Cornerstone injunction extended

HELENA — District Court Judge Kathy Seeley moved last week to extend the preliminary injunction freezing all Cornerstone Financial Corp. and K & B Investments assets as a court-appointed lawyer continues to inventory and track the items.

During the Sept. 22 hearing, parties agreed the injunction will stand until a court-appointed receiver is able to do a full accounting of the assets. The receiver, Billings lawyer Eric Nord, is providing an objective third party who will organize the assets and begin the process to sell them for the benefit of investors.

Company owners Keith Kovick and Robert Congdon are named in state administrative action for their alleged involvement in committing a securities fraud in the form of a Ponzi scheme including more than 100 investors with investments totaling more than $14.4 million in 181 unregistered securities.

Many facets and scenarios can complicate the liquidating process.

“There are quite a few pieces of real property. So far I haven’t found any that aren’t unencumbered,” Nord said.

Many vehicles of value belonging to the men, which are rumored to be numerous and extravagant, are liened, while others are not of substantial value, Nord said. For the short term, Nord is waiting on a ruling for a motion he made last month to be allowed to begin a claims submittal process approved for victims.

Recovering and liquidating assets that are held up by insurance coverage and other stipulations is ongoing, and may take longer than the claims process, Nord said.

Nord has received cooperation from Congdon, he said. Kovich has stated his willingness to cooperate, but has not yet given a deposition statement. 

Company owners Keith Kovick and Robert Congdon are named in state administrative action for their alleged involvement in committing a securities fraud in the form of a Ponzi scheme including more than 100 investors with investments totaling more than $14.4 million in 181 unregistered securities. In March, the partner/owners of Cornerstone Financial Corporation were handed a temporary restraining order on those assets for their alleged involvement in a $3 million deal with D and D Property Management, operating out of Belgrade.

A January hearing is scheduled to address the administrative action brought against the men by the securities and insurance office, but deputy securities administrator Lynn Egan said the priority is letting Nord do his work.

The date of a hearing will depend on that work.

The securities office also said the matter has been referred to federal officials.