The receivership for Southwest Exchange, a financial company that failed holding $95 million in investor money, is running out of cash, attorneys for the receiver told the judge Thursday.

"Right now, there may be $500 in the receiver's bank account," said Nicholas Santoro, an attorney for receiver Larry Bertsch.

"The estate is running on fumes," said Jim Whitmire, another attorney representing the receiver.

The attorneys explained that Nevada officials have recovered $105,000 from UBS, a securities firm in which Southwest Exchange funds were deposited.

Of that sum, about $60,000 appears to be available for the receiver to use for expenses, said Tony Zmaila, another attorney for the receiver.

The state also turned over 2.2 million shares of Medicor Ltd. shares. The Secretary of State's securities division seized the assets after issuing a cease and desist order on Feb. 16 against McGhan and other owners of Southwest Exchange, said Christopher Lee, deputy secretary of state. McGhan was chairman of both Southwest Exchange of Henderson and Las Vegas-based MediCor, a breast implant maker.

The shares last traded at 8 cents on the Pink Sheets Thursday, but the shares trade infrequently. If the shares were not restricted and could be sold for 8 cents, they would have been worth $176,000 on Thursday.

The assets recovered by Nevada officials "give us some breathing room over the next week or so," Zmaila said.

Southwest Exchange operated as an accommodator, or qualified intermediary, for real estate investors trying to delay capital gains taxes on real estate sales. Under the Internal Revenue Code, investors may have the buyer turn over proceeds from a sale to firm like Southwest Exchange. If investors do not touch the money, they reinvest it in another real estate investment and defer income taxes on the gain until a later date.

Southwest Exchange closed its operations on Jan. 30, leaving 130 investors wondering what happened to a total of $95 million they entrusted to the intermediary.

Donna Eaton, a Reno resident, said that $554,000 from the sale of her Portland, Ore., rental residence was wired to the company's bank account the day after Southwest Exchange closed. Yet, Eaton complained that Clark County District Judge Elizabeth Gonzalez refuses to release her money.

Eaton's attorney, Spencer Judd, argued for reconsideration of a motion to release the money to Eaton. Gonzalez denied the request, saying there was neither any new law or new facts to consider.

The judge had ruled the motion was premature.

"This is my life savings. This is for my children's education," Eaton said outside the courtroom. "They know where my money is, and the court is keeping it so they can pay the rent (for the Southwest Exchange estate). It's not fair."

The judge Thursday also heard arguments over a motion to dismiss Donald McGhan, former chairman of Southwest Exchange, as a defendant in the lawsuits.

Mark Dzarnoski, McGhan's attorney, said the lawsuits were not specific enough in allegations about McGhan's role. Gonzalez granted Dzarnoski's motion in part. The judge directed attorney Brad Johnson to provide more detailed information about allegations of negligence and breach of fiduciary duty by McGhan.

Plaintiff's attorney Todd Touton expressed outrage over the dismissal motion. Touton recalled that McGhan bought Southwest Exchange in 2004 because McGhan could not obtain financing for MediCor Ltd., a breast implant maker, where McGhan also served as chairman.

"As soon as he gained control, he began looting these companies," Touton said.

Old investors were paid with money from new investors. "Your honor, that is a Ponzi scheme," Touton said.

Plaintiff's attorney Brian Berman argued that the individual claims should be set aside and that the receivership should pursue recovery from companies that insured Southwest Exchange. A judgment could be obtained from the insurers in several months, he said. "The receiver is going to be out of money long before that happens," Berman said.

"This case is literally a train wreck, and we are headed for a meltdown of biblical proportions if we stay on the course we are on now," Berman said.

"The financial condition of the estate is not good, but I think we've done the best we can and under the budget we have," Santoro said.

Dzarnoski mentioned another looming issue, the possibility Southwest Exchange might be pushed into bankruptcy court.

If the case is transferred to bankruptcy court, "we're looking at a $95 million problem that could turn into a $200 million problem" because of preferential debt payment rules.

Bankruptcy court law requires that debt payments made within 90 days of bankruptcy are preferential and belong to the debtor's estate. The time period is one year if the creditor being paid is an insider.