 . These financial
statements are the responsibility of the Fund's management . Our responsibility is to express
an opinion on these financial statements based on our audit .
•
We conducted our audit in accordance with international standards on auditing. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of mate rial misstatement. An audit includes
examining , on a test basis , evidence supporting the amounts and disclosures in the
financial statements . Our procedures included confirmation of the securities owned as of
December 31, 1999 by corr espondence with the custodian . An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation . We believe that our audit p rovides
a reasonable basis for our opinion .
In our opinion the financial statements referred to above present fairly, in all materi al
respects, the financial position of Lancer Offshore, Inc . as of December 31, 1999 and the
results of its operations, cash flows and changes in net assets for the year ended December
31, 1999, in conformity with international accounting standards.
Curacao, May 19, 2000
1"~w + C
e PricewaterhouseCoopers
•
Pritewase,hosneCoopen NNetherlards AMlBrs) is a l 4fh vlw& AntiPd civil pwtraership ko,med by )Tied lability companies
incorporated under N&iriia ds AralBes Law. PficewateA,aneCoaprss (Netherla,ds Anb-Res) n a member of Pricewahmf% neCoopen
Inlecn Tonal limbed. a conpary BrnYed by pwanlee regige,ed in En`land and Waks.
L-045-00046 1
L-045-000461
Exhibit 3
f iN'~ IZF SU V ~
To Gladys Mau-Asam - SFT Bank
From Michael Lauer
Fax: 5999 737 0124
Pays: 1 including this page
Plwns: 5999 732 2900
Date:
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please wire $ 4,~ ~.9 000•
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Froms Michael Lauer
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Pages: 1 induding this pag e
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L-054-000663
Exhibit 4
11/08 / 00 . TEU 13 :58 FAX 1 310 322 7773 Epson fax machine
Michael Laue r
Ij 00 3
MILAN COR"P 00"RATIO N
6205 Camino de to Cotta
U104 Califiatia 92037
Tek +1(858) 454-5257
Fax: +1 (858] 454-6380
CL R ASSOCIATES LLC .
1 Z!5 E GRAND AVE
EL SEGUNDO , CA 9024 5
PA Y Of
THE- ORDER OF
16160611220
1028
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L-054-000617
1
EXhlbit 5
Michael Lauer
7 Dwight Lan e
Greenwich , CT 0683 1
Craig Rasile
Hunton & Williams
1111 Brickell Avenue
Suite 250 0
Miami, Florida 3313 1
October 20, 200 5
Dear Mr . Rasile :
Please accept this correspondence as my response to your emailed letter dated
October 19 , 2005 requesting "all books, records and documents pertaining to CLR."
Pursuant to your request, I have carefully checked my records, which show that
the only documents in my possession pertaining to CLR Associates ("CLR") originated
from Hunton & Williams, the counsel to the Receiver, as well as the SEC's counsel . As
you know, CLR was one of my business ventures, whose books and records were kept at
my business offices in New York and Connecticut, as well as at my accountants and
bookkeepers (Hal Zoref Associates ; "Zoref") in New York. Therefore, the Receiver, who
has seized control of all of my business (and many personal) documents on July 12, 2003
remains in possession and control of all such records, including documents relating to
CLR .
I would recommend that the counsel for the Receiver contact Zoref for all
corporate documents pertaining to CLR as it was Zoref who prepared and maintained
most of the books and records for CLR . After the commencement of litigation, Zoref has
refused to communicate with me on all matters, therefore, you may have more luck
contacting Zoref directly .
Furthermore, Rocketsports in L ansing Michigan, which is the entity that is
restoring and maintaining the C-11 (CLR' s key asset), with an objective of maximizing
its value, would be well informed about the CLR's liabilities, as the vast majority of such
liabilities are in fact due to Rocketsports. It is my understanding that Rocketsports has
acquired numerous pa rts and invested m any hundreds of labor hours in restoration of the
C-11, in addition to storing and safeguarding the asset since at le ast 2001 . Indeed, if the
C-11 were to be removed from the Rocketspo rts' premises , the Receiver would be in
effect depraving the largest creditor of a collateral it held against the CLR's liabilities .
As a creditor, the Rocketsports' claims upon the CLR ' s assets legally supersede any of
the potential investors ' equity claims against the same asset, as a matter of law .
As for your correspondence's invitation to register my concerns with you
regarding the CLR or the C-11, let me state that they are too numerous to mention for the
purposes of this response . However, you must understand that the C-11 is an
extraordinary technological creation , on which the Mercedes Benz company, in
conjunction with a distinguished Swiss auto racing designer/entrepreneur - Peter Sauber spent over $25 million to design and m anufacture . Each part was artfully designed and
precisely crafted , in order to optimize the vehicle 's performan ce an d reliability that
would consistently carry the team into a victo ry circle , while not failing the racecar-driver
at speeds exceeding 250 MPH . Lives literally depended on the vehicle's aerodynamic
and mech an ical design , as well as the manufacturing precision and structural integrity of
every and each part .
Only six of the C-11's were built by Mercedes ( in Switzerl and), with the CLRowned C- 11, upon information and belief, being the only one of two such historic
racecars in private h ands. Furthermore , the value of any historic racecar - such as the
CLR's C-1 I - is driven to a great extent by the vehicle' s "provenance." In the vintage-car
collector market that usually refers to who campaigned the car, at which racing venues
and with what results. The record from the early Nineties reveals that the C-I1's were
arguably the most successful racecars in the then u tra-popular Europe-b ased Group C, as
measured on the wins/per race scale (also winning the overall championship).
Additionally, the CLR -owned C- i l was the one driven by th e arguably greatest racecar
driver in history - Michael Schumacher - at the 24 Hours of Le M an s cl assic (universally
recognized as the single greatest sportscar race) .
Therefore it is paramount that the Receiver exercise extreme caution in
safeguarding the value of this asset, during the pendency of my litigation with the SEC .
It is my strong recommendation and urgent request - as the owner of the CLR and
someone who h as followed the histo ri c car market for over twenty years - that the C- l 1
remain wi th the Rocketsports org an ization, particularly during the restoration phase of
the asset . The C-i l was at Rocketsports from approximately 2001 precisely because
Rocketsports is one of the most highly regarded and arguably the best qualified
organization in the United States for h andling restoration and maintenance of an
extraordinary technological creation, such as the C-11 . Also, the Rocketspo rts' key
personnel has invaluable contacts in the spo rtscar circles, including access to the
Mercedes factory, which is paramount to sourcing essenti al and often one-of-a-kind pa rts
for this ex tremely unique historic racecar . In my opinion, there is no better qualified
organization than Roketspo rts to complete the restoration of the C-11 .
Consequently, I strongly urge you to establish a good working relationship with
the Rocketsports executives , authorize them to complete the value-maximizing
restoration of the classic C-1I and allow them to store the still appreciating asset (with
your supervision) until the resolution of my litigation with the SEC .
Please call wi th any questions, particularly if you intend to take imminent action
vis-a-vis the C-11 .
Sincerely,
E xhibit 6
The Receiver' s Untimely And Improper Divestiture of the Funds'
Endeavour International Holding Was Exceedingly Damaging to th e
Funds' Values
Endeavour International Corp's . ("END") 2004 10-K, which was filed with the
SEC in March of 2005, irrefutably proves that the Lancer Receiver has engaged in an
improper stock sale of a significant Lancer Funds' holding, which also had an
exceedingly damaging effect on the Funds' portfolio . Additionally, the END's 10-K
filing reveals that the Receiver has knowingly misrepresented to the Court the nature of
the transaction, in order to obtain the Court's approval for the stock sale .
Specifically, the Endeavour's 10-K explicitly discloses a stock offering
("Offering") of 25 million restricted shares at $2 .00 per share to private "Accredited"
investors, which raised for the Company $46 million (after all expenses) . This transaction
closed on February 26, 2004 . Further, the Company's 10-K discloses that a portion of the
net proceeds from the Offering was used in the purchase of: "14.1 million shares of
common and 103 .500 shares of Series B Preferred Stock in exchange for $5.3 million in
cash. " This 10-K-cited transaction refers to the securities repurchased by the Company's
undisclosed insiders from the Receiver-controlled Lancer Funds, for which the Receiver
obtained a per free-trading share price of a mere $0 .37 for the Lancer investors .
Therefore - it is irrefutably established by the Company's documents filed with
the SEC - that during approximately the same time that the END's market stock price
was $2 .50 per share (which was already artificially depressed because of th e
receivership) and Accredited investors - after a thorough due-diligence - committed $50
million at $2 .00 per restricted share of END, the Lancer Receiver divested more than 14
million shares of the same Company's free trading stock to the undisclosed insiders for
an incomprehensible $0 .37 per share .
Common sense and fundamental principles of economics dictate that if the
Accredited investors, who willingly purchased restricted END shares at a 20% discount
to the then market price - were actually extended an opportunity to participate in a
legitimate auction, in which they could have purchased free trading END shares at a
nearly 90% discount, they would have most certainly opted to do so . Other evidence
that proves that no legitimate auction for Lancer's END shares took place and that the
Court was misled by the Receiver as to true facts regarding the END's divestitures,
include :
(a) No reasonable notice of "auction " for Lancer 's END shares was issued by
the Receiver . Pursuant to the Receiver-established deadlines, the would-be
interested third-parties were expected to submit a bid (for nearly half of the
END's outstanding stock), accompanied by a substantial cash deposit, with
approximately only two-week notice . This ultra-abridged notice period is
grossly inadequate, particularly for a Company which had minimal visibility
among the financial community . The industry's well-established norms for a
reasonable due-diligence time period would be in the range of three to six
months . Not surprisingly, no third-party bidders emerged pursuant to the
Receiver's sham "auction," even at a 90% discount to the then market price .
(b) The Receiver failed to disclose to the Court - while seeking its approval to
sell the Lancer' s END holding - that the purchasers of the stock were the
END's insiders . The insiders - who concealed their identity by using an
offshore Cayman Islands-based entity named RAM Trading - directly
benefited from the illicit transaction, at the Lancer investors' expense, by
purchasing the shares at a nearly 90% discount to the then market price . The
undisclosed insiders' participation in the transaction represented a flagrant
conflict of interest, as well as a securities law violation . The Receiver was
duly notified by the Respondent, and thereby was fully apprised that the RAM
Trading actually represented the Company's undisclosed insiders .
(c) The Receiver was also on notice - but did not disclose to the Court - that the
Endeavour-insiders' intermediary for the transaction was a convicted felon,
Leonard Pelullo (the principle of Merritt Litigation Support) . Mr. Pelullo
served more than 10 years in federal prison for various financial frauds .
The Lancer Receiver 's divestiture of END from the Funds' portfolios had an
exceptionally damaging effect on the Funds' values. Had the Receiver simply
maintained the status quo in the Funds - as commanded by the receivership mandate -
the portfolio value of END stock would have approached $75 million by mid-2004, as the
company announced its then-pending listing on the American Stock Exchange . There
clearly was no practical need to rush the divestiture of any holdings, as the Lancer Funds
held only cash and equities in its portfolios . Also, as partly evidenced by the nearconcurrent listing on the national stock exchange of the Endeavour's common - the
Company's operations and balance sheet were in a robust condition, as it is a prerequisite of such listing .
Alternatively, had the Receiver in good faith conducted a legitimate auction for
the Lancer investors' benefit, he could have, at the very least, realized a value to Lancer
shareholders that was somewhat in excess of the $2 .00 per share paid by the Accredited
investors for the restricted stock . This would have resulted in the benefit to Lancer
investors of at least $30 million, instead of the approximately $5 million actually
generated (and already consumed) by the Receiver .
Moreover, if the Receiver - who disingenuously proclaims that he endeavors to
maximize Funds' values - had judiciously sold the stock into the open market in the
subsequent months, the benefit to the Funds would have been significantly in excess to
the discounted price paid by the Accredited investors for the restricted shares ($2 .00 per
share) . The record shows that within several weeks after the undisclosed Endeavour
insiders' purchase of the Lancer's END holding from the Lancer Receiver for $0.37 per
share, the stock surged from the then $mid-2's to over $5 .00 per share . In fact, between
March of 2004 and December of 2004, the Endeavour's stock traded on average at over
$4.00 per share, with the daily trading volume on many of the days exceeding I million
shares . At over $ 4.00 average per share price, the cash proceeds to the Lancer
Funds of the shares the Receiver sold for $5 million would have exceeded $60
million , or more than 12 fold of what was obtained by the Receiver for the Funds'
END holding (the Endeavour's current - actively traded stock - price remains between
$3 and $4 .00 per share) .
Disturbingly, the Receiver's actions are quite rational when viewed from the
Receiver's own perspective, as the Receiver retains a powerful economic motive to
permanently damage the Lancer Funds' values . By harming the Funds' portfolio values ,
the Receiver :
(a) helps to buttress the SEC-complaint's allegations against Lancer, which then justifies
the Lancer Receiver's own continued and ultra-lucrative existence ;
(b) the depressed portfolio values - coupled with the Receiver's other misrepresentations
- have effectively prejudiced the Lancer investors' perceptions, who were misled into
believing that the only meaningful recovery of assets from the Funds could come from
the Receiver's own litigation endeavors against the presumed "deep pockets," i .e., the
Lancer Funds' former service providers . To that end, the Receiver has already attempted
to suborn perjury from the Respondent in support of the Receiver's overreaching
litigation efforts against the "deep pockets ." Through a veritable tsunami of dubious
lawsuits, the Receiver has thus far contrived over 250 defendants in the Lancer-related
cases, which has acted as a wealth transfer mechanism from the Lancer estates to the
Receiver's own law firm (investigative company) ;
(c) The Receiver's own commercial interests are driven exclusively by the volumes of the
receivership-related billings that it generates, which accrue directly to the benefit of the
Receiver's own law firm, in which the Receiver is also a senior Partner . Tellingly, the
Receiver never even attempted to issue an RFP for his legal counsel - as he purportedly
did for all other receivership service providers - therefore likely depriving the Lancer
Estates of the most cost-effective legal counsel available* .
(d) The Receiver's commercial interests are in no way linked or aligned with the actual
values in the Lancer Funds' portfolios ; (e) The Receiver improperly incentivized the
portfolio manager for the Funds, selected by the Receiver, to actively and prematurel y
* Selection of receivers is customarily based on the considered parities' expertise and the lowest fees
attainable for the Estates . By his own admission, the Receiver' s senior counsel from Hunton & Williams
(the Receiver' s partner at H&W - Craig Rasile) had no expe ri ence with hedge funds, when he was noncompetitively , retained by the Receiver to operate the Lancer Funds . Further, given that the Receiver did
not conduct an RFP for counsel prior to retaining his own law firm and the investigative services entity
(TIG, in which the Receiver is also a part-owner) - as he purportedly has done for other service providers the Funds' investors were improperly deprived the benefits of the free-market's natural receivership's costdiminishing forces .
divest Lancer's holdings by instituting "divestiture" fee payments (divestiture fees are not
paid if the portfolios are left undisturbed, or distributions are made "in-kind ."). While the
Lancer Funds' investors suffered unconscionable and unnecessary financial harm, the
Receiver and its appointed service providers generated over $250,000 in the Endeavourrelated transaction fees - for their own benefit ; (f) The Receiver's economic-self-interest
also drives the Receiver to maximize the commercial benefit of the Lancer sinecure early
in the litigation process , so as not to risk an unprovidential (to the Receiver) final
judgment in the principle litigation between the SEC and Lancer . The rationale for the
Receivership's divestiture haste is understandable from the Receiver's perspective, as the
post adjudicative exoneration of the Respondent would end the Lancer sinecure for the
Receiver.
The extraordinary favoritism evidenced by the SEC's attorneys in selecting Marty Steinberg as the
Receiver is also highly inappropriate and, at the ve ry least, suggests an unethical quid pro quo arrangement
between the parties . The record shows that the Plaintiff in its Emergency Motion and Memorandum of
Law For Ex Parte Temporary Restraining Order and Other Relief And Thereafter a Preliminary Injunction,
filed July 8, 2003, specifically lobbied to have Marty Steinberg appointed as the Receiver for Lancer Funds
("The Commission recommends that the Court appoint Marty Steinberg, Esq." Also, "The Commission
respectfully requests that the Court appoint Marty Steinberg, Esq .") . During the Magistrate hearing on
December 28, 2004, the Receiver's counsel, Mr . Craig Rasile, corroborated the incestuous nature of the
relationship between the Receiver and the Plaintiff, by testifying to the Magistrate that he has previously
handled SEC-assigned receiverships and that "I know what the SEC likes ." Therefore, the Receiver
counsel's own words (as well as actions) reveal that the Receiver has abandoned any pretext of neutrality
and objectivity in regard to the underlying proceedings, which is con to th e Receiver ' s sworn du ty , as
"Arm of the Court," in the furtherance of the investors' interests .
Exhibit 7
ROCKEUPORTf
A MOTORfPORT( COMPAN Y
CLR Associates Judge Kenneth A. Marro
C/O Michael Lauer United States Dist rict Court
7 Dwight Lane Southern District of Florida
Greenwich , CT 06831 Fort Lauderdale Dtvislo n
Marty Steinberg. Esq .
C/O Craig Rollie
Hunton & Williams
1 111 Rrickell Avenue
Suite 250 0
Miami. Florida 3313 1
In re : LANCER OFFS HORE, LLC
Case No. 03-80612 - C lv- MARR A
January 25, 200 6
D ear Sirs,
Please accept this correspondence as notification of Rocketspors Inc .. A
Michigan Corporation . declaration of claims against CLR Associates . In
addlijon we would like to provide for involved parties information and
facts that may effect the disposition of the CLR asset, defined pri madly as
a 1990 Mercedes C- I 1 racecar.
As background. Rocketsports was contracted by the CLR's proprietor - Mr .
Michael Lauer - In 2001 to prepare a nd maintain the subject vehicle for
racing exhibitions . From that date unill the removal from Rocketsports by
the Receiver, Rocketsports fulfilled those contractual obligations, as per
agreement. Following Mr . Lauer's Instructions we began the restoration of
the C-11 In early 2002 .
I weuld be remiss if I rind not at this lime explain the significance of this
extr aordinary vehicle and make clear to all Interested parties Its
exceptional value. particularly offer the completion of Rocketsports
restoration already In progress . That restoration was unfortunately
Interrupted by removal of the C-11 from the Rocketsports' premises with
the apparent significant disregard for the preservation of the asset 's value.
The 1990 C-I 1 holds high historicaI significance for several principal
reasons. The most central are-The C- 11 was the dominant vehicle In Prototype Racing for several years,
poilicularly during the pinnacle of "Group C" competition;
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-Its winning and qualifying performance record at the 24 Hours of Lemons
and other impo rtant racing venues , usually exceed all others during the
time Mercedes campaigned the C - 11 (and its immediate twin
predecessor C-9) ;
-This pa rticular vehicle was driven by the unprecedented seven-time
World Champion Michael Schumacher, who many in the racing
community agree could be the greatest driver in histo ry of motor spo rts;
-The CLR' s vehicle is the only C-11 ever sold by Mercedes Benz to a
private collector .
To fulfill our task of restoration we had to first gain the confidence and cooperation of Mercedes Benz and Its Mercedes Classics museum curators .
They held the technical database necessa ry to engineer the replacement
parts required in the restoration of the C - 11 . As they did not release this
information to the public , Rocketsport s used its relationship with a Daimler
board member to make the required introductions . We then fulfilled the
required ce rtification of competency required by the museum . After
several trips and significant communications we were granted access to
the necessa ry drawings , metallurgy and specifications .
The C - 11 has a ve ry defined life cycle to its running components and our
competition preparation for Mr. Lauer had run vital components to their
cycle limit. Specifically , the engine life had been exceeded along with
vital suspension components . To exhibit this vehicle at high speed will
certainly create a significant risk for those involved . This vehicle is
capable of speeds approaching 250 mph ; and, suffice it to say, a
mechanical failure at those velocities could result in terminal
consequences for its driver .
In its previous competition-exhibition , the C- 11 suffered significant
damage at the Daytona Speedway , due to a tire failure . We had begun
the repair process when the restoration stopped at the order of the
receiver. By then, we had spent significant dollars engineering all moving
components in the engine , sourcing their re-production and ordering
them from qualified suppliers around the world . We had - prior to the
Daytona incident - built all the tools required to maintain and repair the
Transaxle and suspension systems .
We have reproduced specialized internal engine components like
titanium connecting rods, camshafts , pistons and crankshafts . These are
fundamental to the value of this vehicle and took more than one year to
produce .
2
From the inception of our relationship with CLR and Mr . Lauer, Rocketsports
has accrued in excess of $250 ,000 of pa rts and services expenses related
to work done at the request of CLR . No payments have been received
and Rocketsports still holds possession of all work products as a result of
that commission . That work product holds a significant place in the future
value potential of the C-11 .
When approached by the Receiver ' s agents , I advised them that the C-11
would have a fully-restored value in excess of $1,500 ,000 and at a high
limit potential of $2,500 ,000. In addition they were advised that our work
to complete would not exceed $100,000 . Subsequent to those
conversations the market for this type of collector -vehicle has only
accelerated . Recent high profile collector-car auctions have shown that
values increasing at a 50% annual increase for unique and historic
collector -items such as this C-11 .
Prior to the removal by the receiver ' s agents we had two interested offers
for purchase the C - 11 from highly credible collectors - beginning at
$1,500,000 - for the vehicle in complete and pe rfect running condition .
Both of these collectors have had prior relationships with Rocketsports,
and their net wo rth individually is in excess of $500 ,000,000 . We have a
nearly three -decade - long record of success in building and restoring
extraordina ry race cars . We also have the collector -car market
knowledge and the long-established relationships to locate well-qualified
buyers for the vehicle , at prices that will fairly reflect its extraordina ry
value .
It is with this information in mind that I must question the reasoning and
method behind the removal of the C - 11 from Rocketsports. After a
discussion with the SEC 's representative , we allowed uninterrupted access
to the receiver ' s agents . The C - 11 was in a completely disassembled
state in organized and categorized build ca rts. Each of these ca rts had
been organized by our specialists and stored in order in our alarmed,
climate controlled warehouse . The removal of these pa rts alone will cost
hundreds of hours of technician time to organize for the necessa ry
reassembly .
To a specialist in these type vehicles , all of the receiver ' s haphazard
actions appear incredibly wasteful , if not actually spiteful . Restored
properly and marketed wisely , this vehicle will no doubt have a ready
market value in excess of $2,000,000 . If the maximization of the asset's
value is the Cou rt's prima ry objective , the actions by the receiver since
the seizure of the C-11 from the Rocketspo rts ' premises, have been highly
counterproductive .
3
From someone who has spent his lifetime In motorspozts, my
recommendations are as follows: The C - 11 should be returned to
Rockeispods for the completion of the res ktaTion and Its evenlual
safekeeping . If ultimately the Court decides that sale of the C -11 is the
most desirable path, then Rocketsports - which Is already Ideniilled with
The C-11 In the collector-car community - would be the best situated
entity to market, present and sell the vehicle , at the highest possible price.
These are not conjectures, but verifiable facts; confirmed by a very long
history of documented success .
i am eager to discuss these topics with any and all Involved parties at their
earliest convenience .
secTfully,
719-
1ul entilozzI, President
Rocketsports, Inc .
About Rocketsport s
Based in Lansing, Michigan, Rocketsports Racing was formed in 1985 and has grown into one of the most diverse and
accomplished companies of its kind in North America . The Rocketsports name has long been associated with multiple
victories in Trans-Am, IMSA GTO and GTS Competition, for team owner and four-time Trans-Am Series Champion, Paul
Gentilozzi . Rocketsports has also recently established a significant presence in the open-wheel scene with a two-car
effort in the Champ Car World Series . In addition to their success on track, Rocketsports has become a leader in race
engine and chassis design and construction .
Gentilozzi's pursuit of fast cars started when he won his first race in March of 1966 . The competition took place on
Interstate 496 in Michigan - which at the time was not yet open to traffic . The prize money, a used twenty-dollar bill,
marked the first investment in his 38-year racing venture . In this time, the organization has kept its focus on building fast
cars and racing to win . To this end, Rocketsports has claimed sixty professional victories as a team and eleven
championship titles, including Manufacturer's Championships for Chevrolet, Oldsmobile, Ford Mustang and Jaguar .
In 18 years of Trans-Am racing , the Rocketsport s team has claimed 52 Trans-Am wins . Rocketspo rt s has built more than
fifty race cars and literally hundreds of engines , including the Oldsmobile Au ro ra engine used in the 1997 IRL season,
which p roduced three Indy 500 Qualifiers . Rocketsports has prepared cars for some of ro ad racing 's most accomplished
d rivers . Among the notables are Tomy D ri ssi , Scott Pruett, Tom Kendall , Dorsey Schroeder, B rian Simo, Chri s Kneifel,
Johnny Miller, Da ri n Brassfield , Jack Baldwin and Pri ce Cobb . Celebrity drivers have included Paul Newman , Craig T .
Nelson and Olympic gold medalist, Bruce Jenner . Rocketspo rts productions have been featured in top indust ry
publica tions , exhibitions and shows . Recent Rocketspo rts automotive ventures include the design and construction of
Jaguar project cars for the 2002 SEMA show and the XKRS Jaguar Con ce pt car revealed at the 2003 Chicago
Intern ational Auto Show. Rocketspo rts also unveiled the ground -breaking production-based Jaguar AJ-V8 stock-block
Trans-Am engine at the 2003 Grand P rix of the Ameri cas, in Miami .
In addition , to a suc ce ssful multi-car effort in the Trans - Am Series, Rocketspo rts Racing branched out to open-wheel
racing for the first ti me in the 2003 with the B ri dgestone Presents The Champ Car World Se ries Powered by Ford . The
ce lebrated road-racing outfit had immediate support from p ri ma ry sponsor Johnson Controls and associate sponsors
Microchip and Futaba .
While the Rocketsports name was new to the Champ Car World Series, it brought together a force of reputable experts
familiar with the Champ Car paddock . The team achieved impressive results in their first year with the Johnson Controls
Ford-Cosworth Lola, driven by French-Canadian, Alex Tagliani . The new crew and driver were among the first in Champ
Car history to prove their strength with a third-place podium finish in the second race of their rookie year . Tagliani earned
the sophomore team its first victory at Road America in Round Eight of the 2004 Champ Car season .
In 2004 the Rocketsports Champ Car team further expanded to include the No . 17 Rocketsports/LeasePlan Lola, driven
by 17 year-old Nelson Philippe . Once again, Rocketsports dabbled in Champ Car history by introducing the youngest
driver ever permitted to drive a Champ Car to the competition . In five starts for Rocketsports, the French teenager proved
himself immediately with solid, consistent results early in his debut season .
Champ Car fan favorite , Memo Gidley drove the No . 17 Rocketsports Air Force Reserve Lola to its best qualifying
position of the season (fifth) in Round Seven at the Molson Indy Vancouver . Following Gidley ' s two temporary d ri ves with
Rocketsports, Guy Smith took the seat of the No.17 Rocketsports car for the balan ce of the season in Round Eight in the
2004 Champ Car World Se ri es at Road Ame ri ca . Smith, the 2003 24 Hours Le Mans champion with team Bentley,
ea rn ed a top-ten finish with Rocketsport s in his debut Champ Car race .
Rocketsports maintains its competitive drive with great results through the vision of its leader and the hard work of many
dedicated employees, who define "teamwork ." The core group of Rocketsports' key members is well into their second
decade working together . Rocketsports' crew chiefs, team leaders, and mechanics have more than a hundred and sixty
years of combined experience . With outstanding drivers in two professional series, committed sponsors and
tremendously loyal fans, look for Rocketsports to continue as one of the most accomplished teams in motorsports today .
http:IAVWW.'ocketaportaracing.com - The O 8dal Website of Rocketsports Raring Generated : 23 January, 2008, 14 :01
The Official Website of Rocketsports Racing
Page 1 of 2
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About Rocketsports
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1/23/2006
The Official Website of Rocketsports Racin g
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Page 2 of 2
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Fm vow hym
1/23/2006
Paul Gentilozzi - Persona l
Consistent with his success on the track, Gentilozzi is on top of his business career. He holds an MBA from Michigan
State Universi ty, and owns and manages one of the largest commercial real estate portfolios in Mid-Michigan .
Gentilozzi's stamina and winning determination are also evident in his family and private life . Sons John and Tony are
both actively involved in the motorsports industry and his wife of 34 years, Debbie, enthusiastically shares in her
husband's love of life and racing . The great number of long-time companions and dedicated employees that surround
Gentilozzi are a testament to his loyalty .
hUpJMww .rodcetcportarecing .com -The ONdW Webeite of Roduatsports Racing
Generated : 23 January, 2000. 14:04
E Xhibit 8
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Car Collecting Is Burning Rubbe r
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Thanks to wealthy baby boomers t ry ing to
regain a piece of their long -lost youth,
aspirational cars are selling for increasingly
high sum s
The 2006 version of the Barrett-Jackson collector car
auction , which takes place Jan . 14 to 22 in
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record of more than $ 100 million in sales - up from
an already-prodigious $ 68 million in 2005 . An
impressive gain in a year , but it's really just indicative
of a market that, as a whole , has been doing an 18month- long version of the drag racer ' s tire-squealing,
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The collector car market seems finally to have shrugged off the malaise it has
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everything trom late-model proauction t-errarls to Fiats . I he ensuing crash put
hundreds of these wannabe investors underwater and left a bad taste in the
mouths of many more .
Things are different today . Most of the recent gains appear sustainable because of
the influx into the collector car hobby of baby boomers pursuing the aspirational
cars of their youth .
SUSTAINABLE ACTIVITY . For example, the 1968-1973 Ferrari 365 GTB/4
Daytona is, to many, the last "real" Ferrari built before emissions and safety
regulations blunted most performance cars . The Daytona is a big brute with a to p
speed of over 170 mph and a macho reputation for being a workout to drive . A little
over a year ago, $125,000 or so would secure a nice Daytona coupe . Today, you'll
have difficulty finding a good one for $200,000 .
The activity in the muscle car market -- especially for hemi-powered Chrysler
(DCX) products - is even more dizzying . If you think $1 million is enough for a
1970 Hemi 'Cuda convertible, you're only halfway there .
Is this recent spike another Internet-type bubble waiting to burst? Probably not .
Demographics and simple economics are conspi ri ng to create a supply-anddemand situation that should make the latest market activity sustainable . The huge
population of baby boomers has accumulated a significant amount of wealth, and
they're determined to acquire what they want. There are simply more moneyed
boomers who desire the Hemi 'Cuda of their pimply-faced teenage dreams than
there are Hemi 'Cudas .
A POWERFUL INVESTMENT. While it may be tempting to sell your conventional
investments and start your own "Car-01(k)," a word of caution : Unlike stock
certificates, old cars require frequent maintenance, insurance, and a garage .
Conversely, reviewing your portfolio performance is nowhere near as much fun as
experiencing the vivid performance of a big-block '67 Corvette .
Hybrid s
INNOVATION
E DESIGN
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Architecture
Brand Equity
Auto Design
Game Roo m
SMALLBIZ
Smart Answers
In actuality, though, most enthusiasts are happy to enjoy a car for a few years, do
a few things to it, and break even when it's time to move on . For those who look at
the old car hobby as a financial investment as well as an investment in pleasure,
there's unanimous agreement in one area : In today's market, it's hard to get hurt
buying a good collector car. If you do your homework, buy the right car, and enjoy
it sensibly, you'll maximize the return on your investment .
Keith Martin, editor and publisher of Sports Car Market magazine, has been immersed in
the collector car hobby for more than 30 years as a writer, TV commentator, and
enthusiast
Success Stories
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Nickname : jon
Review: for the most impressive, one-off or one of very few created coachbuilt cars,
visit www .BlackhawkMuseum .org online, or the Blackhawk Museum in Danville, CA
about 45 minutes southeast of San Francisco between Walnut Creek and Dublin ,
http://www.businessweek .com/autos/content/jan2006/bw20060105_228099 .htm 1/24/2006
E xlhibit 9
LITMAN ,
AsCHE & GIo nr.T . A , T.LP
45 BROAD WAY ATRIUM
RICHARD M . ASCHE
NEW YORK, NEW YORK 10006
RUSSELL M . OIOIELLA
FREDERICK L . SOSINSK Y
JACK T . LITMA N
TELEPHONE ( 212) 809-450 0
OI COON\[ L
TODD @ . TERRY
TELECOPIER ( 212) 509-8403
July 25, 200 3
Kerry A . Zinn, Esq .
Senior Trial Counse l
Securities and Exchange Commission
801 Brickell Avenue, Suite 1800
Miami, Florida 33131
Re :
SEC v . Lauer et al .
Dear Kerry :
I enclose a Statement of Financial Condition of Michael
Lauer together with the following support documentation :
1 . Banc of America Client Position Summary for the
period ending July 15, 2003 ;
2 . Schedule of illiquid investments ;
3 . IRS Form 433(a) given in connection with IRS
Installment Payment Agreement ;
4 . Notice of Lien of IRS dated February 5, 2003
together with Statement of Adjustments to 2001 Form
1040 .
5 . Form 1040 for calendar year 2000 ;
6 . Form 1040 for calendar year 2001 ;
7 . Request for extension for calendar year 2002 .
OMB No. 1545.0074 Page 2
Your nodal security membe r
Schedules MB (Form 1040) 2000
Name(s) Hawn on Form 1040 . Do not enter name and social seowity number a shown on page 1 .
054 ::48 ::639 5
MICHAEL LAUER
Attachment
sequence No . 08
Schedule B - Interest and Ordinary Dividend s
Part I
Interest
Note : If you
received a Form
1099•INT,
Form 1649-01D,
or substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the total Interest
shown an that
form.
Part II
Ordinary
Dividends
Note : If you
received a Form
1099-DIV or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the ordinary
dividends shown
on that form.
Part III
Fo reign
Accounts
an d
Trusts
Note . If you had over $400 in taxable interest, you must also complete an Ill .
I
4,96.
,53 .
BANK OF AMERICA SECURITIES
CHAS E
CITIBANK
BANK OF AMERICA- SECURITIE S
From K - - LANCER PARTNERS L P
From K-1 - LANCER MANAGEMENT GROUP II LLC
E--FAMILY FOODS, LLC
From K -1 - GREAA =
From K -1
WORLD CLASS BOXING LC
From K- I( ' - CLR ASSOCIATES LLC
From K- 1 - MILLENIUM 3 TUNITY FUND LL C
7
10,772
36,057
1,277
1,379
BANK OF AMERICA SECURITIES
MERRILL LYNCH
From K-1 - LANCER PARTNERS L P
From K-1 - LANCER MANAGEMENT GROUP II LLC
From K-1 - GREA" CIRCLE FAMILY FOODS, LL C
.
.
.
.
7.
7
2 Add th e amounts on fine 1
3 Excludable Interest on series EE and I U .S . savings bonds issued after 1989 from Form 8815 ,
line 14 . You MUST attach Form 8815 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
►
4 Subtract line 3 from line 2 . Enter th e result here and on Form 1040 , One 8a
Note . If you had over $400 In ordinary dividends, you must also complete Part 111 .
5 List name of payer . Include only ordinary dividends . If you received any capital gain distributions,
see the instructions for Form 1040, line 13 . ►
6 6T
Amoun t
8,961 .
1,213 .
3,1
9,669 .
360
.
6 Add the amounts on line 5 . Enter the total here and on Form 1040, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
23, 3
You must complete this pa rt If you (a) had over $400 of Interest or ordinary dividends ; ( b) had a fore ign account ; or
( c) received a distribution fro m, or were a grantor of, or a transfe ror to, a fore ign trust .
7a At any time during 2000, did you have an Interest in or a signature or oth er authority over a financial
account In a foreign count ry, such as a bank account , securities account, or other financial account? . . . . . . . . . . . . . . . . .
b It 'Yes,' enter the name of the foreign count ry ►
8 During 2000, did you receive a distribution from, or we re you the grantor of , or transfe ror to, a foreign trust ?
If 'Yes,' you may have to file Form 3520 . See page B-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LHA For Paperwork Reduction Act Notice , sec Form 1040 Instructions.
027501
10-18-00
Amount
List name of payer. If any interest Is from a saller-financed mortgage and the buyer used the
property as a pers onal residence , see page B•i and list this interest first Also, show that
buyer's social security number and address ►
Schedule B (Form 1040) 2000
2000 Income from Passthrough s
CLR ASSOCIATES L L
I .D . Number- 81526 8
nershi p
Activity Information :
CLR ASSOCIATES LL C
Trade or business - Material participatio n
Ordinary income (loss)
Schedule E activity income (loss)
-354,87 0
-354,87 0
Tax Preference Items :
Depreciation adjustment for post-1986 property
21,045
Other K-1 Information :
Interest - Total
Self-employment earnings (loss)
Investment income
028021
11-17-00
7
-354,87 0
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Certificate of Service
I HEREBY CERTIFY that a true and correct copy of the forgoing has been sent
via United States Mail to :
Craig V . Rasile, Esq .
Counsel for the Receiver
1111 Brickell Ave ., Suite 2500
Miami, Fl . 33131
Christopher Martin, Esq .
U.S. Securities and Exch . Commission
801 Brickell Ave . Suite 180 0
Miami, FL. 33131