The latest fee application submitted by the court-appointed receiver on the last calendar date of 2024 that is December 31, reveals several troubling inconsistencies and questionable expenditures, raising critical concerns about transparency, efficiency, and the effective use of funds. Although, till date, the receiver has not released a single penny to the mortgage payments or to the escrow for alleged Chinese Lenders or to the improvement of any of the receivership properties, yet the receiver is putting in enormous self-billing for approvals of the court.
It is important to know that the receiver himself applied for delaying the fee applications payments till Feb 2025, a month ago. Interestingly with less than 30 days before the very appeal that as the first one will likely vacate them [the receiver], they urgently rushed to the Judge to pilfer the funds in the bank hours before they are potential fired by the fifth circuit ruling – is a further evidence of self-dealing. We understand that due to the receiver’s reasons to manipulate the inflow of amounts into the receivership accounts to get their own bills paid. It is clearly due to the receipt of a large amount received against the malicious settlement of 2999TC with HNGH Turtle Creek LLC.
A further astonishing fact is that SEC, being the first responsible agency to analyze the receiver fee applications, did not find any ambiguous entries or irregularities in them, while a mere accountant can find them clearly. The fact that the SEC has not commented or questioned any of the billing is clear evidence that the SEC is dialect of their duties of reviewing the billing and is giving their unopposed authorization without even reviewing the billing. There is no reason for SEC to overlook other than being aiding the malicious intent collectively with the receiver. As the defense, we have identified the following key observations that merit close examination:
A striking inconsistency in the Receiver’s fee application involves the billing for Microsoft 365 licenses, presenting a pattern that is both vague and seemingly unjustified. According to the submitted records, the application charges for an astonishing 80 licenses in July and August 2023, followed by a drastic reduction to only 1 license from September through December 2023. Even more concerning is the complete absence of any Microsoft 365-related billing in 2024.
This inconsistency raises several pressing questions. Why were such a large number of licenses required for just two months? Who were the users of these licenses, and how were they connected to the receivership’s work? Moreover, if the operations required only one license for subsequent months, what justifies the sudden spike to 80 during the earlier period?
Microsoft 365 subscriptions are typically assigned on a per-user basis, making it difficult to rationalize such a dramatic fluctuation in license quantities. Without clear explanations or detailed usage records, this expenditure appears to lack transparency and raises concerns about unnecessary or inflated charges. Leading us to believe fraud occurred as has been seen through out the undocumented and unverified billing. In receivership cases, where every dollar spent should be meticulously accounted for, such discrepancies suggest a troubling lack of oversight or, worse, mismanagement of resources.
The absence of proper documentation to substantiate the need for these licenses undermines the credibility of the application and calls for immediate clarification. Stakeholders and the court must demand answers to ensure that funds are utilized effectively and that such irregularities do not compromise the integrity of the receivership process.
2. Exorbitant Intuit Expenses
The fee application submitted by the Receiver reveals a pattern of Intuit-related expenses that appear to be significantly inflated and inconsistent with standard pricing models. Monthly charges for Intuit services during the reported period reach alarming levels, with expenses such as $4,306.64 in September 2023, contrasting sharply with a mere $746.20 by February 2024. This drastic reduction in costs over a few months is not only perplexing but also indicative of potential overbilling or inflated charges in the earlier periods.
To put this into perspective, Intuit QuickBooks Enterprise, a widely used accounting software, offers subscription plans where even the most extensive package for 40 users is priced at a maximum of $4,668 annually, based on publicly available pricing. The submitted records, however, suggest monthly expenses that far exceed this annual benchmark, raising legitimate concerns about the justification and allocation of these costs.
Such discrepancies in billing practices demand scrutiny. Were the higher expenses in earlier months justified by an actual increase in necessary services or users, or do they reflect a lack of oversight in managing subscriptions and vendor agreements? Additionally, the steep decline in monthly charges over time begs the question of whether previous payments were inflated due to administrative inefficiencies, unnecessary services, or other unexplained factors.
In a receivership scenario where financial prudence and accountability are paramount, these unexplained variances in Intuit expenses cast doubt on the legitimacy of the billing and the Receiver’s financial management. Clear and detailed explanations are essential to address these inconsistencies and ensure that the funds entrusted to the Receiver are being utilized responsibly and transparently. This matter warrants immediate attention from the court and stakeholders to uphold the principles of fairness and accountability.
The question becomes – is the receiver inapt inept and highly unqualified or intentionally deceitful in the allocation of expenses to Mr. Barton’s bills, consistently over-charging? As no receipt is provided and the SEC fails to request any such backup. The question will go unanswered if the Judge consistently fails to do his duty in allowing questioning of exorbitant and unethical billing. Unfortunately, what we have seen to date based on the fact that the Judge contrary to the SEC’s selection, picked a law firm, with no real estate experience and only 1 prior receivership. The decision seems to have been made by a judge who had a conflicted relationship with two young lawyers who were previously clerks in the judge’s court. The more experienced real estate receivership who the SEC had already recommended was passed over for this inferior and questionable law firm. The consistent ruling in favor of the two young male single clerks at Brown Fox Law chose an extreme favor towards them which makes us question the arms length transactions between the judge and the law firm. The receiver, under oath, stated that his job was to “honor Judge Starr”, which again shows the bias against a pre-judgement receivership and an innocent American.
3. Excessive Spending on Receiver’s Declarations and Reports
The fee application raises serious concerns over significant sums billed for the preparation of the Receiver’s Declaration and Interim Report. These documents, intended to justify the Receiver’s continued appointment, represent a substantial drain on receivership funds with little relevance to the core objective of asset recovery and stakeholder benefit. Specifically, the amounts billed include:
- Cort Thomas: $5,544
- Quarterly Report by Cort Thomas: $16,476
- Brown Fox Law (Mostly Charlene Koonce): $36,296
Collectively, these charges amount to over $58,000, a staggering figure for what can be characterized as self-serving reports. Rather than focusing on the efficient management and recovery of assets for the benefit of creditors and stakeholders, these expenditures appear to prioritize justifying the Receiver’s position—a goal that should not come at such an exorbitant cost.
These expenses highlight a troubling misalignment between the Receiver’s responsibilities and the allocation of receivership funds. Preparing reports of this nature is a procedural necessity, but the amounts charged raise questions about the efficiency and necessity of the work performed. The fact that such large sums were directed toward administrative self-validation, rather than addressing the pressing financial challenges of the receivership, Receiver’s financial literacy and stewardship. The receiver seems far more concerned as to how they can increase their own billing instead of being concerned about any funds for the lenders.
The court and stakeholders must scrutinize these expenditures closely to ensure that future reports and filings adhere to principles of fiscal responsibility. Funds entrusted to the Receiver should serve the primary purpose of asset recovery and equitable distribution—not inflated administrative costs that contribute little to achieving these goals.
Why Charlene Koonce, a senior litigant, being paid $36,000 to prepare a pre-functionary report?
Was she interested in more billing for herself in the month?
Or did she in fact prepare for litigation as opposed to what the receiver was ordered to do?
4. Ambiguity in Accounting and Tracing Efforts
The fee application reveals a significant overlap in charges for tracing and reviewing accounting records, with multiple entities billing substantial amounts for what appears to be the same task. The reported expenses include:
- Brown Fox Law: $36,045
- Ahuja & Clark Accounting: $66,162
- Veracity Forensics: $28,850
Combined, these charges amount to over $131,000 in 3 months period, yet the exact nature of the work performed, and the responsible parties remain unclear. Despite these considerable fees, none of the involved entities have completed the tracing analysis as mandated by the Fifth Circuit, and the receiver has self-admitted that they did sampling and not the complete tracing. This lack of clarity raises critical questions about the efficiency, necessity, and legitimacy of these expenditures.
The absence of transparency about who undertook the tracing, and how the tasks were divided among the Receiver’s law firm, accounting firm, and forensic team, suggests a troubling lack of coordination. It also creates the appearance of redundant billing, where the same task may have been billed multiple times by different parties.
This issue is further compounded by the fact that the tracing work, a cornerstone requirement as per the court’s mandate, remains incomplete. If no single entity achieved the mandated outcome, why were such extensive fees incurred, and how were these amounts justified?
It is important to understand that such tracing out of the bank statements is made very easy as all the transactions are done in the daylight of the US banking system. Tracing requires starting with the money into the Wall Entities from the alleged Chinese Lenders and Money out of the Wall entities. Whereas the receiver and his team got themselves engaged into the broadest purview seizing everything and anything that belonged to Barton directly and indirectly, thereby, providing self-selected and manipulated accounting transactions to support their story telling.
5. Incorrect Billing Hours by Ahuja & Clark
The fee application highlights a critical error in the billing practices of Ahuja & Clark Accounting, which undermines their credibility as “experts” in accounting and financial management. The firm reported 328.4 hours worked by their senior associate, yet their own explanation only accounts for 321.4 hours—a clear discrepancy of 7 hours. This error has resulted in an unwarranted charge of $1,470, a figure that, while seemingly small in isolation, raises significant concerns about the accuracy and reliability of their overall billing.
In a case where every dollar spent should be meticulously justified and accounted for, such discrepancies suggest a lack of diligence in tracking billable hours. If errors of this nature are present in reported hours, it calls into question whether similar inaccuracies exist elsewhere in the firm’s invoicing practices.
Moreover, as professional accountants tasked with managing and reviewing financial records, Ahuja & Clark are expected to uphold the highest standards of precision. This mistake not only reflects poorly on their internal controls but also erodes confidence in their ability to manage the receivership’s financial complexities effectively.
The court and stakeholders must demand greater accountability and transparency from Ahuja & Clark. This includes detailed audits of their billing to ensure that errors like these are identified and corrected promptly. Inaccurate billing not only wastes receivership resources but also compromises the trust placed in those appointed to manage and oversee these critical matters. It is essential that such lapses are addressed rigorously to safeguard the integrity of the process.
6. Excessive Spending on Tax Returns
The fee application exposes an alarming allocation of resources toward tax preparation, with 45% of Ahuja & Clark’s total billing—a staggering $247,943 out of $550,413—attributed to this task. The Receiver further asserted that 80% of the accounting efforts were dedicated to tax filings, as outlined in DKT 593. However, this claim is not substantiated by any evidence provided to the court or the defense team.
This lack of transparency raises serious concerns about the efficiency and necessity of the work performed. The defense has reservations regarding the filing of tax returns for entities that never engaged in business activities and never maintained bank accounts. Allocating significant resources to prepare tax returns for such entities appears unjustifiable and wasteful.
The Receiver’s assertion of 80% effort on tax preparation also conflicts with the principle of proportionality. If such a substantial portion of accounting efforts was truly focused on tax filings, it would be reasonable to expect detailed documentation to validate this claim. Yet, neither the court nor the defense has been presented with any tangible work product or justification for these excessive expenditures.
This overstatement not only undermines the credibility of the fee application but also highlights the need for stricter oversight and accountability. Stakeholders must demand a comprehensive audit of these costs to ensure that funds were used appropriately and that any unjustified billing is addressed. The court should further mandate that all tax preparation work be disclosed and justified, particularly in cases where the entities involved had no financial activity to warrant such efforts.
In a process where every expense is scrutinized for its relevance and impact, the unexplained spending on tax returns for inactive entities represents a troubling misuse of receivership resources and calls for immediate corrective action.
7. Vague Billing Entries
The Receiver’s fee application includes 49 billing entries under the vague description of:
“Discussion regarding the status of the project and the next steps.”
These entries account for a total of 36.9 hours and result in charges amounting to $6,754. The ambiguity of these entries raises serious questions about the validity and necessity of these expenditures.
Such descriptions provide little to no insight into the actual work performed or the value it brought to the receivership. Internal discussions, while sometimes necessary, must be clearly documented with specific details about their purpose, participants, and outcomes to justify their inclusion in a fee application. The lack of transparency in these entries makes it impossible to assess whether the billed time was spent on meaningful activities that advanced the receivership’s goals or whether it simply reflects routine internal meetings that should not be chargeable to the receivership estate.
In order to properly create tax returns for the individual Barton entities, all meetings and billing should be allocated towards the specific entity so that it can be carried into future tax returns. The IRS requires much more information than we are being provided, so we question the accuracy of all of the tax returns being filed, if they are not filed according to specific expenditures appropriate to that entity. The tax returns could all be in error if the level of detail that the IRS requires is not used.
In a context where financial accountability is paramount, vague billing practices not only undermine trust but also hinder stakeholders’ ability to evaluate the appropriateness of these charges. Without sufficient detail, these entries risk being perceived as an attempt to inflate bills under the guise of legitimate work.
To address this issue, the Receiver should provide a comprehensive breakdown of these discussions, including the specific topics covered, their relevance to the receivership’s objectives, and any tangible outcomes achieved. Additionally, the court and stakeholders must demand stricter standards for future billing to ensure all entries meet a minimum threshold of clarity and justification. This will help prevent unnecessary costs and uphold the integrity of the receivership process.
Why is it important
The Receiver’s fee application reveals significant concerns about excessive, vague, and unjustified billing practices. Charges for Microsoft 365 licenses, including 80 licenses for only two months, lack clarity and appear unwarranted. Intuit-related expenses show inconsistent and inflated amounts, far exceeding standard pricing models. Substantial sums were billed for preparing self-serving reports, while overlapping charges for tracing efforts by multiple entities raise accountability questions, as none completed the mandated work. Ahuja & Clark’s billing includes a discrepancy of 7 hours, translating to $1,470 in errors, and excessive spending on tax returns—constituting 45% of their billing—was attributed to entities with no financial activity, without justification provided to the court or defense. Additionally, vague billing entries totaling $6,754 for internal discussions lack sufficient detail to warrant such costs. These issues highlight a troubling pattern of inefficiency, redundancy, and lack of transparency, calling for stricter oversight and detailed explanations to ensure accountability and proper use of receivership funds.