ORDER DENYING MOTION TO SELL PERSONAL ASSETS AND TO ESCROW PROCEEDS

CYNTHIA BASHANT, District Judge.

This case involves a receivership resulting from an SEC enforcement action against Defendants Jacob Keith Cooper, Total Wealth Management, Inc., and related entities. Presently before the Court is Defendant Cooper's motion to sell personal assets and to escrow the proceeds. (ECF No. 80 ("Def.'s Mot.")) Cooper seeks to sell a condominium and a boat to reduce his monthly expenses, and proposes to deposit any profits from the sale with the Receiver. The Receiver and the SEC have opposed, and Cooper has replied. (ECF Nos. 84, 85, 91.) For the reasons set forth below, Cooper's motion is denied.

ANALYSIS

"[A] district court's power to supervise an equity receivership and to determine the appropriate action to be taken in the administration of the receivership is extremely broad." SEC v. Capital Consultants, LLC, 397 F.3d 733, 738 (9th Cir. 2005) (quoting SEC v. Hardy, 803 F.2d 1034, 1037 (9th Cir. 1986)). Here, Cooper asks this Court to exercise its discretion to allow him to sell two assets—a condominium and a boat (the "Property")—and deposit the net proceeds in escrow with the Court-appointed Receiver. Cooper emphasizes that the freeze orders currently in place have subjected him to a double bind: while the orders prohibit him from disposing of any real or personal property, they also cut-off the income he needs to make payments associated with the Property. As a result, Cooper explains, "he must pay over $4,000.00 each month to maintain the debt and other payments on the Condo and Boat." (Def.'s Mot. 6:26-27.) On the basis of this financial hardship, Cooper contends there is good cause for the Court to lift or modify the freeze order to allow him to sell the Property.1 (See Def.'s Mot. 6:20-28.)

For several reasons, the Court finds Cooper's argument unpersuasive and his sale proposal fatally flawed. First, the Court agrees with the Receiver that the sale proposal does not guarantee maximum return to the estate. Although Cooper provides estimated valuations of the Property (based primarily on internet research), these valuations are uncertain and, in any event, do not bind Cooper in any way. That is, even as Cooper emphasizes that any profit would be turned over to the Receiver, the proposal itself does not actually obligate Cooper to sell the Property at a profit. The sale is primarily intended to benefit Cooper, not to enhance the Receivership assets. As Cooper has not demonstrated that lifting the freeze is in the interest of the investors, he is not entitled to modify the freeze order. See, e.g., SEC v. Credit Bancorp Ltd., No. 99 Civ. 11395, 2010 WL 768944, at *4 (S.D.N.Y. Mar 8, 2010) ("To succeed on a motion to modify [a] freeze to permit payment of attorneys' fees and other expenses, [a] defendant `must establish that such a modification is in the interest of defrauded investors.'") (citations omitted).

Second, and relatedly, the Court agrees with the SEC that under this arrangement there is nothing to prevent Cooper from selling the Property to his associates at below market value and then profiting from the property at a later date. (ECF No. 85, 3:26-28.) Indeed, instead of proposing an independent agent for selling the condo, Cooper apparently has a specific listing agent in mind, which raises the specter of collusion. Given that fraud allegations are at the heart of this case (see ECF No. 1), the Court declines to take the risk of allowing Cooper complete discretion to conduct the sale of the Property as he sees fit.

Finally, Cooper has not demonstrated that investor funds were not used to purchase, or make payments on, the Property he now wishes to sell. Such confirmation is relevant to the sale proposal because the nature of the source funds directly implicates the Receiver's charge to preserve receivership assets. Cf. SEC v. Private Equity Mgmt. Grp., Inc., No. CV 09-2901 PSG (Ex), 2009 WL 2058247 (C.D. Cal. July 9, 2009) (defendant in receivership proceeding seeking to release frozen assets must demonstrate that the assets are untainted by the alleged fraud). With this issue still in dispute, the Court is wary of facilitating a potential dissipation of receivership assets. See, e.g., SEC v. Schooler, 902 F.Supp.2d 1341, 1360 (S.D. Cal. 2012) ("The point of an asset freeze is to prevent their dissipation and waste so they will be available for disgorgement.") (citations omitted).

CONCLUSION AND ORDER

"[A] primary purpose of equity receiverships is to promote orderly and efficient administration of the estate by the district court for the benefit of creditors." Hardy, 803 F.2d at 1038. Here, although there is a theoretical possibility that Cooper's proposed sale would benefit investors, the Court finds the proposal vests too much discretion with Cooper to conduct the sale on his own terms with no assurance of benefit to the estate. Sale of the Property may make Cooper's life easier, but in the absence of safeguards, such convenience is insufficient to justify approval of this proposal. Accordingly, Cooper's Motion to Sell Personal Assets and to Escrow Proceeds is DENIED. (ECF No. 80.)

IT IS SO ORDERED.