Golenbock Eiseman Assor Bell & Peskoe LLP Retained by Trustee for LandAmerica 1031 Exchange Services Inc.

Case follows firm’s recent success in another complex business fraud bankruptcy/litigation case, also involving 1031 accounts, for which it obtained more than $100 million for Ponzi scheme victims on behalf of bankruptcy trustee.

NEW YORK, NY (December 8, 2009) — Golenbock Eiseman Assor Bell & Peskoe LLP today announced that pursuant to the confirmed plan of reorganization for LandAmerica 1031 Exchange Services Inc. (LES) and LandAmerica Financial Group (LFG), which has become effective, Gerard A. McHale, Jr. has been appointed as trustee for the LES Liquidation Trust created by the Plan, and Mr. McHale has retained Golenbock Eiseman, as his counsel. Bankruptcy Partner Jonathan L. Flaxer and Litigation Partner Michael S. Devorkin will serve as lead counsel for the Trustee.

LES was a “qualified intermediary” company under section 1031 of the US Tax Code, pursuant to which qualified intermediaries facilitate the legal deferral of capital gains taxes from the sale of real property until “in kind” replacement property purchases can be made.

LFG and its 1031 subsidiary LES filed for Chapter 11 bankruptcy protection last November. The 1031-related case has been particularly complex, involving more than 100 fraud complaints filed in bankruptcy court. Some of those complaints have already been litigated, and certain inter-company issues have also been mediated. The current reorganization plan is the result of that mediation.

According to Mr. Flaxer, at a certain point in time LES invested the money people had deposited with LES from the sale of their properties, to be used for 1031 exchanges, into Auction Rate Securities (ARS). “However, when the ARS market froze in early 2008, LES had approximately $200 million in ARS that it couldn’t convert to cash, thus preventing the existing 1031 exchangers from closing on their purchases of new properties.”

“LES then borrowed money from its parent LFG and also continued to run the exchange business and bring in new money — and used those new sources of money to fund the closings of the earlier exchangers, because the money LES had on deposit was now tied up in the ARS mess,” continued Mr. Flaxer. “The Trustee will be moving forward and pursuing certain claims owned by LES and working with the Trustee for LFG, in accordance with the allocations of claims and responsibilities under the Plan.”

The Bankruptcy and Litigation Groups from Golenbock Eiseman Assor Bell & Peskoe LLP recently confirmed a plan of reorganization in another case involving a 1031 company, 1031 Tax Group, LLC, formerly owned by Edward Okun, where they represented Mr. McHale, as bankruptcy trustee. In that case, Golenbock assisted the Trustee to marshal the assets and file suit against individuals, professional firms, insurance companies, and financial institutions, which to date has resulted in recoveries which exceed $100 million and an expected distribution so far of 44% to victims of Okun’s Ponzi scheme.

About Golenbock Eiseman Assor Bell & Peskoe
Golenbock Eiseman Assor Bell & Peskoe LLP is a full-service Manhattan law firm of approximately 50 attorneys which has served its clients’ complex litigation and corporate needs for over 25 years. The firm takes pride in its sophistication, experience and ability to take on major engagements for its domestic and international clients while also maintaining a hands-on, personalized approach to all matters.