On November 24, 1999, the United States Securities and Exchange Commission ("SEC") filed a lawsuit against Cornerstone Prodigy Group, Inc., Gary Reeder and Sandra Reeder in which they were accused of violating various securities laws by operating, among other things, an illegal Ponzi scheme. The lawsuit was assigned Civil Action No. 499-CV-0978-Y, and is pending in the United States District Court for the Northern District of Texas, Fort Worth Division. The judge presiding over the case is Federal District Judge Terry R. Means. All papers which are filed in the case are submitted through the United States District Clerk's Office, whose address is 501 W. 10th St., Room 202, Fort Worth, TX 76102-3643.

At the time the lawsuit was filed, the SEC presented evidence to the Court which supported their allegations of securities fraud. Based upon the evidence presented, the Court issued an order freezing all of the assets of Cornerstone and the Reeders, and an order appointing the Receiver.

In the order freezing the assets, the Court set an expedited hearing on December 10, 1999, to allow Cornerstone and the Reeders to come before the Court, tell their side of the story and present evidence. At the time of the hearing scheduled on December 10, 1999, the Reeders, through their lawyers, met with the SEC, the Receiver and Judge Means to discuss reaching an agreement. As a result of that discussion, an agreement acceptable to the SEC, the Receiver, the Reeders and their lawyers was reached and no actual hearing was conducted in the courtroom. Instead, the agreement was reduced to writing in the form of an Agreed Preliminary Injunction which was then signed by Judge Means.

The order appointing the Receiver required him to make a preliminary report to the Court of the assets and liabilities of Cornerstone and the Reeders by December 25, 1999. By agreement with the Reeders, the deadline was extended until January 14, 2000.

On January 21, 2000, the Receiver sent a letter to all known Cornerstone investors. On March 21, 2000, the Receiver sent a second letter to all investors along with a claim form to be completed and returned to the Receiver.

Since his appointment, the Receiver has taken possession of all known assets and has liquidated them to cash. All of the assets which have been liquidated have occurred only after the Court entered an order allowing the Receiver to do so. The amount of money obtained by the Receiver from the sale of the assets can be found on our Current Status page. In addition, the Receiver has paid all outstanding legitimate bills of Cornerstone and the Reeders.

On February 29, 2000 and March 3, 2000, the Reeders, the SEC and the Receiver reached a settlement of all claims between them, which is embodied in a written document called a Stipulation and Consent. The Court approved the settlement on April 14, 2000, and entered its Final Judgment against the Reeders.

On May 18, 2000, the Receiver filed his Objections to Non-Investor Claims and on June 2, 2000, the Court issued its Order regarding the non-investor claims., On May 26, 2000, the Receiver filed his Objections to Claims of the Credit Card Companies and on July 19, 2000, the Court issued its Order regarding the Receiver's Objections. On August 4, 2000, the Receiver filed his Objections to Investor Claims. After a hearing held on August 18, 2000, the Court issued its Order Regarding Investor Claims. In order to correct minor errors and/or supplement information regarding investor claims, the Court issued its order amending the order regarding investor claims.

On August 14, 2000, the Receiver filed his Motion to Abandon Receivership Assets which was granted by Order dated August 18, 2000. On August 14, 2000, the Receiver also filed his Motion to Approve Compromise and Settlement Agreement with an insurance company which was granted by Court Order dated August 18, 2000.

On August 25, 2000, the Receiver filed his Amended Motion to Sell Real Property which was granted by Order dated August 25, 2000.

On August 23, 2000, the Receiver filed his Final Report and Proposed Distribution which contained a complete detailed report on all monies collected and spent by the Receiver. After a Hearing held on August 25, 2000, the Court issued its order approving Final Report and Proposed Distribution. Thereafter, when the Receiver began preparing checks to mail to investors, he discovered four minor errors which he brought to the attention of the Court. Accordingly, on August 29, 2000, the Court issued its Order amending the August 25, 2000 Order Approving Final Report and Proposed Distribution. Exhibit A to the Order sets forth the amount of each check (final distribution) which will be sent to each investor.

These checks are in the process of being issued and mailed NOW. If your name is on Exhibit A, you should receive your check within a couple of days. Please be sure to cash the check promptly because it will be void after 60 days. YOU WILL NOT RECEIVE ANY MORE MONEY FROM THE RECEIVER OR THE COURT.

* Copies of documents referenced in this page can be read by clicking on the hyperlink within the text or on the document list below.

Note: In order to read the following PDF documents, you must have Adobe Acrobat Reader, which is available for free, through shareware. Click below to download:

Order Granting Unopposed Motion to Sell 2000 Jaquar XKR

1.14.00

Mike Quilling's First Letter to All Investors

Receiver's Objections to Investor Claims

Receiver's Final Report and Proposed Distribution

• Exhibit 1: Summary of Cash Receipts and Disbursements
• Exhibit 2: Detail of Cash Receipts and Distributions
• Exhibit 3: Receiver's Proposed Distribution Percentag

Order Amending Order Approving Receiver's Final Report and Proposed Distribution

• Exhibit A: Amended Cornerstone Investor Claims and Final Distribution