iCap Successfully Completes Chapter 11 with Landmark Ponzi Ruling and 95% Creditor Support

iCap Trust Established to Recover Assets for Over 1,800 Defrauded Investors

Pivot Group, O'Melveny, Bush Kornfeld, K&L Gates, and B. Riley Advisory Services Successfully Lead Restructuring, Setting Stage for Investor Recovery

SEATTLE and LOS ANGELES, Dec. 5, 2024 /PRNewswire/ -- iCap Enterprises, Inc. ("iCap" or the "Company") and its affiliated debtors ("the Debtors"), a Seattle-based real estate investment firm that raised over $250 million and was exposed as having operated as a pre-petition Ponzi scheme, successfully emerged from Chapter 11 under a Court-approved joint plan of liquidation (the "Plan"). Developed in collaboration with the Official Committee of Unsecured Creditors (the "UCC"), the Plan was supported by 95% of former iCap investors and confirmed by the Bankruptcy Court for the Eastern District of Washington (the "Court") on October 18, 2024. The Plan establishes the iCap Trust to oversee recovery efforts for more than 1,800 defrauded investors.

This milestone marks the successful conclusion of a complex restructuring process in which the Debtors, in close partnership with the UCC, prioritized investor interests, achieved consensus among key stakeholders, proved a Ponzi scheme, resolved severe liquidity challenges, fully cooperated with regulatory investigations, supported over 1,800 investors through comprehensive and proactive communication efforts, and developed and executed the terms under the Plan.

"This case was about taking swift, decisive action," said Lance Miller, iCap's Chief Restructuring Officer ("CRO"). "From day one, our focus was to protect investor interests, uncover the truth, and forge a viable path for recovery. Every challenge faced only strengthened our resolve to deliver restitution for those harmed by iCap's scheme."

Uncovering a $250 Million Ponzi Scheme 
iCap's bankruptcy cases began on September 29, 2023, after an ad hoc group of investors, led by UCC Co-Chair Lilian Tan, filed a securities fraud lawsuit against iCap and its founder, Chris Christensen. The lawsuit resulted in a court-ordered injunction that removed Christensen and appointed Miller as CRO, marking a critical first step in protecting the Company's remaining assets amid severe liquidity challenges, months of halted investor distributions, and mounting fraud allegations.

As part of the restructuring, the team conducted an independent investigation into the Company's pre-petition activities, uncovering overwhelming evidence of fraud. The investigation confirmed that iCap operated as a Ponzi scheme from at least 2018 to 2023. Over that period, iCap raised approximately $250 million—primarily from Chinese investors—but generated just $1.4 million in legitimate real estate revenue. Instead, investor funds were systematically misappropriated to sustain operations and fulfill promised returns, relying on a pattern of deceptive transactions, the funneling of funds between entities, and false and misleading statements to fuel continued fundraising.

Landmark Ponzi Ruling Validates Recovery Strategy 
On October 17, 2024, the plan proponents presented overwhelming evidence establishing that iCap operated as a Ponzi scheme. The Court confirmed the Plan and, without delay, made a decisive Ponzi finding from the bench, citing "substantial, if not overwhelming, evidence" of fraud, underscoring the egregious mismanagement of funds, stating that investors "would have been better off putting their money in treasury bonds."

"This ruling is a significant victory for iCap's defrauded investors," said Jay Kornfeld, Lead Counsel for the UCC. "It establishes a strong legal foundation to pursue restitution and hold those who enabled the fraud accountable while offering investors potential relief through theft loss deductions under the tax code."

In confirming the Plan, Chief Judge Whitman L. Holt commended the professionals involved for their "substantial creativity," emphasizing that it was "amply present in this case," particularly in overcoming the severe liquidity challenges that repeatedly threatened the case's survival. He specifically praised the innovative strategy devised by iCap's CRO, Miller, to secure critical debtor-in-possession (DIP) and exit financing, describing it as "a very creative way to not only resolve disputes, which is always encouraged but to address the liquidity [challenges]," calling it a "first" in his extensive experience.

"This case was defined by immense challenges but also by extraordinary collaboration and determination," said Julian Gurule, Lead Counsel for the Debtors. "Through our efforts, our team was able to expose the full extent of the iCap scheme while simultaneously stabilizing the estate and providing a viable path to recoveries for investors."

Path to Advancing Recovery for Defrauded Investors—The iCap Trust 
As part of the Plan, the newly established iCap Trust now leads recovery efforts, including pursuing litigation and asset recovery, on behalf of more than 1,800 investors impacted by iCap's collapse. The Trust is managed by Co-Trustees Lance Miller and Seth R. Freeman, with oversight from an Advisory Board comprised of UCC Counsel Jay Kornfeld and former members of the UCC, Lilian Tan and Tom Temple.

"The recovery process for investors is just beginning," said Seth Freeman, co-trustee of the iCap Trust. "The Co-Trustees will fight for meaningful restitution for all victims and creditors of this complex fraud."

After serving as Special Litigation Counsel for the UCC and lead trial counsel during the October 17 hearing, John T. Bender assumed the role of Lead Litigation Counsel for the iCap Trust. Bender will spearhead the litigation efforts and strategy, ensuring a focused pursuit of meaningful restitution for defrauded investors.

"Judge Holt issued a monumentally important decision, based on overwhelming evidence that iCap operated as a Ponzi scheme. But our work on behalf of iCap's victims is not finished. My team and I are devoted to identifying and recovering iCap's stolen funds and returning every cent we can to their rightful owners," said Bender.

Unified Efforts Behind Confirmation 
The success of iCap's restructuring was the result of coordinated efforts by:

• Pivot Group – Led by Lance Miller as Chief Restructuring Officer, with support from the Pivot Group team as Financial Advisor and Communications Advisor for the Debtors
• O'Melveny & Myers – Led by Julian Gurule, with support from the O'Melveny team as Lead Counsel for the Debtors
• Bush Kornfeld – Led by Jay Kornfeld, with support from the Bush Kornfeld team as Lead Counsel for the Unsecured Creditors Committee
• B. Riley Advisory Services – Led by Seth R. Freeman, with support from the B. Riley Advisory Services team as Lead Financial Advisor for the Unsecured Creditors Committee 
• K&L Gates – Led by John T. Bender, with support from the K&L Gates team as Lead Trial Counsel, Special Litigation Counsel for the Unsecured Creditors Committee
• Buchalter – Led by Khaled Tarazi, with support from the Buchalter team as Counsel for the Debtors on Real Estate-Related Matters
• Unsecured Creditors Committee – Comprising five dedicated committee members whose leadership ensured that investor voices were represented throughout the process. Lilian Tan and Tom Temple served as Co-Chairs of the UCC.
• Supporting Professionals: Black Helterline, local counsel for the Debtors; BMC Claims Group, claims agent; Jack Rader, Pacific Realty Advisors, Local Real Estate Advisor; John LaBella, AlixPartners and Craig Barbarosh, Barbarosh Partners, Independent Board Advisors for the Debtors.

The team would also like to thank Tan and the original ad hoc group of investors for their efforts to initiate and support these cases through to confirmation and the Ponzi finding.

Additional Information 
The full terms of the Plan and Disclosure Statement, as well as additional information related to iCap's Chapter 11 case, can be found at https://cases.creditorinfo.com/iCap.

About The iCap Trust 
After completing its Chapter 11 proceedings, iCap Enterprises, Inc., a Seattle-based real estate investment fund, has transitioned into the iCap Trust. The Trust is focused exclusively on recovery efforts on behalf of defrauded investors. For more information on the iCap Trust, contact Co-Trustee, Seth R. Freeman at [email protected].

Media Contact: 
Liz Gonzalez 
Pivot > 
[email protected] 

SOURCE iCap Trust