Recent Reports and Communications

Letters and Reports to Investors

Receiver To Hold a “Tele-Town Hall” for Wextrust Victims on October 11th


The Receiver will hold a tele-town hall at 9:30 A.M. EDT on Thursday, October 11th to update Wextrust victims on recent actions within the Receivership and to respond to live questions.


To participate, dial toll-free (888) 886-6603, and then when prompted for an extension dial 20036#, at 9:30 A.M. EDT on Thursday, October 11th.


The Receiver will speak for 15-20 minutes about the current "state of the estate", the status of the next distribution, and plans for winding down the receivership.  The Receiver will then take and respond to questions from participants.


Investors are encouraged to email questions in advance by sending them to   with a subject line "Town Hall Question".


“*** UPDATE: *** International callers may have to dial in using the following number: +1 253-382-9982, then when prompted for an extension dial 20036#.


*** UPDATE ***

Outlined below is a summary of the Wextrust Receiver Tele-Town Hall that was held on Thursday, October 11, 2012.

state of the estate

1. Current State

§ Byers and Shereshevsky are in prison

§ Cash in Receivership accounts: Approx. $21 million; added $13 million in last year, $5 million of which was in the last 9 months

§ 8 remaining income-generating properties; 3 properties to be relinquished

2. Key Events of 2012

§ February: Receiver files interim report

§ May: Court hearing on fee applications

§ June: Court hearing and approval of settlements with two law firms for $7.9 million and settlement with general contractor for $560,000; fee applications approved; bank’s motion to take back properties denied

§ August: Court approves sale of First Highland with net cash to estate of $100,000; Receiver files interim report

§ July/August: Receiver and IRS file legal analysis and arguments with the Court on taxation of the receivership

3. Results to Date (8/11/08 – 8/31/12)

§ $68.6m in tenant receipts; $14.2 million net cash flow

§ New leases / renewal of leases signed by Receiver created $37.3 million of revenue

§ Receiver sold 19 properties for $67.7 million; 8 properties relinquished

§ $10.5 million net in other settlements

4. Where Did the Money Go Pre-Receivership?

§ Fraud, waste, and abuse: untold millions

§ Real estate market collapse: most of Wextrust’s assets were in highly leveraged commercial real estate; that market is down approximately 40%

§ Southern Africa: Fraud and waste by Byers and Shereshevsky of more than $50 million

II. status of the next distribution

1. Next Distribution

§ Expected date: First quarter of 2013

§ Amount: Bulk of available cash in receivership (current cash is $21 million)

§ Difficulty remains with IRS, which wants to tax the Receivership; currently in settlement discussions; distribution cannot be made until discussions are completed

2. Expectations: How much will investors recover?

§ Early assessment was as low as 5%; today, expect about 10% total recovery

§ Hopeful for most of that to be paid during 1Q 2013

III. plans for winding down the receivership

§ Plan is to continue the Receiver’s disposition strategy:

· Maximize value on each asset by seeking to fully lease all properties

· Continue to actively market and sell every property

IV. Questions

Q: Does the estimated 10% recovery take into account previous distributions and the final distribution?

A: Yes, the estimated 10% recovery includes both past and future distributions. However, this 10% number does use a fairly conservative valuation of the potential sale price of the various remaining Wextrust properties.

Q: What will be the percentage of total amount of money distributed in each distribution, and when exactly will the next distribution be? Just as an example, would the first distribution be 20% of the total money distributed, the second 70%, and the third 10%?

A: The answer depends very much on the tax liability—before a distribution is made, the IRS must agree on the appropriate method to tax the receivership. The Receiver cannot as of now give percentage numbers, but the next distribution will be the largest, leaving only enough money to fund the case to termination.

Q: Why has the Receiver chosen not to pursue claims against various entities/individuals (e.g. banks, other firms, former Wextrust employees) and why was no insurance claim made?

A: In the investigation the Receiver considered whether there were other claims (against employees and insurance claims) that were worth filing. There was no insurance coverage. The Receiver found evidence of complicity by some Wextrust employees. Rather than spending resources to litigate and recover funds directly from former employees, the Receiver substantially reduced the claims those employees had against Wextrust according to their level of complicity, up to a 100% reduction. The Receiver concluded that further litigation would not result in a net benefit to the estate.

Q: Will Elka Shereshevsky’s assets be sequestered?

A: The majority of Shereshevsky family properties have more debt than they are worth. The Receiver is in the process of finalizing deals with lenders on them, which may net up to $100,000 for the Receivership estate. Elka Shereshevsky had been cooperating but is not any longer; thus, the Receiver is pursuing other measures to close out this issue.

Q: Does the Receiver agree with Judge Chin that, if the amount of professional fees had been known at the start of the Receivership, things would have been done differently?

A: The Receiver was required by the Court’s orders to take a variety of steps to, among other things, secure Wextrust’s assets that were spread across the country and around the world. Many of these requirements were very costly. While fees have been large, they have also included substantial discounts, writeoffs, and holdbacks – amounting to a reduction of about half off standard rates. The Court and the SEC have approved only those fees deemed reasonable. A receiver order with a more limited scope should be an option in future cases. <:p>

Q: Madoff investors received money from SIPC. Why is that not an option for Wextrust investors?

A: SIPC is the Securities Investor Protection Corporation. The Receiver immediately notified SIPC within a month after the case was filed. However, after the Receiver's investigation, there were no specifically identifiable bank or brokerage accounts belonging to specific Wextrust investors. Instead, funds were raised by private placement debt or securities offerings and then placed into Wextrust accounts tied to specific Wextrust entities or investors, and subsequently commingled. By contrast, in Madoff, each individual investor allegedly had a specific account that held his or her cash securities.

Accordingly, the Receiver consulted with the SEC and determined that SIPC claims are not a viable option for Wextrust investors.


Town Hall Meetings

The Receiver has held a series of town hall meetings with investors over the past several months. The first set of meetings took place at the beginning of the receivership on August 26 and September 4, 10, and 11th, in Tel Aviv, New York, Chicago, and Norfolk, Virginia, respectively. Investors at each of these meetings were provided with copies of the Order Appointing a Temporary Receiver, the Order Freezing WexTrust's Assets, and a meeting agenda.

The Tel Aviv meeting on August 26 was held at the Ramat Gan offices of Wextrust Securities, and over 70 Israeli investors attended the meeting. The meeting was conducted in both Hebrew and English.

The New York meeting on September 4 was held at the New York office of Dewey & LeBoeuf LLP, and included presentations by Steven Rawlings, Branch Chief of the Division of Enforcement of the U.S. Securities and Exchange Commission ("SEC"), and Martin Bienenstock, a partner in Dewey & LeBoeuf's Business Solutions & Governance Group. Approximately 110 investors attended the New York town hall either in-person or via teleconference.

The Chicago meeting on September 10 took place at the offices of Wextrust Capital, and was attended, either in person or via teleconference, by approximately 130 investors. Steven Rawlings, Branch Chief of the Division of Enforcement of the SEC, participated in the meeting along with the Receiver.

The Norfolk, Virginia town hall meeting on September 11 was held at the Norfolk Waterside Marriott and included presentations by attorneys from the SEC and Dewey & LeBoeuf LLP. Approximately 260 investors attended the conference in person or via teleconference.

To update investors on the most recent developments in the case, on November 10, 2008, the Receiver hosted a town hall meeting for all Wextrust investors at the New York office of Dewey & LeBoeuf LLP. Both domestic and international investors who were unable to attend the meeting in person were able to participate by telephone, toll-free.

In the future, the Receiver will continue to host town hall meetings with interested parties to update them on the progress of the case. Information about future meetings will be posted on the Receiver's website.