RECEIVER: Zeek Winner ‘sovlife’ Created 80 Victims In Cross-Border Ponzi/Pyramid Scheme

recommendedreading1UPDATED 11:45 P.M. EDT U.S.A. David Ian MacGregor Fraser, a New Zealand resident who used the handle “sovlife” and is challenging a U.S. court’s jurisdiction over him in Zeek Rewards’ clawback actions, enrolled 96 paying members — 80 of whom were “victims,” according to court-appointed receiver Kenneth D. Bell.

Those 80 victims lost a total of $131,063.95, Bell alleged, citing calculations by FTI Consulting Inc., a forensic and litigation firm assisting the receivership.

It is unclear from filings whether MacGregor Fraser also created a small subset of winners among his alleged 96 recruits and whether those people are being sued for the return of Zeek hauls. Bell has sued thousands of alleged winners with U.S. addresses and dozens of individuals with overseas addresses.

In court filings last month, MacGregor Fraser said he joined Zeek in “November 2011″ while he was a “resident of Malaysia” and maintaining “a Post Office Box in New Zealand.”

Eleven of the alleged 80 MacGregor Fraser victims have filed claims and received a distribution from the receivership estate, Bell asserted. He further alleged that MacGregor Fraser hauled $89,722 out of Zeek, but “invested only $828.00 USD.”

Although MacGregor Fraser argued last month that he had “no specific knowledge that ZeekRewards was initiated from the United States” and that he was was “unaware that ZeekRewards originated in North Carolina,” Bell disputed those contentions in court filings yesterday.

From the receiver’s argument that Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina should reject MacGregor Fraser’s jurisdiction claims and motion to dismiss (italics added/light editing performed/formatting not precise):


 

[Zeek operator Rex Venture Group] made known to anyone interested in the ZeekRewards program that the company was based in North Carolina, in the United States of America. At the top of the ZeekRewards homepage, where Defendant Fraser logged in every day, there was a conspicuous “About Us” link.  . . .  A single click on the “About Us” link disclosed the following:

Zeekler and ZeekRewards are owned by Rex Venture Group LLC, a subsidiary of Lighthouse America, US (NV) company. The company was established on June 24, 1997 and adopted the d/b/a Lighthouse America later that year.

Our headquarters is located in the beautiful town of Lexington, NC, USA on the I- 85 corridor connection [sic] Charlotte and Raleigh . . . .

. . . The “About Us” page further stated:

Office Hours & Location

Home office is located at 803 West Center St., Lexington, NC 27292
Zeekler & ZeekRewards primarily operates online with skype and email support.
Office hours are 9:30AM to 5:00PM EST Monday – Friday . . .

. . . And, there was no question that the company not only was headquartered in but also operated in the USA. The ZeekRewards homepage stated:

Here’s How It Works:

Each night after the close of the business day (east coast USA time) the company tallies its sales and shares up to 50% of its net profits with its qualified affiliates . . .

Moreover, on the “How It Works” section of the ZeekRewards website, there is an image of United States currency at the top of the page . . .


 

“From the day he signed up with ZeekRewards, Fraser actively directed efforts and attention to ZeekRewards, in North Carolina, every day until the scheme’s collapse in August 2012,” Bell argued. “Starting on November 4, 2011 and continuing through August 16, 2012, when ZeekRewards was shut down, Fraser logged into his ‘back office’ page to report his having met the so-called daily ‘advertising’ requirement. . . . . In addition, on a frequent, often weekly basis, Defendant Fraser logged in to the ZeekRewards site to request a cash-out payment from them scheme. These payments came from ZeekRewards’ account at a bank in North Carolina and all the money Defendant Fraser requested and received from ZeekRewards was stated in US dollars . . .

“. . . Moreover, Defendant Fraser also directed his actions to North Carolina through the ZeekRewards site by frequently changing the allocation of his daily ‘Retail Profit Pool’ (‘RPP’) payouts between the repurchase of VIP bids and ‘available cash.’ . . .

Exhibits submitted by Bell include several screen shots. That MacGregor Fraser used a computer overseas should not be a barrier to holding him accountable to return his winnings, Bell contended.

“Fraser knew or should have known that if he purposefully availed himself of an opportunity to make money in North Carolina (whether or not he cared to find out the location of the scheme) that any claims related to his participation might be brought in a court in North Carolina,” Bell argued. “To hold otherwise would be to allow individuals outside the state to intentionally come to North Carolina electronically and engage in conduct that subjects them to claims but effectively avoid liability because of the distance and cost of pursuing them outside of North Carolina.

“Fraser even falsely claims that there was supposedly no ‘injury’ from his actions – the 80 victims he recruited to the scheme would undoubtedly disagree. Accordingly, it is both fair and just for this Court to exercise jurisdiction over Defendant Fraser based on his intentional, repeated and extensive participation in the ZeekRewards scheme in North Carolina.”

NOTE: Our thanks to the ASD Updates Blog.

About the Author

12 Responses to “RECEIVER: Zeek Winner ‘sovlife’ Created 80 Victims In Cross-Border Ponzi/Pyramid Scheme”

  1. It’s possible he might have accidentally forgotten to read that part of the website. And he was the only member (out of all the many thousands of others)who didn’t realise they had an office in North Carolina.

      (Quote)

  2. He certainly had some knowledge of the US jurisdiction from this message from him:
    http://www.getresponse.com/archive/7freedomsteps/Zeek-Success-Compliance-Training-Course-8891199.html

      (Quote)

  3. Tony H:
    He certainly had some knowledge of the US jurisdiction from this message from him:
    http://www.getresponse.com/archive/7freedomsteps/Zeek-Success-Compliance-Training-Course-8891199.html

    Oh I would agree Tony. Just my sarcasm coming out.

    My problem is with the many people who claim to be or a called ‘victims’. My opinion is that the vast majority of these are regular participants in such things and had lost money in the past, yet continue to take the chance. These usually the smallest investors) and are always the first to complain when they lose money. It would be interesting to see, not just the numbers of the winners, but the numbers of those who lost money.

    I believe the real victims were those who went in near the end – ie. the unsuspecting general public.

    Zeek went through the usual 3 month ‘no one interested’ period. After that, the promoters caught on and put it out to their lists. Not too many people joined for about 6 months, simply because it wasn’t too easy to understand. Then after that, the penny dropped and they flocked in their many thousands. A few changes were made but this didn’t detar anyone. As long as they could spend their 5-10 min a day doing some clicking and didn’t need to tell a soul.

    Some months later, the usual process never failed. The general public got involved. It is always at this point the SEC appears, even if they have been watching it previously.

    These, I believe, are the real unwitting victims.

      (Quote)

  4. One of the interesting things to me is that the receiver has the ability to calculate what effectively is the failure rate created by individual alleged winners.

    With MacGregor Fraser, the alleged fraction is 80/96. So, in his alleged Zeek environment, more than 83 percent of his recruits were losers. Put another way, if a person signed up under MacGregor Fraser, there was a better than eight in 10 chance he/she was going to become a victim.

    The maximum fraction of “winners” he possibly created is only 16/96. That’s about 16.7 percent. For you baseball fans, that’s far worse than the “Mendoza Line” — the point considered batting incompetence by pros in the Major Leagues.

    http://en.wikipedia.org/wiki/Mendoza_Line

    But there is another problem in creating a small subset of winners: Any one of them could be subjected to litigation. There’s not much talk about that in HYIP Ponzi Land. Look at the MAPs scheme now. Is Simon Stepsys telling the troops that he’s a potential litigation target and that any “winner” he created also is a possible target — and any loser a potential courtroom adversary?

    Hell no! Last I saw, he was showing off his flashy rides — all of which may be attachable in one way or another.

    In this utterly corrupt and fantastically toxic world, both the the losers and the winners are at exceptionally high risk of feeling the pain.

    Patrick

      (Quote)

  5. PatrickPretty.com:In this utterly corrupt and fantastically toxic world, both the the losers and the winners are at exceptionally high risk of feeling the pain.
    Patrick

    Patrick, that is a valid yet obvious point. But the word ‘victim’ should really have the word ‘unwitting’ before it. A gambler is a gambler and if he/she loses money they can hardly be called a victim.

    At least some good will come out of this with genuine victims getting their money back and hopefully a hard earned lesson.

      (Quote)

  6. John: But the word ‘victim’ should really have the word ‘unwitting’ before it.

    Hello John,

    There is no doubt there are “serial” players in these schemes:

    http://patrickpretty.com/2014/08/03/another-mlm-pr-train-wreck-receiver-alleges-clawback-defendants-may-be-serial-participants-in-zeek-like-revenue-sharing-schemes-asks-court-to-take-judicial-notice-of-t-lemont-silver-vid/

    I’m not sure how best to address that problem. Not only is the HYIP World corrupt and fantastically toxic, it’s also Ground Zero for disingenuousness.

    It’s one of the reasons I was heartened when the receiver pursued winners of in excess of $1,000.

    Patrick

      (Quote)

  7. PatrickPretty.com: Hello John,

    There is no doubt there are “serial” players in these schemes:

    http://patrickpretty.com/2014/08/03/another-mlm-pr-train-wreck-receiver-alleges-clawback-defendants-may-be-serial-participants-in-zeek-like-revenue-sharing-schemes-asks-court-to-take-judicial-notice-of-t-lemont-silver-vid/

    I’m not sure how best to address that problem. Not only is the HYIP World corrupt and fantastically toxic, it’s also Ground Zero for disingenuousness.

    It’s one of the reasons I was heartened when the receiver pursued winners of in excess of $1,000.

    Patrick

    My guess is, the longer a scheme goes on, the more likely a person is to be a genuine victim. The ‘get in early’ mentality usually starts with the promoters. And having said that, the program admins and promoters are virtually always the ‘winners.

    The questions people usually ask before joining a program are…How long has it been running? and Do you think it will last?

    No one can truthfully answer the second question.

    The first is a two edged sword. If it has only been around a short time it hasn’t ‘proven’ itself yet. If it’s been around quite a while it’s probably ready to run out of steam (cough cough..sorry new money being put in). So either way it’s a gamble.

    since a promoter with a big list isn’t likely to be on the losing end, they can afford to take more chances – since it’s not their money.

      (Quote)

  8. John: It would be interesting to see, not just the numbers of the winners, but the numbers of those who lost money.

    [From memory]
    In ZeekRewards, appr. 800,000 net losers and 80,000 net winners, but both groups had insignificant winnings or losses for some people.

    Number of claims from net losers: Appr. 175,000
    Claims approved: Appr. 150,000 or more
    Claims paid out 40%: 91,000 in late 2014 (around October 30 2014)
    Claims approved but not paid out: 50-60,000 (late 2014)

    Estimated amount first payout / 91,000 claims: $135 million

    I don’t have any updated list for all those missing payouts from the first payout. I know that some people probably have provided some missing information between December 2014 and May 2015.

      (Quote)

  9. Fraser, given his username, is probably trying to use “willful ignorance” as a courtroom tactic, may be at behest (or read it somewhere) among the “sovereign” friends. Translation: I didn’t know (and I don’t want to know) it’s illegal. That way you can’t blame me for participating. (Hahahahaha!)

    It’s a form of self-deception, but you have to really compartmentalize your brain to eat this kind of self-supplied bull****.

      (Quote)

  10. John: But the word ‘victim’ should really have the word ‘unwitting’ before it. A gambler is a gambler and if he/she loses money they can hardly be called a victim.

    A gambler is operating on a true game of chance where odds are known.

    A Ponzi participant can “improve” the odds by joining early on and enrich him/herself by promoting the scheme heavily and become a net winner before the scheme collapses.

    There is no “gamble” here, except for those who joined too late to be the insiders (and thus, virtually ASSURED net winners) and early enough to make SMALL gains off those who joined later. Those are operating on incomplete information, and thus, may be gamblers.

    But again, gamblers can’t “improve” their odds by playing (increasing the pot also decreases the odds). Ponzi scammers can recruit to both increase the pot AND increase their odds)

    —-

    In a way, the “no victim” argument is of a similar vein here… An unwitting victim (i.e. who don’t realize he’s being cheated) is nonetheless a victim.

      (Quote)

  11. One more contradiction: if they *know* it’s a gamble, doesn’t that IMPLY that they KNOW this has a limited lifespan and thus cannot be a legitimate business model? I.e. for them to consider it a gamble, they would have at least SUSPECTED it is not legal?

      (Quote)

  12. K Chang:
    One more contradiction: if they *know* it’s a gamble, doesn’t that IMPLY that they KNOW this has a limited lifespan and thus cannot be a legitimate business model? I.e. for them to consider it a gamble, they would have at least SUSPECTED it is not legal?

    Chang all your points are valid. And for the most part, the vast majority know a ‘program’ has a limited lifespan, but still hold out for the ‘one. which might change all that. Bringing others in can help a recruiter to quickly recruit his/her outlay before they move onto the next scheme. So for the most part, they don’t in fact lose. Late on in the game, if a scheme lasts the course, unsuspecting people will join who have never had any such experience AND might well assume it’s all legal. Particularly, as in the case of Zeek, when people were lining up publicly to make deposits.

      (Quote)

Leave a Reply