BULLETIN: Zeek Receiver Opposes Appointment Of ‘Examiner’; Zeek Cheerleaders, ZTeamBiz Missives Get A Mention; Let Them ‘Employ Counsel At Their Own Expense,’ Bell Urges Judge
“The ZeekRewards scheme has claimed hundreds of thousands of victims who lost hundreds of millions of dollars at the hands of the scheme’s winners who solicited their participation. Now, apparently not appreciating the irony, the lawyer for hundreds of the largest net winners asks the Court to pay him to be an ‘examiner’ or ‘representative for the affiliates,’ yet again at the expense of the scheme’s victims. The requested appointment is unnecessary and ill-advised because it would duplicate and complicate this Court’s, the Receiver’s, and the SEC’s efforts to compensate the victims, not to mention directly reduce the Receivership Assets available to pay them. Furthermore, the individual whom the net winners recommend for appointment (or more correctly who recommends his own appointment) ignores the inherent conflict of interest in seeking to somehow represent both the scheme’s ‘winners’ and ‘losers,’ two groups with irreconcilably adverse interests.” — Zeek receiver Kenneth D. Bell, Dec. 17, 2012
Section from an email received by the court-appointed receiver in the Zeek Rewards Ponzi scheme case. The note asks the receiver to oppose efforts by Zeek winners to intervene in the case. Source: federal court files.
Shortly after the SEC described Zeek Rewards on Aug. 17 as a $600 million Ponzi- and pyramid scheme, Zeek figure Robert Craddock solicited donations purportedly to hire an attorney and form a “protected” group of affiliates. Whether Zeek losers gave to the effort conducted at ZTeamBiz through Fun Club USA, Craddock’s Florida-based entity, remains unclear.
On Aug. 29, PP Blog guest columnist Gregg Evans questioned how Zeek winners and losers ever could be on the same side.
Today the court-appointed receiver effectively was asking the same question. His conclusion was that they could not — and he asked Senior U.S. District Judge Graham C. Mullen to reject a contention by certain Zeek “winners” that they could.
“The net winners have already been put on notice that they will be asked to return their winnings to the Receiver for reimbursement to the net losers,” Bell said in court filings. “On the other hand, the net losers hope that they can recoup some of their losses from the gains of the scheme’s net winners . . . Thus, the winners and losers are plainly opposed in their respective interests regarding the winners’ efforts to keep their winnings.”
Presumptive Zeek clawback targets Dave Kettner, Mary Kettner and David Sorrells asked Mullen last month to appoint Dallas attorney Michael Quilling as “examiner” over all Zeek affiliates. That should not be permitted to happen, Bell contended, because Quilling “has appeared in this case already as an attorney for Fun Club USA and represents the interests of those net winners.”
In a bid to bolster his claim, Bell cited Craddock ties to Dave Kettner through ZTeamBiz and quoted from a letter attributed to Kettner.
“In a similar vein, Mr. Kettner sent a letter seeking donations from affiliates that stated, “The SEC has tried to make us all believe that Zeek Rewards was an ‘investment’ and a Ponzi scheme. All the pages that were submitted by the SEC indictment [sic] has [sic] all been one sided and what we believe to be a misrepresentation of the truth and facts of what Zeek Rewards was as a viable and legal business,” Bell advised the judge in a footnote that included the URL to ZTeamBiz.
Beyond that, Bell argued, the Craddock entity, the Kettners and Sorrells had no standing in the case brought by the SEC.
And Bell said he has heard from Zeek members who want him to oppose the appointment of Quilling as examiner.
Here, according to Bell, is a passage from one such Zeek member who contacted Bell after learning about the “examiner motion”:
As one of the many losers in Zeek Rewards I wish to encourage you to do whatever is possible to block the motion filed on behalf of Fun Club USA (Robert Craddock) David & Mary Kettner and David Sorrells, asking that their personal attorney Michael J Quilling be appointed as the Examiner to oversee and represent the interest of ALL former Zeek Rewards affiliates.
To many of us this is just another way for another attorney firm to slow up your process of recovery and to diminish the amount of funds to be returned to those of us who are in hopes of being able to recover some of our losses.
Personally I feel that their agenda is also to help block your efforts to recover funds from the 1200 who received subpoenas.
The Kettners and Sorrells potentially have exposure of nearly $2 million in receivership clawback litigation, Bell said.
At least two apparent Zeek winners represented by attorney Ira Lee Sorkin also oppose the appointment of Quilling as examiner, according to filings last week.
Todd Disner, a Zeek affiliate and figure in the AdSurfDaily Ponzi scheme story, once was on a conference call with Craddock.
In recent remarks, Craddock said Disner was in Hong Kong with a “lost” passport.
Reports now have surfaced that Craddock is pitching a “program” known as Offer Hubb that uses a Wyoming mail drop as its address. Disner’s name was listed on the Offer Hubb pitch, according to BehindMLM.com.
If there was ever a case for “proportional loss” (where net winners have to return not only their winnings but also a pro rata portion of their initial investment) the high profile Zeek winners are it. Honestly, though, it has come to light that in at least a few cases, the big winners didn’t have a lot of their own money in the scheme anyhow?
I’d like to ask Mr. Bell to please not offer a compromise in these cases and pursue litigation top recover every penny these shills profited from Zeek.
How, Mr. Bell, can you accept any compromise with these serial ponzi participants that leaves them tens of thousands of dollars in profit when they put in a pittance while at the same time return a percentage of the vast majority of victims’ initial investment, leaving many of them still at a loss of thousands of dollars.
I can pragmatically recognize that getting every last dollar may not be cost effective and letting the Kettners keep, say, $100,000 in a settlement may indeed save the estate more than that in litigation. If for no other reason, to possibly prevent the same pimps names showing up in the next headline grabbing ponzi scheme, I’d like to see you draw a line in the sand for the biggest winners.
And on a side note, I know that longtime ponzi player Ken Russo was involved here, and apparently has enough sense to not raise his hand to show how much he’s being asked to give back. I’s very much like to see him loosing every dime, too, if you get the chance.
So well said Gregg. And how about our sweetheart up in Vermont with her reportedly $1,364,000 profit. She is ponzi queen having been involved in other scams and was a pitchwoman for Zeek. She hired a New York lawyer (ex Madoff attorney) to try and muddy-up the water. This circuit of people go from scheme to scheme seeking whom they may fleece. What a way to make a living. No conscious at all, completely heartless. This is a new experience and rude awakening for me. I thought I had seen some sleaze in life, but now I know what sleaze is all about.
In so many ways, this (and all the high profile cases) is one of the dumb ones. Like I said, we are aware of some big time pimps involved in Zeek who are surely among the big winners but are NOT making high profile fights to keep their profits. It’s smart for them to avoid getting mentioned in outrageous court filings and such which makes them show up in the future when someone google searches them. This helps them build even bigger downlines to take to the next scheme. By making himself a visible target here in Zeek, Dave Kettner has at least seriously damaged his reputation in the future. I guess he and the other people fighting the receivership figured the money involved here (millions among just 4 people!) was too much to let go of as a cost of doing business. My good friend (/sarcasm) Ken Russo bragged about his big Zeek payouts for months on the usual ponzi scheme hangouts but is conspicuously silent now that the scam is over. From his point of view it may be better to let others take the bullets while they storm the ramparts, and if they win he would also benefit, if they lose at least he didn’t pay a lot of legal fees in a lost cause.
Of course, I’m okay with letting a big winner keep that $100,000 in the civil case if they were later prosecuted criminally and if convicted ordered to surrender any ill gotten profits.
Jus’ sayin’
Gregg your friend (joking) Ken Russo is flying under the radar. One of my neighbors, who is a big profiteer in Zeek, is doing the same thing. Over 25 years ago she was the pitchwoman for Stanley Van Etten and Heritage International. Heritage International was found to be a pyramid plus Van Etten was involved in other scams. Van Etten was found guilty in U.S. District Court, Raleigh, NC and received an active sentence of six to seven years. One of Van Etten’s scam victims would have probably become governor of North Carolina had he not accepted a high-level government post. I do not think Paul Burks operated alone. Down the road, I think, we will learn much. Incidentally, Lynndel “Lynn” Edgington, President and Founder of Eagle Research Associates, offers a wonderful website regarding all aspects of white collar crime. This is a non-profit benevolent organization and much needed by the public today. Edgington is author of: “Robbing You With A Keyboard Instead Of A Gun-Cyber Crime How They Do It.” I might note in closing, my neighbor sings in the church choir. Believe me brother, nothing is sacred anymore.
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