Cohen & Co Inc. — Major Shareholding Notification 2006

Jun 20, 2006

SC 13D/A 1 sc13da1106290002_06162006.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. 11)(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) June 16, 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 18 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 18 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 18 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 18 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 18 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 18 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 18 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 18 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 18 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 18 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 18 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 18 Pages ---------------------- ---------------------- The following constitutes Amendment No. 11 ("Amendment No. 11") to the Schedule 13D filed by the undersigned. This Amendment No. 11 amends the Schedule 13D as specifically set forth. Item 4 is hereby amended to add the following: On June 16, 2006, WILLC sent a letter to the Board of Directors of the Issuer stating, among other things, that it does not believe that the terms of the currently proposed merger involving the Issuer and Alesco Financial Trust are advisable or in the best interests of the Issuer's stockholders and that it is WILLC's current intention to vote against the proposed merger. A copy of this letter is attached hereto as Exhibit 6 and is incorporated herein by reference. The letter states that WILLC believes that the Board has superior alternatives to the proposed merger other than liquidating the Issuer or simply "staying the course," one of which is to actively pursue better management for the Issuer. WILLC informed the Issuer that it is willing to discuss this matter further to determine if an amicable resolution can be reached to WILLC's concerns relating to the future direction of the Issuer and the maximization of stockholder value. WILLC stressed, however, that, if an amicable resolution cannot be reached, it is prepared to take any and all actions to protect stockholder interests, including proceeding with a solicitation to oppose the proposed merger. Item 7 is hereby amended to add the following Exhibit: Exhibit 6 Letter to the members of the Board of Directors, dated June 16, 2006. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 13 of 18 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: June 20, 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 14 of 18 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 15 of 18 Pages ---------------------- ---------------------- Exhibit Page ------- ---- 1. Joint Filing Agreement by and among Western Investment LLC, -- 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 LLC, Western Investment Hedged Partners LP, Western Investment Institutional Partners L L C, Western Investment Activism Partners LLC, 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 16-18 16, 2006. ---------------------- ---------------------- CUSIP No. 867708109 13D Page 16 of 18 Pages ---------------------- ---------------------- Exhibit 6 WESTERN INVESTMENT LLC 2855 East Cottonwood Parkway, Suite 110 Salt Lake City, Utah 84121 June 16, 2006 Sunset Financial Resources, Inc. 10245 Centurion Parkway North, Suite 305 Jacksonville, Florida 32256 Attention: Board of Directors Gentlemen: Western Investment LLC, together with certain of its affiliates, is the beneficial owner of an aggregate of 1,016,300 shares of common stock of Sunset Financial Resources, Inc., a Maryland corporation ("Sunset" or the "Company"), representing approximately 9.7% of Sunset's outstanding common stock. As the beneficial holders of a significant number of the Company's shares, we are deeply concerned about the increasing disregard for stockholder interests that the Board of Directors has displayed over the past several months, culminating in the decision to merge with Alesco Financial Trust. Since August 2005, the Board has taken the following actions to the detriment of Sunset stockholders: o Making it more difficult for Sunset stockholders to call a special meeting by increasing the percentage of the outstanding shares required to call a special meeting from 25% to 50%; o Implementing complex procedures governing stockholder-requested special meetings and advance notice of stockholder nominees for directors; o Refusing to appoint a stockholder representative to fill a vacancy that existed on the Board; and o Failing to hold an annual meeting for the election of directors on a timely basis consistent with past practice. The crowning blow, however, was delivered to stockholders by way of Sunset's proposed merger with Alesco. Alesco is a private company (1) that commenced operations less than five months ago, (2) for which sophisticated investors paid $10.00 per share on January 31, 2006 and (3) whose book value was $9.40 per share on March 31, 2006 as opposed to Sunset's book value on such date ---------------------- ---------------------- CUSIP No. 867708109 13D Page 17 of 18 Pages ---------------------- ---------------------- of $10.42 per share. Yet, in the proposed merger, Sunset is offering Alesco stockholders a premium of 1.26 Sunset shares for each Alesco share, effectively valuing Alesco at $13.13 per share. In addition, as a result of the proposed merger, Sunset's senior executive officers will receive a severance package estimated by Sunset to be between $2.3-$2.7 million. Furthermore, Cohen Brothers Management, Alesco's external manager, is already earning a 1.5% management fee to manage Sunset's assets, which are being transitioned into assets consistent with Alesco's investment strategy, a fundamental change in Sunset's investment strategy that occurred without first obtaining stockholder approval. We question the wisdom of fundamentally changing Sunset's investment strategy to invest in what we believe to be a highly leveraged portfolio of credit-sensitive assets at this point in the business cycle. It appears that everyone wins in the proposed merger, except for Sunset's stockholders, who will suffer a dilution in the book value of their shares from $10.42 to $7.77. We do not understand how the proposed Alesco merger could possibly be viewed as maximizing stockholder value. We do not believe the terms of the currently proposed merger are advisable or in the best interests of Sunset's stockholders. It is our current intention to vote against the proposed merger. We also believe that the Board has superior alternatives to the merger other than liquidating the Company or simply "staying the course," one of which is to actively pursue better management for the Company. We have had discussions with Michael Tokarz regarding his (or his affiliate) managing all or a portion of Sunset's portfolio. Mr. Tokarz has over 30 years of lending and investment experience, including, currently, as Chairman and Portfolio Manager of MVC Capital, Inc. (NYSE: MVC), a publicly traded business development company that makes private debt and equity investments; and as Chairman of The Tokarz Group, a private merchant bank that he founded; and, formerly, as a General Partner with Kohlberg Kravis Roberts & Co. (KKR), one of the world's most experienced private equity firms. We believe that Mr. Tokarz is a superior portfolio manager with an exceptional record, and that the Board should explore fully the opportunity to retain his services. We would like to discuss this matter further to determine if we can reach an amicable resolution to our concerns relating to the future direction of the Company and the maximization of stockholder value. We sincerely hope that the Board will demonstrate a similar commitment to Sunset stockholders by favorably responding to our request. Please note, however, that, if an amicable resolution cannot be reached, we are prepared to take any and all actions to protect stockholder interests, including proceeding with a solicitation to oppose the proposed merger. We request that any correspondence concerning this matter be delivered to the undersigned at the address set forth above and copies of such correspondence should also be simultaneously delivered to our counsel, Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, ---------------------- ---------------------- CUSIP No. 867708109 13D Page 18 of 18 Pages ---------------------- ---------------------- New York, New York 10022, Attention: Steven Wolosky, Esq., telephone (212) 451-2333, facsimile (212) 451-2222. Sincerely, WESTERN INVESTMENT LLC By: /s/ Arthur D. Lipson --------------------------------- Arthur D. Lipson Sole Member