URGENT >> BULLETIN >> MOVING: Court Grants Approval For Zeek Receiver To Sue International Winners

breakingnews72URGENT >> BULLETIN >> MOVING: A U.S. federal judge has approved a motion by the receiver in the Zeek Rewards Ponzi- and pyramid-scheme case to sue alleged “net winners” who live outside the United States.

Receiver Kenneth D. Bell sought the authority “to file one or more actions in this Court and in foreign courts to pursue claims for the return of fraudulently transferred money and disgorgement of net funds received against significant ‘net winners’ who reside outside the United States. The foreign ‘net winners’ to be pursued all won at least $1000, the threshold previously approved by this Court.”

Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina authorized the receiver today to pursue the international clawback claims.

Precise details about when Bell intends to bring the actions were not immediately known tonight.

Bell is pursuing clawback claims against more than 9,000 U.S. residents.

Note: Our thanks to the ASD Updates Blog.

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9 Responses to “URGENT >> BULLETIN >> MOVING: Court Grants Approval For Zeek Receiver To Sue International Winners”

  1. Patrick: The link you provided above for the English version was not an English translation. I just right clicked on the page and used Bing to translate.

    What is funny is that some of the winners are now claiming they were losers in Zeek. I especially loved the part about an Oslo-man in the 50 ‘s, who signs as “team leader”, writes in august 2012: “PS: looking for me to hire a cruise ship a or a. time next year along with those who earn the most on the team, and so include all SR. executives, executives and fill the rest of the seats with the managers as far as space. Or maybe we have the higher titles then.”

    And of course this revelation: Today the magazine knows the identity of many of the around 750 Norwegians who were included in the ZeekRewards. Among them are several so-called pyramid regulars-people who have had prominent roles in several Norwegian and international pyramid schemes in recent years.

    Wonder if the Norwegian authorities will also file against these so-called pyramid regulars?

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  2. Lynndel “Lynn” Edgington: Patrick: The link you provided above for the English version was not an English translation.

    Thanks for letting me know, Lynn. Corrected at 4:24 p.m.

    Patrick

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  3. Lynndel “Lynn” Edgington: What is funny is that some of the winners are now claiming they were losers in Zeek.

    The infamous Mary Kettner whine/excuse, sure. The fact they SPENT the money traveling around the country promoting Zeek is apparently enough for them to claim they had “legitimate” business expense and thus excused them from returning the money. Bizarre logic, sure, but who said ponzi pimps are logical?

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  4. I have a growing incertitude about the effectiveness of this clawback lawsuit against individuals.

    According to the receiver’s periodical reports, as of June 30th ’14, the receiver made settlements & collected approximately $2.5 million, of which detail breakdown by period are as follows;
    – 1Q ’13, $36,000.00
    – 2Q ’13, $558,054.50
    – 3Q ’13, $843,342.84
    – 4Q ’13 $687,702.94
    – 1Q ’14, $183,740.46
    – 2Q ’14, $183,508.86

    Mr Bell filed lawsuits to US netwinners on Feb 28th ’14, so only part of the 1Q ’14 settlement was done after the filing though, even the whole settlements in the 1 & 2Q accounts only 0.1% out of over $300 million the receiver is said to pursue in this litigation.
    People may argue that it’s still early stage in the litigation, but what worries me is a trend of the settlements.
    Where can we see positive effect of litigation?
    In truth the surrender of netwinners decreased after the filing. So, it looks most of the netwinners are not bothered by being sued, which implies the receiver will face a lot of resistance when the suits go into enforcement stage.
    Having said, the collection may not be smooth but more costly & lengthy than Mr Bell originally expected, so I’m not sure the efficiency of class action is still valid.

    Now, Mr Bell is moving into the international clawback.
    Unlike US, Ponzi clawback lawsuits does not seem to be popular at all even in many advanced European countries that usually recognize US court judgements, because I can’t find indeed single news of its kind via Google search, I tried to find relevant articles specifically in UK, France, Germany, Spain & Italy etc though only ultra big cases such as Madoff http://www.law360.com/articles/528855/uk-court-rejects-madoff-feeder-fund-s-clawback-suit and Stanford targeting big financial institutions etc. comes out, then the rest goes to US cases, if I had googled in local language, I could have found some though (I searched only in English).

    Anyhow, surprisingly, the Supreme Court in Netherland where Hague Convention (HCCH) was concluded made very difficult judgements for Ponzi clawback – especially “unjust enrichment claim to net-winners” and burden of proof – see the article; http://www.internationallawoffice.com/newsletters/detail.aspx?g=ba7ff5aa-f829-4f21-97e9-9486c1110427&redir=1

    The receiver’s quarterly report explained that they have been in cooperation with multiple overseas law firms. I presume the contract with them must be hourly based rather than contingency based, therfore the foreign law firms may not refuse this business opportunity but rather show positive prospect even though they are sceptical about the results.

    I focused the difficulty of collection if the receiver pursues individuals in; http://patrickpretty.com/2013/12/12/urgent-bulletin-moving-lawsuits-against-zeek-insiders-winners-believed-imminent-paul-burks-dawn-wright-olivares-darryle-douglas-among-alleged-insiders-adsurfdaily-figures-todd-disner-and-j/comment-page-1/#comment-72615 and somehow blindly count on the recognition of foreign courts’ judgements, but now the judgements become question mark even in advanced nations.

    The receiver disbursed a bit over $14 million as of June 30 ’14, which is not big considering the total $850 million case because it accounts only 1.6% for 2 years but obviously the cost related with the clawback litigation will become significant among his future fee & expenses and so far only $2.5 million was recovered from the clawback and there are a lot of uncertainties down the road.

    Hope my concern expressed here http://patrickpretty.com/2014/05/08/zeek-receiver-multilayered-investigation-into-rex-venture-group-and-its-insiders-advisors-and-financial-institutions-continues/comment-page-1/#comment-89934 will not be realized.

    Gary

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  5. Gary:

    Not sure where you got the Receiver had disbursed a bit over $14 Million as of June 30, since the first round of payments to the victims won’t go out until September 30.

    Considering the number of winners who did settle with the Receiver versus the 9,000+ that are scheduled to have a class action lawsuit against them (I believe the Receiver is gibing them one last chance to settle before filing the lawsuit) for not settling.

    We also don’t know how much the winners who did settle actually received and what percentage of that amount was agreed to by the Receiver to settle his claim against them. We only now that the bar was anyone who received more than $1,000 were pursued by the Receiver in the clawback litigation.

    It is way too early to judge how effective he will be with the 9,000+, as well as the foreign winners. You also have to consider that he has Paul, Dawn and her step-son forking over $600 Million. Not a small chunk of change.

    I understand your concern, and in the end you might be proven right, but my bet is on the Receiver to get a whole lot more than past Receiver’s have obtained in their clawback actions.

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  6. Lynn,

    I suggest you make double- check all the available numbers.
    I found both clawback collection & disbursement $ in Exhibit B of each Quarterly report published in the receiver’s site case document page http://www.zeekrewardsreceivership.com/case .

    “We also don’t know how much the winners who did settle actually received “
    – see the item named Settlement from Affiliate-investors in eaxh Exhibit B.

    “Not sure where you got the Receiver had disbursed a bit over $14 Million as of June 30 “
    – the disbursement here refers to the total fee and expense of the Receiver & His Teams & Other Professionals, the breakdown by each Q is as follows;
    Receiver’s Fee & Expense
    – 4Q ’12, $1,703,379
    – 1Q ’13, $1,728,987
    – 2Q ’13, $2,203,782
    – 3Q ’13, $2,647,879
    – 4Q ’13 $2,283,055
    – 1Q ’14, $1,641,545
    – 2Q ’14, $1,862,306 as of June ’13 total $14,070,933 was spent

    Let me know if my readings of the above numbers are wrong.

    “I understand your concern, and in the end you might be proven right, but my bet is on the Receiver to get a whole lot more than past Receiver’s have obtained in their clawback actions.“
    – The receiver is distributing 40% recovery next month, I agree with you that it’s outstanding % compared with many other Ponzi cases, but if I’m not mistaken the majority of the recovery so far came from the seizure of liquid assets such as cash & securities Zeek luckily had not spent yet but still kept in banks, payment processors, & brokers etc. You may agree that this is the easiest part of the recovery. If the receiver pursues clawback of PROFITS mainly from key Big Financial Institutions, then I don’t see so much problems, but targeting individuals doesn’t look worth doing based on the empirical analysis I used to comment in http://patrickpretty.com/2013/12/12/urgent-bulletin-moving-lawsuits-against-zeek-insiders-winners-believed-imminent-paul-burks-dawn-wright-olivares-darryle-douglas-among-alleged-insiders-adsurfdaily-figures-todd-disner-and-j/comment-page-1/#comment-72615 and the actual Zeek receiver’s progress up until the end June 2014.
    – The only optimistic aspect is the size, pursuing over $300 million may justify the cost & uncertainties of these litigations although it is yet much smaller than a few ultra big cases like Madoff & Stanford which went international.

    Time will tell.

    Gary

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  7. Quick note: Received a note from Gary that he couldn’t see his post above in response to Lynn. It was submitted at 4:24 a.m. EDT today and temporarily held in a queue because it contained multiple links. I cleared it at roughly 7 a.m.

    Gary, there have been some caching issues in recent days. I can see your post in Firefox and Chrome. If you can’t see it, please give it a bit more time. It should be visible soon.

    Patrick

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  8. I refreshed the site then have been able to see my post immediately, thank you.

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