BULLETIN: Receiver Re-Serves Zeek Member Who Sought To Quash Subpoena

BULLETIN: An apparent Florida member of the Zeek Rewards “program” who claimed last week that the court-appointed receiver situated in North Carolina had served a subpoena improperly from the Tar Heel state via U.S. Mail now has been served again — this time through a more expensive process that involved certified U.S. Mail, FedEx and a Florida federal district court.

Receiver Kenneth D. Bell said in a court filing today in North Carolina that he had sent a revised subpoena to Nathaniel Woods of Ocala, Fla.

This time, the subpoena was issued by U.S. District Court for the Middle District of Florida, as opposed to U.S. District Court for the Western District of North Carolina, Bell said.

And it was sent by both certified mail and FedEx, Bell noted, adding that the subpoena “requires the requested documents to be produced at a location in Jacksonville, Florida, less than 100-miles from Mr. Woods’ residence in Ocala.”

Jacksonville is approximately 85 miles from Ocala. The address at which the documents must be produced is the Jacksonville office of the McGuireWoods law firm. The firm is counsel for the receiver and also has an office in Charlotte, N.C.

The implication is that Woods now will have to travel from Ocala to Jacksonville to comply with the second subpoena. In the initial process, he could have mailed the requested documents to North Carolina, the home base of the receivership.

Senior U.S. District Judge Graham C. Mullen now should rule Woods’ objections to the manner in which he initially was served moot, Bell argued.

Mullen is overseeing the Zeek case from the Western District of North Carolina.

Bell’s earlier method of serving subpoenas was designed to save money, he advised the judge.

From the receiver’s filing today (italics added):

One of these subpoena recipients, Nathaniel Woods, admittedly received his subpoena, but has filed a motion to quash his subpoena on various procedural grounds. The Receiver’s initial investigation found that Mr. Woods may have received more than $500,000 in other people’s money in net winnings from this scheme. Thus, the documents sought by the Receiver from Mr. Woods are clearly relevant, and are at least likely to lead to relevant and admissible evidence. Indeed, Mr. Woods could simply have contacted the Receiver to discuss or object to the original subpoena or obtain more time to respond, as many other subpoena recipients have done. The Receiver has worked with everyone who has responded in good faith to obtain relevant documents on an agreed schedule. Many recipients are also pursuing the opportunity offered by the Receiver to reach a prompt settlement of the fraudulent transfer claims.

Thus, Mr. Woods’ motion to quash only serves to delay – on the grounds of form, not substance – the production of documents to which the Receiver is undoubtedly entitled in his role as appointed by this Court.

Bell also advised Mullen that the first batch of subpoenas that went out earlier this month were targeted at “approximately 1,200 of the largest net winners of the Zeek Rewards scheme.

“On average,” Bell advised the judge, “these net winners made over $100,000 from the scheme’s victims.”

From the initial mailing of “approximately 1,200 subpoenas,” the receiver said, “to date only 26 have been returned as undeliverable, confirming the Receiver’s belief that this initial method of delivery would accomplish the practical goal of actual notice.”

And, he noted, “It would have cost more than five times as much to serve the subpoenas via certified mail or FedEx and taken far longer to issue them from numerous judicial districts and make arrangements for production of the documents within 100 miles of each address.”

The goal of the initial mailing “was to implement a streamlined process that would most effectively begin the process of recovering Receivership Assets and initiating a dialogue with the net winners who are willing to cooperate with the Receiver in gathering information and discussing the return of fraudulently transferred funds,” Bell said.

In August, the SEC described Zeek as a $600 million Ponzi scheme and pyramid fraud.


About the Author

9 Responses to “BULLETIN: Receiver Re-Serves Zeek Member Who Sought To Quash Subpoena”

  1. Just incase anyone’s wondering where the receiver billed money is going, here’s your answer.

    The original subpoenas were sent out as is to save money, complaining about how they were delivered just adds additional expenses… all taken out of your collective Ponzi earnings.

  2. I think it’s funny how most appear to be ignoring the babble of craddock.

  3. Told ya that’s what would happen. See my previous reply to kschang on why fighting insufficiency of service is futile…

  4. Quick note: We reported earlier that Nathaniel Woods planted the seed that the receiver committed a felony by sending a purported “bogus subpoena” from North Carolina to Florida via U.S. Mail.

    Of course, such claims are red meat to the Zeek crackpot wing — as were similar claims made by ASD’s crackpot wing.

    In any event, after the story broke last night that the receiver had re-served Woods, someone tried to plant the seed on Facebook that the receiver is “continuing his fraud.”

    ASDUpdates has a post about the most recent effort to demonize the receiver:


    This level of disconnect is stunning. It is more or less the ASD narrative all over again.


  5. Yeah, but remember, lawyers play law games much better than amateurs. ;)

  6. Fair to say that Nathaniel Woods can now kiss goodbye any chance of a reduction in the amount needed to be paid back through clawbacks…..

  7. Got a note from Jordan “Ponzitracker” Maglich that Michael Quilling, attorney for Fun Club USA, has filed a motion that Ken Bell, the receiver, should appoint him to be “examiner” as voice of the victims… AND pay him for it.

    WHO DOES HE THINK the receiver is trying to do?!?!?!

    Why? Because Quilling had previously acted as receiver in a case where he appointed an examiner… and paid 1 MIL to the examiner for his efforts.



  8. Hi K. Chang,

    I’m working on an editorial that will include a link to Jordan’s very informative story. Thanks for posting the link in this tread. It will benefit readers.