March 13, 2023

While the Risperdal portfolio of cases in the Prometheus receivership estate settled in 2021, the funding of the settlements has not yet occurred.  We understand from speaking to counsel handling the Risperdal mass tort portfolio cases, Paglialunga & Harris (“P&H”), that the settlement will not fund until a minimum number of claimants have agreed to the settlement terms (see October 28, 2022 update).  As a result, the receivership has yet to receive any payments from the settlement.

As reported in the Receiver’s last report to the Court, submitted on March 9, 2023, P&H recently provided new information about the status of the settlement.  P&H has reported that 81 claimants have signed settlement agreements and that P&H is still attempting to contact 65 other claimants, who have either not responded to P&H’s inquiries or whom P&H has been unable to locate.  P&H also reported that the deadline for claimants to sign off on the Risperdal settlement is June 30, 2023, and that any claimants who have not agreed to the settlement’s terms by that point will be excluded from the settlement.

P&H also provided an update on the other two categories of mass tort cases in the portfolio.  A handful of non-Risperdal tort cases are still being handled by the law firm of Sanders Phillips Grossman, but we have been told that none of those cases will result in a settlement.  Another group of cases were previously referred to the law firm of Girardi & Keese, which is presently in bankruptcy.  Given the uncertainty of the bankruptcy, and our understanding that none of the Girardi cases is likely to result in a substantial additional recovery for the estate, the Receiver will seek to terminate the receivership once the Risperdal settlement is finalized and the funds from it have been distributed to investors.

P&H has estimated that the funding of the Risperdal settlements should be complete by September 2023.  We will make a final distribution to the Prometheus investors soon thereafter.  If you are a Prometheus investor and your address or contact information has changed, you should update the Receiver’s office by emailing info@regulatoryresolutions.com in order to ensure you receive the final distribution check.

October 28, 2022

The last significant asset in the Receivership Estate is the mass tort portfolio – of the cases remaining in that portfolio, the vast majority relate to the drug Risperdal.  While the Risperdal cases settled last year (see the January 14, 2022 update for further details), the settlement funds have not yet been distributed by counsel handling the mass tort portfolio cases (Paglialunga & Harris, or “P&H”).

The Risperdal settlement has taken substantially longer to fund than P&H has projected at various times in the last eighteen months.  The Receiver has followed up with P&H and requested additional detail about settlement progress numerous times.  We have been continually frustrated with the lack and quality of information provided by P&H, and any information is generally only provided after substantial persistence and multiple inquiries on our part.

This update is based on information provided on October 20, 2022 by P&H partner Jim Harris.  Mr. Harris states they still cannot provide a firm timeline as to when the settlement will fund, but indicated that the following parts of the settlement process have been completed:

  • P&H has completed the process of determining which claimants are eligible for the settlement and which are not. For the claimants who are eligible, P&H has also determined how much each claimant is entitled to receive.
  • P&H has sent letters out to all claimants (eligible and ineligible) explaining the settlement. Those who were determined to be ineligible have an opportunity to appeal the decision by providing additional supporting documentation for their claims.
  • P&H has sent eligible claimants settlement paperwork for them to sign if they wish to accept the settlement. At the time of this update, however, fewer than half of the eligible claimants have agreed to the settlement.  Harris reports that this is due to an inability to locate the eligible claimants, as opposed to the claimants’ dissatisfaction with the settlement.

The settlement cannot fund until a sufficient number of eligible claimants have agreed to the terms.  Locating and contacting the remaining eligible claimants is thus the largest obstacle to the settlement funding.  Mr. Harris has explained to the Receiver that if P&H’s most recent round of attempts to make contact with the eligible claimants is unsuccessful, after three weeks P&H will retain a private investigator to attempt to locate the remaining claimants.  If the private investigator has been unable to locate a sufficient number of eligible claimants within thirty days, P&H will have to ask the defense if they are comfortable with proceeding with the settlement for the claimants they have.

This most recent update is the first time Mr. Harris has expressed real concern that P&H may be unable to locate enough claimants to get the settlement to fund.  In light of P&H’s newly-raised concerns, the Receiver is concerned that the settlement could fall apart.  While P&H has every incentive to diligently search for the remaining claimants and still has avenues of research it can explore, investors should understand there is risk the settlement may not fund.  If the settlement does not fund, any final distribution to investors would be minimal, since the Risperdal case portfolio is the largest remaining asset in the Estate.

If P&H is able to locate enough claimants, Mr. Harris has estimated that in less than 6 months, the settlement could be finalized and the funds due the Estate disbursed.  Given that P&H’s previous time estimates vastly underestimated the timeline necessary to consummate the settlements, we would recommend that investors not treat this as a hard deadline.

April 26, 2022

As previously reported, the last significant asset in the Receivership Estate is the mass tort portfolio; of the cases remaining in that portfolio, the vast majority relate to the drug Risperdal.  While the Risperdal cases settled last year (see the January 14, 2022 update for further details), the settlement funds have not yet been distributed by counsel handling the mass tort portfolio cases (Paglialunga & Harris, or “P&H”).  P&H previously reported that the Risperdal settlement would fund by the end of this month, but has since informed the Receiver that the funding has been delayed.  The Receivership Estate will only receive its share of the attorneys’ fees once the settlement funds have been distributed to both the mass tort plaintiffs and P&H (i.e., the settlement is funded).  While the Receiver has no reason to expect that the Risperdal settlement will not go through, P&H has informed the Receiver that the settlement will only fund if a certain percentage of the Risperdal claimants involved accept the terms of the settlement.  Because that has not yet occurred, the settlement has not yet funded.

The most recent estimate that the Receiver has been given by P&H is that rolling payments can begin to be made to the Receivership in 60 days.  Given the number of past delays, however, it is unclear whether payments will begin to be made within this estimate.  The Receiver will continue to press P&H and will provide updates as they are received.

Please see the SEC and Receiver’s Joint Status Report (Mar. 16, 2022) for more details.

January 14, 2022 – Receiver’s Update

The largest remaining asset of the receivership is the case portfolio of medical mass tort cases, the vast majority of which involve the drug Risperdal, which were generated by Prometheus-funded marketing.  (See Case Portfolio FAQs in the Documents section of this webpage for a general discussion.)  As we reported in our last update, the rulings and trial outcomes for the Risperdal cases in our jurisdiction have unfortunately not been favorable to the plaintiffs.  As a result, the settlement offer accepted by outside counsel Jim Harris of Paglialunga & Harris (“P&H”) (the law firm handling these cases) was lower than initially expected, although Harris represents that the average per-claim settlement figure obtained for the Prometheus Risperdal cases was slightly higher than the average Risperdal settlement.

At the time of our last update, Harris had informed us that he expected the settlements to be finalized and paid by the fall of 2021, at which point P&H would pay the receivership its share of the attorneys’ fees and the receiver, in turn, could make a distribution to investors.  The settlement process has taken longer than he projected, however.  Harris now reports that he is working with a special master and an ethicist to allocate the settlement funds among the individual clients.  He expects that early this year letters informing clients whether they qualify for settlement will be sent out to clients, at which point the clients will have to decide whether to accept the settlement offers.  Once enough settlements have been finalized, the defendants will disburse the settlement funds to P&H and the attorneys’ fees (including the portion of counsel’s fees owed to the Prometheus investors) can be disbursed.  Harris has recently advised us that he expects this process to be completed in the first quarter of this year (2022), but that the timeline is subject to change.

Finally, following our last update, Harris confirmed to us that a very small subset of the cases within the Prometheus case portfolio (almost all of which were Risperdal cases) were referred to the law firm Girardi Keese.  Thomas Girardi, one of the firm’s two principals, had his assets frozen by a federal court in December 2020 after it was alleged that Girardi had misappropriated client funds.  In January 2021, Girardi Keese filed for bankruptcy and a bankruptcy trustee was appointed to manage the bankruptcy estate.  Harris reports he has been in contact with the Girardi Keese bankruptcy trustee regarding the Prometheus cases, but has received extremely little information from the trustee at this time.  Accordingly, Harris cannot advise on the amount of assets or claims involved; whether or not the cases were pursued or settled; the amount of any settlements obtained (if any were obtained); whether or not settlement funds were disbursed to the firm; or when the trustee will provide any additional information on the cases.  We will continue to press Harris to follow-up with the trustee for more information.

April 10, 2021 – Receiver’s Update

As we have often reported, the case portfolio of medical mass tort cases generated by Prometheus-funded marketing is the primary potential asset of the receivership.  Please refer to the Case Portfolio FAQs in the Documents section of this webpage for a general discussion.  Outside counsel handling these cases have warned that the value of the portfolio was uncertain because the vast majority of the cases (97%) involved the drug Risperdal.

The Risperdal cases have been pending for some time in the Superior Court of Los Angeles County.  The litigation has moved very slowly.  Certain cases were selected for “lead” status and went to trial to establish the potential value of the tens of thousands of Risperdal cases pending in that court.  Unfortunately, the Superior Court rulings and trial outcomes have not been favorable for plaintiffs.  One of the important Superior Court rulings detrimental to the plaintiffs’ case was appealed to the Court of Appeal and overturned last year which sparked some settlement discussions, but the Pandemic slowed any progress.

Several months ago, outside counsel handling the Prometheus-related Risperdal cases informed the receiver that settlement discussions were occurring.  Counsel stressed that the offers being discussed were very low, and that this was a consequence of the poor results in the lead cases.  Very recently, counsel let us know that he had received and intended to accept a settlement offer for all the Prometheus-related cases.  The settlement figure offered by defendants is very low.  But, taking into account the lead case results, counsel intends to accept the offer.  He presented information to our office reflecting that the settlement figure (per claim) he had obtained was slightly higher than the average Risperdal settlement.

Counsel expects the settlements to finalized and paid by the fall of 2021.  In turn, he will pay the receivership its share of the attorneys’ fees.  At that time, the receiver intends to make a distribution, perhaps a final distribution.

October 8, 2020 – Receiver’s Update

Although the medical mass tort case portfolio is still being handled by outside counsel, they have had little to report in the way of material developments since our last update.  A mediation with the Risperdal defense counsel had been scheduled for September 2020 in New York, but was cancelled due to New York’s 14-day quarantine requirement for all travelers from states with significant rates of COVID-19 transmission.  We will provide an update as we receive any new information about the status of the case portfolio and mediation efforts.

February 28, 2020 – Receiver’s Update

As the Receiver reported in the recently filed status report (accessible in the Documents section of this webpage), the two receivership estate assets are the case portfolio of mass tort cases and the judgments entered against Prometheus sales agents and James Catipay’s ex-girlfriend and family members.  While there were some settlement discussions with Risperdal defense counsel, we were advised that settlement currently appears unlikely and previously tolled litigation will recommence this year.  We will continue to seek periodic updates from the Sanders Firm.

December 6, 2019 – Receiver’s Update

The case portfolio of medical mass tort cases generated by Prometheus-funded marketing remains the primary potential asset of the receivership.  However, the ultimate value of the case portfolio remains uncertain.  To date, the receivership has received $287,595.24 as its fee share on settlements of 28 non-Risperdal cases.

While Paglialunga & Harris (“P&H”) was previously lead counsel for the cases, P&H encountered financial difficulties and brought in the law firm Sanders Phillips Grossman (the “Sanders Firm”) to take over primary responsibility of the case portfolio.  P&H remains co-counsel and the receivership estate’s interest in the portfolio remains the same.  The Sanders Firm previously assisted in the settlement of the transvaginal mesh cases in the case portfolio and they have significant experience with Risperdal cases.  The cases continue to move very slowly in the Los Angeles Superior Court, and one of the decisions in a lead case has been appealed.  We do not expect any material changes in the cases in the immediate future.

Default Judgments have been entered against eight of the former Prometheus sales agents and against certain members of Catipay’s family whom the Receiver’s alleged received fraudulent transfers from Prometheus Law.  We are evaluating how to cost-effectively collect on these judgments.

August 27, 2018 – Receiver’s 5th Status Report and Accounting

On August 27, 2018, the Receiver filed with the Court a Fifth Status Report and Accounting, which may be accessed through the Documents section of this website.

August 23, 2018 – Second Interim Distribution Checks

Checks representing an additional 2% pro rata distribution of approved claims were mailed on August 23, 2018.  We are able to make this distribution so soon after the initial distribution primarily as a result of receipts of sales commissions clawbacks.  As with the first distribution, if the investment was from an IRA account, some custodians requested the funds be sent directly to them.  If that was the case, those investors will receive a notice, and further information can be obtained directly from the investor’s custodian.

We anticipate there may be additional disbursements.  But, as we have indicated in previous investor updates, the primary asset of the receivership is the case portfolio of mass tort cases generated by Prometheus-funded marketing, the vast majority of which involve the drug Risperdal.  Those cases remain pending.  If and when those cases settle or are resolved, additional distributions will be available.  For more information on the portfolio, please see our discussion on the Receiver’s website.  See Case Portfolio FAQs as of Feb. 21, 2018.

July 25, 2018 – First Interim Distribution Checks have been Mailed

The checks for the first interim distribution to investors with approved claims were mailed yesterday.  If the investment was from an IRA account, some custodians requested the funds be sent directly to them.  Investors will receive a notice, if that is the case, and further information can be obtained directly from the investor’s custodian.

As stated previously, these checks represent a 9% pro rata distribution of investors’ approved claims.  Approved claim amounts and the 9% pro rata distribution can be reviewed in the “Final Schedule of Investor Claims-July 19, 2018” on the Receiver’s website.

If you have not received either your check or the notice from us by August 7, 2018, please email us at info@regulatoryreceiver.com.

We anticipate there may be additional disbursements in the future.  As we have indicated in previous investor updates, the primary asset of the receivership is the case portfolio of mass tort cases generated by Prometheus-funded marketing, the vast majority of which involve the drug Risperdal.  Those cases remain pending.  If and when those cases settle or are resolved, additional distributions will be available.  For more information on the portfolio, please refer to the “Case Portfolio FAQs as of Feb. 21, 2018.”  Also check the Receiver’s website for periodic updates.

June 21, 2018 – Court Approves First Interim Distribution and Procedures for Claims Approval

By an Order entered June 20, 2018, the Court has granted the Receiver’s motion, filed December 12, 2017, for Approval of a First Interim Distribution and Procedures for Claims Resolutions.  Please refer to the following documents on this page:

  • Notice to Prometheus Investors
  • Procedures for the Receiver’s Final Determination of Investor Claims and Pro Rata Distributions to Investors with Approved Claims
  • Order Granting Motion re: First Interim Distribution (June 20, 2018)
  • Final Schedule of Investor Claims

The Notice summarizes the Procedures and will also be mailed and emailed to investors.

March 5, 2018 – Receiver’s 4th Status Report

On February 26, 2018, the Receiver filed with the Court a Fourth Status Report and Accounting, which may be accessed through the Documents section of this website.

February 20, 2018 – Frequently Asked Questions re: Case Portfolio

In order to present the most current information in one place, the Receiver has prepared a separate FAQs for the Case Portfolio, which can be accessed from the Documents section of the website.

February 8, 2018 – Update re: First Interim Distribution

As noted in the December 22, 2017 update below, the Receiver filed a motion on December 12, 2017 for Court approval of a first interim distribution of $1,056,000, which is funded primarily from the sale of assets.  That motion was initially set for a hearing on February 5, 2018, but the Court later filed an Order that the motion was “under submission” and a hearing was not necessary.  We have not yet received an order of approval.  It is a common practice with this Court to take matters under submission without a hearing.  Unfortunately, the Court does not provide a date by which it will decide submitted motions.  We have taken steps to alert the Court that this motion is time sensitive.  As soon as we do receive approval, we will immediately implement the first interim distribution.

February 7, 2018 – Updated FAQs

Recent inquiries confirm that investors are frustrated by the pace, and the absence of a timeline for, recovery from the PLC Case Portfolio.  Please refer to the Case Portfolio FAQs which address this issue.  If you have any further questions that are not addressed in the FAQs, please send them to info@regulatoryresolutions.com.

January 29, 2018 – Notice to Investors re First Interim Distribution

As reported in our update of December 22, 2017, the Receiver filed a motion on December 12, 2017 with the Court for approval of a final claims process and for approval of a first interim distribution to investors.  The Court has taken this motion under submission and has not yet issued a ruling which would authorize this interim distribution.  The timing of such rulings is not always predictable.  If we do not receive a ruling by February 5, 2018, which was the initial date set for a hearing until the Court took the motion under submission, we will contact the Court and make every effort to secure authorization for the distribution as soon as possible.

December 22, 2017 – Interim Distribution and Claims Process

The Receiver has recently completed the sale of the Los Angeles condominium purchased by David Aldrich and James Catipay with Prometheus funds in 2014.  With those funds in hand, the Receiver filed a motion with the Court on December 12, 2017 to finalize claims procedures and authorize a first interim distribution to investors totaling $1,056,000, representing 9% of the total investor losses.  Under the claims procedures, each investor will receive, pro rata, a distribution equal to 9% of their claim.  For example, a $100,000 investor will receive $9,000 and a $10,000 investor will receive $900.  Future interim distributions will be made as additional funds become available.

Once that motion is approved by the Court, the Receiver will immediately provide notice to all investors about the procedures and a timeline for the first interim distribution.  Unfortunately, the Court in this case does not set specific dates for hearing and ruling on motions, but takes them “under submission” with no set date for a ruling – as such, we do not have a specific date as to when the motion may be granted and the procedures will be implemented.

In anticipation of the Court’s approval, we request that any investor who has had a recent address change (postal or email) please advise the Receiver’s office of that change at info@regulatoryresolutions.com.

The most promising “asset” of the receivership remains the potential fee sharing revenue from the Case Portfolio.  More than 95% of the cases, however, relate to the drug Risperdal and, to date, there have been no settlements or verdicts in any of those cases and we have no current projections from lead counsel as to the timing and potential amount of future fee revenues from those cases.  For more details on the Case Portfolio and the issues of valuation and timing, please refer to Paragraphs 11-12 of the FAQs section available in the Documents section of this page.

Additional questions may be submitted to info@regulatoryresolutions.com.

December 13, 2017 – Notice to All Investors

Please advise the Receiver’s office immediately if your address has changed.  Send your new mailing address to info@regulatoryresolutions.com.

September 12, 2017 – Receiver’s Update

Third Status Report and Accounting. The Receiver filed a Third Status Report and Accounting on August 29, 2017 which reports on the status of the receivership and includes an accounting that current cash assets are $507,000.  A copy of that Report can be accessed at the right sidebar.

Clawback Claims and Cases. The Receiver has filed three separate clawback cases to recover funds paid out by Prometheus to third parties:  (1) sales agents who received commissions with whom we were unable to reach pre-litigation settlements (McNamara v. Allen, et al., (C.D. Cal.) Case No. 2:17-cv-02858-TJH, filed April 14, 2017); (2) Prometheus Capital Partners (“PCP”) which received $119,000 in commissions and was the beneficiary of a $2.9 million Deed of Trust on the Los Angeles condo. (McNamara v. Prometheus Capital Partners, LLC, (C.D. Cal.) Case No. 2:17-cv-04821-TJH, filed June 30, 2017); and (3) Catipay friends and family (parents, sister, brother, ex-wife, and former girlfriend) (McNamara v. Catipay, et al., (C.D. Cal.) Case No. 2:17-cv-04347-TJH, filed June 12, 2017).

The status of these cases is summarized in the Third Status Report, pages 4-6.

The Los Angeles Condominium. The condominium on Flower Street in Los Angeles was purchased with $1,072,103 in Prometheus funds in June, 2014, but until very recently had no equity because it was encumbered by a $2.9 million Deed of Trust.  That Deed of Trust has now been removed following our August 18, 2017 settlement of our lawsuit against the holder of the Deed of Trust.  The property is now for sale.

Case Portfolio.  There have been no settlements or verdicts in any of the Risperdal cases (which account for more than 95% of the portfolio).  The Receiver has received $179,470 from lead counsel as the receivership’s share of fees from settlements in 16 cases not involving Risperdal.  For a thorough discussion of the Case Portfolio, please go to the FAQs document on this website.

Future Distributions to Investors. The Receiver anticipates that sales proceeds from the sale of the Los Angeles condo, combined with other assets, will provide enough funds for a first distribution to investors.  In anticipation of that, we will file a motion with the Court for approval to make an interim distribution and to approve procedures for the final determination of claims. We will make such a motion once the sales proceeds from a sale of the condo are received or the amount to received  is determined with certainty.

June 20, 2017 – Investor Questions – see FAQs Section in Right Sidebar

The Receiver’s office receives questions from investors on various subjects. Rather than respond to each inquiry separately, we have prepared a section on Frequently Asked Questions (“FAQs”) which addresses these questions.  Click the FAQs link on the right sidebar to access.  The most recurring questions relate to the case portfolio, particularly what is it worth and how much money will it generate to the receivership.  We address this in FAQ No. 11.  In short, there have not yet been any settlements or verdicts in any of the Risperal cases in the portfolio, which account for 95% of the cases, and there is no reliable way to predict results.  We are in regular communication with lead counsel for the portfolio and will provide updates as they are available.

June 19, 2017 – Receiver’s Update
Solicitation Letter Sent to Investors from Law Firm Goodman & Nekvasil

Several investors have alerted our office that they have received a solicitation letter from a Florida law firm, Goodman & Nekvasil, offering their services for an arbitration action against “the brokerage firm that sold this investment.” This advertising – offering the services of an attorney to sue a broker – is understandably confusing to the people who have contacted us.  We can offer the following:

  • The solicitation appears limited to actions against brokerage firms. We are not aware of any investors who invested in Prometheus through a licensed brokerage firm. Indeed, the SEC’s case was based, in part, on the claim of the unlicensed sale of unregistered securities.
  • The Financial Industry Regulatory Authority (“FINRA”) acts as a self-regulatory organization for brokerage firms and operates a large arbitration forum. Most agreements between stockbrokers and their customers include mandatory arbitration agreements calling for FINRA arbitration of disputes. It appears that this law firm handles these types of arbitrations. But, this arbitration would only be available for investments brought through a brokerage firm and, as noted above, we are not aware of any investors who purchased through a broker who would be bound by the FINRA rules.
  • The letter states that “we believe that you have lost your entire investment in Prometheus.” As you know, the Receiver’s main mission is to accumulate the assets of the Defendants, including any fees paid from the case portfolio, for return to investors. While there is no reliable way to predict the “value” of the portfolio, we expect it ultimately to generate funds which will be disbursed to investors through a process approved by the court.
  • We provide this background for informational purposes, each investor must make his or her decision on how to proceed.

May 17, 2017 – Receiver’s Update
PLC Principals Aldrich and Catipay Have Been Sentenced to Federal Prison

PLC principals David Aldrich and James Catipay have now been sentenced in their federal criminal cases brought by the U.S. Attorney’s Office in San Diego. Aldrich was sentenced to 18 months incarceration, plus restitution of $8.3 million.  Catipay was sentenced to 24 months incarceration, plus restitution of $11.7 million.

Both Aldrich and Catipay previously stipulated to judgments in the SEC’s civil case against them. The Aldrich judgment included a specific provision that he pay $3.6 million to the SEC, but he has made no payments toward that judgment – if he does ultimately make any payments to the SEC, we anticipate that the SEC will make such funds available for restitution.  The Catipay judgment does not include a specific dollar judgment as the amount of monetary relief as to Catipay will be determined at a later date.

February 3, 2017 – Receiver’s Update

The Receiver’s office has received multiple inquiries as to the status and potential value of the Case Portfolio as to which Mr. Catipay and Prometheus were to receive a share of the contingency fees due counsel if and when the cases are successfully resolved, by settlement or trial.

The good news is that, despite the Aldrich and Catipay’s squandering of investor funds for their own personal use, there is a Case Portfolio of potential plaintiffs as to which the receivership has a claim to a portion of fees earned from successful cases. Lead counsel for the cases in the Case Portfolio have emphasized, however, that it is not possible to project with precision the “value” of the Portfolio or the fees that may flow from the cases before they are tried or resolved. Nor is it possible to provide any specific timeline as to when the cases may be resolved.  Litigation is inherently unpredictable and all cases are very fact and court specific.  Beyond the lack of precision, it is also not strategically wise for counsel to provide public estimates of valuation which could adversely impact future trials or settlement negotiations.

It is also extremely important to note that, even if the cases are resolved in favor of the plaintiffs, the fees due the receivership are limited to a portion (generally 1/3) of the fees lead counsel receive.

We provide below a general summary of the Case Portfolio which is based upon descriptions and representations of lead counsel.

The Portfolio contains approximately 2,115 potential plaintiffs. This number may fluctuate because potential plaintiffs may be dropped if further due diligence indicates that they are not qualified or their injuries are not provable.  It must be stressed that 2,115 is the number of potential plaintiffs pre-screened by counsel to date, but is not necessarily the number of cases that have actually been filed. We are told this is common in mass tort litigation where cases do not have to be filed until there is an imminent statute of limitations issue.  As favorable results are reached in trials or settlements in the filed cases, counsel for the plaintiffs will work toward a global settlement involving all other plaintiffs with provable injuries.

95% of the Portfolio are potential plaintiffs relating to a single drug manufactured by a large pharmaceutical company which has some known side effects. The ultimate value of these cases will depend on multiple factors, including the age of the plaintiff, the evidence of use and side effects, the years in which the drug was used, and the applicable warning label used during those years. Settlements or trial results in some cases will present valuation parameters for other cases. None of these cases in the Portfolio have yet been settled or decided.  .

The receivership has received, to date, $151,200 in fees relating to cases involving two other drugs that have been resolved:

  • $142,723 has been received as the receivership’s share of fees related to the pre-filing settlement of nine cases relating to a diabetes drug. Those settlements totaled $2,028,619, of which, $1,362,832 has been paid as an interim payment. Additional fees will be paid as the remaining settlement amounts are paid.
  • $8,527 has been received as the receivership’s share of fees from the settlement of four cases involving a female contraception product which were settled for a total of $96,665. The receivership has received $8,527 as its share of the fees due on those settlements.

January 5, 2017 – Receiver’s Update

PLC Principals Aldrich and Catipay to be Sentenced Following Guilty Pleas in Criminal Cases; Receiver’s Status Report and Accounting

PLC principals David Aldrich and James Catipay have both entered guilty pleas in separate criminal cases brought against them by the U.S. Attorney’s Office in San Diego. Both have plead guilty to one count of conspiracy to commit Securities Fraud in violation of 18 United States Code Section 371.  The sentencing hearings are set for February 13, 2017 (Aldrich) and March 20, 2017 (Catipay) before Judge Houston.

On November 22, 2016, the U.S. Attorney’s Office in San Diego did issue a Press Release confirming the guilty pleas – a copy of that Press Release is posted at the right sidebar.

The Receiver has also filed a detailed Status Report and Accounting (filed November 10, 2016) which summarizes receivership activities to date – a copy can be accessed at the right sidebar.

September 28, 2016 – Claw Back Profits Paid to Investors and Commissions Paid to Sales Agents/Consultants

One of the receiver’s duties in cases like PLC is to identify investors who received profits and sales consultants who received commissions.  The law authorizes the receiver to “clawback” such profits and commissions and add them to the pool of funds for later distribution to investors who lost money.

To date, the Receiver has identified six investors who received nominal profits and approximately 37 sales agents/consultants who were paid commissions.  The Receiver has initiated the process of sending notices to each of them demanding the return of such profits and commissions to the receivership.

In order to assist those who receive these notices and their counsel, we are posting copies of two court decisions which include clear explanations of the law and procedures on the return of profits and commissions in Ponzi scheme cases.  Click on the case name below to read a complete copy of each decision.

  • Donell v. Kowell, 533 F.3d 762, 779 (9th Cir. 2008). In this case, the Ninth Circuit Court of Appeals concluded: “Those who receive gains from innocent participation in [a Ponzi] scheme may be required to disgorge those amounts . . .” to a Receiver.
  • Hays v. Adam, 512 F. Supp. 2d 1330, 1344 (N.D. Ga. 2007). This decision from the U.S. District Court in Georgia addresses the return of commissions in Ponzi scheme cases and cases involving the sale of unregistered securities: “Just as the law would require innocent investors to disgorge profits obtained from investing in an unlawful Ponzi scheme, . . . it dictates that the court cannot permit the sales agent defendants to unjustly benefit from their unlawful sales of securities in furtherance of a Ponzi scheme. The court will accordingly use its powers in equity to require the defendants to disgorge their commissions and bonuses arising from these activities.”

Receiver’s Update – The Court has Entered Judgments as to PLC principals David Aldrich and James Catipay

PLC principals David Aldrich and James Catipay have now both consented to the entry of formal Judgments of liability against them. Those Judgments are posted at the right sidebar.

These judgments include recitations that they do not admit or deny the SEC’s allegations against them, but include permanent injunctions against any future violations of the Securities Exchange Act of 1934 or the Securities Act of 1933 and order that each pay disgorgement of all ill-gotten gains and a civil penalty. As to Catipay, the Court will determine the amount of the disgorgement and civil penalty upon a motion which will be brought by the SEC in the future.

As to Aldrich, the Judgment against him recites as follows: “IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $2,667,945.00, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $17,786.30, and a civil penalty in the amount of $1,000,000.00 pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d) and Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3). Defendant shall satisfy this obligation by paying $3,685,731.30 to the Securities and Exchange Commission within 14 days after entry of this Final Judgment.”

August 18, 2016 Update to Investors

Both James Catipay and David Aldrich have now stipulated to formal judgments with the SEC.

The Receiver’s office continues to receive inquiries from investors as to when they can expect to receive payouts from their investments in Prometheus. Undeniably, the most significant asset of the receivership estate is the portfolio of cases as to which Catipay/Prometheus are owed a percentage of the contingency fee earned by the counsel of record as the cases settle or are otherwise resolved.  We anticipate proceeds from this arrangement will be substantial, but we cannot responsibly project the amounts of these proceeds as each case is fact specific with wide variations in the value of claims.  We do know that projections made by the Defendants as to the value of the portfolio, ultimate cash flow to Prometheus, and payouts to investors were very exaggerated.

As cases in the portfolio are resolved and the receivership receives its share of the identified fees, the receivership will accumulate a fund. We must clarify, however, that disbursements to investors from this fund cannot be made until the court approves, and the Receiver implements, a comprehensive claims process.  That process will include procedures by which the Receiver will confirm the amount of principal invested by each investor and a formula for the disbursal of the accumulated fund to those investors.  We anticipate that a series of interim distributions would be made as the fund grows, but those details will ultimately be refined in the claims process approved by the court.

We will provide updates as to the details of the case portfolio, but we do not expect to have fully reliable information to report for several months as we complete a detailed due diligence review of the cases.

The Receiver continues to work toward the accumulation of Prometheus assets beyond the case portfolio. This process will be advanced by the upcoming depositions of James Catipay, David Aldrich and other Prometheus operatives.

Any questions should be sent to info@regulatoryresolutions.com.

June 22, 2016 Update to Investors

Defendant James Catipay has now stipulated to the entry of a formal judgment against him.

The Receiver is taking steps to accumulate available assets of the Defendants. Those efforts have been hampered by the less than candid responses and answers of Defendant Catipay and another former Prometheus employee. The deposition testimony of the Defendants will be taken as soon as responses to bank subpoenas are received. This should occur in the next three weeks. We will continue to follow leads and accumulate as much as possible toward a fund for ultimate disbursal to investors.

The most significant asset of the receivership estate is the portfolio of cases as to which Catipay/Prometheus are owed a percentage of the contingency fee earned by the counsel of record as the cases settled or were otherwise resolved. We anticipate proceeds from this arrangement will be substantial, but we cannot yet quantify with any precision the true value of the interest in the cases. We will undertake further due diligence and consult with counsel of record. We do know that projections made by the Defendants as to the value of the portfolio and ultimate cash flow to Prometheus were often very exaggerated.

We will post further updates and communicate directly with investors as we proceed. Any questions should be sent to info@regulatoryresolutions.com.

April 26, 2016

In a case brought by the Securities Exchange Commission (“SEC”), the U.S. District Court in Los Angeles has placed PLCMGMT, LLC (which operates under the dba Prometheus Law) under the control of a receiver. The receiver was appointed in the case SEC vs. PLCMGMT LLC.  The SEC’s Complaint and the stipulated Preliminary Injunction can be accessed from the right sidebar of this website.

Also named in the case were principals David Aldrich and James Catipay. The SEC alleges that Prometheus committed securities fraud in connection with the solicitation of investments in a legal marketing program which, among other things, promised returns in excess of 100%.  The receiver has suspended all operations and has commenced a thorough review of operations.  Once that review has been completed, the receiver will post additional updates on this website and will communicate directly with investors and other parties.