FUNDING RESOURCE GROUP
COMMONLY ASKED QUESTIONS

This page was last updated on: NOVEMBER 27, 2001.

Below are common questions submitted to the Receiver, Michael J. Quilling, and his response to those questions. You may either click on one of the questions below to go directly to that question and answer, or you may simply scroll down to read all of the information provided on this page.

What is a receiver?
Who is Michael J. Quilling? Is he an employee of the Securities and Exchange Commission?
How is the Receiver and the legal and accounting professionals hired by him going to be paid?
Can the Receiver give me legal advice or should I hire an attorney?
What is a Ponzi scheme?
Does the SEC get a portion of the monies held by the Receiver?
What has the Receiver been doing since his appointment?
How will my claim as to monies held by the Receiver be calculated and what do I need to do or provide to the Receiver?
Will I get my money back? When? How much? What percentage of each investor's claim will be paid?


QUESTION	What is a receiver?
ANSWER	According to Black's Law Dictionary, a receiver is defined as:
	"A person appointed by a court for the purpose of preserving property of a debtor pending an action against him, or applying the property in satisfaction of a creditor's claim, whenever there is danger that, in the absence of such an appointment, the property will be lost, removed or injured. An indifferent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in litigation, and receive its rents, issues, and profits, and apply or dispose of them at the direction of the court when it does not seem reasonable that either party should hold them. A fiduciary of the court, appointed as an incident to other proceedings wherein certain ultimate relief is prayed. He is a trustee or ministerial officer representing court and all parties in interest to litigation, and property or fund entrusted to him. "
	Black's defines a Receiver pendente lite as:
	"A person appointed to take charge of the fund or property to which the receivership extends while the case remains undecided. The title to the property is not changed by the appointment. The receiver acquires no title, but only the right of possession as the officer of the court. The title remains in those in whom it was vested when the appointment is made. The object of the appointment is to secure the property pending the litigation, so that it may be appropriated in accordance with the rights of the parties, as they may be determined by the judgment in the action."


QUESTION	Who is Michael J. Quilling? Is he an employee of the Securities and Exchange Commission?
ANSWER	Michael J. Quilling is a lawyer engaged in the private practice of law through his law firm:Quilling, Selander, Cummiskey & Lownds, P.C.,2001 Bryan Street, Suite 1800, Dallas, Texas 75201. Mr. Quilling is an AV-rated lawyer and is board certified by the Texas Board of Legal Specialization in the areas of civil trial law and business bankruptcy law. Mr. Quilling is an experienced receiver and has been appointed at the request of the Securities and Exchange Commission in other cases, which require a receiver. However, Mr. Quilling does not work for the SEC, does not answer to the SEC and does not take instruction from the SEC. Instead, Mr. Quilling is appointed by the United States District Court and answers directly to the Court. However, Mr. Quilling does work closely with the SEC, and since he serves at their request, he does try to respect the positions of the SEC in connection with matters regarding his duties as Receiver.


QUESTION	How is the Receiver and the legal and accounting professionals hired by him going to be paid?
ANSWER	The Order Appointing Temporary Receiver entered by the Court on November 13, 1998 provides in paragraph N. on page 7 as follows:
	The Temporary Receiver shall seek and obtain approval of this Court prior to disbursement of professional fees and expenses by the Temporary Receiver or his counsel and/or accountants, by presentation of a written application and after consultation with the Commission. All costs incurred by the Temporary Receiver shall be paid from the Receivership Assets.
	What the foregoing means is that all fees and expenses have to be approved by the Court before they can be paid and when they are paid, they are paid out of funds collected by the Receiver.


QUESTION	Can the Receiver give me legal advice or should I hire an attorney?
ANSWER	The Receiver cannot and will not give anyone legal advice with respect to this case. Therefore, should you believe that you need an attorney, you should hire your own and should certainly feel free to do so. However, you need to be aware that the Receiver is acting in the interests of all investors by trying to identify, locate and liquidate assets as quickly as possible, determine and pay only legitimate outstanding expenses, and be in a position to make distributions to investors as soon as possible. There is nothing that an attorney which you might hire can do to either expedite that process or increase the amount that will ultimately be paid to you. The most likely thing an attorney will be able to do for you is obtain information, either from the Court or from the Receiver. As to the Receiver, however, through periodic letters to investors and this web site, the Receiver will provide information to investors and, therefore, an attorney should not be needed in order to obtain that same information for you.


QUESTION	What is a Ponzi scheme?
ANSWER	According to the United States 5th Circuit Court of Appeals, a Ponzi scheme can be described as follows:
	. . . The scheme is named after its most famous practitioner, Charles Ponzi. Ponzi was an Italian immigrant who successfully bilked an unwitting American public out of millions of dollars in a scheme involving international postal reply coupons . . ." US v. Cook, 573 F.2d 281, 284 fn3 (5th Cir. 1978)
	In further explanation, the Court of Appeals additionally states:
	. . . In a Ponzi scheme, a swindler promises a large return for investments made with him. The swindler actually pays the promised return on the initial investments in order to attract additional investors. The payments are not financed through the success of the underlying venture but are taken from the corpus of the newly attracted investments. The swindler then takes an appropriate time to abscond with the outstanding investments. As one author described it, 'he borrowed from Peter to pay Paul. And it worked . . . until Peter got wise . . . Id.


QUESTION	Does the SEC get a portion of the monies held by the Receiver?
ANSWER	No, all monies received by the Receiver, net of receivership expenses, will be paid to investors on a pro-rata basis.


QUESTION	What has the Receiver been doing since his appointment?
ANSWER	Since his appointment, the Receiver, his lawyers and his accountants have been diligently tracing assets and investigating causes of action (lawsuits) against persons and entities who received investor funds for no legitimate reason. The Current Status section of this web site contains more information as to what assets have been located and sold as well as all other recoveries by the Receiver to date. In each instance, assets were sold only after the Court entered an Order authorizing the sale and/or after an agreement was reached between the parties with respect to the particular sale. The Assets section of this web site contains more information as to what assets the Receiver currently has for sale.
	In some instances, as described in the General Information portion of this web site, the receivership has been expanded to allow the Receiver to seize and sell additional assets. The Lawsuits section of this web site contains more information as to lawsuits filed by the Receiver to recover additional assets. The Receiver and his lawyers and accountants have also been diligently trying to reconstruct bank records and investor information as to each particular fund. These efforts have been severely hampered by the lack of records and the unwillingness of those involved in the scams to testify.


QUESTION	How will my claim as to monies held by the Receiver be calculated and what do I need to do or provide to the Receiver?
ANSWER	Regardless of which program you sent funds to, the Receiver intends to propose that your claim be calculated by taking the total amount of actual cash which you invested and subtracting from it all payments, if any, which you received to determine the net amount of your claim. For instance, if you invested $10,000.00 and received $5,000.00 of payments, your net claim against the receivership estate will be $5,000.00. The Receiver will submit the proposal to the Court for approval and you will be given an opportunity to object. This web site will advise you when the proposal is submitted and the date of the hearing.
	In the interim however, the "How Did You Invest" section of this web site found on this site's home page contains preliminary (regularly updated) information regarding what the Receiver believes to be the amount of each claim held by investors with respect to different investment groups. On January 16, 2001, at the request of the Receiver, the Court issued an Order approving a Claim Form to be sent by the Receiver to all potential claimants. Thereafter, the Claim Form was mailed to all known potential claimants. The deadline to return the completed Claim Form to the Receiver was March 31, 2001. If you did not receive the Claim Form, you need to contact the Receiver immediately. Until you are contacted by the Receiver, there is nothing more you need to do.


QUESTION	Will I get my money back? When? How much? What percentage of each investor's claim will be paid?
ANSWER	The good news in this case is that you will get some portion of your money back. The timing and amount will depend on which receivership estate you have a claim against. By court order, this case has been divided into four different receivership estates: (1) Cord/Winterhawk; (2) Funding Resources; (3) Howe Financial; (4) Hammersmith Trust (See the General Information page for more information). All holders of an allowed claim against the Cord/Winterhawk estate have already received a final distribution equal to 25.7% of their claim. All holders of an allowed claim against the Howe Financial estate have already been paid an interim distribution equal to 32.9% of their claim. At this time, the Receiver cannot estimate what percentage will be paid to holders of allowed claims against the Funding Resource estate or the Hammersmith Trust estate. The Receiver hopes to make payments to claimants against the Funding Resources estate during the first quarter of 2002. As to the Hammersmith Trust estate, it will probably be later in the year.