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URGENT >> BULLETIN >> MOVING: SEC Files Motion In Zeek Case To Oppose Appointment Of Examiner; In Blistering Memo, Agency Accuses Robert Craddock Of Encouraging Affiliates ‘Not To Cooperate With The Receiver’

URGENT >> BULLETIN >> MOVING: (UPDATED 11:58 A.M. ET (U.S.A.) The SEC has gone to federal court in the Western District of North Carolina to oppose a motion by Zeek “winners” to appoint an “examiner” over all Zeek affiliates. In a blistering, 12-page memo, the agency accused Zeek figure Robert Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver.

“Moreover,” the SEC claimed, “Craddock has asserted (incorrectly) that the SEC has acknowledged to his lawyers that the SEC has doubts or concerns about its case and is looking for ways to ‘back out’ in order to allow ZeekRewards to re-start its operations. Another Quilling client, David Kettner has repeated assertions similar to those made by Craddock in written communications to former ZeekRewards affiliates.”

The agency also confirmed in its filing that its Zeek investigation was ongoing. The “confidential nature” of the probe, the agency said, potentially could make it difficult to respond to motions filed by opposition attorneys.

There could come a time, the SEC said, that it would ask “to provide the Court with additional information under seal or in a closed hearing.”

The SEC’s filing was dated yesterday — the same day Bell also asked Senior U.S. District Judge not to approve the sought-after appointment of Dallas attorney Michael J. Quilling as examiner. Quilling, Bell said, had an obvious conflict of interest. The SEC argued along the same lines.

Quilling, the SEC said, is representing “certain significant net ‘winners’ in the ZeekRewards Ponzi scheme alleged in the Complaint” and seeks “to have himself appointed ‘Representative for Affiliates,’ provided with counsel, and compensated out of the Receivership Estate.”

From the SEC’s motion (italics added):

The Quilling Motion suffers from several obvious flaws:

(1) The Motion offers no compelling factual or legal basis for the Court to consider appointing a “Representative for Affiliates” – the Commission continues to work closely with and monitor the Receiver to ensure that as much money as possible is returned to injured investors in the most efficient manner possible;

(2) Appointment of a “Representative for Affiliates” would serve only to complicate this already complex matter, obstruct the Receiver’s ability to efficiently marshal Receivership Assets, and significantly and unnecessarily deplete the pool of assets available to be distributed to injured investors (given that Quilling and [Charlotte attorney Rodney E.] Alexander seek to be compensated from Receivership Assets); and

(3) The interests of Quilling and Alexander’s current clients – significant net “winners” in the Ponzi scheme alleged in the Complaint – are diametrically opposed to the vast majority of ZeekRewards investors that were net “losers” in the Ponzi scheme.

One of the potential issues is whether Craddock — through his Florida-based entity Fun Club USA — gathered money from Zeek losers and used it to bolster the aims of Zeek winners in the early days after the SEC’s Aug. 17 Ponzi complaint. Such an act potentially could have put losers in opposition to their own best interests, given that Bell intends to file clawback lawsuits against winners to help fund the receivership estate.

In its motion, the SEC said that Fun Club USA appears to have been formed 11 days after the SEC’s actions and that it and other nonparties had “yet to explain why an entity formed after the Court froze ZeekRewards assets and appointed the Receiver should be heard on the subject matter” of the motion to appoint an examiner.

Read the SEC motion.

Dec 18, 2012
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.

Dec 17, 2012
Payment Processor For Cybercrime Ring Sentenced To 48 Months In Federal Prison; ‘Operation Trident Tribunal’ Is Ongoing

Mikael Patrick Sallnert has been sentenced to 48 months in federal prison for his role in processing payments for a cybercrime ring, the U.S. Justice Department announced.

Sallnert, 37, is a citizen of Sweden. As part of “Operation Trident Tribunal,” Sallnert was arrested in Denmark on Jan. 19, 2012, and extradited to the United States in March 2012. He pleaded guilty on Aug. 17, 2012, to one count of conspiracy to commit wire fraud and one count of accessing a protected computer in furtherance of fraud, the Justice Department said.

“Payment processors like this defendant are the backbone of the cybercrime underworld,” said U.S. Attorney Jenny A. Durkan of the Western District of Washington. “As an established businessman, this defendant put a stamp of legitimacy on cyber criminals. He was involved in defrauding thousands of victims, and his actions contributed to insecurities in e-commerce that stifle the development of legitimate enterprises and increase the costs of e-commerce for everyone.”

If Durkan’s name rings familiar to PP Blog readers, it’s because her office is involved in an investigation into the activities of a group of “sovereign citizens” operating in the Pacific Northwest. Kenneth Wayne Leaming, a figure in the AdSurfDaily Ponzi scheme story, is being prosecuted by Durkan’s office amid allegations he filed false liens against at least five public officials in the ASD Ponzi scheme case.

Sallnert, prosecutors said, provided payment-processing services for “scareware” vendors.

“Mikael Patrick Sallnert played an instrumental role in carrying out a massive cybercrime ring that victimized approximately 960,000 innocent victims,” said Assistant Attorney General Lanny A. Breuer. “By facilitating payment processing, Sallnert allowed the cybercrime ring to collect millions of dollars from victims who were duped into believing their computers were compromised and could be fixed by the bogus software created by Sallnert’s co-conspirators. Cybercrime poses a real threat to American consumers and businesses, and the Justice Department is committed to pursuing cybercriminals across the globe.”

Operation Trident Tribunal is an “ongoing, coordinated enforcement action targeting international cybercrime,” prosecutors said.

“This cyber crime ring spanned multiple countries—increasing the threat it posed and complicating the necessary law enforcement response,” said Laura M. Laughlin, special agent in charge of the FBI’s Seattle Division. “Thanks to the commitment of many foreign partners and FBI entities across the nation, we were able to dismantle that threat and ensure Mr. Sallnert faced justice.”

Scams often rely on international payments processors to fleece their victims.

Dec 17, 2012
Potential Zeek Clawback Target Pitched Collapsed Regenesis 2X2 Cycler: ‘Giddy Up. Get Involved. [It’ll] Be The Best Decision You Ever Made’

UPDATED 7:55 A.M. ET (DEC. 23, U.S.A.) In May 2009, before the launch of the alleged Zeek Rewards Ponzi scheme, a Zeek promoter who has hired famed attorney Ira Lee Sorkin appeared in a check-waving video for an “opportunity” known as Regenesis 2X2.

Check-waving is used as a form of “proof” that an “opportunity” that “pays” is not a scam.

“Giddy up,” intoned Trudy Gilmond of Vermont. “Get involved. [It’ll] be the best decision you ever made.”

Gilmond, according to the video she narrated while waving two checks from Regenesis 2X2 totaling $1,200, sent by Priority Mail and drawn on Bank of America, was “fired up.”

She’d been in Regenesis 2X2 only since May 1, and already had received a nice payout, Gilmond explained.

“Knew this company would work,” she said, before alluding to a Biblical tale of an apostle who insisted on proof of the resurrection of Jesus.

“A lot of people are nonbelievers, doubting Thomases, didn’t believe it,” Gilmond said. She then presented checks as a form of proof that Regenesis 2X2 paid.

About two months later — in July 2009 — the U.S. Secret Service applied for search warrants in federal court in Washington state, the purported home of Regenesis 2X2. From a PP Blog story on Aug. 3, 2009 (italics added):

Agents, according to court filings, observed complaint letters directed at the firm being discarded into a Dumpster that was kept under constant surveillance. Also found in the Dumpster were copies of checks sent in by customers, other documents that included customers’ names and information to identify them personally, complaint faxes sent by customers and a letter from a law firm complaining about false, misleading and deceptive advertising.

In one case in which agents were observing one of the adult principals in the case, they observed a youth described as a teenager exiting a vehicle and “struggling with a large arm full of opened business and UPS Priority Mail envelopes,” the Secret Service said in court filings.

The juvenile entered a building and “then immediately came back outside and discarded the materials into an alley [D]umpster,” agents said.

Agents identified the adult under surveillance as a person “arrested by the Internal Revenue Service out of Las Vegas, Nevada[,] for felony violations related to Illegal Money Laundering from Securities Fraud and Wire Fraud” in a previous case.

How the Regenesis 2X2 probe proceeded is unclear.

What is clear is that Zeek eventually came to the fore. In court filings, Sorkin has noted that Gilmond has potential clawback exposure of more than $1.364 million from the court-appointed receiver in the Zeek Rewards Ponzi scheme case.

Gilmond once was listed on a Zeek website as both an “Employee” and “Official Rep.” So, too, was Zeek pitchman OH Brown of USHBB Inc., which produced ads for both Zeek and the collapsed Narc That Car pyramid scheme. For a while, at least, Zeek and Narc That Car appear to have used the same North Carolina-based bank: NewBridge.

Checks displaying the name of NewBridge showed up in independent affiliate promotions on YouTube in 2010. After one Narc affiliate quit the program, he moved to another one. The check-waving for the new “program” began at the one-second mark. Literally.

BehindMLM reported yesterday that Brown may have a tie to a burgeoning “opportunity” known as Offer Hubb. AdSurfDaily and Zeek promoters Todd Disner and Jerry Napier also appear to be in the communication chain of Offer Hubb. The U.S. Secret Service has described ASD as a “criminal enterprise.” The U.S. Department of Justice has described ASD as “insidious.”

A source told the PP Blog last week that Zeek figure Robert Craddock now was pitching Offer Hubb. Craddock is a purported Zeek “consultant” raising money to contest elements of the SEC’s Ponzi-scheme complaint and the court-appointed receivership. In July, Craddock sought to have the website of Zeek critic K. Chang removed from the Internet. Craddock was successful briefly, but the “K. Chang” Hub at HubPages returned.

By Aug. 4 — just 13 days prior to the filing of a emergency action by the SEC alleging that Zeek was a $600 million Ponzi- and pyramid scheme — Zeek used its Blog to blast unspecified “North Carolina Credit Unions” for raising questions about the “program.”

For years, questions have been raised about whether fraud schemes within the MLM sphere were recycling money between and among schemes and putting banks and other financial-service companies in possession of tainted funds. Purported “Wiring Instructions” of Offer Hubb imply that the Wyoming-based entity is soliciting sums of up to $10,099 from prospects and is using City National Bank.

From a section of the BehindMLM report that describes an address used by Offer Hubb (italics added):

As mentioned in the introduction of this review, “1712 Pioneer Avenue” is the headquarters of “Corporations Today”. The address is apparently so well-known in tax haven circles that Reuters used the 1712 Pioneer Avenue building itself for a 2011 article on corporate secrecy in the United States.

Dec 17, 2012
URGENT >> BULLETIN >> MOVING: Ira Lee Sorkin, Bernard Madoff’s Attorney, Files Motion For Clients Who Are Potential Clawback Targets For More Than $1.56 Million In Zeek Case

URGENT >> BULLETIN >> MOVING: (3RD UPDATE 11:33 P.M. ET (U.S.A.) Famed defense attorney Ira Lee Sorkin is seeking pro hac vice admission to practice in U.S. District Court for the Western District of North Carolina on behalf of two prospective clawback targets in the Zeek Rewards Ponzi scheme case.

Sorkin is with Lowenstein Sandler PC in New York. He perhaps is best known as Ponzi schemer Bernard Madoff’s defense counsel. Sorkin also is the former head of the SEC’s New York regional office.

Sorkin’s clients are Zeek affiliates Trudy Gilmond and Kellie King, and Sorkin is arguing that Zeek did not sell securities and that the receivership should be dissolved.

Gilmond is the prospective target of a clawback action for more than $1.364 million, with receiver Kenneth D. Bell asserting she put in only $3,105, according to Sorkin’s motion. King potentially faces a claim from Bell for more than $205,180 after paying in only $1,492, Sorkin said in the filing.

Sorkin, according to a separate motion, also contests how the receiver issued subpoenas and is opposing a motion late last month by Dallas attorney Michael J. Quilling to be appointed “examiner.”

Quilling sought “to represent the collective interests of the Affiliates and all creditors of the receivership estate” and desired to “be compensated out of the receivership estate,” Sorkin argued.

But that should not be permitted to happen, Sorkin contended.

From Sorkin’s motion (italics added):

It is quite clear from the Receiver’s Preliminary Liquidation Plan and the defective subpoena issued to Ms. Gilmond that Qualified Affiliates have inherently conflicting positions as to one another, and thus cannot be jointly represented. To illustrate, it is in the interests of a Qualified Affiliate who is a “net-winner” to challenge the Receiver’s authority to clawback funds because the Receiver intends to use the “net-winner’s” money to pay net-losers. To the contrary, it is in the interests of a Qualified Affiliate who is a net-loser to support the Receiver’s efforts because the Receiver will take money from the “net-winner” and distribute it to the “net-loser” Qualified Affiliate. As such, an Examiner cannot be appointed to represent all of the Qualified Affiliates because the Examiner would have clients with inherently contradictory positions as to one another.

The motion by Sorkin potentially puts Gilmond and King at odds with positions taken by Quilling clients and potential Zeek clawback targets Dave Kettner, Mary Kettner and David Sorrells. The Kettners and Sorrells, for example, moved to have Quilling appointed examiner.

The Kettners and Sorrells potentially have a combined clawback exposure of nearly $2 million, according to court filings.

Zeek records, according to letters from Bell cited by the trio, suggest Sorrells received $945,539 from Zeek while paying in only $1,695. Dave Kettner received $537,577.95 while paying in only $1,378, and Mary Kettner received $465,866.67 while paying in only $1,495.

Dec 14, 2012
Mass Shooting At Connecticut Elementary School; Preliminary Reports Suggest 18 Children Among 27 Killed

UPDATED 3:58 P.M. ET (U.S.A.): A mass shooting this morning at Sandy Hook Elementary School in Newtown, Conn., reportedly has resulted in 27 deaths, including the death of the presumptive shooter. Twenty of the victims were children, authorities said this afternoon.

Earlier reports had put the death toll of children at 18. Precise details about the circumstances under which the shooting occurred remain unclear.

Courant.com (Hartford Courant) coverage as of the time of this PP Blog post.

Connecticut Gov. Daniel P. Malloy has been notified. So has President Obama at the White House.

The President addressed the American people this afternoon.

http://www.youtube.com/watch?v=mIA0W69U2_Y

Dec 14, 2012
Purported ‘Sovereign’ With DWI Rap And No License Allegedly Tells North Carolina Deputies She’ll Pull Over For $300,000

Jennifer Herring. Source: Brunswick County Sheriff’s Office.

UPDATED 2:56 A.M. ET (DEC. 16, U.S.A.) A purported “sovereign citizen” wanted for failure to appear in court at an impaired-driving proceeding led sheriff’s deputies on a 15-minute chase, the Brunswick County (N.C.) Sheriff’s Office said.

Jennifer Melisa Herring, 37, of Myrtle Beach S.C., now has been charged with Driving While Impaired, Felony Fleeing to Elude Arrest, Driving While License Revoked, Careless and Reckless Driving and Driving Left of Center.

“During the pursuit, the driver called 911 and stated there was no emergency, and she would pull over for $300,000,” the sheriff’s office said.

WECT.com has a video report, along with details of the 911 call.

From the station’s website (italics added):

Herring repeatedly told the 911 operator that the officers trying to pull her over were creating a “false sense of emergency” and that she wasn’t going to stop driving because she wasn’t speeding.

“No, I’m not pulling over because pulling over is voluntary I’m not doing nothing wrong,” Herring told 911. “Are you ready to pay the $300,000? That’s all I want to know. If you want to pay the $300,000 then I’ll pull over. That’s my offer – $300,000. That’s my offer, I’m asking you to accept it.”

WECT TV6-WECT.com:News, weather

Dec 13, 2012
BRIEF: Zeek Receiver Broadens Reach, Files In Southern District Of Florida — And In Northern Mariana Islands Nearly 15,000 Miles Away

Bird Island, Saipan. Source: website of U.S. District Court for the Northern Mariana Islands.

In yet another demonstration of the reach of the alleged Zeek Rewards Ponzi scheme, court-appointed receiver Kenneth D. Bell has filed paperwork in the Southern District of Florida — and in Northern Mariana Islands District Court.

The Northern Mariana Islands are a U.S. Commonwealth. Saipan is perhaps the best-known island in the chain. The flight distance between Saipan and Miami — the city in which the receiver made the filing in the Southern District of Florida — is about 14,571 miles, according to Flightpedia.

Saipan is more than 3,500 miles southwest of Hawaii, the U.S. island state in the Pacific.

Bell previous filed in Guam, a U.S. territory in the western Pacific.

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

Records suggest Bell has filed in more than 70 of the 94 U.S. districts in advance of anticipated clawback actions against Zeek winners.

Dec 13, 2012
Prosecution Asks Court To Impose Life Sentence On Jason Bo-Alan Beckman, Pitchman For Trevor Cook Ponzi Scheme; Beckman Says He Should Serve 364 Days And Then Become A Professional Speaker

“The nature and circumstances of this offense and Mr. Beckman’s history and characteristics, viewed together, cry out for a life sentence. With respect to Mr. Beckman, nothing less than a liberty-ending sentence would reflect the seriousness of this offense, promote respect for the law and provide just punishment. But perhaps most importantly, Mr. Beckman must be locked up for the rest of his life because he is a very dangerous individual who is certain to hurt people if he is ever released.” — From prosecution sentencing memo for convicted swindler Jason Bo-Alan Beckman, a pitchman of the Trevor Cook Ponzi scheme, Dec. 11, 2012

EDITOR’S NOTE: The $194 million Trevor Cook Ponzi scheme is believed to be the second-largest scam of its sort in Minnesota history, trailing only Tom Petters’ epic, $3.65 billion caper. Cook was sentenced to 25 years. Prosecutors in the office of U.S. Attorney B. Todd Jones now are asking a federal judge to sentence convicted Cook pitchman Jason Bo-Alan Beckman to life in prison — or 411 years. In essence, prosecutors are arguing that Beckman was even worse than Cook, a reprobate drunkard who spent victims’ money on booze, strippers and an enormous mansion, and that Beckman piled on crimes targeted at elderly victims even as he helped Cook steal people into poverty.

** _____________________________________ **

UPDATED 5:20 P.M. ET (U.S.A.) The Trevor Cook Ponzi scheme targeted at senior citizens and conservative Christians never has received the national media attention it deserves. But the Cook case is back in the news today.

Man, is it ever . . .

For starters, it became public yesterday that convicted Cook pitchman Jason Bo-Alan Beckman apparently believes he should spend only 364 days in prison “followed by three years of probation requiring 2000 community service hours.”

While on probation and performing his community service, Beckman contended, he would “devote” himself “to speaking to financial firms and investors about what to do and what not to do.”

And as an extra carrot for a lenient sentence, “Beckman would arrange for the immediate delivery of a check for $19,000,000 for payment to victims.”

The Star Tribune of Minneapolis/St. Paul broke the news this morning about Beckman’s apparent belief he could make multiple felony convictions go away with a wrist slap, by using his checkbook as a lure to victims and by turning himself into a professional speaker on the subject of avoiding the perils of intercontinental financial crime.

One victim who contacted the PP Blog today questioned whether Beckman was having a pipe dream about having $19 million. A court-appointed receiver has been policing up money from the scheme since 2009. Since becoming implicated in the Cook scheme, Beckman has become known for offering up bizarre constructions.

He “had the temerity to testify that the money he stole from” an elderly couple “constituted his ‘earnings,’” prosecutors said yesterday. And he also divined a construction by which he was the “top ranked” portfolio manager in the United States “based on a Morningstar comparative study,” they asserted.

To say the prosecution wasn’t impressed by Beckman’s opinion on how justice might best be served perhaps is the greatest understatement in the history of Ponzi-scheme prosecutions worldwide.

Beckman, 42, deserves life in prison — or, as a technical matter 4,932 months or 411 years, according to prosecutors.

“Mr. Beckman is a man with no semblance of a conscience who exudes in his conduct and affairs a sense of great entitlement,” prosecutors argued. “Entitlement to make untrue, grandiose claims about himself. Entitlement to groom the trust of vulnerable persons and then to violate that trust. Entitlement to steal his victims’ money and to use it for luxury items for himself. Entitlement to misuse professionals to cloak his schemes with a skein of legitimacy. Entitlement, when caught, to lie to everybody – the press, his victims, hired attorneys, and this Court – doggedly and repeatedly, about what he knew and when he knew it. To all that appears, Mr. Beckman’s entire life has been deeply suffused with sociopathy. In Mr. Beckman’s mind, the rules simply do not apply to him.”

In 2011, the SEC memorably described Beckman as guilty of “contumacious disobedience” for his manipulation of victims and the courts. The SEC made the claim after criminal prosecutors asserted that Beckman stole millions of dollars from an elderly husband and wife now in their nineties and tried to make it appear as though the wife — a stroke victim with “hemispheric paralysis” — had become his business partner.

Beckman sold two life-insurance policies on the woman’s “then 92-year old husband” for about $3.9 million, and then converted “the proceeds of that sale for his own benefit,” prosecutors alleged last year.

As a companion fraud scheme that flowed from Beckman’s role in the Cook Ponzi, Beckman tried to dupe the National Hockey League in a deal that would make him a part owner of the Minnesota Wild, prosecutors said.

And even as he was stealing from people now in their nineties and confined to a nursing home while trying to run a scam on the NHL and his own attorneys, Beckman “almost completely wiped out the Arthur W. Quiggle [Family] Trust,” prosecutors said.

“In 2007, without authorization, he sold $3.4 million of its low-basis, high-dividend paying stock, funneling the proceeds to the currency program,” prosecutors said. “This triggered enormous capital gains within the trust and wiped out most of the trust’s dividend income, which defeated the trust’s purpose of providing income to the Quiggle family. Then, in July of 2008, just weeks after several attorneys warned Mr. Beckman that the currency program was illegal and a likely Ponzi scheme, Mr. Beckman caused the trust to borrow $3.7 million against its remaining marketable stocks and stole all of it. Again, much of it ended up paying off huge deficits incurred in Mr. Beckman’s name at various trading houses to buoy his chances of becoming an owner of the Wild.”

Beckman is scheduled to be sentenced Jan. 3.

Dec 12, 2012
Nearly $2 Million Allegedly At Stake For 3 Arizona Zeek Affiliates Who Received Subpoenas, Filings Say

“[Zeek operator Paul] Burks is solely responsible for determining the amount of ‘net profits’ to share in the Retail Profit Pool . . . Defendants represent that daily awards are calculated by dividing ‘up to 50%’ of daily net profits by the number of Profit Points outstanding among all Qualified Affiliates. This calculation results in a daily dividend paid to each Qualified Affiliate that consistently has averaged approximately 1.5% per day . . . In fact, the dividend bears no relation to the company’s net profits. Instead, Burks unilaterally and arbitrarily determines the daily dividend rate so that it averages approximately 1.5% per day, giving investors the false impression that the business is profitable.” — From the SEC complaint in the Zeek Rewards Ponzi scheme case, Aug. 17, 2012

“The most successful Affiliates worked the hardest, placed numerous ads, and explained the Zeekler.com penny auction to groups of people several times a month. Some of the Movants, for example, traveled extensively to maintain contact with their network of peers and to educate them, among other things, on how to be successful in the program. These Movants’ successes were a direct result of the amount of time and effort they poured into the effort to promote the penny auction.” — Zeek Affiliates Dave Kettner, Mary Kettner and David Sorrells, Dec. 11, 2012

Although the SEC accused Rex Venture Group LLC/Zeek Rewards operator Paul R. Burks in August of conducting a massive Ponzi scheme and duping members into believing he was presiding over a business that created enormous profits legitimately, three members of the MLM “program” with potentially millions of dollars in ill-gotten gains subject to clawback aren’t buying it.

At stake for Dave Kettner, Mary Kettner and David Sorrells of Arizona is at least $1.94 million they allegedly earned in the “program” through hard work, according to court filings.

Zeek was a legitimate venture, they argued in filings dated Dec. 11. And it was no Ponzi scheme, they advised Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina. Mullen is presiding over the Zeek Ponzi scheme case brought by the SEC Aug. 17.

It was not immediately clear whether the Kettners and Sorrells were the recipients of payouts from Zeek’s Retail Profit Pool (RPP) or commissions for sponsoring new members — or some combination of both. The RPP also is known as the Retail Points Pool.

What is clear, according to their filings, is that each received a letter and subpoena from Zeek Receiver Kenneth D. Bell that paint them as potential clawback targets. The information about the sums Bell is seeking is contained within exhibits filed by the Kettners and Sorrells.

Zeek records, according to letters from Bell cited by the trio, suggest Sorrells received $945,539 from Zeek while paying in only $1,695. Dave Kettner received $537,577.95 while paying in only $1,378, and Mary Kettner received $465,866.67 while paying in only $1,495.

Bell has said Zeek created approximately eight losers for each winner. The SEC described Zeek as a $600 million Ponzi and pyramid scheme that potentially defrauded more than 1 million people.

The PP Blog is working on a related story about assertions by the Kettners and Sorrells that significant sums of money that belong to them effectively are trapped in NxPay, a payment processor used by Zeek. More later . . .

Dec 12, 2012
BULLETIN: Zeek Receiver To Hold Conference Call For Victims On Dec. 17

BULLETIN: Kenneth D. Bell, the court-appointed receiver in the Zeek Rewards Ponzi scheme case, has announced he’ll hold a one-hour, web-based conference call Dec. 17 at 5 p.m. ET (U.S.A.). Bell is encouraging victims to email their questions to him prior to the call. The receiver’s full announcement is published below:

December 11, 2012

When I was appointed as receiver of Rex Venture Group LLC d/b/a Zeekrewards.com, one of my primary goals, in addition to locating and seizing assets from the site so they can be returned to the victims, has been to keep all interested parties informed as we move through this process. In an effort to continue to communicate with you and answer your questions about the receivership, I will be hosting a one-hour web based conference call for ZeekRewards victims on Monday, December 17, 2012 at 5:00pm EST. You may access the video call by clicking on the link and following the directions below:

https://mcguirewoodsevents.webex.com/mcguirewoodsevents/onstage/g.php?d=669382018&t=a&EA=gcooper%40mcguirewoods.com&ET=be20abdd113582919838c5a9b73c73b6&ETR=5e4b1811fab80bf1575c1618f77b7fbc&RT=MiMxMQ==&p

Event password: rewards

If you are not near a computer and wish to join the call over the phone, please follow the directions below:
US TOLL FREE: +1-855-749-4750
US TOLL: +1-415-655-0001
Toll-free dialing restrictions: http://www.webex.com/pdf/tollfree_restrictions.pdf
Access code: 669 382 018
(This is a call-in number only and those calling in will not have an opportunity to ask questions)

You may join either the video or phone call 60 minutes prior to the start time.

I will answer individual questions on the video conference call. However, because we may have more questions than I have time to answer on Monday, I would encourage you to email your questions to me prior to the call so I have the opportunity to address them in my remarks. You can email your question to me at zeekrewardcall@mcguirewoods.com.

We will look at your questions and I will answer as many as I can during the presentation. Please note that I will not be able to address individual account questions, as there would be too many to get to during the time we have. However, if you have a question about the process, the progress we’ve made so far, next steps, estimated timelines, or even rumors you have heard regarding the receivership, please send those questions to me and I will address as many as I can during the call.

In an effort to address as many people as possible, I have asked for the maximum number of available ports that our provider is able to handle. In the event that the call reaches capacity or if anyone cannot join the call on the 17th, it will be recorded and available on this site for anyone to view at a later time. Please continue to monitor this site for any updates.

Thank you for your continuing support.

Kenneth D. Bell
Receiver

Dec 11, 2012