UNITED STATES OF AMERICA

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-21586

In the Matter of

Legacy Hospitality II, LLC,

Legendary Capital REIT III, LLC,

and Corey R. Maple,

Respondents.

I.

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PROPOSED PLAN OF

DISTRIBUTION

OVERVIEW

1.

The Division of Enforcement submits this Proposed Plan of Distribution (the

“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant

to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the

“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair

Fund (the “Fair Fund”) comprised of disgorgement, prejudgment interest, and civil money

penalties paid by Legacy Hospitality II, LLC (“Legacy”), Legendary Capital REIT III, LLC

(“Legendary”), and Corey R. Maple (“Maple”) (collectively, the “Respondents”) in the abovecaptioned matter.1

2.

As described more specifically below, the Plan seeks to compensate investors

who were harmed by the Respondents’ conduct described in the Order, in connection with

improperly allocated expenses. Based on information obtained by the Commission staff during

its investigation and the review and analysis of applicable records, the Commission staff has

reasonably concluded that it has all records necessary to calculate each investor’s harm. As a

result, the Fair Fund is not being distributed according to a claims-made process, so procedures

for making and approving claims in accordance with Rule 1101(b)(4) of the Commission’s

Rules, 17 C.F.R. § 201.1101(b)(4), are not applicable.

3.

As calculated using the methodology detailed in the Plan of Allocation (attached

as Exhibit A), investors will be compensated for their losses from the improperly allocated

expenses charged to Lodging Opportunity Fund Real Estate Investment Trust (“Fund 2”) from

June 1, 2014, through May 31, 2020 (the “Fund 2 Relevant Period”) and Lodging Fund REIT III,

Inc. (“Fund 3”) from September 30, 2018, through December 31, 2018 (the “Fund 3 Relevant

Period”) (each referenced hereinafter, individually, as the “Fund” and collectively, as the

See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making

Findings and Imposing a Cease-and-Desist Order, Securities Act. Rel. No. 11227 (Aug. 28, 2023) (the “Order”).

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“Funds”).

4.

In the view of the Commission staff, this methodology constitutes a fair and

reasonable allocation of the Fair Fund.

5.

The Commission has custody of the Fair Fund and shall retain control of the

assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission

retains jurisdiction over its implementation.

II.

BACKGROUND

6.

On August 28, 2023, the Commission issued the Order instituting and

simultaneously settling cease-and-desist proceedings against the Respondents. In the Order, the

Commission found that from 2014 to 2020, Respondents improperly directed two Real Estate

Investment Trusts to reimburse Legacy and Legendary for approximately $5 million in overhead

expenses in a manner that was inconsistent with disclosures made to investors. The Order

further found that Maple exercised decision-making authority over the allocation of expenses.

The Commission ordered the Respondents to pay a total of $2,746,900.00 in disgorgement,

$544,444.17 in prejudgment interest, and $1,475,000.00 in civil money penalties, for a collective

total of $4,766,344.17, to the Commission. The Commission also created the Fair Fund,

pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties collected, along

with the disgorgement and interest collected, can be distributed to harmed investors.

7.

The Respondents have paid in full. The Fair Fund has been deposited in a

Commission-designated account at the United States Department of the Treasury (the

“Treasury”), and any accrued interest will be added to the Fair Fund.

III.

DEFINITIONS

As used in this Plan, the following definitions will apply:

8.

“Administrative Costs” means any administrative costs and expenses, including

without limitation tax obligations, the fees and expenses of the Tax Administrator and the Fund

Administrator, bond premium expenses, and investment and banking costs.

9.

“Certification Date” means the date established in accordance with this Plan by

which a Preliminary Claimant’s Certification Form must be postmarked or submitted

electronically in order to be eligible to participate in this distribution. The Certification Date

shall be 60 days from the mailing of the Plan Notice.

10.

“Certification Form” means the form that will be emailed or mailed to each

Preliminary Claimant. The Certification Form will require confirmation of the name and mailing

address of the payee to which a Distribution Payment should be issued, tax identification and

other related information from the Preliminary Claimant as determined necessary by the Fund

Administrator in coordination with the Tax Administrator, and a certification that the

Preliminary Claimant is not an Excluded Party.

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11.

“Determination Notice” means the notice sent by the Fund Administrator within

forty-five (45) days of the Certification Date to all Preliminary Claimants that submitted a

deficient Certification Form. The Determination Notice will provide to each Preliminary

Claimant whose Certification Form is deficient, in whole or in part, the reason(s) for the

deficiency and in the event the claim is denied, the Determination Notice will state the reason(s)

for such denial. The Determination Notice will also notify the Preliminary Claimant of the

opportunity to cure any deficiency, request reconsideration, or dispute the determination made by

the Fund Administrator and provide instructions regarding what is required to do so.

12.

“Distribution Payment” means a payment from the Fair Fund to a Payee in

accordance with the terms of this Plan.

13.

“Eligible Claimant” means a Preliminary Claimant, who is determined to have

suffered a Recognized Loss pursuant to the Plan of Allocation, and who is not an Excluded Party

or an Unresponsive Preliminary Claimant.

14.

“Excluded Party” shall mean: (a) the Respondents, and Respondents’ advisers,

agents, directors, founders, employees, nominees, assigns, creditors, heirs, distributees, spouses,

parents, children, or controlled entities; (b) the Fund Administrator, its employees, and those

Persons assisting the Fund Administrator in its role as the Fund Administrator; and (c) any

purchaser or assignee of another Person’s right to obtain a recovery from the Fair Fund for value;

provided, however, that this provision shall not be construed to exclude those Persons who

obtained such a right by gift, inheritance or devise.

15.

“Fair Fund” means the fund created by the Commission pursuant to Section

308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondents’

violations described in the Order.

16.

“Final Determination Notice” means the written notice sent by the Fund

Administrator to (a) all Preliminary Claimant who timely submitted a Certification Form

notifying the Preliminary Claimant of the Fund Administrator’s eligibility determination; (b) any

Preliminary Claimant who timely submitted a written dispute of his, her or its calculated

Recognized Loss notifying the Preliminary Claimant of its resolution of the dispute; and (c)

those Preliminary Claimants who have not responded to the Plan Notice by returning a

Certification Form and/or other requested documentation notifying the Preliminary Claimant that

he, she or it has been deemed an Unresponsive Preliminary Claimant or an Excluded Party and is

not eligible for a distribution. The Fund Administrator will not send a Final Determination

Notice to a Preliminary Claimant, if his, her or its Plan Notice was returned as “undeliverable.”

The Final Determination Notice will constitute the Fund Administrator’s final ruling regarding

the eligibility status and loss calculation and is not subject to appeal.

17.

“Fund 2” means the Lodging Opportunity Fund Real Estate Investment Trust.

18.

“Fund 3” means the Lodging Fund REIT III, Inc.

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2018.

19.

“Fund 2 Relevant Period” is from June 1, 2014, through May 31, 2020.

20.

“Fund 3 Relevant Period” is from September 30, 2018, through December 31,

21.

“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,

less Administrative Costs.

22.

“Payee” means an Eligible Claimant whose distribution amount is equal to or

greater than $20.00, as calculated in accordance with the Plan of Allocation, who will receive a

Distribution Payment.

23.

“Person” means natural individuals as well as legal entities such as corporations,

partnerships, or limited liability companies.

24.

“Plan Notice” means the written notice from the Fund Administrator to each

Preliminary Claimant regarding the Commission’s approval of the Plan, including, as

appropriate: a statement characterizing the distribution; a link to the approved Plan posted on the

Commission’s website and instructions for requesting a copy of the Plan; the Certification Form,

along with specification of any information needed from the Preliminary Claimant to prevent

him, her, or it from being deemed an Unresponsive Preliminary Claimant; his, her or its

preliminary Recognized Loss; a description of the tax information reporting and other related tax

matters; the procedure for the distribution as set forth in the Plan; and the name and contact

information for the Fund Administrator as a resource for additional information or to contact

with questions regarding the distribution.

25.

“Plan of Allocation” means the methodology used by the Fund Administrator to

calculate if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is

attached as Exhibit A.

26.

“Preliminary Claimant” means a Person, or their lawful successors, identified

by the Fund Administrator based on its review and analysis of applicable records obtained by the

Commission staff during its investigation, who may have suffered a loss as a result of improper

allocated expenses charged to Fund 2 and/or Fund 3 during the respective Relevant Periods; or

those Persons who request a Plan Notice as described in paragraph 46 that are determined by the

Fund Administrator to have suffered a loss as a result of improper allocated expenses charged to

the Funds during the respective Fund’s Relevant Period.

27.

“Recognized Loss” means the amount of loss calculated in accordance with the

Plan of Allocation.

28.

“Unresponsive Preliminary Claimant” means a Preliminary Claimant whose

address and/or email the Fund Administrator has not been able to verify; or a Preliminary

Claimant who does not timely return the Certification Form or respond to the Fund

Administrator’s attempts to obtain information, including any information sought in the Plan

Notice and Certification Form. Unresponsive Preliminary Claimants will not be eligible for a

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distribution under the Plan.

IV.

TAX COMPLIANCE

29.

On January 6, 2025, the Commission appointed Heffler, Radetich & Saitta, LLP

as the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations

of the Fair Fund.2 The Tax Administrator will be compensated for reasonable fees and expenses

from the Fair Fund in accordance with its 2025 Engagement Letter Agreement with the

Commission.3

30.

The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section

468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related

regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the

administrator of such QSF for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the

tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not

limited to:

(a)

Obtaining a taxpayer identification number;

(b)

Requesting funds necessary for the timely payment of all applicable taxes,

the payment of taxes for which the Tax Administrator has received funds,

and the filing of applicable returns; and

(c)

Fulfilling any information reporting or withholding requirements imposed

on distributions from the Fair Fund, including but not limited to Foreign

Account Tax Compliance Act (FATCA).

31.

All tax obligations will be paid from the Fair Fund, subject to the review and

approval of Commission staff.

V.

FUND ADMINISTRATOR

32.

On April 25, 2025, the Commission appointed Simpluris Inc., as the fund

administrator for the Fair Fund (the “Fund Administrator”), and the Fund Administrator has

obtained a bond in the amount of $4,766,344.17, as ordered.4 Pursuant to Rule 1105(a) of the

Commission’s Rules, 17 C.F.R. § 201.1105(a), the Fund Administrator may be removed at any

time by order of the Commission or hearing officer.

33.

The Fund Administrator will be responsible for administering the Fair Fund in

accordance with the Plan.

See Order Appointing Tax Administrator, Exchange Act Rel. No. 102128 (Jan. 6, 2025).

See Omnibus Order Extending the Engagement of Two Tax Administrators for Appointment on a Case-by-Case

Basis in Administrative Proceedings that Establish Distribution Funds, Exchange Act Rel. No. 101986 (Dec. 19,

2024).

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See Order Appointing Fund Administrator, Setting Administrator's Bond Amount, and Authorizing the Approval

and Payment of the Fees and Expenses of Administration, Exchange Act. Rel. No. 102936 (Apr. 25, 2025).

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34.

To carry out the purposes of this Plan, the Fund Administrator is authorized to

make and implement immaterial changes to the Plan upon agreement of the Commission staff. If

a change is deemed to be material by the Commission staff, Commission approval is required

prior to implementation by amending the Plan.

35.

The Fund Administrator may extend any procedural deadline contained in the

Plan for good cause shown, if agreed upon by the Commission staff.

36.

When administering this Plan, the Fund Administrator, and/or each of its

designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission,

including orders issued by delegated authority; orders issued by an administrative law judge, if

any, appointed in this proceeding; and any records, including records containing investor

information, provided by Commission staff.

37.

The Fund Administrator is authorized to enter into agreements with third parties

as may be appropriate or necessary in the administration of the Fair Fund, provided such third

parties are not excluded pursuant to other provisions of this Plan. In connection with such

agreements, the third parties shall be deemed to be agents of the Fund Administrator under this

Plan.

38.

The Fund Administrator will be entitled to payment from the Fair Fund of

reasonable fees and expenses, including the bond premium, incurred in the performance of its

duties (including any such fees and expenses incurred by agents, consultants or third parties

retained by the Fund Administrator in furtherance of its duties).

39.

The Fund Administrator will have the authority, in its sole discretion, to waive

technical deficiencies and approve claims on a case-by-case basis, or in groups of claims. All

determinations made by the Fund Administrator in accordance with the Plan in any dispute,

request for reconsideration, or request to cure a deficient claim will be final and not subject to

appeal.

VI.

PLAN PROCEDURES

Specification of Preliminary Claimants

40.

Using information obtained during its investigation, the Commission has

identified the Preliminary Claimants. Preliminary Claimants are limited to only those Persons

who may have suffered a loss as a result of improperly allocated expenses charged to Fund 2

and/or Fund 3 during the respective Relevant Periods.

Procedures for Locating and Notifying Preliminary Claimants

41.

Within forty-five (45) days of Commission approval of the Plan, the Fund

Administrator will:

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(a)

Establish and maintain a website, www.LegacyHospitalityFairFund.com,

devoted solely to the Fair Fund. The Fair Fund’s website will make

available a copy of the approved Plan, include a copy of the Plan Notice

and Certification Form, and related materials in downloadable form, and

such other information that the Fund Administrator believes will be

beneficial to Preliminary Claimants;

(b)

Establish and maintain a toll-free telephone number, 866-675-3042, for

Preliminary Claimants to call and speak to a live representative of the

Fund Administrator during its regular business hours or, outside of such

hours, to hear pre-recorded information about the Fair Fund;

(c)

Establish and maintain a traditional mailing address, P.O. Box 25203,

Santa Ana, CA 92799, and an email address,

info@LegacyHospitalityFairFund.com, which will be listed on all

correspondence from the Fund Administrator to Preliminary Claimants as

well as on the Fair Fund’s website;

(d)

Establish and maintain a case specific database of all Preliminary

Claimants based upon information provided to and obtained by the Fund

Administrator, including their last known physical and email addresses;

(e)

Run a National Change of Address search to retrieve updated addresses

for all records in the database, thereby ensuring the mailing information

for Preliminary Claimants is up-to-date; and

(f)

Send a Plan Notice and Certification Form to each Preliminary Claimant’s

last known email address (if known) and/or mailing address.

42.

The Commission staff retains the right to review and approve any material posted

on the Fair Fund’s website, any communication with investors, and any scripts used in

connection with communications with investors.

Undeliverable Mail

43.

The Fund Administrator will attempt to locate any Preliminary Claimant whose

mailing is returned as undeliverable by the U.S. Postal Service or otherwise, including an

advanced address search using commercially available resources, if feasible, and will document

all such efforts. If another address is obtained, the Fund Administrator will then resend it to the

Preliminary Claimant’s new address within ten (10) days of receipt of the returned mail. If the

mailing is returned again, and the Fund Administrator, despite best practicable efforts, is unable

to find a Preliminary Claimant’s correct address, the Fund Administrator, in its discretion, may

deem such Preliminary Claimant an Unresponsive Preliminary Claimant.

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44.

The Fund Administrator, with Commission staff approval, may engage a third

party search firm to conduct more rigorous searches for Persons whose mailings are returned as

undeliverable.

45.

Any Preliminary Claimant who relocates or otherwise changes contact

information after receipt of the Plan Notice must promptly communicate any change in address

or contact information to the Fund Administrator.

Procedures to Request Plan Notice

46.

Any Person who does not receive a Plan Notice and Certification Form, as

described in paragraph 41, but who is aware of this Plan (e.g., through other Preliminary

Claimants or on www.sec.gov) and believes they should be included as a Preliminary Claimant

should contact the Fund Administrator within sixty (60) days from the approval of the Plan to

establish that they should be considered a Preliminary Claimant. Such Person should include

with that communication, documentation sufficient to support their claim that they should be

considered a Preliminary Claimant, as well as contact information (physical address, telephone

number, and email address, if available) for responsive communications. The Fund

Administrator will send the Person a Plan Notice and Certification Form within fifteen (15) days

of receiving the Person’s documentation, if the Fund Administrator determines that the Person

should be classified as a Preliminary Claimant.

Certification Requirement and Failure to Respond to Plan Notice

47.

In order to maintain classification as a Preliminary Claimant, a completed

Certification Form, together with any supporting documentation as requested in the Plan Notice,

must be signed by the Preliminary Claimant under penalty of perjury under the laws of the

United States and returned to the Fund Administrator by the Certification Date. The

Certification Form must be executed by the Preliminary Claimant, unless the Fund

Administrator, in its discretion, accepts such Certification Form from a successor, heir,

administrator, or other Person authorized to act on the Preliminary Claimant’s behalf. Those

authorized to act on behalf of the Preliminary Claimants will be eligible to participate in the

distribution to the same extent the original investor would have been eligible under the terms of

the Plan.

48.

The Fund Administrator will review all Certification Forms. Each Preliminary

Claimant will have the burden of proof to establish his, her, or its identity as a Preliminary

Claimant, or his, her, or its successor. The Fund Administrator will have the right to request, and

the Preliminary Claimant will have the burden of providing to the Fund Administrator, any

additional information and/or documentation deemed relevant by the Fund Administrator.

49.

If a Preliminary Claimant fails to return the Certification Form and/or any

requested tax forms, as requested in the Plan Notice, by the Certification Date, the Fund

Administrator will make no fewer than two (2) attempts to contact the Preliminary Claimant by

telephone or email, if known to the Fund Administrator. The second attempt will in no event

take place more than ninety (90) days from the initial mailing of the Plan Notice. If a

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Preliminary Claimant fails to respond to the Fund Administrator’s contact attempts as described

in this paragraph, the Fund Administrator, in its discretion, may deem such Preliminary Claimant

an Unresponsive Preliminary Claimant.

50.

The Fund Administrator has the authority, in their sole discretion, to waive

technical deficiencies in the Certification Form.

Review of Certification Forms and Deficiency Process

51.

The Fund Administrator will provide a Determination Notice within forty-five

(45) days of the Certification Date to each Preliminary Claimant whose Certification Form is

deficient, in whole or in part. The Determination Notice will provide the reason(s) for the

deficiency (e.g., failure to provide required information). In the event the claim is denied, in

whole or in part, the Determination Notice will state the reason(s) for such denial. The

Determination Notice will also notify the Preliminary Claimant of the opportunity to cure any

deficiency, request reconsideration, or dispute the determination made by the Fund

Administrator and provide instructions regarding what is required to do so.

52.

Any Preliminary Claimant with a deficient claim will have thirty (30) days from

the date of the Determination Notice to cure any deficiencies identified in the Determination

Notice.

53.

Any Preliminary Claimant seeking reconsideration of a denied claim must advise

the Fund Administrator in writing within thirty (30) days of the date of the Determination Notice.

All requests for reconsideration must include the necessary documentation to substantiate the

basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim.

Dispute Process

54.

Disputes will be limited to the Preliminary Claimant’s calculated Recognized

Loss. If a Preliminary Claimant disagrees with the Recognized Loss listed in the Plan Notice,

such dispute must be detailed on the Certification Form and returned to the Fund Administrator

along with any supporting documentation by the Certification Date. The Fund Administrator

will investigate the dispute, and such investigation will include a review of the written dispute as

well as any supporting documentation.

Final Determination Notices

55.

The Fund Administrator will make their final eligibility determination only after

investigating any disputes indicated on the Certification Forms regarding the Recognized Losses

listed in the Plan Notices.

56.

Within one hundred twenty (120) of the Certification Date, the Fund

Administrator will send a Final Determination Notice to (a) all Preliminary Claimant who timely

submitted a Certification Form notifying the Preliminary Claimant of the Fund Administrator’s

eligibility determination; (b) any Preliminary Claimant who timely submitted a written dispute of

his, her or its calculated Recognized Loss as described in paragraph 54, notifying the Preliminary

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Claimant of its resolution of the dispute; and (c) those Preliminary Claimants who have not

responded to the Plan Notice by returning a Certification Form and/or other requested

documentation as described in paragraph 47, notifying the Preliminary Claimant that he, she or it

has been deemed an Unresponsive Preliminary Claimant or an Excluded Party and is not eligible

for a distribution. The Fund Administrator will not send a Final Determination Notice to a

Preliminary Claimant, if his, her or its Plan Notice was returned as “undeliverable.” The Final

Determination Notice will constitute the Fund Administrator’s final ruling regarding the status of

the claim and is not subject to appeal.

Distribution Methodology

57.

The Fund Administrator will calculate each Preliminary Claimant’s Recognized

Loss in accordance with the Plan of Allocation. All Preliminary Claimants who are determined

to have a Recognized Loss, and who are not deemed an Excluded Party or an Unresponsive

Preliminary Claimant will be deemed an Eligible Claimant. All Eligible Claimants whose

distribution amount is equal to or greater than $20.00, as calculated in accordance with the Plan

of Allocation, will be deemed a Payee and receive a Distribution Payment.

Establishment of a Reserve

58.

Before determining the amount of funds available for distribution and calculating

each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax

Administrator, will establish a reserve to pay Administrative Costs and to accommodate any

unexpected expenditures (the “Reserve”).

59.

After all Distribution Payments are made and Administrative Costs paid, any

remaining amounts in the Reserve will become part of the Residual described in paragraph 80.

Preparation of the Payment File

60.

Within two hundred eighty (280) days of Commission approval of the Plan, the

Fund Administrator will compile and send to the Commission staff the Payee information,

including the name, address, calculated Recognized Loss, and the amount of the Distribution

Payment for all Payees (the “Payee List”). The Fund Administrator will also provide a

Reasonable Assurances Letter to the Commission staff, representing that the Payee List: (a) was

compiled in accordance with the approved Plan; (b) is accurate as to Payees’ names, addresses,

Recognized Losses and amounts of their Distribution Payment; (c) includes the number of

Payees compensated; (d) the percentage of the Payee’s Recognized Loss being compensated by

the disbursement from the Fair Fund, and if applicable, the total percentage to include all prior

disbursements; (e) the total amount of funds to be disbursed, and if applicable, the total amount

of such funds to be withheld pursuant to paragraph 70; and (f) provides all information necessary

to make a payment to each Payee.

The Escrow Account

61.

Prior to the disbursement of funds from the Net Available Fair Fund, the Fund

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Administrator will establish an escrow account (the “Escrow Account”) with a United States

commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve

Act, Subpart D, 12 C.F.R. § 208.43 and that is not unacceptable to the Commission staff (the

“Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by

Commission staff.

62.

The Fund Administrator, pursuant to the Escrow Agreement, shall also establish

with the Bank a separate deposit account (e.g., controlled distribution account, managed

distribution account, linked checking and investment account) (the “Distribution Account”),

insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass

through limit. The Distribution Account shall be linked with the Escrow Account and shall be

named, and records maintained, in accordance with the Escrow Agreement.

63. During the term of the Escrow Agreement, the portions of the Fair Fund transferred

to the Escrow Account (the “Escrow Property”) shall be invested and reinvested in short-term

U.S. Treasury securities backed by the full faith and credit of the United States Government or

an agency thereof. The investment shall be, of a type and term necessary to meet the cash

liquidity requirements for payments to Payees and Administrative Costs, including investment or

reinvestment in a bank account insured by the FDIC up to the guaranteed FDIC limit, or in

money market mutual funds registered under the Investment Company Act of 1940 that invest

100% of their assets in direct obligations of the United States Government.

64. The Fund Administrator shall provide duplicate original bank and/or investment

statements on any accounts established by the Fund Administrator to the Tax Administrator on a

monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements, as

necessary.

65. The Fund Administrator, in consultation with the Commission staff, shall work

with the Bank on an ongoing basis to deposit or invest funds in the Escrow and Distribution

Accounts so as to result in the maximum reasonable net return, taking into account the safety of

such deposits or investments and tax implications; and to determine an allocation of funds

between the Escrow and Distribution Account.

66.

All interest, dividends, and/or income earned by the Escrow Property will accrue

for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and

Distribution Accounts will be the responsibility of the Fund Administrator, who may be

reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to

the Bank, its agents, and/or its affiliates from the Escrow Property.

Distribution of the Fair Fund

67.

Upon the Commission’s staff’s receipt, review, and acceptance of the Payee List

and Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek

an order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17

C.F.R. § 210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank in

accordance with the Payee List for distribution by the Fund Administrator in accordance with the

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Plan. All disbursements will be made pursuant to a Commission Order.

68.

Upon issuance of an order to disburse, the Commission staff will direct the

transfer of funds in accordance with the Payee List to the Bank. The Fund Administrator will

then use its best efforts to commence mailing Distribution Payment checks and/or effect

electronic payments within ten (10) business days of the release of the funds into the Escrow

Account. All efforts will be coordinated to limit the time between the Escrow Account’s receipt

of the funds and the issuance of Distribution Payments.

69.

All checks will be issued by the Fund Administrator from the Distribution

Account. All checks will bear a stale date of ninety (90) days from the date of issuance.

Reissuance of a check must be requested before the stale date, and such request is governed by

paragraph 74.

70.

All Distribution Payments will be preceded or accompanied by a communication

that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that

the tax treatment of the distribution is the responsibility of each Payee and that the Payee should

consult his, her or its tax advisor for advice regarding the tax treatment of the distribution;

however, any backup withholding required under IRC § 3406(a) and the regulations promulgated

thereunder, or withholding required with respect to nonresident aliens (“NRAs”) under Chapter 3

of the IRC, or FATCA-subject Payees under Chapter 4 of the IRC, will be withheld as required

from the Distribution Payment and remitted to the Internal Revenue Service on the Payee’s

behalf; (c) a statement that checks will be void and cannot be reissued after ninety (90) days

from the date the original check was issued; and (d) contact information for the Fund

Administrator for questions regarding the Distribution Payment. The letter or other mailings to

Payees characterizing a Distribution Payment will be prepared by the Tax Administrator and

provided to the Commission staff for review and approval.

71.

All Distribution Payments, either on their face or in the accompanying mailing,

will clearly indicate that the money is being distributed from the Fair Fund established by the

Commission to compensate investors for harm as a result of securities law violations.

72.

At the discretion of the Fund Administrator, certain costs that were not factored

into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s

Distribution Payment. In such situations, the Fund Administrator will immediately notify the

Tax Administrator of the reduction in the Distribution Payment.

Post Distribution; Handing of Returned or Uncashed Checks; and Reissues

73.

The Fund Administrator shall use its best efforts to make use of commercially

available resources and other reasonably appropriate means to locate all Payees whose checks

are returned to the Fund Administrator as “undeliverable.” If new address information becomes

available, the Fund Administrator will repackage the distribution check and send it to the new

address. If new address information is not available after a diligent search (and in no event no

later than ninety (90) days after the initial mailing of the original check) or if the distribution

check is returned again, the check shall be voided, and at the discretion of the Fund

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Administrator the Payee may be removed from the distribution and the allocated Distribution

Payment will remain in the Fair Fund for distribution, if feasible, to the remaining Payees.

74.

The Fund Administrator will reissue checks or electronic payments to Payees

upon the receipt of a valid, written request from the Payee if prior to the initial stale date. In

cases where a Payee is unable to endorse a Distribution Payment check as written (e.g., name

changes, IRA custodian changes, or recipient is deceased) and the Payee or a lawful

representative requests the reissuance of a Distribution Payment check in a different name, the

Fund Administrator will request, and must receive, documentation to support the requested

change. The Fund Administrator will review the documentation to determine the authenticity

and propriety of the change request. If, in the discretion of the Fund Administrator, such change

request is properly documented, the Fund Administrator will issue an appropriately redrawn

Distribution Payment to the requesting party. Reissued checks will be void at the later of ninety

(90) days from issuance of the original check or thirty (30) days from the reissuance, and in no

event will a check be reissued after stale date of the original check without the approval of

Commission staff.

75.

The Fund Administrator will work with the Bank and maintain information about

uncashed checks and any returned items due to non-delivery, insufficient addresses, and/or other

deficiencies. The Fund Administrator is responsible for researching and reconciling errors and

reissuing payments when possible. The Fund Administrator is also responsible for accounting

for all payments. The amount of all uncashed and undelivered payments will continue to be held

in the Fair Fund.

76.

The Fund Administrator will make and document its best efforts to contact Payees

to follow-up on the status of uncashed distribution checks over $100 (other than those returned

as “undeliverable”) and take appropriate action to follow-up on the status of uncashed checks at

the request of Commission staff. The Fund Administrator may reissue such checks, subject to

the time limits detailed herein. If a distribution check remains uncashed after the stale date the

Fund Administrator will instruct the Bank to issue a stop payment on the distribution check. The

Fund Administrator, in their discretion, may remove such Payee from the distribution, and the

allocated Distribution Payment will remain in the Fair Fund for distribution, if feasible, to the

remaining Payees.

Receipt of Additional Funds

77.

Should any additional funds be received pursuant to Commission or Court order,

agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will

be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the

Commission’s Rules.

Administrative Costs

78.

All Administrative Costs will be paid from the Fair Fund in accordance with the

Commission’s Rules. Upon completion of the final distribution, the Fund Administrator will

make arrangements, in consultation with the Commission staff, for the final payment of all

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Administrative Costs.

Disposition of Undistributed Funds

79.

If funds remain following the initial distribution, the Fund Administrator, in

consultation with the Commission staff, may seek subsequent distribution(s) of any available

remaining funds, in a manner that is consistent with this Plan and in accordance with the

Commission’s Rules.

80.

A residual within the Fair Fund will be established for any amounts remaining

after the final disbursement to Payees from the Fair Fund (the “Residual”). The Residual may

include funds from, among other things, amounts remaining in the Reserve, distribution checks

that have not been cashed, checks or electronic payments that were not delivered or were

returned to the Commission, and tax refunds due to the Fair Fund’s overpayment of taxes or for

waiver of IRS penalties.

81.

Within one hundred eighty (180) days of the stale date of the distribution

payments, the Fund Administrator, in consultation with the Commission staff, will determine

whether further distribution of the Fair Fund to investors is feasible. Within ten (10) days of the

determination that further distribution is infeasible, the Fund Administrator will direct the Bank

to stop payment on all uncashed Distribution Payments, and within forty-five (45) days, the Fund

Administrator will return any funds remaining in the Escrow and Distribution Accounts to the

Commission to become part of the Residual.

82.

All funds remaining in the Residual that are infeasible to distribute to investors

will be returned to the Commission and transferred to the Treasury, subject to Section 21F(g)(3)

of the Securities Exchange Act of 1934 (the “Exchange Act”), after the final accounting is

approved by the Commission. Returning such money to the Respondents would be inconsistent

with the equitable principle that no Person should profit from their wrongdoing. Therefore, in

these circumstances distributing disgorged funds to the Treasury is the most equitable

alternative.

Filing of Reports and Accountings

83.

In accordance with Rule 1105(f) of the Commission’s Rules, during the first ten

(10) days of each calendar quarter after funds have been transferred to the Bank, the Fund

Administrator shall file with the Commission, on a standardized accounting form provided by the

Commission staff, an accounting of all monies earned or received and all monies spent in

connection with the administration of the Plan.

84.

Upon completion of all distributions to Payees and the payment of all

Administrative Costs pursuant to the procedures described above, the Fund Administrator will

submit a final accounting for approval by the Commission on a standardized form provided by

the Commission staff. The Fund Administrator will also submit a report to the Commission staff

containing the final distribution statistics regarding distributions to individuals and entities, and

such other information requested by the Commission staff.

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Wind-down and Document Retention

85.

The Fund Administrator will shut down the website, P.O. Box and customer

service telephone line(s) established specifically for the administration of the Fair Fund upon the

transfer of any remaining funds to the Commission as described in paragraph 81.

86.

The Fund Administrator will retain all materials submitted by Preliminary

Claimants in either paper or electronic form for a period of six (6) years from the date of

approval of a final fund accounting. Materials maintained in electronic form must be accessible

and readable for the duration of retention. Pursuant to the Commission staff's direction, the Fund

Administrator will either turn over to the Commission or destroy all materials, including

documents in any media, upon expiration of this period.

Termination of the Fair Fund

87.

The Fair Fund will be eligible for termination and the Fund Administrator will be

eligible for discharge after all of the following have occurred (a) a final accounting, in a standard

accounting format provided by the Commission staff, has been submitted by the Fund

Administrator and approved by the Commission; (b) all Administrative Costs have been paid;

and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer

to the Treasury. Once the Commission has approved the final accounting, the Commission staff

will seek an order from the Commission authorizing: (a) the transfer of the Residual that is

infeasible to return to investors, and any amounts returned to the Fair Fund in the future that is

infeasible to return to investors, to the general fund of the Treasury, subject to Section 21F(g)(3)

of the Exchange Act; (b) discharge of the Fund Administrator; (c) cancellation of the Fund

Administrator’s bond; and (d) termination of the Fair Fund.

88.

Once the Fair Fund has been terminated and funds, if any, are transferred to the

Treasury, no additional payments will be made whatsoever.

VII.

NOTICE OF PROPOSED PLAN AND OPPORTUNITY FOR COMMENT

89.

The Notice of the Proposed Plan of Distribution and Opportunity for Comment

(the “Notice”) shall be published on the Commission’s website

https://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan

must do so in writing by submitting their comments within thirty (30) days of the date of the

Notice (a) to the Office of the Secretary, United States Securities and Exchange Commission,

100 F Street, N.E., Washington, D.C. 20549-1090; (b) by using the Commission’s Internet

comment form (https://www.sec.gov/litigation/admin.shtml); or (c) by sending an e-mail to rulecomments@sec.gov. Comments submitted by e-mail or via the Commission’s website should

include “Administrative Proceeding File No. 3-21586 in the subject line. Comments received

will be publicly available. Persons should only submit comments that they wish to make

publicly available.

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Exhibit A

PLAN OF ALLOCATION

This Plan of Allocation 5 is designed to compensate investors based on the improperly

allocated expenses charged to Lodging Opportunity Fund Real Estate Investment Trust (“Fund

2”) from June 1, 2014, through May 31, 2020 (the “Fund 2 Relevant Period”) and Lodging Fund

REIT III, Inc. (“Fund 3”, together with Fund 2, the “Funds”) from September 30, 2018, through

December 31, 2018 (the “Fund 3 Relevant Period”) due to the misconduct of the Respondents.

Based upon records obtained by the Commission during its investigation, the

Commission has determined the amount of overhead expenses charged to the Funds that should

have been paid by the advisors of the Funds (“Improper Expenses”) and has identified those

investors, or their lawful successors, who may have suffered harm from paying the Improper

Expenses. Investors who did not hold shares of Fund 2 or Fund 3 during their respective

Relevant Periods, or who are an Excluded Party, are ineligible to recover under this Plan.

I.

The Methodology

The Fund Administrator will calculate the amount of loss (“Recognized Loss”) for each

Preliminary Claimant as follows:

5

A.

For each Fund in each calendar quarter of the Fund’s respective Relevant Period,

the “Recognized Loss per Quarter” will be equal to the number of Fund shares

held by the Preliminary Claimant at the end of the calendar quarter divided by the

sum of the quarter-end holdings of the Fund of all Preliminary Claimants, then

multiplied by the total amount of Improper Expenses charged to the Fund during

the calendar quarter.

B.

If the Preliminary Claimant did not hold any shares in the Fund at the end of a

calendar quarter, the Preliminary Claimant’s Recognized Loss per Quarter for that

Fund in that calendar quarter will be $0.00.

C.

The Preliminary Claimant’s “Fund 2 Recognized Loss” will be the sum of the

Recognized Loss per Quarter across all calendar quarters of the Fund 2 Relevant

Period, and the “Fund 3 Recognized Loss” will be calculated in a parallel fashion.

D.

If the Fund 2 Recognized Loss or the Fund 3 Recognized Loss calculates to a

negative value that Fund’s Recognized Loss will be $0.00.

E.

The Preliminary Claimant’s Recognized Loss will be the sum of his, her or its

Fund 2 Recognized Loss and Fund 3 Recognized Loss.

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.

II.

Becoming an Eligible Claimant

Any Preliminary Claimant who suffered a Recognized Loss pursuant to this Plan of

Allocation, and who is not an Excluded Party or an Unresponsive Preliminary Claimant will be

deemed an Eligible Claimant.

III.

Allocation of Funds

Each Eligible Claimant’s distribution amount will equal his, her, or its Recognized Loss,

plus any “Reasonable Interest” awarded. The distribution amount will be subject to the “Offset

for Prior Recovery” and “Minimum Distribution Amount” provisions below.

A.

Offset for Prior Recovery

To avoid payment of a windfall, an Eligible Claimant’s distribution amount will be no

larger than his, her, or its Recognized Loss minus the amount of any compensation for the loss

that resulted from the conduct described in the Order that was received from another source (e.g.,

class action settlement), to the extent known by the Fund Administrator (“Prior Recovery”), plus

any Reasonable Interest awarded. That is, the distribution amount will be capped at the

Recognized Loss less the Prior Recovery, plus any Reasonable Interest awarded.

B.

Reasonable Interest

The Fund Administrator, in consultation with the Commission staff, may include interest

in the distribution amount to compensate for the time value of money. Reasonable Interest will

be calculated using the Short-term Applicable Federal Rate plus three percent (3%), compounded

quarterly from the end of each quarter the Improper Expenses were charged for each of the

Funds through the approximate date of the disbursement of the funds. If there are insufficient

funds to pay Reasonable Interest in full to all Eligible Claimants, Reasonable Interest will be

awarded on a pro-rata basis from the excess funds. If a pro-rata computation is needed, it will

be calculated for each Eligible Claimant as the ratio of his, her or its Reasonable Interest amount

to the sum of Reasonable Interest amounts of all Eligible Claimants.

C.

Minimum Distribution Amount

The Minimum Distribution Amount will be $20.00. An Eligible Claimant whose

distribution amount is less than the Minimum Distribution Amount will be deemed ineligible and

his, her, or its distribution amount may be reallocated on a pro-rata basis to Eligible Claimants

whose distribution amounts are greater than or equal to the Minimum Distribution Amount.

D.

Payee and Distribution Payment

An Eligible Claimant whose distribution amount equals or exceeds the Minimum

Distribution Amount will be deemed a Payee, and will receive a Distribution Payment equal to

his, her, or its calculated distribution amount.

2