[Summary: Tulving ceased operations Mar. 3, filed for bankruptcy Mar. 10, after many reports of multi-month delays]
[Other Tulving pages: FAQ, Old News, Post-Mortem, Order Volume, $42.5M Calculation, PDFs, Tips, Meetings #1, #2]
Tulving's Problems Spread to Other DealersAugust 19, 2014 6:35AM EST
According to a Florida TV station, a woman is accusing a coin dealer in Florida of bilking her out of $30,000 of gold coins that she paid for 6 months ago. When the TV station confronted the owner, he explained that he had ordered the coins through The Tulving Company. Apparently unable to absorb the loss, he tried passing the loss on to his customer.
I am not naming the dealer, as it appears to be an isolated incident, and he claims to be a Tulving creditor (although my records do not show him having filed a Proof of Claim form).
Hannes Tulving, Jr. SeenAugust 18, 2014 5:50PM EST
Hannes Tulving, Jr. appeared today at a court-ordered deposition in an invdivual lawsuit by one of the claimants, and pled the 5th to most questions.
I believe this is the first time Hannes has been seen since he shut down the business.
If I get more details on the deposition, I will post them here.
Customer List Sale/Auction PostponedAugust 13, 2014 6:50AM EST
R. Todd Neilson, the Tulving bankruptcy trustee, has withdrawn his motion to sell/auction the Tulving customer list and other intangibles, due to "certain concerns subsequently raised in respect to the proposed sale."
My understanding is that the intangibles would still be sold/auctioned, but at a later date, with some modifications (likely adding a clause to the contract preventing disclosure to third parties).
Customer List to be Auctioned for $150K+August 8, 2014 8:40AM EST
[13 Aug 2014 UPDATE: It sounds like the privacy concerns are being addressed.]
R. Todd Neilson, the bankruptcy trustee, has filed a motion (Docket #158, #159) to sell the Tulving customer list (along with domain name, phone number, customer order records, etc.) for $150,000 (or a higher amount, if a higher bidder is found at an auction). He has already had discusssions with 4 other interested parties.
While this sounds good, there is one part that concerns me. A footnote refers to 363(b)(1), which (in general) prohibits the sale of personally identifiable information in a bankruptcy if the debtor had a policy of prohibiting such transfers, unless a consumer privacy ombudsman is appointed and approves the sale. Mr. Neilson stated that he believes that no such policy exists. This surprised me, due to the extreme privacy constraints of many bullion buyers. I could not believe Tulving would not have had made statements regarding privacy.
tulvingbankruptcy.com Website Minor UpdateJuly 31, 2014 7:40PM EST
Today, the tulvingbankruptcy.com website had some minor updates.
They added the bar date (30 Sep 2014) to several places,
The Claims Register was also updated,
[NOTE: The website was later changed to reflect the issues I noted]
Chapter 11 ReportJuly 24, 2014 9:35AM EST
Yesterday, R. Todd Neilson, the Chapter 11 Trustee, filed the final Chapter 11 report (it is considered final because further reports will be Chapter 7). The report was required per Docket 108 (entered May 29), which required a final report to be filed with the U.S. Trustee within 30 days.
Mr. Neilson points out that assets include (but are not limited to): Tulving's customer lists, potential preference and other actions, the coins seized by the Secret Service, domain names, E-mail addresses, and phone numbers. There is also a safe that the Secret Service seized with unknown (to us) contents that was not specifically mentioned, and the mysterious ~$1M in accounts receivable (that might be -- just a guess -- money owed by people due to a 'market loss' policy).
He also lists the unpaid debts after the bankruptcy petition was filed and before the conversion, so about March 10 through May 29 (about 80 days). They include $39,103.78 for Pachulski Stand Ziehl & Jones (attorneys), $38,839.00 for BRG (accountants), and $19,541.55 for R. Todd Neilson (Trustee), for a total of $97,484.33. That works out to roughly $36,500 per month. The amount owed PSZ&J works out to right around $600 per docket that was filed from the time they sought employment until the Chapter 7 conversion.
Creditors' Meeting #2 Audio/Notes/TranscriptJuly 17, 2014 2:50PM EST
I today got hold of the audio to the 2nd Creditors' Meeting (1st Chapter 7 Creditors' Meeting). You can find the audio here.
The meeting was less than 15 minutes, and there was not a lot of new information. In addition to (and repeating some of) the notes I posted before:
Mailing ListIf you are looking to get important updates on The Tulving Company, you can sign up for the mailing list. This mailing list will only be used to provide important updates regarding The Tulving Company (on average about one a week). Although it is intended primarily for those who have placed orders with Tulving in the past year, anyone may join the list. If you want to contact me directly (all your information is kept confidential unless you state otherwise), feel free to .
Tips WantedJune 23, 2014 5:10PM EST
Do you have any tips regarding Tulving that you want to be (reasonably) anonymous? I have added a tip form that you can use. Quite a few people have E-mailed me, but this extra level of anonymity may be helpful for some.
You can also E-mail me at about.ag [at] gmail.com if you wish a response, or do not mind me knowing who you are (I have never given out any of my sources, nor do I have any intent to).
Claims Pass $5,000,000July 10, 2014 7:40AM EST
I have heard from the court that yesterday claims in The Tulving Company's bankruptcy passed $5,000,000, with about 118 customers (and 5 other creditors, such as Ford, the IRS, and a bank).
Estimating the total claims filed is very inaccurate, as it is very difficult to predict how many people will file Proof of Claim forms based on how many have been filed so far. That said, if claims continue at the rate that they have for the past 1-2 weeks (higher than previously, perhaps now that I have explained that all creditors must file a Proof of Claim form to get any money), there would be around 275 creditors with total claims of about $11M. That would be much less than the up to 1,000 creditors with $40M in claims that I was estimating. I cannot say whether this estimate is way off (it could be), whether the actual number of creditors is much less than I thought, whether creditors are waiting to file, or whether there are many creditors not willing to file (prefering privacy over money).
As a reminder, Proof of Claim forms must be received by the court by September 30, 2014.
Ford Gets the VanJuly 10, 2014 7:20AM EST
Yesterday, there was a hearing to determine if Ford could repossess the Ford E-350 SD van that Tulving bought in in November, 2010. There had been no objections.
Ford is owed $13,384.17, and valued the van at $14,400. It should have a negligible impact on the assets available to creditors, as I was not treating the van as having value (since we have known of Ford's secured interest in it for a long time), and the value of the van is so close to what is owed.
California Payroll Tax OwedJuly 4, 2014 7:45AM EST
The State of California has put in a claim for $9,888.54 for unpaid taxes ($8,989.58) and a 10% penalty ($898.96).
This is for the period January 1, 2014 through March 10, 2014. It covers SDI, PIT, UI, and ETT payroll taxes. The majority of the claim is a priority claim (priority claims get paid in full before any non-priority claims get paid).
Aside from this claim, the other claims by non-customers so far have totalled under $3,000 (except for Ford that is owed a bit over $13,000, but has the truck as security, which should cover most or all of what they are owed), including the IRS claim.
Creditors' Meeting SummaryJuly 3, 2014 4:15PM EST
Here are some brief notes from the Creditor's Meeting.
Further Details on RetractionJuly 3, 2014 4:35PM EST
I have had several requests for any communication I may have had from A-Mark regarding the retraction I made. While I do not feel it appropriate to disclose any communications, to help ensure that the truth is properly disseminated, I will add that A-Mark made the following statements (verbatim, except for possible typos):
Creditors' Meeting Today: Information WantedJuly 2, 2014 7:15AM EST
The Chapter 7 Creditors' Meeting is today at 10AM PST (1PM EST).
It is expected that Hannes Tulving, Jr. will not show up, but he could. Mr. Neilson will be there and available to answer questions. I had previously posted a list of some suggested questions. Another good one to ask would be explain why he stated that Tulving engaged in commodities futures trading with A-Mark, when that is false.
If anyone attends the meeting and would like to send any information, you can E-mail me at about.ag [at] gmail.com, or alternatively there is now a tip form that is more anonymous than E-mail.
Retraction About A-MarkJuly 1, 2014 5:15PM EST
I had previously made two updates on this page about Tulving's dealings with A-Mark. I have recently received information from A-Mark that shows several of the assumptions I had made from Mr. Neilson's statement at the Creditors' Meeting were incorrect. This led me to make statements that may have been misleading or incorrect.
Some correct facts about A-Mark include:
I apologize for any incorrect statements I may have made. One of my primary goals for this website has been to find the truth. The good news is that the truth is now known here. I wish to apologize both to my readers for any misinformation, as well as to A-Mark.
100 Known CreditorsJuly 1, 2014 10:10AM EST
The bankruptcy Trustee has just released the latest list of claims filed, at tulvingbankruptcy.com. There are now 100 creditors known to the court.
The average customer claim is just over $45,000 (very close to the $44,000 figure I have often used since before the bankruptcy). Of the claims, 29 were filed in March, 29 in April, 13 in May, and 29 (so far) in June. 15 claims have been filed since I notified creditors (almost 3 weeks ago) that the Proof of Claim form is now required. 96 of the 100 claims are from customers. The total claims so far are just about $4.4M.
I estimate that the total number of creditors is around 500-1,000. If correct, that means that only about 10% to 20% have filed a Proof of Claim so far. It may be over 2 months before we find out the actual number of creditors, and almost 3 months before we find out the total claims (some people likely will choose not to file a claim).
July 2 Creditors' MeetingJune 27, 2014 4:25PM EST
On Wednesday is the next Creditors' Meeting. This meeting is occurring because the bankruptcy was converted from Chapter 11 to Chapter 7. The meeting starts at 10:00AM, and is at 411 W Fourth St., Room 3-110, Santa Ana, CA 92701.
Given that Hannes did not show up to the previous Creditors' Meeting, I would be surprised if he shows up to this one. However, it is possible that he will show up (doing so might be advantageous if there are criminal proceedings against him).
The bankruptcy trustee, R. Todd Neilson, will be present, and available to answer questions. Therefore, it would be beneficial if there are at least a few creditors and/or their attorneys present. Perhaps some will look at the suggested questions I had listed before the previous meeting. Also:
Assets now at ~$3,400,000June 24, 2014 5:00PM EST
The tulvingtbankruptcy.com website was updated today (the last update was June 12). The monthly operating report for May, 2014 was just added to the site, and the trustee report #2 was released. Things I noted include:
A special thanks to Mr. Neilson for being forthcoming with the information on the appraisal.
Estimated NumbersJune 13, 2014 3:30PM EST
It's been over 3 months since The Tulving Company filed for bankruptcy, and it could be another 3 months before some key numbers are given. So I'll step in with some actual number and some estimates.
Another Extention for Creditor List and SchedulesJune 13, 2014 2:30PM EST
Yesterday, R. Todd Neilson filed a request for an extension to file the creditor list and other schedules, until September 10, 2014 (or alternatively no sooner than August 27). That's more than 5 months after they were originally required to be filed.
The good news is that since this is now a Chapter 7 bankruptcy, the Proof of Claim forms are required, so the filing of the creditor list has little importance to those creditors who are already aware of the bankruptcy (the majority, I suspect).
The bad news is that this further delays the answers to some basic questions, including: How much money does Tulving owe (the court sees only about $3M in claims so far, whereas they could easily be as high as $40M or more)? How many creditors are there (I expect at least 400, possibly 1,000)? The financial statements could provide valuable information as well (which Mr. Neilson has, but are not public).
Mr. Neilson states "The Trustee has limited information concerning the scope of creditors in this case" and "It will take many weeks for the Trustee to analyze and compile the information needed to identify additional creditors and complete the schedules.". It's a shame that the first extended deadline of May 31 came and went without a word from Mr. Neilson, with creditors thinking he was going to file everything by then, when in fact he knew he would not be able to do it for many months. This is information that is normally required within 2 weeks of filing for bankruptcy, and presumably can in most cases be done in that amount of time. A quick 5-minute E-mail to me once or twice a week to pass on (or just updating tulvingbankruptcy.com) would make a world of difference to the creditors.
From this document and other statements, it almost sounds like Mr. Neilson never intended to start working on the creditor list and schedules until after the bankruptcy was converted to a Chapter 7, rather than attempting to meet the origianl deadline. Since the original deadline was 2 weeks ago, signficant progress would have been made otherwise.
I guess this should help justify the fees that the professionals are charging; I can only imagine how much higher the fees would be for accountants that could have met the original deadlines.
Proof of Claim GuidelinesJune 12, 2014 2:45PM EST
As a reminder, the Proof of Claim form is now required. If you do not send one in by the bar date (September 30, 2014 per Docket 117), you may not get your share of any distributions that may be made.
I have a page here that covers the basics of filling out a Proof of Claim form. I cannot give advice on how to fill out the form, but have provided sample answers that people have used on forms that have already been filed. It also has the link for getting the form, address to mail it to, and privacy pointers (the form and supporting documents are a public record).
Compensation, Part IIJune 11, 2014 3:25PM EST
After listening to the audio of the Creditors' Meeting, I became curious as to Mr. Neilson's claim of having to write off his time (along with his implication that I had been inciting creditors about fees). I did a bit of research. Maybe he was on to something.
Trustees get a maximum payment, based on the amount of money distributed to creditors. I recently explained his 'write offs' with an example of a thought process that "If the court paid me by the hour, I would get $500/hr. I put in 100 hours of work, that is worth $50,000. I only got $15,750, so I lost $34,250.".
Looking at another Chapter 11 bankruptcy, it shows that Mr. Neilson submits to the court a detailed line item summary of the work that he and his staff put in (if you have ever been billed by an attorney, it will look familiar). To get paid as much as possible, you would want to bill at least the maximum amount allowed by law. In other words, to be awarded the maximum amount from the court, you must bill in such a way that you have a 'write off'. So a write-off means that you made as much money as possible -- a good thing (for a trustee), not a bad thing.
As an example of what gets billed, R. Todd Neilson billed a Chapter 11 bankruptcy estate $2,665 for work he performed on December 14, 2011. That work? "Travel to and from fee application in Santa Barbara." So he got paid $2,665 for driving a car one day to ask for money. In that bankruptcy, he received about $2.1M from July, 2003 through November, 2011 (some went to his staff), or just over $250,000 a year just from that one bankruptcy (averaging less than 7 hours a week).
In another bankruptcy, from March, 2009 through November, 2013, he received $2,610,792.01 (again, some went to his staff), or just over $550,000 per year. In that case, he got $952 one day for an hour and a half reviewing his fee application. One billing period shows about 90% of the money went directly to Mr. Neilson, with about 10% going to his staff. The staff is separate from the company he works for, BRG, who received $4,508,850.06 from March, 2009 through February 28, 2011.
June 12, 2014 7:15AM EST Update
Detailed Summary of Creditors' Meeting AudioJune 11, 2014 9:25AM EST
I now have a detailed summary of the Creditors' Meeting audio. It includes notes, such as correcting some errors, and inserting facts Mr. Neilson was unaware of.
Although the audio (available here) may be a bit boring, the summary is worth looking at. There is a lot of information that wasn't in the original notes that I placed online, and the summary lets you find what you might be interested in quickly.
Creditors' Meeting Audio AvailableJune 9, 2014 3:45PM EST
Today, I got a copy of the audio from the Creditors' Meeting.
Feel free to download the .mp3 file here. It is just over an hour, at 1:06:19, and about 60MB in size.
I hope to add a summary of the contents of the audio within a day or so along with time references, to help you find parts of interest. The section relating to me is found below.
Setting the record straightJune 9, 2014 3:15PM EST
I have received the audio for the creditors' meeting from May 21, and found that Mr. Neilson made a number of erroneous statements and omissions regarding myself. I have transcribed the related section (please excuse any errors), with some time references (where 00:00 would be the beginning of the audio recording):
[All statements here by R. Todd Neilson] 26:30 Let's talk a bit about the claims. There is an individual by the name of Josh Gibbons who has I don't know what relationships he has had. I am going to assume that it is all, that my last communication to him was that I am going to assume that what he is trying to do is an act of a good samaritan, he has no claims here. He has taken upon himself to be a conduit for a number of creditors. 27:15 I have a standard and a policy I have had over a number of years, I won't deal with people unless they are a creditor or an attorney representing a creditor or some party in interest. I'm not going to talk to someone who comes off the street and says 'Let me tell you how to do things.' I've got enough people who have a stake here that have anted up that can tell me how to do things. 27:45 He apparently felt like, and I did say it is obvious you don't have any bankruptcy experience, based upon the questions you are asking me. So I said I am going to disregard, you are not going to be the filter to a number of creditors, I'm not going to do that. 28:15 And so he told creditors, people he was in touch with, that I was unresponsive, and wouldn't deal with him. And that he found out that it was vital to file a creditor's list, that I was shirking my responsibility, that it must be filed by a certain date. I said that is not true, and I don't know where you are getting this, other than you are probably Googling something. It's just not true. 28:45 I said we will provide, and we are very careful about the claims in this estate, but what happened is he suggested to his minions that they start sending me E-mails and that they start calling me, I have 15 calls I haven't returned, 20 E-mails I have responded back to every single one of them. I will return every call. If the creditors want to talk to me, that is what I am there for. And I told him, in the future that I am not going to deal with someone who doesn't understand things. He has no skin in this game. I'll talk to creditors all day, but I am not going to talk to someone like that. 29:40 So I am getting pushed back from a number of creditors who are associated with him, saying we want him to represent us, and I say he is not a lawyer. I think we have gone a ways towards solving that, and I said we have set up a website. And it is called tulvingbankruptcy.com. Here is my first report that I will be finalizing today. We will have references to Proof of Claims, filings that have taken place, that will be uploaded on a regular basis, we will have schedules, detailing proofs of claim, we will have notices, those types of things that people can understand. 59:20 All I ask is that we have civil discussions. I have not had civil discussions with Mr. Gibbons.My notes follow, corresponding to the times above:
26:30 Essentially correct, although he never said to me that he assumed I was a Good Samaritan. He stated "Why you choose to inject yourself in this bankruptcy is beyond me", and that I have "whipped [creditors] into an unjustified frenzy". Hardly saying I am a Good Samaritan. 27:15 He neglects to mention that in my first contact I stated "I hope it is appropriate for me to contact you directly." After 3 weeks he responded, and then answered a few questions I had. So he does deal with non-creditors as he sees fit. I also never attempted to tell him how to do his job; I simply gave him information and a suggestion of where to look in financial records that might produce some quick answers (without any expectation of a reply). And apparently he feels that you have to be a gambler to play this game (you have to risk losing money to gain a lot of money in fees). 27:45 He did say that it was obvious I do not have any bankruptcy experience and that he was going to disregard me -- but it took many creditors contacting him before he would tell me that. After he said he was going to cease communicating with me, I only sent 1 final E-mail (apologizing and asking he re-consider). 28:15 He makes it sound as if he was responsive; the facts are very clear that this is not the case. I still believe that the law requires R. Todd Neilson to file a creditor list, and read in court documents that the creditors' list was due by May 31, 2014 (in response to the extension request was filed). I have no idea what the Judge means by "Debtor shall file its schedules and Statement of Financial Affairs by May 31, 2014" (Docket 27) if the schedules (e.g. the Court says Schedule F is a list of creditors holding unsecured non-priority claims) do not really need to be filed by then. But I am not an attorney, so maybe I just do not understand. Perhaps orders by judges are just suggestions, or "shall" has the legal meaning of "if you want." Perhaps rather than spending time telling everyone I am wrong, which doesn't help anyone, he could tell people how I am wrong. Maybe he just prefers dealing with creditors who are uneducated on bankruptcy matters? 28:45 Here, he implies that I asked him about filing the creditor list (true) and that he gave me information about how they handle the claims (blatantly false). He never responded to my original request (knowing I was waiting for his response before updating this page), nor a request for comment before I sent out an E-mail to creditors. He then complains that I my "minions" (in other words, Tulving creditors, people he is obligated to serve) contact him, yet it was solely due to his refusal to respond. He then says how he told me he would not deal with me, but that was only after his continued silence. 29:40 Here, he refers to creditors who are "associated" with me, making it sound like I'm an ambulance chaser that has found a few creditors desparate for help. We're talking about 400 or so creditors, compared to the 50 or so that R. Todd Neilson knows about. And the only association is that I am providing information. I have also never suggested to creditors that I represent them in any legal capacity; that is very deceptive. What I stated (and he has seen this) was "If you would like Mr. Neilson to provide updates to creditors through me, feel free to let him know.". It is great that he set up a website for the bankruptcy; but even now there are no filings on there. Isn't it interesting that he charges perhaps $300/hr or so for someone to take weeks to put hand-picked filings online, yet I can put them all online daily at no cost? It provides nearly no benefit to creditors, at a large cost. 59:20 It is refreshing that R. Todd Neilson admitted that he was not civil in his discussions with me. Although with his talk about how discussions should be civil, and how people can agree to disagree, I would think that he would not have been so contentious, and more open to keeping communication open. I certainly hope that R. Todd Neilson was not being misleading and implying that my side of the discussions were not civil (again, anyone is welcome to read the E-mails).It sounds like at first, he took me as just some guy off the street, then I gained a little respect in his mind when he heard about me from creditors (and therefore started dealing with me). But as soon as I started asking questions that could cut billable hours (trying to get the Proof of Claim forms to be consistent), he got a bit upset, and decided to stop responding to me (but without telling me), somehow hoping I would not tell creditors that he had stopped responding. When I didn't accept that, and suggested creditors contact him directly, it sounds like he got royally pissed off, for some reason unknown to myself. But that would have never happened if he had simply done what he implied, and told me that he wasn't going to communicate with me.
Sorry for the rant, but I believe when someone makes such misleading and/or untrue comments against someone, it deserves a response. As a reminder, the correspondence between R. Todd Neilson and myself can be found here.
Proof of Claim Deadline: September 30, 2014June 5, 2014 9:35AM EST
Yesterday, a new Creditors' Meeting notice was sent out. Most importantly, it shows two key pieces of information (not yet reflected at tulvingbankruptcy.com):
 A Proof of Claim form is now required. As a Chapter 11 bankruptcy, it was not expected to be required. Mr. Neilson did not say if the conversion to a Chapter 7 bankuptcy would require a Proof of Claim. Now, we know for certain. The notice states in no uncertain terms "To be paid, you must file a Proof of Claim even if your claim is listed in the schedules filed by the debtor.". There is now no question that it must be filed.
 The Bar Date (deadline for filing the Proof of Claim form) is September 30, 2014. You absolutely, positively must make sure that you have sent in the Proof of Claim form, and that the court has received it, by that date.
At some point within the next few days or so, I will provide more information on the Proof of Claim form, and hopefully offer advice for filling it out. R. Todd Neilson refused to answer questions I asked him about the form (before he cut off communication with me and suggested I stop assisting creditors), and I cannot provide legal advice, but I hope to provide some useful tips for filling out the form.
I have seen 3 different addresses for sending the Proof of Claim; the address shown in the notice of the Creditors' Meeting is: U. S. Bankruptcy Court, 411 West Fourth Street, Suite 2030, Santa Ana, CA 92701-4593.
New Creditors' MeetingJune 5, 2014 9:35AM EST
Another Creditors' Meeting has been scheduled for July 2, 2014 at 10:00AM, at 411 W Fourth St., Room 3-110, Santa Ana, CA 92701.
Although there was already a Creditors' Meeting (which Hannes Tulving, Jr. did not show up to), I understand that the conversion to a Chapter 7 bankruptcy automatically results in a new Creditors' Meeting.
No Creditor List YetJune 2, 2014 8:45PM EST
My understanding is that the bankruptcy required the final documentation, including creditor list and financial statements, to be filed by May 31, 2014 (per Docket 27). This has not been done.
This may be due to the conversion to a Chapter 7 bankruptcy, but is not quite welcome, especially without any explanation available. The financial statements may have provided important clues as to what happened. However, it is important to note that R. Todd Neilson stated that the release of the creditor list was unimportant, and not something to be concerned about at this point.
Tulving Was Current on Auto PaymentsMay 30, 2014 8:30PM EST
Ford Motor Company filed a Motion for Relief from Stay, which I understand means that they want to be able to repossess a truck that Tulving had purchased and owed money on.
One noteworthy piece in the 19-page document is that Tulving was current on payments through February 11, 2014. In other words, Tulving was keeping up with many day-to-day debts through the very end.
Also interesting is that it has Hannes' home address, which was not well known before the bankruptcy. This was listed as 2112 1/2 Oceanfront, Newport Beach, CA, 92663 (which The Tulving Company was paying the lease for). Hannes personally cosigned the loan.
There was a trade-in of a 2010 Mustang when the 2010 Ford E-350 SD was purchased.
However, most telling is that the purchase, made in November of 2010, was 100% financed, despite this occurring nearly a year before the first known financial issues at The Tulving Company, and less than 3 months before The Tulving Company claimed inventory worth over $10,000,000!
Who Are the Professionals?June 10, 2014 7:15AM EST UPDATED
May 29, 2014 4:15PM EST
So who are the professionals involved in the Tulving Companys' bankruptcy? Here are the ones I am certain have done work so far (there are likely others):
How Professional Compensation WorksMay 28, 2014 5:10PM EST
I thought I would take a moment to clarify how compensation of professionals works in a bankruptcy such as this.
There are essentially 2 categories of people getting paid from Tulving's estate: the trustee, and the other professionals (lawyers, accountants, etc.).
The professionals get paid as they normally would outside a bankruptcy, typically by the hour. There is a process where the trustee must get approval from the court to employ them (with the option for interested parties to oppose); this has been completed for PSZ&J and BRG. Once approved, after they have done work (and/or including work done before they were approved), they need to file paperwork with the court to get paid. Both of these processes are normally automatically approved. But, as we saw in this case, 2 lawyers filed oppositions to the employment of PSZ&J and BRG.
The trustee, however, normally gets paid a commission based on how much money is distributed to creditors. The law allows for reasonable compensation. The law defines the maximum commission, which is what trustees customarily get. It is 25% of the first $5,000, plus 10% of the amount up to $50,000, plus 5% of the amount up to $1,000,000, plus 3% of anything beyond that.
So in this case, if $400,000 is recovered (which it seems it has), and the professionals bill hourly fees of $150,000 (I made that number up) and the court approves it, $250,000 would be left to go to creditors. For $250,000, R. Todd Neilson would earn $15,750. If the professionals used up the entire $400,000 in fees, R. Todd Neilson would earn nothing. If the professionals did their work for free, R. Todd Neilson would get a commission on the whole $400,000 ($23,250). As you can see, it gives R. Todd Neilson a financial incentive to reduce the fees, and increase the amount distributed to creditors.
From what little I have seen, it seems that bankruptcies have a "sweet spot" of professionals taking roughly half of the money recovered.
Some of you may wonder how Mr. Neilson may have to "write off" many of the hours he puts into the bankruptcy, and how he has lost tens of thousands of dollars -- even if he gets paid $15,750 (as in my above example). This is done using accounting magic. Specifically, the logic goes something like this: "If the court paid me by the hour, I would get $500/hr. I put in 100 hours of work, that is worth $50,000. I only got $15,750, so I lost $34,250." Again, the numbers are made up, but show how the loss works.
The Bisom Group Employment RejectedMay 28, 2014 5:00PM EST
The judge ruled that The Bisom Group, which had been representing Tulving in the bankruptcy, may not be employed by Tulving.
Apparently, in a Chapter 11 bankruptcy, a debtor in possession (which I understand Tulving would have been, if a Chapter 11 trustee had not been appointed, which is often done in cases where fraud may be involved) is allowed to employ professionals. However, when a Chapter 11 trustee takes over, a Chapter 11 debtor is not authorized to employ professionals.
First Trustee Report AvailableMay 23, 2014 1:00PM EST
The first trustee report is available. You can find a copy here.
A few thoughts/notes:
Regarding what happened to the money, he states "It appears there was an ongoing dissipation of assets over an extended period of time. It further appears that in a late-stage desperate attempt to recover funds, Tulving engaged in speculative commodity trading which further depleted the available assets... at first blush, that is what we believe occurred." This seems to match what I suggested, that Tulving went through about $20M of inventory and then perhaps $20M-$50M or so of customer money, using commodities futures or commodities options. However, the 'dissipation of assets' does suggest two stages: a loss of inventory, and then the commodities gambling. I certainly hope these words came from research on their end, and they are not just relying on what they have heard on websites (I.E. from me).
The Secret Service seized about 100,000 coins. However, they are most likely high graded PCGS-graded common non-bullion coins (my guess), and were described as "worthless" (however, if they are PCGS-graded coins, it would shock me if they were worth less than perhaps $100,000-$200,000 at minimum).
R. Todd Neilson states "prior to [PSZ&J] being paid for their services we must bring assets into the estate and those assets will generally not flow into the estate without the threat of legal action." There is already about $400K in assets, between the bank account and auctioned assets, so I am not clear why the threat of legal action would be necessary to pay PSZ&J (except for fees exceeding what has already been recovered). It also seems odd that their presence is needed to pay themselves (I'm guessing that isn't really the case, it is just poor wording). It also hints at clawbacks (people being forced to send back metal they got within 90 days of the bankruptcy filing).
About 68 Proof of Claim forms have already been filed by creditors (as of May 20). As you likely know, most creditors have not filed Proof of Claim forms, since R. Todd Neilson neglected to answer my questions about the form (I wanted to ensure they would be filled out consistently, helping save the bankrupty from wasted fees).
He again points out the unimportance of the court being aware of creditors at this stage, and refers to me (although not by name).
In the first paragraph, he suggests that the report will cover "timing for a possible distribution to those with allowed claims.", but does not cover it.
Also, he wrote the report several days before releasing it. As a result, it does not mention that the court approved the applications for PSZ&J and BRG as professionals, and that the court approved the conversion to a Chapter 7 bankruptcy.
The Tulving Company Bankruptcy Site Goes LiveMay 23, 2014 12:55PM EST
I have just found out that the official website of The Tulving Company's bankruptcy has gone live. There is not a lot of information there yet, but should be a helpful resource. You can find it at http://www.tulvingbankruptcy.com.
Court Approves Employment of PSZ&J and BRGMay 22, 2014 4:50PM
I just heard that the court approved the application for R. Todd Neilson to use PS&J and BRG as professionals in The Tulving Company's bankruptcy.
My understanding is that the court also explained that it scrutinizes each fee application. In other words, R. Todd Neilson can use PSZ&J and BRG, but they haven't been given a 'blank check.' For example, a high-priced attorney doing the work of a paralegal would likely not be tolerated. Likewise, if they charge $2,000 to complete a task that the average-price competent local bankruptcy attorney would only charge $1,000 for, I doubt that would be tolerated.
Plus, since an opposition was made, I believe there would be less leniency regarding fees (in other words, the fee applications cannot say 'The creditors accepted our hourly fees').
Bankruptcy Converted to Chapter 7May 22, 2014 4:35PM
I have just found out that the bankruptcy was successfully converted from Chapter 11 to Chapter 7.
A Chapter 11 bankruptcy is designed for a business to continue (reorganize), with a plan for how to become profitable and pay off creditors. A Chapter 7 bankruptcy, however, is designed to sell off any assets and distribute them to creditors. So the conversion comes as no surprise.
I will update as I find out exactly what this may mean to you. One important note is that in a Chapter 7 case, I believe all creditors are required to fill out a Proof of Claim form (as opposed to Chapter 11, where it is not normally required). I do not yet know what happens in the case of a conversion, if the Proof of Claim form is required; I believe most likely it will be. At the very least, when the creditor list is filed, you should get a mailing from the court telling you about this. But keep in mind that you may be required to fill out the Proof of Claim form (and by a specific deadline).
E-mails To and From R. Todd NeilsonMay 22, 2014 1:15PM
R. Todd Neilson once said "I am more than willing to subject myself to the scrutiny of ... fair minded people." I agree.
Given that R. Todd Neilson chose to cut off communications with me (prefering to keep creditors in the dark), requested I stop acting as an advocate for creditors, and accused me of wasting his time and costing creditors thousands and thousands of dollars, I thought giving people access to the actual E-mail exchange would be useful (my only contact with R. Todd Neilson has been through E-mail). You can read them here. It's not important that you do, but if you are curious, they make for an interesting read.
Even More DetailsMay 22, 2014 11:05AM
Here are some details of the meeting. This is my interpretation based on notes from several people who were there. I was not present, nor do I have the audio (I should within about 2 weeks, which I will post online).
The fact that Hannes requested permission to attend via telephone is encouraging. It sounds like he is doing what he can to cooperate, except for coming out of hiding.
It sounds like the most likely scenario is that Hannes was gambling in the futures market, as I had guessed, but it sounds like that is preliminary information.
I have no idea about the accounts receivable, as that would suggest Hannes was selling metal without first getting paid.
Hannes' request to appear by telephone is a catch-22: if Mr. Neilson he had allowed it, we may well have gotten a lot of answers. But, if it was allowed, he would have been in compliance with the bankruptcy rules (and therefore would not risk losing the protection of the bankruptcy), and yet still remained in hiding.
That is what I have for now. The audio may provide a bit more, but likely not much since Hannes was not present.
And a big thank-you to those that provided me with notes about the meeting.
This Just In: Hannes Tulving, Jr. Does Not Show Up!May 21, 2014 7:05PM
I have just received word that Hannes Tulving, Jr. did not show up at the Creditors' Meeting.
I do not know yet if he chose not to show up, or was arrested, or there was some other reason.
I will start doing some research into the ramifications of not showing up at the Creditors' Meeting. By not showing up, he runs the risk of the case being dismissed.
Suggested Questions for Creditors' MeetingMay 20, 2014 6:25PM EST
Here are some suggestions for questions to ask Hannes Tulving, Jr., if he shows up at the creditors' meeting tomorrow (Wednesday). As a reminder, the public is welcome, but questions are primarily restricted to the trustee and creditors.
These questions match those I sent out to the Tulving Updates E-mail list (see form below if you want to join). If I add anything before the meeting, I will make it clear. [UPDATE: A few questions have been added in a separate section, and 2 more questions added at about 9:05AM PST]
QuietMay 20, 2014 12:55PM EST
No court documents have been filed since late afternoon May 13, the longest time period with no court document filings since the beginning of the case in March.
I am guessing this may be due to the Creditors' Meeting tomorrow, and the hearings on Thursday. On Thursday, there is a Status Conference, a hearing regarding the request to employ PSZ&J and BRG, and "the Chapter 11 Trustee’s Motion to Convert Case to Chapter 11" (I don't want to let my inexperience show and suggest that the court document is in error and should say 'Convert Case to Chapter 7').
Unjustified Concerns Cause Thousands of Dollars of FeesMay 19, 2014 4:30PM EST
R. Todd Neilson, the Chapter 11 trustee of The Tulving Company's bankruptcy, has been telling creditors that they will be paying "thousands and thousands of dollars" to professionals, due to unjustified concerns.
He also points out that these concerns were a result of me suggesting creditors contact him. That is completely true. Had I not suggested creditors contact him, these fees would not have been expended.
What he neglects to point out is that the concern (the the bankruptcy court is unaware of about 90%-95% of the creditors) is a reasonable concern -- in other words, one that should be addressed (even if there is no cause for concern). To me, Bankruptcy Rule 2002(l) and its notes suggest that Mr. Neilson should publish notice of certain events (via newspaper, website, etc.) if "it is reasonable to believe that publication may reach some of the creditors who would otherwise be missed". We're not talking about a handful of missed creditors; we're talking about the vast majority of creditors.
I have believed since before R. Todd Neilson was appointed that it would be far more efficient for him to field questions through me, where appopriate, and pass answers on to creditors (rather than responding to each individually).
I therefore E-mailed R. Todd Neilson on May 9 about my concern. He got the E-mail, and knowing that I was waiting for a response before updating the website, chose not to respond. I again E-mailed on May 13, explaining that I would be sending out an update to creditors, and gave him a chance to comment. He again ignored the request, knowing I would be letting creditors know of my concern and that he was not responding.
I will let you decide whose actions caused these thousands of dollars to be wasted.
Creditors' Meeting WednesdayMay 19, 2014 9:15AM EST
As a reminder, the Creditors' Meeting is on Wednesday (May 21), at 10:00AM in meeting room 1-154 at the Ronald Reagan Federal Courthouse, 411 W Fourth ST, Santa Ana, CA 92701.
The public is allowed to attend, however questions are normally limited to the trustee (who runs the meeting) and creditors. The Department of Justice instructs trustees that "Creditors and other parties in interest must also be given an opportunity to ask questions and examine the debtor.".
Audio of the meeting will be available afterwards, which I plan to obtain and place online.
I believe there is a good chance that Hannes will not show up. I have been told that he believes he will be arrested if he goes out in public, and he has missed several depositions that he was expected to attend. However, if he misses the meeting, he risks losing any protections the bankruptcy may provide.
Bankruptcy Will Have a WebsiteMay 16, 2014 10:55AM EST
R. Todd Neilson has informed one of the creditors that he will be setting up a website about the Tulving bankruptcy, which will go live in a few weeks or so. The website will be TulvingBankruptcy.com.
As I like to dig into things, I looked into this a bit. The domain name was registered on May 14, 2014. I sent out the first E-mail about R. Todd Neilson being unresponsive at 9:42AM PST. It sounds like he registered the domain as a result of input from creditors that morning. Good work!
Oddly, the owner of the domain is a man named "Jason Strong".
19 May 2014 Update: R. Todd Neilson states "I was not pressured by the Creditors into creating a website. I have created numerous websites over the years and always fully intended on doing so in this matter. It is a good source of information for the creditors and I will keep them apprised of the progress of the bankruptcy case on a regular basis."
Hannes Tulving, Jr. Responding as of 12 May 2014May 16, 2014 7:10AM EST
I have just discovered that Hannes Tulving, Jr. signed a court document on May 12, 2014.
This confirms that Hannes, although still in hiding, is still in contact with his attorneys.
Backup of tulving.com websiteMay 13, 2014 2:10PM EST
On March 6, 2014, I downloaded a copy of the entire Tulving website, knowing that it might otherwise become lost.
The archive of the website can be found at tulving.about.ag. Due to the way that the web works, not all links may work (e.g. a link may lead to www.tulving.com/pagename.htm); if that happens, you can replace "www.tulving.com" with "tulving.about.ag" and the page will load.
My Concerns re: No Mention of Late Creditor ListMay 12, 2014 5:20PM EST
The day after Tulving filed for bankruptcy, the judge ordered a Status Conference for May 22. The first action listed that the court may take at the conference is to "set deadlines for the filing proofs of claims." (after that date, anyone owed money who is not listed with the court normally gets nothing). So this conference is very important to creditors.
Before the conference, a Status Report gets filed, which is designed to answer some questions for the judge (and anyone else interested in the case). The second of 11 questions the judge asked was "Whether Debtor is in compliance with all duties under 11 U.S.C. §§ 521,...". In other words, the judge wants to make sure that the bankruptcy is running the way it was intended. Since the judge relies on the Status Report when preparing for the Status Conference, this report is very important to creditors.
The problem, as almost all of you know, is that the creditor list has yet to be filed -- it's been a huge problem for hundreds of people, who have to wait for the Chapter 11 trustee to get and file the creditor list before they can put this behind them (and hopefully get a check at some point). The delay was because the documents were seized by the Secret Service.
The Chapter 11 trustee (R. Todd Neilson) filled out the Status Report, and for the question "Whether Debtor is in compliance with all duties under 11 U.S.C. §§ 521,...", he mentioned that 2 reports were not yet filed. Yet no mention was made of the creditor list not having been filed (despite the first 8 words of § 521 being "The debtor shall file a list of creditors"). To me, this can be construed either as erroneous or at best highly misleading (especially in conjunction with another filing the same day).
Besides the creditor list not having been filed yet, Bankruptcy Rule 2002 requires that creditors be notified of certain events at certain times. I do not believe that the Tulving bankruptcy has followed these requirements (as they have proceeded with certain events, such as rejecting leases, without notifying creditors, since the court is unaware of all the creditors). When the judge asked if the law was being followed, I believe this should have been mentioned as well. Taking those actions without creditors knowing may be appropriate given the circumstances (I am not a lawyer), but this is something the judge clearly is requesting to know about, and needs to know about.
This is, in my opinion, a very serious problem. The judge is likely unaware of this issue, and may not handle the case properly as a result, which could be devastating to creditors (a number of whom have lost their life savings). The judge is relying on the Chapter 11 trustee to report properly. It is bad enough if the bankruptcy proceeds without the judge being informed of the lack of a creditor list, but for the judge not to be informed when he asks seems inexcusable.
The error, by itself, is understandable -- we all make mistakes. The problem, however, is that the Chapter 11 trustee and his counsel have not responded to my concern (either to me, or the court). I am acting as an advocate for hundreds of creditors that the judge is unaware of, and have alleged a serious error in a court document, yet silence. I'm not quite sure what the Chapter 11 trustee and his counsel are expecting will happen by ignoring this (or delaying a response). It took them only 3 business hours to correct a clerical error in Docket #59.
For reference, the times to get a response to my previous E-mails to R. Todd Neilson were:  Under an hour,  12 days (the response came about an hour after a creditor called him an mentioned about.ag), and  5+ weeks (no response yet). That suggests I would have heard by now if I was going to get a response.
When I inititally discovered this error, I immediately started writing about it for the website -- but then I decided it was important enough to check in with the R. Todd Neilson and his counsel first, to give them a chance to explain or fix the error. Mr. Neilson is aware that I update the website frequently, and should certainly have expected that I would disclose this.
Status Report Filed: No Mention of Late Creditor List!May 10, 2014 11:00AM EST
Yesterday, I reported that the first Status Report was filed, and that I believed there was missing information, and that I was waiting to hear back from the Chapter 11 trustee and his counsel.
It has been over 24 hours, and I have heard nothing, nor were any court documents filed yesterday. I promised more information shortly, so I will simply show you the E-mail I sent to the Chapter 11 trustee (R. Todd Neilson) and his counsel, so you are aware of what I noticed:
Date: Fri, May 9, 2014 at 9:50 AM EST [6:50AM PST] Subject: Serious omission in The Tulving Company Status Report Hi, I have introduced myself to Mr. Neilson previously; I run the only website that has covered the issues with The Tulving Company, and am acting as an advocate for the estimated 1,000 creditors in this bankruptcy. In addition to offering updates via my website, I am providing updates via E-mail to over 400 individuals, most of whom I believe to be Tulving creditors. I was extremely concerned this morning by what appears to be an error/omission in the Status Report (Docket #91). Specifically, in response to the court's request (Docket #7) for a status update on "Whether Debtor is in compliance with all duties under 11 U.S.C. §§ 521, 1106, and 1107, and all applicable guidelines of the Office of the U.S. Trustee. If not, explain why.", no mention was made that the creditor list has not yet been filed. The first 8 words of 11 U.S.C. § 521 are "The debtor shall file a list of creditors." The list of creditors, however, has not yet been filed. This is a very serious omission, given the actions that have occurred so far in the bankruptcy that require notice to creditors. Worse, the Status Report was filed on the same day as the "Additional Notice of 341(A) Meeting of Creditors" (Docket #92), which was filed because "additional creditors ... have appeared in this case." This strongly suggests that the creditor list is similar to that of a typical bankruptcy (almost all creditors listed, but perhaps a few missing), when in fact the court is unaware of the majority of creditors. From what I can gather, the bankruptcy court is only aware of perhaps 5% to 20% of Tulving's creditors. In my opinion, this is critical information, which the court requested in the Status Report, but did not appear there. JG
Hannes Tulving, Jr. Responding as of 06 May 2014May 10, 2014 7:30AM EST
I have just discovered that Hannes Tulving, Jr. signed a court document on May 6, 2014.
This proves that Hannes, although still in hiding, is still in contact with his attorneys.
The paperwork is a stipulation, where he agrees (if the court orders it) to have his personal bank accounts frozen, being able to withdraw $10,000 a month for rent, food, and utilities. As a reference, The Tulving Company had been paying $10,300 per month for Hannes' previous apartment and home office.
Status Report Filed - More Information SoonMay 9, 2014 10:00AM EST
The Chapter 11 trustee has filed the first status report.
I believe there may be some information missing from the report; I am waiting to hear back from the Chapter 11 trustee and/or his counsel, and will provide further details at that point.
Tulving Lease to be RejectedMay 7, 2014 3:45PM EST
The Chapter 11 trustee has made a motion to the court to reject the $31,000/month lease of The Tulving Company's Costa Mesa office, and allowing anything left in the building to be abandoned.
This makes sense, given that all of Tulving's physical assets (aside from those in the possession of the Justice Department) will have been auctioned off.
It remains to see what will happen with the intangible assets (e.g. the domain name, phone number, and customer list).
Tulving Unable to Make Rent in 2013May 7, 2014 7:30AM EST
Court documents show that The Tulving Company was unable to make rent payments for their warehouse/office building in Costa Mesa in 2013. The 10-year lease, signed in 2011, was for $31,000 per month, with a $30,000 security deposit put down when signing the lease. However, the security deposit was applied towards the lease in 2013 when Tulving was unable to pay the rent.
Only ~$350,000 in Secured LoansMay 6, 2014 1:30PM EST
After it was discovered about a week ago that Tulving had inventory seized by the Secret Service, the question came up as to whether there are any secured creditors (anyone owed money by Tulving that has assets as collateral, which would go to them and not unsecured creditors). Unfortunately, we do not yet know for certain if The Tulving Company has secured creditors, since they neglected to file the Schedule D when they filed the voluntary bankruptcy petition.
However, to be a secured creditor with full protection in bankruptcy, you need what the Uniform Commercial Code refers to as a 'perfected lien'. This process leaves a public record.
There is only 1 organization that has a perfected lien against The Tulving Company (none with Hannes Tulving, Jr. himself). It is a subsidiary of A-Mark Precious Metals. They had a secured loan with what I calculate to be roughly $350,000 of collateral (raw, ungraded 2007 quarters and dollars).
What does this mean? First, it helps answer the question as to who Tulving was paying high-interest payments to (their hint as to why they filed for bankruptcy). However, that opens further questions, as how can you lose $10M-$60M from a $350,000 loan?
The Chapter 11 trustee stated that the Secret Service seized Tulving's inventory, "e.g., gold and silver bullion, other precious coins and metals." The coins securing A-Mark's loan do not fit that description (there are over 250,000 such coins, made of base metals, likely in rolls, and much less secure than bullion). Presumably, that means that the bullion inventory seized had a reasonable value (e.g. in the $1,000,000+ range, not a single $12,000 monster box of silver eagles). However, that adds a new question: if The Tulving Company had $1,000,000 or more of inventory, why did they state under $50,000 in assets on the bankuptcy petition?
Given Tulving's statement (suggesting a high-interest collateralized loan caused the company to lose the $10M-$60M or so it lost), that would suggest that someone did lend Tulving a very large amount of money, but did not have a lien or did not perfect it (risking losing most or all of their money). Of course, it would be nearly impossible to lose so much money from a loan, so again, there are more questions than answers.
Tulving's Initial ExplanationMay 3, 2014 4:30PM EST
Hannes Tulving, Jr. has come up with a brief statement regarding the reason for the bankruptcy:
"[The Tulving Company] filed for bankruptcy protection because it could not pay its daily operating expenses, including high-interest payments on inventory that was collateralized for operating expenses."
It is cute, but doesn't really say much. It says that they filed for bankruptcy because they had high interest loans using inventory as collateral, and couldn't keep up with the interest expenses. But if you have the inventory, and your operating expenses are too high, why take out a loan? You need to raise your prices, or go out of business.
This also means that much of The Tulving Company's inventory, which we just found out 2 days ago was seized by the Secret Service (previously, it was only known that records were seized), may be used as collateral for loans, and not available to creditors.
$371,418.75 in Tulving's Bank AcccountMay 1, 2014 9:00AM EST
Court documents show that The Tulving Company's primary bank account had a balance of $371,418.75 at the end of March. This comes as a surprise due to the bankruptcy petition showing less than $50,000 of assets.
However, it is a very small amount compared to the amount creditors are owed.
It also shows that the Chapter 11 trustee was aware that the estate assets were about 10 times what The Tulving Company claimed, at about the time he was looking to employee a law firm.
The same document also provides information that a $600,000+ cashier's check was deposited in January, 2014. This is very concerning, as it appears to be an order from a customer, yet our records of over 600 complaints the largest dollar amount shown was just under $320,000. This suggests that there may be many 'hidden' creditors out there that we are not yet aware of.
Conversion to a Chapter 7 BankruptcyMay 1, 2014 8:35AM EST
The Chapter 11 trustee has filed a motion requesting the court convert the bankruptcy from Chapter 11 (where the business can continue running) into a Chapter 7 bankruptcy (where it is disolved).
As far as I can tell, this makes perfect sense, as there really never seemed to be a reason to file as Chapter 11 in the first place.
Tulving Inventory Seized in MarchMay 1, 2014 8:25AM EST
Court documents now show a new twist: Tulving's inventory was seized by the Secret Service in March, along with their records.
No information is available on what inventory they had, or what it was worth, but presumably any metal they had was seized. The Tulving Company claimed less than $50,000 in assets, and apparently was almost exclusively drop-shipping orders, so there likely was not much.
Tulving Considered Bankruptcy in June, 2013According to information I just received, The Tulving Company was in discussions with a bankruptcy attorney in June, 2013.
This may have huge ramifications. The discusions occured only about 2 months after the The TUlving Company was no longer a viable business (mid-April, 2013). This shows that Hannes Tulving, Jr. clearly knew that his company was facing serious financial problems, and for over 8 months took orders he knew likely could not be filled. It also helps show that the "All Items With Prices Are In Stock" statement on their website was false. It also nearly proves that the ponzi-like scheme was going on at that point in time (as those following my site knew had to be the case, but proof is always helpful).
IRS Field Audit around April, 2013April 20, 2014 6:15PM EST
I have been given information suggesting that The Tulving Company was the subject of an IRS field audit around late April, 2013.
A field audit is the most serious type of IRS audit, and typically reserved for cases where the IRS feels they may generate a substantial tax liability, due to either overreported expenses or underreported income. In April, 2013, they likely would have been investigating either the 2011 or 2012 tax return (2011 was the best sales year for Tulving).
This could introduce a new, although unlikely, theory: that unpaid tax bills caused the demise of The Tulving COmpany. The problem is it would be hard for the theory to account for money being spent in late 2011 and early 2012, as well as a field audit in 2013. Also, it would be hard for the numbers to add up given how much money Tulving lost (unless there were massive penalties, interest, and fees). However, it could have compounded other problems.
Lawsuit & Bankruptcy Documents AvaialbleApril 18, 2014 8:30PM EST
I have added most of the documents relating to the class action lawsuit and bankruptcy here.
They are slightly redacted, meaning that I have removed some pages with information about creditors (e.g. addresses).
The Tulving Company's Assets to be AuctionedApril 18, 2014 12:40PM EST
The Chapter 11 trustee has made a motion with the court to auction what appears to be nearly the entirety of what The TUlving Company claims for assets. It does not include their customer list, however.
Assets include a 2010 Ford E350 Econoline Superduty van, a 2008 Ford E450 14' box truck, a forklift, coin counters, pallet racking and dexion shelving, computer monitors, printers, art and decor, furniture, fixtures, and equipment.
The assets to be auctioned are valued at $18,000 to $20,000. The proposed auctioneer will charge a 13% buyer's fee to buyers, plus $4,750 of expenses. The expenses include $1,400 for 2 ads in the Los Angeles Times (known for its great coverage of Tulving's issues circa 1990, but no coverage of the issues today), $850 to send 1,000 postcards about the auction, $300 for a performance bond, and $2,200 for 7 days of labor.
The auction will also make sure that the $30,000/month lease can be rejected.
Opposition to Trustee's Choice of Law Firm, Part IIApril 18, 2014 12:50PM EST
On April 11, a notice of opposition was filed with the court objecting to the $850/hr fees for the attorney the Chapter 11 trustee wishes to use, stating the fees are unreasonably high.
The Chapter 11 trustee and the proposed law firm replied, suggesing that a lower rate would guarantee less qualified counsel, that the proposed law firm might save results in a cost savings, that opposition should occur when the law firm requests to be paid, that other law firms would not take on the risk of not getting paid, and that the opposition was made in bad faith.
Yesterday, another opposition was filed by the Law Offices of M. Candice Bryner, with thorough details. It points out that the proposed law firm is too far away (3-7 hours travel time to Orange County round trip, for which lawyers would get paid), suggesting a contingency fee or lower fees would be better for creditors. The attorney filing the opposition also points out that she is aware of several highly qualified law firms that would take the case at substantially lower fees. She also points out that she has never heard of an attorney in the Los Angeles or Orange County area charging $850/hr. She also points out that the point of filing an Application for Employment of Counsel is to provide creditors the opportunity to object to the terms, and that she feels that the first objection (that the Chapter 11 trustee felt was made in bad faith) was indeed made in good faith.
2 Tulving Leases to be RejectedApril 17, 2014 4:25PM EST
The Chapter 11 Trustee filed paperwork with the court yesterday to reject 2 leases that The Tulving Company had, to ensure that no money can be owed for the leases as of about the end of this month. Any contents with minimal value would be abandoned (e.g. furniture), as the costs involved would likely outweigh the money obtained by removing, storing, and selling them.
The first interesting point is that one of these units is apparently where Hannes was living ($5,800/mo), and the other is listed as a "Home Office" ($4,500/mo) with an address next to the residential address. This suggests that The Tulving Company was paying for Hannes' rent, which I believe is very unusual. It also suggests that there may be serious issues with separating Hannes Tulving from The Tulving Company (commingling funds), and could provide more reason why Hannes Tulving should be responsible for The Tulving Company's debts. This is especially so given that the Chapter 11 trustee believes that the contents can be abandoned, as they would presumably belong to Hannes Tulving (who has not applied for bankruptcy, as far as we know).
Another interesting point is that the landlord is listed as Levon Gugasian, which is very similar to "Leo Gushgarian", who is listed as having loaned The Tulving Company $1,000,000. They are almost certainly the same person.
Update: April 18, 2014
Opposition to Trustee's Choice of Law FirmApril 16, 2014 9:00AM EST
On Friday, a creditor filed an opposition to the Chapter 11 trustee's choice of a law firm to use for the bankruptcy. He felt the feels were unreasonably high, and should be limited to $375/hr ($125/hr for paralegals).
The law firm has filed an a reply, suggesting that lower fees would result in less qualified counsel, and might not result in cost savings. They point out that the court should not interfere with the selection of counsel except in the rarest of cases. They also point out that the opposition is premature, without considering what amount will be billed for the work performed (the law firm is required to get approval from the court for actual fees at a later point).
Interestingly, the law firm is requesting that if there is a hearing in the matter, they be allowed to appear telephonically to limit administrative costs (presumably to help show that they are aware of ways to keep costs down).
Hannes Tulving has been ServedApril 12, 2014 8:45AM EST
Hannes Tulving, Jr. has been served in the class action lawsuit against him.
The bankruptcy of The Tulving Company put a stay on the class action lawsuit against The Tulving Company, but not against Hannes Tulving, Jr. Hannes Tulving is believed to be in hiding, and therefore could not be served. However, the lawfirm handling the class action lawsuit made a motion for alternate service, which the judge granted. This allowed service by E-mail and regular mail, allowing the lawsuit to proceed.
Tulving Website DownApril 9, 2014 6:55AM EST
Yesterday, The Tulving Company's website was shut down.
The company still owns the domain name (tulving.com), and has pre-paid through 2020. However, the website will likely remain unavailable until it is possible to pay the web hosting company.
Trustee to employ Pachulski Stang Ziehl & JonesApril 4, 2014 8:35AM EST
The Chapter 11 Trustee has requested that the court authorize him to employ the lawfirm of Pachulski Stang Ziehl & Jones as his general bankruptcy counsel.
Creditor Meeting Date ChangedApril 2, 2014 7:00AM EST
Yesterday, the Trial Attorney for the bankruptcy approved a change of the date for the creditor meeting, at the request of the Chapter 11 Trustee. The meeting has been moved to Wednesday, May 21, 2014 at 10:00AM (in Room 1-154 of the Ronald Reagan Federal Courthouse).
This is both good and bad. The bad part is that it gives Hannes Tulving, Jr. another month to stay in hiding, and delays getting very important questions answered.
However, given that the creditor list has not been filed yet, this delay was really necessary, as it is the only way to ensure that most or all creditors are aware of the meeting. Presumably, the request for the delay was due to the Trustee believing that the creditor list will be filed before then (in enough time to send notice to all creditors about the meeting).
All creditors are welcome (and encouraged) to attend the creditor meeting, but have no obligation to. It gives creditors a chance to ask Hannes Tulving, Jr. questions regarding assets, that he must answer under oath (an audio recording of the meeting is made). Creditors may ask questions 'pertaining to assets or any other matter pertinent to the administration of the case.'
There may be a bit of excitement involved, given that Hannes appears to be in hiding, and will likely be approached by process servers, and perhaps law enforcement due to the criminal investigation.
A quiet weekMarch 28, 2014 1:55PM EST
Not much has been going on this week regarding Tulving. At this point, we are pretty much waiting on the U.S. Attorney's office to get copies of Tulving's records to them, so Tulving can finish the bankruptcy filing.
Behind the scenes, the bankruptcy generates a fair bit of paperwork, but nothing noteworthy (aside from what I have mentioned here).
If anyone has any questions, feel free to .
Creditor List Deadline ExtendedMarch 25, 2014 7:25AM EST
Yesterday, the judge granted Tulving an extension to complete the bankruptcy paperwork (schedules). The new deadline is May 31, 2014.
Most importantly, this means that it may be more than 2 months until Tulving files the creditor list. This appears to be a very rare extension, and is unforunate as it keeps creditors in limbo (not being able to verify that their name is on the creditor list, which is very important). It will also make some people (e.g. press looking at court documents) continue to think this case is much smaller than it is (it looks like there are 9 creditors owed $1.7M, versus hundreds of creditors owed perhaps as much as $40M). However, given that Tulving's records were seized, the extension was unavoidable (assuming Tulving did not have an off-site backup of his records).
I expect to send an E-mail by the end of the day going into more detail about the creditor list. The short version is that if you do appear on the creditor list (and agree with the amount, and it is not listed as disputed, unliquidated or contingent), you do not need to send any paperwork to get your share of any money that may be distributed. But if you are on the list, you will need to send paperwork by a to-be-determined deadline (after the creditor list is filed). If you are not on the mailing list, you can sign up below.
Tulving Assets Seized by Secret ServiceMarch 20, 2014 6:30PM EST
There was a rumor last week that Tulving's assets had been seized by federal authorities.
Today, bankruptcy paperwork confirms that the Secret Service "seized all of [Tulving's] computers, files, and records", acting on behalf of the U.S. Attorney on or about March 9.
This is expected to delay the completition of the bankruptcy paperwork by up to 60 days. Importantly, this also means that the bankruptcy court will be operating with the hastily compiled list of just 9 out of the hundreds of Tulving creditors.
Chapter 11 Trustee AssignedMarch 20, 2014 12:20PM EST
The U.S. Trustee has assigned R. Todd Neilson to serve as the Chapter 11 trustee for the Tulving bankruptcy.
R. Todd Neilson has been involved in a number of high-profile bankruptcy cases, and appears to be exactly what creditors of The Tulving Company would want in a trustee. He has extensive forensic accounting experience, which should be very helpful here given the circumstances. Regarding one Chatper 11 bankruptcy case, he stated "All I’m doing here, and all I did in the FBI, is try to get to the truth." I like those words.
Creditor HearingMarch 14, 2014 7:15AM EST
A creditor hearing has been scheduled for
As a reminder, the creditor list in the voluntary petition is minimal. I understand this must be corrected within 14 days of the petition, which would be Monday, March 24. At that point, all creditors should be listed.
If you are owed money or metal by The Tulving Company, I would recommend downloading a PDF copy of the Notice of Chapter 11 Bankruptcy Case, Meeting of Creditors, & Deadlines. This is required to be sent to you, but as the list of creditors is incomplete at this time, the notice will be delayed.
Did you get metal or cash after December 9?March 13, 2014 9:05AM EST
The Tulving Company filed a petition for bankruptcy on March 10, 2014.
As mentioned in our FAQ, bankruptcy law has something called 'preference' (commonly known as 'clawback').
Unfortunately, this means that if you received metal or cash from The Tulving Company after December 9, 2013, you may be required to return it to the bankruptcy trustee. Returning products in a bankruptcy proceeding is unusual, but may apply here due to the liquid nature and high value of the products.
You may want to pass this information on to people who may have received product (or cash) from Tulving after December 9, 2013. This will be unpleasant news, but knowing sooner rather than later may be helpful.
FAQMarch 12, 2014 5:05PM EST We have added a FAQ about the Tulving fiasco here.
The Tulving Company Files for Chapter 11 BankruptcyMarch 11, 2014 8:00PM EST
We have just heard that The Tulving Company has filed for bankruptcy, effective March 10, 2014.
There are a few surprises here. First is that it is a Chapter 11 bankruptcy, which would allow for reorganization (staying in business). The second is that he lists only 9 creditors, which obviously cannot be including all customers owed metal. He lists assets as less between $0 and $50,000, much less than I would have expected.
The creditor list (showing 9 creditors) is incomplete, and will be corrected with schedules that will be attached to the voluntary petition.
Temporary Restraining Order approvedMarch 17, 2014 Update
On Friday, the court re-scheduled the hearing to March 18, 2014 at 1:30PM.
March 10, 2014 1:15PM EST
The order is good until March 17, at which point a request for an preliminary injunction will be made. A hearing is set for Monday March 17, 2014 at 9:00AM. Hannes Tulving, Jr. is ordered to appear at the hearing.
Essentially, it means that the bank account that The Tulving Company was using has been frozen, and Hannes Tulving, Jr. cannot legally sell, withdraw, loan, conceal, etc. any metal that may be owned by him or The Tulving Company.
Class Action LawsuitMarch 6, 2014 7:45PM
We have just heard from an attorney whose firm has just filed a class action lawsuit against The Tulving Company and Hannes Tulving personally. The case number is 3:14-cv-01054.
The attorney is Karl S. Kronenberger of KRONENBERGER ROSENFELD, LLP, and can be reached at or via phone at (415) 955-1155, x-150.
If you placed an order with The Tulving Company and have not received it, I would recommend E-mailing this attorney and giving them details of your order(s). You do not need to contact them to be a class member (unless for some reason Tulving's records are unavailable, which I would post here and to the mailing list). However, doing so will improve the case, showing the size of the problem.
If you Ordered After December 9, 2013Please see the FAQ for details. The details relevant to you depend on whether or not you received what you were owed, and whether you were buying metal (or selling and owed money).
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