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Tag: Four Oaks Bank & Trust Co. Inc

  • URGENT >> BULLETIN >> MOVING: Justice Department Sues Four Oaks Bank, Says It Turned Blind Eye To Red Flags At Rex Venture Group, Operator Of Zeek Rewards

    breakingnews72URGENT >> BULLETIN >> MOVING: (4th Update 5:14 p.m. ET U.S.A.) The U.S. Department of Justice has sued North Carolina-based Four Oaks Bank, alleging that it turned a blind eye to fraud markers at Rex Venture Group LLC and processed “close to $60 million in ACH transactions in furtherance of the illegal scheme.”

    Rex Venture was the operator of Zeek Rewards, which the SEC has described as a Ponzi- and pyramid scheme that gathered at least $850 million.

    In “Spring 2012,” the Justice Department alleged, Four Oaks granted ACH access to Rex Venture, a merchant client of a payment-processing entity known as TPPP-TX.

    Four Oaks did this, the Justice Department alleged, “despite knowing that: (1) Rex Venture’s principals could not be identified through business database searches; (2) the Bank could not independently verify the type of legitimate business in which Rex Venture Group was engaged; (3) one of the two addresses reported by the company was a vacant lot, and the other was a different business; and (4) the Social Security Number of one of the company’s purported principals was associated with a different person. A Bank official even concluded that the purported owner of Rex Venture Group “keeps changing company names so his reputation will not catch up with him.”

    And, the Justice Department alleged, “By August 17, 2012, the public learned what Four Oaks Bank already knew or should have Known — Rex Ventures Group allegedly was a massive Ponzi and pyramid scheme.”

    The lawsuit against the bank was filed yesterday by the office of U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina. The Zeek Ponzi case is filed in North Carolina’s Western District.

    In a statement today, Four Oaks said it had cooperated with the Justice Department and agreed to a settlement in which “the Bank does not admit any facts alleged in the accompanying complaint nor does the Bank admit to any liability. ”

    Four Oaks also is accused in the complaint of aiding the processing of illegal payday loans and gambling transactions for other TPPP-TX clients.

    See story at WRAL.com, which lists the settlement amount at $1.2 million.

    Four Oaks is referenced in Zeek-related court files, including a 2012 filing in which the bank said it held a commercial account in the name of “Nx Systems Inc.”

    Nx Systems was a Zeek payment vendor. See Sept. 1, 2012, PP Blog story.

  • URGENT >> BULLETIN >> MOVING: Charles Schwab Accounts Holding Nearly $18.6 Million In Name Of Accused Zeek Operator Paul Ray Burks Or Rex Venture Group Have Been Frozen

    URGENT >> BULLETIN >> MOVING: (UPDATED 12:16 P.M. EDT (U.S.A.) The office of the corporate counsel for Charles Schwab in San Francisco has informed a federal judge that it is holding almost $18.6 million in two accounts linked to the alleged Zeek Rewards’ Ponzi scheme.

    One of the accounts is in the name of Rex Venture Group LLC and has more than $10.3 million in cash and more than $4.94 million in securities, according to court filings. Rex Venture is Zeek’s purported parent company.

    The second Schwab account, meanwhile, holds more than $2.3 million in cash and more than $1.3 million in securities, Schwab informed the court. The second account is in the name of Paul Ray Burks, Zeek’s alleged operator.

    Schwab has “frozen” the assets in both accounts under court order, the firm said in a court filing.

    Separately, North Carolina-based NewBridge Bank has certified in court filings that it is holding more than $11.64 million in an account under the name of Rex Venture Group LLC, Zeek’s purported parent company. Zeek announced suddenly on May 28 (Memorial Day) that it was closing its NewBridge account and advised members to cash checks before June 1 or they would bounce.

    Why so much money remained in the account was not immediately clear.

    Other court filings suggest that Rex Venture also had money on deposit at Four Oaks Bank & Trust Co. Inc., a bank in North Carolina. Four Oaks has asked the court to give it until Sept. 3 to comply with an order to specify precisely how much Rex had on deposit at the institution.

    Extra time was needed because of the “complexity of the financial information that must be analyzed and the need to obtain relevant information from a third party,” the bank informed the court.

    Four Oaks did not identify the third party.

    When the U.S. Secret Service brought the AdSurfDaily Ponzi case in 2008, it was discovered ASD President Andy Bowdoin had more than $65.8 million in 10 personal bank accounts.

    On Aug. 17, the SEC alleged that Zeek was a massive Ponzi- and pyramid scheme that had gathered about $600 million.

    ASD operator Andy Bowdoin is scheduled to be sentenced tomorrow on a charge of wire fraud.

    Zeek is known to have members in common with ASD. The U.S. Secret Service also is investigating Zeek.