URGENT >> BULLETIN >> MOVING: Justice Department Sues Four Oaks Bank, Says It Turned Blind Eye To Red Flags At Rex Venture Group, Operator Of Zeek Rewards

breakingnews72URGENT >> BULLETIN >> MOVING: (4th Update 5:14 p.m. ET U.S.A.) The U.S. Department of Justice has sued North Carolina-based Four Oaks Bank, alleging that it turned a blind eye to fraud markers at Rex Venture Group LLC and processed “close to $60 million in ACH transactions in furtherance of the illegal scheme.”

Rex Venture was the operator of Zeek Rewards, which the SEC has described as a Ponzi- and pyramid scheme that gathered at least $850 million.

In “Spring 2012,” the Justice Department alleged, Four Oaks granted ACH access to Rex Venture, a merchant client of a payment-processing entity known as TPPP-TX.

Four Oaks did this, the Justice Department alleged, “despite knowing that: (1) Rex Venture’s principals could not be identified through business database searches; (2) the Bank could not independently verify the type of legitimate business in which Rex Venture Group was engaged; (3) one of the two addresses reported by the company was a vacant lot, and the other was a different business; and (4) the Social Security Number of one of the company’s purported principals was associated with a different person. A Bank official even concluded that the purported owner of Rex Venture Group “keeps changing company names so his reputation will not catch up with him.”

And, the Justice Department alleged, “By August 17, 2012, the public learned what Four Oaks Bank already knew or should have Known — Rex Ventures Group allegedly was a massive Ponzi and pyramid scheme.”

The lawsuit against the bank was filed yesterday by the office of U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina. The Zeek Ponzi case is filed in North Carolina’s Western District.

In a statement today, Four Oaks said it had cooperated with the Justice Department and agreed to a settlement in which “the Bank does not admit any facts alleged in the accompanying complaint nor does the Bank admit to any liability. ”

Four Oaks also is accused in the complaint of aiding the processing of illegal payday loans and gambling transactions for other TPPP-TX clients.

See story at WRAL.com, which lists the settlement amount at $1.2 million.

Four Oaks is referenced in Zeek-related court files, including a 2012 filing in which the bank said it held a commercial account in the name of “Nx Systems Inc.”

Nx Systems was a Zeek payment vendor. See Sept. 1, 2012, PP Blog story.

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4 Responses to “URGENT >> BULLETIN >> MOVING: Justice Department Sues Four Oaks Bank, Says It Turned Blind Eye To Red Flags At Rex Venture Group, Operator Of Zeek Rewards”

  1. I think Four Oaks just entered a guilty plea and agreed to pay 1.2 million plus render assistance to federal officials regarding others involved.

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  2. Bob Mercer: I think Four Oaks just entered a guilty plea and agreed to pay 1.2 million plus render assistance to federal officials regarding others involved.

    Hi Bob,

    See this:

    http://www.wral.com/government-accuses-four-oaks-bank-of-turning-blind-eye-to-illegal-activity/13285954/

    Looks as though the bank and the Feds worked out a proposed agreement before the civil case was filed.

    Patrick

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  3. Quick note: Four Oaks says it has agreed to a settlement with the Justice Department and that the bank “does not admit any facts alleged in the accompanying complaint nor does the Bank admit to any liability.”

    http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=1137105#PRdialog

    Patrick

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  4. Patrick,

    Unless I blinked which is easy for me to do, the folks in Louisiana are now mudding-up the water.

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