Skip to Content

U.S. Marshals Service

   
USMS Seal

FOR SALE
JRECK SUBS FRANCHISE RIGHTS, TRADEMARKS, AND OTHER BRAND-RELATED TANGIBLE AND INTELLECTUAL PROPERTY
 
NOTICE OF INTERLOCUTORY PUBLIC JUDICIAL SALE PURSUANT TO TITLE 28, UNITED STATES CODE, §§ 2001(a) and 2002

By the Order for Interlocutory Sale entered on September 9, 2019 in United States v. Christopher Swartz, 5:16-CR-00264(DNH), in the United States District Court for the Northern District of New York, the UNITED STATES MARSHAL SERVICE, was ordered to sell the following property at a public sale as provided by 28 U.S.C. §§ 2001(a) and 2002 and as further ordered by the Court:

The franchisor corporate business doing business as Jreck Subs.

The terms, provisions, and conditions, of said order, are:
 
  1. The United States Marshals Service shall market, sell, and dispose of the subject business interest, through any reasonable commercial method, without further order of the Court.
  2. The subject business interest shall be sold for the best and highest market price reasonably obtainable.
  3. The United States Marshals Service, without further order of the Court, is authorized to execute documents, transfer title, and to otherwise effect the transfer of all rights, title, and interest to the subject business interest to any purchaser thereof.
  4. The purchaser or purchasers of the Forfeited Assets shall take clear title free of any liens or claims which may have been applicable to, payable from, or secured by the subject business interest.
  5. The United States Marshals Service shall be reimbursed from the proceeds of the sale of the subject business interest for any expenses incurred in the custody, maintenance, and sale of the subject business interest, including the employment of any professionals, marketing expenses, and sales commissions and the proceeds remaining after the deduction of the foregoing expenses will be the “Net Proceeds” of the sale.
  6. The Net Proceeds from the sale will be held by the United States Marshals Service, pending further order of the Court.
  7. Any and all claims and defenses applicable to, arising from, or secured by, the subject business interest shall, after the sale, be applied to and payable solely from the Net Proceeds and such other funds as were derived from the business interest and held by the United States Marshals Service.
  8. The United States Marshals Service, as it deems warranted, shall continue to provide such supervision of the subject business interest post sale to pay suppliers and taxes as is required to provide an orderly transition of ownership of the subject business interest to the purchaser or purchasers.
 
THIS NOTICE DOES NOT CONSTITUTE AN OFFER TO SELL BUT INVITES INTERESTED PARTIES TO SUBMIT A BID FOR PURCHASE. THE FOLLOWING INFORMATION IS BEING PROVIDED WITHOUT RECOURSE TO THE UNITED STATES OF AMERICA AND THE UNITED STATES MARSHALS SERVICE.

CHECK BACK FREQUENTLY FOR UPDATES
 
PLEASE READ ALL INSTRUCTIONS CAREFULLY.

FAILURE TO COMPLY WITH ANY OF THE FOLLOWING INSTRUCTIONS WILL RESULT IN DISQUALIFICATION FROM THIS SEALED BID AUCTION.

***
 
On September 9, 2019, the United States District Court for the Northern District of New York issued an ORDER GOVERNING SALE regarding the assets identified for forfeiture in the criminal case United States v. Christopher M. Swartz, case no. 5:16-CR-00264(DNH), forfeiting any and all of defendant’s interest in business known as JRECK SUBS including the franchise rights, trademarks, and other brand-related intellectual property.

This is a sealed bid auction, which will include an initial round of bid submissions and a best-and final round. Bidders will not have the opportunity to view other bids submitted. The best-and-final round will include the top four (4) bidders from the initial round only, where these four (4) bidders will be given the opportunity to submit a second final bid for the assets.
 
Assets Included in Sale
 
  • Rights of the franchisor under all existing franchise agreements and amendments and extensions*, including receipt of weekly franchisee sales reports and all royalties and fees related thereto.
  • List of current franchisees, including contact information.
  • List of key suppliers, vendors and service providers, and assignment of contract rights thereunder to the extent such rights are assignable (detailed in due diligence materials).
  • Balance of funds as of the closing date in the Franchise-wide Advertising Fund, balance of $124,737 as of August 31, 2019, whose funds are restricted in use to corporate-wide advertising expenditures under the various franchise agreements.
  • Accounts Receivable, Franchisee Notes Receivable under various repayment plans, and Vendor Rebates Receivable, totaling $167,518 as of August 31, 2019.
  • Furniture and Equipment, to include: bread pans, office furniture and equipment (list included in due diligence materials), and store equipment stored off-site (list included in due diligence materials).
  • Trademarks and Other intellectual property (detailed in due diligence materials).
 
*Please note that one (1) of the 32 stores are currently under active franchise agreements. The remaining thirty-one (31) stores are operating and paying weekly royalties under an implied-in-fact-contract in exchange for their continued right to use the JRECK Subs trademarks and other intellectual property. The non-compete clause on these remaining stores will expire on March 30, 2020. The due diligence portal will provide additional information regarding the status of each of the 33 stores. The USMS recently was informed that one of the 33 stores currently operating will cease operating as of December 31, 2019.

Below is the entire process and schedule of the auction. All times below are in the Eastern United States time-zone. It is the responsibility of the bidders to be aware of seasonal time changes and to plan accordingly.
 
Phase I: Registration
Opens: 8:00 AM EDT, Monday, September 16, 2019
Ends: 5:00 PM EDT, Monday, October 7, 2019

All interested parties must first register with the USMS. You are not eligible to submit a bid or otherwise participate in this auction unless you have submitted all required documents and have received confirmation from the USMS that you are an eligible bidder. Any registration documents received after the deadline will not be considered.

Required Registration Items:
 
  • A manually signed pdf copy of the Bidder Registration Form
  • A manually signed pdf copy of the Confidentiality Agreement
  • A copy of a Government-issued photo ID for the Bidder (or Control Person(s) of Bidder)
    You must deliver the Required Registration Items by email to AFDComplexAssets@usdoj.gov by 12:00 PM EDT, Monday, October 7, 2019. The USMS will notify all bidders about their eligibility to participate in the auction, via email, no later than 5:00 PM EDT on Monday, October 7, 2019.
Auction Related Questions:

Interested parties will be allowed to submit questions about the auction during the Registration period. Any questions must be submitted via email to AFDComplexAssets@usdoj.gov. The USMS will endeavor to answer any and all questions related to the auction process. The USMS will not answer any questions pertaining to the assets for sale, as this information will be provided to the approved registered bidders prior to the bidding period.
 
Phase II: Due Diligence
Opens: 8:00 AM EDT, Tuesday, October 8, 2019
Ends: 5:00 PM EDT, Wednesday, October 23, 2019

Acceptance as a Registered Bidder:

If you are confirmed by the USMS to be a Registered Bidder, in the acceptance email you will be provided a link to a second website (due diligence portal) that provides all of the due diligence materials that are made available to bidders to do their own assessment of the financial value of the assets for sale. The due diligence website will be available for 15 calendar days, allowing all registered bidders the same length of time to review the information made available by the USMS.

Due Diligence Portal:

The due diligence portal that will be made available only to approved registered bidders will include the following information. The information provided in the due diligence portal is the only information that the USMS will providing bidders to assess the value of the assets. Registered bidders will not be able to request additional information or ask questions during the due diligence period.
 
  •  Financial Reports (2016 – YTD 2019)
  • Franchise Store List
  • Franchise Agreements and Extension Agreements
  • Vendor List & Assignable Contracts
  • Draft Asset Purchase Agreement/Bid Form
 
Phase III: Bid Submission

Initial Bid Submission
Opens: 8:00 AM EDT, Thursday, October 24, 2019
Ends: 5:00 PM EDT, Thursday, October 31, 2019

All approved registered bidders will have eight (8) days to submit their bid packages to the USMS for review and consideration. The initial sealed-bid auction will terminate at 5:00 PM EDT on Thursday, October 31, 2019. The USMS will review all bids submitted by the deadline and determine the top four (4) bidders that will be invited to participate in the Best & Final Round.

The top four (4) bidders will be notified, via email, of their inclusion in the Best & Final Round by 5:00 PM EDT on Friday, November 1, 2019.
 
Required Bid Package Items:
 
  • A manually signed Asset Purchase Agreement/Bid Form
  • A $100,000.00 Bid Deposit, via Certified Check made payable to the U.S. Marshals Service (deposit checks will be held securely by the USMS until a winning bidder is determined)
  • Proof of Financial Ability (explained below)
Bid Deposit: Please note that the required $100,000.00 bid deposit must be submitted in a certified funds check. The deposit check will be held by the USMS for the duration of the sealed-bid process. Those bidders that fail to make the Best-and-Final round will have their checks returned to them by the USMS. Bidders that violate any of the sealed bid auction rules, set forth herein, risk losing their refundable bid deposit. Winning bidders that do not complete the sale, will lose their bid deposit.

Proof of Financial Ability: Registered Bidders must provide information that indicates a financial ability to complete the sale. This information may include a signed financial statement, a letter from a bank officer, a bank statement or a statement from another financial institution, a Letter of Credit or any other similar such document supporting the financial ability to close the sale on an all-cash basis.

You must deliver the Required Bid Package Items by mail/express courier to one of the USMS address, provided below, by the deadline. The USMS is not responsible for shipping delays and other events that may delay the on-time submission of the Bid Package, NO EXCEPTIONS. The USMS will notify all bidders, via email, to confirm that their Bid Package was received.
 
FEDEX & UPS
 

Attn: Complex Assets Unit
Asset Forfeiture Division, CG3
United States Marshals Service
Landover Operations Center
3601 Pennsy Drive
Landover, MD 20785

United States Postal Service
 

Attn: Complex Assets Unit
Asset Forfeiture Division, CG3
United States Marshals Service
Washington, DC 20530-1000

Best-And-Final Bid Submission
Opens: 8:00 AM EST, Monday, November 4, 2019
Ends: 12:00 PM EST, Friday, November 8, 2019

The top four (4) bidders from the initial round of bid submissions will be invited, via email, to submit a Best-and-Final bid by 12pm EST, Friday, November 8, 2019. The invitation email from the USMS will include a Best-and-Final bid form that must be used to submit bids. Best-and Final bids must be submitted on the provided bid form via email to AFDComplexAssets@usdoj.gov. The USMS will review all bids, that are submitted by the deadline, in the best-and-final round and determine the winning bidder. The winning bidder will be notified directly, via email, by 5:00 PM EST, Friday, November 8, 2019.
 
Phase IV: Award and Sale Close

No later than 5:00 P.M. EST on Friday, November 8, 2019, the USMS will notify the winning bidder that their Best-and-Final bid has been selected. The winning bidder must send the balance of their purchase price funds (less the deposit amount) by a wire transfer originating from a bank located within the United States and provide a wire transmittal receipt to the USMS by 2:00 P.M. EST, on Thursday, November 21, 2019. It is the responsibility of the winning bidder to understand their bank’s deadline for initiating wire transfers in order to ensure that the domestic wire transfer is initiated and a wire transmittal receipt provided to the USMS by the deadline. Failure to provide the USMS with a copy of the wire transmittal receipt by the deadline will result in disqualification, forfeiture of the deposit, and award to another bidder.

The sale is not deemed final until the USMS has confirmed receipt of all purchase funds. Once the purchase funds are confirmed the USMS will provide the winning bidder with a Bill of Sale and will work with the buyer in changing title of the applicable assets into their name. The winning bidder will be given private instructions related to the transferring of title of the assets.
***
TERMS OF SALE
 
  • Payment. The bid must be an all cash offer. Bids that are contingent on financing terms of any kind will not be considered. All bids must be made in U.S. dollars.
  • Receipt of Funds. The winning bidder should be prepared to wire purchase funds to the USMS by 2:00 PM EST on Thursday, November 21, 2019. If the winning bidder does not provide the USMS with a copy of the wire transmittal receipt by this date and time, the bidder will be disqualified and another winning bidder will be selected. FAILURE TO INITIATE A WIRE TRANSFER AND PROVIDE THE USMS WITH A COPY OF THE WIRE TRANSMITTAL RECEIPT BY THURSDAY, NOVEMBER 21, 2019, AT 2:00 PM EST WILL RESULT IN FORFEITURE OF THE BIDDER’S DEPOSIT. The winning bidder is responsible for any wire transfer fees associated with his or her payment.
  • Asset Transfer. The USMS will not transfer any title to the assets until it has confirmed receipt of purchase funds from the buyer. The title to the registered portion of the assets will be done by the USMS in cooperation with the buyer.
  • Transfer Fees. Any transfer fees associated with the transfer of the title to the assets will be paid by the buyer.
  • Bidder Qualification. The USMS reserves the right to reject any bid for any reason whatsoever. The USMS reserves the right to sell all, some or none of the assets at auction.
  • Bill of Sale. The winning bidder will receive a signed Bill of Sale from the United States Marshals Service.
 
ADDITIONAL INFORMATION
 
  • The USMS does not make any representations or warranties regarding the value of or future financial return on the assets being purchased.
  • Questions related to the auction process should be directed to AFDComplexAssets@usdoj.gov. The USMS in its discretion will respond directly to email communications or will post additional items to the “Frequently Asked Questions” section below. The USMS will not respond to any telephone inquiries from the general public. The USMS will not answer any questions regarding (a) the associated criminal or civil cases that resulted in the seizure of the assets being auctioned.
  • The USMS will not sell to any person in violation of USMS Policy 13.7, Persons Prohibited from Purchasing Forfeited Property.
 
FREQUENTLY ASKED QUESTIONS
 
How did the USMS get the authority to sell these assets?

The USMS authority to dispose of forfeited property can be found at 28 C.F.R. 0.111(i).

Can a foreign citizen participate in the auction?

Yes. However, bids will not be accepted from any person or entity that appears on the U.S. Treasury Department’s Office of Foreign Assets Control list of “Specially Designated Nationals.”

All deposit and purchase funds must be received from a U.S. bank. No exceptions.

Can I form a business entity (LLC, Corporation, etc.) of buyers to participate in the auction?

Yes. The person or entity that registers to bid in this auction must satisfy all registration requirements, including certifying that the bidder is not acting in concert with the defendants or defendant entities (See USMS Policy 13.7, Persons Prohibited from Purchasing Forfeited Property). This certification extends and applies to all members of any business entity that bids on the assets. It is the responsibility of the primary bidder to perform whatever due diligence necessary in order to comfortably make that certification.

How much money do I need to make a bid?

You are responsible for ensuring that you have enough available funds to cover your bid. If you are selected as a winning bidder, you must be able to wire transfer and provide the USMS with a copy of the wire transmittal receipt by Thursday, November 21, 2019, by 2:00 PM EST. Failure to initiate a wire deposit in the full amount of your bid, less the initial deposit, will result in forfeiture of your deposit.

Is there a reserve price for this auction?

There is no disclosed reserve price for this auction. The United States Marshals Service reserves the right to sell the assets for the highest bid received, without additional consideration.

What information about the auction process or results will the USMS release?

The USMS will contact the winning and losing bidders directly. The USMS will not proactively release any information to the general public pertaining to the auction process or results, except for the number of registered bidders and the number of bids received.

How will my deposit be returned if I am not a winning bidder?

The USMS will initiate the return of losing bid deposits within (5) business days following the end of auction that they were not successful top bidders.

Losing bid deposits will be returned to the address that the deposit originated. If the registrant would like their deposit returned to a different address, they must provide this instruction along with their Bid Package. The USMS will solely determine the type of service that they will use to return the deposits, unless the send provides a pre-paid label with their Bid Package.

Please note, all payments are subject to the Treasury Offset Program (TOP). The Debt Collection Improvement Act of 1996, 31 United States Code § 3716, requires the Department of the Treasury and other disbursing officials to offset Federal payments to collect delinquent debts owed to the United States, or delinquent debts owed to states, including past-due child support. For more information on TOP, please visit Treasury’s Bureau of Fiscal Service website at Debt Collection - TOP.
 

September 2019

Mon

Tue

Wed

Thurs

Fri

16

8am EDT - Registration Opens

17

 

18

 

19

 

20

23

24

25

26

27

30

 

 

 

 

 

October 2019

Mon

Tue

Wed

Thurs

Fri

 

1

2

3

4

7

5pm EDT – Registration Ends

8

8am EDT – Due Diligence Opens

9

 

10

 

11

 

14

15

16

17

18

21

22

23

5pm EDT – Due Diligence Ends

24

8am EDT – Initial Round of Bid Submissions Open

25

28

29

30

31

5pm EDT – Initial Round of Bid Submissions End

 

 

November 2019

Mon

Tue

Wed

Thurs

Fri

 

 

 

 

1

4

8am EST – Best-and-Final Submissions Open

5

6

 

7

 

8

12pm EST – Best-and-Final Round Bid Submissions End

11

12

13

14

15

18

19

20

21

2pm EST – Asset Sale Close on or before this date.

22

 

Asset Forfeiture

 

usmarshals.gov is an official site of the U.S. Federal Government, U.S. Department of Justice