SEC v. Colon End Parenthesis Trust LLC, et al.
And The CEP Bankruptcies

Frequently Asked Questions

[Note: Because these matters are the subject of a legal proceeding, you may want to consult with an attorney to make sure your rights are protected.]

1. What is the status of CEP Trust and my investment in Cepcoast.com, Coastin88.com and CEP.net?
2. Will the CEP websites return to normal operation?
3. I recently sent checks and money orders to CEP after the Receiver took over. Where is my money?
4. The list of the 20 largest creditors included in the bankruptcy petition did not include me even though my investment is much larger. Why was I not listed?
5. How do I compute my claim in the bankruptcy?
6. How do I file my claim in the bankruptcy?
7. How long will this process take? When do I get my money?

 

1. What is the status of CEP Trust and my investment in Cepcoast.com, Coastin88.com and CEP.net?
   I have placed CEP Trust and CEP Holdings, Inc., which owns the three websites, into federal Chapter 11 bankruptcy and I am serving as the debtor-in-possession. This was done because CEP Trust only has approximately $77,000 in its bank accounts, but appears to have approximately $1 million in liabilities. That amount is representative of only the Trust payment processor balances. In addition, the three website programs have obligations to thousands of participants involving several millions of dollars more and these websites have no apparent hard assets or cash at all. It is very early in this case, and we are examining literally millions of lines of computer databases, but I have yet to see any evidence that the three "investment" programs have means of external income or support other than participant cash flowing in. In other words, I have not yet seen anything that disputes the SEC's allegations that CEP was a Ponzi or pyramid scheme.
   
   Bankruptcy offers a time-tested structure and processes for recovery that I believe will prove to be advantageous under these circumstances.
   
   
2. Will the CEP websites return to normal operation?
   Given the apparent nature of the CEP operations described above, I cannot foresee any of these websites being reactivated.
   
   
3. I recently sent checks and money orders to CEP after the Receiver took over. Where is my money?
   All the mail to CEP is being forwarded to my office in Atlanta. No checks or money orders received will be deposited. If an email address is available, I will advise each participant of the check's destruction and you can stop those checks if you haven't already. Domestic money orders will be returned in due course by mail.
   
   
4. The list of the 20 largest creditors included in the bankruptcy petition did not include me even though my investment is much larger. Why was I not listed?
   This is confusing, I agree. The petition for the payment processor, which I call CEP Trust or the Trust for short, is the only one of the two petitions on which I've actually attempted to list the 20 largest creditors. The amounts listed for these individual participants reflects only their Trust balance, not the amounts invested in CEP.net, Coastin88.com or CEPcoast.com. So that's why your investment balances are not listed there.
   
   On the list of 20 largest creditors for CEP Holdings, Inc., which owns the three "investment" websites, I have simply listed "UNDETERMINED". I realize that you have large sums of money, literally millions of dollars in the aggregate, sunk into these programs. But I'm frankly not sure what balance to report. As you are well aware, these programs returned large "profits" that are reflected in your investments via rollovers and payouts to your Trust account. If there really were no profits, as appears to be the case, and these "profits" are really numbers literally posted from thin air, then any cash actually distributed back to your bank account via Trust likely represents the subsequent "investments" of other participants. Even the Trust balances I reported on its list of top 20 creditors likely include credits for profit payouts from the three investment programs.
   
   Further, with CEP.net, my understanding is that there was no return of "principal". You received a 2% per day payout for a stipulated period, say 180 days, and that's it. The original investment was not to be credited back. Similarly, with the auto-surf sites, you were purchasing advertising. Maybe you viewed the websites each day to recover your costs, maybe not. Some clearly never did. How do I calculate what is due to you, or is the balance simply your advertising costs?
   
   
5. How do I compute my claim in the bankruptcy?
   First of all, to be clear, I can't dictate what claim you make. You may prepare your claim for what you believe is right.
   
   However, it's my responsibility to review the claims and object to them if I deem them incorrect in some way. That's very time consuming and expensive, because I have to examine each claim, compare it to CEP records, and then the bankruptcy judge has to rule on each objection at a hearing.
   
   So what do I believe is the proper way for you to calculate then? Well, what claim can you make if you can't claim profits? My present thinking, as I've done in other similar cases, is that your claim is not your reported balances, which are proving to be fictional-but that your claim is your net cash position. That is, sum up the actual dollars you put into CEP from external sources, less the dollars you got back. So that if you invested $1,000 and have gotten a check or ACH transfers to your bank account for $500, then your net claim is $500. On the other hand, if you put in $1,000 and got back $2,000 into your bank account (or your account at Egold or Alertpay or Virtual Money, etc.), then perhaps you owe money back to the CEP bankruptcy estates for the benefit of the other investors.
   
   
6. How do I file my claim in the bankruptcy?
   This is a two-step process.
   
   First, I am responsible for filing on behalf of the Debtors a Statement of Financial Affairs for each company and detail schedules of all known creditors of all categories with the Court. These schedules are presently due by August 13, 2007, but we will probably ask for an extension of approximately 30 days.
   
   If you agree with the amount listed on the creditor schedule as CEP's liability for your account, then you do not have to file a claim unless you receive notice from the Court to the contrary.
   
   My present plan, subject to Court approval or other possible developments, is to calculate the net cash position of each participant in CEP programs according to CEP records and databases, and to include all positive balances that I calculate on the unsecured creditor schedule, which is Schedule F. Schedule F and all other significant bankruptcy documents will be posted on this website for your review.
   
   Second step: if you do not agree with the amount I list on Schedule F as your net cash position, you may file your own claim with the Clerk of the Bankruptcy Court. We will provide you with a claim form and instructions at this website when we post the creditor schedules.
   
   
7. How long will this process take? When do I get my money?
   The straight answer is I don't know. Frankly, the funds we presently have may not cover the administrative costs that we incur. So, distributions to creditors are dependant upon the recovery of funds that have been paid out to various parties. Lawsuits will be filed starting later this week for that purpose, and the key documents involved in the legal process will be posted on this website. Litigation takes time and can be a drawn out process. My attorney and I will try to expedite these cases to the extent practical and cost effective.