Canopy Statement of Financial Affairs

Case 09-44943 Doc 87 Filed 12/29/09 Entered 12/29/09 16:40:14 Desc Main
Document Page 1 of 25
IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re: ) Chapter 11
)
CANOPY FINANCIAL, INC., ) Case No. 09-44943
)
Debtor. ) Hon. Eugene R. Wedoff
STATEMENT PERTAINING TO SCHEDULES OF ASSETS AND LIABILITIES

AND STATEMENT OF FINANCIAL AFFAIRS OF CANOPY FINANCIAL, INC.
On December 29, 2009, Canopy Financial, Inc. (“Canopy” or the “Debtor”) filed its
Schedules of Assets and Liabilities and Statement of Financial Affairs (collectively, the
“Schedules and SOFA”) in accordance with Federal Rule of Bankruptcy Procedure 1007(b).
1. Schedules and SOFA. The Debtor’s management has made commercially
reasonable efforts to ensure that the Schedules and SOFA are accurate and complete based on
information that was available at the time of preparation. However, as a result of the events
precipitating the Debtor’s bankruptcy filing, namely the discovery of significant financial and
accounting irregularities, many of the Debtor’s historical records are unavailable or inaccurate,
and the Schedules and SOFA may require substantial amendments or revisions to the extent
additional information is uncovered. In addition, the Schedules and SOFA may contain
inadvertent errors or omissions. Accordingly, the Debtor reserves its right to amend the
Schedules and SOFA as may be necessary or appropriate. This statement is incorporated by
reference in, and comprises an integral part of, the Schedules and SOFA, and should be referred
to and reviewed in connection with any review of the Schedules and SOFA.
2. Summary of Reporting Policies for Schedules and SOFA. The Schedules and
SOFA have been verified by Robert Angart, the Debtor’s Chief Operating Officer, who was
retained by the Debtor one day before the Petition Date. In reviewing and signing the Schedules
and SOFA, Mr. Angart necessarily relied upon the efforts, statements, and representations of
other of the Debtor’s personnel and professionals. Mr. Angart has not (and could not have)
personally verified the accuracy of each such statement and representation, including statements
and representations concerning amounts owed to creditors and their addresses.
3. Causes of Action. The Debtor has not set forth all causes of action against all
third parties as assets in its Schedules and SOFA. The Debtor reserves all of its rights with
respect to any causes of action it may have, and nothing contained in the Schedules and SOFA
shall be deemed a waiver of any such causes of action.
4. Claims. Except as otherwise agreed in accordance with a stipulation or agreed
order or any other order entered by the Bankruptcy Court, the Debtor reserves its rights to
dispute or challenge the validity, perfection or immunity from avoidance of any lien purported to
be granted or perfected in any specific asset to a secured creditor listed on Schedule D. In
addition, Schedules D, E and F permit the Debtor to designate a claim as disputed, contingent
and/or unliquidated. A failure to designate a claim on any of these Schedules as disputed,
contingent and/or unliquidated does not constitute an admission that such claim is not subject to
objection. The Debtor reserves the right to dispute, or assert offsets or defenses to any claim
reflected on these Schedules as to nature, amount, liability or status, or to otherwise subsequently
designate any claim as disputed, contingent, or unliquidated.
5. Schedule G. While reasonable best efforts have been made to ensure the accuracy
of Schedule G, inadvertent errors or omissions may have occurred. The Debtor hereby reserves
all rights to dispute the validity, status or enforceability of any contracts, agreements or leases set
forth in Schedule G and to amend or supplement such Schedule as necessary. Additionally,
listing a contract or lease in this Schedule shall not be deemed an admission that such contract is
2
an executory contract or unexpired lease, or that it is necessarily a binding, valid and enforceable
contract.
3
B7 (Official Form 7) (12/07)
United States Bankruptcy Court

Northern District of Illinois, Eastern Division
In re Canopy Financial, Inc. Case No. 09-44943
Debtor(s) Chapter 11
STATEMENT OF FINANCIAL AFFAIRS
This statement is to be completed by every debtor. Spouses filing a joint petition may file a single statement on which the information for
both spouses is combined. If the case is filed under chapter 12 or chapter 13, a married debtor must furnish information for both spouses whether or
not a joint petition is filed, unless the spouses are separated and a joint petition is not filed. An individual debtor engaged in business as a sole
proprietor, partner, family farmer, or self-employed professional, should provide the information requested on this statement concerning all such
activities as well as the individual's personal affairs. To indicate payments, transfers and the like to minor children, state the child's initials and the
name and address of the child's parent or guardian, such as "A.B., a minor child, by John Doe, guardian." Do not disclose the child's name. See, 11
U.S.C. § 112; Fed. R. Bankr. P. 1007(m).
Questions 1 - 18 are to be completed by all debtors. Debtors that are or have been in business, as defined below, also must complete
Questions 19 - 25. If the answer to an applicable question is "None," mark the box labeled "None." If additional space is needed for the answer
to any question, use and attach a separate sheet properly identified with the case name, case number (if known), and the number of the question.
DEFINITIONS
"In business." A debtor is "in business" for the purpose of this form if the debtor is a corporation or partnership. An individual debtor is "in
business" for the purpose of this form if the debtor is or has been, within six years immediately preceding the filing of this bankruptcy case, any of
the following: an officer, director, managing executive, or owner of 5 percent or more of the voting or equity securities of a corporation; a partner,
other than a limited partner, of a partnership; a sole proprietor or self-employed full-time or part-time. An individual debtor also may be "in business"
for the purpose of this form if the debtor engages in a trade, business, or other activity, other than as an employee, to supplement income from the
debtor's primary employment.
"Insider." The term "insider" includes but is not limited to: relatives of the debtor; general partners of the debtor and their relatives;
corporations of which the debtor is an officer, director, or person in control; officers, directors, and any owner of 5 percent or more of the voting or
equity securities of a corporate debtor and their relatives; affiliates of the debtor and insiders of such affiliates; any managing agent of the debtor. 11
U.S.C. § 101.
__________________________________________
Software Copyright (c) 1996-2009 Best Case Solutions, Inc. - Evanston, IL - (800) 492-8037 Best Case Bankruptcy
1. Income from employment or operation of business

None State the gross amount of income the debtor has received from employment, trade, or profession, or from operation of the debtor's
business, including part-time activities either as an employee or in independent trade or business, from the beginning of this calendar
year to the date this case was commenced. State also the gross amounts received during the two years immediately preceding this
calendar year. (A debtor that maintains, or has maintained, financial records on the basis of a fiscal rather than a calendar year may
report fiscal year income. Identify the beginning and ending dates of the debtor's fiscal year.) If a joint petition is filed, state income for
each spouse separately. (Married debtors filing under chapter 12 or chapter 13 must state income of both spouses whether or not a joint
petition is filed, unless the spouses are separated and a joint petition is not filed.)
In November 2009, the Debtor discovered that the purportedly audited

financial statements provided to its investors and lenders were fraudulent,
and upon further investigation uncovered other significant financial and
accounting irregularities. The two officers of the Debtor implicated in the
fraud were removed from management, and one of those officers since has
been arrested and charged with wire fraud. The Debtor has further
determined that a substantial amount of health savings account (“HSA”)
funds belonging to certain of the Debtor’s customers also were
misappropriated. Although the Debtor has engaged forensic accountants to,
inter alia, identify and analyze transfers and other key historical information,
based on existing information presently available to the Debtor, the Debtor
cannot accurately respond to SOFA Question 1 (income from employment or
operations of business). The Debtor intends to amend the SOFA to the
extent it is able to provide an accurate answer to SOFA Question 1 in the
future.
2. Income other than from employment or operation of business

None State the amount of income received by the debtor other than from employment, trade, profession, or operation of the debtor's business
during the two years immediately preceding the commencement of this case. Give particulars. If a joint petition is filed, state income for
each spouse separately. (Married debtors filing under chapter 12 or chapter 13 must state income for each spouse whether or not a joint
petition is filed, unless the spouses are separated and a joint petition is not filed.)

determined that a substantial amount of HSA funds belonging to certain of
the Debtor’s customers also were misappropriated. Although the Debtor has
engaged forensic accountants to, inter alia, identify and analyze transfers
and other key historical information, based on existing information presently
available to the Debtor, the Debtor cannot accurately respond to SOFA
Question 2 (income other than from employment or operations of business).
The Debtor intends to amend the SOFA to the extent it is able to provide an
accurate answer to SOFA Question 2 in the future.
3. Payments to creditors
None Complete a. or b., as appropriate, and c.
a. Individual or joint debtor(s) with primarily consumer debts. List all payments on loans, installment purchases of goods or services,
and other debts to any creditor made within 90 days immediately preceding the commencement of this case unless the aggregate value
of all property that constitutes or is affected by such transfer is less than $600. Indicate with an (*) any payments that were made to a
creditor on account of a domestic support obligation or as part of an alternative repayment schedule under a plan by an approved
nonprofit budgeting and creditor counseling agency. (Married debtors filing under chapter 12 or chapter 13 must include payments by
either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)
NAME AND ADDRESS DATES OF AMOUNT STILL

OF CREDITOR PAYMENTS AMOUNT PAID OWING
None b. Debtor whose debts are not primarily consumer debts: List each payment or other transfer to any creditor made within 90 days
immediately preceding the commencement of the case unless the aggregate value of all property that constitutes or is affected by such
transfer is less than $5,475. If the debtor is an individual, indicate with an asterisk (*) any payments that were made to a creditor on
account of a domestic support obligation or as part of an alternative repayment schedule under a plan by an approved nonprofit
budgeting and creditor counseling agency. (Married debtors filing under chapter 12 or chapter 13 must include payments by either or
both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)
SEE ATTACHMENT 3B
None c. All debtors: List all payments made within one year immediately preceding the commencement of this case to or for the benefit of
creditors who are or were insiders. (Married debtors filing under chapter 12 or chapter 13 must include payments by either or both
spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)
SEE ATTACHMENT 3C
The Debtor is continuing to investigate transfers made within the year preceding the
Petition Date. The Debtor has identified transfers for which (a) the transfer was made
to an entity that does not appear to be a regular vendor or supplier to the Debtor; or
(b) the Debtor is currently unable to identify the recipient of the transfer. The Debtor
is investigating the nature of these transfers to determine whether they were made to
or for the benefit of any of the Debtor's insiders. To the extent the Debtor
identifies additional insider transfers, the Debtor intends to amend the SOFA to
supplement its answer to Question 3c. Please note that Attachment 3c also does not
include any payroll-related transfers to insiders that were processed through Paychex.
4. Suits and administrative proceedings, executions, garnishments and attachments

None a. List all suits and administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of
this bankruptcy case. (Married debtors filing under chapter 12 or chapter 13 must include information concerning either or both spouses
whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)
CAPTION OF SUIT COURT OR AGENCY STATUS OR

AND CASE NUMBER NATURE OF PROCEEDING AND LOCATION DISPOSITION
Securities and Exch. Comm'n Enforcement Action U.S. District Court, N.D. Ill. Pending
v. Canopy Financial, Inc., et al.
(No. 09-CV-7429)
None b. Describe all property that has been attached, garnished or seized under any legal or equitable process within one year immediately
preceding the commencement of this case. (Married debtors filing under chapter 12 or chapter 13 must include information concerning
property of either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not
filed.)
NAME AND ADDRESS OF PERSON FOR WHOSE DESCRIPTION AND VALUE OF

BENEFIT PROPERTY WAS SEIZED DATE OF SEIZURE PROPERTY
5. Repossessions, foreclosures and returns

None List all property that has been repossessed by a creditor, sold at a foreclosure sale, transferred through a deed in lieu of foreclosure or
returned to the seller, within one year immediately preceding the commencement of this case. (Married debtors filing under chapter 12
or chapter 13 must include information concerning property of either or both spouses whether or not a joint petition is filed, unless the
spouses are separated and a joint petition is not filed.)
DATE OF REPOSSESSION,
NAME AND ADDRESS OF FORECLOSURE SALE, DESCRIPTION AND VALUE OF
CREDITOR OR SELLER TRANSFER OR RETURN PROPERTY
6. Assignments and receiverships

None a. Describe any assignment of property for the benefit of creditors made within 120 days immediately preceding the commencement of
this case. (Married debtors filing under chapter 12 or chapter 13 must include any assignment by either or both spouses whether or not a
joint petition is filed, unless the spouses are separated and a joint petition is not filed.)
DATE OF
NAME AND ADDRESS OF ASSIGNEE ASSIGNMENT TERMS OF ASSIGNMENT OR SETTLEMENT
None b. List all property which has been in the hands of a custodian, receiver, or court-appointed official within one year immediately
preceding the commencement of this case. (Married debtors filing under chapter 12 or chapter 13 must include information concerning
property of either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not
filed.)
NAME AND LOCATION

NAME AND ADDRESS OF COURT DATE OF DESCRIPTION AND VALUE OF
OF CUSTODIAN CASE TITLE & NUMBER ORDER PROPERTY
7. Gifts
None List all gifts or charitable contributions made within one year immediately preceding the commencement of this case except ordinary
and usual gifts to family members aggregating less than $200 in value per individual family member and charitable contributions
aggregating less than $100 per recipient. (Married debtors filing under chapter 12 or chapter 13 must include gifts or contributions by
either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)

the Debtor’s customers also were misappropriated. Although the Debtor
has engaged forensic accountants to, inter alia, identify and analyze
transfers and other key historical information, based on existing information
presently available to the Debtor, the Debtor cannot accurately determine
whether any transfers from Canopy were “gifts” and therefore cannot
accurately respond to SOFA Question 7 (Gifts). The Debtor intends to
amend the SOFA to the extent it is able to provide an accurate answer to
SOFA Question 7 in the future.
8. Losses
None List all losses from fire, theft, other casualty or gambling within one year immediately preceding the commencement of this case or
since the commencement of this case. (Married debtors filing under chapter 12 or chapter 13 must include losses by either or both

financial statements provided to its investors and lenders were fraudulent, and
upon further investigation uncovered other significant financial and accounting
irregularities. The two officers of the Debtor implicated in the fraud were
removed from management, and one of those officers since has been arrested
and charged with wire fraud. The Debtor has further determined that a
substantial amount of HSA funds belonging to certain of the Debtor’s
customers also were misappropriated. Although the Debtor has engaged
forensic accountants to, inter alia, identify and analyze transfers and other key
historical information, and also believes that it was indeed the victim of theft
losses, based on existing information presently available to the Debtor, the
Debtor cannot accurately determine whether which transfers from Canopy
were theft losses and therefore cannot accurately respond to SOFA Question
8 (Losses). The Debtor intends to amend the SOFA to the extent it is able to
provide an accurate answer to SOFA Question 8 in the future.
9. Payments related to debt counseling or bankruptcy

None List all payments made or property transferred by or on behalf of the debtor to any persons, including attorneys, for consultation
concerning debt consolidation, relief under the bankruptcy law or preparation of the petition in bankruptcy within one year immediately
preceding the commencement of this case.
DATE OF PAYMENT, AMOUNT OF MONEY

NAME AND ADDRESS NAME OF PAYOR IF OTHER OR DESCRIPTION AND VALUE
OF PAYEE THAN DEBTOR OF PROPERTY
Jenner & Block LLP 11/20/2009 150,000.00
353 N. Clark St.
Chicago, IL 60653
Alvarez & Marsal(1) 11/20/2009; 11/25/2009 450,000.00
Two Liberty Square
Boston, MA 02109
(1) Alvarez & Marsal was engaged on November 11, 2009 to provide forensic accounting services to assist Canopy's
Board of Directors. After the Board determined that a bankruptcy filing was in the best interests of Canopy, Alvarez &
Marsal also performed certain services in contemplation of Canopy's chapter 11 filing. A $200,000 retainer Alvarez &
Marsal received on November 20, 2009 and a $250,000 retainer Alvarez & Marsal received on November 25, 2009
related both to services provided in contemplation of bankruptcy and general forensic accounting services. As of the
Petition Date, Alvarez & Marsal had billed $317,585 for services provided in contemplation of bankruptcy as well as for
general forensic accounting services, and had received an aggregate retainer of $650,000.
10. Other transfers

None a. List all other property, other than property transferred in the ordinary course of the business or financial affairs of the debtor,
transferred either absolutely or as security within two years immediately preceding the commencement of this case. (Married debtors
filing under chapter 12 or chapter 13 must include transfers by either or both spouses whether or not a joint petition is filed, unless the
spouses are separated and a joint petition is not filed.)

fraud were removed from management, and one of those officers since
has been arrested and charged with wire fraud. The Debtor has further
the Debtor’s customers also were misappropriated. Although the Debtor
has engaged forensic accountants to, inter alia, identify and analyze
transfers and other key historical information, and also believes that it was
indeed the victim of theft losses, based on existing information presently
available to the Debtor, the Debtor cannot accurately determine whether
which transfers from Canopy were theft losses and therefore cannot
accurately respond to SOFA Question 10 (Other transfers). The Debtor
intends to amend the SOFA to the extent it is able to provide an accurate
answer to SOFA Question 10 in the future.
None b. List all property transferred by the debtor within ten years immediately preceding the commencement of this case to a self-settled
trust or similar device of which the debtor is a beneficiary.
NAME OF TRUST OR OTHER AMOUNT OF MONEY OR DESCRIPTION AND

DEVICE DATE(S) OF VALUE OF PROPERTY OR DEBTOR'S INTEREST
TRANSFER(S) IN PROPERTY
11. Closed financial accounts

None List all financial accounts and instruments held in the name of the debtor or for the benefit of the debtor which were closed, sold, or
otherwise transferred within one year immediately preceding the commencement of this case. Include checking, savings, or other
financial accounts, certificates of deposit, or other instruments; shares and share accounts held in banks, credit unions, pension funds,
cooperatives, associations, brokerage houses and other financial institutions. (Married debtors filing under chapter 12 or chapter 13 must
include information concerning accounts or instruments held by or for either or both spouses whether or not a joint petition is filed,
unless the spouses are separated and a joint petition is not filed.)
NAME AND ADDRESS OF INSTITUTION TYPE OF ACCOUNT, LAST FOUR DIGITS OF ACCOUNT NUMBER,
AMOUNT OF FINAL BALANCE DATE OF CLOSING
Fifth Third Bank Operating ****1971 $0 Closed: 8/4/2008
ATTN: Mary Dowers Clearing ****2243 $0 Closed: 8/6/2008
38 Fountain Sq. Clearing ****2359 $0 Closed: 8/20/2008
Cincinnati, OH 45263 Clearing ****2748 $0 Closed: 8/4/2008
Clearing ****7538 $0 Closed: 8/4/2008
Operating ****7546 $0 Closed: 8/15/2008
Clearing ****1963 $0 Closed: 10/14/2008
Custodial ****7481 $0 Closed: 1/15/2008
NAME AND ADDRESS OF INSTITUTION TYPE OF ACCOUNT, LAST FOUR DIGITS OF ACCOUNT NUMBER,
AMOUNT OF FINAL BALANCE DATE OF CLOSING
Northern Trust Co. Operating ****9594 $0 Closed: Prior to 11/16/2009
ATTN: Denise Stroz Operating ****9688 $0 Closed: Prior to 11/16/2009
50 S. LaSalle St., M-27 Operating ****9691 $0 Closed: Prior to 11/16/2009
Chicago, IL 60603 Operating ****9700 $0 Closed: 11/18/2009
Clearing ****1466 $0 Closed: 11/18/2009
Clearing ****9602 $0 Closed: 11/3/2009
Clearing ****9701 $0 Closed: 10/29/2009
Clearing ****9746 $0 Closed: 10/30/2009
Clearing ****9937 $0 Closed: 11/18/2009
Operating ****9348 $0 Closed: 11/5/2009
Silicon Valley Bank Operating ****3059 $0 Closed 11/16/2009
ATTN: Stephanie O'Donnell
185 Berry St.
Lobby 1, Ste. 3000
San Francisco, CA 94107
Amcore Bank Clearing ****5005 $0 Closed: 8/6/2009
ATTN: Caroline Matchen Clearing ****5038 $0 Closed: 3/11/2009
1180 E. Higgins Rd. Investment ***8297 $0 Closed: 4/13/2009
Schaumburg, IL 60173
Ridgestone Bank Custodial ****0165 $0 Closed: 8/10/2009
ATTN: Eileen F. Carr Custodial ****0164 $0 Closed: 8/11/2009
10 N. Martingale Rd., Ste. 100 Clearing ****0312 $0 Closed: 8/11/2009
Schaumburg, IL 60173
12. Safe deposit boxes

None List each safe deposit or other box or depository in which the debtor has or had securities, cash, or other valuables within one year
immediately preceding the commencement of this case. (Married debtors filing under chapter 12 or chapter 13 must include boxes or
depositories of either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not
filed.)
NAMES AND ADDRESSES

NAME AND ADDRESS OF BANK OF THOSE WITH ACCESS DESCRIPTION DATE OF TRANSFER OR
OR OTHER DEPOSITORY TO BOX OR DEPOSITORY OF CONTENTS SURRENDER, IF ANY
13. Setoffs
None List all setoffs made by any creditor, including a bank, against a debt or deposit of the debtor within 90 days preceding the
commencement of this case. (Married debtors filing under chapter 12 or chapter 13 must include information concerning either or both
NAME AND ADDRESS OF CREDITOR DATE OF SETOFF AMOUNT OF SETOFF
14. Property held for another person

None List all property owned by another person that the debtor holds or controls.
DESCRIPTION AND VALUE OF PROPERTY
As of the Petition Date, the Debtor maintained in certain accounts funds that appear
to have been deposited by or held for the benefit of, or are the proceeds of funds
deposited by or held for the benefit of, customers and/or employees of Coventry
Health Care, Dewitt Stern Group, Workable Solutions, ISU Financial Services, Inc.,
Shawnee Administrative Services, LLC, Veritas Health Systems Administrators and
Insurance, and the Debtor itself (Wellfund). As of November 30, 2009,
approximately $1,754,046 remained in such accounts; according to the Debtor’s
records, $21,116,117.54 should have been maintained in custodial accounts for the
benefit of these entities and their customers. As previously disclosed, the Debtor
has determined that a substantial amount of funds belonging to these customers
have been misappropriated. The Debtor is continuing to investigate the facts and
circumstances surrounding these misappropriations and intends to amend the SOFA
to the extent it is able to provide additional information in response to SOFA
Question 14 in the future.
15. Prior address of debtor

None If the debtor has moved within three years immediately preceding the commencement of this case, list all premises which the debtor
occupied during that period and vacated prior to the commencement of this case. If a joint petition is filed, report also any separate
address of either spouse.
ADDRESS NAME USED DATES OF OCCUPANCY
16. Spouses and Former Spouses

None If the debtor resides or resided in a community property state, commonwealth, or territory (including Alaska, Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington, or Wisconsin) within eight years immediately preceding the
commencement of the case, identify the name of the debtor’s spouse and of any former spouse who resides or resided with the debtor in
the community property state.
NAME
17. Environmental Information.
For the purpose of this question, the following definitions apply:
"Environmental Law" means any federal, state, or local statute or regulation regulating pollution, contamination, releases of hazardous
or toxic substances, wastes or material into the air, land, soil, surface water, groundwater, or other medium, including, but not limited to,
statutes or regulations regulating the cleanup of these substances, wastes, or material.
"Site" means any location, facility, or property as defined under any Environmental Law, whether or not presently or formerly
owned or operated by the debtor, including, but not limited to, disposal sites.
"Hazardous Material" means anything defined as a hazardous waste, hazardous substance, toxic substance, hazardous material,
pollutant, or contaminant or similar term under an Environmental Law
None a. List the name and address of every site for which the debtor has received notice in writing by a governmental unit that it may be liable
or potentially liable under or in violation of an Environmental Law. Indicate the governmental unit, the date of the notice, and, if known,
the Environmental Law:
NAME AND ADDRESS OF DATE OF ENVIRONMENTAL

SITE NAME AND ADDRESS GOVERNMENTAL UNIT NOTICE LAW
None b. List the name and address of every site for which the debtor provided notice to a governmental unit of a release of Hazardous
Material. Indicate the governmental unit to which the notice was sent and the date of the notice.
NAME AND ADDRESS OF DATE OF ENVIRONMENTAL

SITE NAME AND ADDRESS GOVERNMENTAL UNIT NOTICE LAW
None c. List all judicial or administrative proceedings, including settlements or orders, under any Environmental Law with respect to which
the debtor is or was a party. Indicate the name and address of the governmental unit that is or was a party to the proceeding, and the
docket number.
NAME AND ADDRESS OF

GOVERNMENTAL UNIT DOCKET NUMBER STATUS OR DISPOSITION
18 . Nature, location and name of business

None a. If the debtor is an individual, list the names, addresses, taxpayer identification numbers, nature of the businesses, and beginning and
ending dates of all businesses in which the debtor was an officer, director, partner, or managing executive of a corporation, partner in a
partnership, sole proprietor, or was self-employed in a trade, profession, or other activity either full- or part-time within six years
immediately preceding the commencement of this case, or in which the debtor owned 5 percent or more of the voting or equity securities
within six years immediately preceding the commencement of this case.
If the debtor is a partnership, list the names, addresses, taxpayer identification numbers, nature of the businesses, and beginning and
ending dates of all businesses in which the debtor was a partner or owned 5 percent or more of the voting or equity securities, within six
years immediately preceding the commencement of this case.
If the debtor is a corporation, list the names, addresses, taxpayer identification numbers, nature of the businesses, and beginning and
ending dates of all businesses in which the debtor was a partner or owned 5 percent or more of the voting or equity securities within six
years immediately preceding the commencement of this case.
LAST FOUR DIGITS OF

SOCIAL-SECURITY OR
OTHER INDIVIDUAL
TAXPAYER-I.D. NO. BEGINNING AND
NAME (ITIN)/ COMPLETE EIN ADDRESS NATURE OF BUSINESS ENDING DATES
None b. Identify any business listed in response to subdivision a., above, that is "single asset real estate" as defined in 11 U.S.C. § 101.
NAME ADDRESS
The following questions are to be completed by every debtor that is a corporation or partnership and by any individual debtor who is or has
been, within six years immediately preceding the commencement of this case, any of the following: an officer, director, managing executive, or
owner of more than 5 percent of the voting or equity securities of a corporation; a partner, other than a limited partner, of a partnership, a sole
proprietor or self-employed in a trade, profession, or other activity, either full- or part-time.
(An individual or joint debtor should complete this portion of the statement only if the debtor is or has been in business, as defined above, within
six years immediately preceding the commencement of this case. A debtor who has not been in business within those six years should go directly to
the signature page.)
19. Books, records and financial statements

None a. List all bookkeepers and accountants who within two years immediately preceding the filing of this bankruptcy case kept or
supervised the keeping of books of account and records of the debtor.
NAME AND ADDRESS DATES SERVICES RENDERED

Jeremy Blackburn 12/14/2004 to 11/10/2009
Anthony Banas 12/14/2004 to 11/10/2009
John Ingram (Maintained certain lists of receipts and disbursements) 3/1/2007 to Present
None b. List all firms or individuals who within the two years immediately preceding the filing of this bankruptcy case have audited the books
of account and records, or prepared a financial statement of the debtor.
10
NAME ADDRESS DATES SERVICES RENDERED
None c. List all firms or individuals who at the time of the commencement of this case were in possession of the books of account and records
of the debtor. If any of the books of account and records are not available, explain.
NAME
Robert Angart, Chief Operating Officer
John Ingram, Vice President, Administration
As previously disclosed, in November 2009, the Debtor discovered that the

purportedly audited financial statements provided to its investors and lenders
were fraudulent, and upon further investigation uncovered other significant
financial and accounting irregularities. The two officers of the Debtor
implicated in the fraud were removed from management, and one of those
officers since has been arrested and charged with wire fraud. A number of
bank and other financial records pertaining to the Debtor's business cannot
be located, and the Debtor has engaged forensic accountants to, inter alia,
identify key historical financial and bank data. It is not clear whether these
records were ever maintained in the ordinary course of the Debtor's business,
or whether the books and records in question were wrongfully removed,
concealed or destroyed.
None d. List all financial institutions, creditors and other parties, including mercantile and trade agencies, to whom a financial statement was
issued by the debtor within two years immediately preceding the commencement of this case.
NAME AND ADDRESS

Spectrum Equity Investors V, LP
ATTN: Michael J. Kennealy, Managing Director
333 Middlefield Rd., Ste. 200
Menlo Park, CA 94025
Federal Trade Commission

600 Pennsylvania Ave., N.W.
Washington, DC 20580
Venture Lending & Leasing IV, Inc.

Venture Lending & Leasing V, Inc.
2010 N. 1st St., Ste. 310
San Jose, CA 05131
The Hartford
Twin Cities Fire Ins. Col.
Indianapolis, IN 46268
As previously disclosed, the Debtor has determined that its purportedly

audited financial statements for 2008 contained fraudulent information and
accounting irregularities. These financial statements were provided to
Venture Lending & Leasing IV, Inc. and Venture Lending & Leasing V, Inc.,
the Federal Trade Commission, and Spectrum Equity Investors V, LP, and
also may have been provided to other third parties. In addition, other
persons or entities may have received other financial statements; the Debtor
is presently unable to determine whether those financial statements
11
contained any materially inaccurate information. The Debtor intends to

amend the SOFA to the extent it identifies additional information responsive
to SOFA Question 19(d) in the future.
20. Inventories
None a. List the dates of the last two inventories taken of your property, the name of the person who supervised the taking of each inventory,
and the dollar amount and basis of each inventory.
DOLLAR AMOUNT OF INVENTORY

DATE OF INVENTORY INVENTORY SUPERVISOR (Specify cost, market or other basis)
None b. List the name and address of the person having possession of the records of each of the two inventories reported in a., above.
NAME AND ADDRESSES OF CUSTODIAN OF INVENTORY

DATE OF INVENTORY RECORDS
21 . Current Partners, Officers, Directors and Shareholders

None a. If the debtor is a partnership, list the nature and percentage of partnership interest of each member of the partnership.
NAME AND ADDRESS NATURE OF INTEREST PERCENTAGE OF INTEREST
None b. If the debtor is a corporation, list all officers and directors of the corporation, and each stockholder who directly or indirectly owns,
controls, or holds 5 percent or more of the voting or equity securities of the corporation.
NATURE AND
PERCENTAGE OF
NAME AND ADDRESS TITLE STOCK OWNERSHIP
Anthony Banas Former Director, Former Common Stock - 13.8421%
Chief Technology Officer
Jeremy Blackburn Former Director, Former Common Stock - 23.0702%
President
Foundation Capital Shareholder Series C-1 Preferred Stock -
100%
David Frankel & Associates Shareholder Series A Preferred Stock -
44.5377%
Granite Global Ventures III LP Shareholder Series B Preferred Stock - 100%
Series C Preferred Stock -
100%
Scott Hazdra Chief Security Officer 0
John Ingram Chief Administrative 0

Officer
Vikram Kashyap Chairman of the Board, 55.3685% of Common Stock
60 Haver Ave., Apt. 23A Chief Executive Officer
New York, NY 10032
12
NATURE AND
PERCENTAGE OF
NAME AND ADDRESS TITLE STOCK OWNERSHIP
Michael J. Kennealy Director 0
The Moti and Suman Kashyap Family Shareholder Series A Preferred Stock -
Trust 16.2608%
John Powers Director Series A Preferred Stock -

6.3625
Spectrum Equity Investors V Shareholder Series D Preferred Stock -
83.3334%
STG Partners Shareholder Series A Preferred Stock -
6.3625%
22 . Former partners, officers, directors and shareholders

None a. If the debtor is a partnership, list each member who withdrew from the partnership within one year immediately preceding the
commencement of this case.
NAME ADDRESS DATE OF WITHDRAWAL
None b. If the debtor is a corporation, list all officers, or directors whose relationship with the corporation terminated within one year
immediately preceding the commencement of this case.
NAME AND ADDRESS TITLE DATE OF TERMINATION

Anthony Banas Chief Technology Officer November 2009
Jeremy Blackburn Director/President/Chief November 2009

Operating Officer
Vikram Kashyap Chief Executive Officer November 2009
Glenn Solomon Director Summer 2009
Charles Drucker Director December 2008
23 . Withdrawals from a partnership or distributions by a corporation

None If the debtor is a partnership or corporation, list all withdrawals or distributions credited or given to an insider, including compensation
in any form, bonuses, loans, stock redemptions, options exercised and any other perquisite during one year immediately preceding the
commencement of this case.
NAME & ADDRESS AMOUNT OF MONEY

OF RECIPIENT, DATE AND PURPOSE OR DESCRIPTION AND
RELATIONSHIP TO DEBTOR OF WITHDRAWAL VALUE OF PROPERTY
13
24. Tax Consolidation Group.

None If the debtor is a corporation, list the name and federal taxpayer identification number of the parent corporation of any consolidated
group for tax purposes of which the debtor has been a member at any time within six years immediately preceding the commencement
of the case.
NAME OF PARENT CORPORATION TAXPAYER IDENTIFICATION NUMBER (EIN)
25. Pension Funds.

None If the debtor is not an individual, list the name and federal taxpayer identification number of any pension fund to which the debtor, as an
employer, has been responsible for contributing at any time within six years immediately preceding the commencement of the case.
NAME OF PENSION FUND TAXPAYER IDENTIFICATION NUMBER (EIN)
DECLARATION UNDER PENALTY OF PERJURY ON BEHALF OF CORPORATION OR PARTNERSHIP
I declare under penalty of perjury that I have read the answers contained in the foregoing statement of financial affairs and any attachments thereto
and that they are true and correct to the best of my knowledge, information and belief.
Date December 29, 2009 Signature /s/ Robert Angart

Robert Angart
Chief Operating Officer
[An individual signing on behalf of a partnership or corporation must indicate position or relationship to debtor.]
Penalty for making a false statement: Fine of up to $500,000 or imprisonment for up to 5 years, or both. 18 U.S.C. §§ 152 and 3571
ATTACHMENT 3B
DATE PAYEE AMOUNT

08/25/09 David Evans $155,310.11
08/25/09 Douglas Matthew Ghernon $31,059.35
08/25/09 Jeffrey Thomas $31,059.35
08/25/09 Moneesha Prokash $126,595.24
08/25/09 Pendragon NA $114,243.93
08/25/09 Silicon Valley Bank - Service Charges $30.00
08/26/09 Coca Cola $577.91
08/26/09 Matthew Copell $60,744.14
08/26/09 Peter Masucci $38,827.53
08/27/09 Jonathan Asher Lewin $31,059.35
08/27/09 Marc Hamid $419,896.50
08/27/09 S. Taylor Glover $310,620.21
08/27/09 Seth Bair $31,059.35
08/27/09 Stephens Family Trust $155,310.11
08/28/09 Accountemps $8,851.05
08/28/09 Compensia, Inc. $7,729.52
08/28/09 Paychex - Payroll $386,541.00
08/31/09 American Express $33,000.00
08/31/09 Credit Card Management Corp. $16,384.20
08/31/09 Jeremy Blackburn $916,000.00
08/31/09 RMT Holdings, LLC $38,827.53
09/01/09 Airways Freight $4,949.73
09/01/09 Perkins Coie, LLP $226.00
09/01/09 Scott Robert Stephens $62,118.70
09/01/09 Venture Lending $66,204.62
09/01/09 Venture Lending $163,476.32
09/02/09 Coastal International $1,935.39
09/02/09 On the Side Investments, LLC $2,263.27
09/02/09 On the Side Investments, LLC $23,678.58
09/03/09 Finance 2000 LLC $305,662.32
09/03/09 Greg Harris $196,000.00
09/03/09 Lakeshore MC $23,750.00
09/03/09 UMB - Service Charges $36.00
09/04/09 AmpCo System Parking $375.00
09/04/09 Ping Identity $8,000.00
09/04/09 SVB Analytics $9,000.00
09/08/09 Paychex - Payroll $1,837.29
09/09/09 Celent $4,625.00
09/09/09 Creative Works $337.25
09/09/09 Paychex - Payroll $809.35
09/09/09 Paychex - Payroll $1,633.36
09/09/09 Paychex - Payroll $324,620.63
09/09/09 TRC Environmental Corporation $24,439.18
09/10/09 First Data Resources - Fees $11,399.79
09/10/09 Paychex - Payroll $1,970.14
09/10/09 Paychex - Payroll $16,648.11
Page 1 of 7
ATTACHMENT 3B
DATE PAYEE AMOUNT

09/10/09 Paychex - Payroll $117,057.69
09/11/09 Paychex - Payroll $1,500.00
09/14/09 CDW $34,826.89
09/14/09 Dell Marketing LP $1,992.47
09/14/09 ThoughtWorks $48,070.00
09/15/09 Paychex - Payroll $1,217.21
09/15/09 Splice Communications $12,398.53
09/15/09 Wellpoint $32,500.35
09/16/09 230 West Monroe PT, LLC $41,807.72
09/16/09 Paychex - Payroll $1,395.37
09/16/09 Phoenix Life Insurance Company $1,115.00
09/17/09 First Data Resources - Fees $22.90
09/17/09 Hipskind Technology Solutions Group $9,941.31
09/17/09 Rex Electric & Technologies, LLC $17,149.50
09/18/09 Coloserv $2,805.00
09/18/09 Fifth Third Bank $5,229.89
09/18/09 Fifth Third Bank $5,289.35
09/21/09 Accountemps $4,534.55
09/21/09 Dow Jones & Company $2,500.00
09/21/09 Lincoln National $4,253.77
09/21/09 Morningstar Inc $9,625.00
09/21/09 Net Jets $311,463.00
09/21/09 Personix (Fiserv) $375.00
09/21/09 Thomson Reuters $2,523.06
09/22/09 3Core Software Corporation $2,400.00
09/23/09 Coca Cola $227.74
09/23/09 Compensia, Inc. $1,479.76
09/23/09 FedEx $4,860.99
09/23/09 Paychex - Payroll $1,864.13
09/23/09 Paychex - Payroll $299,788.96
09/23/09 Wilson Sonsini Goodrich & Rosati $68,893.00
09/24/09 Bedros Orunckiel $57,000.00
09/24/09 Intelius $240.00
09/24/09 Ogletree, Deaking, Nash, Smack & Stewart P.C. $4,320.00
09/24/09 Paychex - Payroll $1,862.99
09/24/09 Paychex - Payroll $16,640.21
09/24/09 Paychex - Payroll $115,496.44
09/24/09 PH Developers $50,000.00
09/25/09 Commonwealth Ed $1,573.63
09/25/09 Northern Trust $11,840.74
Page 2 of 7
ATTACHMENT 3B
DATE PAYEE AMOUNT

09/25/09 PBP $4,725.63
09/28/09 Corner Bakery Catering $3,255.98
09/28/09 FirstService Williams $36,864.57
09/28/09 GE Capital (Sharp Copier) $2,937.44
09/28/09 SPR Companies $15,000.00
09/30/09 WebEx $4,129.16
10/01/09 Venture Lending $163,476.32
10/05/09 Paychex - Payroll $1,002.11
10/05/09 Paychex - Payroll $5,107.83
10/06/09 AmpCo System Parking $375.00
10/07/09 Paychex - Payroll $1,864.13
10/07/09 Paychex - Payroll $346,683.69
10/08/09 CT Corporation $70,939.22
10/08/09 Northern Trust $12,293.80
10/08/09 Paychex - Payroll $1,875.84
10/08/09 Paychex - Payroll $17,026.55
10/08/09 Paychex - Payroll $123,858.96
10/09/09 Accountemps $2,358.50
10/09/09 Symmetricom $3,819.69
10/13/09 CDW $16,481.14
10/13/09 FirstService Williams $32,957.12
10/13/09 Global Crossing $9,779.15
10/13/09 Net Jets $625,000.00
10/13/09 Red Ant Army $1,000.00
10/13/09 Sunguard $4,982.95
10/13/09 Thompson Publishing Group $318.95
10/14/09 A-1 Technology $4,370.00
10/14/09 A-1 Technology $10,188.75
10/14/09 Broadview Networks $1,799.90
10/14/09 Cintas Document Management $299.60
Page 3 of 7
ATTACHMENT 3B
DATE PAYEE AMOUNT

10/14/09 Merchant & Gould $11,140.73
10/15/09 Enterprise Wizard $1,000.00
10/15/09 Iron Mountain $1,187.35
10/16/09 230 West Monroe PT, LLC $43,483.74
10/16/09 Cogent Communications $5,165.00
10/16/09 Interactive Data Real-Time Services $2,000.00
10/16/09 Ironwood Capital Management $22,537.50
10/19/09 A-1 Technology $4,607.50
10/19/09 CDW $17,383.01
10/19/09 Coloserv $2,805.00
10/19/09 Sonneshein Nath and Rosenthal LLP $5,000.00
10/20/09 LexisNexis $2,675.00
10/20/09 Qwest Communications $16,271.19
10/20/09 The American Bankers’ Association - HSA $25,000.00
10/21/09 Bedros Orunckiel $57,000.00
10/21/09 Paychex - Payroll $1,864.13
10/21/09 Paychex - Payroll $296,846.94
10/21/09 PH Developers $50,000.00
10/22/09 Ariba Supplier Network $2,642.00
10/22/09 Paychex - Payroll $1,891.84
10/22/09 Paychex - Payroll $17,153.47
10/22/09 Paychex - Payroll $125,503.01
10/23/09 Rice Mechanical $351.00
10/23/09 SIGIS $2,500.00
10/26/09 ADAM, Inc. $24,909.00
10/26/09 CDW $11,191.09
Page 4 of 7
ATTACHMENT 3B
DATE PAYEE AMOUNT

10/26/09 Morningstar Inc $9,625.00
10/26/09 Ricoh Americas Corporation $10,326.82
10/27/09 3Core Software Corporation $1,600.00
10/27/09 A-1 Technology $4,108.75
10/27/09 EscrowTech $2,130.00
10/27/09 FYI Systems, Inc $42,840.00
10/27/09 Iron Mountain $75.00
10/27/09 RSA Security $127,533.26
10/28/09 Human Capital Management Solutions $10,400.00
10/28/09 Ironwood Capital Management $11,268.75
10/28/09 Personix (Fiserv) $300.00
10/28/09 Plainsboro Township $500.00
10/29/09 Lincoln National $11,206.62
10/29/09 Wellpoint $68,046.20
10/30/09 Net Jets $122,206.74
10/30/09 Trustwave $5,973.00
11/02/09 Ridgestone Bank Service Charges $20.00
11/02/09 Venture Lending $163,476.32
Page 5 of 7
ATTACHMENT 3B
DATE PAYEE AMOUNT

11/04/09 Paychex - Payroll $1,864.13
11/04/09 Paychex - Payroll $7,048.17
11/04/09 Paychex - Payroll $321,315.67
11/05/09 Paychex - Payroll $1,837.29
11/05/09 Paychex - Payroll $18,829.06
11/05/09 Paychex - Payroll $127,231.51
11/12/09 Paul Hastings $200,000.00
11/17/09 Alvarez & Marsal $200,000.00
11/17/09 Venture Lending $1,164,877.25
11/17/09 Venture Lending $4,307,935.36
11/18/09 Paychex - Payroll $1,384.62
11/18/09 Paychex - Payroll $467,942.46
11/19/09 Paychex - Payroll $1,824.45
11/19/09 Paychex - Payroll $14,074.83
11/20/09 Alvarez & Marsal $200,000.00
11/20/09 Jenner Block $150,000.00
11/20/09 Paul Hastings $160,807.00
11/20/09 Wilson Sonsini Goodrich & Rosati $168,117.45
Page 6 of 7
ATTACHMENT 3B
DATE PAYEE AMOUNT

11/25/09 Alvarez & Marsal $250,000.00
Page 7 of 7
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Case 09-44943 Doc 87 Filed 12/29/09 Entered 12/29/09 16:40:14 Desc Main

IN THE UNITED STATES BANKRUPTCY COURT

STATEMENT PERTAINING TO SCHEDULES OF ASSETS AND LIABILITIES

1. Schedules and SOFA. The Debtor’s management has made commercially

Schedules and SOFA as may be necessary or appropriate. This statement is incorporated by

and representations concerning amounts owed to creditors and their addresses.

shall be deemed a waiver of any such causes of action.

4. Claims. Except as otherwise agreed in accordance with a stipulation or agreed

be granted or perfected in any specific asset to a secured creditor listed on Schedule D. In

and/or unliquidated. A failure to designate a claim on any of these Schedules as disputed,

reflected on these Schedules as to nature, amount, liability or status, or to otherwise subsequently

designate any claim as disputed, contingent, or unliquidated.

forth in Schedule G and to amend or supplement such Schedule as necessary. Additionally,

United States Bankruptcy Court

STATEMENT OF FINANCIAL AFFAIRS

1. Income from employment or operation of business

In November 2009, the Debtor discovered that the purportedly audited

2. Income other than from employment or operation of business

In November 2009, the Debtor discovered that the purportedly audited

NAME AND ADDRESS DATES OF AMOUNT STILL

4. Suits and administrative proceedings, executions, garnishments and attachments

CAPTION OF SUIT COURT OR AGENCY STATUS OR

NAME AND ADDRESS OF PERSON FOR WHOSE DESCRIPTION AND VALUE OF

5. Repossessions, foreclosures and returns

6. Assignments and receiverships

NAME AND LOCATION

In November 2009, the Debtor discovered that the purportedly audited

In November 2009, the Debtor discovered that the purportedly audited

9. Payments related to debt counseling or bankruptcy

DATE OF PAYMENT, AMOUNT OF MONEY

10. Other transfers

In November 2009, the Debtor discovered that the purportedly audited

NAME OF TRUST OR OTHER AMOUNT OF MONEY OR DESCRIPTION AND

11. Closed financial accounts

12. Safe deposit boxes

NAMES AND ADDRESSES

NAME AND ADDRESS OF CREDITOR DATE OF SETOFF AMOUNT OF SETOFF

14. Property held for another person

DESCRIPTION AND VALUE OF PROPERTY

15. Prior address of debtor

ADDRESS NAME USED DATES OF OCCUPANCY

16. Spouses and Former Spouses

17. Environmental Information.

For the purpose of this question, the following definitions apply:

NAME AND ADDRESS OF DATE OF ENVIRONMENTAL

NAME AND ADDRESS OF DATE OF ENVIRONMENTAL

NAME AND ADDRESS OF

18 . Nature, location and name of business

LAST FOUR DIGITS OF

19. Books, records and financial statements

NAME AND ADDRESS DATES SERVICES RENDERED

NAME ADDRESS DATES SERVICES RENDERED

John Ingram, Vice President, Administration

As previously disclosed, in November 2009, the Debtor discovered that the

NAME AND ADDRESS

Federal Trade Commission

Venture Lending & Leasing IV, Inc.

As previously disclosed, the Debtor has determined that its purportedly

contained any materially inaccurate information. The Debtor intends to

DOLLAR AMOUNT OF INVENTORY

NAME AND ADDRESSES OF CUSTODIAN OF INVENTORY

21 . Current Partners, Officers, Directors and Shareholders

NAME AND ADDRESS NATURE OF INTEREST PERCENTAGE OF INTEREST

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