From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.
URGENT >> BULLETIN >> MOVING: (12th Update 2:57 p.m. EDT U.S.A.) In what may be a warning shot fired across the bow of payment vendors who hope to profit from Ponzi schemes, Zeek Rewards’ vendor Jaymes Meyer of Preferred Merchants Solutions LLC has pleaded guilty to a criminal charge of obstructing investigators in the Zeek Ponzi- and pyramid-scheme case.
Meyer, 47, of Napa, Calif., was charged criminally March 10 by federal prosecutors in the Western District of North Carolina. They alleged he hatched an “elaborate obstruction of justice scheme to conceal millions of dollars from the Government using a series of domestic and foreign nominees and related bank and brokerage accounts.”
He was specifically accused of impeding the SEC’s Zeek probe beginning in 2012 and later lying to a federal judge and Zeek receiver Kenneth D. Bell.
Senior U.S. District Judge Graham C. Mullen is presiding over the SEC’s Zeek case.
As the PP Blog reported in October 2014, Bell accused Meyer of directing a $4.8 million transfer from a Rex Venture Group trust account to Preferred Merchants’ account “just 19 minutes after the SEC told them about the asset freeze and imminent shutdown of RVG” on Aug. 16, 2012.
Rex, or RVG, was the operator of Zeek. It was under the control of accused Zeek Ponzi schemer Paul R. Burks. Burks is scheduled to go on trial in July.
U.S. Magistrate Judge David S. Cayer accepted the guilty plea from Meyer on March 22. Certain documents in the case remain sealed. One document shows Meyer withdrew $195,000 in Zeek money in cash.
At least two other payment vendors may be in Bell’s sights. On Feb. 21, 2016, the PP Blog reported that millions of dollars that originated through Zeek-related transactions involving Payza and Payment World may have ended up in a collapsed Russian bank.
Zeek receiver Kenneth D. Bell has filed a land claim in the Turks and Caicos Islands on behalf of Zeek victims, according to this evidence exhibit in U.S. District Court for the Western District of North Carolina. (Masking by PP Blog.)
BULLETIN: The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case says millions of dollars in Zeek assets were transferred from the United States to the Cook Islands in the South Pacific by a former Zeek vendor known as Preferred Merchants Solutions LLC. At least part of the money allegedly then was used to purchase and renovate a “water-view vacation home” in the Turks and Caicos Islands in the North Atlantic.
Receiver Kenneth D. Bell hired local counsel in the Turks and Caicos to bottle up the property through the filing of a “Caution,” which Bell says “forbids any action with respect to the title of the Turks & Caicos Property” until the matter is resolved in the United States.
Senior U.S. District Judge Graham C. Mullen has frozen the island property, which Bell said he intends to sell to benefit Zeek victims.
Zeek was operated by Paul R. Burks through Rex Venture Group LLC. Preferred is operated by Jaymes Meyer of Napa, Calif.
Events that led to the island freeze involve a bizarre circumstance that allegedly occurred in June 2012, when tens of millions of dollars in undeposited checks — enough to fill six to eight mail bins — had backed up at Zeek, starving the Rex enterprise for cash during a period in which Zeek was having banking problems in North Carolina and its alleged Ponzi was crumbling.
As the PP Blog reported in October 2014, Burks allegedly hired Preferred to solve the problem and also to provide trust services. Bell contends that Preferred effectively transferred Zeek Ponzi cash to itself after it learned from the SEC on Aug. 16, 2012, that an order freezing Zeek assets was imminent.
Bell now says Preferred Merchants, “a single-member LLC owned entirely by Jaymes Meyer, transferred $7,737,402 of RVG assets from an RVG trust account . . . for which Preferred Merchants served as trustee. Prior to receiving the RVG Trust Funds, Preferred Merchants had a total of $2,790 in its bank account on August 1, 2012. Preferred Merchants is Meyer’s only source of income.”
The SEC moved against Zeek on Aug. 17, 2012, securing an asset freeze.
“On October 5, 2012,” according to Bell, “Meyer transferred $300,000 from Preferred Merchants to a Scottrade account held in the name of Fidus, LLC, a Delaware entity for which Meyer is the managing member, but was owned by ‘The Spiritum Holdings Irrevocable Trust,’ . . . a ‘Cook Islands Trust’ that Meyer set up in September 2012” after the Zeek freeze.
“On October 9, 2012, Meyer transferred an additional $6,100,000 from Preferred Merchants to the Scottrade Fidus account,” Bell said. “All or nearly all of the money held or transferred by Preferred Merchants or Meyer to the Scottrade Fidus account were RVG Trust Funds.”
More asset-shielding shenanigans occurred as 2013 was getting under way, months after the court-imposed freeze in August 2012, Bell alleged.
“On February 21, 2013, Meyer wired $6,000,000 from the Scottrade Fidus account to an account owned by the Spiritum Trust at Capital Security Bank Limited located in the Cook Islands,” Bell alleged. “On July 3, 2013, Meyer wired the $400,000 remaining in the Scottrade Fidus accounts to the same Spiritum Trust account in the Cook Islands.
“On or about June 28, 2013, Bella Vita Ltd., an entity in the Turks & Caicos Islands that was created and owned by the Spiritum Trust, purchased real property in the Turks & Caicos Islands designated as Title # 60609/24/Norway & Five Cays Section / Providenciales Island (‘Turks & Caicos Home’).”
What are the specs on the home?
It “is described as a 5 bedroom 5 bath home, which Meyer testified has views of the water,” Bell said. “The money used to purchase this real property were RVG Trust Funds that Meyer had deposited into various accounts owned by the Spiritum Trust.”
What else did Zeek victims allegedly pay for?
“Since the purchase of the Turks & Caicos Home, Meyer has coordinated and supervised improvements and renovations to the home and property, purchased furniture and fixtures, and purchased a boat, scuba equipment, and other personal property to be used with the Turks & Caicos Home . . .
“Meyer claims that over $1.5 million . . . has been spent ‘renovating’ the property and making these additional purchases,” Bell said. “All of these purchases were made with RVG Trust Funds that had come directly or indirectly from the Spiritum Trust or Meyer. However, Meyer and Preferred Merchants disclaim any ownership interest or control over Bella Vita, Ltd. or the Turks & Caicos Property.”
Bell has asked Mullen to “impose and enforce an equitable lien by ordering transfer of title to the Turks & Caicos Property to the Receivership Estate to ensure that there is no more evasion or hindrance of the Receiver’s recovery of these assets by Preferred Merchants and Meyer. The Receiver can then sell the Turks & Caicos Property to collect additional funds for the benefit of the victims of the ZeekRewards scheme.”
This map, created by the PP Blog through ZeeMaps, depicts the headquarters of Zeek Rewards in Lexington, N.C., the headquarters of of Preferred Merchants Solutions LLC in Napa, Calif., the Cook Islands’ island of Rarotonga in the South Pacific, and the island of Providenciales (Turks and Caicos) in the North Atlantic.
DEVELOPING STORY: (Updated 10:02 p.m. EDT U.S.A.) In an extraordinary development on this Halloween Friday, the federal judge presiding over the SEC’s Ponzi- and pyramid-scheme case against Zeek Rewards has issued a Temporary Restraining Order and directed a Zeek vendor to immediately turn over to the receivership more than $4.85 million.
The order was entered “without notice,” owing to concerns the money could go missing. It applies to Zeek financial vendor Preferred Merchants Solutions LLC and Jaymes Meyer, Preferred’s California-based sole member and manager.
Events that led to the order involve a bizarre circumstance that allegedly occurred in June 2012, when tens of millions of dollars in undeposited checks — enough to fill six to eight mail bins — had backed up at Zeek, starving the Rex Venture Group LLC enterprise for cash during a period in which Zeek was having banking problems in North Carolina and its alleged Ponzi was crumbling.
Zeek operator Paul Burks allegedly hired Preferred to solve the problem and also to provide trust services. According to a document filed by Preferred in August 2014, the first time the company visited Zeek headquarters, “ex- or off-duty police officers [were] providing security.”
Preferred contends it solved Zeek’s problem with the backed-up checks and legitimately is owed the $4.85 million at issue.
But receiver Kenneth D. Bell, who is seeking a contempt sanction against Preferred and alleges that Preferred effectively transferred Zeek Ponzi cash to itself after it learned from the SEC on Aug. 16, 2012, that an order freezing Zeek assets was imminent, asked Mullen for the TRO on Oct. 28.
Bell alleges that “the evidence establishes that Preferred Merchants and Meyer directed the $4.8 million transfer from the RVG trust account to Preferred Merchants’ account just 19 minutes after the SEC told them about the asset freeze and imminent shutdown of RVG” on Aug. 16, 2012.
He further alleges that “[n]ot only did Meyer fail to tell the SEC about his custody and control over RVG assets, Meyer also failed to disclose that he anticipated making any transfers, or, after the transfers were executed, that he had done so.”
From the order entered at 11 a.m. today by Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina (italics added):
The Receiver has satisfied the requirements of Federal Rule of Civil Procedure 65(b) and established that an order is appropriate in this case to avoid irreparable injury, loss, or damage to the Receivership Estate of Rex Venture Group, LLC, including the further waste and dissipation of Receivership Property. Notably, the Court finds that the large amount of money at stake, the liquidity of the funds which could be transferred overseas or hidden, and Preferred Merchants’ and Meyer’s apparent pattern of misconduct present a likelihood of irreparable harm and necessitate this order being entered without notice. Accordingly, and for the reasons stated in the motion and memorandum, the Court will GRANT the motion.
IT IS, THEREFORE, ORDERED, ADJUDGED, AND DECREED that: 1. This Order is entered at 11 a.m. on October 31, 2014. 2. The Receiver’s Motion for Temporary Restraining Order is GRANTED; 3. Preferred Merchants Solutions, LLC (“Preferred Merchants”) and Jaymes Meyer (“Meyer”) are directed to immediately deposit with the Receivership $4,854,010.40, which is the amount they transferred from RVG’s trust account after the SEC notified them of the asset freeze and requested that they freeze all RVG accounts and assets; 4. The Receiver is directed to deposit and maintain these funds in a segregated account; 5. This injunction shall expire no later than fourteen (14) days from the entry of this Order or sooner upon further order of the Court. 6. The Court will conduct a hearing on this matter on Wednesday, November 12, 2014 at 2 p.m. in Courtroom 3 at the Charles R. Jonas Federal Building, 401 W. Trade Street, Charlotte, NC 28202. The Receiver is directed to use all reasonable efforts to notify Meyer and Preferred Merchants of the date, time, and location of the hearing.
Burks, 67, of Lexington, N.C., was indicted a week ago today on criminal charges, including mail fraud, wire fraud and conspiracy. A separate lawsuit filed by Bell last month against alleged Zeek winners in Canada contends that Zeek “insiders often worried about being caught.”
Mountains of undeposited checks also were an issue in the AdSurfDaily Ponzi-scheme case in 2008. ASD purported to pay a dividend of 1 percent a day. Zeek’s average daily payout was about 1.5 percent, according to the SEC.
