goulding

UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

SECURITIES AND EXCHANGECOMMISSION,

Plaintiff,

V.

THE NUTMEG GROUP, LLC,RANDALL GOULDING,DAVID GOLDING,

Case No. 09-CV-1775

Judge William J. Hibbler

Magistrate Judge Ashman

Defendants,

DAVID GOULDING, INC.,DAVID SAMUEL, LLC,FINANCIAL ALCHEMY, LLC,PHILLY FINANCIAL, LLC,SAM WAYNE, and ERIC IRRGANG,

Relief Defendants.

TEMPORARY RECEIVER'S MOTION FOR AUTHORITY TO ENTER INTOSETTLEMENT AGREEMENT WITH H3 ENTERPRISES AND JACK FREEDMAN

Leslie J. Weiss (the "Receiver"), the Temporary Receiver of The Nutmeg Group and its

various funds, including but not limited to Mercury Fund requests authority to enter into a

settlement agreement with H3 Enterprises, Inc. and Jack Freedman (collectively the

"Defendants"). In support of this motion, the Receiver states as follows:

1. The Receiver was authorized by this Court' s Order dated August 6, 2009 to take

possession of all of the assets of The Nutmeg Group and its related funds , including Mercury

Fund, LLLP.

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Case: 1:09-cv-01775 Document #: 77 Filed: 10/08/09 of 5 PageID #:1087

2. Among the assets which the Receiver has taken over are certain causes of action

originally filed by Randall Goulding and Fred Harbecke in the Circuit Court of Cook County.

One of the cases is The Nutmeg/Mercury Fund, LLLP v. Jack Freedman and H3 Enterprises,

Inc., Case No. 07 L 03898 (the "Complaint"). A copy of the Complaint is attached to this

Motion as Exhibit A.

3. Fred Harbecke has withdrawn from his representation in the Circuit Court and

after certain investigation, the Receiver has been able to negotiate a settlement with Jack

Freedman for a cash payment of $56,000.

4. The Complaint which the Receiver wishes to settle, involves the alleged breach of

a Stock Purchase Agreement dated February 1, 2007 between Jack Freedman and Randy

Goulding. The complaint further alleges that Goulding, on behalf of the Mercury Fund provided

$100,000 to Freedman for the benefit and use of H3. In exchange, Mercury Fund or its agent

was to receive 2,500,000 shares of stock in H3 which planed on developing "a flat screen video

gaming display called H3TV, an energy drink called BG-7 and intends to open a chain of cyber

gaming and hip-hop music playing, healthy fast-food restaurants called `Hip Hop Soda Shops."

5. The complaint further alleges that Jack Freedman did not deliver the 2,500,000

shares of stock. In May 2009, the Tampa location of what the Receiver believes was the only

Hip Hop Soda Shop to actually open closed. The Receiver does not believe that there is

sufficient value in H3 to support stock value. She has negotiated a settlement providing for a

release of the "Claim" asserted in the Complaint.

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6. The Receiver has drafted a settlement agreement with Mr. Freedman and is

seeking an order from this Court providing her with authority to execute the settlement

agreement. A copy of the proposed Settlement Agreement is attached as Exhibit B.

7. The Receiver has provided notice of this settlement motion to the SEC and all

others on the service list attached to the notice of motion.

Wherefore, the Receiver requests this Court, enter an order approving the terms of the

settlement with Jack Freedman and H3 Enterprises, Inc. as fair and reasonable, authorizing the

Receiver to enter the Freedman/H3 Enterprises settlement agreement, a copy of which is attached

as Exhibit "B" and, granting such other relief as may be appropriate in the circumstances.

Dated: October 8, 2009Respectfully submitted

Leslie J. Weiss , Temporary Receiver for theNutmeg Group, LLC

By: /s/ Deborah L. ThorneOne of her attorneys

Deborah L. Thorne (ARDC # 6186482)Barnes & Thornburg, LLPOne North Wacker DriveSuite 4400Chicago, IL 60606(312) 357-1313 (Tel)(312) 759-5646 (Fax)

CHDS01 DTHORNE 565565vl

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CERTIFICATE OF SERVICE

The undersigned hereby states that the above Temporary Receiver 's Motion forAuthority to Enter into Settlement Agreement with H3 Enterprises and Jack Freedman wasserved on all parties of record (see Service List below), via this Court's ECF filing system andvia First Class Mail, postage prepaid, where indicated, on October 8, 2009.

/s/ Deborah L. Thorne

SERVICE LIST

Plaintiff, Securities And ExchangeCommission

Defendants,The Nutmeg Group, LLCRandall GouldingDavid GouldingDavid Goulding, INCDavid Samuel, LLCFinancial Alchemy, LLCPhilly Financial, LLCEric Irrgang

Robert MacDonald MoyeU.S. Securities & Exchange Commission (IL)175 West Jackson Boulevard, Suite 900Chicago, IL 60604(312) 353-1051Email: [email protected]

AUSAUnited States Attorney 's Office (NDIL)219 South Dearborn Street , Suite 500Chicago, IL 60604(312) 353-5300Email : [email protected]

Andrew Charles ShoenthalSecurities and Exchange Commission175 West Jackson Boulevard, Suite 900Chicago, IL 60604(312) 353-7390Email: [email protected]

Fredrick Rahn HarbeckeLaw Offices of Fred R. Harbecke29 South LaSalle, #945Chicago, IL 60603(312)443-9505Email: [email protected]

Steven B. NaglerSteven B. Nagler, Ltd.601 Skokie Blvd. , Suite 504Northbrook, IL 60062(847) 562-0246Email: [email protected] First Class Mail, postage prepaid

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Defendant , Samuel Wayne

Receiver , Leslie Weiss

CHDS01 DTHORNE 5655650

Karla R. PascarellaBarton East & Caldwell, LLP700 N. St. Marys, Suite 1825San Antonio , TX 78205(210) 225-1655Email: [email protected] First Class Mail, postage prepaid

Deborah L . ThorneBarnes & ThornburgOne North Wacker Drive, Suite 4400Chicago, IL 60606(312)357-1313Email: [email protected]

Paula K. JacobiBarnes & Thornburg LLP1 North Wacker Dr., Suite 4400Chicago, IL 60602(312) 214-4866Fax: (312) 759-5646Email: [email protected]

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