Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007
IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
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SECURITIES AND EXCHANGECOMMISSION
Plaintiff,vs.
PENSION FUND OF AMERICA, L.C., PFAASSURANCE GROUP, LTD., PFAINTERNATIONAL, LTD., CLAREN TPA,LLC, LUIS M. CORNIDE and ROBERT DELA RIVA,
Defendants.
Case No. 05-20863-CIV-MOORE/GARBER
MARCELLA CORDOVA, JORGEFLORES, HENRY IURMAN, MARCOSMUSTIELES, And KATIA OCAMPO,individually and on behalf of all others Case No. 05-21169-CIV-MOORE-GARBERsimilarly situated,
Plaintiffs,vs.
LEHMAN BROTHERS, INC., a New YorkCorporation ; MERRILL LYNCH & CO.,INC., a Delaware Corporation; RAYMONDJAMES FINANCIAL SERVICES, INC., aFlorida Corporation ; OLIVA INVESTMENTGROUP, INC., a Florida Corporation;SUNTRUST BANKS, INC., a GeorgiaCorporation, and HSBC BANK, U.S.A.,LUIS CORNIDE and ROBERT A. DE LARIVA,
Defendants.
JOINT MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENTAND INCORPORATED MEMORANDUM OF LAW
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 2 of
Court-appointed Receiver, Thomas G. Schultz, solely in his capacity as Court-appointed
Receiver in the above -captioned SEC Action, and Plaintiffs in the above-captioned Cordova
Litigation , on behalf of themselves and the putative class (the "Settlement Class )1, by and
through their counsel of record, hereby move the Court for the entry of the [Proposed] Order
Preliminarily Approving Settlement and Providing for Notice ("Preliminary Approval Order ),
attached to the Stipulation as Exhibit A. In support hereof, the Receiver and Plaintiffs state as
follows:
INTRODUCTION
A. Procedural Background
On March 28, 2005, the Securities and Exchange Commission ("SEC ) filed a complaint
commencing the above-captioned SEC Action against Pension Fund of America, L.C. and its
related entities ("PFA ) and principals, alleging that PFA engaged in an offering fraud. There is
pending litigation between the Receiver and the De La Riva Parties over the $450,000 plus
accruing interest held in the trust account of counsel for the De La Riva Parties. On April 17,
2006, the Receiver filed with the Court an Amended Motion for a determination that the funds in
the foregoing account are property of the Receivership and should be transferred to the Receiver
for distribution to all investors (the "Receiver's Turnover Motion ). IPM is a party to the
Turnover Motion. The De La Riva Parties opposed the Motion. The matter remains pending.
On April 21, 2005, a complaint was filed in the United States District Court for the
Southern District of Florida on behalf of a putative class of PFA investors who had purchased
' Capitalized terms have the meaning ascribed to them in the Stipulation and Agreement ofSettlement ("Stipulation ) dated May 25, 2007, attached hereto as Exhibit "1.
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 3 of
trust plans from PFA from 1999 through March 30, 2005. Henry Turman v. Pension Fund of
America L. C. et al. Case No. 05-21101. On April 28, 2005, a second related complaint was filed
on behalf of the same putative class of PFA investors. Samuel Puterman v. Lehman Brothers,
Inc. et al., Case No. 05-21169.
On June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended Class
Action Complaint, styled Cordova, et. al. v. Lehman Brothers, Inc., et. al., Case No. 05-21169
alleging common law claims for (1) breach of fiduciary duty, (2) aiding and abetting PFA's
common law fraud and (3) aiding and abetting PFA's breaches of its fiduciary duties. The
Complaint named Lehman Brothers , Inc., Merrill Lynch & Co., Inc., Raymond James Financial
Services, Inc., Oliva Investment Group, Inc. and HSBC as defendants (hereinafter, the "Financial
Institution Defendants ). The Complaint raised these claims on behalf of a putative class of
investors consisting of
All persons who held and/or retained investments in retirement trust plans offeredby PFA, or its affiliated companies, during the period commencing January 1999through the present ("Class Period ). Excluded from the Class are Defendants,PFA, PFA Assurance, PFA International, Claren TPA, Luis Cornide, Robert de laRiva and all of the Defendants' alter-ego entities, all employees or agents ofDefendants and agents of the Defendants' alter ego entities, all subsidiaries andaffiliates of the Defendants, the Defendants' officers, agents, and employees, anyagents or brokers (and their immediate family members) who sold or solicited thesale of investments in PFA or PFA Assurance.
The consolidated actions are referred to herein collectively as the "Class Action
Litigation . On January 17, 2006, the Court granted Defendants ' motions to dismiss, ruling
the common law claims asserted in the Complaint were preempted by the Securities Litigation
Uniform Standards Act ("SLUSA ). On February 13, 2006, Plaintiffs filed their Second
Amended Class Action Complaint, alleging violations by the Financial Institution Defendants of
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Sections 12 and 15 of the Securities Act of 1933 ("Securities Act ) and Section 10(b) of the
Securities Exchange Act of 1934 ("Exchange Act ). Motions to dismiss the Second Amended
Class Action Complaint are currently pending.
B. The Settlement Stipulation
Counsel for the parties to the Stipulation have engaged in substantial arms-length
negotiations in an effort to resolve all claims that have been or could be asserted in the Cordova
Litigation or by the Receiver. The parties then spent a significant amount of time drafting and
negotiating the Stipulation submitted herewith.
The parties believe that the settlement provides significant benefits to creditors of the
Receivership Entities in the SEC Action holding allowable claims , including Settlement Class
Members in the Cordova Litigation:
a. The Settlement Stipulation requires that the Class Settlement Fund of $112,500,
less fees and costs, be distributed to the Class.
b. The Settlement Stipulation calls for the proceeds of the Receiver's Turnover
Action, including the $50,000 currently held in trust, and $62,500 to be paid by
the De La Riva Parties for a total of $112,500, to be transferred by the De La Riva
Parties to the Receiver.
c. The Settlement Stipulation provides for a Plan of Allocation that provides for the
distribution of the net settlement and Turnover proceeds, as well as other
receivership estate assets . The distribution will benefit the Settlement Class and
other Authorized Claimants, because they will avoid prolonged litigation
regarding distribution preferences and claim set-offs. Thus, the putative class will
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receive a considerable distribution of money without the uncertainty, delay, and
expense of protracted litigation.
d. The distribution will proceed in accordance with the Plan of Allocation, as soon
as practicable after the Effective Date of the Settlement, and after claims are filed
and reviewed and any necessary reserves for disputed claims are established.
SPECIFIC TERMS OF THE SETTLEMENTWhile the Stipulation (Exhibit "1 ) speaks for itself, the principal terms of the settlement
are as follows:
1. Settlement Distribution Fund
The Settlement Distribution Fund consists of the following three components:
a) The sum of $112,500, plus interest , representing $50,000 in funds
that are currently being held in trust and $62,500 to be paid by the De La
Riva Parties, representing resolution of the Receiver's Turnover Motion;
b) The sum of $112,500, less fees and expenses awarded by the
Court, to be paid by the De La Riva Parties in consideration for settlement
of the Cordova Litigation, after deduction of fees to be approved and
awarded by the Court to Plaintiffs' Settlement Counsel, and other costs
allocable to the settlement as set forth in Paragraph 5.2 of the Settlement
Stipulation;
2. Recipients of the Settlement Proceeds
The following are the recipients of the Settlement Distribution Fund:
a. Members of the Settlement Class with allowable claims under the claims filing
and allowance procedures set forth in the Stipulation (See 4 in ra who do not
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exclude themselves from the settlement ("Eligible Settlement Class Members ),
all of whom are also claimants of the Receivership Estate.
b. All other Claimants of the Receivership Estate who timely file claims and whose
claims are thereafter allowed under the procedures set forth in Paragraph 5.3 of
the Stipulation (See 4 in ra).
3. The Proposed Plan of Allocation of the Settlement Distribution Fund
The proposed Plan of Allocation of the Settlement Distribution Fund is the same as the
plan set forth in detail in the HSBC Settlement Order, which is a fair and just allocation of the
funds , and has been preliminarily approved by the Court.
4. Approval of Notice Forms, Claims Procedures and Related Processes
The Settlement Stipulation also provides for the following:
a. The form of a Notice of Settlement to be provided to the Settlement Class
Members, including information on requests for exclusion from the Settlement
Class and the procedure for objections to the Settlement. The form Notice is
attached as Exhibit A to the Stipulation.
b. The form of written proof of claim forms to be filed by Settlement Class Members
and Receivership Creditors in order to be eligible to receive proceeds of the
Settlement Distribution Fund and any future distributions by the Receiver.
c. The establishment of a claims filing deadline of 60 days after a mailing of the
proof of claim form to Settlement Class Members and other Receivership
Creditors after the Effective Date of the settlement.
d. The appointment of a Claims Administrator (Garden City Group) to assist the
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Receiver and Plaintiffs Settlement Counsel with the transmission and tabulation
of the Notices, and claims forms and other administrative duties. The Receiver
and his professionals will be responsible for the review of and objections to
claims.
e. Certification of the Settlement Class pursuant to Rule 23(e) of the Federal Rules
of Civil Procedure, confirming the Cordova Plaintiffs as representatives of the
class , and Plaintiffs' Counsel as class counsel.2
5. Attorneys' Fees and Costs
The Stipulation also contains provisions regarding attorneys' fees and costs to Plaintiffs'
Counsel and the Claims Administrator. The Stipulation provides that such Counsel will apply
for (1) an award not to exceed 30% of the Class Settlement Fund to be paid by the De La Riva
Parties, and (2) reimbursement of their reasonable expenses and costs incurred in connection
with prosecuting the Cordova Litigation. Settlement Counsel have agreed not to seek any award
of fees from the proceeds of the Receiver's Turnover Motion to be paid by the De La Riva
Parties as part of the settlement. Settlement Counsel will file a motion for an award of such
expenses and fees , and any such request is subject to the approval of the Court.3
2 This certification is for settlement purposes only. Certification for purposes of theentire litigation is a separate issue, and this Court has entered an Order to Show Cause why theClass should not be certified for all purposes. Plaintiffs responded to the Order to Show Causeon November 15, 2006. That issue is fully briefed and remains pending.
3 The Receiver and his retained professionals, who have received no compensation forperiods commencing on January 1, 2006 will make application to the Court for an award of feesand costs from funds on hand in the Receivership Estate other than the proceeds of thissettlement and the designated Receivership assets which are also to be distributed as part of thesettlement.
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PROPOSED APPROVAL SCHEDULE
The parties recommend that notice of the Settlement be sent to Members of the
Settlement Class at this time. The Preliminary Approval Order (Exhibit "2") approves the form
and content of the proposed Notice of Pendency of Class Action, Proposed Settlement, and
Fairness Hearing ("Notice ), attached to the Stipulation as Exhibit C. The proposed notice
advises Settlement Class Members of the essential terms of the settlement, defines the Settlement
Class and the Settlement Class Period, sets forth the procedure for opting out of the Settlement
Class or filing objections and will provide specifics on the date, time and place of the final
approval hearing. The Notice provides information which will enable Settlement Class Members
to exercise their rights and make an informed decision regarding the proposed settlement.
In the interest of saving costs and judicial resources, the parties recommend that the
schedule set out in the Court's May 4, 2007 Orders Preliminarily Approving Settlement and
Providing For Notice and the May 22, 2007 Order Granting Motion to Extend Settlement
Approval Deadlines be followed. The schedule for mailing notices to the Settlement Class,
setting dates for Settlement Class Members to opt-out of or object to the settlement, setting a
date by which counsel will file papers in support of the Settlement, and setting a final approval
hearing date is as follows:
Notice mailed to class
Last day for class membersto opt-out of settlement
June 8 , 2007 ("Notice Date )
July 10, 2007
Last day for class membersto object to settlement
Date by which to file papersin support of settlement,
July 23, 2007
August 3, 2007
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007
Plan of Allocation and requestfor attorneys' fees and expenses
Date by which Objectors must file July 23, 2007
any papers in support of their
objections
Final approval hearing August 10, 2007
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This schedule is similar to those used and approved by numerous courts in class action
settlements and provides due process to class members with respect to their rights concerning the
Settlement.
A. Class ActionMEMORANDUM OF LAW
1. Legal Standard
To conclude the Settlement, Rule 23(e) requires that there be notice to the Class, a
fairness hearing, and this Court's approval. Before scheduling a fairness hearing and ordering
Class Notice, this Court must be presented with a settlement that warrants implementing the Rule
23(e) procedures. The purpose of obtaining preliminary approval is "to determine if the proposed
settlement falls within the range of possible approval, i.e., whether probable cause exists to
certify the class and issue notification of the settlement' s terms . Matter ofSkinner Group, Inc.,
206 B.R. 252, 261 (N.D. Ga. 1997).
In determining whether to preliminarily approve a class action settlement, the
court assesses whether there is "probable cause to provide notice and hold a fairness hearing.
See In re Mid-Atlantic Toyota Antitrust Litig., 564 F.Supp. 1379, 1385 (D. Md. 1983). An
inquiry into the ultimate fairness of the Settlement is not necessary at this time, because there
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will be a further hearing at which the fairness of the Settlement will be addressed, after notice to
the Class. Therefore, even if there are aspects of a proposed settlement that raise questions, they
"should not derail the orderly workings of the settlement process at this point. Id. at 1386.
Preliminary approval should be denied only if there are apparent grounds to doubt the
settlement's fairness , or other "obvious deficiencies . Manualfor Complex Litig., § 30.41 (3d ed.
1993). See also H. Newberg, Newberg on Class Actions, § 11.25 at 11-37 (3d ed. 1993)
(settlement within the range of possible judicial approval should be preliminarily approved). As
discussed below, no such deficiencies exist here.
2. The Settlement Should be Preliminarily Approved as Fair,Reasonable, and Adequate
Judicial approval of class action settlements requires a two-step process. In the
first step, the court makes a preliminary decision as to whether the settlement "falls within the
range of possible judicial approval. H. Newberg, Newberg on Class Actions § 11/25 at 11-37
(3d ed. 1993). Once the settlement is found to be within the range of possible approval, a final
approval hearing is scheduled and notice is provided to the class. See id. The second step
involves final determination, following a hearing at which pertinent evidence and any objections
by class members may be considered, of whether the settlement is fair, reasonable, and adequate
from the standpoint of the class. See id. at § 11.41. On the instant Motion, the Court is presented
with the initial matter of preliminarily evaluating the Settlement.
In Warren v. City ofTampa, 693 F . Supp . 1051 , 1054 (M.D. Fla . 1988), the district
court described its review of class action settlements as follows:
The Court initially recognizes the principle that settlements are highlyfavored in the law. The Court is required to make a two part determinationthat 1) there is no fraud or collusion in reaching settlement, and 2) the
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settlement is fair, adequate and reasonable. The evaluation of whethersettlement is fair, reasonable and adequate is committed to the sounddiscretion of the trial court.
Id. at 987 (citations omitted). See also Ex Parte First Nat'l Bank of Jasper, 717 So.2d
342, 344 (Ala. 1997) (settlement classes "promote the strong policy favoring settlements )
In determining whether a settlement is fair and reasonable, the trial court is
entitled to rely upon the judgement of experienced counsel for the parties. See Behrens v.
Wometco, 118 F.R.D. 534, 538 (S.D. Fla. 1988). Moreover, there is a strong initial presumption
that the compromise is fair and reasonable. See In re Chicken Antitrust Litig,, 560 F.Supp. 998
(N.D. Ga. 1980). Accordingly, courts exercise restraint in examining proposed settlements,
recognizing that settlements, by definition, are compromises that need not satisfy every concern
of the parties, but may fall anywhere within a broad range of upper and lower limits.
In lieu of a more extended inquiry into the claims asserted, courts concentrate on
the negotiating process by which the settlement was reached. See Weinberger v. Kendrick, 698
F.2d 61, 74 (2d Cir. 1982). The courts insist that a settlement be the result of "arm's length
negotiations effected by counsel with the "experiences and ability ... necessary to effective
representation of the class' interests. Weinberger, 698 F.2d at 74 (citation omitted). Once
counsel's experience is established, courts give such counsel's "opinion . . . supporting the
settlement ... ` considerable weight .' In re Saxon Sec. Litig., Nos. 82-Civ-3103 (MJL), 83-3760,
1985 WL 48177, at *5 (S .D.N.Y. Oct . 30, 1985 ). This is done because courts recognize that the
parties' counsel are best able to weigh the relative strengths and weaknesses of their arguments.
See id.
As discussed above, the Settlement was reached after extensive arm's length
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negotiations among Class Counsel, Receiver's counsel, and counsel for the De La Riva Parties.
As in the litigation itself, all of the parties aggressively presented their positions, and the
negotiations required continuous efforts over a number of months to bear fruit. There was
nothing collusive about any of the settlement negotiations or the ultimate Settlement reached.
The Settlement Stipulation is fully supported and recommended by counsel for all parties.
Movants believe that there are no terms in the Settlement that militate against preliminary
approval. Although this Settlement comes at a relatively early stage in the litigation, the Receiver
and Class Counsel have engaged in a significant review of materials made available through the
Receivership, and conducted extensive, in-depth factual investigations. In the end, Class
Counsel had sufficient information regarding the case against the De La Riva Parties to make an
informed decision regarding the adequacy of the Settlement. See In re Corrugated Container
Antitrust Litig., 643 F.2d 196 (5th Cir. 1981) (lack of pre-settlement discovery should not
invalidate settlement where other information was available regarding the facts of the case);
Cotton v. Hinton, 559 F.2d 1326 (5th Cir. 1977) (same); Mashburn v. Nat'l Healthcare, Inc., 684
F.Supp. 660 (M.D. Ala. 1988) (early settlements are to be encouraged).
3. The Settlement Class Should be Provisionally Certified
Before exercising its discretion to certify the Settlement Class, the Court should
be satisfied that the requirements of Rule 23 are met. See Anchem Prods. Inc., v. Windsor, 521
U.S. 591 (1997). Thus, a settlement class should be certified where the four requirements of
Rule23(a) - numerosity, commonality, typicality, and adequacy - are satisfied as well as one of
the three subsections of Rule 23 (b). See Strube v. American Equity Inv. Life Ins. Co. 226 F.R.D.
688, 695 (M.D.Fla. 2005). Those requirements are easily met here.
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a. The Settlement Class Is So Numerous That Joinder of AllMembers is Impracticable
First, the Settlement Class satisfies the numerosity requirement of Rule 23(a)(1).
Under Rule 23(a)(1), the Class must be so numerous that joinder of all members is
"impracticable . See In re Flat Glass Antitrust Litig., 191 F.R.D. 472 , 477 (W.D.Pa. 1999).
"Impracticable does not mean impossible; showing a strong hardship or inconvenience may be
sufficient. See id. at 477 (citing In re Fine Paper Antitrust Litig., 82 F.R.D. 143 (E.D.Pa. 1979)).
In reviewing the practicability of joinder under Rule 23(a)(1), the size of the proposed class is a
key factor. Courts have found the numerosity requirement satisfied with classes numbering as
few as 20 members. See Vargas v. Meese, 119 F.R.D. 291, 293 (D.D.C. 1987).4 There is no
dispute that the Settlement Class consists of thousands of individuals and entities, a number more
than sufficient to satisfy numerosity. See In re Flat Glass Antitrust Litig., 191 F.R.D. at 477;
Hedges Enters., Inc. v. Continental Group, Inc., 81 F.R.D. 461, 465 (E.D. Pa. 1979) (classes
numbering in the hundreds "have routinely satisfied the numerosity requirement ); Zanni v.
Lippold, 119 F.R.D. 32 (C.D. Ill. 1988) (151 member class certified).
b. There Are Questions of Law and Fact Common to EachMember of the Settlement Class
As for commonality, Rule 23(a)(2) requires only that there be some questions of
law or fact common to the class . "The existence of shared legal issues with divergent factual
predicates is sufficient, as is a core of salient facts coupled with disparate legal remedies within
4B.J. Moore, Moore's Federal Practice 1 23.05 [1] (2d ed. 1987) (modern trend is thattwenty-one or fewer plaintiffs will be insufficient, between twenty-one and forty plaintiffs willreceive a mixed response, and with over forty plaintiffs, the courts always find that therequirement of numerosity has been met).
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one class . Hanlon v. Chrysler Corp., 150 F . 3d 1011, 1019 (9th Cir. 1998). Accordingly, the
commonality requirement has been aptly characterized as a "low hurdle easily surmounted.
Scholes v. Stone, Mcguire & Benjamin, 143 F.R.D. 181, 185 (N.D. Ill. 1992) (quotations and
citations omitted). See also Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994).
In this case, there are several issues of law and fact common to each Class
Member, including , among others:
a. whether Robert De La Riva fraudulently transferred $500,000 from thefrom the Receivership Entitles to his parents, Juan and Amanda De LaRiva;
b. whether the De La Riva Parties were unjustly enriched by the above-mentioned transfer;
c. whether the De La Riva Parties breached a fiduciary duty owed to thePlaintiffs by engaging in the above-mentioned transfer; and
d. whether the Plaintiffs were damaged by the De La Riva Parties' course ofconduct.
Because each and every Class Member purchased a "retirement trust from PFA
and have been damaged thereby, it is clear that the commonality requirement is satisfied in this
case . See Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 472 (5th Cir. 1986) (commonality is
satisfied when the members of a proposed class share at least on common factual or legal issues);
Vines v. Sands, 188 F.R.D. 302 (N.D. Ill. 1999) (finding commonality satisfied because the same
form letter was sent to each class member).
c. The Representative Plaintiffs ' Claims Are Typical of the ClassMembers ' Claims
Rule 23(a)(3) requires that "the claims . . . of the representative parties [be]
typical of the claims ... of the class. Typicality focuses on "whether the individual claim of the
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class representatives has the essential characteristics common to the claims of the class. In re
Flat Glass Antitrust Litig., 191 F.R.D. at 479. A plaintiffs claim is typical "if it arises from the
same event or practice or course of conduct that gives rise to the claims of other class members
and his or her claims are based on the same legal theory. Rosario v. Livaditis, 963 F.2d 1013,
1018 (7th Cir. 1992) (quoting De La Fuente v. Stokely- Van Camp, Inc., 713 F.2d 225, 232 (7th
Cir. 1983)). See also In re VMS Sec. Litig., 136 F.R.D. 466, 475 (N.D. Ill. 1991). "[F]actual
differences will not render a claim atypical if the claim arises from the same event or practice or
course of conduct that gives rise to the claims for the class members, and if it is based on the
same legal theory. H. Newberg & A. Conte, Newberg On Class Actions § 3.13, at 3-76 (3d ed.
1992) ("Newberg ). See also In re NASDAQ Market-Makers Antitrust Litig., 169 F.R.D. 493,
511 (S.D.N.Y. 1996) (factual differences among class members do not defeat class certification
where all claims arise from the same price-fixing conspiracy); In re Domestic Air Transp.
Antitrust Litig., 137 F.R.D. 677, 699 (N.D. Ga. 1991) (typicality requirement satisfied even
though the 12.4 million class members purchased tickets for an enormous number of different
routes, at diverse times, at a multitude of varying prices, and on diverse terms). Courts have
construed the typicality requirement liberally. See, e.g., Scholes, 143 F.R.D. at 185; Mersay v.
First Republic Corp. OfAm., 43 F.R.D. 465, 468 (S.D.N.Y. 1968).
In this case, Plaintiffs' claims are unquestionably typical of the claims of the
Class they seek to represent . Plaintiffs allege that they were the victims of a massive fraudulent
scheme, of which PFA was at the center. Plaintiffs' claims are typical because their claims, just
like all Class Members' claims , arise out of the same course of conduct by PFA and the trustee
banks and are all based on the same legal theory. Thus, the typicality requirement is satisfied.
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See, e.g., Kornberg v. Carnival Cruise Lines, Inc., 741 F.2d 1332, 1337 (11th Cir. 1984)
(typicality found where the claims of the class and class representatives arise from the same
pattern or practice and are based on the same legal theory).
d. The Representative Plaintiffs Will Fairly andAdequately Represent the Settlement Class
The final requirement of Rule 23(a) is that the representative parties fairly and
adequately represent the class . More specifically:
Two criteria for determining the adequacy of representation are generallyrecognized: (1) the named representative must not have antagonistic orconflicting interests with unamed members of the class , and (2) therepresentatives must appear to be able to vigorously prosecute the interestsof the class through qualified counsel.
Nat'l Assn of Reg'l. Med. Program v. Matthews , 551 F.2d 340, 345 (D.C. Cir. 1976)
(citations omitted). See also Sosna v. Iowa, 419 U.S. 393, 403 (1975) (holding that where it is
unlikely that segments of the class would have interests conflicting with the class representative,
and where the interests of the class have been competently urged at each level of the proceeding,
the test of Rule23(a)(4) has been met).
Here, the interests of the Plaintiffs are aligned with the interests of the other Class
Members because they have all been injured by the same conduct. Plaintiffs do not have any
interest antagonistic to those of other Class Members. The central issue in this case - whether
PFA, its Principals, and other related entities fraudulently sold unregistered securities and
whether the Defendants participated in the scheme - are common to the claims of the Plaintiffs
and the other members of the proposed Class. Furthermore, absent this Settlement, each
Settlement Class Member would have the same interest in proving that the De La Riva Parties
are primarily liable for participating in furtherance of PFA's allegedly fraudulent scheme.
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Plaintiffs have the same interest as each of the other Class Members in proving each of the
elements of the alleged claims . Proof of these elements by Plaintiffs will necessarily support the
claims of the other Settlement Class Members.
Furthermore, Plaintiffs are represented by qualified and experienced lawyers who
have prosecuted numerous securities class actions to successful resolutions, so "there is no
ground for supposing that plaintiff will not adequately represent the class. In re Glassine &
GreaseproofPaper Antitrust Litig., 88 F.R.D. 302, 306 (E.D. Pa. 1980).
e. The Proposed Class Satisfies the Requirements of Rule 23(b)(3)
Once the four prerequisites of Rule 23(a) are met, the Class must also satisfy at
least one provision of Rule 23(b). See Thomas v. Albright, 139 F.3d 227, 234 (D.C. Cir. 1998).
Pursuant to Rule 23(b)(3), class certification is appropriate where "the questions of law or fact
common to the members of the class predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for the fair and efficient
adjudication of the controversy. Fed. R. Civ. P. 23(b)(3). See Thomas, 139 F.3d at 234; In re
VMS Sec. Litig., 136 F.R.D. at 479. Here, the proposed Class clearly satisfies Rule23(b)(3).
Rule 23 requires only that common issues predominate, not that they be
dispositive of the entire litigation . See, e.g., Brown v. Pro Football, Inc., 146 F.R.D. 1, 4
(D.D.C. 1992) ("common issues need not be exclusive, but must only predominate over
individual concerns ). The Supreme Court has recognized that predominance is a test readily met
in cases alleging consumer fraud. See Amchem, 521 U. S. at 625. "The predominance
requirement is satisfied unless it is clear that individual issues will overwhelm the common
questions and render the class action valueless . NASDAQ, 169 F .R.D. at 517 (citations omitted).
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Here, the central issue is whether PFA and other parties took money by constructing a scheme to
defraud investors - an issue that can be proved with class-wide evidence. This central issue
dwarfs any individual issues . Thus, the questions of law or fact common to the members of the
Class predominate over questions affecting only individual Class Members. In addition, the facts
and terms of the Settlement also provide predominating common issues.
A class action is also a superior device for adjudicating the effects of the De La
Riva Parties' actions on the Class. Neither the parties nor the judicial system would benefit from
duplicative litigation in this matter. Class treatment of the Settlement of these claims is plainly
superior to a multiplicity of suits. Finally, class treatment of this Settlement presents no
manageability problems. Because the Settlement will provide the Settlement Class with
substantial monetary benefits without the risk, costs , and delay of litigation, class certification is
superior to the other available methods of resolving the Settlement Class' claims against the De
La Riva Parties.
This Settlement satisfies all the requirements of Rule 23. Numerosity,
commonality, typicality, and adequacy are all present in this case, with common questions
predominating, and class treatment is the superior way to handle this matter. The Court should,
therefore, certify the proposed Settlement Class.
B. Receivership
The Amended Receivership Order at Paragraph 6 empowers the Receiver to settle
actions where the Receiver is a party with the approval of this Court. The proposed Stipulation
will result in significant benefits to the Receivership Estate by avoiding the continued risk,
expense and delay inherent in all litigation, and payment of a significant settlement amount
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 19 of
followed by significant distributions to Receivership Creditors. Securities and Exchange
Commission v. Credit Bancorp, Ltd., 2002 WL 1792053 (S.D. N.Y. 2002); In re Justice Oaks, II,
Ltd., 898 F.2d 1544, 1549 (11th Cir. 1990); In re Arrow Air, Inc., 85 B.R. 886 (Bkrtcy. S.D. Fla.
1988) (approving a proposed settlement of litigation for these exact reasons).5 The approval of
the Settlement is a matter of discretion and will not be disturbed or modified on appeal unless
approval or disapproval is an abuse of discretion. Id. at 891. To aid the court in making its
determination, the court must be given all the relevant facts and must evaluate whether the
compromise falls below the "lowest point in the range of reasonableness. Id. (citing In re
Teltronics Services, Inc., 762 F. 2d 185, 189 (2d Cir. 1985); In re Jackson Brewing Co., 624 F.2d
599, 602-03 (5th Cir. 1980).
When deciding whether to approve or disapprove a settlement, the Eleventh
Circuit, echoing the Arrow Air court, has considered the following factors : (a) The probability of
success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection;
(c) the complexity of the litigation involved; (d) the paramount interest of the creditors and a
proper deference to their reasonable views in the premises . See In re Justice Oaks II, Ltd., 898
F.2d at 1549 (citing Martin v. Kane (In re A&C Properties), 784 F.2d 1377, 1381 (9th Cir. 1986)
(quoting In re Flight Transp. Corp. Sec. Litig., 730 F.2d 1128, 1135 (8th Cir. 1984), cert. denied,
469 U.S. 1207 (1985), cert. denied, 479 U.S. 854 (1986)).
In Arrow Air, Inc., a Chapter 11 corporate debtor and committee of unsecured
creditors sought approval of the settlement of class litigation brought by the class against the
5 Although Justice Oaks and Arrow Air dealt with settlements in a bankruptcycontext , courts have noted the similarity in purpose and duty of a bankruptcy trustee and an
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 20 of
debtor and others . Arrow Air, Inc., 85 B .R. at 887 . The court approved the settlement reasoning
that the settlement would eliminate claims against the estate and provide for payment to the
estate of $300,000. Id. at 892. Furthermore, the court noted that by settling, the continued
expense, risks, and delay of litigation would be avoided. Id. Thus, because the settlement was
"clearly in the best interest of all creditors of the estate, the court granted the motion. Id.
The settlement set forth in the Stipulation (Exhibit "1 ) will result in recovery by
the investors of a significant amount of their losses . This distribution will include the Net Class
Settlement Fund of $112,500, less expenses and fees , as well as $112 ,500 as the proceeds of the
Receiver's Turnover Motion. This result is accomplished without the expense, delay and risk of
continued litigation with the De La Riva Parties. In short, the Agreement, like the settlement that
was ultimately approved in Arrow Air, is in the best interest of the Receivership Estate and
should be approved.
CONCLUSION
The Settlement Stipulation provides a fair resolution to the claims of the class and
the Receiver against the De La Riva Parties for their role in PFA's fraudulent scheme. Settling at
this stage provides numerous benefits to the Class and other Receivership Creditors including
avoiding the expense and delay of further litigation, and providing funds for the Class to pursue
other claims against parties involved in the PFA fraud. Lead Plaintiffs and the Receiver request
that the Court preliminarily approve the Settlement and enter the Proposed Preliminary Order
attached hereto as Exhibit "2.
equity receiver. Scholes v. Lehmann, 56 F.3d 750, 753 (7' Cir. 1995).
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007
Dated : May , 2007
Thomas G. Schultz , not individually,but solely in his capacity as Receiverfor Pension Fund of America, L.C.PFA Assurance Group, Ltd.PFA International, Ltd.Claren TPA, LLCShadow Creek Investments, LLCAtlantic Realty Ventures LLCc/o Tew Cardenas, LLP1441 Brickell Avenue , 15th FloorMiami, Florida 33131305-536-1112305-536-1116 (fax)[email protected]
Harley S. Tropin, Esq.Kozyak Tropin & Throckmorton,P.A.2525 Ponce de Leon, 9th FloorCoral Gables , Florida 33134Telephone : 305.372.1800Facsimile : [email protected]
Page 21 of 22r]
Tew Cardenas LLPCounsel for ReceiverFour Seasons Tower, 15th Floor1441 Brickell AvenueMiami, Florida 33131Telephone: (305) 536-1112Facsimile: (305) 536-1116dml(ctewlaw.com
By:David M. Levine, EsquireFlorida Bar No. 0328731
Victor M. Diaz, Esq.Podhurst, Orseck, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130Telephone : 305.358.2800Facsimile: [email protected] class representatives
By:Victor M. Diaz, Esq.Florida Bar No.
Case 1:05-cv-21169-KMM Document 323-1 Entered on FLSD Docket 05/29/2007 Page 22 of
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing wasfurnished via Electronic Mail (unless otherwise noted) to all parties on the attached service listthis day of May, 2007, and will be posted in English, Spanish and Portugese on theReceiver's website.
22
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 1 of
IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
SECURITIES AND EXCHANGECOMMISSION
Plaintiff, Case No. 05-20863-CIV-MOOREIGARBER
vs.
PENSION FUND OF AMERICA, L.C.,PFA ASSURANCE GROUP, LTD.,PFA INTERNATIONAL, LTD.CLAREN TPA, LLC,LUIS M. CORNIDE andROBERT DE LA RIVA,
Defendant.
MARCELLA CORDOVA, JORGE FLORES,HENRY IURMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,
Plaintiffs, No. 05-211 d9--CIV-MOORE-GARBER
vs.
LEHMAN BROTHERS, INC., a New YorkCorporation ; MERRILL LYNCH & CO., INC.,a Delaware Corporation ; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation ; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andHSBC BANK, U.S.A., LUIS CORNIDE andROBERT A. DE LA RIVA,
Defendants.
-1-EXHIBIT`
---L--
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 2 of
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement, dated as of May 25, 2007 (the
"Stipulation"), is made and entered into by and among the following Settling Parties (capitalized
terms used herein are defined in §IV hereof) to the above-entitled Class Action Litigation and
Receivership Case: (i) Plaintiffs (as defined in 111.13 herein), on behalf of themselves and each
of the Settlement Class Members, by and through their counsel of record in the Class Action
Litigation; (ii) Thomas G. Schultz, the Court-appointed receiver (the "Receiver") in the above-
captioned action commenced by the Securities and Exchange Commission ("SEC"), by and
through his counsel of record in such action (the "Receivership Case"); (iii) Tistituto de
Prevision Militar ("IPM"); and (iv) Juan De la Riva, Amanda De la Riva, and Robert De la Riva
(collectively, the "De la Riva Parties"). This Stipulation is intended by the Settling Parties,
subject to the approval of the Court and the satisfaction of the conditions of settlement as set
forth herein, to fully, finally and forever resolve, discharge and settle and dismiss with prejudice
the Released Claims, upon and subject to the terms hereof
1. THE LITIGATION
On March 28, 2005, the SEC filed the above-captioned civil action against Pension Fund
of America, L.C. and its related entities (hereinafter "PFA") and principals, alleging PFA
engaged in an offering fraud, On that same day, the District Court for the Southern District of
Florida entered a TRO and appointed the Receiver.
a. The Receiver's Turnover Motion .
There is pending litigation between the Receiver and the De la Riva Parties over the
$450,000 plus accruing interest held in the trust account of counsel for the De la Riva Parties.
On April 17, 2006, the Receiver filed with the Court an Amended Motion for a determination
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 3 of
that the funds in the foregoing account are property of the Receivership and should be transferred
to the Receiver for distribution to all investors (the "Receiver's Turnover Motion"). IPM is a
party to the Turnover Motion. The De la Riva Parties opposed the Motion. The matter remains
pending.
b. The Class Action Litigation
On April 21, 2005, a complaint was filed in the United States District Court for the
Souther District of Florida on behalf of a putative class of PFA investors who had purchased
trust plans from PFA from 1999 through March 30, 2005. Hem)' lurnnan v. Pension Fund of
America L.C. et al. Case No. 05-21101. On April 28, 2005, a second related complaint was filed
on behalf of the same putative class of PFA investors. Samuel Puterman v. Lehmann Brothers,
Inc. et al., Case No. 05-21169.
On June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended Class
Action Complaint, styled Cordova, et. al. v. Lehman Brothers, Inc., et, al., Case No. 05-21169
alleging common law claims for (1) breach of fiduciary duty, (2) aiding and abetting PFA's
common law fraud and (3) aiding and abetting PFA's breaches of its fiduciary duties. The
Complaint named Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond James Financial
Services, Inc., Oliva I Zvestment Group, Inc. and HSBC as defendants (hereinafter, the "Financial
Institution Defendants"). The Complaint raised these claims on behalf of a putative class of
investors consisting of:
All persons who held and/or retained investments in retirement trust plans offered
by PFA, or its affiliated companies, during the period commencing January 1999
through the present ("Class Period"). Excluded from the Class are Defendants,
PFA, PFA Assurance, PFA International, Claren TPA, Luis Cornide, Robert de la
Riva and all of the Defendants' alter-ego entities, all employees or agents of
Defendants and agents of the Defendants' alter ego entities, all subsidiaries and
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Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 4 of
affiliates of the Defendants, the Defendants' officers, agents, and employees, any
agents or brokers (and their immediate family members) who sold or solicited the
sale of investments in PFA or PFA Assurance.
The consolidated actions are referred to herein collectively as the "Class Action
Litigation." On January 17, 2006, the Court granted Defendants' motions to dismiss, ruling
the common law claims asserted in the Complaint were preempted by the Securities Litigation
Uniform Standards Act ("SLUSA"). On February 13, 2006, Plaintiffs filed their Second
Amended Class Action Complaint, alleging violations by the Financial Institution Defendants,
including HSBC, of Sections 12 and 15 of the Securities Act of 1933 ("Securities Act") and
Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"). Motions to dismiss the
Second Amended Class Action Complaint are currently pending.
II. DE LA RIVA PARTIES' DENIAL OF WRONGDOING AND LIABILITY
The De la Riva Parties have expressly denied and continue to deny, and this Stipulation
may not be deemed and is not an admission of, any and all charges of fault, wrongdoing or
liability against it arising out of any of the conduct, statements, acts or omissions alleged, or that
could have been alleged, in the Receiver's Turnover Motion and the Class Action Litigation, or
of any infirmity in the defenses that the De la Riva Parties asserted or could have asserted in the
Receiver's Turnover Motion and the Class Action Litigation.
Nonetheless, the De La Riva Parties have taken into account the uncertainty and risks
inherent in any litigation, especially in complex cases like the Receiver's Turnover Motion and
the Class Action Litigation, and the sharply contested legal and factual issues, and have
concluded that further conduct of the Receiver's Turnover Motion and the Class Action
Litigation would be protracted, expensive, and disruptive to the De la Riva Parties. The De la
Riva Parties have, therefore, determined that it is desirable and beneficial that the Receiver's
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Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 5 of
Turnover Motion and the Class Action Litigation be fully and finally settled in the manner and
upon the terns and conditions set forth in this Stipulation.
Ill. CLAIMS OF THE PLAINTIFFS AND THE RECEIVER AND BENEFITS OF
SETTLEMENT.
Based on the investigation of their counsel, the Plaintiffs believe that the as yet
unasserted claims against the De la Riva Parties in the Class Action Litigation have merit and
that the evidence developed to date supports the claims. However, counsel for the Plaintiffs
recognize and acknowledge the expense and length of continued proceedings necessary to
prosecute the Class Action Litigation against the De la Riva Parties through trial and through
appeals. Counsel for the Plaintiffs also have taken into account the uncertain outcome and the
risk of any litigation, especially in complex actions such as the Class Action Litigation, as well
as the difficulties and delays inherent in such litigation. Counsel for the Plaintiffs are mindful of
the inherent problems of proof under and possible defenses to the unasserted claims in the Class
Action Litigation. Counsel for the Plaintiffs believe that the settlement set forth in this
Stipulation confers substantial benefits upon the Settlement Class. The settlement requires the
De la Riva Parties to pay $112,500 to the Class. The settlement also calls for the resolution of
the Receiver's Turnover Motion through payment by the De la Riva Parties of $62,500 to the
Receiver in addition to the release of $50,000 already held in a Trust under the name of Juan De
la Riva's grandson, for a total settlement with the Receiver of $112,500. These funds have
already been taken into account in the Plan of Allocation set forth in the Stipulation of
Settlement with HSBC that the Court has already preliminarily approved. By achieving a class
settlement against the De la Riva Parties at this early stage in the class action litigation, the
alleged Plaintiff class will receive a considerable distribution of money without the uncertainty,
-5-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 6 of
delay and expense of protracted litigation. Based on their evaluation, counsel for the Plaintiffs
have determined that the settlement set forth in this Stipulation is fair, reasonable and adequate
and in the best interests of the Settlement Class. Likewise, the Receiver and the De la Riva
Parties recognize the benefits of settlement of both the Receiver's Turnover Motion and the
Class Action Litigation, so that the proceeds of the Receiver's Settlement and the net proceeds of
the Class Action Litigation (after allowance of professional fees and deduction of certain other
costs) may be distributed by the Receiver to creditors of the Receivership Case, including the
Settlement Class, pursuant to the Plan of Allocation described in the HSBC Stipulation at
Section 1.16 and Exhibit A-1.
IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the
Plaintiffs (for themselves and the Settlement Class Members), the Receiver and the De la Riva
Parties, by and through their respective attorneys of record, that, subject to the approval of the
Court, the Released Claims and the Receiver's Turnover Motion shall be finally and filly
compromised, settled, released and dismissed with prejudice as to the De la Riva Parties.
1. Definitions
As used in this Stipulation and the related exhibits attached hereto, the following terms
have the meanings specified below:
1.1 "Authorized Claimant" means any Settlement Class Member and other creditors
of the Receivership Case who submit a valid Proof of Claim, and sufficient supporting
documentation in such form and manner, and within such time, as the Court shall prescribe and
whose claim for recovery thereafter is allowed pursuant to the terms of Paragraph 5.3 this
Stipulation.
-6-
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1.2 "Claimant" means any Settlement Class Member and other creditor of the
Receivership Case who file a Proof of Claim in such form and manner , and within such time, as
the Court shall prescribe, as set forth in ¶ 5.3 herein.
1.3 "Claims Administrator" means Garden City Group.
1.4 "Class Action Litigation" shall mean the above-captioned litigation styled
Cordova, et al. v. Lehman Brothers , et al., Case No. 05-21169-CfV-MOORE-GARBER.
1.5 "Class Settlement Fund" means One Hundred Twelve Thousand Five Hundred
Dollars ($112,500) in cash to be paid to the Escrow Agent and to be held in Escrow pursuant to
¶2.1 of this Stipulation, plus all interest earned thereon.
1.6 "Effective Date" means, with respect to the Receiver's Turnover Motion and the
Released Claims, the date of completion of the following: (z) entry of an Order and Final
Judgment, which approves in all material respects (A) the dismissal of the claims that have been
or could be asserted against Juan De la Riva and Amanda De la Riva in the Class Action
Litigation; (B) the releases and bar orders provided for in this Stipulation with respect to the
Released Claims; and (C) the Plan of Allocation set forth in Exhibit A-1 to the HSBC
Stipulation; and (ii) either (A) expiration of the time to appeal or otherwise seek review of the
Order and Final Judgment which approves, in all material respects, the settlement of the
Released Claims and the Receiver's Turnover Motion as provided in this Stipulation, without
any appeal having been taken or review sought, or (B) if an appeal is taken or review sought, the
expiration of five (5) days after an appeal or review shall have been dismissed or finally
determined by the highest court before which appeal or review is sought and which affirms the
material terms of such appealed settlement and/or Order and Final Judgment and is not subject to
-7-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 8 of
further judicial review; provided, however, that any award of attorneys' fees or costs shall not be
considered a material provision of the Order and Final Judgment and any appeal of any such
award shall not delay the Effective Date and any modification as a result of such appeal shall not
be considered a modification of a material term.
1.7 "Escrow Agent" means Podhurst Orseck P.A.
1.8 "Final" means no longer subject to further appeal or review, whether by
exhaustion of any possible appeal, lapse of time or otherwise.
1.9 "De la Riva Parties" means Juan De la Riva, Amanda De la Riva, and Robert De
la Riva.
1.10 "Judgment" means the judgment to be rendered by the Court, substantially in the
form attached hereto as Exhibit B.
1.11 "Net Class Settlement Fund" means the amount of the Class Settlement Fund to
be distributed by the Receiver pursuant to the Plan of Allocation, after the deductions described
in Paragraph 5.2.
1.12 "Person" means an individual, corporation, partnership, limited partnership,
association, joint stock company, estate, legal representative, trust, retirement plan,
unincorporated association, government or any political subdivision or agency thereof, and any
business or legal entity, and any spouse, heir, legatee, executor, administrator, predecessor,
successor , representative or assign of any of the foregoing.
1.13 "Plaintiffs" means and includes Marcella Cordova, Jorge Flores, Henry Turman,
Marcos Mustieles, Katia Ocarripo, Cesar Aguirre Urbaneja, Malliya Salazar Lara, Fernando M.
-8-
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 9 of
Quevedo Araoz, Martha Landivar Gantier, Fabio Moreno Charme, Enrique Loeser Bravo, Jose
Luis Zambrano Hidalgo, and Julio Ledesma.
1.14 "Plaintiffs' Counsel" means any counsel who have appeared on behalf of
Plaintiffs and/or any Settlement Class Member in the Litigation.
1.15 "Plaintiffs' Settlement Counsel" means: Podhurst Orseck P.A., 25 West Flagler
Street, Suite 800, Miami, FL 33130 and Kozyak Tropin & Tbrockmorton, PA, 2525 Ponce de
Leon, 9th Floor, Miami, FL 33134.
1.16 "Plan of Allocation" means a plan or fora ula of allocation of the Proceeds of the
Receiver's Settlement and the Net Class Settlement Fund, as described in Section VIII of the
Notice of Pendency and Proposed Settlement of Class Action and Receiver's Turnover Action
attached to the HSBC Stipulation as Exhibit A-1, whereby the Net Settlement Fund, the Proceeds
of the Receiver's Settlement and, upon liquidation, of certain other receivership assets shall be
distributed to Authorized Claimants.
1.17 "Proceeds of the Receiver's Settlement" shall mean the sum of 5112,500,
consisting of $50,000 currently held in trust under the name of Juan De la Riva's grandson and
the additional $62,500 to be paid by the De la Riva Parties.
1.18 Receivership Case" shall mean the above-captioned Case No. 05-20863-CIV-
MOORE commenced by the SEC against PFA and its principals.
1.19 "Receivership Claims Procedure" means the procedure set forth in Paragraph 5.3
for the filing of claims in the Receivership Case by Receivership Creditors.
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Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 10 of
1.20 "Receivership Creditors" shall mean all Persons, including Settlement Class
Claimants, who have claims against the Receivership Entities and who file claims in the
Receivership Case pursuant to Section 5.3 by the Claims Filing Deadline.
1.21 "Released Claims:" (i)With respect to Juan and Amanda De la Riva, "Released
Claims" means all claims (including "Unknown Claims" as defined herein), demands, rights,
liabilities and causes of action of every nature and description whatsoever, known or unk n.own,
suspected or unsuspected, whether or not concealed or hidden, fixed or contingent, arising out of,
based upon or related to the purchase, acquisition, maintenance or sale of any trust or other plan
or security issued or sold by or on behalf of PFA to the Plaintiffs or any settlement class member
during the settlement class period, and all claims, counter-claims, set-offs or defenses which
were asserted, might have been asserted, or in the future could be asserted, in the Class Action
Litigation and the Receiver's Turnover Motion including, without limitation, claims for
negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, fraud,
breach of fiduciary duty, or disgorgement of any gains, profits or unjust enrichment, or claims
arising under or for violations of any state or federal statutes, rules, regulations or common law.
(ii) With respect to Robert De la Riva, "Released Claims" means any and all claims, counter-
claims, set-offs or defenses which were asserted, might have been asserted, or in the future could
be asserted, in the Receiver's Turnover Motion including, without limitation, claims for
negligence, gross negligence, breach of duty of care and/or breach of duty of loyalty, fraud,
breach of fiduciary duty, or disgorgement of any gains, profits or unjust enrichment, or claims
arising under or for violations of any state or federal statutes, rules, regulations or common law.
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1.22 "Settlement Class" means all Persons (other than those Persons who timely and
validly request exclusion from the Settlement Class) who purchased or otherwise acquired trust
plans and/or other securities from PFA during the period between January 1, 1999 and March 31,
2005, inclusive. Excluded from the Settlement Class are (a) any Defendant named in the
Complaint (or any previous complaints), including any and all subsidiaries, affiliates, alter-ego
entities, and/or immediate family members thereof; (b) PFA, PFA Assurance, PFA International,
Claren TPA, including any and all subsidiaries , affiliates and/or alter-ego entities thereof; (c) all
officers, directors, employees or agents (and their immediate family members) of the entities and
individuals described in subsections (a) and (b); (d) all employees, agents and/or brokers (and
their immediate family members ) who sold or solicited the sale of investments in PFA or PFA
Assurance; (e) any person, firm, trust, officer, director or any individual or entity in which any of
the individuals or entities described in subsections (a) through (d) above has a controlling interest
or which is affiliated with any such individuals or entities; (f) the legal representatives, agents,
affiliates , heirs, successors -in-interest or assigns of any such excluded party.
1.23 "Settlement Class Member" or "Member of the Settlement Class" mean a Person
who falls within the definition of the Settlement Class as set forth in $1.4 of this Stipulation.
1.24 "Settlement Class Period" means the period commencing on January 1, 1999
through March 31, 2005, inclusive.
1.25 "Settling Parties" means, collectively, the De la Riva Parties, the Plaintiffs on
behalf of themselves and the Members of the Settlement Class, the Receiver, and IPM.
1.26 "Unknown Claims" means any Released Claims any of the Settling Parties does
not know or suspect to exist in his, her, its or their favor at the time of the release of the Released
-11-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 12 of
Persons which, if known by him, her, it or them, might have affected his, her, its or their
settlement with and release of the Released Persons, or might have affected his, her, its or their
decision not to object to this settlement . With respect to any and all Released Claims, the
Settling Parties stipulate and agree that, upon the Effective Date, they shall be deemed to have,
and by operation of the Judgment shall have, expressly waived the provisions, rights and benefits
of any statute, rule or provision which prohibits the release of Unknown Claims.
2. The Settlement
a. The Class Settlement Fund
2.1 The $112,500 Class Settleme nt Fund shall be transferred by or on behalf of the
De la Riva Parties to the Escrow Agent on or before five (5) business days after preliminary
approval of the settlement by the Court (the "Transfer Date"). If the $112,500 is not timely
deposited with the Escrow Agent, the unpaid amount shall bear interest at the rate of eight
percent (8%) per annum from the Transfer Date until paid. On the Effective Date, the Class
Settlement Fund, after deduction of fees allowed to counsel for the Settlement class, and the fees
and costs of the Notice and Administration Fund and the Escrow Agent and other items as set
forth in Paragraph 5.2, will be transferred to the Receiver for distribution to Authorized
Claimants in accordance with the Plan of Allocation as approved by the Court.
b. The Proceeds of the Receiver's Turnover Motion
2.2 The $62,500 to be paid by the De la Riva Parties shall be transferred by or on
behalf of the De la Riva Parties to the Receiver on the Transfer Date, and the $50,000 currently
held in trust shall be released to the Receiver. Together, these funds make up the Proceeds of the
Receiver's Turnover Motion, which will be distributed by the Receiver after the Effective Date
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to Authorized Claimants pursuant to the Plan of Allocation in its current form or as may be
approved by the Court. Prior to the Transfer Date, the De la Riva Parties shall continue to hold
the funds in their attorneys' trust account until their turnover to the Receiver on the Transfer
Date. The De la Riva Parties shall continue to hold the $450,000 that is the subject of the
Receiver's Turnover Motion, less payments made as described in 11 2.1 and 2 .2, in their
attorneys' trust account until the Effective Date.
2.3 The payments set forth in Sections 2.1 and 2.2 shall be the only payments that the
De la Riva Parties shall be required to make or cause to be made in connection with the
Settlement Agreement. The De la Riva Parties shall have no responsibility for, interest in or
liability with respect to the investment of the Class Settlement Fund, the determination or
calculation of any claim or payment from, or distribution of such Fund, the administration of
such Fund, or any losses incurred in connection with such matters.
c. The Escrow Agent
2.4 Pursuant to the terms hereof, Podhurst Orseck P.A. is hereby appointed the
Escrow Agent and accepts the duties and obligations of the Escrow Agent set forth herein. The
Escrow Agent shall invest the Class Settlement Fund deposited pursuant to ¶2.1 hereof in
instruments backed by the full faith and credit of the United States Government or fully insured
by the United States Government or an agency thereof, and shall reinvest the proceeds of these
instruments as they mature in similar instruments at their then-current market rates. The Escrow
Agent shall bear all risks related to investment of the Class Settlement Fund.
2.5 The Escrow Agent shall not disburse the Class Settlement Fund except as
provided in this Stipulation, by an order of the Court, and with the written agreement of counsel
for the De la Riva Parties; provided, however, that the Escrow Agent shall transfer to the Net
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Class Settlement Fund to the Receiver on the Effective Date for distribution to Authorized
Claimants in accordance with the Plan of Allocation as approved by the Court.
2.6 Subject to further order( s) and/or directions as may be made by the Court, the
Escrow Agent is authorized to execute such transactions on behalf of the Settlement Class
Members as are consistent with the terms of this Stipulation.
2.7 All funds held by the Escrow Agent shall be deemed and considered to be in
custodies legis of the Court, and shall remain subject to the jurisdiction of the Court, until such
time as such funds shall be distributed pursuant to this Stipulation and/or further order ( s) of the
Court.
d. Taxes
2.8 (a) The Settling Parties and the Escrow Agent agree that the Class Settlement
Fund shall be a "qualified settlement fund" within the meaning of Treas. Reg. §1.468B-1 at all
times after preliminary approval of this Stipulation by the Court. In addition, the Escrow Agent
shall timely make such elections as necessary or advisable to carry out the provisions of this
¶2.8, including the "relation-back election" (as defined in Treas. Reg. §1.468B-1(j)) to enable
the Settlement Fund to be treated as a qualified settlement fund from the earliest permissible
date. Such elections shall be made in compliance with the procedures and requirements
contained in such regulations. It shall be the responsibility of the Escrow Agent to timely and
properly prepare and deliver the necessary documentation for signature by all necessary parties,
and thereafter to cause the appropriate filing to occur. All Settling Parties hereto agree to
cooperate with each other to assist the Escrow Agent in these efforts and effectuate the purpose
of this paragraph, and shall not take a position in any filing or before any tax authority that is
inconsistent with this paragraph or its purpose.
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(b) For the purpose of §468B of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, the "administrator" shall be the Escrow
Agent. The Escrow Agent shall timely and properly file all informational and other tax returns
necessary or advisable with respect to the Class Settlement Fund (including without limitation
the returns described in Treas. Reg. §1.468B-2(k)). Such returns shall be consistent with this
¶2.8 and in all events shall reflect that all taxes (including any estimated taxes, interest or
penalties) due with respect to the Class Settlement Fund, to the extent required under federal or
state law, shall be paid out of the Class Settlement Fund as provided in ¶2.8(c) hereof
(c) All (a) taxes (including any estimated taxes, interest or penalties ) arising
under federal or state law with respect to the income earned by the Class Settlement Fund,
including any taxes that may be imposed upon the Class Settlement Fund, the De la Riva Parties,
or their counsel with respect to any income earned by the Class Settlement Fund for any period
during which the Class Settlement Fund does not qualify as a "qualified settlement fund" for
federal or state income tax purposes ("Taxes"), and (b) expenses and costs incurred in
connection with the operation and implementation of this ¶2.8 (including, without limitation,
expenses of tax attorneys and/or accountants and mailing and distribution costs and expenses
relating to filing (or failing to file) the returns described in this $2.8) ("Tax Expenses"), shall be
paid out of the Class Settlement Fund. In all events, the De la Riva Parties and their counsel
shall have no liability or responsibility for the Taxes or the Tax Expenses or any other tax-related
liability with respect to the Class Settlement Fund. The Escrow Agent shall indemnify and hold
the De la Riva Parties and their counsel harmless for Taxes, Tax Expenses and any other tax-
related liability arising out of the Class Settlement Fund (including, without limitation, Taxes
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payable by reason of any such indemnification). Further, Taxes and Tax Expenses shall be
treated as, and considered to be, a cost of administration of the Class Settlement Fund and shall
be timely paid by the Escrow Agent out of the Class Settlement Fund without prior order from
the Court and the Escrow Agent shall be obligated (notwithstanding anything herein to the
contrary) to withhold from distribution to Authorized Claimants any finds necessary to pay such
amounts including the establishment of adequate reserves for any Taxes and Tax Expenses (as
well as any amounts that may be required to be withheld under Treas. Reg. § 1.468B-2(l)(2)); the
De la Riva Parties and their counsel shall not be responsible or have any liability therefore. The
Settling Parties hereto agree to cooperate with the Escrow Agent, each other, and their tax
attorneys and accountants to the extent reasonably necessary to carry out the provisions of this
$18.
(d) For the purpose of this ¶2.8, references to the Class Settlement Fund shall
include both the Class Settlement Fund and any earnings thereon.
e. Termination of Settlement
2.9 In the event that the material terms of this Stipulation are not finally approved by
the Court or this Stipulation is terminated, canceled , or fails to become effective for any reason:
(i) the Class Settlement Fund (including accrued interest) less expenses actually incurred or due
and owing in connection with the settlement provided for herein, shall be refunded by the
Escrow Agent to the De la Riva Parties within five (5 ) business days. In such event, the Escrow
Agent or its designee shall apply for any Tax refund owed to the Class Settlement Fund as set
forth in ¶2.8 hereof, and pay the proceeds, after deduction of any fees or expenses incurred in
connection with such application(s), to the De la Riva Parties, and (ii) the $62,500 paid by the De
la Riva Parties shall be refunded by the Receiver within five (5) business days, and the De la
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Riva Parties shall continue to hold the proceeds of the Receiver's Turnover Motion in their
attorneys' trust account as set forth in ¶2.2 pending further order of the Court. Also, in the event
of termination or if the Stipulation is not finally approved, the De la Riva Parties shall continue
to hold the $450,000 that is the subject of the Receiver's Turnover Motion in their attorneys'
trust pending further order of the Court.
3. Notice Order, Settlement Hearings and Judgment
3.1 For purposes of this Stipulation and Settlement only, the Settling Parties agree
that the claims asserted in the Class Action Litigation on behalf of the putative class be certified
as a class action pursuant to the requirements of Rule 23 of the Federal Rules of Civil Procedure.
3.2 Within ten (10) business days after execution of this Stipulation, Plaintiffs and the
Receiver shall submit to the United States District Court for the Southern District of Florida,
Miami Division, a joint motion, to be stipulated to by the De la Riva Parties, attaching this
Stipulation and requesting the Court enter a Preliminary Approval Order, substantially in the
form of Exhibit A attached hereto, (a) preliminarily certifying the Settlement Class and relevant
claims pursuant to Rule 23 of the Federal Rules of Civil Procedure, solely for the purpose of this
settlement, (b) authorizing the mailing of a settlement notice of the Class Action Litigation and
the Receiver's Turnover Motion (the "Notice"), substantially in the form of Exhibit C attached
hereto, and (c) scheduling a hearing to consider the final approval of this Stipulation of
settlement. The Notice shall include the general terms of the settlement set forth in this
Stipulation, the proposed Plan of Allocation, the general terms of the Fee and Expense
Application as defined in $6.1 hereof, and the date of the Settlement Hearin-, as defined below.
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3.3 Plaintiffs' Settlement Counsel and the Receiver shall request that after notice is
given, the Court hold a hearing (the "Settlement Hearing") and approve the settlement of the
Class Action Litigation, the Receiver's Turnover Motion and Released Claims against the De la
Riva Parties, only, as fair, reasonable and adequate and in the best interests of the Settlement
Class and the Receivership Case. At the same Settlement Hearing, Plaintiffs' Settlement
Counsel and the Receiver also will request that the Court approve the proposed Plan of
Allocation. Plaintiff's Settlement Counsel will also request that the Court approve the Fee and
Expense Application, and approve and enter a Judgment substantially in the form of Exhibit B
hereto.
4. Releases
4.1 Upon the Effective Date, as defined in ¶ 1.6 hereof, the Plaintiffs and each of the
Settlement Class Members, including IPM, including but not limited to each of their respective
successors, predecessors, assigns, attorneys (including Settlement Class Counsel), heirs,
representatives, administrators, executors, legatees, and estates, and the Receiver, his agents,
employees, retained professionals and successors and assigns shall be deemed to have, and by
operation of the order approving this Stipulation and the Judgment shall have, fully, finally, and
forever released, relinquished, discharged and dismissed with prejudice all Released Claims
against the De la Riva Parties (including Unknown Claims).
4.2 The filing of a Proof of Claim by Settlement Class Members shall constitute
further evidence of the release of all Released Claims against the Released Persons. The Proof
of Claim shall be substantially in the form contained in Exhibit A-2 to the HSBC Stipulation.
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4.3 Upon the Effective Date, as defined in 1i 1.6 hereof, each of the De la Riva
Released Persons, including but not limited to each of their respective successors, predecessors,
assigns, attorneys, (including the De la Riva Parties' counsel), heirs, representatives,
administrators, executors, legatees, and estates, shall be deemed to have, and by operation of the
order approving this Stipulation and the Judgment shall have, fully, finally, and forever released,
relinquished, discharged and dismissed with prejudice each and all of the Settlement Class
Members, counsel to the Plaintiffs and the Receiver and his agents, employees and retained
professionals , and successors and assigns, from all claims (including Unknown Claims), arising
out of, relating to, or in connection with the institution, prosecution, assertion , settlement or
resolution of the Class Action Litigation, the Receiver's Turnover Motion, the Receivership Case
or the Released Claims.
5. Administration and Calculation of Claims, Final FeeAwards and Supervision and Distribution of the ClassSettlement Fund and the Proceeds of the Receiver'sTurnover Action
5.1 The Claims Administrator shall supervise and administer the notice process as
well as process claims as more fully set forth below and elsewhere in this Stipulation.
5.2 The Class Settlement Fund shall be applied as follows:
(a) to pay Settlement Class Counsel's fees and expenses with interest thereon
(the "Fee and Expense Award"), if and to the extent allowed by the Court;
(b) to pay all the costs and expenses reasonably and actually incurred in
connection with providing notice, locating Settlement Class Members, soliciting Settlement
Class and Receivership claims, assisting with the filing of claims, processing Proof of Claim and
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Release forms, paying, escrow fees and costs, if any, and administering and distributing the Class
Settlement Fund and Proceeds of the Receiver's Turnover Motion to Authorized Claimant;
(c) to pay the Taxes and Tax Expenses described in ' 192.8 and 2.9 hereof;
and to distribute the balance of the Class Settlement Fund (the "Net Class Settlement Fund") to
the Receiver for distribution to Authorized Claimants and Receivership Creditors as allowed by
this Stipulation, the Plan of Allocation, and/or the Court.
5.3 Upon the Effective Date and thereafter, and in accordance with the terms of this
Stipulation, the Plan of Allocation, or such further approval and further order(s) of the Court as
may be necessary or as circumstances may require, the Net Class Settlement Fund and the
Proceeds of the Receiver's Turnover Motion shall be distributed to Authorized Claimants,
subject to and in accordance with the following.
(a) Within thirty (30) days after the Effective Date, the Proof of Claim form
shall be mailed to all Settlement Class Members and Receivership Creditors. Within sixty (60)
days after the mailing of the Proof of Claim or such other time as may be set by the Court, (the
"Claims Filing Deadline"), each Claimant and all other known creditors of the Receivership Case
shall be required to submit to the Claims Administrator a completed Proof of Claim,
substantially in the form of Exhibit A-2 attached to the HSBC Stipulation, signed under penalty
of perjury and supported by such documents as are specified in the Proof of Claim and as are
reasonably available to the Claimant. The duties of the Claims Administrator shall be to transmit
the Proof of Claim forms to all known claimants and creditors of the Receivership Case, and to
report to the Receiver and to Plaintiffs' Settlement Counsel regarding an analysis and tabulation
of claims filed by the Claims Filing Deadline.
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(b) The Receiver and his professionals will be responsible for reviewing, and,
if appropriate, filing objections to the validity and amount of filed claims. These objections will
be determined by the Court under procedures to be recommended by the Receiver and approved
by the Court.
(c) The allowed amount of the claim of an Authorized Claimant for purposes
of all distributions to be made by the Receiver pursuant to this Stipulation and all other
distributions in the Receivership Case shall be the amount allowed by the Court, after objection
by the Receiver, or the amount set forth in the claimant's Proof of Claim timely filed by the
Claims Filing Deadline, assuming no objection by the Receiver.
(d) Except as otherwise ordered by the Court, all Settlement Class Members
and Receivership Creditors: (i) who fail to timely submit a Proof of Claim by the Claims Filing
Deadline and who do not timely and validly request exclusion from the Settlement Class, or (ii)
whose claim is disallowed after objection by the Receiver, shall be forever barred from receiving,
any payments from the De la Riva Parties pursuant to this Stipulation and the settlement set forth
herein and from the Receivership Estate, but will in all other respects be subject to and bound by
the provisions of this Stipulation, including the releases contained herein, and the Judgment.
(e) The Net Class Settlement Fund and the proceeds of the Receiver's
Turnover Motion shall be distributed by the Receiver to the Authorized Claimants, substantially
in accordance with a Plan of Allocation to be described in the Notice of Pendency and Proposed
Settlement of Class Action and Receiver's Turnover Motion, attached hereto as Exhibit A-1 and
approved by the Court. If there is any balance remaining in the Net Class Settlement Fund after
six (6) months from the date of distribution of the Net Class Settlement Fund (whether by reason
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of tax refunds, encashed checks or otherwise), the Receiver shall, if economically feasible and
practical, reallocate such balance among Authorized Claimants in an equitable and economic
fashion.
5.4 This is not a claims-made settlement, and if all conditions of the settlement are
satisfied and the settlement becomes Final, no portion of the Class Settlement Fund will be
returned to the De la Riva Parties. Except for a violation of the terms of this Stipulation (e.g.
¶2.2), the De la Riva Parties shall have no responsibility for, interest in, or liability whatsoever,
and no Person shall have any claim against the De la Riva Parties, with respect to (i) the
investment, the distribution or administration of the Class Settlement Fund, the Net Settlement
Fund, the proceeds of the Receiver's Turnover Motion or the Plan of Allocation; (ii) the
determination, administration, or solicitation, calculation of claims, or Proofs of Claims; or (iii)
the payment or withholding of Taxes, or any losses incurred in co nection therewith.
5.5 No Person shall have any claim against the Plaintiffs, Settlement Class Counsel,
the Receiver and his agents, employees and retained professionals, any claims administrator, or
the De la Riva Parties based on the distributions made substantially in accordance with this
Stipulation and the settlement contained herein, the Plan of Allocation, or further order(s) of the
Court.
6. Plaintiffs' Settlement Counsel's Fees and Reimbursement of Expenses
6.1 The Plaintiffs and/or their counsel may submit an application or applications (the
"Fee and Expense Application") for distributions to them from the Class Settlement Fund (but
not from the proceeds of the Receiver's Turnover Motion) for: (a) an award of attorneys' fees not
to exceed 30% of the Class Settlement Fund; plus (b) reimbursement of actual expenses, plus (c)
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any interest on such attorneys' fees and expenses at the same rate and for the same periods as
earned by the Settlement Fund (until paid).
6.2 The attorneys' fees and expenses, as awarded by the Court, shall be paid to
Plaintiffs' Settlement Counsel from the Class Settlement Fund only, as ordered, immediately
after the Court executes an order awarding such fees and expenses . Plaintiffs ' Settlement
Counsel have allocated the attorneys' fees in a manner in which they in good faith believe
reflects the contributions of Plaintiffs' Counsel to the prosecution and settlement of the Released
Claims and the Class Action Litigation. Settlement Class Counsel shall hold such court-awarded
fees and expenses in an interest bearing, trust account until the Effective Date, at which time they
will be distributed. In the event that the Effective Date does not occur, or the Judgment or the
order making the Fee and Expense Award is reversed or modified, or this Stipulation is canceled
or terminated for any other reason, then Plaintiffs' Settlement Counsel shall within five (5)
business days from receiving, notice from the De la Riva Parties' counsel or from a court of
appropriate jurisdiction, refund to the Settlement Fund the fees and expenses previously paid to
Plaintiffs' Settlement Counsel's trust account, plus any accrued interest thereon. The Receiver
and the Receivership Case Estate shall have no liability for the refund of any such fees and
expenses.
6.3 Any order or proceeding relating to the Fee and Expense Application, or any
appeal from any order relating thereto or reversal or modification thereof, shall not operate to
terminate or cancel the Stipulation, or affect or delay the finality of the Judgment approving the
Stipulation and the settlement of the Released Claims and/or the Class Action Litigation and
Receiver's Turnover Motion as to the De la Riva Parties.
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6.4 The De la Riva Parties shall have no responsibility for any payment of attorneys'
fees and expenses to Plaintiffs' Settlement Counsel, however, Settlement Class Counsel may
apply for a portion of that Fund as a fee, as set forth in 11 6.3. The Receiver and the Receivership
Case shall have no liability whatsoever for the payment of such fees and expenses to Settlement
Class Counsel.
6.5 The De la Riva Parties shall have no responsibility for the allocation among
Plaintiffs' Counsel, and/or any other Person who may assert some claim thereto, of any Fee and
Expense Award that the Court may make in the Class Action Litigation, and the De la Riva
Parties take no position with respect to such matters.
6.6 Each such. Plaintiffs Counsel, as a condition of receiving such fees and expenses,
on behalf of itself and each partner and/or shareholder of it, agrees that the law firin and its
partners and/or shareholders are subject to the exclusive jurisdiction of the Court for the purpose
of enforcing the provisions of this section.
7. Conditions of Settlement, Effect of Disapproval, Cancellation orTermination
7.1 The Effective Date of this Stipulation shall be conditioned on the occurrence of
all of the following events:
(a) the De la Riva Parties have timely made its contributions to the Class
Settlement Fund and continued investment of the proceeds of the Receiver's Turnover Motion as
required by' 112.1 and 2.2 hereof;
(b) neither Plaintiffs nor the De la Riva Parties have exercised their option to
ten-ninate this Stipulation pursuant to 117.3 hereof;
(c) the Court has entered the Notice Order, as required by 113.2 hereof;
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(d) the Court has certified the Settlement Class, for purposes of this
Stipulation and Settlement, as defined in ¶1.22 hereof;
(e) the Court has entered the Order and Judgment approving this Stipulation,
substantially in the form of Exhibit B attached hereto; and
(f) the Order and Judgment has become Final, as defined in ¶ 1.8 hereof.
7.2 Upon the occurrence of all of the events referenced in ¶7.1 hereof, any and all
remaining interest or right of the De la Riva Parties in or to the Class Settlement Fund and the
Proceeds of the Receiver's Turnover Motion, if any, shall be absolutely and forever
extinguished. If all of the conditions specified in ¶7.1 hereof are not met, then the Stipulation
shall be canceled and terminated subject to ¶112.9 and 7.4 hereof unless Plaintiffs' Settlement
Counsel, the Receiver and counsel for the De la Riva Parties mutually agree in writing to
proceed with the Stipulation.
7.3 Unless otherwise ordered by the Court, in the event this Stipulation shall
tenilinate, or be canceled, or shall not become effective for any reason, within five (5) business
days after written notification of such event is sent by counsel for the De la Riva Parties or
Plaintiffs' Settlement Counsel to the Escrow Agent, subject to the terms of ¶2.8 hereof, the
Settlement Fund (including accrued interest), shall be refunded by the Escrow Agent pursuant to
written instructions from counsel for the De la Riva Parties. At the request of counsel for the De
la Riva Parties, the Escrow Agent or its designee shall apply for any tax refund owed on the
Settlement Fund and pay the proceeds, after deduction of any fees or expenses incurred in
connection with such application(s) for refund, at the written direction of counsel for the Dc la
Riva Parties.
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7.4 In the event that this Stipulation is not approved by the Court or the settlement set
forth in this Stipulation is terminated or fails to become effective in accordance with its terms,
the Settling Parties shall be restored to their respective positions in the Litigation as of May 25,
2007. In such event, the terms and provisions of this Stipulation, with the exception of IT I 1.1-
1.25, 2.2-2.9, 5.2, 7. 3, 8.2-8.5 and 8 . 11-8.13 hereof, shall have no further force and effect with
respect to the Settling Parties and shall not be used in this Litigation or in any other proceeding
for any purpose, and any judgment or order entered by the Court in accordance with the terms of
this Stipulation shall be treated as vacated, nunc pro tunc. No order of the Court or modification
or reversal on appeal of any order of the Court concerning the Plan of Allocation or the amount
of any attorneys' fees, costs, expenses and interest awarded by the Court to Plaintiffs' Settlement
Counsel shall constitute grounds for cancellation or termination of this Stipulation.
7.5 If the Effective Date does not occur , or if this Stipulation is terminated pursuant to
its terms, neither the Plaintiffs, the Receiver nor any of their counsel shall have any obligation to
repay any amounts actually and properly disbursed from the Notice and Administration Fund and
to pay Tax Expenses.
8. Miscellaneous Provisions
8.1 The Settling Parties (a) acknowledge that it is their intent to consummate this
agreement; and (b) agree to cooperate to the extent reasonably necessary to effectuate and
implement all terms and conditions of this Stipulation and to exercise their best efforts to
accomplish the foregoing terms and conditions of this Stipulation.
8.2 The Settling Parties intend this settlement to be a final and complete resolution of
all disputes between them with respect to the Receiver ' s Turnover Motion. With respect to the
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Class Action Litigation, the Settling Parties intend this settlement to be a final and complete
resolution of all claims between Plaintiffs and Juan and Amanda De la Riva. The settlement
compromises claims which are contested and shall not be deemed an admission by any Settling
Party as to the merits of any claim or defense. The Settling Parties agree that the amount paid to
the Settlement Fund and the other terms of the settlement were negotiated in good faith by the
Settling Parties, and reflect a settlement that was reached voluntarily after consultation with
competent legal counsel. The Settling Parties reserve their right to rebut, in a manner that such
party deters-nines to be appropriate, any contention made in any public forum that the Litigation
was brought or defended in bad faith or without a reasonable basis.
8.3 Neither this Stipulation nor the settlement contained therein, nor any act
performed or document executed pursuant to or in furtherance of the Judgment, this Stipulation
or the settlement: (a) is or may be deemed to be or may be used as an admission of, or evidence
of, the validity of the Class Action Litigation, the Receiver's Turnover Motion and/or any
Released Claim, or of any fault, wrongdoing, liability, misrepresentation or omission of the
Released Persons or of any infirmity in the defenses that the De la Riva Parties asserted or could
have asserted in the Class Action Litigation and the Receiver's Turnover Motion; (b) is or may
be deemed to be or may be used as an admission of, or evidence of, any fault, wrongdoing,
liability, misrepresentation or omission of the De la Riva Parties in any civil, criminal or
administrative proceeding in any court, administrative agency or other tribunal; or (c) is or may
be alleged or mentioned by or on behalf of any Settlement Class Member in any litigation or
other action unrelated to the enforcement of this Stipulation. Provided, however, that the
Released Persons may file or offer into evidence this Stipulation, Judgment and/or the releases
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executed pursuant thereto in any action or proceeding that may be brought against them in order
to support a defense or counterclaim based on principles of res judicata, collateral estoppel,
release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion
or issue preclusion or similar defense or counterclaim.
8.4 All agreements made and orders entered during the course of the Litigation
relating to the confidentiality of information shall survive this Stipulation. The Settling Parties
will coordinate jointly any news releases or other comments to the press or media regarding the
settlement.
8.5 All of the Exhibits to this Stipulation are material and integral parts hereof and are
fully incorporated herein by this reference.
8.6 This Stipulation may be amended or modified only by a written instrument signed
by or on behalf of all Settling Parties or their respective successors-in-interest.
8.7 This Stipulation, the Exhibits attached hereto, and all documents executed
pursuant hereto constitute the entire agreement among the parties hereto and no representations,
warranties or inducements have been made to any party concerning this Stipulation or its
Exhibits other than the representations, warranties and covenants contained and memorialized in
such documents. Except as otherwise provided herein, each party shall bear its own costs.
8.8 Plaintiffs' Settlement Counsel, on behalf of the Settlement Class, and the
Receiver and his agents , employees or professionals are expressly authorized by the Plaintiffs to
take all appropriate action required or permitted to be taken by the Settlement Class and
Receivership Estate pursuant to this Stipulation to effectuate its terms and also are expressly
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authorized to enter into any modifications or amendments to this Stipulation on behalf of the
Settlement Class and Receivership Estate which they deem appropriate.
8.9 Each counsel or other Person executing this Stipulation or any of its Exhibits on
behalf of any party hereto hereby warrants that such counsel or Person has the full authority to
do so, subject to the approval of the Court.
8.10 This Stipulation may be executed in one or more counterparts. All executed
counterparts and each of them shall be deemed to be one and the same instrument. A complete
set of original executed counterparts shall be filed with the Court.
8.11 This Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto.
8.12 The Court shall retain exclusive jurisdiction with respect to implementation and
enforcement of the terms of this Stipulation, and all parties hereto submit to the exclusive
jurisdiction of the Court for purposes of implementing and enforcing the settlement embodied in
this Stipulation.
8.13 This Stipulation and the Exhibits hereto shall be considered to have been
negotiated, executed and delivered, and to be wholly performed, in the State of Florida, and the
rights and obligations of the parties to this Stipulation shall be construed and enforced in
accordance with, and governed by, the internal, substantive laws of the State of Florida without
giving effect to that State's choice-of-law principles.
8.14 The Settling Parties acknowledge, represent and warrant to each other that the
mutual releases and payments hereunder are such that each of the Settling Parties is to receive
adequate consideration for the consideration given.
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8.15 The Settling Parties may not waive or vary any right hereunder except by an
express written waiver or variation . Any failure to exercise or any delay in exercising any such
rights, or any partial or defective exercise of such rights, shall not operate as a waiver or
variation of that or any other such right. The waiver by one Settling Party of any breach of the
Stipulation by another Settling Party shall not be deemed a waiver of any other prior or
subsequent breach of this Stipulation.
8.16 Each Settlement Class Member hereby represents and warrants that he, she or it
has not assigned any rights, claims or cause of action that was asserted or could have been
asserted in connection with, under, or arising out of any of the claims being settled or released
herein, provided, however, that nothing contained in this Stipulation should prevent any
Settlement Class Member or Receivership Creditor from assigning his, her or its right to
distribution.
8.17 Any signature to this Stipulation, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manners and respects as an original signature and shall
be considered to have the same binding legal effect as if it were the original signed version
thereof delivered in person . At the request of a Settling Party to this Stipulation , any other
Settling Party to this Stipulation so executing and delivering this document by means of a
facsimile machine shall re-execute original forms thereof and deliver them to all Settling Parties.
No party to this Stipulation shall raise the use of a facsimile machine to deliver a signature or the
fact that any signature or agreement was transmitted or communicated through the use of a
facsimile machine as a defense to the formation or enforceability of this Stipulation and each
such Person forever waives any such defense.
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Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 31 of
IN WITNESS WHEREOF, the Settling Parties hereto have caused this Stipulation to be
executed , by their duly authorized attonzeys , dated as of May 2007.
-31-
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 32 of
Victor M. Diaz, Jr.Podhurst Orseck P.A.25 West Flagler Street, Suite 800Miami, Florida 33130(305) 358-2800(305) 358-2382 (fax)VD1AZ(@,PODHURST.com
//1 4,111 ^^-Victor M. Diaz, Jr.
Harley S. TropinKozyak Tropin & Throckmorton,PA2525 Ponce de Leon, 9th FloorMiami, Floirda 33134(305) 372-1800(305) 372-3508 (fax)hstQa.kttlaw.com
Harley S . Tropi
Counsel for Plaintiffs and the Settlement ClassMembers
Kathy E. RentasBecker & Poliakoff, F.A.3111 Stirling RoadFt. Lauderdale, Florida 33312(954) 364-6026(954) 985-4176 (fax)krentasa,becker-poliakoff.com
Kathy E. Rentas
Counsel for the De la Riva Parties
32
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 33 of
Thomas G. Schultz, notindividually, but solely in hiscapacity as Receiver forPension Fund of America, L.C.PFA Assurance Group, Ltd.PFA International, Ltd.Claren TPA, LLCShadow Creek Investments, LLCAtlantic Realty Ventures LLCc/o Tew Cardenas, LLP1441 Brickell Avenue15`h FloorMiami, Florida 33131305.536-1112305-536-1116 (fax)[email protected]
David M. Levine
Tew Cardenas, LLP
1441 Brickeli Avenue
15Lh Floor
Miami, Florida 33131305-536-1112305-536 -111 ax)
Davidp. Levine
VAttorney for Court-Appointed Receiver ThomasG. Schultz
-33-
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 34 of
Jonat han Cohen
Slmtts & Bowen , L.L.P.
1500 Miami Center
201 South Biscayne Blvd.
Miami, Florida 3313 1305-379-9173305-347-7873) (P{lx)
C]^011 l7 C1 ? S11Lltt5.C0111
Jonat4 hell
Counsel [or the Innstituto de Prevision Nlilitar
-34-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007
IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAMIAMI DIVISION
SECURITIES AND EXCHANGECOMMISSION
Plaintiff,
vs.
PENSION FUND OF AMERICA, L.C.,PFA ASSURANCE GROUP, LTD.,PFA INTERNATIONAL, LTD.CLAREN TPA, LLC,LUIS M. CORNfDE andROBERT DE LA RNA,
Defendant.
MARCELLA CORDOVA, JORGE FLORES,HENRY TURMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,
Plaintiffs,
vs,
LEHMAN BROTHERS , INC., a New YorkCorporation; MERRILL LYNCH & CO., INC.,a Delaware Corporation; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andHSBC BANK-, U.S.A., LUIS CORNIDE andROBERT A. DE LA RIVA,
Defendants.
Case No. 05-20863-CIV-MOOREIGARBER
No. 05-21169-CIV-MOORS-GARBER
EPROPOSEDI ORDERPRELIMINARILY APPROVINGSETTLEMENT AND PROVIDINGFOR NOTICE
EXHIBIT A
Page 35 of 6811
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 36 of
WHEREAS, on March 28, 2005, the SEC filed a civil action against Pension Fund of
America, L. C. and its related entities (hereinafter "PFA") and principals , alleging PFA engaged in an
offering fraud. On that same day, the District Court for the Southern District of Florida entered a
Temporary Restraining Order and appointed the Receiver;
WHEREAS, there is pending litigation between the Receiver and the De la Riva Parties over
the $450,000 plus accruing interest held in the trust account of counsel for the De la Riva Parties.
On April 17, 2006, the Receiver filed with the Court an Amended Motion for a determination that
the funds in the foregoing account are property of the Receivership and should be transferred to the
Receiver for distribution to all investors (the "Receiver's Turnover Motion"). IPM is a party to the
Turnover Motion. The De la Riva Parties opposed the Motion. The matter remains pending.
WHEREAS, on April 21, 2005, a complaint was filed in the United States District Court for
the Southern District of Florida on behalf of a putative class of PFA investors who had purchased
trust plans from PFA from January 1, 1999 through March 31, 2005, inclusive (the "Settlement Class
Period"). Henry Iacrjrzan v. Pension Fui:d ofAnie3 ica L. C. et al. Case No. 05-21101. On April 28,
2005, a second related complaint was filed on behalf of the same putative class of PFA investors.
Sa nuel Putermaza v. Lehman Brothers, Inc. et al., Case No. 05-21169;
WHEREAS, on June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended
Class Action Complaint styled Cordova, et al. v. Le/unwz Bros., Inc., et al., Case No. 05-21169. The
consolidated cases are collectively referred to herein as the "Cordova Litigation." The First
Amended Complaint alleged con non law claims for (1) breach of fiduciary duty, (2) aiding and
abetting PFA's common law fraud and (3) aiding and abetting PFA's breaches of its fiduciary duties.
The Complaint named Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond James Financial
Services, Inc., Oliva Investment Group, Inc. and HSBC Bank, U.S.A. as defendants (hereinafter, the
"Financial Institution Defendants");
-1-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 37 of
WHEREAS, on January 17, 2006, the Court granted Defendants' motions to dismiss, ruling
the common law claims asserted in the Complaint were preempted by the Securities Litigation
Uniform Standards Act ("SLUSA");
WHEREAS, on February 13, 2006, Plaintiffs filed their Second Amended Class Action
Complaint ("Complaint") alleging violations by HSBC ofSections 12 and 15 ofthe Securities Act of
1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act");
WHEREAS, motions to dismiss the Second Amended Class Action Complaint are currently
pending;
WHEREAS, the Court has received the Stipulation of Settlement, dated as ofMay 25, 2007
(the "Stipulation"), that memorializes the Settlement entered into by Plaintiffs ' Settlement Counsel
on behalf of the Plaintiffs and the Settlement Class, Receiver through his counsel, and Juan De La
Riva, Amanda De La Riva, and Robert De La Riva, through their counsel (the "De La Riva Parties"),
and the Court has reviewed the Stipulation and its attached Exhibits;
WHEREAS, all defined tern-ms contained herein shall have the same meanings as set forth in
the Stipulation;
WHEREAS, counsel for the Settling Parties represent that they have engaged in substantial
am m.'s length negotiations in an effort to resolve all claims that have been or could be asserted in the
Cordova Litigation and/or by the Receiver in the Turnover motion or in any civil or administrative
proceeding, including, conducting, numerous meetings and telephone conferences where the terns of
the agreements detailed herein were extensively debated and negotiated;
WHEREAS, based on the investigation of their counsel , Plaintiffs believe that the claims
asserted in the Cordova Litigation have merit and that the evidence developed to date supports the
claims. However, Plaintiffs' Settlement Counsel recognize and acknowledge the expense and length
of continued proceedings necessary to prosecute the Cordova Litigation against the De La Riva
.. 7 ..
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 38 of
Parties through trial and through appeals. Plaintiffs' Settlement Counsel also have taken into
account the uncertain outcome and the risk of any litigation, especially in complex actions such as
the Cordova Litigation, as well as the difficulties and delays inherent in such litigation. Plaintiffs'
Settlement Counsel are mindful ofthe inherent problems ofproofunder and possible defenses to the
securities law violations asserted in the Cordova Litigation. Plaintiffs' Settlement Counsel have
concluded that the proposed Settlement is fair, reasonable and adequate and in the best interests of
the Settlement Class;
WHEREAS, the De La Riva Parties expressly have denied and continue to deny any and all
charges of fault, wrongdoing or liability against them arising out of any of the conduct, statements,
acts or omissions alleged, or that could have been alleged, in the Cordova Litigation and/or by the
Receiver in the Turnover Motion or in any civil or administrative proceeding, or of any infirmity in
the defenses that the De La Riva Parties asserted or could have asserted in such action or
proceedings, and are entering into the Settlement in order to eliminate the burden, distractions,
expense and uncertainty of further litigation;
WHEREAS, the Litigation is being, settled against the De La Riva Parties only, and the
Settlement shall have no effect whatsoever on the pending Cordova Litigation between Plaintiffs and
the Non-Settling Defendants, nary ely Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond
James Financial Services, Inc., Oliva Investment Group, Inc., and Luis Cornide (the "Non-Settling
Defendants");
WHEREAS, the Settling Parties having made application, pursuant to Federal Rule of Civil
Procedure 23(e), for an order preliminarily approving the Settlement of this Cordova Litigation, in
accordance with the Stipulation which, together with the Exhibits annexed thereto, sets forth the
terms and conditions for the proposed Settlement; and
-3-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 39 of
WHEREAS, the Court having read and considered the Stipulation and the Exhibits annexed
thereto;
NOW, THEREFORE, IT IS HEREBY ORDERED:
1. The Court does hereby preliminarily approve the Stipulation and the Settlement set
forth therein, subject to further consideration at the Settlement Approval Hearing described below.
Settlement Approval Hearing
2. A hearing (the "Settlement Approval Hearing") shall be held before the undersigned,
United States District Judge K. Michael Moore, at the United States Courthouse, Courtroom #3,
Room 1104, James Lawrence King Federal Justice Building, 99 Northeast, 4`' Street #1168, Miami,
Florida 33142 on August 10, 2007 , at 10:00 a.m., to determine:
(a) whether the Court should certify the Settlement Class for purposes of this
Settlement only and whether Plaintiffs and Plaintiffs' Settlement Counsel have adequately
represented the Settlement Class;
(b) whether the proposed Settlement of the Released Claims on the terms and
conditions provided for in the Stipulation is fair, reasonable and adequate to the Settlement Class and
Receivership Creditors and should be approved by the Court;
(c) whether a Judgment as defined in § 1.10 of the Stipulation and as set forth in
the Stipulation, Exhibit B should be entered herein;
(d) whether the Court should permanently enjoin the assertion of any claims
against the De La Riva Parties that arise from or relate to the subject matter of the Cordova
Litigation or the Released Claims by any Plaintiff, Settlement Class Member, Non-Settling
Defendant, the Receiver or any other persons;
(e) whether the proposed Plan of Allocation should be approved;
-4-
Case 1:05-cv-21169-KM M
(f)
Counsel; and
(I)
Document 323-2 Entered on FLSD Docket 05/29/2007 Page 40 of
the amount of fees and expenses that should be awarded to Plaintiffs'
such other matters as the Court may deem necessary or appropriate.
Preliminary Certification of Settlement Class
3. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, the Court
preliminarily certifies, for purposes of effectuating this Settlement only, a Settlement Class of all
Persons who purchased, sold, held and/or retained investments in trust plans and/or other securities
from PFA, or its affiliated companies, during the Settlement Class Period. Excluded from the
Settlement Class are (a) any Defendant named in the Complaint (or any previous complaints),
including any and all subsidiaries, affiliates, alter-ego entities, and/or immediate family members
thereof; (b) PFA, PFA Assurance, PFA International , Claren TPA, including any and all subsidiaries,
affiliates and/or alter-ego entities thereof; (c) all officers, directors, employees or agents (and their
immediate family members) of the entities and individuals described in subsections (a) and (b); (d)
all employees, agents and/or brokers (and their immediate family members) who sold or solicited the
sale of investments in PFA or PFA Assurance or any subsidiaries, affiliates and/or alter-ego entities
thereof; (e) any Person, firm, trust, officer, director or any individual or entity in which any of the
individuals or entities described in subsections (a) through (d) above has a controlling interest or
which is affiliated with any such individuals or entities; (f) the legal representatives, agents,
affiliates, heirs, successors-in-interest or assigns of any such excluded party.
4. For purposes of this Settlement only, the Plaintiffs are temporarily appointed as
representatives of the class and Plaintiffs' Settlement Counsel are temporarily appointed as
settlement class counsel.
5. For purposes of this Settlement only, this Court preliminarily finds and concludes
that: (a) the Settlement Class Members are so numerous thatjoinder ofall Settlement Class Members
-5 -
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 41 of
in the Cordova Litigation for purposes of this Settlement is impracticable; (b) there are questions of
law and fact common to the Settlement Class which predominate over any individual questions; (c)
the claims of the Plaintiffs are typical of the claim of the Settlement Class; (d) the Plaintiffs and
Plaintiffs' Settlement Counsel have fairly and adequately represented and protected the interests of
all of the Settlement Class Members; and (e) a class action is superior to other methods for the fair
and efficient adjudication of this controversy, considering: (i) the interests of the Settlement Class
Members in individually controlling the prosecution ofthe separate actions, (ii) the extent and nature
of any litigation concerning the controversy already commenced by Settlement Class Members, (iii)
the desirability or undesirability of concentrating the litigation of these claims in this particular
forum, and (iv) the difficulties likely to be encountered in the management of the Cordova
Litigation . In the event that this Settlement is not approved or the De La Riva Parties withdraw from
the Settlement, these findings will be set aside and the issues of class certification and the
appointment ofrepresentative or lead plaintiff and class or lead counsel may be contested. Nothing
in this Order or the Stipulation shall effect the issue of class certification, the appointment of
representative or lead plaintiff, or the appointment of lead or class counsel in the pending Cordova
Litigation against the Non-Settling Defendants.
Approval of Notice Forms, Claims Filing Procedures and Related Processes
6. The Court approves, as to form and content, the Notice of Pendency and Proposed
Settlement of Class Action (the "Notice") annexed as Exhibit C to the Stipulation, and finds that the
mailing and distribution of the Notice substantially in the manner and form set forth in 118 of this
Order meet the requirements of Federal Rule of Civil Procedure 23 and due process, and is the best
notice practicable under the circumstances and shall constitute due and sufficient notice to all
Persons entitled thereto.
-6-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 42 of
7. The Court finds that the Notice and Claims Procedure for the Settlement Class
Members and the Receivership Creditors may be coordinated pursuant to a single Claims Procedure
as set forth in the Stipulation, since Settlement Class Members are also creditors ofthe Receivership
Estate. The Court also approves the claims filing procedure for Receivership Creditors and
Settlement Class Members as set forth in Paragraph 5.3 of the Stipulation, and further referred to in
Paragraphs 21-22 hereof, including, but not limited to the establishment of the Claims Filing
Deadline referenced therein and the provisions regarding disallowance of untimely filed claims.
8. Garden City Group ("Claims Administrator") is hereby retained to supervise and
administer the notice procedure as well as the processing of claims as more fully set forth below:
(a) The Claims Administrator, with the cooperation of the Receiver, shall make
reasonable efforts to identify all Persons who are Settlement Class Members, Receivership Creditors
and/or potentially interested parties, and not later than June 8, 2007 (the "Notice Date"), shall cause
a copy of the Notice, substantially in the form annexed as Exhibit C to the Stipulation, to be mailed
by first class mail to all Settlement Class Members who can be identified with reasonable effort; and
(b) At least seven (7) calendar days prior to the Fairness Hearing, the Class
Administrator shall cause to be served on the De La Riva Parties' counsel and Plaintiffs' Settlement
Counsel and filed with the Court proof, by affidavit or declaration , of such mailing and publishing.
9. All reasonable expenses incurred in identifying and notifying Settlement Class
Members and the Receivership Creditors, as well as administering the Distribution Fund, shall be
paid as set forth in the Stipulation. In the event the Settlement is not approved by the Court, or
otherwise fails to become effective, neither the Plaintiffs nor Plaintiffs' Settlement Counsel shall
have any obligation to repay any amounts actually and properly disbursed from the Notice and
Administration Fund.
-7-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 43 of
10. Any person receiving notice of the settlement who purchased or acquired PFA trust
plans for the benefit of another during the period from January 1, 1999 through March 31, 2005,
inclusive, shall forward the Notice to all beneficial owners of such PFA plans within ten (10) days
after receipt thereof, or send a list of the names and addresses of such beneficial owners to the
Claims Administrator within ten (10) days of receipt thereof, in which event the Claims
Administrator shall promptly mail the Notice to such beneficial owners.
11. All Settlement Class Members and/or Receivership Creditors shall be bound by all
determinations and judgments contained herein and/or in the Final Order, whether favorable or
unfavorable to the Settlement Class and/or Receivership Creditors.
Objections to Settlement and/or Exclusions from Settlement Class
12. Any Settlement Class Member and/or Receivership Creditors may enter an
appearance in the Cordova Litigation, at their own expense, individually or through counsel of their
own choice. If Settlement Class Members do not enter an appearance, they will be represented by
Plaintiffs' Settlement Counsel.
13. Any Person falling within the definition of the Settlement Class may, upon written
request, be excluded from the Settlement Class. Any such Person must submit to Settlement Class
Counsel a request for exclusion ("Request for Exclusion"), postmarked no later than July 10, 2007.
A Request for Exclusion must state: (a) the name, address, and telephone number of the Person
requesting exclusion; (b) the name, address, and telephone number of the Person who originally
purchased the PFA trust plan; (c) each of the Person's acquisitions of a PFA trust plan during the
Settlement Class Period, including the dates ofpurchase or sale, the type of trust plan purchased, the
amount of the initial investment, and the amount of the total investment in such plan; (d) any
distributions , refunds or other monies received from PFA; and (e) that the Person wishes to be
excluded from the Settlement Class. All Persons who submit valid and timely Requests for
-8-
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 44 of
Exclusion in the manner set forth in this paragraph shall have no rights under the Stipulation, shall
not share in the distribution of the Net Settlement Fund, and shall not be bound by the Stipulation or
the Judgment entered in the Litigation.
14. Any Settlement Class Member may appear and show cause, if he, she or it has any,
why the proposed Settlement of the Released Claims should or should not be approved as fair,
reasonable and adequate, why a Judgment should or should not be entered thereon, why the Plan of
Allocation should or should not be approved, or why attorneys' fees and expenses should or should
not be awarded to Plaintiffs' Settlement Counsel; provided, however, that no Settlement Class
Member, or any other Person shall be heard or entitled to contest the approval of the terms and
conditions ofthe proposed Settlement, or, if approved, the Judgment to be entered thereon approving
the same, or the order approving the Plan of Allocation, or the attorneys' fees and expenses to be
awarded to Plaintiffs' Settlement Counsel, unless that Person has delivered by hand or sent by first
class mail written objections and copies of any papers and briefs such that they are received on or
before July 23, 2007, by Podhurst Orseck P.A., Victor M. Diaz, 25 West Flagler Street, Suite 800,
Miami, FL 33130, Kozyak Tropin & Throckmorton, PA, Harley S. Tropin, 2525 Ponce de Leon, 9"
Floor, Miami, FL 33134; David M. Levine, Esq., Tew Cardenas, LLP, Miami Center, 26'1' Floor, 201
South Biscayne Boulevard, Miami, FL 33131-4336 and Becker & Poliakoff, P.A., Kathy E. Rentas,
3111 Stirling Road, Fort Lauderdale, FL 33312, and filed said obj ections, papers and briefs with the
Clerk of the United States District Court for the Southern District ofFlorida, Miami Division, James
Lawrence King Federal Justice Building, 99 Northeast, 4"' Street #1168, Miami, Florida 33142 on or
before July 23, 2007. Any person who does not make his, her or its objection in the manner
provided shall be deemed to have waived such objection and shall forever be foreclosed from
making any objection to the fairness, reasonableness or adequacy of the proposed Settlement as set
-9-
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 45 of
forth in the Stipulation, to the Plan of Allocation, or to the award of attorneys' fees and expenses to
Plaintiffs' Settlement Counsel, unless otherwise ordered by the Court.
15. All papers in support ofthe Settlement, the Plan ofAllocation, and any application by
Plaintiffs' Settlement Counsel for attorneys' fees or reimbursement of expenses shall be filed and
served seven (7) calendar days prior to the Settlement Approval Hearing.
Distribution Funds
16. All fiends held by the Escrow Agent shall be deemed and considered to be in custodia
legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such
funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court.
17. At the Settlement Approval Hearing, the Court shall determine whether the Plan of
Allocation proposed by Plaintiffs' Settlement Counsel, and any application for attorneys' fees or
reimbursement of expenses shall be approved.
18. The S 112,500 Class Settlement Fund shall be transferred by or on behalfofthe De La
Riva Parties to the Escrow Agent within five (5) business days of the date of this Order (the
"Transfer Date"). If the S 112,500 is not timely deposited with the Escrow Agent, the unpaid amount
shall bear interest at the rate of five percent (5%) per annum from the Transfer Date until paid.
Upon the Effective Date, the Net Settlement Fund shall be transferred to the Receiver for distribution
to Authorized Claimants in accordance with the Plan of Allocation finally approved by this Court.
19. Pursuant to 112.2 of the Stipulation, the De la Riva Parties shall transfer the Turnover
Proceeds to the Receiver on or before the Transfer date, subject to the terms and conditions of the
Stipulation. After transfer to the Receiver on the Transfer Date, the Turnover Proceeds will be held
by the Receiver in a separate account at market rate interest in instruments backed by the full faith
and credit of the United States Government or fully insured by the United States Goverment or an
agency thereof until the Effective Date. Upon the Effective Date, $112,500 of the Turnover
-10-
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 46 of
Proceeds may be distributed by the Receiver to Authorized Claimants pursuant to the Plan of
Allocation in its current form or as may be approved by the Court.
20. Neither the De La Riva Parties, their Related Parties, nor its counsel shall have any
responsibility for the Plan of Allocation or any application for attorneys' fees or reimbursement of
expenses submitted by Plaintiffs' Settlement Counsel, and such matters will be considered separately
from the fairness, reasonableness and adequacy of the Settlement.
Claims Process
21. Within thirty (30) days after the Effective Date the Proof of Claim form shall be
mailed to all Settlement Class Members and Receivership Creditors in the form attached as Exhibits
A-2 and A-3 to the HSBC Stipulation and/or as modified by the Court in the Final Order.
22. All Settlement Class Members and/or Receivership Creditors who wish to participate
in the Settlement shall complete and submit Proof ofClaim forms in accordance with the instructions
contained therein. Unless the Court orders otherwise, all ProofofClaim forms must be submitted no
later than sixty (60) days from the date the Proof of Claim Forms were mailed. Any Settlement
Class Member and/or Receivership Creditor who does not timely submit a Proof ofClaim within the
time provided for, shall be barred from sharing in the distribution of the proceeds ofthe Distribution
Fund or from the Receivership Estate, unless otherwise ordered by the Court.
Miscellaneous Provisions
23. Neither the Stipulation, nor any of its tern-ms or provisions, nor any ofthe negotiations
or proceedings connected with it, shall be offered or received into evidence in any action or
proceeding, or be used or construed in any was as an admission or concession by the De La Riva
Parties of the truth of any ofthe allegations in the Litigation, or of any liability, fault, or wrongdoing
of any kind.
_11_
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 47 of
24. All proceedings against the De La Riva Parties in the Cordova Litigation, other than
proceedings necessary to carry out the terns and conditions ofthe Settlement, are hereby stayed and
suspended until further order of the Court. Pending final determination of whether the Settlement
and Stipulation should be approved and the Settlement Class certified for purposes ofthis Settlement
only, all Settlement Class Members, the Receiver and any Non-Settling Defendants are hereby
barred and enjoined from commencing or prosecuting against the De La Riva Released Persons any
action asserting any Released Claims.
25. The Court reserves the right to adjourn the date of the Settlement Approval Hearing
without further notice to the Settlement Class Members or Receivership Creditors, and retains
jurisdiction to consider all further applications arising out of or connected with the proposed
Settlement. The Court may approve the Settlement, with such modifications as maybe agreed to by
the Settling Parties, if appropriate, without further notice to the Settlement Class or Receivership
Creditors.
IT IS SO ORDERED.
DATED:
THE HONORABLE K. MICHAEL MOOREUNITED STATES DISTRICT JUDGE
-12-
Case 1:05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 48 of
IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
SECURITIES AND EXCHANGECOMMISSION
Plaintiff,
vs.
PENSION FUND OF AMERICA, L.C.,PFA ASSURANCE GROUP, LTD.,PFA INTERNATIONAL, LTD.CLAREN TPA, LLC,LUIS M. CORNIDE andROBERT DE LA RIVA,
Defendant.
MARCELLA CORDOVA, JORGE FLORES,HENRY [URMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,
Plaintiffs,
Case No. 05-20863-CIV-MOORE/GARBER
No. 05-21169-CIV-MOORE-GARBER
vs,
LEHMAN BROTHERS, INC., a New YorkCorporation; MERRILL LYNCH & CO., INC.,a Delaware Corporation ; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation ; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andLUIS CORNIDE and ROBERT A. DE LARIVA,
[PROPOSED] FINAL JUDGMENTAND ORDER OF DISMISSAL WITHPREJUDICE
Defendants.
{ EXHIBIT
D
EXHIBIT B
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 49 of
This matter came before the Court for hearing pursuant to the Order of this Court, dated
2007 on the application of the parties for approval ofthe settlement set forth in the
Stipulation of Settlement dated as ofMay 25, 2007 (the "Stipulation "). The Court having reviewed
and considered the Joint Motion for Final Approval of Settlement, dated , 2007 in the above-
captioned actions, and having reviewed and considered the terms and conditions of the proposed
settlement (the "Settlement") as set forth in the stipulation of Settlement dated May 25, 2007 (the
"Stipulation"), a copy of which has been submitted to the Court, and having reviewed and
considered the applications of Plaintiffs' Settlement Counsel for an award of attorneys' fees and
expenses, and the Court having held a Fairness Hearing after being satisfied that notice to the
Settlement Class Members had been provided in accordance with the Court's Order Preliminarily
Approving Settlement and Providing for Notice entered on , 2007 (the "Preliminary Approval
Order"), and the Court having taken into account the objections submitted prior to the Settlement
Approval Hearing in accordance with the provisions of the Preliminary Approval Order and the
presentations and other proceedings at the Settlement Approval Hearing, the Court makes the
following FINDINGS:
A. This Judgment incorporates by reference the definitions in the Stipulation, and all
terns used herein shall have the same meanings as set forth in the Stipulation, unless otherwise set
forth herein.
B. This Court leas jurisdiction over the subject matter ofthe Cordova Litigation and SEC
Action pursuant to 28 U.S.C. § 1331, and over all parties thereto, including all Settlement Class
Members.
C. Notice to members of the Settlement Class has been provided in accordance with the
notice requirements specified by the Court in the Preliminary Approval Order. Such notice
constitutes the best means ofnotice to members ofthe Settlement Class, that is practicable under the
_1_CEHIDI _50407100633369900002 3/30/2007 12:34 PM
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 50 of
circumstances and is due and sufficient notice of the Settlement and the Fairness Hearing to all
persons affected by and/or entitled to participate in the Settlement or the Fairness Hearing, in full
compliance with the requirements of due process and the Federal Rules of Civil Procedure.
D. The Court has held a hearing to consider the fairness, reasonableness and adequacy of
the Settlement, has been advised of all objections to the Settlement and has given fair consideration
to such objections.
E. The Settlement is the product of good faith, arm's length negotiations between
Plaintiffs' Settlement Counsel on behalf ofthe Plaintiffs and the Settlement Class, Receiver through
his counsel, and Juan De La Riva, Amanda De La Riva, and Robert De La Riva, through their
counsel (the "De La Riva Parties")
F. The Settlement , as provided for in the Stipulation , is in all respects fair, reasonable,
adequate and proper and in the best interest of the Settling Paris and the, the Settlement Class. In
reaching this conclusion, the Court has considered a number of factors, including: (i) an assessment
ofthe likelihood that the Plaintiffs and/or the Settlement Class would prevail at trial; (ii) the range of
possible recovery available to Plaintiffs and/or the Settlement Class as a result ofsuch a trial; (iii) the
consideration provided to Settlement Class Members pursuant to the Settlement, as compared to the
range of possible recovery discounted for the inherent risks of further litigating the Cordova
Litigation, the Receiver's Turnover Motion or the Released Claims; (iv) the complexity, expense and
possible duration of such litigation in the absence of a settlement; (v) the nature and extent of any
objections to the Settlement; and (vi) the stage ofproceedings at which the Settlement was reached.
Specifically, the settlement calls for the payment by the De La Riva Parties of S 112,500 (the "Class
Settlement Fund"). The settlement also requires the De La Riva Parties to pay over to the Receiver
$112,500, $50,000 ofwhich is currently held in trust by the Receiver (the "Turnover Proceeds"), and
the remaining $62,500 to be paid by the De La Riva Parties. Finally, the settlement provides for a
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Plan of Allocation that is in accordance with the plan set forth in the HSBC Settlement, which
distribution will inure to the benefit of the Settlement Class Members and other Authorized
Claimants and avoid prolonged litigation between and among Settlement Class Members and other
Authorized Claimants regarding distribution preferences and claim set-offs. By achieving a class
settlement against the De La Ri.va parties at this stage in the Cordova Litigation , the putative plaintiff
class will receive a considerable distribution ofmoney without the uncertainty, delay and expense of
protracted litigation.
G. A list of those Settlement Class Members who have timely elected to opt-out of the
Settlement and the Settlement Class and who therefore are not bound by the Settlement, the
provisions of the Stipulation, this Order and the Judgment to be entered by the Clerk of the Court
hereon, has been submitted to the Court as an exhibit to the Affidavit of
sworn to on , 2007. A copy of such Exhibit is attached hereto and
incorporated by reference herein. All other Settlement Class Members (as permanently certified
below only for purposes of this Settlement) shall be subject to all ofthe provisions of the Settlement,
the Stipulation , this Order and the Judgment to be entered by the Clerk of the Court.
H. The bar order provision of this Order, which prohibits the assertion of claims against
the De La Riva Parties, as set forth below, is a condition of the Settlement and a significant
component of the consideration afforded to the De La Riva Parties in the Settlement, and that
provision is reasonable under the circumstances. Supporting this conclusion is the fact that as an
express term of that provision, the persons who are enjoined from asserting any claims against the
De La Riva Parties shall have any subsequent verdict in the Cordova Litigation reduced by the
amount of the De La Riva Parties' liability or the an ount the De La Riva Parties paid to the
Settlement Class as a result of the Settlement, S250,000. To the extent that a Non-Settling
Defendant's claims against the De La Riva Parties have been barred and permanently enjoined, the
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claims of the De La Riva Parties against that person or entity respecting those Released Claims are
similarly finally and fully barred.
I. The dismissal with prejudice and entry of Judgment contemplated by the Settlement
and this Order will dispose of fewer than all of the claims at issue, or parties to, the Cordova
Litigation. The Court finds that there is no just reason for delay in entering judgment in the form
attached hereto (the "Judgment") dismissing the Action with prejudice as to the De La Riva Parties
and that entry ofthe Judgment to that effect, as directed below, is warranted under Rule 54(b) ofthe
Federal Rules of Civil Procedure.
On the basis of the foregoing findings and the submissions and proceedings referred to
above, NOW THEREFORE, IT IS HEREBY ORDERED ADJUDGED AND DECREED:
1. Pursuant to Federal Rule of Civil Procedure 23(e), this Court finds that the settlement
as set forth in the Stipulation is, in all respects, fair, reasonable and adequate to the Settlement Class
and the Receivership Creditors, the result of good-faith and arn's-length negotiations and is hereby
finally approved in all respects. The Settling Parties are hereby directed to perform its terns.
2. This Court certifies a Settlement Class for settlement purposes only. This Court finds
and concludes that the prerequisites for a class action have been satisfied in that. (a) the Members of
the Settlement Class are so numerous that joinder of all Settlement Class Members in the Cordova
Litigation is impracticable; (b) there are questions of law and fact common to the Settlement Class
which predominate over any individual question; (c) the claims of the Plaintiffs are typical of the
claims of the Settlement Class; (d) the Plaintiffs and Plaintiffs' Settlement Counsel have fairly and
adequately represented and protected the interests of the Settlement Class Members; and (e) a class
action is superior to other available methods for the fair and efficient adjudication of this
controversy, considering: (i) the interests of the Settlement Class Members in individually
controlling the prosecution of the separate actions, (ii) the extent and nature of any litigation
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concerning the controversy already commenced by Settlement Class Members, (iii) the desirability
or undesirability of concentrating the litigation of these claims in this particular forum, and (iv) the
difficulties likely to be encountered in the management of the Cordova Litigation.
3. "Settlement Class" means all Persons (other than those Persons who timely and
validly request exclusion from the Settlement Class) who purchased, sold, held and/or retained
investments in trust plans and/or other securities from PFA during the period between January 1,
1999 and March 31, 2005, inclusive. Excluded from the Settlement Class are (a) any Defendant
named in the Complaint (or any previous complaints), including any and all subsidiaries, affiliates,
alter-ego entities, and/or immediate family members thereof; (b) PFA, PFA Assurance, PFA
International , Claren TPA, including any and all subsidiaries, affiliates and/or alter-ego entities
thereof; (c) all officers, directors, employees or agents (and their immediate family members) of the
entities and individuals described in subsections (a) and (b); (d) all employees, agents andlorbrokers
(and their immediate family members ) who sold or solicited the sale of investments in PFA or PFA
Assurance; (e) any person, fire, trust, officer, director or any individual or entity in which any ofthe
individuals or entities described in subsections (a) through (d) above has a controlling interest or
which is affiliated with any such individuals or entities ; (f) the legal representatives, agents,
affiliates, heirs, successors-in-interest or assigns of any such excluded party.
4. To the extent not already addressed by this Court, and for purposes ofthis Settlement
only, Plaintiffs are certified as representatives of the Settlement Class and Plaintiffs' Settlement
Counsel is appointed counsel to the Settlement Class. The Court concludes that Plaintiffs'
Settlement Counsel and Plaintiffs have fairly and adequately represented the Settlement Class with
respect to the Settlement and the Stipulation.
5. Notwithstanding the certification ofthe foregoing Settlement Class and appointment
of class representatives for purposes ofeffecting the Settlement, if this Order is reversed on appeal or
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the Stipulation is terririnated or is not consummated for any reason, the foregoing certification ofthe
Settlement Class and appointment of class representatives shall be void and of no further effect and
the Settling Parties shall be returned to the status each occupied before entry of this Order, without
prejudice to any legal argument that any of the Settling Parties might have asserted but for the
Settlement and Stipulation. The certification of the Settlement Class and appointment of Plaintiffs
and Settlement Class Counsel shall have no effect on the pending litigation between Plaintiffs and
the Non-Settling Defendants.
6. The Notice given to the Settlement Class was the best notice practicable under the
circumstances, including the individual notice to all Settlement Class Members and Receivership
Creditors who could be identified through reasonable effort. Said Notice provided the best notice
practicable under the circumstances of those proceedings and of the matters set forth therein,
including the class certification for settlement purposes, the proposed Settlement set forth in the
Stipulation, and the Settlement Approval Hearing to all Persons entitled to such notice, and said
Notice fully satisfied the requirements ofFederal Rule ofCivil Procedure 23 and the requirements of
due process.
7. The Court approves the Plan of Allocation attached hereto as Exhibit and finds
that it distributes the Settlement Class Fund and S 112,500 ofthe Turnover Proceeds in a manner that
is reasonable and fair to all Settlement Class Members.
8. Except as to any individual claim of those Persons (identified in Exhibit - attached
hereto) who have validly and timely requested exclusion from the Settlement Class, the Cordova
Litigation and all claims contained therein, as well as all of the Released Claims, are dismissed with
prejudice as to the Plaintiffs and the other Members of the Settlement Class, as against each and all
of the De La Riva Parties. The Court also dismisses with prejudice all claims that could have been
brought by the Receiver in any civil or administrative proceeding against each and all of the De La
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Riva Parties. The Settling Parties are to bear their own costs, except as otherwise provided in the
Stipulation.
9. The Claims Administrator, appointed by and subject to such supervision and direction
of the Court as may be necessary or as circumstances may require, shall calculate the claims
submitted by Plaintiffs, Settlement Class Members and Receivership Creditors and the Receiver
shall be responsible for reviewing, and if appropriate, objecting to claims, and shall oversee
distribution of the Settlement Fund to the Authorized Claimants in accordance with the approved
Plan of Allocation.
10. On the Effective Date hereto, the Class Settlement Fund, after deduction of fees
allowed to counsel for the Settlement Class, and the fees and costs ofthe Notice and Administration
Fund and the Escrow Agent and other items as set forth in Paragraph shall be transferred to the
Receiver for distribution to Authorized Claimants in accordance with the Plan of Allocation as
approved herein.
11. Upon the Effective Date and thereafter, and in accordance with the terms of the
Stipulation and the Plan ofAllocation, the Net Class Settlement Fund and S 112,500 of the Turnover
Proceeds shall be distributed to Authorized Claimants, subject to and in accordance with the
following.
(a) Within thirty (30) days after the Effective Date, the Receiver shall cause a
copy of the Proof of Claim form to be mailed to all Settlement Class Members and Receivership
Creditors in the forms attached to the HSBC Preliminary Approval Order as Exhibits A-2 and A-3.
(b) Within sixty (60) days after the mailing of the Proof of Claim Form (the
"Claims Filing Deadline"), each Claimant shall be required to submit to the Claims Administrator a
completed Proof of Claim, substantially in the form of Exhibit A-2 attached hereto, signed under
penalty ofperjury and supported by such documents as are specified in the Proofof Claim and as are
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reasonably available to the Claimant. The duties of the Claims Administrator shall be to transmit the
Proof of Claim forms to all known Claimants and to report to the Receiver and to Plaintiffs'
Settlement Counsel regarding an analysis and tabulation of claims filed by the Claims Filing
Deadline.
(c) The Receiver and his professionals will be responsible for reviewing, and, if
appropriate, filing objections to the validity and amount of filed claims. These objections will be
determined by the Court under procedures to be recommended by the Receiver and approved by the
Court.
(d) The allowed amount of the claim of a Claimant for purposes of all
distributions to be made by the Receiver pursuant to this Stipulation shall be the amount allowed by
the Court, after objection by the Receiver, or the amount set forth in the Claimant's Proof of Claim
timely filed by the Claims Filing Deadline, if no objection by the Receiver.
(e) Except as otherwise ordered by the Court, all Settlement Class Members and
Receivership Creditors: (i) who fail to timely submit a Proof of Claim by the Claims Filing
Deadline and who do not timely and validly request exclusion from the Settlement Class, or (ii)
whose claim is disallowed after objection by the Receiver, shall be forever barred from receiving any
payments from the De La Riva Parties pursuant to this Stipulation and the settlement set forth herein
and from the Receivership Estate, but will in all other respects be subject to and bound by the
provisions of this Stipulation, including the releases contained herein, and the Judgment.
(f) The Net Class Settlement Fund and S 112,500 of the Turnover Proceeds shall
be distributed by the Receiver to the Authorized Claimants, substantially in accordance with a Plan
of Allocation to be described in the Notice of Pendency and Proposed Settlement of Class Action,
Receiver's Turnover Motion and Receivership Claims, attached hereto as Exhibit A-1 and/or as
modified and approved by the Court.
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12. Upon the Effective Date hereto, the Plaintiffs, each ofthe Settlement Class Members,
including, but not limited to each of their respective successors, predecessors, assigns, attorneys
(including Settlement Class Counsel), heirs, representatives, administrators, executors, legatees, and
estates, and the Receiver, his agents, employees, attorneys, retained professionals and successors and
assiggns, shall be deemed to have, and by operation of the Order approving this Stipulation and the
Final Judgment shall have, fully, finally, and forever released, relinquished, discharged and
dismissed with prejudice all Released Claims in the Class Action Litigation and the Receiver's
Turnover Motion against Juan and Amanda De La Riva.
13. Upon the Effective Date hereto, the Plaintiffs, each ofthe Settlement Class Members,
including but not limited to each of their respective successors, predecessors, assigns, attorneys
(including Settlement Class Counsel), heirs, representatives, administrators, executors, legatees, and
estates, and the Receiver, his agents, employees, attorneys, retained professionals and successors and
assigns, shall be deemed to have, and by operation of the Order approving this Stipulation and the
Final Judgment shall have, fully, finally, and forever released, relinquished, discharged and
dismissed with prejudice Robert De La Riva from any and all claims, counter-claims, set-offs or
defenses which were asserted, might have been asserted, or in the future could be asserted, in the
Receiver's Turnover Motion.
14. Upon the Effective Date, as defined in I[ 1.6 of the Stipulation, each ofthe De La Riva
Parties, including but not limited to each of their respective successors, predecessors, assigns,
attorneys, (including the De La Riva Parties ' counsel), heirs, representatives , administrators,
executors, legatees, and estates, shall be deemed to have, and by operation of the order approving
this Stipulation and the Judgment shall have, fully, finally, and forever released, relinquished,
discharged and dismissed with. prejudice each. and all of the Settlement Class Members, Plaintiffs'
Settlement Counsel and the Receiver and his agents, employees and retained professionals, and
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successors and assigns, from all claims (including Unknown Claims), arising out of, relating to, or in
connection with the institution , prosecution, assertion , settlement or resolution of the Cordova
Litigation, the Receiver's Turnover Motion, the Receivership Estate or the Released Claims.
15. Any order or proceeding relating to the Fee and Expense Application or the Plan of
Allocation, or any appeal from any order relating thereto or reversal or modification thereof, shall
not operate to terminate or cancel the Stipulation, or affect or delay the finality of the Judgment
approving the Stipulation and the settlement of the Released Claims, the Cordova Litigation and/or
the Receiver's Turnover Motion as to the De La Riva Parties.
16. Neither the Stipulation nor the Settlement contained therein, nor any act performed or
document executed pursuant to or in furtherance of the Judgment, the Stipulation or the Settlement:
(a) is or may be deemed to be or may be used as an admission of, or evidence of, the validity of any
Released Claim, or of any fault, wrongdoing, liability, misrepresentation or omission of the De La
Riva Parties or of any infirmity in the defenses that the De La Riva Parties asserted or could have
asserted relating to the Released Claims; (b) is or may be deemed to be or may be used as an
admission of, or evidence of, any fault, wrongdoing, liability, misrepresentation or omission of any
of the De La Riva Parties in any civil, criminal or administrative proceeding in any court,
administrative agency or other tribunal; or (c) is or may be alleged or mentioned by or on behalf of
any Settlement Class Member in any litigation or other action unrelated to the enforcement of the
Stipulation. Provided, however, that the De La Riva Parties may file or offer into evidence the
Stipulation, Judgment and/or the releases executed pursuant thereto in any action or proceeding that
may be brought against them in order to support a defense or counterclaim based on principles ofres
judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other
theory of claim preclusion or issue preclusion or similar defense or counterclaim.
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17. Without affecting the finality of this Judgment in any way, this Court hereby retains
continuing jurisdiction over: (a) implementation ofthis Settlement and any award or distribution of
the Distribution Fund, including interest earned thereon; (b) disposition ofthe Distribution Fund; and
(c) all parties hereto for the purpose of construing, enforcing and administering the Stipulation.
18. The Court finds that during the course of the above-captioned litigation, the Settling
Parties and their respective counsel at all times complied with the requirements of Federal Rule of
Civil Procedure 11.
19. The De La Riva Parties are by virtue of the Settlement hereby released and
discharged from all claims for contribution that have been or may hereafter be brought by any person
or entity, whether arising under state, federal or common law, based upon, arising out of, relating to,
or in connection with the Released Claims. Accordingly, to the full extent provided by the Private
Securities Litigation Reform Act ("PSLRA"), the Court hereby bars all claims for contribution
arising out of, relating to, or in connection with the Released Claims: (a) against the De La Riva
Parties; and (b) by the De La Riva Parties against any person or entity (the "Reform Act Bar Order").
20. The De La Riva Parties are by virtue of the Settlement hereby released and
discharged to the fullest extent allowed by law from and against any and all claims, however styled,
whether for indemmnifcation, contribution, or otherwise arising out of or relating to the acts and
transactions that are the subject of the Released Claims, whether arising under federal , state, or
common law (the "Complete Bar Order").
21. Pursuant to the PSLRA, by virtue of the De La Riva Parties entering into this
Settlement with Plaintiffs and the Settlement Class prior to final judgment or verdict of all claims
and parties, any subsequent verdict orjudgment against the Non-Settling Defendants in the Cordova
Litigation shall be reduced by the greater of (i) an amount that corresponds to the percentage of
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responsibility of the De La Riva Parties; or (ii) the amount the De La Riva Parties paid to the
Settlement Class as a result of the Settlement.
22. In the event that the Settlement does not become effective in accordance with the
terms of the Stipulation, or the Effective Date does not occur, or in the event that the Distribution
Fund is returned to the De La Riva Parties in accordance with the Stipulation, then this Judgment
and Order shall be rendered null and void to the extent provided by and in accordance with the
Stipulation and shall be vacated and, in such event, all orders entered and releases delivered in
connection herewith shall be null and void to the extent provided by and in accordance with the
Stipulation.
23. There is no just reason for delay in the entry of this Final Judgment and Order and
immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54(b) ofthe Federal
Rules of Civil Procedure.
IT IS SO ORDERED.
DATED:THE HONORABLE K. MICHAEL MOOREUNITED STATES DISTRICT JUDGE
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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA
CASE NO.: 05-21169-CIV-MOORE
MARCELA CORDOVA, et al.,individually and on behalf of allothers similarly situated,
Plaintiffs,vs.
LEHMAN BROTHERS, INC., et al.,
Defendants.
NOTICE OF PENDENCY OF CLASS ACTION,PROPOSED SETTLEMENT AND FAIRNESS HEARING
TO: ALL PERSONS WHO PURCHASED OR HELD INVESTMENTS IN PENSION
FUND OF AMERICA, KNOWN AS RETIREMENT TRUST PLANS.
IF YOU HAVE RECEIVED THIS NOTICE, YOU HAVE ALREADY BEENIDENTIFIED FROM THE RECORDS OF PENSION FUND OF AMERICA ASBEING A POTENTIAL CLASS MEMBER
THIS NOTICE EXPLAINS YOUR RIGHTSPLEASE READ IT CAREFULLY
THIS IS NOT A LAWSUIT AGAINST YOU.IT IS THE PARTIAL SETTLEMENT OF A LAWSUIT IN WHICH YOUMAY BE ENTITLED TO RECEIVE MONETARY COMPENSATION
1. PURPOSE OF NOTICE
An asserted class action lawsuit has been filed in the United States District Court for the
Southern District of Florida on behalf of a class of investors as defined in Section II, below(hereinafter referred to as "Lawsuit"). The plaintiffs in this lawsuit pending before the
Honorable K. Michael Moore in the United States District Court for the Southern District ofFlorida ("Court"), have agreed to a settlement with Juan De La Riva, Amanda De La Riva, andRobert De La Riva (hereinafter referred to collectively as "the De La Riva Parties"), to resolveall claims related to or in connection with their handling and investment of, or involvement in
any way with, any monies invested with Pension Fund of America ("PFA"). The proposed
Settlement is with only the De La Riva Parties. The Plaintiffs shall continue to pursue all theirclaims against the other non-settling defendants for their involvement with PFA. The Settlement
EXHIBIT
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is described in more detail in Section IV below. The proposed Settlement is subject to approval
by the Court at a final approval hearing (the "Fairness Hearing").
The purpose of this Notice is to inform you as a potential member of the Settlement Class
(described below) of your rights. The provisions of this Notice are qualified and subject in their
entirety to the terms of the Stipulation of Settlement, copies of which are available for review in
the manner provided in Section IX below. Capitalized terms used but not defined herein have
the meanings given to them in the Stipulation of Settlement.
II. THE SETTLEMENT CLASS
The "Settlement Class" or "Class," which this Court has conditionally certified for the
purposes of the Settlement, consists of all persons who purchased, sold, held and/or retained
investments in "retirement trust" plans offered by PFA, or its affiliated companies, during the
period commencing January 1999 through the present ("Class Period"). Excluded from the
Class are the Defendants , PFA, PFA Assurance, PFA International , Claren TPA, Robert
De la Riva, Luis Cornide, and all of the Defendants ' alter-ego entities , all employees or
agents of Defendants and agents of the Defendants ' alter-ego entities , all subsidiaries and
affiliates of the Defendants, the Defendants ' officers , agents, and employees, any agents or
brokers (and their immediate family members) who sold or solicited the sale of investments
in PFA or PFA Assurance.
IF YOU ARE COVERED BY ONE OF THESE EXCLUSIONS YOU ARE NOT APARTY TO THE SETTLEMENT CLASS.
III. BACKGROUND OF THIS LITIGATION
On March 28, 2005, the Securities and Exchange Con-emission ("SEC") filed a Complaintagainst PFA and other related entities and individuals , alleging that PFA's sale of retirementtrusts was in violation of federal securities laws. On that same day, the Court appointed ThomasSchultz, Esq . as Receiver for PFA and related entities.
On April 21 and 25, 2005, Plaintiffs filed two separate class actions complaint againstnumerous parties in connection with the PFA scheme. These two cases were ultimately
combined into one consolidated lawsuit. Plaintiffs subsequently filed a second amended classaction complaint against various banking institutions and other individuals and entities forviolation of federal securities laws related to the PFA scheme. The Plaintiffs have engaged innegotiations with the De La Riva Parties in order to resolve all claims against those Partiesrelated to their handling, investment or involvement with funds invested with. PFA.
Class Counsel have met several times with counsel for the De La Riva Parties to discussthe potential settlement of this Action. Class Counsel reached a binding settlement with the De
La Riva Parties, resolving all issues relating to the De La Riva Parties' handling and investmentof, or involvement in any way with, any monies invested with PFA. A written SettlementAgreement was executed on May 25, 2007, and was preliminarily approved by the Court.
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Plaintiffs and Class Counsel all have concluded that it would be in the best interests of
the Class to enter into the Settlement Agreement with the De La Riva Parties because the
Settlement would be a fair, reasonable and adequate resolution of this Action. The Settlement
calls for the payment by the De La Riva Parties of $112,500 (the "Class Settlement Fund"). The
Settlement also requires that the Proceeds of the Receiver's Turnover Action, including the
$50,000 currently held in trust, and $62,500 to be paid by the De La Riva Parties, for a total of5112,500 be allocated to Authorized Claimants. Finally, the settlement provides for a Plan of
Allocation that provides for the distribution of the Net Class Settlement Fund that is in accordwith the Plan set forth in the settlement with the HSBC Parties, which distribution will inure tothe benefit of the Settlement Class Members and other Authorized Claimants and avoid
prolonged litigation between and among Settlement Class Members and other AuthorizedClaimants regarding, distribution preferences and claim set-offs. By achieving a class settlement
with the De La Riva Parties relatively early in the litigation, the Settlement Class Members willreceive a significant amount of money without the uncertainty, delay, and expense of protractedlitigation. Based on their evaluation, counsel for the Plaintiffs have determined that thesettlement set forth in this Stipulation is fair, reasonable and adequate and in the best interests ofthe Settlement Class.
The De La Riva Parties, while continuing to deny vigorously Plaintiffs' claims and anyliability with respect to such claims, nevertheless recognize the costs and uncertainties attendantupon further litigation of the claims in this Action, and have therefore concluded that it isdesirable to enter into the proposed Settlement to avoid further expenses.
IV. PROPOSED SETTLEMENT OF THIS ACTION
After extensive negotiations among the attorneys for the parties in this Action, the partieshave agreed to a Settlement of the Action ("Settlement"), subject to final approval by the Court.The parties agree that the Settlement shall not be deemed or construed to be an admission orevidence of any violation of any statute or law or of any liability or wrongdoing or of the truth ofany of the claims or allegations in the Action. The terns and conditions of the Settlement areincorporated in a Stipulation of Settlement, which is on file with the Court. The following is asummary description of the Stipulation of Settlement.
Class Settlement Fund
The first financial term of the Settlement is as follows: Upon final approval of thissettlement, the De La Riva Parties shall pay a total of ONE HUNDRED TWELVETHOUSAND FIVE HUNDRED DOLLARS ($112,500) ("Settlement Fund") to the Class inexchange for a release of all Released Claims as defined in the Stipulation, and for otherpromises and consideration set forth in the Stipulation of Settlement.
The Settlement Fund, net of attorneys' fees and expenses as awarded by the Court, andthe net of the expenses for administering the Settlement ("Net Settlement Fund") will betransferred to the Receiver for distribution to the Class pursuant to the Plan of Allocation.
Turnover Proceeds
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The second financial term of the Settlement is as follows: upon final approval of this
Settlement, the De La Riva Parties shall pay over to the Receiver ONE HUNDRED TWELVE
THOUSAND FIVE HUNDRED DOLLARS ($112,500), plus accrued interest , Fifty Thousand
Dollars ($50,000) of which is currently held in trust by the Receiver (the "Turnover Proceeds"),
and the remaining Sixty Two Thousand Five Hundred Dollars ($62,500) to be paid by the De La
Riva Parties.
All of the Turnover Proceeds, net of the expenses for administering the Settlement, will
be transferred to the Receiver for distribution to the Class pursuant to the Plan of Allocation.
Plan of Allocation
The Plan of Allocation calls for distribution to qualified Settlement Class Members,
WHO DO NOT ELECT TO EXCLUDE THEMSELVES FROM THE SETTLEMENT, of thefollowing monies: ( 1) the Net Settlement Fund ($112,500, less Court awarded fees and expenses,
expenses attributable to administration of the Settlement and Taxes) and (2) $ 112,500 of the
Turnover Proceeds.
The total amount of the monies to be distributed will be divided equally between twofunds. The first fund will be distributed on a pro-rata basis to all qualified Settlement ClassMembers , WHO DO NOT EXCLUDE THEMSELVES FROM THE SETTLEMENT, and who
did not receive any distribution or return of their investment from PFA prior to the appointment
of the Receiver . The second fund will be distributed on a pro-rata basis among all qualifiedSettlement Class Members, WHO DO NOT EXCLUDE THEMSELVES FROM THESETTLEMENT, regardless of whether they received the prior distribution or return of theirinvestment , and Receivership Creditors whose claims are allowed by the court after anyobjections deemed appropriate are made by the Receiver . Therefore , those investors who havenot received any return of their investment from PFA prior to the appointment of the Receiverwill share in distributions from the entire amount to be distributed by the Receiver. Thoseinvestors who have already received a partial return or liquidation of their investment from PFAprior to the appointment of the Receiver will share on a pro -rata basis in the distribution of onlyhalf of the recovered fiends.
After final approval of the Settlement, and 30 days after the Effective Date of theSettlement , the Receiver shall mail a Proof of Claim form to all Settlement Class Members,WHO DID NOT ELECT TO EXCLUDE THEMSELVES FROM THE SETTLEMENT. Theform of the proof of claim has been approved by the Court as part of this Settlement. ALLINVESTORS WHO WISH TO SHARE IN ANY OF THE RECOVERIES FROM THESETTLEMENT WILL BE REQUIRED TO COMPLETE THE PROOF OF CLAIM ANDRETURN IT TO THE RECEIVER, ALONG WITH SUPPORTING DOCUMENTATION. TheReceiver will verify all claim for i s that are submitted and will either confirm the amount ofclaim or may object.
The exact amount of money that you will receive from the Settlement cannot bedetermined until all claim forms are submitted and verified. Please note that the proof of claim
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 65 of
form will not be mailed until 30 days after the Settlement is approved and the effective date of
the Settlement.
Attorneys' Fees and Costs
The award of attorneys ' fees to Class Counsel is a matter committed to the sole discretion
of the Court. The Settlement provides that Class Counsel will apply for ( 1) an award not to
exceed thirty percent (30%) of the Class Settlement Fund, and (2) reimbursement of their
reasonable expenses and costs incurred in connection with prosecuting this Action ("the Fee
Request" ). AS PART OF THIS SETTLEMENT, CLASS COUNSEL HAVE AGREED
NOT TO SEEK THE AWARD OF ANY FEE FROM THE TURNOVER PROCEEDS TOBE PAID BY HSBC AS PART OF THIS SETTLEMENT . Any award made by the Court in
response to the Fee Request shall be paid solely from the Settlement Fund. The fairness,
reasonableness , and adequacy of the Settlement may be considered and ruled upon by the Courtindependently of any award of attorneys' fees and costs.
V. RELEASE AND DISCHARGE OF CLAIMS
The following is a sui ary of the Release agreed to by the Settling Parties as part of theSettlement: Juan and Amanda De la Riva shall be released and forever discharged from allmanner of claims, demands, rights, liabilities and causes of action of every nature anddescription whatsoever, known or unknown, suspected or unsuspected, whether or not concealed
or hidden, fixed or contingent, arising out of, based upon or related to the purchase, acquisition,maintenance or sale of any trust or other plan or security issued or sold by or on behalf of PFA
by the Plaintiffs or any settlement class member during the settlement class period, and allclaims, counter-claims, set-offs or defenses which were asserted, might have been asserted, or inthe fixture could be asserted, in the Class Action Litigation and the Receiver's Turnover Motionincluding, without limitation, claims for negligence, gross negligence, breach of duty of careand/or breach of duty of loyalty, fraud, breach of fiduciary duty, or disgorgement of any gains,profits or unjust enrichment, or claims arising under or for violations of any state or federalstatutes, rules, regulations or common law. Robert De la Riva shall be released and foreverdischarged from any and all claims, counter-claims, set-offs or defenses which were asserted,might have been asserted, or in the future could be asserted, in the Receiver's Turnover Motionincluding, without limitation, claims for negligence, gross negligence, breach of duty of careand/or breach of duty of loyalty, fraud, breach of fiduciary duty, or disgorgement of any gains,profits or unjust enrichment, or claims arising under or for violations of any state or federalstatutes, rules, regulations or common law.
VI. YOUR RIGHT TO BE EXCLUDED FROM THE SETTLEMENT
If the Settlement is finally approved, you will be bound by the final judgment and releaseas entered by the Court unless you exclude yourself from the Settlement. Thus, if you are aClass Member, you have a choice whether or not to remain a member of the Class. This choicewill have consequences that you should understand before malting your decision. IF YOUWANT TO REMAIN A MEMBER OF THE CLASS AND BE ABLE TO APPLY TORECEIVE PART OF THE MONIES RECOVERED AS PART OF THIS SETTLEMENT,
Case 1 : 05-cv-21169-KMM Document 323-2 Entered on FLSD Docket 05/29/2007 Page 66 of
YOU ARE NOT REQUIRED TO DO ANYTHING AT THIS TIME. By remaining a Class
Member, you cannot assert in any other lawsuit, any claims against the De La Riva Parties
arising out of your investment with PFA. Also, by remaining a Class Member, you will have the
opportunity to, at a later date, receive a distribution in accordance with the Plan of Allocation.
IF YOU WANT TO BE EXCLUDED FROM THE CLASS FOR ANY REASON AND
DO NOT WANT TO SHARE IN THE MONIES RECOVERED AS PART OF THISSETTLEMENT, YOU MUST MAKE A WRITTEN REQUEST FOR EXCLUSION FROM
THE CLASS AND SEND IT, VIA FIRST CLASS MAIL, TO
De La Riva Settlement Exclusion
c/o Ailyn PopowskiPodhust Orseck, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130
Your request for exclusion must be received by no later than July 10, 2007. It should include
(a) the name, address, and telephone number of the Person requesting exclusion; (b) the name,
address, and telephone number of the Person who originally purchased the PFA trust plan; c)
each of the Person's acquisitions of a PFA trust plan during the Settlement Class Period,including the dates of purchase or sale, the type of trust plan purchased, the amount of the initial
investment, and the amount of the total investment in such plan; (d) any distributions, refunds orother monies received from PFA; and (e) that the Person wishes to be excluded from theSettlement Class. IF YOU ELECT TO BE EXCLUDED, YOU WILL NOT SHARE IN
ANY RECOVERY TO BE PAID TO THE CLASS AS A RESULT OF THESETTLEMENT OF THIS ACTION, YOU WILL NOT BE ENTITLED TO APPEAR ATTHE FAIRNESS HEARING DISCUSSED IN SECTION VII BELOW, AND YOU WILLNOT BE BOUND BY THE RELEASE SET FORTH IN THE STIPULATION OFSETTLEMENT.
VII. THE FAIRNESS HEARING
The Court has scheduled a hearing to be held on August 10, 2007 at 10:00a.m . beforethe Honorable K. Michael Moore, Judge of the United States District Court for the SouthernDistrict of Florida, at the United States Courthouse, Eleventh Floor, Courtroom No. III, 99Northeast Fourth Street, Miami, Florida 33132, for the purpose of determining whether to:finally approve the terms of the Settlement, approve Class Counsel's motion for attorneys' feesand costs, finally certify the Settlement Class, and such other matters that the Court deemsappropriate to consider ("Fairness Hearing,"). The time and date of the Fairness Hearing may becontinued or rescheduled by the Court without further notice. Furthermore, the Court mayapprove the proposed Settlement at or after the Fairness Hearing with any modification agreed toby the De La Riva Parties and without further notice to the Class.
If you wish to comment in support of, or in opposition to, the Settlement, the Plan ofAllocation, or the motion for attorneys' fees and costs, you may do so, but you MUST first mailyour comments and/or objections in writing, postage prepaid, upon Class Counsel and
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Counsel for the De La Riva Parties at the addresses below, and file your comments and/or
objections with the Court no later than July 23, 2007. You must include your name and
current address with your comments and/or objections.
ANY PERSON WHO FILES ANY OBJECTION TO THIS SETTLEMENT MUSTAGREE TO SUBMIT THEMSELVES EXCLUSIVELY TO THE JURISDICTION OFTHIS COURT FOR FINAL DETERMINATION OF THEIR OBJECTION.
If you also wish to be heard at the Fairness Hearing in person or through your own
attorney, you or your attorney MUST file a written Notice of Appearance with the Clerk of
the Court for the United States District Court for the Southern District of Florida, 301North Miami Avenue, Room 150 , Miami, Florida 33128, on or before July 23, 2007, andinclude a statement of the position to be asserted and the reasons for your position, together with
copies of any supporting papers or briefs. Your notice must include in a prominent location the
name of the case (Cordova, et al. iJ Lehman Bros., et al.) and the case number (No. 05-21169-CIV-MOORE). You MUST also mail a copy of your Notice of Appearance along with allaccompanying papers to Class Counsel and Counsel for the De La Riva Parties (addressesbelow).
Counsel for the Plaintiffs and the Class
Harley S. Tropin, Esq.Kozyak, Tropin & Throckmorton, P.A.2525 Ponce de Leon, 9`t' FloorCoral Gables, Florida 33134
Victor M. Diaz, Esq.Podhurst Orseck, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130
Counsel for the De La Rivas Parties
Kathy E. Rentas, Esq.Becker & Poliakoff, P.A.3111 Stirling RoadFt. Lauderdale, FL 33312-6525
Counsel for the Receiver
David M. Levine, EsquireTew Cardenas LLPMiami Center 26th Floor201 South Biscayne BlvdMiami, FL 33131-4336
Except as provided herein, no person shall be entitled to contest the terms and conditionsof the Settlement, or to object to counsel's motion for attorneys' fees and costs, and persons whofail to object as provided herein shall be deemed to have waived and shall be foreclosed foreverfrom raising any such objections. You need not appear at the hearing in order to object.
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VIII. TERMINATION
The Settlement Agreement shall terminate (1) at the option of either party if the Court, or
any appellate court(s) modifies or denies approval of any portion of the Stipulation, other than
the Plan of Allocation or the award to Plaintiffs' Counsel of any fees or expenses; and (2) at the
option of either party if a court does not enter and confirm the Final Order of Judgment.
IX. ADDITIONAL INFORMATION
The above is only a summary of the Settlement. A copy of the Stipulation of Settlement,
which includes the Release, as well as other pleadings, are on public file with the Clerk of the
Court for the United States District Court for the Southern District ofFlorida, 301 North Miami
Avenue, Room 150, Miami, Florida 33128. In addition, Class Counsel will file with the Court
their motion for attorneys' fees and costs as previously described (7) seven days prior to the
Fairness Hearing. The Stipulation of Settlement and counsel's motion for attorneys' fees and
costs will be available for inspection during normal business hours at the Office of the Clerk.
PLEASE DO NOT CONTACT THE COURT REGARDING THE SETTLEMENT
Dated: , 2007 BY ORDER OF THE COURTUNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDA
Case 1 : 05-cv-21169-KMM Document 323-3 Entered on FLSD Docket 05/29/2007
IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAMIAMI DIVISION
SECURITIES AND EXCHANGECOMMISSION
Plaintiff,
vs.
PENSION FUND OF AMERICA, L.C.,PFA ASSURANCE GROUP, LTD.,PFA INTERNATIONAL, LTD.CLAREN TPA, LLC,LUIS M. CORNIDE andROBERT DE LA RIVA,
Defendant.
MARCELLA CORDOVA, JORGE FLORES,HENRY IURMAN, MARCOS MUSTIELES,And KATIA OCAMPO, individually and onbehalf of all others similarly situated,
Plaintiffs,
vs,
LEHMAN BROTHERS, INC., a New YorkCorporation; MERRILL LYNCH & CO., INC.,a Delaware Corporation; RAYMOND JAMESFINANCIAL SERVICES, INC., a FloridaCorporation; OLIVA INVESTMENT GROUP,INC., a Florida Corporation ; SUNTRUSTBANKS, INC., a Georgia Corporation, andHSBC BANK, U.S.A., LUIS CORNIDE andROBERT A. DE LA RIVA,
Defendants.
Case No. 05-20863-CIV-MOORE/GARBER
No. 05-21169-CIV-MOORE-GARBER
IPROPOSEDI ORDERPRELIMINARILY APPROVINGSETTLEMENT AND PROVIDINGFOR NOTICE
EXHIBIT A
Page 1 of 13[1
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WHEREAS, on March 28, 2005, the SEC filed a civil action against Pension Fund of
America, L.C. and its related entities (hereinafter "PFA") and principals, alleging PFA engaged in an
offering fraud. On that same day, the District Court for the Southern District of Florida entered a
Temporary Restraining Order and appointed the Receiver;
WHEREAS, there is pending litigation between the Receiver and the De la Riva Parties over
the $450,000 plus accruing interest held in the trust account of counsel for the De la Riva Parties.
On April 17, 2006, the Receiver filed with the Court an Amended Motion for a determination that
the funds in the foregoing account are property of the Receivership and should be transferred to the
Receiver for distribution to all investors (the "Receiver's Turnover Motion"). 1PM is a party to the
Turnover Motion. The De la Riva Parties opposed the Motion. The matter remains pending.
WHEREAS, on April 21, 2005, a complaint was filed in the United States District Court for
the Southern District of Florida on behalf of a putative class of PFA investors who had purchased
trust plans from PFA from January 1, 1999 through March 31, 2005, inclusive (the "Settlement Class
Period"). Heavy Iia-man v. Pension Fund ofAmerica L. C. et al. Case No. 05-21101. On April 28,
2005, a second related complaint was filed on behalf of the same putative class of PFA investors.
Samuel Puterman v. Lehman Brothers, Inc. et al., Case No. 05-21169;
WHEREAS, on June 22, 2005, Plaintiffs consolidated these cases by filing a First Amended
Class Action Complaint styled Cordova, et al. vv. Lehman Bros., Inc., et al., Case No. 05-21169. The
consolidated cases are collectively referred to herein as the "Cordova Litigation." The First
Amended Complaint alleged common law claims for (1) breach of fiduciary duty, (2) aiding and
abetting PFA's common law fraud and (3) aiding and abetting PFA's breaches ofits fiduciary duties.
The Complaint named Lehman Brothers, Inc., Merrill Lynch & Co., Inc., Raymond James Financial
Services, Inc., Oliva Investment Group, Inc. and HSBC Bank, U.S.A. as defendants (hereinafter, the
"Financial Institution Defendants");
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WHEREAS, on January 17, 2006, the Court granted Defendants' motions to dismiss, ruling
the common law claims asserted in the Complaint were preempted by the Securities Litigation
Uniform Standards Act ("SLUSA");
WHEREAS, on February 13, 2006, Plaintiffs filed their Second Amended Class Action
Complaint ("Complaint") alleging violations by HSBC of Sections 12 and 15 ofthe Securities Act of
1933 ("Securities Act") and Section 10(b) ofthe Securities Exchange Act of 1934 ("Exchange Act");
WHEREAS, motions to dismiss the Second Amended Class Action Complaint are currently
pending;
WHEREAS, the Court has received the Stipulation of Settlement, dated as ofMay 25, 2007
(the "Stipulation"), that memorializes the Settlement entered into by Plaintiffs' Settlement Counsel
on behalf of the Plaintiffs and the Settlement Class, Receiver through his counsel, and Juan De La
Riva, Amanda De La Riva, and Robert De La Riva, through their counsel (the "De La Riva Parties"),
and the Court has reviewed the Stipulation and its attached Exhibits;
WHEREAS, all defined terms contained herein shall have the same meanings as set forth in
the Stipulation;
WHEREAS, counsel for the Settling Parties represent that they have engaged in substantial
arm's length negotiations in an effort to resolve all claims that have been or could be asserted in the
Cordova Litigation and/or by the Receiver in the Turnover motion or in any civil or administrative
proceeding, including conducting numerous meetings and telephone conferences where the terns of
the agreements detailed herein were extensively debated and negotiated;
WHEREAS, based on the investigation of their counsel, Plaintiffs believe that the claims
asserted in the Cordova Litigation have merit and that the evidence developed to date supports the
claims. However, Plaintiffs' Settlement Counsel recognize and acknowledge the expense and length
of continued proceedings necessary to prosecute the Cordova Litigation against the De La Riva
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Parties through trial and through appeals. Plaintiffs' Settlement Counsel also have taken into
account the uncertain outcome and the risk of any litigation, especially in complex actions such as
the Cordova Litigation, as well as the difficulties and delays inherent in such litigation. Plaintiffs'
Settlement Counsel are mindful of the inherent problems ofproof Linder and possible defenses to the
securities law violations asserted in the Cordova Litigation. Plaintiffs' Settlement Counsel have
concluded that the proposed Settlement is fair, reasonable and adequate and in the best interests of
the Settlement Class;
WHEREAS, the De La Riva Parties expressly have denied and continue to deny any and all
charges of fault, wrongdoing or liability against them arising out of any of the conduct, statements,
acts or omissions alleged, or that could have been alleged, in the Cordova Litigation and/or by the
Receiver in the Turnover Motion or in any civil or administrative proceeding, or of any infirmity in
the defenses that the De La Riva Parties asserted or could have asserted in such action or
proceedings, and are entering into the Settlement in order to eliminate the burden, distractions,
expense and uncertainty of further litigation;
WHEREAS, the Litigation is being settled against the De La Riva Parties only, and the
Settlement shall have no effect whatsoever on the pending Cordova Litigation between Plaintiffs and
the Non-Settling Defendants, namely Lehman Brothers, Inc., Merrill Lynch. & Co., Inc., Raymond
James Financial Services, Inc., Oliva Investment Group, Inc., and Luis Comide (the "Non-Settling
Defendants");
WHEREAS, the Settling Parties having made application, pursuant to Federal Rule of Civil
Procedure 23(e), for an order preliminarily approving the Settlement of this Cordova Litigation, in
accordance with the Stipulation which, together with the Exhibits annexed thereto, sets forth the
terms and conditions for the proposed Settlement; and
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WHEREAS, the Court having read and considered the Stipulation and the Exhibits annexed
thereto;
NOW, THEREFORE, IT IS HEREBY ORDERED:
1. The Court does hereby preliminarily approve the Stipulation and the Settlement set
forth therein, subject to further consideration at the Settlement Approval Hearing described below.
Settlement Approval Hearing
2. A hearing (the "Settlement Approval Hearing") shall be held before the undersigned,
United States District Judge K. Michael Moore, at the United States Courthouse, Courtroom #3,
Room 1104, James Lawrence King Federal Justice Building, 99 Northeast, 4`^' Street #1168, Miami,
Florida 33142 on August 10, 2007 , at 10:00 a. n., to determine:
(a) whether the Court should certify the Settlement Class for purposes of this
Settlement only and whether Plaintiffs and Plaintiffs' Settlement Counsel have adequately
represented the Settlement Class;
(b) whether the proposed Settlement of the Released Claims on the terms and
conditions provided for in the Stipulation is fair, reasonable and adequate to the Settlement Class and
Receivership Creditors and should be approved by the Court;
(c) whether a Judgment as defined in § 1.10 of the Stipulation and as set forth in
the Stipulation, Exhibit B should be entered herein;
(d) whether the Court should permanently enjoin the assertion of any claims
against the De La Riva Parties that arise from or relate to the subject matter of the Cordova
Litigation or the Released Claims by any Plaintiff, Settlement Class Member, Non-Settling
Defendant, the Receiver or any other persons;
(e) whether the proposed Plan of Allocation should be approved;
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(f) the amount of fees and expenses that should be awarded to Plaintiffs'
Counsel; and
(g) such other matters as the Court may deem necessary or appropriate.
Preliminary Certification of Settlement Class
3. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, the Court
preliminarily certifies, for purposes of effectuating this Settlement only, a Settlement Class of all
Persons who purchased, sold, held and/or retained investments in trust plans and/or other securities
from PFA, or its affiliated companies, during, the Settlement Class Period. Excluded from the
Settlement Class are (a) any Defendant named in the Complaint (or any previous complaints),
including any and all subsidiaries, affiliates, alter-ego entities, and/or immediate family members
thereof; (b) PFA, PFA Assurance, PFA International, Claren TPA, including any and all subsidiaries,
affiliates and/or alter-ego entities thereof; (c) all officers, directors, employees or agents (and their
immediate family members) of the entities and individuals described in subsections (a) and (b); (d)
all employees, agents and/or brokers (and their immediate family members) who sold or solicited the
sale of investments in PFA or PFA Assurance or any subsidiaries, affiliates and/or alter-ego entities
thereof; (e) any Person, firm, trust, officer, director or any individual or entity in which any of the
individuals or entities described in subsections (a) through (d) above has a controlling interest or
which is affiliated with any such individuals or entities; (f) the legal representatives, agents,
affiliates, heirs, successors-in-interest or assigns of any such excluded party.
4. For purposes of this Settlement only, the Plaintiffs are temporarily appointed as
representatives of the class and Plaintiffs' Settlement Counsel are temporarily appointed as
settlement class counsel.
5. For purposes of this Settlement only, this Court preliminarily finds and concludes
that: (a) the Settlement Class Members are so numerous that joinder of all Settlement Class Members
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in the Cordova Litigation for purposes of this Settlement is impracticable; (b) there are questions of
law and fact common to the Settlement Class which predominate over any individual questions; (c)
the claims of the Plaintiffs are typical of the claim of the Settlement Class; (d) the Plaintiffs and
Plaintiffs' Settlement Counsel have fairly and adequately represented and protected the interests of
all of the Settlement Class Members; and (e) a class action is superior to other methods for the fair
and efficient adjudication of this controversy, considering: (i) the interests of the Settlement Class
Members in individually controlling the prosecution ofthe separate actions, (ii) the extent and nature
of any litigation concerning the controversy already commenced by Settlement Class Members, (iii)
the desirability or undesirability of concentrating the litigation of these claims in this particular
forum, and (iv) the difficulties likely to be encountered in the management of the Cordova
Litigation. In the event that this Settlement is not approved or the De La Riva Parties withdraw from
the Settlement, these findings will be set aside and the issues of class certification and the
appointment of representative or lead plaintiff and class or lead counsel may be contested. Nothing
in this Order or the Stipulation shall effect the issue of class certification, the appointment of
representative or lead plaintiff, or the appointment of lead or class counsel in the pending Cordova
Litigation against the Non-Settling Defendants.
Approval of Notice Forms, Claims Filing Procedures and Related Processes
6. The Court approves, as to form and content, the Notice of Pendency and Proposed
Settlement of Class Action (the "Notice") annexed as Exhibit C to the Stipulation, and finds that the
mailing and distribution of the Notice substantially in the manner and form set forth in 118 of this
Order meet the requirements of Federal Rule of Civil Procedure 23 and due process, and is the best
notice practicable under the circumstances and shall constitute due and sufficient notice to all
Persons entitled thereto.
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7. The Court finds that the Notice and Claims Procedure for the Settlement Class
Members and the Receivership Creditors may be coordinated pursuant to a single Claims Procedure
as set forth in the Stipulation, since Settlement Class Members are also creditors ofthe Receivership
Estate. The Court also approves the claims filing procedure for Receivership Creditors and
Settlement Class Members as set forth in Paragraph 5.3 of the Stipulation, and further referred to in
Paragraphs 21-22 hereof, including, but not limited to the establishment of the Claims Filing
Deadline referenced therein and the provisions regarding disallowance of untimely filed claims.
8. Garden City Group ("Claims Administrator") is hereby retained to supervise and
administer the notice procedure as well as the processing of claims as more fully set forth below:
(a) The Claims Administrator, with the cooperation of the Receiver, shall make
reasonable efforts to identify all Persons who are Settlement Class Members, Receivership Creditors
and/or potentially interested parties, and not later than June 8, 2007 (the "Notice Date"), shall cause
a copy ofthe Notice, substantially in the form annexed as Exhibit C to the Stipulation, to be mailed
by first class mail to all Settlement Class Members who can be identified with reasonable effort; and
(b) At least seven (7) calendar days prior to the Fairness Hearing, the Class
Administrator shall cause to be served on the De La Riva Parties' counsel and Plaintiffs' Settlement
Counsel and filed with the Court proof, by affidavit or declaration, of such mailing and publishing.
9. All reasonable expenses incurred in identifying and notifying Settlement Class
Members and the Receivership Creditors, as well as administering the Distribution Fund, shall be
paid as set forth in the Stipulation. In the event the Settlement is not approved by the Court, or
otherwise fails to become effective, neither the Plaintiffs nor Plaintiffs' Settlement Counsel shall
have any obligation to repay any amounts actually and properly disbursed from the Notice and
Administration Fund.
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10. Any person receiving notice of the settlement who purchased or acquired PFA trust
plans for the benefit of another during the period from January 1, 1999 through March 31, 2005,
inclusive, shall forward the Notice to all beneficial owners of such PFA plans within ten (10) days
after receipt thereof, or send a list of the names and addresses of such beneficial owners to the
Claims Administrator within ten (10) days of receipt thereof, in which event the Claims
Administrator shall promptly mail the Notice to such beneficial owners.
11. All Settlement Class Members and/or Receivership Creditors shall be bound by all
determinations and judgments contained herein and/or in the Final Order, whether favorable or
unfavorable to the Settlement Class and/or Receivership Creditors.
Objections to Settlement and/or Exclusions from Settlement Class
12, Any Settlement Class Member and/or Receivership Creditors may enter an
appearance in the Cordova Litigation, at their own expense, individually or through counsel oftheir
own choice. If Settlement Class Members do not enter an appearance, they will be represented by
Plaintiffs' Settlement Counsel.
13. Any Person falling within the definition of the Settlement Class may, upon written
request, be excluded from the Settlement Class. Any such Person must submit to Settlement Class
Counsel a request for exclusion ("Request for Exclusion"), postmarked no later than July 10, 2007.
A Request for Exclusion must state: (a) the name, address, and telephone number of the Person
requesting exclusion; (b) the name, address, and telephone number of the Person who originally
purchased the PFA trust plan; (c) each of the Person's acquisitions of a PFA trust plan during the
Settlement Class Period, including the dates ofpurchase or sale, the type of trust plan purchased, the
amount of the initial investment, and the amount of the total investment in such plan; (d) any
distributions, refunds or other monies received from PFA; and (e) that the Person wishes to be
excluded from the Settlement Class. All Persons who submit valid and timely Requests for
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Exclusion in the manner set forth in this paragraph shall have no rights under the Stipulation, shall
not share in the distribution of the Net Settlement Fund , and shall not be bound by the Stipulation or
the Judgment entered in the Litigation.
14. Any Settlement Class Member may appear and show cause, if he, she or it has any,
why the proposed Settlement of the Released Claims should or should not be approved as fair,
reasonable and adequate, why a Judgment should or should not be entered thereon, why the Plan of
Allocation should or should not be approved, or why attorneys' fees and expenses should or should
not be awarded to Plaintiffs' Settlement Counsel; provided, however, that no Settlement Class
Member, or any other Person shall be heard or entitled to contest the approval of the terms and
conditions of the proposed Settlement, or, if approved, the Judgment to be entered thereon approving
the same, or the order approving the Plan of Allocation, or the attorneys' fees and expenses to be
awarded to Plaintiffs' Settlement Counsel, unless that Person has delivered by hand or sent by first
class mail written objections and copies of any papers and briefs such that they are received on or
before July 23, 2007, by Podhurst Orseck P.A., Victor M. Diaz, 25 West Flagler Street, Suite 800,
Miami, FL 33130, Kozyak Tropin & Throcknnorton, PA, Harley S. Tropin, 2525 Ponce de Leon, 9`j'
Floor, Miami, FL 33134; David M. Levine, Esq., Tow Cardenas, LLP, Miami Center, 26'' Floor, 201
South Biscayne Boulevard, Miami, FL 33131-4336 and Becker & Poliakoff, P.A., Kathy E. Rentas,
3111 Stirling Road, Fort Lauderdale, FL 33312, and filed said objections, papers and briefs with the
Clerk ofthe United States District Court for the Southern District of Florida, Miami Division, James
Lawrence King Federal Justice Building, 99 Northeast, 4"' Street #1168, Miami, Florida 33142 on or
before July 23, 2007. Any person who does not make his, her or its objection in the maimer
provided shall be deemed to have waived such objection and shall forever be foreclosed from
making any objection to the fairness, reasonableness or adequacy of the proposed Settlement as set
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forth in the Stipulation, to the Plan of Allocation, or to the award of attorneys' fees and expenses to
Plaintiffs' Settlement Counsel, unless otherwise ordered by the Court.
15. All papers in support of the Settlement, the Plan ofAllocation, and any application by
Plaintiffs' Settlement Counsel for attorneys' fees or reimbursement of expenses shall be filed and
served seven (7) calendar days prior to the Settlement Approval Hearing.
Distribution Funds
16. All funds held by the Escrow Agent shall be deemed and considered to be in custodia
legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such
funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court.
17. At the Settlement Approval Hearing, the Court shall determine whether the Plan of
Allocation proposed by Plaintiffs' Settlement Counsel, and any application for attorneys' fees or
reimbursement of expenses shall be approved.
18. The $112,500 Class Settlement Fund shall be transferred by or on behalf ofthe De La
Riva Parties to the Escrow Agent within five (5) business days of the date of this Order (the
"Transfer Date"). If the $112,500 is not timely deposited with the Escrow Agent, the unpaid amount
shall bear interest at the rate of five percent (5%) per annum from the Transfer Date until paid.
Upon the Effective Date, the Net Settlement Fund shall be transferred to the Receiver for distribution
to Authorized Claimants in accordance with the Plan of Allocation finally approved by this Court.
19. Pursuant to 112.2 of the Stipulation, the De la Riva Parties shall transfer the Turnover
Proceeds to the Receiver on or before the Transfer date, subject to the terms and conditions of the
Stipulation. After transfer to the Receiver on the Transfer Date, the Turnover Proceeds will be held
by the Receiver in a separate account at market rate interest in instruments backed by the full faith
and credit of the United States Government or fully insured by the United States Government or an
agency thereof until the Effective Date. Upon the Effective Date, $112,500 of the Turnover
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Proceeds may be distributed by the Receiver to Authorized Claimants pursuant to the Plan of
Allocation in its current form or as may be approved by the Court.
20. Neither the De La Riva Parties, their Related Parties , nor its counsel shall have any
responsibility for the Plan of Allocation or any application for attorneys' fees or reimbursement of
expenses submitted by Plaintiffs' Settlement Counsel, and such matters will be considered separately
frorn the fairness, reasonableness and adequacy of the Settlement.
Claims Process
21. Within thirty (30) days after the Effective Date the Proof of Claim form shall be
mailed to all Settlement Class Members and Receivership Creditors in the form attached as Exhibits
A-2 and A-3 to the HSBC Stipulation and/or as modified by the Court in the Final Order.
22. All Settlement Class Members and/or Receivership Creditors who wish to participate
in the Settlement shall complete and submit ProofofClaim forms in accordance with the instructions
contained therein. Unless the Court orders otherwise, all ProofofClaim forms must be submitted no
later than sixty (60) days from the date the Proof of Claim Forms were mailed. Any Settlement
Class Member and/or Receivership Creditor who does not timely submit aProofofClaim within the
time provided for, shall be barred from sharing in the distribution of the proceeds of the Distribution
Fund or from the Receivership Estate, unless otherwise ordered by the Court.
Miscellaneous Provisions
23. Neither the Stipulation , nor any of its terms or provisions , nor any ofthe negotiations
or proceedings connected with it, shall be offered or received into evidence in any action or
proceeding, or be used or construed in any was as an admission or concession by the De La Riva
Parties ofthe truth of any of the allegations in the Litigation, or of any liability, fault, or wrongdoing
of any kind.
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24. All proceedings against the De La Riva Parties in the Cordova Litigation, other than
proceedings necessary to carry out the terms and conditions of the Settlement, are hereby stayed and
suspended until further order of the Court. Pending final determination of whether the Settlement
and Stipulation should be approved and the Settlement Class certified for purposes ofthis Settlement
only, all Settlement Class Members, the Receiver and any Non-Settling Defendants are hereby
barred and enjoined from commencing or prosecuting against the De La Riva Released Persons any
action asserting any Released Claims.
25. The Court reserves the right to adjourn the date of the Settlement Approval Hearing
without further notice to the Settlement Class Members or Receivership Creditors, and retains
jurisdiction to consider all further applications arising out of or connected with the proposed
Settlement , The Court may approve the Settlement , with such modifications as may be agreed to by
the Settling Parties, if appropriate, without further notice to the Settlement Class or Receivership
Creditors.
IT IS SO ORDERED.
DATED:THE HONORABLE K. MICHAEL MOOREUNITED STATES DISTRICT JUDGE
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