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UNITED STATES BANKRUPTCY COURT


DISTRICT OF MINNESOTA

In re Jointly Administered under


Case No. 08-45257
Petters Company, Inc., et al.,
Court File No. 08-45257
Debtors.
Court File Nos.:
(includes:
Petters Group Worldwide, LLC; 08-45258 (KHS)
PC Funding, LLC; 08-45326 (KHS)
Thousand Lakes, LLC; 08-45327 (KHS)
SPF Funding, LLC; 08-45328 (KHS)
PL Ltd., Inc.; 08-45329 (KHS)
Edge One LLC; 08-45330 (KHS)
MGC Finance, Inc.; 08-45331 (KHS)
PAC Funding, LLC; 08-45371 (KHS)
Palm Beach Finance Holdings, Inc.) 08-45392 (KHS)

Chapter 11 Cases
Judge Kathleen H. Sanberg

Douglas A. Kelley, in his capacity as the PCI


Liquidating Trustee of the PCI Liquidating Trust,

Plaintiff, Adv. Proc. No. _____________

v.

Steve Goran Stevanovich and The University of


Chicago,

Defendants.

COMPLAINT

Douglas A. Kelley, in his capacity as the Trustee of the PCI Liquidating Trust (“the PCI

Liquidating Trustee”), by and through his undersigned legal counsel, for his Complaint against
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Defendants Steve Goran Stevanovich (“Stevanovich”) and the University of Chicago (the

“University”), states and alleges as follows:

NATURE OF ACTION

1. The Trustee brings this adversary proceeding to protect the value of the PCI

Liquidating Trust (the “Trust”) against further diminution at the hands of Defendant Stevanovich.

2. As the Court is aware, in October 2010 and April 2016, the Trustee commenced

two adversary proceedings (Nos. 10-04396 and 16-04044) against Stevanovich to avoid transfers

of the debtors’ property to Stevanovich and other defendants and to recover said property for the

benefit of the Chapter 11 estates.

3. Since filing those actions, Stevanovich repeatedly represented to the Court he has

been experiencing financial difficulties, largely due to the alleged detrimental impact of those

pending proceedings on his investment funds.

4. Notwithstanding his professed financial hardship, since 2010, Stevanovich has

made substantial monetary gifts to the University totaling over a million dollars and has committed

to give the University many more millions through formal pledges.

5. At the same time Stevanovich promised to give away millions of dollars to the

University, he has remained a defendant in the adversary proceedings pending before this Court.

6. The complaints in those adversary proceedings assert over $3 billion in claims

against Stevanovich and certain funds and management companies he controls.

7. Any recovery against Stevanovich in those proceedings will fund distributions to

Trust beneficiaries made up primarily of the victims of the Petters Ponzi scheme.

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8. Based on the Trustee’s existing claims against Stevanovich, the Trustee now brings

this proceeding pursuant to the Illinois Uniform Fraudulent Transfer Act, 740 ILCS 160/1 et seq.

(“IUFTA”) and Title 11 of the Unites States Code (the “Bankruptcy Code”) to preserve the value

of the Trust’s claims against Stevanovich and to maximize distributions to Trust beneficiaries by

(i) avoiding the transfers and obligations that Stevanovich has made to or incurred for the benefit

of the University and to the detriment of creditors’ rights, (ii) enjoining Stevanovich from making

further payments to the University to the detriment of his creditors, and (iii) recovering the

fraudulent transfers by Stevanovich to the University.

9. The facts alleged by the Trustee in this pleading are based upon information and

belief, unless otherwise stated.

PARTIES

10. Plaintiff is the trustee for the Trust, which was created pursuant to Article 8 of the

Second Amended Chapter 11 Plan of Liquidation dated April 8, 2016 (the “Second Amended Plan”

or the “Plan”). See Second Amended Chapter 11 Plan of Liquidation (Case No. 08-45257, Docket

No. 3263).1

11. Under Article 8 of the Plan, Debtor Petters Company, Inc. (“PCI”) and PCI’s

affiliates (together with PCI, the “Debtors”) contributed virtually all of their assets (including all

pending lawsuits, and all potential claims and causes of action belonging to the bankruptcy estates)

to the Trust.

1
This Court confirmed the Plan on April 15, 2016. See Findings of Fact, Conclusions of Law and
Order Confirming the Second Amended Chapter 11 Plan of Liquidation, dated April 8, 2016 (Case
No. 08-45257, Docket No. 3305) (the “Confirmation Order”).

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12. Under Section 8.9 of the Plan, the PCI Liquidating Trustee has the power to

prosecute all claims and causes of action belonging to the Trust, including any pending or potential

claims they may possess.

13. Stevanovich is a U.S. citizen who resides in Chicago, Illinois, or ostensibly

elsewhere, and serves on the Board of Trustees for the University.

14. Stevanovich is, and at all times relevant herein was, a hedge fund investment

manager, adviser and promoter who was the manager of some of the largest investors in the Petters

Ponzi scheme.

15. At all relevant times, Stevanovich was the founder, president, manager, and/or

managing director of the management companies that manage, inter alia, the Westford Special

Situations Master Fund, L.P., the Epsilon Global Master Fund, L.P., the Epsilon Global Master

Fund II, L.P., the Epsilon Global Master Fund III, L.P. and related funds (collectively the

“Westford Funds”).

16. The University, at all relevant times, was and is a duly organized and existing

corporation chartered under the laws of the State of Illinois, with its principal place of business in

Chicago, Illinois.

JURISDICTION & VENUE

17. This Court has subject matter jurisdiction over this adversary proceeding pursuant

to 28 U.S.C. § 1334. The claims asserted in this Complaint arise under Bankruptcy Code and are

related to cases pending before this Court under the Bankruptcy Code.

18. The jurisdiction of this Court is also proper under the Plan and the Confirmation

Order, under which the Court retained exclusive jurisdiction to issue injunctions and such other

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orders as may be necessary or appropriate to advance the Trustee’s duty to preserve or enhance

the value of the Trust.

19. Section 11.1(c) of the Plan provides for the retention by the Court of exclusive

jurisdiction to, inter alia, “issue injunctions or take such other actions or make such other orders

as may be necessary or appropriate to restrain interference with the Plan or its execution or

implementation by any Person,” and “to issue such orders as may be necessary for the

implementation, execution, performance and consummation of the Plan and all matters referred to

herein.” Second Amended Plan § 11.1(c), at 58; see also Confirmation Order ¶ 34, at 42-43

(providing for the Court’s “exclusive jurisdiction over all matters arising out of or related to the

Chapter 11 Cases and the Plan to the fullest extent permitted by law…”).

20. A key feature of the Plan that is instrumental to its implementation is the creation

of the Trust, which is charged with, inter alia, preserving and enhancing the value of the Trust’s

assets. Second Amended Plan § 1.5(a) at 3.

21. In its Findings of Fact and Conclusions of Law, the Court found it may properly

retain jurisdiction “[t]o hear, determine and adjudicate on a non-exclusive basis, any and all Trust

Claims …” Confirmation Order ¶ HH.2, at 23 (emphasis in original).

22. This present action falls within the Plan’s definition of “Trust Claims,” which are

“all Claims and Causes of Action asserted, or which may be asserted, by or on behalf of the Chapter

11 Trustee, the Debtors or the Estates, in respect of matters arising prior to the Effective Date,

including any pending or potential Avoidance Actions…” Second Amended Plan § 1.1 at 18.

23. This adversary proceeding is a core proceeding pursuant to 28 U.S.C. § 157(b) (2)

(A), (H), and (O).

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24. Venue of this adversary proceeding in this Court is proper pursuant to 28 U.S.C.

§ 1409.

25. The Trustee has authority to assert the claims herein pursuant to 11 U.S.C. §§ 323

and 1142(a) of the Bankruptcy Code and Article 8.9 of the Plan.

26. Defendants are subject to personal jurisdiction pursuant to Fed. R. Bankr. P. 7004.

27. Each of the Defendants herein has established minimum contacts with the United

States.

28. Where a federal statute or rule provides for nationwide service of process, as does

Rule 7004, a federal court has personal jurisdiction over any defendant having minimum contacts

with the United States.

29. This Court has personal jurisdiction over Defendants based on their contacts with

the United States.

RELEVANT PROCEDURAL AND FACTUAL HISTORY

30. On October 11, 2008 (the “Petition Date”), Debtor PCI filed a voluntary petition

for relief in this Court under Chapter 11 of the Bankruptcy Code. Between October 11, 2008 and

October 19, 2008, PCI’s affiliates filed voluntary petitions for relief under Chapter 11 of the

Bankruptcy Code. Those cases are now jointly administered before this Court.

31. On October 8, 2010, Douglas A. Kelley, then acting in his capacity as the Chapter

11 trustee, filed an adversary complaint against Stevanovich and the funds and management

companies he controlled. See Douglas A. Kelley, in his capacity as the court-appointed Chapter

11 Trustee of Debtor Petters Company, Inc. and PL Ltd., Inc. v. Westford Special Situations Master

Fund, L.P. et al., Adv. P. No. 10-04396 (the “Initial Transferee Action”).

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32. In the Initial Transferee Action, the Trustee asserts that, from approximately 2001

through 2007, Stevanovich and other defendants loaned approximately $2.5 billion to the Debtors

under 344 separate promissory notes. See Am. Compl. ¶ 114 (Adv. P. No. 10-04396, Docket No.

89).

33. Rates of return on the defendants’ promissory notes ranged from 12% to 48% on

an annualized basis. Id. ¶¶ 112, 118(c).

34. During that time, the Debtors made net payments to the defendants in the amount

of approximately $2.8 billion, resulting in false profits for the defendants of approximately $323

million. Id. ¶¶ 115, 119-121, Exs. J, K.

35. Of the transfers made to the defendants, 19 of them, adding up to $85.5 million,

were made within two years of the Petition Date. Id. ¶ 122, Ex. J.

36. In the Initial Transferee Action, the Trustee seeks to recover the Debtors’ transfers

made to the defendants, including Stevanovich, as fraudulent transfers and under other theories.

37. On April 6, 2016, the Trustee commenced another adversary proceeding against

Stevanovich and other defendants seeking to recover more than $398 million from those

defendants as immediate or mediate (hereinafter “subsequent”) transferees of Capital Strategies

Fund Ltd. (“Capital Strategies”), n/k/a Barrington Capital Group Ltd., pursuant to section 550(a)

of the Bankruptcy Code. See Douglas A. Kelley, in his capacity as the court-appointed Chapter

11 Trustee of Debtor Petters Company, Inc. and PL Ltd., Inc. v. Steven G. Stevanovich et al., Adv.

P. No. 16-04044 (the “Subsequent Transferee Action”).

38. This Court had avoided approximately $398 million in transfers to Capital

Strategies as an “immediate transferee.” See Order Granting Trustee’s Application for Entry of

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Default Judgment Against Defendant Capital Strategies Fund Ltd. (Case No. 10-04396, Docket

No. 120).

I. This Court Grants the Trustee’s Request to Conduct Rule 2004 Examination
Concerning any Transfers or Donations by Stevanovich to the University |

39. After filing the Initial Transferee Action, the Trustee learned Stevanovich had made

a gift to the University for $10 million.

40. On January 10, 2017, the Trustee moved this Court for an order authorizing a Rule

2004 examination of Stevanovich and the University regarding the $10 million gift “and any other

transfers or donations Mr. Stevanovich may have made to the University of Chicago since

September 24, 2008.” Notice of Hearing and Verified Motion for Order Authorizing Rule 2004

Examinations of Steve Goran Stevanovich and the University of Chicago at 1 (Case No. 08-45257,

Docket No. 3700) (the “Rule 2004 Motion”).

41. In its Rule 2004 Motion, the Trustee argued that, given the pending adversary

proceedings against Stevanovich, “the Trustee is a ‘creditor’ of Mr. Stevanovich under state

fraudulent transfer laws,” and that “the Trustee may possess a claim to avoid [the $10 million

donation] as a fraudulent transfer under state law.” Rule 2004 Motion at 15.

42. IUFTA defines “creditor” as “a person who has a claim,” and defines a “claim” as

“a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed,

contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”

740 ILCS 160/2(c), (d).

43. In his opposition to the Rule 2004 Motion, Stevanovich argued that he could not be

a subject of a Rule 2004 examination because the Trustee was not a judgment creditor of

Stevanovich.

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44. Stevanovich never seriously contested the Trustee’s status as a “creditor” of

Stevanovich within the meaning of the applicable state law on fraudulent transfers.

45. At the January 25, 2017 hearing on the Rule 2004 Motion, counsel for Stevanovich

admitted that the “claim that the trustee has to money that Mr. Stevanovich might owe him is the

lawsuit that’s pending [in the adversary proceedings].” Transcript of Proceedings at 13:18-19

(Case No. 08-45257, Docket No. 3720).

46. By order dated January 25, 2017, the Court granted the Trustee’s Rule 2004 Motion

to examine Stevanovich and the University, inter alia, on whether the $10 million pledge violated

applicable state law on fraudulent transfers. Order Granting Motion for 2004 Examination (Case

No. 08-45257, Docket No. 3714).

II. Documents Produced by Stevanovich and the University Show that Stevanovich
Transferred Substantial Funds to the University and Has Promised to Transfer Even
More |

47. Following the Court’s order granting the Rule 2004 Motion, the University and

Stevanovich produced documents to the Trustee showing that on or around April 30, 2014, the

University recorded a pledge from Stevanovich for $10 million (the “$10 Million Pledge”), though,

on information and belief, no part of that pledge has yet been paid to the University.

48. Stevanovich and the University formalized that pledge by letter dated May 12,

2014.

49. Since being sued in the Initial Transferee Action, Stevanovich has transferred $1.4

million to the University under a preexisting pledge, though, as of 2012, Stevanovich had stopped

making payments in satisfaction of that pledge.

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50. Apart from the $10 Million Pledge, the University also expects to receive from

Stevanovich $2.8 million on account of the earlier pledge (the “$2.8 Million Pledge”), whereby

Stevanovich promised to make annual payments of $700,000 from 2012 through 2015.

51. While he was in default of his $2.8 Million Pledge, Stevanovich made periodic gifts

to the University on or about these dates and in these amounts:

a. June 23, 2014 – $10,000; see Ex. A at STEV000099

b. June 30, 2015 - $5,000; see Ex. B at STEV0000097

c. November 24, 2015 - $10,000; see id.

52. When Stevanovich made the pledges and each transfer described above, he was

insolvent or would have been rendered insolvent by incurring those obligations to the University.

53. In opposing the Rule 2004 Motion, Stevanovich admitted that since becoming the

subject of the Initial Transferee Action in 2010, he has suffered a “detrimental impact” with respect

to “[his] personal finances” and that the assets of his Westford Funds also suffered. Steve G.

Stevanovich’s Opp’n to Motion for an Order Authorizing Rule 2004 Examination at 13 (Case No.

08-45257, Docket No. 3705) (the “Opp’n to Rule 2004 Motion”). Specifically, in his supporting

declaration, Stevanovich stated:

Following the commencement of the [Initial Transferee Action] the Westford


Funds’ ability to conduct business was severely impaired, including the Funds’
ability to raise the necessary capital for follow-on investments. Many of the Funds’
investments required one or more “follow on” investments in order for the Westford
Funds to realize on their underlying strategies and obtain anticipated returns. The
Westford Funds have since exhausted substantially all of their cash and proceeds
of investments that could be easily liquidated in order to support their remaining,
illiquid holdings and defend claims brought in the [Initial Transferee Action].

Opp’n to Rule 2004 Motion at 79 (Declaration of Steve G. Stevanovich in Opposition to Motion

for an Order Authorizing Rule 2004 Examination (Dkt. No. 3700), dated January 20, 2017

(“Stevanovich Dec.”) ¶ 4); see also Epsilon Defendants’ Memorandum in Opposition to Trustee’s

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Motion to Modify Scheduling Order at 21 (Adv. P. No. 10-04396, Docket No. 180) (highlighting

that the “total loss of liquidity as a result of the costs of defending [the Initial Transferee Action]

and the inability to raise new funds has caused the Westford Funds to cease all payments to the

fund managers (including Mr. Stevanovich himself)”).

54. Consistent with those admissions about his financial troubles at the relevant time,

Stevanovich repeatedly informed the University he could not fulfil his pledge commitments in the

foreseeable future or to settle them entirely in cash.

55. For example, by email dated December 22, 2014, a University representative

informed his colleague that Stevanovich “is going to give us securities – privately held which we

will need to hold and sell at the appropriate time – which would be when [Stevanovich] tells us.”

Ex. C at UChicago_0008718. The email stated the University expected “to receive payment over

the next 3-5 years but not clear how much each year.” Ex. C at UChicago_0008718.

56. By the end of 2016, Stevanovich paid no part of the $2.8 Million Pledge or the $10

Million Pledge, which, according to the University’s representatives, prompted the chairman of

the University’s Board of Trustees, Joseph Neubauer, to question the reason that the University

had accepted Stevanovich’s pledge as well the University’s “due diligence process in making

certain that the donors have the financial capacity to make his/her gifts.” Ex. D at

UChicago_0001209.

57. On or about December 9, 2016, Mr. Neubauer spoke to Stevanovich about his

financial condition and then emailed the University stating that “it was not possible for

Stevanovich to make his payment since 2010 and ongoing,” partly due to the pendency of the

adversary proceedings against him. Ex. E at UChicago_0000121.

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58. In that email, dated December 21, 2016, Mr. Neubauer summarized Stevanovich’s

financial problems as follows:

[Stevanovich] tried to sell some illiquid assets, but it did not work out. In 2015 he
agreed to a 5 year payout on his pledge and hopes to get some liquidity in 2017 ...
He will need at least 2-3 years to gain additional liquidity and intends to pay his
pledges in full once his liquidity is restored.

Ex. E at UChicago_0000121.

59. By email dated December 26, 2016, Stevanovich confirmed to Mr. Neubauer that

“liquidity is still an issue for me at this time.” Despite his confessed liquidity problems,

Stevanovich nevertheless offered to increase his pledge to the University. Ex. F at

UChicago_0008293.

60. In response, Mr. Neubauer wrote to the University, stating “[as] I suspected it may

be a while until we see some real personal cash from Steve. However he is trying and we should

stay with him next year.” Ex. F at UChicago_0008292.

61. In or around July 2017, Stevanovich told representatives at the University he

continued to experience liquidity issues, noting that he was engaged in a “restructuring of his

investments into a holding company,” which evidently “delayed access to the liquidity that would

allow [Stevanovich] to begin payment of open pledges.” Ex. G at UChicago_0008880.

62. At that time, Stevanovich also informed representatives of the University he

expected “the valuations of his two most promising companies to skyrocket, giving him both short-

term liquidity and exceptional levels of personal wealth in the long-term.” Id. One of those

“promising companies” was a company named “Skyworks,” which Stevanovich claimed had a

$1.7 billion valuation. Id.

63. Just two months after Stevanovich made that representation to the University, an

involuntary bankruptcy petition was filed against Skyworks Global, Inc. based upon its failure to

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pay salaries and office rent. See In re General Aeronautics Corp., Chapter 11 Case No. 17-28510

(Bankr. D. Utah), Docket No. 1. That bankruptcy case remains pending.

III. The University Accepted Stevanovich’s $10 Million Pledge After the Trustee
Sued Stevanovich |

64. At all relevant times, and significantly prior to accepting the pledge, the University

knew that Stevanovich was a defendant in a multi-billion dollar lawsuit arising out of his

involvement in the Petters Ponzi scheme and that the pendency of that litigation could affect the

pledge.

65. By email dated April 7, 2014—that is several weeks before the University accepted

Stevanovich’s pledge—a University representative wrote to his colleague that Stevanovich

“reiterated that there is no possibility for clawback for a gift he might make from the Petters

bankruptcy court.” Ex. H at UChicago_0008679. In that email, the representative acknowledged

that “[a]ny gift [Stevanovich] made—cash, securities, future gift or past giving to the Center—

would be vulnerable to such a clawback claim.” Ex. H at UChicago_0008679.

66. On April 8, 2014, another University representative wrote to her colleagues, noting

that “the fact that [Fidelity Charitable] is declining [Stevanovich’s] potential gift (at least initially)

due to potential clawback concerns should raise red flags with us as well.” Ex. H at

UChicago_0008678.

67. On April 9, 2014, Stevanovich emailed the University and asked if the University

had expressed its concern to Fidelity Charitable about the contemplated pledge being subject to a

clawback claim. Ex. I at UChicago_0008962. On that same day, a University representative

responded that “this concern about clawback did not come from us,” and explained his colleague

“contacted Fidelity about [Stevanovich’s] potential stock gift [and] only said in passing on the

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phone that [Stevanovich was] involved in a legal matter that had ‘been in the news.’” Ex. I at

UChicago_0008692.

COUNT I: TO AVOID FRAUDULENTLY INCURRED OBLIGATION


DUE TO ACTUAL FRAUD – 740 ILCS 160/5(A)(1)

68. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

68 of the Complaint as if fully set forth herein.

69. The Trustee is a creditor of Stevanovich and has a claim against Stevanovich in the

pending Initial Transferee Action and the Subsequent Transferee Action. In the former action,

Stevanovich admitted that the Trustee filed the Initial Transferee Action “seeking, among other

things, a judgment in excess of $3.2 Billion from me...” Stevanovich Dec. ¶ 3.

70. IUFTA provides that an obligation is fraudulent if incurred with actual intent to

hinder, delay or defraud any creditor of the debtor. 740 ILCS 160/5(a)(1).

71. Section 3(b) of the IUFTA provides that “[a] debtor who is generally not paying his

debts as they become due is presumed insolvent.” 740 ILCS 160/3.

72. In determining actual intent, courts look to the non-exclusive badges of fraud set

forth in the IUFTA, among other considerations. See 740 ILCS 160/5. Here, the $10 Million

Pledge bears multiple badges of fraud, including: (i) Stevanovich incurred the $10 Million Pledge

after the Trustee sued him in the Initial Transferee Action; (ii) by its very nature, the $10 Million

Pledge is a voluntary gift for which Stevanovich receives no consideration that is reasonably

equivalent to the value of the incurred obligation; and (iii) Stevanovich was insolvent when, or

became insolvent shortly after, he incurred the obligation of the $10 Million Pledge.

73. Based on the foregoing, the $10 Million Pledge to the University was incurred with

the intent to hinder, delay or defraud the Trustee and the creditors on whose behalf the Trustee is

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pursuing the Initial Transferee Action and the Subsequent Transferee Action. The $10 Million

Pledge is a fraudulently incurred obligation pursuant to 740 ILCS 160/5(a)(1).

COUNT II: TO AVOID FRAUDULENTLY INCURRED OBLIGATION DUE TO


CONSTRUCTIVE FRAUD – 740 ILCS 160/5(A)(2)

74. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

74 of the Complaint as if fully set forth herein.

75. Section 5(a)(2) of the IUFTA provides, in relevant part, that an “obligation incurred

by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after … the

obligation was incurred, if the debtor made the transfer or incurred the obligation: … without

receiving a reasonably equivalent value in exchange for the … obligation, and the debtor:

(A) was engaged or was about to engage in a business or a transaction for which the
remaining assets of the debtor were unreasonably small in relation to the business
or transaction; or

(B) intended to incur, or believed or reasonably should have believed that he would
incur, debts beyond his ability to pay as they became due.

76. The $10 Million Pledge constituted an incurrence of an obligation within the

meaning of the IUFTA.

77. Stevanovich incurred the obligation of the $10 Million Pledge to the University as

a gift for which he received no consideration of reasonably equivalent value.

78. Stevanovich incurred the obligation of the $10 Million Pledge while lacking the

financial ability to fulfill that pledge, as evidenced by his failure to pay any part of that pledge or

the pre-existing $2.8 Million Pledge for years since incurring those obligations.

79. As set out above, Stevanovich admitted that he was unable make good on those

pledges due to his inability to generate sufficient cash flow. When Stevanovich incurred the $10

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Million Pledge, he incurred an obligation for which his assets were unreasonably small in relation

to the obligation amount.

80. Stevanovich’s decision to incur the $10 Million Pledge while he remained in default

of his preexisting $2.8 Million Pledge shows that Stevanovich intended to incur, or believed or

reasonably should have believed that he would incur debts beyond his ability to pay as they became

due.

81. The $10 Million Pledge is a fraudulently incurred obligation pursuant to 740 ILCS

160/5(a)(2).

COUNT III: TO AVOID FRAUDULENTLY INCURRED OBLIGATION DUE TO


CONSTRUCTIVE FRAUD – 740 ILCS 160/6(A)

82. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

82 of the Complaint as if fully set forth herein.

83. Section 6(a) of the IUFTA provides, in relevant part, that an obligation is fraudulent

“as to a creditor whose claim arose before … the obligation was incurred if the debtor … incurred

the obligation without receiving a reasonably equivalent value in exchange for …the obligation

and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer

or obligation.” 740 ILCS 160/6(a).

84. Section 3(b) of the IUFTA provides that “[a] debtor who is generally not paying his

debts as they become due is presumed insolvent.” 740 ILCS 160/3.

85. The Trustee’s claim within the meaning of the IUFTA arose, at the latest, when the

Initial Transferee Action was commenced in 2010, which was well before Stevanovich pledged

$10 million to the University.

86. The $10 Million Pledge constituted an incurrence of an obligation within the

meaning of the IUFTA.

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87. Stevanovich incurred the $10 Million Pledge to the University as a gift for which

he received no consideration of reasonably equivalent value.

88. Given the evidence of his financial difficulties and demonstrated failure to make

scheduled payments, as set out above, Stevanovich was insolvent at the time of the $10 Million

Pledge or became insolvent because of that pledge.

89. The $10 Million Pledge is a fraudulently incurred obligation pursuant to 740 ILCS

160/6(a)(1).

COUNT IV: TO AVOID AND RECOVER FRAUDULENT TRANSFERS


DUE TO ACTUAL FRAUD – 740 ILCS 160/5(A)(1)

90. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

90 of the Complaint as if fully set forth herein.

91. The Trustee is a creditor of Stevanovich and has a claim against Stevanovich the

pending Initial Transferee Action and the Subsequent Transferee Action.

92. IUFTA provides that a transfer is fraudulent if made with actual intent to hinder,

delay or defraud any creditor of the debtor. 740 ILCS 160/5(a)(1).

93. Section 3(b) of the IUFTA provides that “[a] debtor who is generally not paying his

debts as they become due is presumed insolvent.” 740 ILCS 160/3.

94. As set forth above, in 2014 and 2015, Stevanovich made three monetary gifts to the

University totaling $25,000 (each a “Transfer,” and collectively, the “Transfers”).

95. In determining actual intent, courts look to the non-exclusive badges of fraud set

forth in the IUFTA, among other considerations. 740 ILCS 160/5.

96. Here, each of the Transfers bears multiple badges of fraud, including: (i)

Stevanovich made each of the Transfers to the University after the Trustee sued him in the Initial

Transferee Action; (ii) by its very nature, each of the Transfers is a voluntary gift for which

17
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Stevanovich received no consideration that is reasonably equivalent to the value of the transfer;

(iii) Stevanovich disclosed none of the Transfers to the Trustee when he made them; and (iv)

Stevanovich was insolvent at the time of each of the Transfers or became insolvent shortly after

he made each of the Transfers.

97. Each Transfer was made with the intent to hinder, delay or defraud the Trustee and

the creditors on whose behalf the Trustee is pursing the Initial Transferee Action and the

Subsequent Transferee Action. The Transfers are fraudulent pursuant to 740 ILCS 160/5(a)(1),

and as such may be recovered by the Trustee pursuant to, without limitation, 740 ILCS 160/9(b).

COUNT V: TO AVOID AND RECOVER FRAUDULENT TRANSFERS DUE TO


CONSTRUCTIVE FRAUD – 740 ILCS 160/6(A)

98. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

98 of the Complaint as if fully set forth herein.

99. Section 6(a) of the IUFTA provides, in relevant part, that a transfer is fraudulent

“as to a creditor whose claim arose before the transfer was made … if the debtor made the transfer

… without receiving a reasonably equivalent value in exchange for the transfer … and the debtor

was insolvent at that time or the debtor became insolvent as a result of the transfer ...” 740 ILCS

160/6(a).

100. The Trustee’s claim within the meaning of the IUFTA arose, at the latest, when

the Initial Transferee Action was commenced in 2010, which was well before Stevanovich made

each of the Transfers.

101. In exchange for each of the Transfers, Stevanovich received no consideration of

reasonably equivalent value.

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102. Given the foregoing evidence of his financial difficulties and demonstrated failure

to make scheduled payments on prior pledges to the University, Stevanovich was insolvent when

he made each of the Transfers or became insolvent as a result of each of those Transfers.

103. Each of the Transfers to the University is fraudulent pursuant to 740 ILCS

160/6(a)(1) and as such may be recovered by the Trustee pursuant to, without limitation, 740

ILCS 160/9(b).

COUNT VI: FOR INJUNCTIVE RELIEF PURSUANT TO 11 U.S.C. § 105

(Against Stevanovich)

104. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

104 of the Complaint as if fully set forth herein.

105. Section 105(a) of the Bankruptcy Code empowers a bankruptcy court to exercise

its equitable powers, and to fashion relief that is necessary or appropriate to carry out the provisions

of the Bankruptcy Code, including utilizing that broad grant of power to enjoin both the Debtors

and non-debtors from taking actions that may affect the amount of property in the Debtors’ estate.

106. Pursuant to 11 U.S.C. § 105(a), Fed. R. Bankr. P. 7001(7) and 7065, and all other

applicable law, the Trustee seeks to enjoin Stevanovich from making any gifts or charitable

contributions to the University, including any part of the $10 Million Pledge and the $2.8 Million

Pledge, pending the resolution of the Initial Transferee Action and the Subsequent Transferee

Action, and the full satisfaction of any judgment for the Trustee and against Stevanovich that may

issue in those proceedings.

107. The Trustee’s claim satisfies all prerequisites for injunctive relief.

108. First, injunctive relief is necessary here to prevent irreparable harm to the Trustee

for which there is no adequate remedy at law because monetary transfers by Stevanovich because

19
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of his pledges to the University will, inter alia, cause any judgment against Stevanovich in the

Initial Transferee Action and the Subsequent Transferee Action to become uncollectable and/or

will result in severe delay and unrecoverable expense to the Trustee in collecting such judgment

for the benefit of the Trust and its creditors.

109. Second, the Trustee is likely to succeed on the merits of its avoidance claims as

Stevanovich incurred the substantial pledge obligations and made monetary transfers to the

University after having been sued in the Initial Transferee Action and that Stevanovich received

no equivalent value in return for those obligations and transfers. As set forth above, Stevanovich

was insolvent at the time of making the transfers and incurring the obligations or became insolvent

as a result of those transactions.

110. Third, the balance of equities supports injunctive relief here because the requested

injunction is narrowly tailored to restrain payments by Stevanovich solely to the University and

places no restrictions on Stevanovich’s use of assets in the ordinary course of business or for

everyday needs.

111. The injunction would cause no prejudice to the University, which, as described

above, was at the very least aware that the $10 Million Pledge could be rendered avoidable and, in

any event, is not entitled to any payments ahead of the Trust while Stevanovich is insolvent.

Conversely, without the injunction, any dissipation of assets by Stevanovich would cause

substantial harm to the Trustee as he would have to expend the Trust’s resources to institute costly

proceedings to recover the wrongfully transferred assets.

112. The need for injunctive relief is particularly heightened here because, according to

the University’s records, Stevanovich has told the University he intends to begin making payments

towards his pledges as soon as discovery ends in the Initial Transferee Action and that he has been

20
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“avoid[ing] any giving to the University because he doesn?t [sic] want the Trustee to use it as a

sign of profligacy . . . .” Ex. G at UChicago_0008880.

113. Lastly, injunctive relief would promote the public interest by empowering the

Trustee to defend creditors’ interests and to protect the Trust from further diminution at the hands

of Stevanovich.

COUNT VII: FOR INJUNCTIVE RELIEF PURSUANT TO 740 ILCS 160/8

(Against Stevanovich)

114. The Trustee re-alleges and incorporates by reference the preceding paragraphs 1-

114 of the Complaint as if fully set forth herein.

115. Section 8(a)(3)(A) of the IUFTA provides for injunctive relief against further

disposition by the debtor or a transferee, or both, of any asset transferred or of other property.

116. To obtain injunctive relief under Illinois law, a party “must prove it has a clear and

ascertainable right in need of protection, irreparable harm will result if injunctive relief is not

granted, and no adequate remedy at law exists.” Neuros Co. v. KTurbo, Inc., No. 08-CV-5939,

2013 WL 1706368, at *3 (N.D. Ill. Apr. 17, 2013).

117. Here, the Trustee has a clear and ascertainable right in need of protection by virtue

of his status as a creditor of Stevanovich under the IUFTA.

118. As shown above, in the absence of injunctive relief, the Trustee will suffer

irreparable harm for which there is no adequate remedy at law.

119. The Court should enjoin Stevanovich from making any gifts or charitable

contributions to the University, including any part of the $10 Million Pledge and the $2.8 Million

Pledge, pending the resolution of the Initial Transferee Action and the Subsequent Transferee

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Action, and the full satisfaction of any judgment for the Trustee and against Stevanovich that may

issue in those proceedings.

PRAYER FOR RELIEF

120. The Trustee therefore respectfully requests that the Court:

a. Declare the $10 Million Pledge by Stevanovich to the University fraudulent


pursuant to IUFTA;

b. Avoid the $10 million pledge by Stevanovich to the University;


c. Declare each of the Transfers by Stevanovich to the University fraudulent
pursuant to IUFTA;

d. Avoid the Transfers by Stevanovich to the University and enter judgment,


pursuant to, without limitation, 740 ILCS § 160/9, against the Defendants and
for the Trustee in the amount to be proven at trial, but no less than the full
amount of the Transfers, plus interest;

e. Enjoin Stevanovich from making any payments to the University, including


pursuant to the $10 Million Pledge and the $2.8 Million Pledge;

f. Order such other and further legal and/or equitable relief as may be just and
proper.

22
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DATED: April 20, 2018

By: /e/ J David Jackson


J David Jackson, Esq. (Minnesota
Bar No. 049219)
DORSEY & WHITNEY LLP
50 South Sixth Street Suite 1500
Minneapolis, MN 55402
Telephone: (612) 340-2760
Fax: (952) 516-5596
jackson.j@dorsey.com

By: /e/ D. Farrington Yates


D. Farrington Yates (pro hac vice)
(New York Bar No. 2986586)
Adam M. Lavine (pro hac vice)
(New York Bar No. 4957049)
Igor Margulyan (pro hac vice)
(New York Bar No. 4770541)
KOBRE & KIM LLP
800 Third Avenue New
York, NY 10022
Telephone: (212) 488-1200
Fax: (212) 488-1220
Farrrington.Yates@kobrekim.com
Adam.Lavine@kobrekim.com
Igor.Margulyan@kobrekim.com

ATTORNEYS FOR DOUGLAS A. KELLEY,


AS PCI LIQUIDATING TRUSTEE FOR THE
PCI LIQUIDATING TRUST

23
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EXHIBIT A
 
 
 
 
 
 
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EXHIBIT B
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EXHIBIT C
 
 
 
 
 
 
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Message
From: Heather McClean [hmcclean@uchicago.edu]
Sent: 12/22/2014 8:39:37 AM
To: Denise Chan Gans [dchangans@uchicago.edu]
Subject: Fw_ stevanovich LOG.pdf

From:
To:
subject:
Date:
Heather McClean
Denise Chan Gans
Fw: stevanovich LOG
Monday, December 22, 2014 8:39:37 AM
Can we discuss re the equities? I think you answered this before. will check my messages.
From: Kenneth Manotti <kmanotti@uchicago.edu>
Sent: Monday, December 22, 2014 8:31 AM
To: Heather McClean
Subject: RE: stevanovich LOG
Hi Heather:
Thanks.
He is now interested in designating the 10M to name the Institute for the Formation of
Knowledge_ (I need to confirm he exact_title).
,•-•-•-•-•-•-•- -. .-•- -•-•- -•-~ ~-•- •-•- -•-•-•-•-•-• -•-• •-•- -•
Redacted
He is going to give us securities - privately Tield which we will need to hold and sell at the
appropriate time - which would be when he tells us.
We expect to receive payment over the next 3-5 years but not clear how much each year.
Can you prepare a revised LOG to reflect the designation and the payment plan?
Do you see any issues with the private securities source?
Ken
From: Heather McClean
Sent: Monday, December 22, 2014 7:48 AM
To: Kenneth Manotti; Cheri Chenoweth
Subject: RE: stevanovich LOG
Ken,
I've attached the version of the agreement that they eventually signed. This is what was sent to Paul I

and I believe he filled in the pledge amount ($10NIM) and changed the due date to 2019. I've attached
the signed version we have as well. Is this what you were looking for?
From: Kenneth Manotti
Sent: Friday, December 19, 2014 6:39 PM
To: Cheri Chenoweth; Heather McClean
Subject: stevanovich LOG

Confidential UChicago_0008718
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can you please locate the latest LOG that I sent him and resend to me as a word
document?
Thanks,
Ken

Confidential UChicago_0008719
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EXHIBIT D
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Message
From: Ciaran Escoffery [/O=THE UNIVERSITY OF CHICAGO/OU=EXCHANGE ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=CESCOFFERY]
Sent: 4/11/2017 6:50:28 PM
To: Kenneth Manotti [kmanotti@uchicago.edu]
Subject: Fwd: Joe N phone call

Found it... it looks like it was Friday, December 9th

Ciaran S. Escoffery
Senior Director, Strategic Planning and Board Relations
University of Chicago

On Dec 10, 2016, at 3:57 PM, Kenneth Manotti


<kr~7anc~ti:i( u::hic:~~go.ecif> wrote:

FYI only

From: Kenneth Manotti


Sent: Saturday, December 10, 2016 3:44 PM
To: Robert J. Zimmer <rzirnmer@uchicago.edu>
Subject: Joe N phone call

Bob - FYI only

Joe wanted to speak to me about 2 issues.

<!--[if !supportLists]-->1. <!--[end if]-->Campaign


end date
<!--[if !supportLists]-->2. <!--[endif]--
>Stevanovich

Campaign end date

UChicago_0001207
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He was not happy (?) that I did not tell him that we
had been discussing Dec. 31,2019 as a potential
campaign end date.

i explained that the official date in our trustee


reporting and presentations has been FY 2019 (i.e.
June 30th) but that we have had internal
conversations about giving some us some flexibility
by continuing to December.

His issue was that I told Dennis Keller this and not
him.

I explained to Joe that Dennis had called me on the


day before he called me and I told Dennis that this is
what we have been discussing but we would certainly
need to present to the Trustees.

I told him that we would be discussing this at the


Executive Committee meeting on January 111h.

Steve Stevanovich conversation

Joe is going to send you a more detailed report on the


call. He asked me why 1 had not told him about the
legal issues that Steve had faced which had caused
some of his liquidity issues.

I explained to Joe that Steve told us 2 years ago that


he no longer had legal issues so I didn't think it was
relevant to the conversation about Steve's paying off
his pledges.

According to Joe, Steve's explanation is the same as


with us. He expects to be liquid next year. I informed
Joe that Steve has been saying this for the past 2
years.

UChicago_0001208
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Joe then asked me why we accepted Steve's pledge to
SIFK and asked about our due diligence process in
making certain that the donors have the financial
capacity to make his/her gifts.

I told him that we do research this for many of our PG


donors but we have not done this type of due
diligence for our trustees (since I have been here).

He told me that we should have a process for


everyone including trustees and we should not trust
what they say (i.e. even him - Joe).

Please let me know if you have any


questions/comments.

Ken

Ken Manotti

1.773.702.0685 (office)

Redacted

UChicago_0001209
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EXHIBIT E
 
 
 
 
 
 
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Message
From: Kim Taylor [/O=THE UNIVERSITY OF CHICAGO/OU=EXCHANGE ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=KIMTAYLOR918]
Sent: 12/21/2016 6:44:37 PM
To: Joseph Neubauer [neubauer-joe@nextegggroup.com]; Kenneth Manotti [kmanotti@uchicago.edu]
Subject: Re: Steve Stevanovich Pledge Payments

Joe -

Thank you for this. _Redacted._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._.-

Best,
Kim

Kim Taylor
Vice President and General Counsel
The University of Chicago
5801 S. Ellis Ave; Suite 619
Chicago, IL 60637
773-702-7749
kimtaylor@uchicago.edu

DISCLAIMER: This message (including attachments, if any) contains confidential and proprietary information, some or all of which may be legally
privileged or otherwise protected from unauthorized use, disclosure, distribution or copying. It is for the intended recipient only. If you are not the
intended recipient, you may not use, disclose, distribute, copy, print or retain this message or any part of it. If you have received this message due
to an addressing, transmission or other error, please so notify the sender immediately by replying to this message and then please delete this
message from your computer.

From: Joseph Neubauer <neubauer-joe(@nexteggRroup.com>


Date: Wednesday, December 21, 2016 at 6:39 PM
To: Kenneth Manotti <kmanotti@uchicago.edu>
Cc: Kim Taylor <kimtaylor@uchicago.edu>
Subject: Steve Stevanovich Pledge Payments

Ken —

1
I spoke with Steve Stevanovich on December 9" regarding his two commitments to the Capital Campaign, i.e. remaining
-- --- -- --- -- --- -- --- --- -- Redacted...................................
.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-...-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-....bnd the $10MM commitment(made in
April 2014)for The Stevanovich Institute on the Formation of Knowledge.

He explained that several factors combined to cause his funds to be illiquid. The bankrupt Petters Fund, which was
accused of a Ponzi scheme is Minneapolis, drew Stevanovich's funds Epsilon Investment Management and Westford
Asset Management into the suit in 2010. The Trustee was seeking to recover money from Stevanovich's, which was a
feeder fund into the Petters Fund. Thus it was not possible for Stevanovich to make his payments since 2010 and
ongoing.

As to the Institute for Knowledge, he stated that he told the University that "I don't have any liquid assets." He tried to
sell some illiquid assets, but it did not work out. In 2015 he agreed to a 5 year payout on his pledge and hopes to get
some liquidity in 2017. The SEC cleared him of any misconduct. He will need at least 2-3 years to gain additional
liquidity and intends to pay his pledges in full once his liquidity is restored. "I owe the University of Chicago quite a bit
and intend to do even more once I have liquidity". He intends to convert his "fund structure" to a holding company (a la
Berkshire Hathaway) and have liquidity thereafter.

Confidential UChicago_0000121
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Redacted
I thanked him for sharing this information, and we will catch up again in 2017.

Joe

Confidential UChicago_0000122
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EXHIBIT F
 
 
 
 
 
 
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Message
From: Kenneth Manotti [/O=THE UNIVERSITY OF CHICAGO/OU=EXCHANGE ADMINISTRATIVE GROUP
(FYD160HF23SPDLT)/CN=RECIPIENTS/CN=KMANOTTI]
Sent: 12/29/20161:39:09 PM
To: Joseph Neubauer [neubauer-joe@nextegggroup.com]; Robert J. Zimmer [rzimmer@uchicago.edu]
Subject: RE: Stevanovich Institute on the Formation of Knowledge building is

Joe — thank you again for taking the time to speak with him about this.

Ken

From:Joseph Neubauer[mailto:neubauer-joe@nextegggroup.com]
Sent:Thursday, December 29, 2016 9:25 AM
To: Robert J. Zimmer <rzimmer@uchicago.edu>; Kenneth Manotti <kmanotti@uchicago.edu>
Subject: Fwd:Stevanovich Institute on the Formation of Knowledge building is

As I suspected it may be a while until we see some real personal cash from Steve. However he is trying and we
should stay with him next year.

Begin forwarded message:

From: Steve Stevanovich <steve(r~sgsfunds.com>


Date: December 28, 2016 at 10:53:29 AM EST
To: Joseph Neubauer <neubauerjoe@nextegggroup.com>
Subject: Re: Stevanovich Institute on the Formation of Knowledge building issue

Hi Joe,

Understood. I can't make that commitment as yet, but will try to work towards it in 2017.

In the meantime, one way that I can bring funding into the University now is thru the
Stevanovich Center for Financial Mathematics. Last year(in November of2015)I was able to
get a financial firm (Ortec: http://www.ortec-finance.com)interested in providing funding to the
Center. I then discussed this with Per Mykland who is the Faculty Director ofthe Center. Per
did follow up and discuss internally, but the discussion stalled as we needed a way to structure
this as a donation rather than income to the University. During the summer,Rocky Kolb (the
Center falls under the Physical Sciences Division)suggested that since UChicago does an
evaluation ofthe mission of their Centers & Institutes every five years and since it has now been
ten years without a mission evaluation for the Center, he suggested that during the 2016-2017
school year we try to find a solution as part ofthat mission review. For whatever reason, the
mission review was not able to start this fall, however, Bob Zimmer pointed out that various
UChicago departments(IME,Chemistry, etc..) already work with outside companies who in turn
provide funding. During the last Trustee board meeting this past November I discussed the issue
with Kim Taylor and she suggested a way forward using the Booth Lab courses as a
model. Rocky is meeting with Doug Skinner in the first week of January to discuss the Booth
Lab courses and how we might be able to use a similar portal. I am hoping that this will now
move forward. Ortec is still interested and I have other Wall Street type firms that are interested
as well. If the momentum starts to slow again, I may need to ask your help.

Confidential UChicago-0008292
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Thank you,
Steve

On Dec 26, 2016, at 3:07 PM,Joseph Neubauer <neubauer-


joe@nextegggroup.com<mailto:neubauerjoe@nexteg,gi roup.com>> wrote:

Steve, thanks very much for your generous offer to assist the Institute on the Formation of
Knowledge. In my opinion the most helpful financial assistance that they can use is a three year
cash payment of$250000 annually for expendable funds while your significant liquidity is
restored. If you can make this additional cash commitment and start it next year that will be very
much appreciated. Thx for continuing to support the U of C

On Dec 24, 2016, at 11:36 AM,Steve Stevanovich <steve @sgsfunds.com> wrote:

M Joe,

I hope you are enjoying your holiday. Ijust had a thought re our last call re the unforeseen
expenses for the SIFK building renovation. I understand that what is really needed is cash to fix
the problem. As I mentioned, while I am working on it and getting closer to accomplishing it,
liquidity is still an issue for me at this time. What I wanted to ask is if increasing my pledge
could help with this issue in any way? I know that the repairs need cash, but I don't know if a
pledge increase can help in any way with internal allocations? If that can help in any way,I'm
happy to do so.

Thank you,
Steve

[cid:2EOB85D9-7694-4592-8E06-DEA78B5F5D6C]

CONFIDENTIALITY NOTICE: The information in this electronic mail transmission is legally


privileged and confidential information intended only for the use ofthe individual or entity
named above. If the reader ofthis message is not the intended recipient, you are hereby notified
that any dissemination, distribution or copy ofthe transmission is strictly prohibited. If you have
received this transmission in error, please delete the message and notify us immediately.
This communication is for informational purposes only. This communication is not intended as
an offer or solicitation for the purchase or sale of any financial instrument or as an official
confirmation of any transaction. An investment in the Fund involves a high degree of risk. It
should not be assumed that an investment in the Fund will be profitable or that the performance
ofthe Fund will equal its past performance. Actual investment results may vary. All market
prices, data and other information are not warranted as to completeness or accuracy and are
subject to change without notice. Any information contained in, or attached to this
communication is qualified in its entirety by the certain Offering Memorandum or Private
Placement Memorandum ("Offering Documents")relating to the Fund. In the case of conflicting
information, only the Offering Documents shall govern. Interested parties should not rely on any
information contained herein that is in conflict with the Offering Documents.

Confidential UChicago_0008293
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Document Page 41 of 52
CONFIDENTIALITY NOTICE: The information in this electronic mail transmission is legally
privileged and confidential information intended only for the use ofthe individual or entity
named above. If the reader ofthis message is not the intended recipient, you are hereby notified
that any dissemination, distribution or copy ofthe transmission is strictly prohibited. If you have
received this transmission in error, please delete the message and notify us immediately.
This communication is for informational purposes only. This communication is not intended as
an offer or solicitation for the purchase or sale of any financial instrument or as an official
confirmation of any transaction. An investment in the Fund involves a high degree of risk. It
should not be assumed that an investment in the Fund will be profitable or that the performance
ofthe Fund will equal its past performance. Actual investment results may vary. All market
prices, data and other information are not warranted as to completeness or accuracy and are
subject to change without notice. Any information contained in, or attached to this
communication is qualified in its entirety by the certain Offering Memorandum or Private
Placement Memorandum ("Offering Documents")relating to the Fund. In the case of conflicting
information, only the Offering Documents shall govern. Interested parties should not rely on any
information contained herein that is in conflict with the Offering Documents.

Confidential UChicago_0008294
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Document Page 42 of 52

EXHIBIT G
THE UN 1 VERS I TY OF Prospect Actions and Entity Notes
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CHICAGO Document Page 43 of 52 X

URM: University VP/AVP


Stevanovich, Steve G.
Campaign
AB 1985 COL; MBA 1990 BUS FUL
Action ID: 1,218,792

Action Date Due Date Date Added Lead Participants Team Contact Type Status
7/26/17 7/28/17 Seeley, Paul A. Booth Principal Gifts Visit Done

Action Summary
Steve shared update on legal troubles, busines prospects, and plans for giving

Action Text
***ACTION TEXT ABRIDGED***

Seeley met Steve for lunch at Volare to get his news and tee up a first meeting with Madhav Rajan. Steve explained the hold-up of his pledge
payments and annual giving. The Petters bankruptcy suit is still ongoing. Steve withdrew from the settlement process that he initiated two years
ago because the outcome of a similar case turned the suit in his favor. Since then the presiding judge retired and was replaced, the trustee
overseeing the suit was replaced by a committee of creditors, and the law firm engaged by the trustee was replaced twice. The new judge is
motivated to clear the case from the court by expediting the calendar of discovery and settlement. Steve has avoided any giving to the University
because he doesn?t want the Trustee to use it as a sign of profligacy or invite further harassment from the Trustee?s law firm. Apparently, the
University received a subpoena from the Trustee asking for information about Steve?s giving. Discovery is supposed to conclude on January 1,
ending the need to withhold all giving. Settlement is supposed to conclude by March 1.
The restructuring of his investments into a holding company has also delayed access to the liquidity that would allow him to begin payment of his
open pledges. Apparently, this requires separate deals for his hundreds of investors, both domestic and international, who all reside in different
jurisdictions with different tax strategies depending on the type of entity. Steve?s primary investors are pension funds(McKinsey, Bridgestone,
Shell, and City of Seattle were some he mentioned). He did not have a timeline for when he expected these negotiations to close.
Steve also expects the valuations of his two most promising companies to skyrocket. giving him both short-term liquidity and exceptional levels of
personal wealth in the long-term. ADP is a company that desulpherizes crude oil using a catalyst, using much lower levels of heat, energy, and
waste products than the current industrial methods. He is about to launch a test site next to Marathon refinery in Ohio and if successful could
lead to a full-on, refinery wide deal. Argonne connections have been helpful identifying advisors. Skyworks is the gyrocopter manufacturer
formerly known as Groen. Steve is exploiting the potential military applications and markets of the technology, hired a former general as CEO
and recruited Senator Byron Dorgan, fellow member of the Argonne Board, to his advisory board. He is also exploring Argonne battery
technologies and electric engine prototypes to make develop a fully electric gyrocopter. Current valuation of ADP is $700M. Skyworks, $1.76.
He thinks these could both be multi-billion dollar companies. Oil companies, for example, spend $3 trillion a year on desulpherization.
Steve opened up a conversation about his current thinking about philanthropy. He doesn?t want to use his wealth to set up a foundation and was
openly critical of the Bill Gates approach to funding small projects here and there without a cumulative impact. He wants to partner with the
University do something transformative in the same way as, but on a much larger scale than the Pearson brothers. He said his prior to the
University was useful, but in no way transformative. He wants to create ?a legacy,? but one that would probably not bear his name as a brand,
but would not be anonymous either (like Homer). He doesn?t want to name or endow an existing structure, such as the College, and he doesn?t
believe in scholarships, saying he paid his own way and others should as well. A nine-figure gift could be possible in the next five-ten years.
Quick update on his daughters. Alexandra, the budding marine, developed conservative political views in her freshman year in the College and
became a pariah for her freshman roommates and on the girls tennis team. She?s now an English major, developing an interest in creative
writing, and living at home.

Note ID: 1,218,314

Note Date Date Added Lead Participants Contact Type Status


7/26/17 7/26117 Olejniczak, Jennifer Michel Note Done

Note Summary/Description
1000395765 Katarina Stevanovich attended Pine Crest School
Entity Note Text
1000395765 Katarina Stevanovich attended Pine Crest School

*ton

URM: University VP/AVP


Stevanovich, Steve G. Entity ID: 0004764198 rospect ID: 13831
Campaign
MUMM
AB 1985 COL; MBA 1990 BUS FUL

GRIFF Run Date: 09/18/2017 Confidential Page 153 of 155

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From: Denise Chan Gans


To: Paul Seeley
Subject: FW: Stevanovich
Date: Tuesday, April 08, 2014 6:24:00 PM

Depending on how Ken responds, you might let him know about Steve's offer to have his attorneys
speak with us. This might address any concerns about accepting/counting a pledge and/or payments
at this point, but is separate from the whole question of whether we can accept his closely held
stock as a gift asset.

Denise
x 2-0882

From: Denise Chan Gans


Sent: Tuesday, April 08, 2014 5:22 PM
To: Kenneth Manotti
Cc: Paul Seeley
Subject: Stevanovich

r en,

I know there has been a lot of activity surrounding Steve and his pledge over the past week. Paul
and Heather have been handling it beautifully.

I want to chime in to share what I said to Paul last night about this. I do not know the details of the
situation as well as Paul does, but the fact that Fidelity is declining a potential gift (at least initially)
due to potential clawback concerns should raise red flags with us as well. I am guessing that Andy
Alper and necessary individuals on the Board know about the situation. It would be my
recommendation that before we(a)count a signed pledge agreement,(b) agree to name anything in
recognition for a pledge from Steve and (c) accept any pledge payments from Steve, we have
confirmation from the Board that they are comfortable accepting a gift from Steve Stevanovich at
this point. This would protect us/the University later if any questions are raised and in a worst case
scenario would show that a deliberate decision was made. Perhaps this is all already in place. I do
riot see this as much as a legal risk (although being the subject of clawback suit is a legal risk) as
much as one of reputation,/fiduciary duty/corporate responsibility.

I'd be happy to reach out to Russ for his opinion also, if you like.

Denise
x 2-0882

From: Paul Seeley


Sent: Monday, April 07, 2014 10:33 AM
To: Kenneth Manotti
Cc: Denise Chan Gans
Subject: Steve call

Hi Ken,

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I just had a short call with Steve who asked me about my conversation with Fidelity on Friday. He
was upset to hear about Fidelity's concerns about the Petters suit. He said that he and his attorneys
would be able to overcome any concerns Fidelity might have if they were able to brief them on the
situation. However, they can't disclose any of the relevant information unless Fidelity signs a
confidentiality agreement protecting this personal information. It seems there's confusion about
what the confidentiality agreement covers: this personal/legal information or the possible
transaction of donating his shares to the Fidelity DAF. Steve has no issues with the confidentiality of
the latter.

Steve reiterated that there is no possibility for clawback for a gift he might make from the Petters
bankruptcy court. My sense is that he'd like some reassurance the University has no such concern.
Any gift he made—cash or securities, future gift or past giving to the Center—would be vulnerable
to such a clawback claim.

Steve's attorney is supposed to talk to Fidelity later this morning, early afternoon.

Paul

Paul Seeley
Executive Director, Regional Major Gifts
University of Chicago
7th Floor
5235 South Harper Court
Chicago, IL 60615
w. 773-702-8884
m. 773-612-7544
http://www.uchicago.edu

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Message
From: Paul Seeley [/O=THE UNIVERSITY OF CHICAGO/OU=EXCHANGE ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=PSEELEY]
Sent: 4/9/2014 9:44:03 AM
To: 'Steve'[steve@email_-path.com]
Subject: RE: Redacted

Steve,

This concern about: clawback did not come from us. My colleague who contacted Fidelity about your potential stock gift
only said in passing on the phone that you were involved in a legal matter that had "been in the news."

Thanks for your offer to make your attorneys available to the University (our general counsel) if we wart more
information.

Paull

Paul Seeley
Executive Director, Regional Major Gifts
University of Chicago
.cn
Floor
523.5 South Harper Court
Chicago, IL 60615
w. 773-702.-8884
-- --- Redacted -- -
http://www.uchicago.edu

From: Steve [mailto:steve@email-path.com]


Sent: Tuesday, April 08, 2014 4:24 PM
To: Paul Seeley
Subject: Fwd:`._._._._._Redacted._._._._._.;

Hi Paul,

Please see the below from John. I told him to see if the NDA with Fidelity works before reaching out to the
other person you suggested. We will reach out to the other person if the process with Fidelity stalls for some
reason.

As an aside, as you can see below, Fidelity told John that it is UChicago that has the issue with the claw
back. Please let me know if you would like me to arrange for my Petters counsel to speak with any UChicago
counsel re this. As an aside, we have already informed the US Trustee in the Petters matter about this potential
donation.

Thanks,
Steve

Begin forwarded message:

From: John Monahan <iohn@monahan-law.com>


Subject: RE:; Redacted_._................

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Date: April 8, 2014 at 5:19:03 PM EDT
To: Steve <steve@email-gath.com>

Steve:
Fidelity Charitable has agreed the NDA is the next step and they are preparing a new draft. looks like they have agreed
with all our proposed changes. We will send it to you for review upon receipt.
They mentioned the UoC had issues with the Petters claw back and that was holding up the N CL's. Now back on track.
Would you want to stay with Fidelity Charitable at this point? Or change to Charitable Solutions LLC?
1ohnM

From: Steve [maiIto:steve@email-path.com]


Sent: Tuesday, April 08, 2014 2:04 PM
To: John Monahan
Subject: Fwd: _ .Redacted_._._._._._

Hi John,

I don't know if you heard back from the Fidelity Charitable guy re signing a proper confidentiality agreement,
but here is another person that with whom the University works to whom you can reach out.

Thank you,
Steve

Begin forwarded message:

From: Paul Seeley <pseelev(a,uchicago.edu>


Subject: RE: _Redacted
Date: April 8, 2014 at 5:02:48 PM EDT
To:'Steve Stevanovich' <steve(a-o-sgsfunds.com>, Kenneth Manotti <kmanotti(o)uchicago.edu>

Steve,

Here's another contact we have who provides the same type ofservice as Fidelity.

Pahl

Bryan Clontz, CFP®


President - Charitable Solutions, LLC
3713 Pine St.
Jacksonville, FL 32205
P:(404)375-5496
F:(904)339-9014

www.charitablesoltitionsllc.com - a non-cash asset receipt and disposition, life insurance


appraisals/audits, speaking, emergency assistance administration, and gift annuity risk audits and
reinsurance brokerage film www.decliomai.org - a national donor advised fimd for non-cash
charitable donations(e.g., real estate, C and S core, limited partnerships, LLCs,collectibles and
other weird gifts) www.ek-strom-associates.com - a practitioner-based community foundation

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consulting firm www.emergencyassistmicefdn.org - a national charity for employee-to-employee
giving allowing employers to private label employee emergency assistance and disaster relief
funds.

Paul Seeley
Executive Director, Regional Major Gifts
University of Chicago
7th Floor
5235 South Harper Court
Chicago,IL 60615
w. 773-702-8884.........
Redacted
iiip .7www.uchicago.edu

Original Message
From: Steve Stevanovich [mailto:Steve cr sgsfunds.com]
Sent: Tuesday, April 08,2014 3:51 PM
To: Kenneth Manotti
Cc: Paul Seeley
Subject: Re: Redacted

Thanks Ken. Let me know ifthere is a plan B if Fidelity refiises to sign a confidentiality
agreement. Are there any other companies with which the University works? I don't understand
why they would refuse to sign a confidentiality agreement, it seems like such a minor thing. Why
is it so important to them to publish my private information? Its like someone there wants to be
able to write a book!

On Apr 8,2014, at 4:40 PM,Kenneth Manotti


<knianotti@uchicago.edu<mailto:kmanotti c@?r uchicago.edu>> wrote:

Hi Steve:

Redacted
._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._.

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Redacted
............................................................................................................
I

Please let me know if you have any additional questions/comments.

I know that I have sent you a lot ofinfonnation about possible areas for support. I hope ...................
._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._.__._._._._._.__._. it has been
informative and helpful; ._._. ---- ---- ---- _....................................................
Redacted_._._._._._._._._._._._._._._._._._._._._................
.Redacted
L...............................................................................................................................

I look forward to continuing our conversation. If at all possible, I hope we can finalize your intent
before the May retreat in Paris.

With regards

Ken

Ken Manotti
Vice President
Alumni Relations and Development
University of Chicago
:
1 773.702.0686
_._._._._ ---------------------,
Redacted
_._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._._.

._._._._._._._._._._._._._._._._._._._._._._._._ ._._._._............................ ._._._._._._Y

-Redacted
...........................................................
...._._._._.__._._._._._._._._._._._._._._._._._._._._._._._._._._.

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