BULLETIN: Judge In Zeek Clawback Cases Grants Receiver’s Motion To Certify Class Of 9,400 Alleged Winners; Todd Disner Faces Default; Phil Piccolo May Be Background Player

BULLETIN: (Updated 11:11 p.m. ET U.S.A.) Senior U.S. District Judge Graham C. Mullen has certified a class of more than 9,000 alleged “winners” of more than $1,000 in the Zeek Rewards scheme.

Receiver Kenneth D. Bell sued more than 10 named “winners” in February 2014 in a case styled “Kenneth D. Bell v. Todd Disner, et al.” The suit included class claims against about 9,400 winners of smaller sums.

The ruling by Mullen effectively means the winners of the smaller sums are now defendants who will be represented by the same lawyers representing the larger winners. Bell “proposed that one or more of the following named Defendants serve as Class Representatives: Trudy Gilmond and Trudy Gilmond, LLC; Jerry Napier; Darren Miller; Rhonda Gates; Innovation Marketing, LLC; Aaron Andrews; Shara Andrews; Global Internet Formula, Inc.; T. LeMont Silver; Karen Silver; and Durant Brockett,” Mullen wrote.

Disner is facing a default judgment of more than $2 million, but is trying to get it reversed.

Bell asked for the class certification in July 2014, explaining that he “asked that the Court appoint one or more of the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the Net Winner Class.”

Mullen agreed today with that logic.

“If the Receiver herein was forced to file separate actions against the 9,400 Defendants, he would certainly be risking inconsistent and varying adjudications,” Mullen wrote. “If one court found that a fraudulent transfer occurred, but another court did not, then those inconsistent decisions would place the Receiver in a stalemated or conflicted position. If the Receiver attempted to enforce a valid judgment against a particular Defendant, that Defendant might refuse to pay because other Defendants similarly situated were not held to be liable for the same underlying conduct related to ZeekRewards. An additional layer of inconsistency would arise if the Receiver attempts to settle a lawsuit, but the Net Winner Defendant is not willing to compromise since that Defendant is already aware of the inconsistent adjudication based on the same set of facts. These anomalous results would leave the Receiver in an untenable position and circumstances such as these are precisely why class actions exist.”

Mullen specifically found that, with 9,400 defendants, Bell had satisfied the “numerosity requirement” to make a class-action reasonable and efficient. He also found that Bell had established a “commonality factor” in that the smaller winners had things in common with the larger ones.

These included questions about “whether ZeeksRewards’ operation was a Ponzi and/or pyramid scheme,” Mullen wrote.

And, he noted, “[a]ll class members had or controlled usernames and accounts with ZeekRewards through which they received funds from [Zeek operator Rex Venture Group]. Further, each class member received more money from RVG than they paid into RVG (their ‘net winnings’) during the course of their participation as affiliates in the ZeekRewards program. There is also a common question of law, that is: whether the payments from ZeekRewards to class members are fraudulent transfers that must be disgorged and repaid.”

Bell also satisfied a “typicality” requirement that examines whether “the claims or defenses of the representative parties are typical of the claims or defenses of the class,” Mullen ruled.

At the same time, the judge ruled, Bell had shown that the class of 9,400 would receive “fair and adequate representation.”

“Here, the proposed Class Representatives’ interests are not antagonistic to, but rather aligned with, the interests of the unnamed class members because they share the common objective to defend against having to return funds received from ZeekRewards as demanded by the Receiver. Thus, there is no conflict which would defeat adequacy of representation.”

Mullen rejected contentions that the defendants did not have enough in common for the matter to proceed as a class action.

He also rejected contentions that the largest winners “simply cannot afford to represent the Net Winner Class, noting that “their protestations of poverty ring hollow in light of the fact that together they won over $11 million in profits from ZeekRewards.”

Regardless, Mullen observed, the “Court has repeatedly made it clear that the Receiver will be required to help fund the defense of the class.”

A footnote in the ruling reads (italics added):

That Court is mindful that despite the large winnings of the Named Defendants, it is possible that much of the net winnings has been dissipated. As stated at the last status conference in this matter, the Court fully expects that the Named Defendants will provide the Receiver with any and all evidence of their financial status and the location of all net winnings received from ZeekRewards, including deposition testimony as to the same. Such financial transparency will not only aid the Court in its determination as to what extent the Receiver shall be required to fund the defense of the class, but will also undoubtedly aid in any settlement discussions.

Disner, who pitched both the AdSurfDaily Ponzi scheme and Zeek, is now listed as a “Black Diamond” member on the website of an MLM program known as Lumaxa.

Lumaxa sells Nyloxin, a pain-relief product made from cobra-venom. Longtime MLM huckster Phil Piccolo has been linked to the Nyloxin program once sold through MyNyloxin.com and may be a Zeek winner. Another business with a Piccolo tie was known as Text Cash Network or TCN. It operated from the area of Boca Raton, Fla.

As the PP Blog reported in December 2011, the name of Rex Venture Group once appeared on TCN’s website.

An entity known as “TCN CUSTOMER SERVICE INC” of Boca Raton is listed as a Zeek winner.

Lumaxa, the company to which the MyNyloxin domain now rotates, may be facing some challenges, a source with knowledge of the “program” told the PP Blog.

“The company is sounding desperate to have people keep their money invested, and in fact giving more, higher rates of interest to cancel their withdrawals and earn more,” the source said.

Rod Cook, the “MLM Watchdog,” reported last year that Piccolo was scamming sellers of Nyloxin.

Scott Miller, who pushed the TelexFree “program” now alleged to be a $1.8 billion pyramid scheme, also is listed as a Lumaxa “Black Diamond.”

Also see August 2014 BehindMLM.com report.

NOTE: Our thanks to the ASD Updates Blog.