URGENT >> BULLETIN >> MOVING: U.S. Secret Service Has Seized Zeek Money

URGENT >> BULLETIN >> MOVING: (UPDATED 8:59 P.M. EDT U.S.A.) The U.S. Secret Service has seized more than $11.5 million allegedly traceable to the Zeek Rewards MLM “program,” according Preferred Merchants Solutions LLC (PM), which cited an “asset seizure warrant” in a new court filing.

PM is a Zeek vendor. The company also says it is in possession of between $10 million and $15 million of “unprocessed checks” linked to Zeek. Moreover, the company has advised a federal judge that there may be an additional $3 million in checks that were not processed due to “processing errors.”

The Secret Service confirmed on Aug. 17 that it was investigating Zeek. The filing by PM is believed to be the first public document that shows the agency is seizing Zeek-related money. The SEC has described Zeek as a $600 million Ponzi- and pyramid scheme.

PM, according to Florida records, is a Miami-based company. The company, whose registration in Florida was marked reinstated on July 2, also lists an address in Napa, Calif., in Florida records.

Separately, North-Carolina-based Four Oaks Bank & Trust Co., which earlier said it needed more time to establish how much it was holding in Zeek-related funds through Rex Venture Group LLC, has advised the judge it does not have an account in the Rex name “or any other direct relationship” with Rex.

However, the bank went on to say that it “does have a commercial account in the name of “Nx Systems Inc.” and that the bank “froze the entire NX Systems’ Commercial Account” on Aug. 17.

Rex Venture is Zeek’s purported parent company.

Nx Systems was a Zeek vendor. What the freeze of its “entire” commercial account means to other NX Systems’ customers was not immediately clear. Four Oaks advised the judge that it could not “independently certify” the amount of funds Nx Systems holds in the name of Rex and that Nx Systems told the bank it was working on a reconciliation for presentation to the court.

Earlier this year, Zeek identified NX Systems as a service-provider. Zeek also scolded members for making phone calls to NX Systems, which operates an entity known as NxPay.

See June 26 story on BehindMLM.com.

Link to PM filing (courtesy of ASDUpdates.)

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17 Responses to “URGENT >> BULLETIN >> MOVING: U.S. Secret Service Has Seized Zeek Money”

  1. Four Oaks Bank is a tiny community bank in North Carolina. Why would NX Sys based on Oregon have an account there?

    IMHO this is a Zeek account, and there’s a whiff of money laundering.

    This is getting more interesting.

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  2. If I recall correctly NxSystems uses Four Oaks Bank as their debit card solution.

    NxSystems is a payment processor that used to operate under a different name but that name escapes me at the moment.

    ARWR

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  3. Got a question from a “not-fan”…

    The receiver is supposed to transfer all money into a court-supervised interest -bearing account.

    What happens to the interest? :)

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  4. K. Chang: Got a question from a “not-fan”…
    The receiver is supposed to transfer all money into a court-supervised interest -bearing account.
    What happens to the interest? :)

    It becomes part of the funds returned to victims.

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  5. I was doing research on “suspense accounts”. Apparently FTC’s suspense account pays NO INTEREST.

    All of DOTreas’s documents just says how to handle the money, nothing about interest. :) And it’s mostly about Customs seizures and SS seizures.

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  6. In this case, neither the FTC or the Secret Service “shut down” Rex/Zeek, so those non-interest paying suspense accounts are irrelevant. In fact, I would ask why a Zeeker is so interested in what is happening to the money now, when they had little interest while Zeek was in operation. If they were to question where the money was coming from they should have realized it was an obvious ponzi scheme.

    I believe at this moment in time, the Zeek/Rex accounts are/should be frozen. Therefore at the moment I guess no interest is being paid. At some point in the future the court (NOT the SEC) will order the transfer of funds to the control of the receiver.

    This gives some info on how the receiver appointed by the court acting as a result of SEC enforcement:
    http://webster.utahbar.org/barjournal/2007/11/sec_receivers_what_are_they_an.html

    If appointed, the receiver is charged with marshaling the assets of the company and individuals in receivership for the benefit of the investors. If the scheme includes income-producing assets, then the receiver will operate them pending their sale. The receivership may own real or personal property, which the receiver will sell. Typically, a receiver will trace assets and seek to recover funds from investors who received more than they invested or from persons and entities who received money without giving commensurate compensation to the receivership entities.

    Generally, it is the receiver’s job to marshal the assets of the Ponzi scheme and hold them for SEC distribution to the investors. To effectuate the receiver’s duties, the court will typically grant the receiver very broad powers, including the authority to sue on behalf of the receivership and to place the receivership in bankruptcy. Essentially, the receiver takes control of all of the receivership company’s assets and is granted discretion to gather, manage, and liquidate those assets.

    Worrying about is happening to the “interest” on the funds is probably a distraction technique. I guess the insinuation is that the “greedy” receiver or the “evil” SEC are trying to bank some cash by using the “innocent” Zeek money.

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  7. Tony H: Worrying about is happening to the “interest” on the funds is probably a distraction technique. I guess the insinuation is that the “greedy” receiver or the “evil” SEC are trying to bank some cash by using the “innocent” Zeek money.

    Hi Tony,

    You’ll recall that, in the ASD case, ASD’s Conspiracy Theory Wing advanced these notions:

    * Help us fund our lawsuit against the evilGUBment because the prosecution/agents invested the money on foreign soil and turned the $80 million into more than $1 billion.

    * The prosecution/agents were partying with the money.

    * The money was used to fund black-ops, the CIA and the Federal Reserve.

    Patrick

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  8. I know it’s a distraction (it’s victim’s money! Receiver is getting paid by money derived from victim’s money!), but it’s necessary to get the real info out there. Those “broad powers” quote doesn’t quite cut it.

    As interest earned becomes part of the account, it also goes toward the cost of operating the receivership itself. Good enough for me.

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  9. What I found ironic was that Paul had a Charles Schwab account. Now if all these programs that are paying 1%-2% per day are so real and legitimate, why did Paul have part of his money in real investments that were only providing him 7%-12% annual rates of return?

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  10. K. Chang: Four Oaks Bank is a tiny community bank in North Carolina. Why would NX Sys based on Oregon have an account there?
    IMHO this is a Zeek account, and there’s a whiff of money laundering.
    This is getting more interesting.

    I am no expert. Could someone explain the money laundering possibility with NxPay. Also, My understanding is that a getaway driver is also responsible for the murder during a bank robbery. What are the potential ramifications for the insiders in a ponzi?

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  11. Quick note to Vinish: This is a story about the U.S. Secret Service seizing cash in the Zeek case — and yet you don’t reference that at all. Instead, you spam a link to your Blog and tout the ZTeamBiz effort to gather money.

    And you claim on your Blog: “SNR Denton defends Zeek Rewards in its fraud charges by the SEC of being a ponzi scheme. The law firm claims that documents submitted by the Securities Exchange Commission are misleading, false, and do not refelct the true business model of Zeek Rewards. The SEC closed Zeek Rewards on August 17, 2012 without showing any proof to the judge. This could raise some serious questions about the case.”

    Far as I can tell, there is not one factual assertion in the quoted material above.

    Do not spam this Blog, Vinish.

    Patrick

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  12. @GE — we don’t know what the exact relationship is between Zeek and NxSystem. Four Oaks Bank document says they froze the entire NxSystems account at their bank and the bank don’t know how much in that account belongs to Zeek, and only NxSystems would know that.

    If NxSystem came back and say the most/all of that money actually belongs to Zeek, then the question is how much special treatment did Zeek get from NxSystem to get a separate account in a bank local to Zeek, and whether that constitute an attempt to hide the true owner of the money.

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  13. Does NxSystems process payments for anyone else?
    If they were to turn out to have common ownership with RVG this might get intersting, ESPECIALLY if they do process payments for other programs. What was CEPs internal processor called again?

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  14. Gregg Evans: What was CEPs internal processor called again?

    Hi Gregg,

    It was called CEPTrust. You’ll find its name in this story, which includes a screen shot from ASD’s old website:

    http://patrickpretty.com/2009/03/11/ramping-up-the-adsurfdaily-insanity/

    One of the CEP braintrust may have a link to the MPBToday scam:

    http://patrickpretty.com/2010/09/23/a-cep-ponzi-scheme-tie-mpb-today-member-says-trevor-reed-in-his-organization-no-immediate-comment-from-usda/

    Patrick

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  15. Kinda funny they went after some people in May for fraud but turned the blind eye to this scam:

    NxSystems, Inc. v. Monterey County Bank et al
    Share |
    Plaintiff: NxSystems, Inc.
    Defendants: Monterey County Bank and Northern California Bankcorp, Inc.

    Case Number: 3:2012cv00905
    Filed: May 22, 2012

    Court: Oregon District Court
    Office: Portland (3) Office
    Presiding Judge: Janice M. Stewart

    Nature of Suit: Torts – Property – Other Fraud
    Cause: 28:1332 Diversity-Fraud
    Jury Demanded By: Plaintiff

    Had to use google cache to see that.

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  16. To clarify: ‘this scam’ meaning zeek.

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