Cohen & Co Inc. — Major Shareholding Notification 2006

Jul 7, 2006

SC 13D/A 1 sc13da1206290002_07052006.htm sec document SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 12)(1) Sunset Financial Resources, Inc. -------------------------------- (Name of Issuer) Common Stock, Par Value $.001 Per Share --------------------------------------- (Title of Class of Securities) 867708109 --------- (CUSIP Number) STEVEN WOLOSKY, ESQ. OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP Park Avenue Tower 65 East 55th Street New York, New York 10022 (212) 451-2300 -------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 5, 2006 ------------ (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /. NOTE. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. SEE Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 33 Pages) ------------------ (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, SEE the NOTES). ---------------------- ---------------------- CUSIP No. 867708109 13D Page 2 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) WESTERN INVESTMENT L L C -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 1,016,300 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 1,016,300 ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,016,300 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.7% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 3 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) ARTHUR D. LIPSON -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF, OO -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 1,022,300 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 1,022,300 ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,022,300 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.7% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 4 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) WESTERN INVESTMENT HEDGED PARTNERS LP -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 305,300 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 305,300 ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 305,300 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.9% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 5 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) WESTERN INVESTMENT INSTITUTIONAL PARTNERS L L C -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 633,300 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 633,300 ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 633,300 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.0% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 6 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) WESTERN INVESTMENT ACTIVISM PARTNERS L L C -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 77,700 OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 77,700 ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 77,700 -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.7% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 7 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) MATTHEW S. CROUSE -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 8 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) JAMES S. SCHALLHEIM -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 9 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) D. JAMES DARAS -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 10 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) MARSHALL W. COBURN -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 11 of 33 Pages ---------------------- ---------------------- ================================================================================ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) GERALD HELLERMAN -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/ (b) / / -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) / / -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY - 0 - OWNED BY ----------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH - 0 - ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER - 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN ================================================================================ *SEE INSTRUCTIONS BEFORE FILLING OUT! ---------------------- ---------------------- CUSIP No. 867708109 13D Page 12 of 33 Pages ---------------------- ---------------------- The following constitutes Amendment No. 12 ("Amendment No. 12") to the Schedule 13D filed by the undersigned. This Amendment No. 12 amends the Schedule 13D as specifically set forth. Item 4 is hereby amended to add the following: On July 6, 2006, WIHP issued a press release announcing that it filed a preliminary proxy statement in opposition to the proposed merger of the Issuer with Alesco Financial Trust (the "Merger"). A copy of the press release is attached hereto as Exhibit 7 and is incorporated herein by reference. The Reporting Persons believe that the proposed Merger is not in the best interest of the Issuer's stockholders. The Reporting Persons intend to solicit the Issuer's stockholders to vote against the Issuer's Merger proposals to be submitted to a vote of the stockholders at a special meeting to be called by the Issuer. In addition, WIHP called upon the Issuer to hold its 2006 annual meeting of stockholders concurrently with the special meeting to avoid unnecessary expense, and announced its intention to nominate directors for election to the Issuer's Board of Directors at the annual meeting. Item 6 is hereby amended to add the following: On July 5, 2006, the Reporting Persons entered into an amended and restated Joint Filing and Solicitation Agreement in which, among other things, (a) the parties agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law, (b) the parties agreed to solicit proxies or written consents (i) in opposition to the Issuer's proposals in connection with the proposed Merger and (ii) in favor of the election of WIHP's director nominees at the Issuer's 2006 annual meeting of stockholders (the "Solicitations"), and (c) WILLC agreed to bear all expenses incurred in connection with the Reporting Persons' activities, including approved expenses incurred by any of the parties in connection with the Solicitations, subject to certain limitations. A copy of this agreement is attached hereto as Exhibit 8 and is incorporated herein by reference. Item 7 is hereby amended to add the following Exhibits: Exhibit 7 Press release, dated July 6, 2006. Exhibit 8 Joint Filing and Solicitation Agreement by and among Western Investment L L C, Western Investment Hedged Partners LP, Western Investment Institutional Partners L L C, Western Investment Activism Partners L L C, Arthur D. Lipson, Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman, dated July 5, 2006. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 13 of 33 Pages ---------------------- ---------------------- Exhibit 9 Powers of Attorney, dated July 5, 2006, executed by Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 14 of 33 Pages ---------------------- ---------------------- SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: July 7, 2006 WESTERN INVESTMENT L L C By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Sole Member WESTERN INVESTMENT HEDGED PARTNERS LP By: Western Investment L L C, Its General Partner By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Managing Member WESTERN INVESTMENT INSTITUTIONAL PARTNERS L L C By: Western Investment L L C, Its Managing Member By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Managing Member WESTERN INVESTMENT ACTIVISM PARTNERS L L C By: Western Investment L L C, Its Managing Member By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Managing Member /s/ Arthur D. Lipson ------------------------------------------- ARTHUR D. LIPSON /s/ Matthew S. Crouse ------------------------------------------- MATTHEW S. CROUSE /s/ James S. Schallheim ------------------------------------------- JAMES S. SCHALLHEIM ---------------------- ---------------------- CUSIP No. 867708109 13D Page 15 of 33 Pages ---------------------- ---------------------- /s/ D. James Daras ------------------------------------------- D. JAMES DARAS /s/ Marshall W. Coburn ------------------------------------------- MARSHALL W. COBURN /s/ Gerald Hellerman ------------------------------------------- GERALD HELLERMAN ---------------------- ---------------------- CUSIP No. 867708109 13D Page 16 of 33 Pages ---------------------- ---------------------- EXHIBIT INDEX Exhibit Page ------- ---- 1. Joint Filing Agreement by and among Western Investment L L C, -- Arthur D. Lipson, Western Investment Hedged Partners LP, Western Investment Institutional Partners L L C and Western Investment Activism Partners L L C, dated March 16, 2005 (previously filed). 2. Special Meeting Demand Letter dated August 27, 2005 -- (previously filed). 3. Letter to the members of the Board of Directors, dated -- September 22, 2005 (previously filed). 4. Director Nomination Letter from Western Investment Hedged -- Partners LP, dated December 1, 2005 (previously filed). 5. Joint Filing and Solicitation Agreement by and among Western -- Investment L L C, Western Investment Hedged Partners LP, Western Investment Institutional Partners L L C, Western Investment Activism Partners L L C, Arthur D. Lipson, Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman, dated December 1, 2005 (previously filed). 6. Letter to the members of the Board of Directors, dated June -- 16, 2006 (previously filed). 7. Press release, dated July 6, 2006. 17-18 8. Joint Filing and Solicitation Agreement by and among Western 19-23 Investment LLC, Western Investment Hedged Partners LP, Western Investment Institutional Partners L L C, Western Investment Activism Partners L L C, Arthur D. Lipson, Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman, dated July 5, 2006. 9. Powers of Attorney, dated July 5, 2006, executed by Matthew 24-33 S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 17 of 33 Pages ---------------------- ---------------------- Exhibit 7 PRESS RELEASE WESTERN INVESTMENT FILES PROXY STATEMENT OPPOSING SUNSET FINANCIAL RESOURCES, INC. MERGER WITH ALESCO FINANCIAL TRUST CALLS ON SUNSET TO HOLD ITS ANNUAL MEETING OF STOCKHOLDERS Salt Lake City, UT, July 6, 2006 - A group led by Western Investment Hedged Partners LP has filed a preliminary proxy statement in opposition to the proposed merger of Sunset Financial Resources, Inc. (NYSE: SFO) with Alesco Financial Trust. The Western group will solicit the votes of Sunset's stockholders against the proposed merger. Sunset and Alesco announced that they had signed a merger agreement on April 27, 2006. The Western group, which owns 1,022,300, or approximately 9.7%, of Sunset's outstanding shares, also announced that it intends to nominate directors for election to the Sunset Board at Sunset's 2006 annual meeting of stockholders. As more fully described in its preliminary proxy materials, the Western group believes that the Alesco merger should be rejected because, among other things, the Western group believes: o The proposed exchange ratio of 1.26 Sunset shares for each Alesco share is highly dilutive and unfair to Sunset's stockholders. o Sunset has potentially more favorable alternatives than the proposed merger, including remaining a standalone company. o The estimated transaction costs in the merger transaction of approximately $9 million are excessive. o The proposed merger represents a fundamental change in investment strategy that has not been justified to stockholders. We believe this change in strategy and merger involve substantial credit and other risks, and that it is the wrong time in the business cycle to be taking these significant risks. Speaking on behalf of the Western group, Art Lipson said, "We believe that the proposed merger is not in the best interests of Sunset's stockholders. We have confidence in Sunset, and believe the right management and board will be able to maximize value for all of Sunset's stockholders. We intend to nominate directors for election to the Sunset Board, which will give Sunset's stockholders the opportunity to elect a new, highly qualified board of directors whose interests are aligned with stockholders and who are committed to maximizing stockholder value. We call upon Sunset to hold its 2006 annual meeting of stockholders, which we believe is long overdue, concurrently with the special meeting currently planned to vote upon the merger proposals, and to permit the election of directors at that meeting." The Western group urges all Sunset stockholders to demonstrate their opposition to the proposed merger by promptly voting the GREEN proxy card as soon as it becomes available. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 18 of 33 Pages ---------------------- ---------------------- The Western group has retained Innisfree M&A Incorporated to assist with the solicitation of proxies. Stockholders can call Innisfree M&A Incorporated toll-free at (888) 750-5834 with questions or assistance in voting their shares. CERTAIN INFORMATION CONCERNING PARTICIPANTS On June 30, 2006, Western Investment Hedged Partners LP, together with the other Participants (as defined below), made a preliminary filing with the Securities and Exchange Commission (the "SEC") of a proxy statement and accompanying proxy card to be used to solicit votes against proposals related to a proposed merger involving Sunset Financial Resources, Inc. (the "Company") and Alesco Financial Trust to be submitted to a vote of the stockholders of the Company at a special meeting of stockholders to be called by the Company (the "Special Meeting"). The Western group expects to prepare and file a definitive proxy statement in connection with the Special Meeting. THE WESTERN GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE SOLICITATION WILL PROVIDE COPIES OF DEFINITIVE PROXY MATERIALS, WITHOUT CHARGE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT ITS TOLL-FREE NUMBER: (888) 750-5834. THE PARTICIPANTS IN THE SOLICITATION ARE WESTERN INVESTMENT HEDGED PARTNERS LP, WESTERN INVESTMENT LLC, WESTERN INVESTMENT INSTITUTIONAL PARTNERS LLC, WESTERN INVESTMENT ACTIVISM PARTNERS LLC, ARTHUR D. LIPSON, MATTHEW S. CROUSE, JAMES S. SCHALLHEIM, D. JAMES DARAS, MARSHALL W. COBURN AND GERALD HELLERMAN (THE "PARTICIPANTS"). INFORMATION REGARDING THE PARTICIPANTS AND THEIR DIRECT OR INDIRECT INTERESTS IS AVAILABLE IN THEIR PRELIMINARY PROXY STATEMENT FILED WITH THE SEC ON JUNE 30, 2006. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 19 of 33 Pages ---------------------- ---------------------- Exhibit 8 JOINT FILING AND SOLICITATION AGREEMENT WHEREAS, certain of the undersigned are stockholders, direct or beneficial, of Sunset Financial Resources, Inc., a Maryland corporation ("Sunset"); WHEREAS, Western Investment LLC ("Western Investment"), Western Investment Hedged Partners LP ("WIHP"), Western Investment Institutional Partners LLC, Western Investment Activism Partners LLC, Arthur D. Lipson, Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman wish to form a group for the purposes of (a) voting in favor of and soliciting proxies or written consents in favor of the election of Arthur D. Lipson, Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman, or any other person(s) nominated by WIHP, to the Board of Directors of Sunset at the Annual Meeting (as defined below) (the "Annual Meeting Proposals"); (b) voting against and soliciting proxies or written consents against a proposed merger involving Sunset and Alesco Financial Trust and any related proposals to be submitted to a vote of the stockholders of Sunset at a special meeting to be called by Sunset for such purpose (the "Merger Proposals" and the special meeting called for such purpose, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, the "Merger Special Meeting"), and (c) taking all other action necessary to achieve the foregoing; WHEREAS, WIHP intends to nominate Arthur D. Lipson, Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman as nominees to be elected to the Board of Directors of Sunset at the 2006 annual meeting of stockholders of Sunset, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the "Annual Meeting"); WHEREAS, this agreement amends and restates the Joint Filing and Solicitation Agreement among the parties dated December 1, 2005. NOW, IT IS AGREED, this 5th day of July 2006 by the parties hereto: 1. In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, each of the undersigned (collectively, the "Group") agrees to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of Sunset to the extent required under applicable securities laws. Each member of the Group shall be responsible for the accuracy and completeness of his/its own disclosure therein. 2. So long as this agreement is in effect, each of the undersigned shall provide written notice to Olshan Grundman Frome Rosenzweig & Wolosky LLP ("Olshan") of (i) any of their purchases or sales of securities of Sunset or (ii) any securities of Sunset over which they acquire or dispose of beneficial ownership. Notice shall be given no later than 24 hours after each such transaction. 3. Each of the undersigned agrees to form the Group for the purposes of (a) voting in favor of and soliciting proxies or written consents in favor of the Annual Meeting Proposals, (b) voting against and ---------------------- ---------------------- CUSIP No. 867708109 13D Page 20 of 33 Pages ---------------------- ---------------------- soliciting proxies or written consents against the Merger Proposals and (c) taking all other action necessary to achieve the foregoing. 4. Western Investment agrees to bear all expenses incurred in connection with the Group's activities, including expenses incurred by any of the parties in a solicitation of proxies or written consents by the members of the Group in connection with the Annual Meeting and/or the Merger Special Meeting. Notwithstanding the foregoing, Western Investment shall not be required to reimburse any party for (i) out-of-pocket expenses incurred by a party in the aggregate in excess of $250 without Western Investment's prior written approval; (ii) the value of the time of any party; (iii) legal fees incurred without Western Investment's prior written approval; or (iv) the costs of any counsel, other than Olshan, employed in connection with any pending or threatened litigation without Western Investment's prior written approval. 5. Western Investment agrees to indemnify and hold each of Matthew S. Crouse, James S. Schallheim, D. James Daras, Marshall W. Coburn and Gerald Hellerman (the "Nominees") harmless from and against any and all claims of any nature, whenever brought, arising from the Nominee's nomination for election as director of Sunset and the related proxy solicitation by WIHP, Arthur Lipson and certain of their affiliates, the proxy solicitation by WIHP, Arthur Lipson and certain of their affiliates in opposition to the Merger Proposals, and any related transactions, irrespective of the outcome. This indemnification will include any and all (each, a "Loss") losses, liabilities, damages, demands, claims, suits, actions, judgments or causes of action, assessments, costs and expenses, including, without limitation, interest, penalties, reasonable attorneys' fees, and any and all reasonable costs and expenses incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation asserted against, resulting, imposed upon, or incurred or suffered by a Nominee, directly or indirectly, as a result of or arising from such nomination, proxy solicitations and any related transactions. In the event of a claim against a Nominee pursuant to the prior paragraph or the occurrence of a Loss, each Nominee shall give Western Investment written notice of such claim or Loss. Upon receipt of such written notice, Western Investment will provide such Nominee with counsel to represent him. Such counsel shall be reasonably acceptable to the Nominee. In addition, each Nominee will be reimbursed promptly for all Losses suffered by him and as incurred and for all reasonable out-of-pocket expenses incurred by each Nominee relating to the nomination, the proxy solicitations and any related transactions. 6. The relationship of the parties hereto shall be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any party to act as an agent for any other party, or to create a joint venture or partnership, or to constitute an indemnification. Nothing herein shall restrict any party's right to purchase or sell securities of Sunset, as he/it deems appropriate, in his/its sole discretion, provided that all such sales are made in compliance with all applicable securities laws. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 21 of 33 Pages ---------------------- ---------------------- 7. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute but one and the same instrument, which may be sufficiently evidenced by one counterpart. 8. In the event of any dispute arising out of the provisions of this Agreement, the parties hereto consent and submit to the exclusive jurisdiction of the Federal and State Courts in the State of New York. 9. Any party hereto may terminate his obligations under this agreement at any time on 24 hours written notice to all other parties, with a copy by fax to Steven Wolosky at Olshan, Fax No. (212) 451-2222. 10. Each party acknowledges that Olshan shall act as counsel for both the Group and Western Investment. [Signature page follows] ---------------------- ---------------------- CUSIP No. 867708109 13D Page 22 of 33 Pages ---------------------- ---------------------- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. WESTERN INVESTMENT L L C By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Sole Member WESTERN INVESTMENT HEDGED PARTNERS LP By: Western Investment L L C, Its General Partner By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Managing Member WESTERN INVESTMENT INSTITUTIONAL PARTNERS L L C By: Western Investment L L C, Its Managing Member By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Managing Member WESTERN INVESTMENT ACTIVISM PARTNERS L L C By: Western Investment L L C, Its Managing Member By: /s/ Arthur D. Lipson --------------------------------------- Name: Arthur D. Lipson Title: Managing Member /s/ Arthur D. Lipson ------------------------------------------- ARTHUR D. LIPSON /s/ Matthew S. Crouse ------------------------------------------- MATTHEW S. CROUSE ---------------------- ---------------------- CUSIP No. 867708109 13D Page 23 of 33 Pages ---------------------- ---------------------- /s/ James S. Schallheim ------------------------------------------- JAMES S. SCHALLHEIM /s/ D. James Daras ------------------------------------------- D. JAMES DARAS /s/ Marshall W. Coburn ------------------------------------------- MARSHALL W. COBURN /s/ Gerald Hellerman ------------------------------------------- GERALD HELLERMAN ---------------------- ---------------------- CUSIP No. 867708109 13D Page 24 of 33 Pages ---------------------- ---------------------- Exhibit 9 POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints ARTHUR D. LIPSON, signing singly, the undersigned's true and lawful attorney-in-fact to take any and all action in connection with the investment by Western Investment Hedged Partners LP, or its affiliates ("Western"), in the voting securities of Sunset Financial Resources, Inc. ("SFO"), including, without limitation, relating to the formation of a Group (as defined below) whose members include the undersigned and Western, all filings on Schedule 13D (as defined below), all filings on Forms 3, 4 and 5 (as defined below), any solicitation of proxies or written consents in support of the election of directors of SFO or other proposal(s), any solicitation of proxies or written consents in opposition to any proposals related to the proposed merger of SFO with Alesco Financial Trust, and all other matters related, directly or indirectly, to SFO (together, the "SFO Investment"). Such action shall include, but not be limited to: 1. executing for and on behalf of the undersigned all Schedules 13D ("Schedule 13D") required to be filed under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder in connection with the SFO Investment; 2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 ("Forms 3, 4 and 5") required to be filed under Section 16(a) of the Exchange Act and the rules thereunder in connection with the SFO Investment; 3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of a group, as contemplated by Rule 13d-1(k) promulgated under the Exchange Act (a "Group"), in connection with the SFO Investment; 4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and 5. taking any other action of any type whatsoever in connection with the SFO Investment which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 25 of 33 Pages ---------------------- ---------------------- This Power of Attorney shall remain in full force and effect until July 4, 2007 unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5th day of July, 2006. /s/ Matthew S. Crouse ------------------------------------------- Matthew S. Crouse ---------------------- ---------------------- CUSIP No. 867708109 13D Page 26 of 33 Pages ---------------------- ---------------------- POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints ARTHUR D. LIPSON, signing singly, the undersigned's true and lawful attorney-in-fact to take any and all action in connection with the investment by Western Investment Hedged Partners LP, or its affiliates ("Western"), in the voting securities of Sunset Financial Resources, Inc. ("SFO"), including, without limitation, relating to the formation of a Group (as defined below) whose members include the undersigned and Western, all filings on Schedule 13D (as defined below), all filings on Forms 3, 4 and 5 (as defined below), any solicitation of proxies or written consents in support of the election of directors of SFO or other proposal(s), any solicitation of proxies or written consents in opposition to any proposals related to the proposed merger of SFO with Alesco Financial Trust, and all other matters related, directly or indirectly, to SFO (together, the "SFO Investment"). Such action shall include, but not be limited to: 1. executing for and on behalf of the undersigned all Schedules 13D ("Schedule 13D") required to be filed under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder in connection with the SFO Investment; 2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 ("Forms 3, 4 and 5") required to be filed under Section 16(a) of the Exchange Act and the rules thereunder in connection with the SFO Investment; 3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of a group, as contemplated by Rule 13d-1(k) promulgated under the Exchange Act (a "Group"), in connection with the SFO Investment; 4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and 5. taking any other action of any type whatsoever in connection with the SFO Investment which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 27 of 33 Pages ---------------------- ---------------------- This Power of Attorney shall remain in full force and effect until July 4, 2007 unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5th day of July, 2006. /s/ James S. Schallheim ------------------------------------------- James S. Schallheim ---------------------- ---------------------- CUSIP No. 867708109 13D Page 28 of 33 Pages ---------------------- ---------------------- POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints ARTHUR D. LIPSON, signing singly, the undersigned's true and lawful attorney-in-fact to take any and all action in connection with the investment by Western Investment Hedged Partners LP, or its affiliates ("Western"), in the voting securities of Sunset Financial Resources, Inc. ("SFO"), including, without limitation, relating to the formation of a Group (as defined below) whose members include the undersigned and Western, all filings on Schedule 13D (as defined below), all filings on Forms 3, 4 and 5 (as defined below), any solicitation of proxies or written consents in support of the election of directors of SFO or other proposal(s), any solicitation of proxies or written consents in opposition to any proposals related to the proposed merger of SFO with Alesco Financial Trust, and all other matters related, directly or indirectly, to SFO (together, the "SFO Investment"). Such action shall include, but not be limited to: 1. executing for and on behalf of the undersigned all Schedules 13D ("Schedule 13D") required to be filed under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder in connection with the SFO Investment; 2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 ("Forms 3, 4 and 5") required to be filed under Section 16(a) of the Exchange Act and the rules thereunder in connection with the SFO Investment; 3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of a group, as contemplated by Rule 13d-1(k) promulgated under the Exchange Act (a "Group"), in connection with the SFO Investment; 4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and 5. taking any other action of any type whatsoever in connection with the SFO Investment which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 29 of 33 Pages ---------------------- ---------------------- This Power of Attorney shall remain in full force and effect until July 4, 2007 unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5th day of July, 2006. /s/ D. James Daras ------------------------------------------- D. James Daras ---------------------- ---------------------- CUSIP No. 867708109 13D Page 30 of 33 Pages ---------------------- ---------------------- POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints ARTHUR D. LIPSON, signing singly, the undersigned's true and lawful attorney-in-fact to take any and all action in connection with the investment by Western Investment Hedged Partners LP, or its affiliates ("Western"), in the voting securities of Sunset Financial Resources, Inc. ("SFO"), including, without limitation, relating to the formation of a Group (as defined below) whose members include the undersigned and Western, all filings on Schedule 13D (as defined below), all filings on Forms 3, 4 and 5 (as defined below), any solicitation of proxies or written consents in support of the election of directors of SFO or other proposal(s), any solicitation of proxies or written consents in opposition to any proposals related to the proposed merger of SFO with Alesco Financial Trust, and all other matters related, directly or indirectly, to SFO (together, the "SFO Investment"). Such action shall include, but not be limited to: 1. executing for and on behalf of the undersigned all Schedules 13D ("Schedule 13D") required to be filed under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder in connection with the SFO Investment; 2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 ("Forms 3, 4 and 5") required to be filed under Section 16(a) of the Exchange Act and the rules thereunder in connection with the SFO Investment; 3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of a group, as contemplated by Rule 13d-1(k) promulgated under the Exchange Act (a "Group"), in connection with the SFO Investment; 4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and 5. taking any other action of any type whatsoever in connection with the SFO Investment which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 31 of 33 Pages ---------------------- ---------------------- This Power of Attorney shall remain in full force and effect until July 4, 2007 unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5th day of July, 2006. /s/ Marshall W. Coburn ------------------------------------------- Marshall W. Coburn ---------------------- ---------------------- CUSIP No. 867708109 13D Page 32 of 33 Pages ---------------------- ---------------------- POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints ARTHUR D. LIPSON, signing singly, the undersigned's true and lawful attorney-in-fact to take any and all action in connection with the investment by Western Investment Hedged Partners LP, or its affiliates ("Western"), in the voting securities of Sunset Financial Resources, Inc. ("SFO"), including, without limitation, relating to the formation of a Group (as defined below) whose members include the undersigned and Western, all filings on Schedule 13D (as defined below), all filings on Forms 3, 4 and 5 (as defined below), any solicitation of proxies or written consents in support of the election of directors of SFO or other proposal(s), any solicitation of proxies or written consents in opposition to any proposals related to the proposed merger of SFO with Alesco Financial Trust, and all other matters related, directly or indirectly, to SFO (together, the "SFO Investment"). Such action shall include, but not be limited to: 1. executing for and on behalf of the undersigned all Schedules 13D ("Schedule 13D") required to be filed under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder in connection with the SFO Investment; 2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 ("Forms 3, 4 and 5") required to be filed under Section 16(a) of the Exchange Act and the rules thereunder in connection with the SFO Investment; 3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of a group, as contemplated by Rule 13d-1(k) promulgated under the Exchange Act (a "Group"), in connection with the SFO Investment; 4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and 5. taking any other action of any type whatsoever in connection with the SFO Investment which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 33 of 33 Pages ---------------------- ---------------------- This Power of Attorney shall remain in full force and effect until July 4, 2007 unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5th day of July, 2006. /s/ Gerald Hellerman ------------------------------------------- Gerald Hellerman