ZEEK RECEIVER TO NET WINNERS: ‘The Time For Court Action Is Drawing Closer’
UPDATED 1:20 P.M. EDT (APRIL 4, U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi scheme case has warned net winners that “the time for court action is drawing closer” and that “there is an opportunity for settlement.”
Receiver Kenneth D. Bell published a letter to winners today on the website of the receivership.
A snippet from the letter (italics added):
The time for court action is drawing closer. I am sending this message to make sure that net-winners understand that there is an opportunity for settlement, but that the window for the opportunity is closing. To allow a reasonable time for all those who would like to pursue a settlement to do so, I am going to continue to make my team available to negotiate settlements for at least 60 more days. Therefore, if net winners want to pursue a settlement they should contact us by no later than May 31, 2013. After that date, I will assume that all net-winners that want to avoid the legal process by discussing settlement have done so, and I will move forward with court action, likely in June 2013, against the remaining net-winners.
In August 2012, the SEC descibed Zeek as a $600 million Ponzi- and pyramid scheme operated by Paul R. Burks through Rex Venture Group LLC. Based on the number of victims, Zeek may be the largest Ponzi scheme in U.S. history.
Bell noted in the letter that he already has discussed settlements with a “number of net-winners” and that “we have successfully negotiated payments which will, subject to Court approval, result in the release of the Receiver’s claims against those winners.”
Some winners have received significant discounts, Bell said. But he noted that settlements depend on circumstances and that not all winners will get the same deal.
“The settlements take into account the amount of the affiliate’s winnings, the nature of their involvement and their involvement of others, their cooperation, their ability to repay the money (and the time period in which the repayment can reasonably be made) and other individual factors and circumstances,” Bell said in the letter. “The amounts of the settlements have ranged from approximately 40% to 80% of the affiliate’s net winnings. However, not all net winners have been or will be offered discounted settlements and the amounts of future settlements may vary from this range. The amount of the settlement offered to each net-winner will be based on the affiliate’s particular circumstances and ultimately must – in both my and the Court’s opinion – be in the overall best interests of the victims, considering the costs associated with the legal process.”
Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina is presiding over the Zeek case.
Mullen’s name also was in the news last week as a result of a different government action that alleged fraud.
On March 27, the CFTC sought an asset freeze against James Harvey Mason of Graham, N.C., The JHM Forex Only Pool (JHM) and Forex Trading at Home (FTAH).
Mullen granted the freeze, amid CFTC allegations that Mason fraudulently solicited “at least $1.1 million from at least 60 individuals to participate in off-exchange foreign currency (forex) commodity pools and misappropriat[ed] at least $600,000 of participant funds.”
