Pho An, Llc et al v. Capital One, N.A.

MOTION for Summary Judgment

E.D. La.April 7, 2017

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF LOUISIANA PHO AN, LLC ET AL CIVIL ACTION VERSUS NO. 16-14400, CIW 16-15802; 16-14733 CAPITAL ONE, NA SECTION "E" (1) MOTION FOR SUMMARY JUDGMENT BY PLAINTIFF KANETHA ARUN CHAU HILLIP K. WALLACE (#13198) 4040 Florida Street, Suite 203 Mandeville, Louisiana 70448 Telephone: (985) 624-2824 Faesimile: (985) 624-2823 Email: PhilkwaJ\@aoLeom Attorney for Plaintiff, Kanetha Arun Chau Case 2:16-cv-14400-SM-JVM Document 20 Filed 04/07/17 Page 1 of 6 TABLE OF CONTENTS Table of Contents, Cases, Statutes & Authorities . . . . . . . . . . . . . . . . . . . . . . i, ii, iii I. Motion for Summary Judgment . . . . . . . . . . . . . . . . . . . . . . . . 01 II. Statement of Material Facts Not at Issue . . . . . . . . . . . . . . . . . 03 III. Memorandum in Support/Arugument . . . . . . . . . . . . . . . . . . . 09 Summary Judgment Standard . . . . . . . . . . . . . . . . . . . . . . . . . . 09 Capital One, NA is not a Custodian Pursuant to 11 U.S.C. § 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Capital One Asserts Administrative “freeze and hold” Does Not constitute an Act to Collect a Debt . . . . . . . . . . . . . . . . . 10 Capital One is in violation of 11 U.S.C. § 362(a)(3) . . . . . . . 12 Citizen’s Bank of Maryland v. Strumpf, 516 U.S. 16 (1995) Inapplicable in this Matter . . . . . . . . . . . . . . . . . . . . . . . . 13 11 U.S.C. §542 Turnover of Property of the Estate . . . . . . . . 13 IV. Conclusion . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 V. Certificate of Service . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 18 VI. Affidavits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 VII. Exhibit List . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 VIII. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibits 1-9 CASE LAW, STATUTES AND AUTHORITIES Statutes: 11 U.S.C. Section 362 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02,10,11 FRCP 56 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09 i Case 2:16-cv-14400-SM-JVM Document 20 Filed 04/07/17 Page 2 of 6 CASE LAW, STATUTES AND AUTHORITIES (Continued) 11 U.S.C. § 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 U.S.C. § 541 . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 U.S.C. § 362(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,12,13,14 11 U.S.C. §362(a)(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,14,15 11 U.S.C. §542(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 11 U.S.C. §542(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 11 U.S.C. §363 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 11 U.S.C. §522 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 11 U.S.C. §542(c)(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 11 U.S.C. §553 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Case Law: Hulsey v. Kmart, Inc., 43 F.3d 555, 557 (10th Cir. 1994) . . . . . . . . . . . . . . . . . 09 Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552, 91 L. Ed.2d 265 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 2514, 91 L.Ed.2d 202 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09 O’Connor v. Smith, 427 Fed. Appx. 359 (5 Cir 2011) . . . . . . . . . . . . . . . . . 09 Citizens Bank of Md. v. Strumpf, 516 U.S. 16, 21 (1995) . . . . . . . . . . . . . . . . . 10,11,13 Flynn, 143 B.R. 798, 801 (Bankr. D.R.I. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . 11,13,14 Quality Interiors, Inc., 127 Bankr. 39, 394 Patterson, 967 F.2d 505 (11th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Wildcat Const. Co., Inc., 57 Bankr. 981 (Bankr. D. Va. 1986) . . . . . . . . . . . . . . . 12 Patterson, 967 F.2d 505 (11th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13 ii Case 2:16-cv-14400-SM-JVM Document 20 Filed 04/07/17 Page 3 of 6 Case Law: (Continued) Amdura Corp., 167 B.R. 640 (D. Co. 1994), aff’d. 75 F.3d 1447 (10th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Bryn Athyn Investors, Ltd., 69 Bankr. 452, 456 (Bankr. E.D. N.C. 1987) . . . . . . 14 U.S. v. Whiting Pools, Inc., 462 U.S. 198, 76 L. Ed. 2d 515, 103 S. Ct. 2309 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Pimental, Bk. No. 91-13187, 1992 WL 151585 (Bankr. D.R.I. June 17, 1992) . 14 Lange, 102 Bankr. 295 (Bankr. D.R.I. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 First Connecticut Small Business Investment Company v. Bank of Boston Connecticut (In re First Connecticut Small Business Inv. Co.), 118 Bankr. 179 (Bankr. D.Conn. 1990) . . . . . . . . . . . 14 Homan v. Kemba Cincinnati Credit Union (In re Homan), 116 Bankr. 595 (Bankr. S.D. Ohio 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Patterson, 125 Bankr. 40, 44 (Bankr. N.D. Ala. 1990), aff'd 1992 WL 161214 (11th Cir. July 29, 1992) . . . . . . . . . . . . . . . . . . . . . . . . . 14 iii Case 2:16-cv-14400-SM-JVM Document 20 Filed 04/07/17 Page 4 of 6 I. MOTION FOR SUMMARY JUDGMENT OF PLAINTIFF KANETHA ARUN CHAU COMES NOW, Kanetha Arun Chau, Plaintiff, through undersigned Counsel pursuant to Rule 56(a) of the Federal Rules of Civil Procedure and moves the Court to enter Summary Judgment for Plaintiff in connection with Case No. 16-14733, entitled Kanetha Arun Chau (“Ms. Chau”) vs. Capital One, NA (“Capital One”) in the above referenced consolidated actions in that Kanetha Arun Chau is entitled to Judgment as a matter of law, on the ground that there is no genuine issue as to any material fact which is supported by Plaintiff’s Statement of Material Facts Not at Issue and the attached Memorandum in Support of Plaintiff’s Motion for Summary Judgment. In support of this Motion, Plaintiff Chau refers to the record in this action, including the Complaint, the Answer, the Defendant’s Amendment to the Answer, Plaintiff Chau’s Affidavit attached, Affidavit of Financial Expert Paul Daryl Schouest, the record in the Chapter 11 Bankruptcy Case No. 14-10059, and the Plaintiff’s Statement of Material Facts Not at Issue. WHEREFORE, Kanetha Arun Chau, Plaintiff in Case No. 16-14733, prays that her Motion for Summary Judgment be granted; and that there be Judgment in her favor and against Defendant Capital One, NA: -1- Case 2:16-cv-14400-SM-JVM Document 20 Filed 04/07/17 Page 5 of 6 a) Awarding fees, damages and costs to Plaintiff, Kanetha Arun Chau, a Chapter 11 Debtor in Possession, for violation of the stay provided by 11 U.S.C. §362 and the injunction provided to an individual Debtor in Possession while in process of Confirmed Plan operations; and b) For all other general and equitable relief against Capital One, NA for its deliberate actions as the Court deems appropriate. Mandeville, Louisiana this 7th, day of April, 2017. Respectfully submitted, /s/ Phillip K. Wallace PHILLIP K. WALLACE (#13198) 4040 Florida Street, Suite 203 Mandeville, Louisiana 70448 Telephone: (985) 624-2824 Facsimile: (985) 624-2823 Email: Philkwall@aol.com Attorney for Plaintiff, Kanetha Arun Chau -2- Case 2:16-cv-14400-SM-JVM Document 20 Filed 04/07/17 Page 6 of 6 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA Pho An, LLC et al CIVIL ACTION PLAINTIFF(S) No. 16-14400,c/w 16-15802, 16-14733 VERSUS "E" (I)SECTION: Capital One, NA DEFENDANT(S) NOTICE OF SUBMISSION PLEASE TAKE NOTICE that the Motion for Summary Judgment is hereby set for submission before District Judge/Magistrate Judge Susie Morgan on May 3, at 10:0_0___ .J!...m. ~/~ac"""';=----~ (Signature) Phillip K. Wallace (Name) 4040 Florida Street, Suite 203 (Address) Mandeville, LA 70048 (City) (State) (Zip) (985) 624-2824 (Telephone) eeRTIFICATE OF SERVICE I hereby certify that [ have served a cOl'Y of tbis document on all counsel ofrewnl either in person or by mailing it postage prel,aid on thi!S 7th day of -Allril ,20.J..L., G~URE) Case 2:16-cv-14400-SM-JVM Document 20-1 Filed 04/07/17 Page 1 of 1 II. PLAINTIFF KANETHA ARUN CHAU’S STATEMENT OF MATERIAL FACTS NOT AT ISSUE NOW COMES, Plaintiff, Kanetha Arun Chau in Case No. 16-14733, entitled Kanetha Arun Chau vs. Capital One, NA. in the above referenced consolidated actions filed in U.S. District Court for the Eastern District of Louisiana through undersigned Counsel who provides the following Statement of Material Facts Not at Issue in connection with her Motion for Summary Judgment and asserts the following. 1. Kanetha A. Chau is the Plaintiff in Adversary Case No. 16-14733, Section E, entitled Kanetha Arun Chau vs. Capital One, NA. lodged in U.S. District Court, Eastern District of Louisiana.1 2. Kanetha A. Chau filed an individual Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code, Case No. 14-10059, on January 13, 2014 in the United States Bankruptcy Court for the Eastern District of Louisiana.2 3. At the time of her individual Chapter 11 Bankruptcy filing on January 13, 2014, the Debtor, Kanetha Arun Chau, had no business relationship with the Defendant, Capital One NA.3 1 In re: Chau, No. 16-14733, R. Doc. 1 (E. D. La) 2 In re: Kanetha Arun Chau, No. 14-10059, R. Doc 2 (Bankr. E.D. La.) 3 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 20-21; 24 (Bankr. E.D. La) -3- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 1 of 7 4. The Debtor-in-Possession Bankruptcy Checking Account No. xxxx xx 3815 of Debtor, Kanetha Arun Chas was opened with Capital One, NA on January 22, 20144 and remained open during the entirety of the active bankruptcy proceeding. 5. The Second Amended Disclosure Statement of Kanetha Arun Chau in her individual Chapter 11 Bankruptcy Case No. 14-100595 was approved by the Bankruptcy Court on September 3, 2014.6 6. The Second Amended Disclosure Statement of Kanetha Arun Chau, Exhibit No. 9, reflected Monthly Income of the Debtor in an amount of $5,000.00 from the restaurant known as Pho An; $4,000.00 from the restaurant known as Thai Chili and Disability Income in a monthly amount of $1,200.00 for a total of monthly income of $10,200.00.7 7. Debtor-in-Possession Kanetha Arun Chau filed with the Bankruptcy Court her Second Amended Chapter 11 Plan on August 30, 20148 which was approved by the Bankruptcy Court on October 6, 2014.9 4 Capital One Disovery, Exhibit No. 1, Bates No. 0059-60 5 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 198 (Bankr. E.D. La) 6 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 207 (Bankr. E.D. La) 7 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 198-9 (Bankr. E.D. La) 8 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 202 (Bankr. E.D. La) 9 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 216 (Bankr. E.D. La) -4- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 2 of 7 8. The “Means for Implementation of the Plan” for the Court approved Second Amended Plan of Kanetha Arun Chau reflects the following items of income for the Debtor:10 Entity Monthly Draw Amount Monthly Total Pho An Restaurant $ 5,000.00 $ 5,000.00 Thai Chili Restaurant 4,000.00 4,000.00 Disability Income 1,200.00 1,200.00 $ 10,200.00 $ 10,200.00 9. The Individual Chapter 11 Bankruptcy, Case No. 14-10059 of Kanetha Arun Chau is an active, ongoing proceeding in which there has been no final decree; has not been closed; and is being administered by the Debtor-in-Possession.11 10. The monthly disbursements by the Debtor, Kanetha Arun Chau in her Chapter 11 Bankruptcy Case decreased significantly after Capital One, NA Seized her Debtor-in- Possession Checking Account No. xxxx xx 3815 on or about August 7, 2015 as reflected by her Post Confirmation Report dated March 9, 201712 and summarized below: 10 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 202, Par. 7.1, p. 24 (Bankr. E.D. La) 11 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 1-286, (Bankr. E.D. La) 12 In re: Kanetha Arun Chau, Case No. 14-10059, R. Doc. 285-0, pg. 2 (Bankr. E.D. La)(Exhibit No. 2 -5- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 3 of 7 Period Total Expenditures Monthly Average for Period Expenditures January - December, 2014 $ 72,739.19 $ 6,061.60 January - July, 2015 63,257.83 9,036.83 (DIP Account Seized by Capital One on August 7, 2015) August - December, 2015 20,271.38 4,054.26 January - December, 2016 46,154.32 3,846.19 January - February, 2017 4,600.94 2,300.42 The expenditures/disbursements by the Debtor Kanetha A. Chau subsequent to the Capital One Seizure were reduced on average as follows: Period Reduction in Plan Payments August - December, 2015 40% reduction January - December, 2016 49% reduction January - February, 2017 69% reduction This reflects the reduced availability of funds after the Capital One Seizure. 11. On August 7, 2015, Ms. Chau visited Capital One in Covington, Louisiana to close her Debtor in Possession Account; and to open a new Debtor in Possession Account with her remaining funds at Regions Bank. (See Exhibit No. 4 attached hereto, Chau 0043) -6- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 4 of 7 Period Total Expenditures Monthly Average for Period Expenditures January - December, 2014 $ 72,739.19 $ 6,061.60 January - July, 2015 63,257.83 9,036.83 (DIP Account Seized by Capital One on August 7, 2015) August - December, 2015 20,271.38 4,054.26 January - December, 2016 46,154.32 3,846.19 January - February, 2017 4,600.94 2,300.42 The expenditures/disbursements by the Debtor Kanetha A. Chau subsequent to the Capital One Seizure were reduced on average as follows: Period Reduction in Plan Payments August - December, 2015 40% reduction January - December, 2016 49% reduction January - February, 2017 69% reduction This reflects the reduced availability of funds after the Capital One Seizure. 11. On August 7, 2015, Ms. Chau visited Capital One in Covington, Louisiana to close her Debtor in Possession Account; and to open a new Debtor in Possession Account with her remaining funds at Regions Bank. (See Exhibit No. 4 attached hereto, Chau 0043) -6- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 5 of 7 12. At all times relevant to the banking relationship of Debtor-in-Possession, Kanetha A. Chau with Capital One, NA from January 22, 2014 through August 31, 2015 Capital One, NA was aware that the bank Checking Account No. xxxx xx 3815 of Kanetha A. Chau was a Debtor- in-Possession account subject to the oversight of the U.S. Bankruptcy Court for the Eastern District of Louisiana, Case No. 14-10059.13 13. Upon the discovery of the seizure of her Debtor-in-Possession banking account, Ms. Chau contacted Capital One, NA personnel on various and numerous occasions to attempt to obtain information about the seizure and/or the release of her funds being held by Capital One without any Court authority.14 14. Capital One, NA personnel were aware that the Debtor-in-Possession, Ms. Chau had employees and vendors to pay and without her funds she could not do so.15 15. Counsel for Debtor-in-Possession, Kanetha Chau determined through investigation that Ms. Amy Bateman, In-House Counsel for Capital One, NA was in charge of the All Funds Hold (“AFH”) matter placed on all of the related accounts of Ms. Chau. An e-mail was sent to Ms. Bateman on August 18, 2015 which requested a release of all funds being held by Capital One, NA. Ms Bateman replied on August 19, 2015advising that the balance of all accounts would be released.16 13 Capital One, NA Discovery, Bates # 00644, Exhibit No. 5 attached hereto 14 Capital One, NA Discovery, Bates # 00625-626, Exhibit No. 6 attached hereto 15 Capital One, NA Discovery, Bates # 00625-626, Exhibit No. 6 attached hereto 16 E-mail correspondence by and between Phillip K. Wallace, Attorney for Debtor-in- Possession, Kanetha A. Chau, and Capital One, NA In-House Counsel, Ms. Amy Bateman dated August 18-19, 2015 is attached hereto as Exhibit No. 7. (Chau 000047-48) -7- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 6 of 7 16. On August 19, 2015 Capital One, NA released the seized funds of the Debtor-in- Possession Account No. xxxx xx 3815 of Debtor, Kanetha Arun Chau back to Debtor, Kanetha Arun Chau in an amount of $7,680.80 and closed the Debtor-in-Possession Account No. xxxx xx 3815.17 17. External Fraud Inv. Check Fraud Incident Reports by Capital One Investigator, Mr. Clifford McIlroy dated September 15, 2016, Case ID No. 201511960 reveals that Capital One, NA suffered absolutely no loss whatsoever as the result of the actions of Debtor-in-Possession, Kanetha Arun Chau.18 18. All information in the above referenced Plaintiff’s Motion for Summary Judgment and Memorandum in Support in Case No. 16-14733, Section E, Kanetha Arun Chau vs. Capital One, NA. against Capital One, NA is true, correct, and supported by the attached documentation. 17 The Capital One Statement Savings/Checking/MMA withdrawal statement dated August 19, 2015 for the Debtor-in-Possession Account No. xxxx xx 3815 in an amount of $7,680.80 is attached hereto as Exhibit No. 8. (Cap One 00365) 18 Please see Capital One External Fraud Inv. Check Fraud Incident Reports by Mr. Clifford McIlroy dated September 15, 2016, Capital One, NA Discovery Bates No. 00632-00643 attached hereto as Exhibit No. 9. -8- Case 2:16-cv-14400-SM-JVM Document 20-2 Filed 04/07/17 Page 7 of 7 III. MEMORANDUM IN SUPPORT ARGUMENT Summary Judgment Standard District Courts shall grant summary judgment where the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. FRCP 56 (a). Hulsey v. Kmart, Inc., 43 F.3d 555, 557 (10th Cir. 1994). To avoid summary judgment, the non-movant must make a showing sufficient to establish an inference of the existence of each element essential to the case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552, 91 L. Ed.2d 265 (1986). The non-movant "may not rest upon mere allegation or denials of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). As to materiality, the substantive law will identify which facts are material. Only a dispute over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of Summary Judgment. O’Connor v. Smith, 427 Fed. Appx. 359 (5 Cir 2011). Plaintiff must prove standing on summary judgment just as any other element of the case. In order for Plaintiff to carry its burden on summary judgment, Plaintiff must show with evidentiary support that no genuine dispute of material fact exists with respect to Plaintiffs’ standing. FRCP 56(a). -9- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 1 of 9 Capital One, NA is not a Custodian Pursuant to 11 U.S.C. § 101: The Bankruptcy Code defines custodian as follows: (A) receiver or trustee of any of the property of the debtor, appointed in a case or proceeding not under this title; (B) assignee under a general assignment for the benefit of the debtor’s creditors; or (C) trustee, receiver, or agent under applicable law, or under a contract, that is appointed or authorized to take charge of property of the debtor for the purpose of enforcing a lien against such property, or for the purpose of general administration of such property for the benefit of the debtor’s creditors. 11 U.S.C. §101(11). Capital One meets none of these criteria. Capital One has no standing conferred upon it by contract, statute or the Bankruptcy Code to take an action to affect the Debtor’s monies in the Debtor-in-Possession Account which is considered property of the Estate under §541. Capital One Asserts Administrative “freeze and hold” Does Not constitute an Act to Collect a Debt Capital One was not a creditor in the Kanetha Arun Chau Bankruptcy proceeding but states in it’s Answer to Complaint, Affirmative and Additional Defenses, No. 2: the “freeze and hold” does not constitute an act to collect a debt in violation of 11 U.S.C. §362(a) and quotes Citizens Bank of Md. v. Strumpf, 516 U.S. 16, 21 (1995) (“Strumpf) as a temporary refusal to pay is neither a taking of possession or respondent’s property nor an exercising of control over it, but merely a refusal to perform its promise. -10- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 2 of 9 However, in the Strumpf matter, Citizens Bank filed a Motion for Relief from the Stay which was granted by the United States Bankruptcy Court which authorized Citizens Bank to set off the remaining checking account balance against the loan owed by Debtor to Citizens Bank. In addition, Citizens Bank made contact by numerous letters to Debtor and the Chapter 13 Trustee that the account would be frozen until such time the Chapter 13 Trustee responded to Citizens Bank’s correspondence. As such, Capital One’s interpretation of the Citizens Bank of Md. v. Strumpf case law does not apply in this matter as the Debtor was a Chapter 13 Debtor in the Citizens Bank of Md. case with an outstanding loan owed to Citizens Bank the present facts differ substantially. The commencement of a bankruptcy case creates an estate comprised of all legal or equitable interests of the Debtor in property as of the filing of the petition. When an administrative freeze is placed on a Debtor’s account for an excessive period of time with no action by the bank to request relief from the stay §362(a)(3) is violated; In re Flynn, 143 B.R. 798 (Bankr. D.R.I. 1992) (holding that the bank violated the automatic stay by using the administrative freeze as leverage to collect on pre-petition debt). Such is clearly a violation of Section 362 of the Bankruptcy Code. Capital One was not a creditor in Ms. Chau’s Bankruptcy proceeding and has not asserted any claim against the Debtor, nor was it owed a pre-petition debt. As such Capital One deliberately and intentionally placed a “freeze and hold” on the Debtor-in Possession Account with No Notice, No Warning and No Communication whatsoever to the Debtor or Debtor’s Counsel. In addition, Capital One did not have a Court Order from the United States Bankruptcy Court granting the “freeze and hold” on the Debtor-in-Possession Account nor did it have a Court Order Granting a Relief from the Automatic Stay to “freeze and hold” this Debtor-in-Possession Account of Ms. Chau. In re Flynn, 143 B.R. 798, 801 (Bankr. D.R.I. 1992) -11- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 3 of 9 Capital One is in violation of 11 U.S.C. § 362(a)(3): Notably, §362(a)(3) provides that the automatic stay applies to: "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." The placing of an administrative freeze on a Debtor's bank account is undeniably an act designed to "exercise control over property of the estate," and thus such is an express violation of the automatic stay. In re Quality Interiors, Inc., 127 Bankr. 391. As In re Quality Interiors, we subscribe to the reasoning of Judge Waldron in In re Wildcat Const. Co., Inc., 57 Bankr. 981 (Bankr. D. Va. 1986), that perhaps the most fundamental problem with countenancing the freezing of the debtor's bank accounts before any judicial determination of the rights of the parties has been made is that it begs the critical question, assuming in advance the precondition for its validity . . . the freeze is essentially an extra-judicial temporary restraining order. In re Quality Interiors, 127 Bankr. at 394 (quoting Wildcat Construction, 57 Bankr. at 981). The automatic stay prohibits: “...any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; ...”. 11 U.S.C. §362(a)(3), emphasis added. Capital One denied Kanetha Arun Chau any access to any of the funds she deposited in her Debtor-in-Possession checking account. This was an attempt to exercise control over property of the estate. Since Capital One was not a creditor there is no level of interest to justify its actions. -12- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 4 of 9 Citizen’s Bank of Maryland v. Strumpf, 516 U.S. 16 (1995) Does not Apply in this Matter: There was originally a significant split of authority about whether this type of freeze to preserve a right of setoff constituted a violation of the automatic stay; that split was resolved by the U.S. Supreme Court in 1995. Most of the setoff cases, including the U.S. Supreme Court’s opinion in Strumpf, revolve around 11 U.S.C. §362(a)(7) and §542(b). These cases are argued by both sides in this adversary proceeding because they are the only cases available, although they are not really on point. The Plaintiff is more concerned with the effect of U.S.C. §362(a)(3), than the effect of §362(a)(7). A more useful line of the setoff cases is In re Patterson, 967 F.2d 505 (11th Cir. 1992) and In re Flynn, 143 B.R. 798 (Bankr. D.R.I. 1992). These cases do not rely on §362(a)(7), and are thus not affected by the Supreme Court’s Strumpf decision. These cases point out that Congress added the phrase: “...or to exercise control over property of the estate....” to §362(a)(3). 11 U.S.C. §542 Turnover of Property of the Estate: The Bankruptcy Code provides a third party in possession of estate property must forthwith turn it over to a trustee or Debtor-in-Possession. 11 U.S.C. §542(a) (property not in the hands of a custodian) In the event that third party refuses to turn over the estate property, the Code provides a cause of action to compel turnover. Id. Turnover is not conditioned upon equity in the property, or on a demonstration the property is necessary to an effective reorganization. Custodians ordinarily gain possession to enforce a lien or administer property for the benefit of creditors. Non-custodians ordinarily have an economic interest in the subject property, such as a security interest. There are different standards for the two types of turnover. Turnover under §542(a) does not apply to -13- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 5 of 9 custodians. As argued above, Capital One does not qualify as a custodian. Turnover is only allowed for estate property and clearly the Debtor-in-Possession Account was property of the estate. In re Amdura Corp., 167 B.R. 640 (D. Co. 1994)., aff’d. 75 F.3d 1447 (10th Cir. 1996) stating bank accounts are Estate Property. The District Court opinion also includes the language: “Funds deposited into a bank account are presumed to belong to the entity in whose name the account is established.” To the extent to which a debtor's interest in property creates "property of the estate" for turnover purposes is a question of federal law. Amdura Nat'l Distribution Co. v. Amdura Corp. (In re Amdura Corp.), 167 B.R. 640, 643 (D. Colo. 1994), In re Bryn Athyn Investors, Ltd., 69 Bankr. 452, 456 (Bankr. E.D. N.C. 1987) (citing U.S. v. Whiting Pools, Inc., 462 U.S. 198, 76 L. Ed. 2d 515, 103 S. Ct. 2309 (1983)). Capital One had no legal right to seize, freeze or hold the funds in the Debtor-in- Possession Account. In re Flynn, 143 B.R. 798 (Bankr. D.R.I. 1992) the Court followed the line of cases holding that the placing of a freeze is a violation of the automatic stay, §§ 362(a)(3) and/or (a)(7). In re Pimental, Bk. No. 91-13187, 1992 WL 151585 (Bankr. D.R.I. June 17, 1992); In re Lange, 102 Bankr. 295 (Bankr. D.R.I. 1989); accord In re Patterson, 1992 WL 161214 (11th Cir. July 29, 1992); In re Quality Interiors, Inc., 127 Bankr. 391 (Bankr. N.D. Ohio 1991); First Connecticut Small Business Investment Company v. Bank of Boston Connecticut (In re First Connecticut Small Business Inv. Co.), 118 Bankr. 179 (Bankr. D.Conn. 1990); Homan v. Kemba Cincinnati Credit Union (In re Homan), 116 Bankr. 595 (Bankr. S.D. Ohio 1990). -14- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 6 of 9 11 U.S.C. §542 Turnover of Property of the Estate States the following: (a) Except as provided in subsection (c) or (d) of this section, an entity, other than a custodian in possession, custody, or control, during the case, of property that the trustee may use, sell, or lease under section 363 of this title, or that the debtor may exempt under section 522 of this title, shall deliver to the trustee, and account for, such property or the value of such property, unless such property is of inconsequential value or benefit to the estate. (b) Except as provided in subsection (c) or (d) of this section, an entity that owes a debt that is property of the estate and that is matured, payable on demand, or payable on order, shall pay such debt to, or on the order of, the trustee, except to the extent that such debt may be offset under section 553 of this title against a claim against the debtor. (c) Except as provided in section 362(a)(7) of this title, an entity that has neither actual notice nor actual knowledge of the commencement of the case concerning the debtor may transfer property of the estate, or pay a debt owing to the debtor, in good faith and other than in the manner specified in subsection (d) of this section, to an entity other than the trustee, with the same effect as to the entity making such transfer or payment as if the case under this title concerning the debtor had not been commenced. As mentioned hereinabove, Capital One was not a custodian in Ms. Chau’s Bankruptcy proceeding, and the funds seized in the administrative hold and freeze in her Debtor-in Possession -15- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 7 of 9 account were of value to the Estate. In addition, Capital One was not owed a pre-petition debt in Ms. Chau’s Bankruptcy proceeding, nor was it unaware of Ms. Chau’s Chapter 11 filing. Clearly the checking account seized was titled, Kanetha Arun Chau, Debtor-in Possession. Although in previous rulings the Courts didn’t specifically recall having §542(b) in mind in finding a technical violation of the stay, a present review of this Code section points up the inconsistency in the application of these different provisions. Nevertheless, we continue to believe that §362(a)(3) controls with respect to this incongruity, as we find its language to be comprehensive, wide-sweeping and direct. We are also persuaded by the rationale given by the bankruptcy court in In re Patterson, 125 Bankr. 40, 44 (Bankr. N.D. Ala. 1990), aff'd 1992 WL 161214 (11th Cir. July 29, 1992), that the July 10, 1984 amendment to 11 U.S.C. § 362(a)(3), which added the words "or to exercise control over property of the estate," indicated a congressional intent to broaden the reach of the automatic stay. In re Flynn, 143 B.R. 798, 801 (Bankr. D.R.I. 1992) IV. CONCLUSION The Plaintiff’s evidence is sufficient to establish all of the elements of her claims in this matter and she is entitled to Summary Judgment. Kanetha Arun Chau urges the Court to Grant her Motion for Summary Judgment; that there be judgment in favor of Kanetha Arun Chau and against Capital One, NA, and for all other equitable relief in the circumstances including damages for violation of 11 U.S.C. § 362, the consequential damages to the Estate of Ms, Chau caused by the Seizure above described, and attorneys fees and costs. -16- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 8 of 9 Mandeville, Louisiana this 7th, day of April, 2017. Respectfully submitted, /s/ Phillip K. Wallace PHILLIP K. WALLACE (#13198) 4040 Florida Street, Suite 203 Mandeville, Louisiana 70448 Telephone: (985) 624-2824 Facsimile: (985) 624-2823 Email: Philkwall@aol.com Attorney for Plaintiff, Kanetha Arun Chau -17- Case 2:16-cv-14400-SM-JVM Document 20-3 Filed 04/07/17 Page 9 of 9 CERTIFICATE OF SERVICE I, PHILLIP K. WALLACE, hereby certify that a copy of the foregoing Plaintiff, Kanetha Arun Chau’s Motion for Summary Judgment, Memorandum in Support, Exhibits, Affidavits and Statement of Material Facts Not at Issue has been served by the Court’s CM/ECF System and by Electronic Mail and/or U.S. Mail upon the following this 7th, day of April, 2017. Thomas J. Lutkewitte Conor T. Lutkewitte Favret, Demarest, Russo & Lutkewitte 1515 Poydras Street, Suite 1400 New Orleans, Louisiana 70112 Email: tlutkewitte@favretlaw.com Email: clutkewitte@favretlaw.com Stavros Panagoulopoulos Pelican Law Group 1515 S. Salcedo Street, Suite 211 New Orleans, Louisiana 70125 stavros.p@pelicanlawgroup.com /s/ Phillip K. Wallace PHILLIP K. WALLACE (#13198) 4040 Florida Street, Suite 203 Mandeville, Louisiana 70448 Telephone: (985) 624-2824 Facsimile: (985) 624-2823 Email: Philkwall@aol.com Attorney for Plaintiff, Kanetha Arun Chau -18- Case 2:16-cv-14400-SM-JVM Document 20-4 Filed 04/07/17 Page 1 of 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA PHO AN, LLC, ET AL CIVIL ACTION VERSUS NO. 16-14400 C/W 16-15802; 16-14733 CAPITAL ONE, NA. SECTION “E” (1) AFFIDAVIT STATE OF LOUISIANA PARISH OF ST. TAMMANY BEFORE ME, the undersigned Notary Public, personally came and appeared: KANETHA ARUN CHAU a person of full age of majority and a resident of St. Tammany Parish, State of Louisiana, who after being duly sworn, did depose and state the following: 1. Kanetha Arun Chau (sometimes “Ms. Chau”) filed an individual Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code, Case No. 14-10059, on January 13, 2014 in the United States Bankruptcy Court for the Eastern District of Louisiana and continues to operate as an individual Debtor- in-Possession with all the rights and powers of a Debtor-in-Possession in accordance with the Bankruptcy Code. 2. Ms. Chau is the Plaintiff in Case No. 16-14733, Section E, entitled Kanetha Arun Chau vs. Capital One, NA. lodged in U.S. District Court, Eastern District of Louisiana. 3. On October 6, 2014, the U. S. Bankruptcy Court for the Eastern District of Louisiana entered an Order Confirming Kanetha A. Chau’s Second Amended Plan of Reorganization. -1- Case 2:16-cv-14400-SM-JVM Document 20-5 Filed 04/07/17 Page 1 of 3 4. There has been no final decree in Ms. Chau’s individual Bankruptcy Case No. 14-10059 nor has the case been closed. It is an active, ongoing individual “Chapter 11" Bankruptcy Case which Ms. Chau is presently administering. 5. Ms. Chau’s income is solely derived from management fees received from Pho An Restaurant, Chili Thai, d/b/a Thai Chili Restaurant, and Pad Thai Restaurant, located in Covington, Louisiana. Chau’s income from these restaurants is the means for implementing her Chapter 11 Plan of Reorganization. (the “Plan”) Without her income from both of these restaurants, Ms. Chau would be unable to fund her individual Plan as approved by the Bankruptcy Court or make any Payments in connection with her Plan. 6. On August 7, 2015, Ms. Chau visited Capital One in Covington, Louisiana to close her Debtor in Possession Checking Account; and to open a new Debtor in Possession Account with her remaining funds at Regions Bank. Ms. Chau was informed that an internal “freeze” or “hold” was placed on her Debtor-in- Possession Account by Capital One, NA; more particularly, the account of Kanetha Arun Chau, Debtor-in-Possession, Account Ending 3815 with funds in the amount of $ 7,880.80 as well as the checking accounts of Pho An, LLC, Account xxx-xx-0661 and Chili Thai, LLC, Account xxx-xx-3322. 7. Due to the seizure of her funds by Capital One, NA, Ms. Chau was unable to continue making her Plan Payments in connection with her Confirmed Chapter 11 Plan since Pho An, LLC and Chili Thai, Inc. d/b/a Thai Chili Restaurant are main sources of income for Kanetha Arun Chau and the business income was significantly reduced due to the “freeze” and seizure of Pho An LLC, Business Checking, Account Ending 0661 and Chili Thai, Inc. d/b/a Thai Chili Restaurant, Business Checking, Account Ending 3322. 8. Capital One was aware that Kanetha Arun Chau was a Chapter 11 Bankruptcy Debtor inasmuch as Ms. Chaus’s checking account was a Debtor-in-Possession (“DIP”) Account, Account Ending 3815, which was opened with Capital One in February, 2014 and the Account Title listed Kanetha Arun Chau, Debtor-in-Possession, Case No. 14-10059. 9. After intervention of her Bankruptcy Counsel on or about August 19, 2015, Ms. Chau obtained possession of checks from Capital One representing the funds frozen and seized on August 7, 2015, from the Checking Accounts of Kanetha Arun Chau, Pho An, LLC and Thai Chili and Pad Thai. -2- Case 2:16-cv-14400-SM-JVM Document 20-5 Filed 04/07/17 Page 2 of 3 10. Due to the seizureofthe Debtor-in-PossessionAccount ofKanethaArun Chau by Capital One, NA and related entities there is a continued loss ofbusiness tor Pho An, LLC and Thai Chili Restaurant which impedes her Plan Payments due to the violation of 11 u.s. C. § 362 of the Bankruptcy Code by Capital One, NA. 11. Due to the seizure offunds by Capital One, NA, Ms. Chau has been unable to continue making her Plan Payments in connection with her Confirmed Chapter 11 Plan. 12. Due to the above seizure of funds by Capital One, NA, Ms. Chau was forced to file a Motion to ModifY/Amend Plan with the United States Bankruptcy Court for the Eastern District ofLouisiana; and a Hearing is presently pending. 13. Ms. Chau has reviewed the Motion for Summary Judgment and Memorandum in Support as well as the Statement of Material Facts in which she is the Plaintiff in this matter. 14. All information in the Plaintiff's Motion for Summary Judgment and Memorandum in Support in Case No. 16-14733, Section E, captioned Kanetha Arun Chau vs. Capital One, NA. is true and correct to the best of her knowledge and belief. Mandeville, Louisiana this1L~ day of April, 2017. BY:IdL__~ i . uges Kanetha Arun Chan ~' >~~i Little\ SWORN TO A UBSCRmED BEFORE~M;;E~,~·~~~d~a~~o~f~.~~.!e:n~·~~2~0~17~.__ PHIL IP K. WALLACE (LA Bar No. 13198) NOTARY PUBLIC -3 Case 2:16-cv-14400-SM-JVM Document 20-5 Filed 04/07/17 Page 3 of 3 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA PHO AN, LLC, ET AL CIVIL ACTION VERSUS NO. 16-14400 C/W 16-15802; 16-14733 CAPITAL ONE, NA. SECTION “E” (1) AFFIDAVIT STATE OF LOUISIANA PARISH OF ST. TAMMANY BEFORE ME, the undersigned Notary Public, personally came and appeared: PAUL DARYL SCHOUEST a person of full age of majority and a resident of St. Landry Parish, State of Louisiana, who after being duly sworn, did depose and state the following: 1. He is a Financial Analyst who was appointed as an Expert by the United States Bankruptcy Court for the Eastern District of Louisiana on behalf of Kanetha Arun Chau in connection with her individual Chapter 11 Plan in the U.S. Bankruptcy Court for the Eastern District of Louisiana, Case No. 14- 10059, Section A. 2. He has previously been appointed as an Expert Witness/Financial Analyst in the U.S. Bankruptcy Court for the Eastern District of Louisiana in Chapter 11 Bankruptcy Cases entitled Devier Design Build, LLC, Case No. 14-11231 and Purchasing Incentives, LLC, Case No. 12-12930. 3. He has also been appointed as an Expert Witness - Production Management in the U.S. Bankruptcy Court for the Eastern District of Louisiana, in Mrs. Wheat’s Fabulous Foods, Inc., Case No. 13-13410. -1- Case 2:16-cv-14400-SM-JVM Document 20-6 Filed 04/07/17 Page 1 of 5 4. He has also been appointed and served as an Expert Witness in the 15th Judicial District Court for the Parish of Lafayette, State of Louisiana. 5. He has reviewed the financial documents of Kanetha Arun Chau, Pho An, LLC, Thai Chili, LLC and Pad Thai, LLC in connection with Ms. Chau’s finances during her ongoing Chapter 11 Case and subsequent to Capital One’s seizure of checking account funds. 6. He has reviewed multiple internal memorandums, reports and e-mails provided by Capital One in response to discovery and has analyzed a timetable of events associated with Capital One’s seizure of funds to determine the losses incurred by Kanetha Arun Chau. 7. He is familiar with Kanetha Arun Chau’s Second Amended Chapter 11 Plan Case No. 14-10059, Confirmed on October 6, 2014 in the U.S. Bankruptcy Court, Eastern District of Louisiana, having been appointed as an Expert Witness/Financial Analyst for Ms. Chau by the U.S. Bankruptcy Court for the Eastern District of Louisiana. 8. Ms. Chau’s income is primarily derived from management fees received from Pho An Restaurant, Chili Thai, d/b/a Thai Chili Restaurant, and Pad Thai Restaurant, located in Covington, Louisiana. In addition, Ms. Chau’s income from these restaurants is the primary means for implementing her Plan of Reorganization. Without her income from both of these restaurants, Ms. Chau would be unable to fund her individual Plan as approved by this Court or to make any Payments in connection with her Plan of Reorganization 9. The simplistic approach to determine the financial losses to the Debtor, Kanetha Arun Chau, as a result of the Capital One seizure (“Seizure”) of funds of the Debtor and her related entities, Pho An, LLC and Chili Thai, LLC is to review her case disbursements before and after the Seizure which, of course, directly relates to the cash available for disbursements. 10. The following “cash disbursements” figures are taken directly from the Post Confirmation Reports filed in the Kanetha Arun Chau Chapter 11 Case No. 14-10059, R. Doc. 285, pg. 2: -2- Case 2:16-cv-14400-SM-JVM Document 20-6 Filed 04/07/17 Page 2 of 5 A. Chau Disbursements Prior to “Seizure” August 7, 2015 Date Disbursements 1st Quarter of 2014 $ 5,490.82 2nd Quarter of 2014 22,236.60 3rd Quarter of 2014 19,930.13 4th Quarter of 2014 25,082.14 Total 2014 $ 72,739.69 1st Quarter of 2015 $ 25,658.50 2nd Quarter of 2015 28,812.89 July of 2015 8,787.63 Total January to July, 2015 $ 63,259.02 Total Disbursements for $ 135,998.71 19 Months prior to Seizure Average Monthly Disbursements for 19 Months prior to “Seizure”: $135,998.71 ÷ 19 Months ' $7,157.83/Month B. Chau Disbursements After “Seizure” August 7, 2015 Date Disbursements 3rd Quarter of 2015 $ 6,742.65 (August to September) 4th Quarter of 2015 13,528.73 (October to December) Total August to December, 2015 $ 20,271.39 -3- Case 2:16-cv-14400-SM-JVM Document 20-6 Filed 04/07/17 Page 3 of 5 Date Disbursements 1st Quarter of 2016 $ 20,221.35 2nd Quarter of 2016 12,443.15 3rd Quarter of 2016 6,848.43 4th Quarter of 2016 6,651.39 Total 2016 $ 46,164.32 January to February, 2017 $ 4,600.84 $ 4,600.84 $ 71,041.55 Average Monthly Disbursements for 19 Months after “Seizure”: $ 71,041.55 ÷ 19 Months ' $3,739.03/Month 11. From the above analysis the cash available for disbursements prior to the Capital One Seizure is $7,157.03 per month and the cash available for disbursements subsequent to the Capital One Seizure is $3,739.03 per month yielding a net loss of $3,418.80 per month to Ms. Chau since the Capital One Seizure. Therefore the real losses are projected to Ms. Chau are as follows: (a) Average loss since August 7, 2015 to present for the 19 month period is as follows: $ 3,418.80 per month x 19 Months ' $64,957.20 (b) Average loss projected for five (5) year period: $ 3,418.80 per month x 12 Months x 5 Yrs. ' $ 205,128.00 -4- Case 2:16-cv-14400-SM-JVM Document 20-6 Filed 04/07/17 Page 4 of 5 (c) Average loss projected for ten (10) year period: $ 3,418.80 per month x 12 Months x IOYrs ..~ $410,256.00 12. Due to the actions ofCapital One, NA, Ms. Chau has been unable to continue making her Plan Payments in connection with her Confirmed Chapter II Plan since Pho An, LLC and Chili Thai, Inc. d/b/a Thai Chili Restaurant are main sources ofincome for Kanetha Arnn Chau; and the business income has been significantly reduced due to the Seizure ofthe Pho An LLC, Business Checking, Account Ending 0661, and Chili Thai, Inc. d/b/a Thai Chili Restaurant, Business Checking, Account Ending 3322 as projected hereinabove. 13. The information above related to the Plaintiffs Motion for Summary Judgment and Memorandum in Support in Case No. 16-14733, Section E, Kanetha Arnn Chau VB. Capital One, NA. against Capital One, NA is true and correct to the best of his knowledge and belief. Mandeville, Louisiana this ~ay ofApril, 2017. BY~~ Daryl Sc uest Terri Little SWORN TO ~/»UBSCRIBED BEFORE ME, this tu-lIi day of April, 2017. ~~-. PHILLIPK. WALLACE (LA BarNo. 13198) NOTARY PUBLIC -5 Case 2:16-cv-14400-SM-JVM Document 20-6 Filed 04/07/17 Page 5 of 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA PHO AN, LLC, ET AL CIVIL ACTION VERSUS NO. 16-14400 C/W 16-15802; 16-14733 CAPITAL ONE, NA. SECTION “E” (1) EXHIBIT LIST Exhibit No. Description of Exhibit 1. Capital One Debtor in Possession Account Statement January 22, 2014 to February 11, 2014. (Cap One 00059-60) 2. U.S. Bankruptcy Court Post Confirmation Report February 1, 2017 to February 28, 2017. In re: Kanetha Arun Chau, No. 14-10059, R. Doc 285 (Bankr. E.D. La) 3. Second Amended Plan of Reorganization Propounded by Debtor filed on August 30, 2014, and approved by the United States Bankruptcy Court for the Eastern District of Louisiana. In re: Kanetha Arun Chau, No. 14-10059, R. Doc 202, 216 (Bankr. E.D. La) 4. Capital One DDA (Checking Statement) provided by Capital One reflecting Balance in Account date of Seizure of Funds, August 7, 2015 in the amount of $7,880.80. (Chau 000043) -27- Case 2:16-cv-14400-SM-JVM Document 20-7 Filed 04/07/17 Page 1 of 2 EXHIBIT LIST (Continued) Exhibit No. Description of Exhibit 5. Capital One Discovery No. 00644; Fraud Alert Touchpoint Screen, Kanetha A. Chau Debtor in Possession Account ending 3815. (Cap One 00644) 6. Capital One Internal E-mail from Rebecca Boyer dated September 15, 2016 to William White. (Cap One 00625) 7. E-mail correspondence by and between Phillip K. Wallace, Attorney for Debtor-in- Possession, Kanetha A. Chau, and In-House Counsel, Ms. Amy Bateman dated August 18-19, 2015. (Chau 000047) 8. Capital One Statement Savings/Checking/MMA withdrawal statement dated August 19, 2015 for the Debtor-in-Possession Account No. xxxx xx 3815 in an amount of $7,680.80. (Cap One 00365) 9. Capital One External Fraud Inv. Check Fraud Incident Reports by Mr. Clifford McIlroy dated September 15, 2016, ( Capital One, NA Discovery Bates No. 00632- 00643). -28- Case 2:16-cv-14400-SM-JVM Document 20-7 Filed 04/07/17 Page 2 of 2 @ W'H«.capitalorwoonl\,oomKANIlTHA ARliN CHAU Go groan wilh orrliM $/.atements"DIP" EASTERN D1ST OF LA CASIlI4-10059 1548 cuTlY SAR.!< COVE 1-l100·655·8ANK {ll2651 SLIDELL LA 71l46! @ @ ~~~_·_Si~tl_~_,_ro_C_'I_br.m ______-I__C_h ACCOUNT SUMMARY FOR PE1UQDJANlJARY 22, 2<)14. l'EBlWAI/,Y)I, 2014 1 Depo,i,slCreOIIlr oCh",ksIl:lebils $300.00 $0,00 $\).00 $300.00 $em:. Charges $\),00 Ending Bal.... 02111114 $300.00 ACCOUNT DETAIL FOBPEIUOOIANUAR!l~, lOl4 .. 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Ill'\k!::t Bd!llli ~ l'!ease ~ yoof (~I!!IiV'6 dirt«1y IV GiIII 1-800·241-391"t !or ril!)1C" in.fcmmtint,. PAG£ 20Fl PSf~O/SHC: O/1.OD~R CONFiDENTIi\L CAJ>ONEOO~ Chau 000002 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 2 of 61 POST CONFIRMATION REPORT CHAl'TERll Case Name; Kanetha Arao Chau em.. Number: "14-10059 For l'uIod, February 1,2017 to FebrualY 28, 2Ot7 This: n::pDtt is due 15 dfl}'S wrthc end oftbe momh. The Debtor mUSt &tlae.h eaeb. ofthe ful1owing. furms Wlless the UnitcdStAteG TJ:'USb:~has waived the Kquinmientin writing. FUe:with thewurtand $Ubmit 0: papcrcopy In un with an Otlglnal&igJtaIure. Form l'R\'lousJy AtlRehed Wajved REQUIRED REPORTSIDOCllMENTS 1J { } ~tiveSalon"'; Sheet (Form 2.8) { I ( ) I'rotit ond Loss St.lement (Form 2-C) { I { Cash Receipts 'l1Id Disbursements Statement (fber 2,511.25 • November 1,589.61 325 :2016 December -July 3,Oll.O5~ Tolal 6.651.39 August 1,313.29 41hQ.m:tcr September ~~4.o9 Total 6.848.43 1017 3rd Quarter January 2,050.47 february 2,$50.47 Moren' To,al 4.600.94 IslQum:tcr Chau 000004 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 4 of 61 UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA IN RE: * CHAPTER 11 BANKRUPTCY * KANETHA ARUN CHAU * * CASE NO. 14-10059 * DEBTOR * SECTION “A ” * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * SECOND AMENDED PLAN OF REORGANIZATION PROPOUNDED BY DEBTOR Acknowledged and Respectfully submitted, Approved: /s/ Phillip K. Wallace PHILLIP K. WALLACE (#13198) /s/ Kanetha Arun Chau 2027 Jefferson Street Kanetha Arun Chau Mandeville, Louisiana 70448 Telephone: (985) 624-2824 Facsimile: (985) 624-2823 Email: Philkwall@aol.com Attorney for Debtor, Kanetha Arun Chau Chau 000005 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 5 of 61 TABLE OF CONTENTS I. Article I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01 II. Article II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02 Classification of Claims and Interests . . . . . . . . . . 02 III. Article III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02 Treatment of Administrative Expense Claims, U.S. Trustee’s Fees and Priority Tax Claims . . . . . 02 Class 1 Allowed Claims of Professional, Phillip K. Wallace . . . . . . . . . . . . . . . . . 02 Class 2 Administrative Claim of US Trustee . . 03 Class 3 Priority Tax Claims . . . . . . . . . . . . . . . . 04 IV. Article IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08 SECURED AND UNSECURED 4.1 Treatment of Claims and Interests Under the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08 Class 4 Secured Claim of Gulf Coast Bank & Trust . . . . . . . . . . . . . . . . . . . . . 10 Class 5 Secured Claim of Ocwen Loan Servicing 13 Class 6 Secured Claim of Hancock Bank. . . . . . . 17 Class 7 General Unsecured Claims . . . . . . . . . . . 18 Class 8 Equity Security Interest . . . . . . . . . . . . . 20 V. Allowance and Disallowance of Claims . . . . . . . . . . . . . . . 20 5.1 Disputed Claim . . . . . . . . . . . . . . . . . . . . . . . . . 20 5.2 Delay of Distribution of Disputed Claim . . . . . 21 5.3 Settlement of Disputed Claim . . . . . . . . . . . . . . 21 -i- Chau 000006 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 6 of 61 VI. Provisions for Unexpired Leases and Executory Contracts 6.1 Assumed Executory Contracts and Unexpired Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 VII. Means for Implementation of the Plan . . . . . . . . . . . . . . . 24 7.1 Means for Implementation of Plan . . . . . . . . . . . . . 24 VIII. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 8.1 Definitions & Rules of Construction . . . . . . . . . . . . . 24 8.2 Effective Date of Plan . . . . . . . . . . . . . . . . . . . . . . . . 24 8.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.5 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.6 Controlling Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 8.7 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . 26 8.8 Fraudulent/Conveyance Actions . . . . . . . . . . . . . . . . 26 IX. Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 9.1 Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 9.2 §1141(5) Effect of Confirmation if the Debtor . . . . . 27 is an Individual X. Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 10.1 Reservation of Claims . . . . . . . . . . . . . . . . . . . . . . . . . 28 10.2 Objections to Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 10.3. Default Under the Plan . . . . . . . . . . . . . . . . . . . . . . . . 31 10.4 Modification of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 33 10.5 Retention of Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 34 10.6 Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 34 -ii- Chau 000007 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 7 of 61 KANETHA ARUN CHAU PLAN OF REORGANIZATION ARTICLE I SUMMARY This Second Amended Plan of Reorganization (the “Plan”) under Chapter 11 of the Bankruptcy Code (the “Code”) proposes to pay creditors of Debtor, Kanetha Arun Chau from future income of Debtor. This Plan provides for (3) classes of secured claims; one (1) class of unsecured claims; and one (1) class of equity security holders. Unsecured creditors holding allowed claims will receive distributions in accordance with the Plan Distributions attached hereto. This Plan also provides for the payment of administrative and priority claims over the life of the Plan. All creditors and equity security holders should refer to Articles III through VI of this Plan for information regarding the precise treatment of their claim. A Disclosure Statement that provides more detailed information regarding this Plan and the rights of creditors and equity security holders has been circulated with this Plan. Your rights may be affected. You should read these papers carefully and discuss them with your attorney, if you have one. (If you do not have an attorney, you may wish to consult one.) -1- Chau 000008 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 8 of 61 ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS Class 1: Allowed Claim of Professional, Phillip K. Wallace Class 2: Administrative Claim of US Trustee Class 3: Priority Tax Claims Class 4: Secured Claim of Gulf Coast Bank & Trust Class 5: Secured Claim of Ocwen Loan Servicing Class 6: Secured Claim Hancock Bank Class 7: General Unsecured Claims Class 8: Equity Security Holders ARTICLE III TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS, U.S. TRUSTEES FEES, AND PRIORITY TAX CLAIMS 3.1 Administrative Expense Claims Class 1: Allowed Claim of Professional, Phillip K. Wallace and Phillip K. Wallace, PLC Allowed Claims of Professionals will include the professional fees of Phillip K. Wallace, PLC (the “Wallace Firm”), as counsel for the Debtor. The Wallace Firm received approval from the Court for its employment to -2- Chau 000009 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 9 of 61 represent the Debtor. It is estimated that approximately $75,000.00 in legal fees and expenses could be incurred in representing the Debtor. Prior to the filing of Debtor’s Chapter 11 proceeding, Debtor’ Counsel received a retainer in the amount of $10,000.00 and the filing fee in the amount of $1,213.00 which was credited to the estimated legal fees and expenses incurred. This retainer was disclosed in the Disclosure of Compensation of Attorney file upon the record. In connection with Plan Payments to professionals, Debtor’s Counsel is working with Debtor regarding such fees. Kanetha Arun Chau has agreed to pay for all legal fees of counsel. Class 1 is unimpaired and not allowed to vote on the Plan Class 2: Allowed Administrative Claim of U. S. Trustee The allowed Administrative Claim of the U.S. Trustee (“Quarterly Fees”) will be paid in accordance with 28 U.S.C. Section 1930(a)(6) and are estimated to be in the amount of $2,925.00 including the quarterly fees of the U.S. Trustee; and shall be paid on a current basis. Currently, Debtor is incurring and paying $325.00 per Quarter to the United States Trustee; however, this amount is expected in increase to $650.00 based on the estimated Plan Payments. All Quarterly Fees are presently current and paid. The Quarterly Fees of the U.S. Trustee shall be paid by the -3- Chau 000010 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 10 of 61 Debtor as necessary and required on a quarterly basis, both pre-petition and post petition In accordance with the Chapter 11 Guidelines and Reporting Requirements of the Office of the United States Trustee, Region 5 until a Final Decree is entered into this proceeding. Class 2 is unimpaired and not allowed to vote on the Plan. Class 3: Priority Tax Claims Priority tax claims are unsecured income, employment, and other taxes described by § 507(a)(8) of the Code. Unless the holder of such a § 507(a)(8) priority tax claim agrees otherwise, it must receive the present value of such claim, in regular installments paid over a period not exceeding five (5) years from the order of relief. a) Internal Revenue Service The Internal Revenue Service Amended its Proof of Claim No. 4 on July 1, 2014 in the amount of $58,118.16 as an Unsecured Priority Claim with a General Unsecured Claim in the amount of $1,651.42 which consists of the following: -4- Chau 000011 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 11 of 61 Thai Chile Form 941 Taxes 2010 to 2013 $ 11,991.05 Tax ID No. Ending 8515 T.C. Cuisine Form 941 Taxes 2011 to 2012 16,371.43 Tax ID No. Ending 7831 Osaka 21, LLC Business Closed 2012 29,655.68 Form 941 2011 to 2012 Tax ID No. Ending 1367 Kanetha Chau Estimated 2013 Taxes Due 100.00 Tax ID No. Ending 8246 Total $ 58,118.16 The Debtor shall pay this tax liability within five (5) years of the Petition Date; however, the IRS will be allowed to calculate the monthly payment amount upon confirmation of the plan and notify the debtor. The payments will be made in accordance with the interest rate provided by statute, under 11 U.S.C. Section 511. The proposed Plan Payment amounts will be adjusted to fully pay out the Secured Priority Tax Claim, with the applicable interest rate provided by statute, under 11 U.S.C. Section 511. Plan payments will begin within sixty days of the Plan Confirmation Date. The General Unsecured Claim in the amount of $1,651.42 of the IRS will be treated in Class 7, General Unsecured Claims. The Court ruled on the Claims of the IRS and an Order was entered into the record regarding the Treatment of the IRS Claims. -5- Chau 000012 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 12 of 61 b) Louisiana Department of Revenue As detailed in Section III, F, Claims Objections, hereinabove, on July 15, 2014 Debtor filed Objections to the Louisiana Department of Revenue Proof of Claims Numbers, 14, 16 and 19. The Hearing has been scheduled for August 26, 2014. Debtor asserts the following is owed to the Louisiana Department of Revenue which will be treated in Class 3, Priority Tax Claims and General Unsecured Claims: Claim No. Class 3 Class 7 Priority General Unsecured Entity No. 14 2,957.55 9,590.78 Osaka West, Inc. 2008, 2009 Sales And Withholding No. 16 52,176.46 43,483.50 Osaka 21, LLC 2010, 2012 Interest, Penalties and Fees No. 19 41,925.96 25,154.06 Osaka 21, LLC. 2010,2012 Sales Taxes 97,059.97 78,228.34 The following Class 3 Priority Claim in the amount of Z97,059.97 and Class 7 General Unsecured Claims in the amount of Z78,228.34 are treated in Plan Payments in Debtor’s Exhibit No. 9, Monthly Budget. -6- Chau 000013 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 13 of 61 A Hearing was held on August 26, 2014 and the Court Granted the Objections to the Proof of Claims listed above. As such the amounts listed as Priority and General Unsecured are correct and are treated thru the Plan. Debtor proposes to pay the Louisiana Department of Revenue General Unsecured Priority Claim in the amount of Z97,059.97 at the rate of Z2,022.08 for forty eight (48) months or until extinguished. The General Unsecured Claim which includes Interest, Fees and Penalties shall be treated in Class 7, General Unsecured Claims. c) Property Tax Claims (i) Parish of St. Tammany The property tax claims of St. Tammany Parish are listed below which are in rem tax obligations : Description Entity Year Due Amount Parish of St. Tammany 1021 Clipper Dr. 2013 $ 5,106.94 Slidell, LA. 2012 5,718.93 2011 5,172.32 2009 6,112.30 $22,110.49 -7- Chau 000014 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 14 of 61 As mentioned in Significant Events during the Bankruptcy Case, (Section E), hereinabove, Whitney Bank f/k/a Hancock Bank filed a Motion to Lift Stay on March 13, 2014 in connection with the real property known as 1021 Clipper Drive, Slidell, Louisiana 70458 which was scheduled for April 7th, 2014 and continued to April 23, 2014. The Stay was Lifted on April 23, 2014. A Foreclosure Sale was held on July 30, 2014 and the Deficiency Balance on the Clipper Drive Note including Sheriff’s expenditures is in the amount of $269,853.00 which is detailed in General Unsecured Claims, Class 7. All outstanding tax liabilities have been resolved through the liquidation of the property. As such, the Tax Liabilities for the Parish of St. Tammany will not be treated in Debtor’s Plan. Debtor acquired an Agreement to Purchase the Military Road and Robert Road properties referenced hereinabove in the amount of $350,000.00. Counsel for Gulf Coast Bank & Trust presented the offer to his client who agreed to the sale in the amount of $350,000.00 with a $75,000.00 Deficiency Balance to be paid by Debtor through the Plan. Debtor filed a Motion for Authority to Sell Real Property, known as 77173 Old Military Road, Covington, Louisiana and 226 Robert Road/Front Street, Slidell, Louisiana to Adam Troung, Pursuant to 11 U.S.C. §363(b) and a Hearing was held on May 20, 2014. -8- Chau 000015 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 15 of 61 As of this writing the Sale of the above referenced properties has not been effected due to the liens on the Military Road Property and the Robert Road Property which have not been extinguished. Counsel for Gulf Coast Bank and Trust Company filed an Objection to the First Amended Disclosure Statement on August 21, 2014. The Sale was approved by the Court however, it was not effected. As such, Gulf Coast Bank filed a Motion to Lift Stay in connection with these properties. Gulf Coast Bank’s Motion to Lift Stay in connection with the Military Road and Robert Road properties was granted at the Hearing on the First Amended Disclosure Statement on August 29, 2014. As such, Gulf Coast Bank will initiate Foreclosure Proceedings in connection with this Stay being lifted. At this time, the Deficiency Balance on the Gulf Coast Bank Loan cannot be determined as the Foreclosure Sale Date is unknown. Debtor has allowed $75,000.00 as a Deficiency Balance until the correct amount can be determined. Listed below are the past due property taxes owed on these properties: Description Entity Year Due Amount St. Tammany Parish 77173 Old Military Rd. 2013 $ 6,197.56 Covington, LA St. Tammany Parish 226 Robert Rd 2013 753.27 Slidell, LA 2012 753.27 $ 7,704.10 The above past due property taxes will be resolved thru the Liquidation of the properties and will not be treated through the Plan. -9- Chau 000016 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 16 of 61 ARTICLE IV SECURED AND UNSECURED CLAIMS 4.1 Treatment of Claims & Interests Under the Plan d) Allowed Secured Claims are claims secured by property of the Debtor’s bankruptcy estate to the extent allowed as secured claims under § 506 of the Code. If the value of the collateral securing the creditor’s claim is less than the amount of the creditor’s allowed claim, the deficiency will be classified as a general unsecured claim. Class 4 : Secured Claim of Gulf Coast Bank & Trust Company Class 4 is comprised of the Secured Claim of Gulf Coast Bank & Trust which is the holder of a Promissory Note described as follows: Promissory note in the amount of $507,313.85 dated March 9, 2012, payable to the order of Gulf Coast Bank and Trust Company and executed by Debtor (the “Hand Note”). The Hand Note bears interest at the rate of 6.5% per annum from date until paid and provides for 21% interest in the event of default. The Hand Note is secured by, inter alia, the pledge of a certain collateral mortgage note in the amount of $1,000,000 dated July 17, 2008 executed by Debtor. The collateral mortgage note is secured by a collateral mortgage executed by Debtor on the same date and which collateral mortgage was recorded in the public records of the Parish of St. Tammany on at Instrument #1692461 (“Collateral Mortgage 1.”). The collateral mortgage encumbers the property briefly described as 77173 Old Military Road, Covington, Louisiana. -10- Chau 000017 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 17 of 61 The Hand Note is also secured by, inter alia, the pledge of a certain collateral mortgage note in the amount of $1,000,000 dated July 17, 2008 executed by Debtor. The collateral mortgage note is secured by a collateral mortgage executed by Debtor on the same date and which collateral mortgage was recorded in the public records of the Parish of St. Tammany on at Instrument #1692469 (“Collateral Mortgage 2.”). The collateral mortgage encumbers the property briefly described as 226 Robert Road. Debtor acquired an Agreement to Purchase in the amount of $350,000.00 for 77173 Old Military Road, Covington, Louisiana and 226 Robert Road, Slidell, Louisiana, from Adam Troung, a personal guarantor on the existing Note and fifty (50%) percent owner of the Military Road Property free and clear of all liens and encumbrances. Counsel for Gulf Coast Bank & Trust presented the offer to his client who agreed to the sale in the amount of $350,000.00 with a $75,000.00 Deficiency Balance to be paid by Debtor through the Plan. A Hearing was held on April 23, 2014 in connection with Gulf Coast Bank’s Motion to Lift Stay and Counsel for Debtor presented the offer from Gulf Coast Bank in connection with the Agreement to Purchase from Adam Troung. The Court determined that the sale would be in the best interest of the Estate. -11- Chau 000018 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 18 of 61 Debtor filed a Motion for Authority to Sell Real Property, known as 77173 Old Military Road, Covington, Louisiana and 226 Robert Road/Front Street, Slidell, Louisiana to Adam Troung, Pursuant to 11 U.S.C. §363(b) and a Hearing was held on May 20, 2014. The Sale of the above referenced properties has not been effected due to the liens on the Military Road Property and Robert Road Property which have not been extinguished. Counsel for Gulf Coast Bank and Trust Company filed an Objection to the First Amended Disclosure Statement on August 21, 2014. Counsel for Gulf Coast Bank and Trust Company filed an Objection to the First Amended Disclosure Statement on August 21, 2014. The Sale was approved by the Court however, it was not effected. As such, Gulf Coast Bank filed a Motion to Lift Stay in connection with these properties. Gulf Coast Bank’s Motion to Lift Stay in connection with the Military Road and Robert Road properties was granted at the Hearing on the First Amended Disclosure Statement on August 29, 2014. As such, Gulf Coast Bank will initiate Foreclosure Proceedings in connection with this Stay being lifted. At this time, the Deficiency Balance on the Gulf Coast Bank Loan cannot be determined as the Foreclosure Sale Date is unknown. Debtor has allowed $75,000.00 as a Deficiency Balance until the correct amount can be determined. -12- Chau 000019 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 19 of 61 The Past Due Property Taxes associated with these properties is listed below. Description Entity Year Due Amount St. Tammany Parish 77173 Old Military Rd. 2013 $ 6,197.56 Covington, LA St. Tammany Parish 226 Robert Rd 2013 753.27 Slidell, LA 2012 753.27 $ 7,704.10 The above past due property taxes will be resolved thru the Liquidation of the properties and will not be treated through the Plan. Class 4 is impaired and allowed to vote on the Plan. Class 5: Allowed Secured Claim of Ocwen Loan Servicing Class 5 is comprised of the Allowed Secured Claim Ocwen Loan Servicing, formerly GMAC, of which collateral securing the Promissory Note is Debtor’s residence, located at 1548 Cutty Sark Cove, Slidell, Louisiana (“Cutty Sark”). The fair market value of 1548 Cutty Sark Cove, Slidell is approximately $370,000.00. Debtor acquired an Appraisal of the Cutty Sark Cove, Slidell, Louisiana Property on August 15, 2014 which was attached to the Second Amended Disclosure Statement as Exhibit No. 12, prepared by Frank W. Evans, 107 Hickory Place, Covington, Louisiana, 70433. -13- Chau 000020 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 20 of 61 Cutty Sark sustained severe damage during Hurricane Isaac and was uninhabitable for over ten (10) months at which time Debtor became delinquent on the mortgage payments. Cutty Sark is now repaired and Debtor is living in the dwelling, although she fell behind ten (10) payments during the months in which it was being repaired. Counsel for Ocwen Loan Servicing filed an Objection to the Disclosure Statement and an Objection to Confirmation of the Plan asserting the following: A. The ongoing post-petition payment should be Z3,594.41 in accordance with the Promissory Note, not the Z2,687.00 payment that she had been forwarding since April, 2014; B. The arrearage is in the amount of Z53,382.24 which includes the amount of escrow advances, late fees and other allowable charges, not the Z33,859.41 as reported in the Disclosure Statement; and C. The security agreement between the parties provides for periodical increases in the interest rate for July 1, 2016, July 1, 2017 and July 1, 2018 which the Plan fails to provide for. The Objection to the Disclosure Statement filed by Ocwen was Withdrawn and an Order was signed Granting the Withdrawal of the Objection to the Disclosure Statement on August 5, 2014. -14- Chau 000021 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 21 of 61 Debtor contacted the Bankruptcy Department at Ocwen Loan Servicing and confirmed that the mortgage payment monthly to Ocwen was in the amount of Z2,701.56 which is reflected on Debtor’s Exhibit No. 11. It was confirmed that the amount of the monthly payment to Ocwen Loan Servicing of Z2,701.56 (as Debited from the Debtor in Possession Account, Exhibit No. 11) was the correct amount thru July of 2016; then an increase of 1% would be required on the loan payment and thereafter the 1% increase would go into effect in July, 2017 and July, 2018. The loan payment in the amount of Z3,594.41 as asserted by Counsel for Ocwen in its Objection mentioned hereinabove is incorrect and Ocwen has debited the Debtor’s Debtor in Possession Account for the July, 2014 payment in the correct amount. In addition, Counsel for Debtor contacted the Bankruptcy Department at Ocwen on August 19, 2014 and Ocwen provided the following information in connection with the existing Loan: Current Balance on Loan as of August 15, 2014 $ 428,871.77 Arrearage on Loan thru August 29, 2014 62,648.02 As of the date of this writing, Counsel for Debtor has not received a loan history on this account; although it was requested thru Counsel for Ocwen in April, of 2014. As such, the following reveals the treatment of the Secured Claim of Ocwen: Current Balance on Loan $ 428,871.77 Less Arrearage 62,648.02 Total $ 366,223.75 -15- Chau 000022 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 22 of 61 The Fair Market Value of the Debtor’s residence located at 1548 Cutty Sark Cove, Slidell, Louisiana is $ 370,000.00. As mentioned hereinabove, Debtor has confirmed with Ocwen the current loan payment is in the amount of $2,701.56 per month which includes the property taxes and insurance. Debtor will continue to pay the amount of $ 2,701.56 per month to Ocwen until the increase of $27.01 is due on July, 2017 with an additional increase of 1% in July, 2018. The claim of Ocwen shall be bifurcated to treat the outstanding arrearage of the existing loan due to the current market value. A Hearing was held on the Proof of Claim submitted by Ocwen Loan Servicing and the Appraisal of the client on the Cutty Sark Cove Property and Valuation of same on August 29, 2014. The Court granted the Debtor’s valuation of the Cutty Sark property in the amount of $370,000.00 and an Order was entered into the record of this proceeding reflecting same and the Amended the Proof of Claim of Ocwen Loan Servicing. The current rate of interest on the Ocwen Loan is 2.125%. The Arrearage in the amount of $62,648.02 on the Ocwen Loan will be treated as a General Unsecured. Plan payments are to begin sixty (60) days following the date of the entry of the order of confirmation. Class 5 is impaired and allowed to vote on the Plan. -16- Chau 000023 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 23 of 61 Class 6 : Secured Claim of Hancock Bank Class 6 is comprised of the Secured Claim of Hancock Bank, for the real property known as 1021 Clipper Drive, Slidell, Louisiana. Hancock Bank filed Proof of Claim No. 7 in the amount of $407,028.34 on March 26, 2014. Debtor borrowed $344,963.50 from Hancock, Loan Number 33000081166 (the "81166 Loan") to purchase the real property known as 1021 Clipper Drive, Slidell, Louisiana. In connection with the 81166 Loan, on August 16, 2006 Debtor executed a multiple indebtedness mortgage (the "Mortgage") in which she mortgaged, affected and hypothecated in favor of Hancock and any future holder of the Mortgage all of her current and future right, title and interest in and to the property that the Mortgage describes to secure her current and future indebtedness to Hancock. The loan was recorded with the Clerk of Court for the Parish of St. Tammany recorded the Mortgage as instrument #157243. In connection with the 81166 Loan, Debtor executed promissory notes payable to Hancock. In connection with the 81166 Loan, on September 28,2009 Debtor executed a promissory note in the principal amount of $338,264.95 with interest as provided therein payable to Hancock which was a renewal of the existing Loan. -17- Chau 000024 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 24 of 61 Hancock Bank filed a Motion to Lift Stay on March 13, 2013 in connection with the real property known as 1021 Clipper Drive, Slidell, Louisiana 70458 which was scheduled for April 7th, 2014 and continued to April 23, 2014. The Stay was Lifted on April 23, 2014 and the Order Granting the Motion was signed and entered into the record on May 5, 2014. A foreclosure sale was held on July 30, 2014 and the Deficiency Balance on the Clipper Drive Note including Sheriff’s expenditures is in the amount of $269,853.00 which is detailed in General Unsecured Claims, Class 7. All outstanding tax liabilities have been resolved through the liquidation of the property. Class 6 is impaired and allowed to vote on the Plan. Class 7: General Unsecured Claims Class 7 is comprised of the General Unsecured Claims listed below as follows: Acadian Ambulance 82 B&B Petroleum 63,383 (Teddy’s Poboys) Brian T. Carr 2,466 CM Combs Construction 6,000 Charter Communications 319 Gulf Coast Bank 75,0001 1 Gulf Coast Bank’s Motion to Lift Stay in connection with the Military Road and Robert Road properties was granted at the Hearing on the First Amended Disclosure Statement on August 29, 2014. As such, Gulf Coast Bank will initiate Foreclosure Proceedings in connection with this Stay being lifted. At this time, the Deficiency Balance on the Gulf Coast Bank Loan cannot be determined as the Foreclosure Sale Date is unknown. Debtor has allowed $75,000.00 as a Deficiency Balance until such time the correct amount is determined. -18- Chau 000025 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 25 of 61 Gulf Coast Bank 441,121 (TC Cuisine PG) Gulf Coast Bank 1,279,521 (Osaka Holdings, LLC PG) Whitney Bank/Hancock Bank (Deficiency Balance Clipper Dr.) 269,853 Grover Brothers Restaurant 12,738 Hancock Bank Judgement 2,732,970 (C&O Enterprises, LLC) Internal Revenue Service 1,652 (Unsecured) La. Dept of Revenue 78,229 (Penalties, Fees & Interest) Ocwen Loan Servicing 62,648 (Arrearage on Cutty Sark) Pelican Pages/ATT 217 Southfins Medical 247 St. Tammany Parish Tax Collector 242,394 (Parish Sales Taxes, Penalties, Interest) USAA Savings Bank 8,920 USAA Savings Bank 4,226 Telerecovery Medical 70 Whitney Line of Credit 483 Total 5,327,539 -19- Chau 000026 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 26 of 61 Class 7 General Unsecured Claimants will be paid at the rate of one (1%) percent over the sixty months (60) at the rate of $887.92 per month which will begin sixty days after the date the Confirmation Order is signed and entered into the record of this proceeding. Class 7 is impaired and allowed to vote on the Plan. Class 8: Equity Security Holders Equity interest holders are parties who hold an ownership interest in the Debtor. In a corporation, entities holding preferred or common stock are equity interest holders. Class 8 is comprised of the Equity Interest of Kanetha Arun Chau. Although Class 8 is impaired, Class 8 is not entitled to vote. ARTICLE V ALLOWANCE AND DISALLOWANCE OF CLAIMS 5.1 Disputed Claim A disputed claim is a claim that has not been allowed or disallowed by a final non-appealable order, and as to which either: (i) a proof of claim has been filed or deemed filed, and the Debtor or another party in interest has filed an objection; or (ii) no proof of claim has been filed, and the Debtor has scheduled such claim as disputed, contingent, or unliquidated. -20- Chau 000027 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 27 of 61 The following claims were in Dispute: Claim No. Class 3 Class 7 Priority General Unsecured Entity No. 14 2,957.55 9,590.78 Osaka West, Inc. 2008, 2009 Sales And Withholding No. 16 52,176.46 43,483.50 Osaka 21, LLC 2010, 2012 Interest, Penalties and Fees No. 19 41,925.96 25,154.06 Osaka 21, LLC. 2010,2012 Sales Taxes 97,059.97 78,228.34 A Hearing was held on August 29, 2014 and the Debtor’s Objections were Granted by the Court; as such, the above amounts on the Proof of Claims submitted by the Louisiana Department of Revenue are treated correctly in Debtor’s Disclosure Statement. 5.2 Delay of Distribution on a Disputed Claim. No distribution will be made on account of a disputed claim unless such claim is allowed by a final non-appealable order. 5.3 Settlement of Disputed Claims. The Debtor will have the power and authority to settle and compromise a disputed claim with court approval and compliance with Rule 9019 of the Federal Rules of Bankruptcy Procedure. -21- Chau 000028 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 28 of 61 ARTICLE VI PROVISIONS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES 6.1 Section 365 of the Bankruptcy Code generally gives the Debtor or plan proponent the ability, subject to the approval of the Bankruptcy Court, to assume or reject executory contracts and unexpired leases before the confirmation of a Plan of Reorganization. An executory contract or unexpired lease may be assumed or rejected either through a Plan of Reorganization or by Order of the Bankruptcy Court on motion, after notice and hearing. Following rejection of an executory contract or unexpired lease, the Bankruptcy Court grants the other party to the contract or lease a limited period in which to file a proof of claim for any damages incurred because of the rejection (a “Rejection Claim”). To assume an executory contract or unexpired lease the Bankruptcy Code requires that the existing defaults be promptly cured, with certain limitations, and that adequate assurance of future performance of obligations under the executory contract or lease be provided. At the time of Debtor’s Bankruptcy filing, Debtor had a lease in place for the property known as 1021 Clipper Drive, Slidell, Louisiana. This property is collateral for the Whitney/Hancock Bank Loan mentioned hereinabove in which the Stay was Lifted by the Court at the Hearing on April 23, 2014. -22- Chau 000029 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 29 of 61 A Foreclosure was held on July 30, 2014. As such the Executory Contract in place for the Clipper Drive property is rejected. Debtor has the following Executory Contracts in effect which will remain in effect and will be assumed by Debtor thru the Plan of Reorganization: Name of Entity Description Expiration Date USA Agencies Auto Insurance March, 2015 2006 Lexus The Hartford Flood Insurance May, 2015 1548 Cutty Sark Slidell, Louisiana QUB Homeowner’s Insurance January, 2015 1548 Cutty Sark Slidell, Louisiana In addition, the following Executory Contracts will remain in place by other entities of the Debtor: Name of Entity Address Lessee/Description Dates of Lease KTC Properties, LLC 70330 Highway 21 RNS Enterprises 12/06/13 to Covington, La. Corporation 12/06/16 KTS Properties, LLC State Farm Life Pledged to KTC Insurance Loan -23- Chau 000030 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 30 of 61 C & O Enterprises, LLC 70340 Highway 21 Sake 21, LLC 06/15/12 to Covington, La. 05/15/17 C & O Enterprises, LLC 70340 Highway 21 Fairway Med 12/10/09 to Covington, La. Urgent Care 12/10/14 ARTICLE VII MEANS FOR IMPLEMENTATION OF THE PLAN 7.1 Debtor will fund the Plan through the draws derived from Pho An Restaurant in the amount of $5,000.00 per month and Thai Chile Restaurant in the amount of $2,000.00 per month. As of August 1, 2014 the Draw from Thai Chili Restaurant will be increased by an additional amount of $2,000.00, for a total of $4,000.00 due to the owners permanent return to Thailand for her terminally ill son. In addition, Debtor receives Disability Income in the amount of $1,200.00 per month which shall also be applied and utilized as necessary and required. ARTICLE VIII GENERAL PROVISIONS 8.1 Definitions and Rules of Construction The definitions and rules of construction set forth in §§ 101 and 102 of the Code shall apply when terms defined or construed in the Code are used in this Plan. -24- Chau 000031 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 31 of 61 8.2 Effective Date of Plan The effective date of this Plan is sixty (60) days following the date of the entry of the Order of Confirmation. But if a stay of the Confirmation Order is in effect on that date, the effective date will be the first business day after that date on which no stay of the Confirmation Order is in effect, provided that the Confirmation Order has not been vacated. 8.3 Severability If any provision in this Plan is determined to be unenforceable, the determination will in no way limit or affect the enforce-ability and operative effect of any other provision of this Plan. 8.4 Binding Effect The rights and obligations of any entity named or referred to in this Plan will be binding upon, and will inure to the benefit of the successors or assigns of such entity. 8.5 Captions The headings contained in this Plan are for convenience of reference only and do not affect the meaning or interpretation of this Plan. 8.6 Controlling Effect Unless a rule of law or procedure is supplied by federal law (including the Code or the Federal Rules of Bankruptcy Procedure), the laws of the State of Louisiana govern this Plan and any agreements, documents, and instruments executed in connection with this Plan, except as otherwise provided in this Plan. -25- Chau 000032 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 32 of 61 8.7 Corporate Governance The Debtor, Kanetha Arun Chau is an individual and as such, the corporate governance does apply. 8.8 Fraudulent/Conveyance Actions The Debtor in Possession or the Trustee, as the case may be, has what are called "avoiding" powers. These powers may be used to undo or reverse a transfer of money or property made during a certain period of time before the filing of the bankruptcy petition. By avoiding a particular transfer of property, the Debtor in Possession can cancel the transaction and force the return or "disgorgement" of the payments or property, which then are available to pay all creditors. Generally, and subject to various defenses, the power to avoid transfers is effective against transfers made by the Debtor within 90 days before filing the petition. But transfers to "insiders" (i.e., relatives, general partners, and directors or officers of the Debtor) made up to a year before filing may be avoided. Refer to 11 U.S.C. §§ 101(31), 101(54), 547, 548. In addition, under 11 U.S.C. § 544, the trustee or Debtor-in-Possession is authorized to avoid transfers under applicable state law, which often provides for longer time periods. Avoiding powers prevent unfair pre-petition payments to one creditor at the expense of all other creditors. In connection with Section 547 and Section 548 of the Bankruptcy Code there are no avoidable or preferential transfers or fraudulent conveyances to the best of Debtor’s knowledge and belief. -26- Chau 000033 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 33 of 61 ARTICLE IX CONFIRMATION 9.1 Confirmation Confirmation of this Plan grants a discharge under this Plan or as otherwise provided in §1141(d)(1) of the Code. Confirmation of the Plan binds the Debtor, the creditors and the parties in interest to the terms of the Plan as approved by the Court and constitutes a final order of the Court. 9.2 §1141(5) Effect of Confirmation if the Debtor is an Individual (5) In a case in which the debtor is an individual— (A) unless after notice and a hearing the court orders otherwise for cause, confirmation of the plan does not discharge any debt provided for in the plan until the court grants a discharge on completion of all payments under the plan; (B) at any time after the confirmation of the plan, and after notice and a hearing, the court may grant a discharge to the debtor who has not completed payments under the plan if— (i) the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 on such date; (ii) modification of the plan under section 1127 is not practicable; and (iii) subparagraph (C) permits the court to grant a discharge; and (C) the court may grant a discharge if, after notice and a hearing held not more than 10 days before the date of the entry of the order granting the discharge, the court finds that there is no reasonable cause to believe that— (i) section 522(q)(1) may be applicable to the debtor; and -27- Chau 000034 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 34 of 61 (ii) there is pending any proceeding in which the debtor may be found guilty of a felony of the kind described in section 522(q)(1)(A) or liable for a debt of the kind described in section 522(q)(1)(B); ARTICLE X OTHER PROVISIONS 10.1 Reservation of Claims Except as otherwise provided in the Plan, all claims and causes of action in favor of the Debtor, including but not limited to all claims under Sections 547, 548, 549, 551, 553 and 554 of the Bankruptcy Code, are reserved and may be prosecuted after the Confirmation Date. With respect to the claims and causes of action reserved in favor of the Debtor, the Debtor may prosecute the claims and causes of action and may sell or assign such claims and causes of action to any entity who is not an insider of the Debtor. To the extent that any creditor is made a defendant in an action brought under this reservation of rights, or to the extent that a reserved claim hereunder is alleged as a defense or offset to any creditor’s claim, no distribution shall be made to such creditor until a final order of the Court is entered with respect to the determination of the liability of the creditor to the estate. Further, to the extent that any creditor is cast in judgment under this reservation of claims and causes of action by the Debtor, no distribution shall be made to the creditor on account of any Allowed Claim until the judgment rendered -28- Chau 000035 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 35 of 61 against the creditor has been satisfied in full pursuant to the provisions of Section 502(d) of the Code. Hancock Bank of Louisiana initiated Foreclosure Proceedings on C & O Enterprises, LLC for the real property known as 70340 Highway 21, Covington, Louisiana which has two tenants, Fairway Urgent Care and Sake Japanese Grill, entitled Hancock Bank of Louisiana vs. C & O Enterprises, LLC, Case No. 2013- 10944, Division G, 22nd Judicial District Court, Parish of St. Tammany, State of Louisiana. Currently a Suspensive Appeal is pending with the Louisiana First Circuit Court of Appeal. As of this writing, Counsel for C&O Enterprises has requested Oral Argument in this proceeding with the Louisiana First Circuit Court of Appeal. As such this Cause of Action shall be pursued by Debtor. 10.2 Objections to Claims The Plan provides for only those creditors who hold Allowed Claims which will be considered for inclusion for payment under the Plan. Under the Plan, the Debtor has full right, power and authority to investigate and if necessary, object to any Claim on or within thirty (30) days after the Effective Date unless the Bankruptcy Court extends the time to assert such objection on appropriate notice for cause shown. Objections to Claims must be filed by the Claim objections deadline, in default of which the Claim shall be deemed allowed. If any Claim of any creditor is allowed to be filed, by Final Order of the Court, after the expiration of the Proof of Claim Bar Date, then the Proof Claim Bar Date for that particular creditor -29- Chau 000036 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 36 of 61 shall only be deemed extended for thirty (30) days from entry of a Final Order allowing the Claim to be filed. In such event, the creditor must file the Claim within thirty (30) days of the date it was allowed by the Court to be filed, and the Debtor shall have thirty (30) days from the date that the creditor properly serves Notice of the filing of the Claim on the attorney for the Debtor for filing objections. Subsequent to confirmation, the Debtor shall have and retain any and all rights and defenses with respect to any Claim as of the Petition Date. The Debtor reserves the right to negotiate, settle and finally resolve any and all Disputed Claims or objections to Claims. Upon entry of a Final Order allowing any disputed or objected Claim, the Debtor shall distribute to the holder of such Claim any and all amounts held in escrow for such Creditor. Debtor has filed the following Objections to Proof of Claims submitted by the Louisiana Department of Revenue: Claim No. Class 3 Class 7 Priority General Unsecured Entity No. 14 2,957.55 9,590.78 Osaka West, Inc. 2008, 2009 Sales And Withholding No. 16 52,176.46 43,483.50 Osaka 21, LLC 2010, 2012 Interest, Penalties and Fees No. 19 41,925.96 25,154.06 O s a k a 2 1 , L L C . 2010,2012 -30- Chau 000037 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 37 of 61 Sales Taxes 97,059.97 78,228.34 A Hearing was held on August 29, 2014 and the Debtor’s Objections were Granted by the Court; as such the above amounts on the Proof of Claims submitted by the Louisiana Department of Revenue are treated correctly in Debtor’s Disclosure Statement. 10.3 C. Default Under the Plan The Plan allows any holder of an Allowed Claim to notify the Debtor in writing of a default under the Plan. If such a written notice of default is transmitted to the Debtor, the Debtor or any party in interest will have thirty (30) days from receipt of the notice to cure the alleged default. If the alleged default is not cured, the aggrieved party is authorized to seek relief as appropriate. Should any claim holder with the exception of the Internal Revenue Service, fail to notify the Debtor or the Court of a default under the Plan during the term of the Plan, such default shall be deemed prescribed as of the termination or end of the Plan life, and the claim is extinguished as of the date of the Plan termination. -31- Chau 000038 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 38 of 61 However, if the reorganized debtor substantially defaults on the plan payments due to the IRS, the outstanding balance is immediately due and payable. Payment shall be for the entire amount owed to the IRS under the Plan. The IRS may collect these unpaid tax liabilities through the administrative collection provisions of the Internal Revenue Code. The IRS shall maintain its rights to collect the debt whether the Debtor defaults on the Plan or not. If the debtor fails to pay in full the debt in accordance with the Plan term, the Debtor shall not be entitled to a discharge of the debt. Notwithstanding anything in the Plan to the contrary, the Bankruptcy Court shall not retain jurisdiction with respect to pre-petition tax claims except for (i) resolving the amount of any state tax claim arising prior to confirmation, and (Ii) enforcing the discharge provision of the Plan. A failure by the reorganized Debtor make a payment to the Louisiana Department of Revenue pursuant to the terms of the Plan shall be an Event of Default. The Louisiana Department of Revenue shall give the Debtors written notice thereof, with a copy to the Debtors counsel, and the Debtors may cure such default within twenty (20) days from the receipt of such notice If the reorganized Debtor falls to cure and Event of Default within (20) days after receipt of written notice of default, then the Louisiana Department of Revenue may (a) enforce the entire amount of Its claim; (b) exercise any and all rights and remedies. allowed under applicable state law; and/or (c) seek such relief as my be appropriate in the Court. -32- Chau 000039 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 39 of 61 Should the Debtor fail to adequately and properly account for the Estate Proceeds in a timely manner as herein provided, or should the Debtor make distributions that are not in accordance with the Plan or Court Orders, the United States Trustee or his representative, upon thirty (30) days written notice to all parties in interest, the Court and Debtor’s Counsel, may seek an order of the Court to remedy and/or cure any such deficiency pursuant to this Plan. In addition, and in accordance with the Chapter 11 Guidelines and Reporting Requirements of the Office of the United States Trustee, Region 5, Debtor is filing Monthly Operating Reports into the record of this proceeding. Debtor will file Post-Confirmation reports monthly once the Plan is confirmed and continue to do so until a Final Decree is entered into this proceeding. The Debtor will continue to pay quarterly fees to the Office of the United States Trustee as required and to file the necessary reports with the Court. 10.4 Modification of the Plan The Debtor reserves the right under the Plan, according to the Bankruptcy Code, to further amend or modify the Plan before the Confirmation Date. After the Confirmation Date, the Debtor may, upon order of the Bankruptcy Court, and according to Section 1127(b) of the Bankruptcy Code, remedy any defect or omission or reconcile any inconsistencies in the Plan in such manner as may be necessary to carry out the purposes and intentions of the Plan. A claimant that has accepted or -33- Chau 000040 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 40 of 61 rejected the Plan will be deemed to have either accepted or rejected, as the case may be, any modifications to the Plan, even if they are made after the solicitation of votes of acceptance or rejection of the Plan, unless the Bankruptcy Court orders that such claimant may change its previous vote within a time established by the Bankruptcy Court for such changes to be made. 10.5 Retention of Jurisdiction This Plan provides for the Bankruptcy Court to retain jurisdiction over many aspects of the Plan. The specific purposes for which the Bankruptcy Court retains jurisdiction with respect to the reorganization Plan of the Debtor are set forth herein. 10.6 Termination of the Plan The Plan shall terminate upon completion of the term of the Plan life as provided for under the Plan. When the Plan has been terminated, the Debtor shall seek, as required by law, and the Court shall be requested to enter an Order closing the case. Mandeville, Louisiana this 30th, day of August, 2014. -34- Chau 000041 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 41 of 61 Acknowledged and Respectfully submitted, Approved: /s/ Phillip K. Wallace PHILLIP K. WALLACE (#13198) /s/ Kanetha Arun Chau 2027 Jefferson Street Kanetha Arun Chau Mandeville, Louisiana 70448 Telephone: (985) 624-2824 Facsimile: (985) 624-2823 Email: Philkwall@aol.com Attorney for Debtor, Kanetha Arun Chau -35- Chau 000042 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 42 of 61 OIge :. 1 Document Nam:::ecc:~u::cn:::tc::icctccl,-=e,-,d,---__.____~__ IMI3 08/11/15 DDA STATEMENT INQUIRY 14.51.12 PAGE 4 KANETHA ARUN CHAU ACCOUNT 000-000-0000-5628293815 "DIP" EASTERN DIST OF LA CASE 14-10059 DATE THIS STATEMENT 08/11/15 1548 CUTTY SARK COVE DATE LAST STATEMENT 07/09/15 *****DDA TRANSACTIONS***** BALANCE CHECKS/OTHER DEBITS DEPOSITS/OTHER CREDITS BALANCE LAST STATEMENT NBR TOTAL AMOUNT NBR TOTAL AMOUNT THIS STATEMENT 543.36- 33 37517.34 15 45941.50 7880.80 DATE CK NBR AMOUNT TY TRANSACTION DESCRIPTION BALANCE 08/04 351 650.00 Customer withdrawal 08/04· 10.00 Return Item Chargeback 780.70 M/05 1000.00 CR Customer Deposit 08/05 324.00 CR Customer Deposit 08/04 35.00 DR AMT 650.00 002614019 08/04 35.00 DR AMT 1,755.35 002627966 473.30 08/06 10417.50 CR Customer Deposit 10890.80 08/07 3000.00 CB NSF 1st 08/07 10.00 Return Item Chargeback 7880.80 08/07 0.00 204.85RET TRAN HOLD 08/07 0.00 374.08RET TRAN HOLD 08/07 0.00 527. 99RET TRAN HOLD PF1 - PAGE FWD PF2 - PAGE BKWD - .......-.----~--------- Chau 000043 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 43 of 61 Kanetha Chau SS# 8246 Accl# 3815 - Closed on 08f31f2015 Capital One ConlldentiaVProprietary CONFIDENTIAL CAP ONE 00644 Chau 000044 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 44 of 61 .....~------------------------From: Boyer, Rebecca Sent Thursday, September 15, 201612;58 PM To: White, William Subject: RE; Quick Request CSI-SW OC re: case 2015011960, ac has called multlple times since AFH placed. Business aeas are linked 8< also on hold. ac has employees & vendors to pay. SubmItted Tier 1call back req. ac will call back this afternoon If she hasn't heard from IA. ac Inq abt lawver. Adv we can't dlSl:uss her acct Info with a 3rd party, so that will not help her. Adv we have PPG that we are following, IA is in charge of the case and will make decisions reo acClS. Above Is my note from TouchPoint, then my note from the case below: Submitted ner 1 call back request to IA. Customer has called many times and will continue to call olten until she speaks with Investigator. Ph #985.290.1552 Kevin, that's all I have. Hope It helps, Rebecca Boyer fraud Specialist III Custumer Seculity Intake (CSI) 866-399-8973 From: White, William Sent: Thursday, September 15, 2016 1:46 PM To: Boyer, Rebect; ArthUr, Betty ; Mcilroy, Clifford C ;Hazel,Aprll E. Subject; Quick Request Good Afternool'!- Thanksl 1 COII]FIDENTIAL CAl' ONE 00625 Chau 000045 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 45 of 61 W. Kevin White Sr. Associate Bank Fraud Operations ph 302-888-0738 CONFIDE:'IITrAL CAP ONE 00626 Chau 000046 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 46 of 61 Print Page 1 of2 Subject: Re: Kanetha Chau & related entities checking accounts From: PK Wallace (philkwaU@aol.com) To: Amy.Bateman@capitalone.com; Cc: kimahughes@aol.com; Date: Wednesday, August 19, 2015 9:39 AM Ms Bateman Thanks for your assistance in this matter. My client Kanetha Chau will pick up the checks on all the accounts at the Highway 190, COVington, La. Branch of Capital One. ----.original Message-- From: Bateman, Amy To: PK Wallace Cc: kimahughes Sent: Wed, Aug 19,20159:29 am Subject: RE: Kanetha Chau & related entities checking accounts Hi Mr. Wallace, Please be advised that Capital One is exiting the banking relationship with your client at this time. We are prepared to cut checks to your client for the balance of her accounts. Please advise whether your client would prefer to pick up the checks or whether we should mail the checks to the address on file. Thank you, Amy Bateman 504-533-2170 From: PK Wallace [[nailto:phill<\.vall@aol.comJ Sent: Tuesday, August 18, 2015 2:46 PM To: Bateman, Amy Cc: kimahughes@aol.com Subject: Kanetha Chau & related entities checking accounts Dear Ms Bateman I represent Kanetha Chau and her related entities which have had their checking accounts frozen/suspended by Capital One. As you might be aware she is in an individual Chapter 11 Bankruptcy case which has a confirmed plan with protections of the Court remaining in place. In addition she has related entities also in bankruptcy at this pOint. As a result of this action by Capital One she was unable to make payroll and her staff abandoned two of her businesses; in addition Cleco advises that the power will be discontinued tomorrow at two of her restaurants. This is a serious situation that cries out for resolution ... Please call me to discuss. Best regards, "_"·II~n ~~;1 ""h"" ""m/neollmmch?oartner=sbc&.rand=27m3a2nlctuOg 4/2/2017 Chau 000047 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 47 of 61 Print Page2of2 P KWaliace Phillip K Wallace Attorney at Law 4040 Florida Street Suite 203 . Mandeville, La 70448-3305 tel 985-624-2824 fax 985-624-2823 e-mail philkwall@aol.com =- .== The information contained in this e~mall is confidential and/or proprietary to Capital One andlor its affiliates and may only be used solely in performance of work or services for Capital One. The information transmitted herewith is intended cnry for use by the individual or entity to which it is addressed. If the reader of this message is not the intended recipient, you are hereby notified that any review, retransmission, dissemination, dIstribution, copying or other use of, or taking of any action in reliance upon this information is strictly prohibited. If you have received this communication in error, please contact the sender and delete the materlal from you r computer. 41212017h_c,llrn" ",,,;1 v"hnn.com/neollaunch?partner=sbC&.rand=27m3a2nlctuOg Chau 000048 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 48 of 61 AMour.rr WITHDRAWN I: 5000...0 l. G. bl: ProcDate: 2015108119 AccounlNum: _3815 CheckAml: 7,860.80 SerialNum: 1698 MnmS~l(;~, _O9()< CAPITAL OKF-, NA IIIIIIII512 08192015 RICHMOND, VA 281 0 Deposk 1IP803 CONFIDENTIAL CAP OlliE 1111365 Chau 000049 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 49 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Clifford Mcllroy CaseID: 2015011960 Category: :-+1)3 Check CHAU,K-Check NSF 414S0-NSH-STW-HWY 190 RTL BNKG (11) DateOccurr.d: Tim.Occurred: Localion ID: Location: Jurisdiction: 213/2015 16:56 414&0 NSH-STW·HWY 190RTLBN B.nkDepl: Loss Bra nch ID: 42480 Loss Location: NSH·STW-HWY 190 BUS BN Loss Cost Center: L~._.=====_=__.__ ~. __...J Presented Date 213/2015 Time 16:56 Item Date 2/412015 Location 41480 NSH·STW·HWY 190 RTtBNKG Fraud Method Check(s) Deposited Check Type Business· Checking Bank Title Non Employee Cheek # 2067 Acct# .0670 Bank of Account Resource Bank Item Amount $4,900.00 Loss $0.00 Prevent $4,900.00 Recovered $0.00 Payee KANETHA CHAU Suspect Maker SAKE 21 LLC Endorser KANETHA CHAU f.:xposure Prevented: I Net Loss: . $4,900.00 $4,900.00 I . ..;,,_."" -~"""'" . Policy Violation No violation --.~- --.-~~~~.- ---~~.-.~~~~~ ,-- Incident Factors r ~,New Account Over The Counter 0 Transit 0 Vil)ATM 0 Client SecurityfPfOCEldure: 0 Bank Procedure 0 Improper/No Hold 0 Direct Bank C) Internet Banking C i Touch Signature 0 Photo Available 0 Teller Number~ First; Last Name BFK289 Capita10nel2015011960 CONFIDENTIAL CAP ONE 0063Z Chau 000050 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 50 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Clifford Mcilroy Category: :+03 Check NSF DateOecurred, TimeOccurred: Location ID: Location: ,Jurisdietion: 212412015 17:45 41492 Hwy21 Bank Dept: Loss Branch!D: 42480 Loss Location: NSH-STW·HWY 190 BUS BN IJOss Cost Center! Presented Date 212412015 Time 17:45 Item Date 212512015 Location 41492 Hwy21 Fraud Method Check(s) Deposited CbeekType Business· Checking Bank Title NOll Employee Cbeck# 2099 Acct# .0670 Bank of Account Resource Bank Item Amount M,900.00 Loss $0.00 Prevent $4,900.00 Recovered $0.00 Payee KANFTHA CHAU Suspect Maker SAKE 21 1.1.C Endorser KANETHA CHAU ~-----~~.~--.~•. Ca.. !D: 2015011960 CHAU,K·Cheek Exposure $4,900.~ Prevented: $4,900.00 I Net Loss: $0.00--_.- -- -._.-.-._.-- _. How Discovered Employee Detected r: -- I Policy Violation j No violation Incident Factors NewAccoont OverThe Counter o Transit C) ViaATM o Client Security/Procedure o Bank Procedure o Improper/No Hold o Direct BatiK o Intemet Banking o -------.~----~·~--·-~·--·-I Touch Signature 0 Photo Avallahle 0 Tellet Number, First, I,ust Name FYA706 ________.~.__.~~.___.__J CapitalOne!2015011960 CONFIDENTIAL CAP ONE 00633 Chau 000051 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 51 of 61 External Fraud Inv. Check Fraud Incident Report 9iJ5i2016 Investigator Clifford McIlroy Case ID: 2015011960 Category: :+03 Check CHAU,K-Check NSF 41492-Hwy 21 (6) nateOccurred: TimeOccurred: 1,0.ation ID: Location: .Jurisdiction: 514/2015 41492 Hwy 21 Bank Dept: Loss Branch ID: 42480 Loss Location: NSH-STW-HWY 190 BUS BN Loss Cost Center: Presented Date 51412015 Time Item Date 514/2015 Location 41492 IIwy21 Fraud Method Check(s) Deposited Check Type Business - Checking Bank Title Non Employee Check # 1006 Acct# _1756 Bank of Account FIRST NBC Item Amount $3,500.00 Loss SO.OO Prevent $3,500,00 Recovered $0,00 Payee KANETHA CHAU Suspect Maker KTC PROPERTIES, LLC. Endorser KANETHA CHAU Es.posure $3,500,00 Prevented: $3,500,00 Net Loss: $0,00 How Discovered Deposit Fraud Model Policy Violation r,;;;;;dent Factors New Account o Over The Counter c Transit () ViaATM o Client SecUrity/Procedure V" Bank Procedure o Improper/No Hold c Direct Bank o Intemet Banking o i I Touch Signalute () Photo Available (J Teller Number, First, l.ast Name 08 QOD995 CapitalOnel2015011960 CONFIDENTIAL CAP ONE 00634 Chau 000052 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 52 of 61 External Fraud Inv. Check Fraud Incident Report 91/512016 Investigator Clifford MCilroy Case ID: 2015011960 Category: :+03 Check CHAU,K-Check NSF 414S0-NSH-STW-HWY 190 RTL BNKG (7) DateOccurred: 512712015 TimeOccurred: Location ID: 41480 Location: NSH-STW-HWY 190 RTL BN Jurisdiction: B.nkDept: Loss Branch!D: 42480 Loss Location: NSH-STW-HWY 190 BUS BN Loss Cost Center: "-'-'-1 Presented Date 512712015 Time Item Date 5/2612015 Location 41480 NSH-~'TW-HWY 190 RTL BNKG Fraud Method Check(s) Deposited Cheek Type Business - Checking Bank Title Non Employee Check # 1006 Acet# _3353 Bank of Account CHASE Item Amount $4,000.00 Loss $0.00 Pfflvent $4,000.00 Recovered $0.00 Payee KANETHA CHAU Suspect Maker KTC PROPERTIES, L.L.C. Endorser KANETlIA elIAU Policy ViolationI I Exposure $4,000.00 Prevented: $4,000.00 Net Loss: $0.00 How Di~overed Deposit Fraud MOdel----·-: Incident factors New Accounl 0 OverThe Counter 0 Transit 0 ViaATM 0 Client Security/Procedure 0 Bank: Procedure 0 Improper/No HoJd "\.j nDirect Sank v Internet Banklng 0 I __ ._._._._..-.-.l Touch Signature Photo Available 'felfer Numbert First, Lost Name 05 IRG928 , -----~-----.- Capita10nel2015011960 CONFIDRNTIAL CAP ONR 00635 Chau 000053 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 53 of 61 I External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Clifford McIlroy Case ID: 2015011960 Category: :+03 Check CHAU,K·Chcck NSF 414S0-NSH-STW-HWY 190 RTL BNKG (1) D.teOccurred: 6/412015 TimeOccurred: Location ID: 41480 Location: NSH·STW-HWY 190 RTL BN JUrisdiction: Bank Dept: Loss Branch ID: 42480 Loss Location: NSH·STW·HWY 190 BUS BN , I-A)SS Cost Center: L-._~___. Presented Date 6/412015 Time Item Date 61512015 Location 41480 NSH·STW-HWY 190 RTL BNKG Fraud Method Check(s) Dep: 2015011960 Category: :+03 Check CHAU,K·Check NSF - ---~--.-. -------.__. --------_.__._--------_.-. 41480-NSII-STW-HWY 190 RTL BNKG (3) DaleOceurred: TimeOccurred: Location ID: Location: Jurisdiction: 7/212015 11:36 41480 NSH·STW·HWY 190 RTL BN Bank Depl: Loss Branch IV: 42480 Ln•• Location: NSH·STW·HWY 190 BUS BN Cost Center: Pr••ented Date 712/2015 Time 11:36 Item Date 71212015 Location 41480 NSH-STW-HWY 190 RTL BNKG Fraud Method Check(s) Deposited Check Type Business - Checking Bank Title Non Employce Check # 1017 Acd# _3353 aank of Account CHASE Item Amount $4,500.00 Loss $0.00 Prevent $4,500.00 Reeovered $0.00 Payee PHO AN LLC Suspect Maker KTC PROPERTIES, L.L.c. Endorser STAMP Exposure Prevented: ------, $4,500.00 $4,500.00 I Net Loss: How Discovered Deposit Fraud Model Policy Violation Incident Factors NewAccouot 0 Over The Counter (:-) Transit ,_/" ViaATM 0 Client Security/Procedure 0 Bank Procedure 0 Improper/No Hold C) Direct Bank 0 Internet Banking 0 Touch Signature 0 Ph()1o Available 0 TelJer Number, First, Last Name 11 RNJ&70 Capita10nel20150J1960 CONFIDENTIAL CAP ONE U0637 Chau 000055 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 55 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator ClilTord McIlroy Ca.e ID: 2015011960 Category: :+03 Check CHAU,K·Check NSF OateOccurred: TimeOccurred: Location ID, Location: Jurisdiction: 7/8/2015 41480 NSH-STW·HWY 190 RTL BN Bank Dept, Loss Branch ID, 42480 I_os> Location: NSH-STW-HWY 190 BUS BN Loss Cost Center: ~._._~.__...__,_~_~_._.____.__._______.~i -'-'-'--'-"-'-"-"-'-"'---, Presented Date 71812015 Time Item Date 71812015 Location 41480 NSH·STW-HWY 190 RTL BNKG Fraud Method Check(s) Deposited Cbeek Type Business - Checking Bank Title Non Employee Check # 1023 Acet U _1756 Bank of Account FIRST NBC Item Amount $4,400,00 Loss $0,00 Prevent $4,400,00 Recovered SO,OO Payee PHUANNLLC Suspect Maker KTC PROPERTIES, L,L,C. Endorser STAMP ~,posure . S~.400~;-~ I ~...vented: $4,4{)0,OO I Net Loss: $o.OO.J How Discovered Deposit Fraud Model Policy Violation •.. __• __. ___ ,,,_,_,,_,_ •._.J 10cident Factors Ne\'v Account o Oller The Counter o Transll o ViaATM Client SecuritylProcedure Bank Procedure Improper/No Hold o Direct Bank () Internet Banking L ___.____._____.___. Touch Signature- 0 Photo Avallahle Teller Number, First, Last Name 04 XYYI02 .__._."._._.__._._"._. CapitalOnel2015011960 CONFIDENTIAL CAP ONE 00638 Chau 000056 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 56 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Clifford Mcilroy CaselD: 2015011960 Category: :+03 Check CHAU,K-Check NSF ----------- ..-~~.-...~. 41492-Hwy 21 (8) nateOccurred: Time-Occurred: Location IJ): Location: Jurisdiction: 7/1412015 41492 Hwy 21 Bank Dept: Loss Branch ID: 42480 La•• Location: NSH-STW-HWY 190 BUS BN Cost Center: Presented Date 711412015 Time Item Date 7/14120J5 Location 4J492 HwyZl Fraud Method Check(s) Deposited Check Ty(le BUSllw&' - Checking Bank Titl. Non Employee Check # 1021 Acct# _1756 Bank of Account FIRST NBC ltemAmount $3,000.00 Loss $0.00 Prevent $3,000.00 Recovered $0.00 Payee KANETHA CHAU Suspect Maker KTC PROPERTIES, Endorser KANETHACHAU $3,000.00I Expo.ure Prevented: $3,000.00 I Loss: $0.00 I"'"";'~'" "'~"'."' ....,--- ~ Policy Violation ---~---.- .-.~.-.-- Incident Factor'S New Account Over The Counter () Transit o ViaATM o Client Securlty/procedure o Bank Pcooedure o lmproperfNo Hold o Dimet Bank o Internet Banking o Touch Signature 0 Photo AvaiiabJe r~) Teller Number, FirSt, I~ast Name 05 RH0472 Capita10ne12015011960 CONFIDENTIAL CAP ONE 00639 Chau 000057 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 57 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 [ nvestigator Clifford McIlroy Ca.elD: 2015011960 Category: :+03 Check CHAU,K-Cheek NSF 41480-NSH-STW-HWY 190 RTL BNKG (9) DateOccurred: 7130/2015 TlmeOccurred: Location ID: 41480 Locatiou: NSH-STW-HWY 190 RTL BN Jurisdiction: Bank Dept: Loss Branch ID: 42480 Loss Location: NSH-STW-HWY 190 BUS BN Center: Presented Date 713012015 Time Item Date 7/3012015 Location 41480 NSH-STW-HWY 190 R1L lli'lKG Fraud Method Check(s) Deposited Check Type Business .. Checking Bank Title Non Employee CheekY 1035 Acct# _1756 Bank of ACCOUnt FIRST NBC Item Amount $2,500.00 Loss $0.00 Prevent $2,500.00 Recovered $0.00 Payee KANETHA CHAU Suspect Maker KTC PROPERTIES, L.L.C. Elldorser STAMP Exposure Prevented: Net Loss: .-.-.-.-.--.--.--. $2,500.00 $2,500.00 $0.00 . How Discovered Deposit Fraud Model Policy Violation ~. Incident Factors New Account C) Over The Counter 0 Transit 0 ViaATM 0 Client Security/Procedure 0 Bank Procedure 0 Improper/No Hold 0 Direct Bank 0 Intemet Banklng n ~~ Touch Signature o Photo Available () Tener Number, Fir'st, Last Name 05 IRG928 Capita10ne!20l5011960 CONFIDENTIAL CAP ONE 00640 Chau 000058 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 58 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Clifford McIlroy Case ID: 2015011960 Category: :+03 Check CHAU,K-Check NSF 41480-NSH-STW-HWY 190 RTL BNKG (5) DateOccurred: 713012015 TimeOccurred: 10:05 Location ID: 41480 Location: NSH-STW-HWY 190 RTL BN Jurisdiction: BankD.pt: Loss Brancb Ill: 42480 Loss Location: NSH-STW-HWY 190 BUS BN Loss Cost Center: Presented Date 713012015 Time 10:05 Item Date 713012015 Localion 41480 NSH-STW-HWY 190 RTL BNKG Fraud Method Chcck(s) Deposited Check Type Business - Checking Bank Title Non Employee Check # 1034 Acet# _1756 Bank of Account FJRSTNBC Item Amount $4,700.00 Loss SO.OO Prevent $4,700.00 Recovered $0.00 Payee PHOANLLC Su.spect Maker KTC PROPERTIES, L.L.C. Endorser STAMP !;xposure I Prevented: I Net Lo." ~============= II How Diseove;ed Deposit Fraud Model I Policy Violation _._~. __ ___ _ Inctdent Factors New Account Over The Counter Transit ViaATM o o u ~ o CUen! Securily/Procedure '~) Bank. Procedure o Improper/No Hold c DIrect Bank c Irrternet Banking o rT ouch Signature 0 Photo Available () Teller Number, First, Last Name I 11 RNJ870 $4,700.~ $4,700.00 I $0.00 IJ Capital Onel20150 11960 CONFIDENTIAL CAP ONE 00641 Chau 000059 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 59 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Clifford Mcilroy Case ID: 2015011960 Category: :+03 Cheek CHAU,K-Check NSF 41492-Hwy 21 (10) I ~-~ Exposure $3,000.00 Prevented: $3,000.00 I ~L:::N:::e:::t:::~:::..::s::===========$=0.:::00=" How Discovered Deposit Fraud Model IPolicy Violation I Loss Location: NSH·STW·HWY 190 BUS Dat.Occurred: 8/412015 TimeOccurred: Location !D: 41492 Location: Hwy 21 Jurisdiction: Bank Drpl: Loss Branch!D: 42480 Loss Cost Center: Prosented Date 814/2015 Time Item Date 81312015 Location 41492 Hwy21 Fraud Method Check(s) Deposited Check Type Business· Checking Bank Title Non Employee Check # 1037 Acct# _1756 Sank of Account FIRST NBC Item Amount $3,000.00 Loss $0.00 Prevent $3,000.00 Recovered $0.00 Payee KANETHA CHAU Suspect Maker KTC PROPERTIES, Endorser KANElHA eHAU IncIdent Faetors New Account o Over ihe Counter o iransit o VlaATM () Client Security/Procedure o Bank Procedure o Impropef'/NO Hold o Direct Bank o Intemet Banking () Touch SIgnature Photo Available Teller Number, First, Last Name 05 RHQ472 I Capita10ne1201501196() CONFIDENTIAL {:AP ONE 00642 Chau 000060 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 60 of 61 External Fraud Inv. Check Fraud Incident Report 911512016 Investigator Category: :+03 Clifford McIlroy Check NSF 41492-Hwy 21 (4) DateOccurred: 8/4/2015 TimeOccurrcd: 17:40 Location!D: 41492 Location: Hwy 21 Jurisdiction: Bank Dept: Loss Branch!D: 42480 Loss Location: NSH-STW-HWY 190 BUS BN Loss Cost Center: Presented Date 8/412015 Time 17;40 Item Date 813/2015 Location 41492 Hwy21 Fraud Method Check(s) Deposited Check Type Business - Checking Bank Title Non Employee Check # 1038 Acct# _1756 Sank of Account FIRST NBC Item Amount $4,000.00 Loss $0.00 Prevent $4,000.00 Recovered $0.00 Payee PHOAN LLC Suspect Maker KTC PROPERTIES, L.L.C. Endorser Case !D: 2015011960 CHAU,K-Check Exposure $4,000.00 ]'reventcd: $4,000.00 Net Loss: $0.00 Incident Factors NewAccount 0 Over The Counter 'J " Transit 0 VlaATM () Cltent Security/Procedure C'-' Bank Procedure () Improper/No Hold 0 Direct Bank C Internet Banking 0 ,----.-.'-~~--.--.--.-.. Touch Signature ~::) Photo Available 0 Teller Number, First, Last Name 05 RH0472 Capital One12015011960 CONFIDENTIAL CAP ONE 00643 Chau 000061 Case 2:16-cv-14400-SM-JVM Document 20-8 Filed 04/07/17 Page 61 of 61