Winter 2005 • Issue 16, page 12

Profile: David L. Ray

By Rense, Kirk*

(As is the case with many members of the California Receivers Forum, David L. Ray initially became a receiver by happenstance, only to find it was the career he had been searching for. Here is a brief sketch of his professional life, in his own words.)

It’s funny how one ends up doing one’s life’s chosen work. In my case, it probably all began when I was a CPA with a client who had a terrific idea. His idea was to sell second trust deeds with his personal guarantee of payment.

Today we know that it is sheer idiocy to guarantee such investments. Second trust deeds are a gamble at best. But in the late 1960’s my client believed they were as solid as the rock of Gibraltar and saw no reason not to attract investors with a guarantee of payment, and that is exactly what he did. Of course, second trust deeds very often go bad, and that is exactly what they did.

One day my client’s counsel called, asking if I would like to be a receiver. I said, “What’s a receiver?” He explained and I said, “Heck anybody could do that!” So I was named a receiver for the first time.

His counsel should have known I had a conflict and shouldn’t be a receiver in that particular case of course, but it didn’t seem to bother him or the judge. I, of course, didn’t know any better.

When dealing with second trust deeds one must be concerned about the holders of the first trust deeds, so I found myself dealing with counsel for many banks and saving and loan associations (when there were such things). They evidently liked the professional manner in which I dealt with them and the financial problems that arose, and they were soon using me as a receiver in their cases.

At that time I knew of only one person in Los Angeles who was functioning as a full time receiver. At that point I thought to myself, this looks like something I would like to do. Hence, I began my career as a receiver.

I’ll step back now and say a little about my family and myself. I was born in Los Angeles and went to grammar school, junior high, and high school on LA’s Westside. This was the time of the Korean War, and I applied for and was approved to enter air cadet training in the Air Force. I was deferred from the draft for approximately one and one-half years while waiting to begin my training. I met my wife during that time and quickly decided that I would rather get married than fly airplanes (at that time you couldn’t be an air cadet and be married). We were married, and when I returned from our honeymoon my orders to report to Randolph Field for training were waiting. I told the air force that I was no longer eligible to be a pilot cadet, and they passed along the message to the draft board. I received my draft notice within two weeks, and reported for basic training at Fort Ord in Monterey, California.

Toward the end of basic training an officer came and offered me three choices. I could remain a private and fight with the infantry in Korea, a choice that didn’t sound to good to me. Or, I could go to officers’ candidate school and become a lieutenant in the CIC corps. That meant that after training and getting my commission I would be sent behind enemy lines to do counter intelligence work. That also didn’t sound too promising. The third choice was to be sent to Texas, to work at a special weapons base for the duration of my two-year term of duty. The only disadvantage to this choice was that I would not be able to leave the continental United States for five years after I left the army (because of the secret information I would be privy to). I had this tremendous stroke of luck because at the time I was drafted I was working at Douglas Aircraft as an assistant time study engineer (which meant I carried a stop watch). The army considered this being an engineer, when, in reality, I was a theater arts major (with a business advertising minor) in college.

When I got out of the Army, I realized that I had to get serious. With a wife and a child on the way I had to drop the fun of acting and apply myself to making a living. My father had an accounting practice and I had always had an aptitude in that direction. I also had worked in his practice during my high school years. So, I went back to UCLA as a business major. I worked part time in my father’s practice while carrying a full schedule at school.

After 2 years, I received my Bachelor of Science degree with my wife and young son attending my graduation. I took the CPA exam, was lucky enough to pass on my first try, and officially joined the practice as a partner.

The business flourished over the years, and my father eventually retired. By then I had another child, a daughter. Even though the accounting practice was very successful, it really didn’t match my talents because I was really a people person. At that time accountants tended to do introspective auditing and tax work, and spent a lot of their time administrating and staying in the office.

This brings me back to the beginning of my article — my discovery of receiverships. My analysis was that doing receiverships was really more a legal function than an accounting function, and so, after 10 years as a CPA and running a 30-person accounting practice, I decided to go back to school and become a lawyer. I worked full time as an accountant while carrying a full four-year program in law school.

Upon graduation I decided to sell the accounting practice to my partners. I started my own law firm. I retained the staff that were assisting me in my receiverships and hired another attorney and paralegal.

A milestone in my business life was when Henley Saltzburg and I joined forces, soon becoming Saltzburg, Ray & Bergman. Our firm handled all manner of business law and made good use of my expertise in bankruptcy and receiverships. I left behind rents, issues and profits receiverships, expanding into governmental enforcement, equity receiverships, and other types of receiverships that were more challenging and more interesting.

The beauty of a receivership practice is the variety of it, as most of you know. I have operated almost any type of retail establishment that you can name — from small retail food outlets and take-out shops to large department store type operations. I recently was receiver for a mega-dealership auto center, which was security for an outstanding line in excess of $28,000,000. This auto park had six operating retail dealerships. This required negotiating and dealing with six different auto manufacturers, the selling and marketing of autos, providing after market products, service and maintenance, and the like.

I recently completed the receivership for one of the largest money order companies licensed by the State of California, with more than 70,000 claimants and $30,000,000 in assets. I was able to return 170% including interest to qualified claimants. We achieved this in part by bringing actions against approximately 1,400 agents who had refused to pay what they owed the company.

One of my most unusual cases was a receivership for a plastic manufacturer, which attempted to collect on an officer’s life insurance policy. It turned out that the officer/owner was murdered by his sons (also owners of the company), who needed the life insurance proceeds to continue company operations. They were convicted and are serving prison time.

I have run factories that manufactured busses, cosmetics, textiles and textile design, jeans, that processed and packaged poultry, and that made golf clubs, to name just a few.

Probably my greatest success came indirectly because the appointing court, upon receiving my report, refused to shut down a telemarketing firm that was the subject of a governmental enforcement receivership. My report showed that the company was eminently savable, provided it ceased certain objectionable tele-marketing methods. It was a firm with more than 1,000 employees, and the court didn’t want these people to lose their jobs. The court directed me to reform the company and marketing procedures, and to monitor operations to ensure that the company conducted its business honestly, fairly, and within the law. I did so. Eventually a judgment was entered against the company, which was allowed to continue operating. This was a success not only because the company continued operating, but also because it was recently sold to a large conglomerate for more than $50,000,000.

Obviously, that kind of thinking was the reason a receiver had been put in. These disreputable people had started divesting the doctor of his many investments — he had been terrifically successful and there were plenty of assets to divest. That receivership terminated after we got the doctor back on his medicine, recovered his many investments and placed them in a separate trust and straightened out his legal and personal affairs.

Almost every Receivership case has unique problems, situations and players, which makes each case unique. These are some of the more unusual. That’s not to say that the mini horse registry case, the grape farms in Delano, the motion picture distribution company, the Beverly Hills discotheque of the 80’s, the mobile home and housing tract developments, the upscale hotels and the pedestrian motels, the independent bus transit company, the securities brokerage firm, and other I have been receiver for didn’t have unique and interesting problems to resolve and I truly enjoyed working on all of them for that very reason. They say that variety is the spice of life and that passion keeps one youthful; I am blessed to have had the opportunity to work and learn from every case in which I’ve been involved. I can honestly say that I did so with passion and care.