Hamstreet & Associates will use this page to answer questions as information becomes available. Because we are actively working to better understand certain questions, answers will evolve over time. We’ve added date stamps to some answers so you can easily find the latest information.
What is a receivership?
It’s a legal process in which a court-appointed official – the receiver – takes custody and control of a company’s assets and operations for purposes set forth by the court. The receiver is an officer of the court and has an obligation to act in the best interests of the receivership and for the benefit of creditors.
Why are the AEM LLCs in receivership?
Lawsuits were brought against certain AEM funds. Because the AEM funds were insolvent and could not meet their obligations, the funds’ manager – American Equities, Inc. – made the decision to put the assets into receivership.
Who is Hamstreet & Associates?
Hamstreet & Associates is a nationally recognized firm that specializes in working with troubled companies to manage difficult situations, improve results, and preserve value.
How much longer will the receivership be in place?
Currently, the Receiver is engaged in selling property in Mexico, supporting ongoing litigation, and managing administrative functions. The Mexican property will hopefully be liquidated by 2024 but is dependent on the market. The litigation is scheduled for trial in February 2023. The administrative functions will cease at the close of the Receivership.
What are the funds’ assets?
The Receiver has liquidated almost all of the domestic real estate assets. As of April 15, 2022, there is one pending sale and one parcel in Montana being cleaned up for listing later this spring. The contract portfolio is being held and serviced by Evergreen Note Servicing. In Mexico, there are two pending sales, two condos listed, and 3 tracts of bare land. Two tracts are in the process of being developed into rustic subdivisions, and the first lots will be available for sale by the end of April 2022.
The Receiver anticipates the remaining value of the estate, approximately $3 to $5 million, to be realized over the next 2 years.
How did the funds become insolvent?
The investigation into the mismanagement and decline of the AEM pools has been completed. Please visit the documents section for a detailed recounting of the Receiver’s findings, contained in the following documents:
October 21, 2019 – Declaration of Michael Ueltzen
November 13, 2019 – Summary of October 2 Investor Meeting and related slides
Information can also be found in the Receiver’s most recent complaint
January 12, 2022 – Receiver’s 2nd Amended Complaint
What costs are associated with the receivership, and who pays?
Costs for the receiver, attorneys, forensic accounts, ongoing staff, insurance, office rent, property taxes, and foreclosure expenses will be paid from the funds’ assets.
Are investors in other entities, like AEI or Ridgecrest, able to join the receivership?
Hamstreet & Associates was appointed the Receiver by the Clark County Court, and our authority is limited to the 15 AEM Pools named in the Receivership Order. We do not have the jurisdiction to include any other LLCs.
What is MIMO?
The MIMO calculation (also called the net investment approach) used to determine allowed claim amounts looks at cash in and cash out of the Pools from January 31, 2007 to May 19, 2019. The difference between the money put into the pools and the cash payments received from the Pools during that time is the balance of your claim. If the difference is negative, the Receiver has proposed that it be disallowed.
More information on MIMO and the claims calculation can be found on the documents page:
May 28, 2021 – Motion
What is the distribution schedule?
The Receiver will make interim distributions periodically when enough cash has been collected to make a significant distribution. The first distribution of $3 million was made on July 8, 2021. The Receiver anticipates a similar distribution in 2022, in both value and timing
Can I file a claim for theft loss on taxes I’ve previously paid on my investment?
Whether an investor claims a theft loss is a decision each investor must make individually with their tax advisor. Generally, there need to be at least criminal charges and ideally a criminal conviction in order to claim a theft loss. The Receiver cannot bring criminal charges but can cooperate with agencies who might. No charges have been made to date. The Receiver does not recommend taking a left loss based on the information currently available. The relevant IRS rulings are Rev Proc 2009-20, Rev Proc 2011-58, and Rev Rul 2009-9.
Will distributions be subject to taxation?
Distributions from the receivership will be considered a return of principal. The Receiver is not planning to issue 1099s for the distributions. If you are invested through a traditional IRA, then your custodian may issue a 1099 related distributions received or claims transferred out of your IRA.
What am I supposed to do about taking my Required Minimum Distribution (RMD)?
The receivership does not change the rules about RMDs, but you may be able to reduce the amount of your required minimum distribution by asking your trust company to revise the value of your AEM investment.
I have both IRA and non-IRA claims. How will my distribution be paid out?
The distribution will be paid pro-rata to your IRA and to you personally. If your IRA is serviced through a custodial service, such as Forge Trust, the payment will be sent to the custodian directly.
The Receivership records of IRA ownership are incomplete. If you receive a distribution addressed to you personally that you believe should be directed to your IRA at an external custodian, you will be responsible for forwarding the payment onwards. If you would like to contact the receivership to ensure that the custodian address and account number on record are correct, you are encouraged to do so as soon as possible.
Can I move my claim out of my IRA?
Yes. All legally performed transfers of claims are recognized in the Receivership, including a re-assignment of an IRA. Please contact the Receiver directly for more information on this process.