A Receiver Unravels Profit Connect's Mess, Recovers $9.1 Million—But Warns of More Clawbacks Coming
The Profit Connect receiver has clawed back $9.1 million so far, but the real fight is just beginning.
According to the Receiver's Second Status Report filed February 7th, recovery efforts have hit their stride through asset sales and cryptocurrency liquidation. A December virtual auction alone brought in $1.25 million, with three Can-Ams fetching $182,750 and a 2021 Ford F650 selling for $86,500. Computer hardware flew off the block above retail prices. The big score came from liquidating seized cryptocurrency: $4 million recovered, a $2 million profit against what the company paid for it.
Real estate sales are still pending, but the Receiver currently holds $18.5 million in total equity.
The operation hit a snag in August when COVID-19 swept through the office. On August 4, 2021, Brent Kovar—apparently a key player in whatever remained of Profit Connect—informed the Temporary Receiver that an employee had tested positive. Six employees and one member of the Receiver's team ended up infected. The Temporary Receiver sent everyone home, demanded negative test results before anyone returned, and hired a professional cleaning crew to sanitize the facility.
What's costing the Receiver real money now isn't operational expenses. It's the legal warfare among Profit Connect investors themselves.
Multiple lawsuits have been filed by victims trying to jump the line and recoup their losses ahead of other investors. One investor, Jeffrey Nicholas, refused to dismiss or stay his lawsuit against his upline Troy Sutton. The Receiver's counsel had to file a motion under the All Writs Act to stop him. Nicholas caved immediately upon seeing the motion.
But here's where it gets messy: after Nicholas filed suit, someone from his own downline sued him. Then another investor in Texas state court filed against Nicholas with similar allegations. The Receiver's counsel is now in talks with that investor's attorney, hoping to negotiate a settlement that benefits the estate.
There's also a planned class-action brewing from yet another group of investors.
All these lawsuits technically violate the preliminary injunction that was already granted, meaning they'll either be dismissed or go nowhere. But they're draining the receivership fund regardless. Legal fees have already climbed to $495,000.
The math is stark: recover $9.1 million, spend nearly half a million on legal fees just to keep investors from suing each other while the Receiver tries to salvage what's left of this wreck. And according to the filing, more clawbacks are coming—meaning victims who got payouts early may soon have to give some of that money back.
🤖 Quick Answer
What significant recovery milestone has the Profit Connect receiver achieved?The court-appointed receiver has recovered $9.1 million through strategic asset liquidation, including cryptocurrency sales generating $4 million and vehicle auctions. A December virtual auction contributed $1.25 million, with additional proceeds from computer hardware sales. The receiver currently holds $18.5 million in total equity, with pending real estate transactions expected to increase recovery amounts further.
Why are additional clawbacks anticipated in the Profit Connect case?
The receiver's Second Status Report indicates ongoing investigation into transferred assets and potentially fraudulent transactions. Clawback proceedings target funds distributed to investors or third parties during the scheme's operation. Legal recovery actions continue as the receiver identifies additional assets and addresses complex financial entanglements requiring court intervention for asset return.
How did cryptocurrency liquidation contribute to recovery efforts?
Seized cryptocurrency holdings were liquidated for $4 million,
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