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Tag: Kenneth D. Bell

  • BULLETIN: Paul Burks Of Zeek Rewards Sentenced To More Than 14 Years; Judge Comments On ‘Cheerleaders’

    3RD UPDATE 4:52 P.M. ET U.S.A. Paul Burks, the principal behind the $939 million Zeek Rewards Ponzi- and pyramid scheme broken up by the SEC and the U.S. Secret Service in August 2012, has been sentenced to 176 months in federal prison, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said moments ago.

    U.S. District Judge Max Cogburn Jr. presided over sentencing court for Burks, 70.  Zeek was an MLM scam that created hundreds of thousands of victims globally.

    “But anyone could have seen what was going to occur outside himself and his (marketing) cheerleaders,” the judge said in court, according to the Winston-Salem Journal.

    In clawback lawsuits, Zeek receiver Kenneth D. Bell has triumphed over thousands of net winners in the scheme.

    When Burks was indicted in October 2014, the grand jury alleged that Burks and others offered a “bogus 125% return on investment” through a “sham internet-based penny auction company.”

    Bell earlier alleged that some of the winners he sued were “serial” participants in Zeek-like schemes to defraud. Among the clawback defendants were Todd Disner, a figure from the AdSurfDaily Ponzi scheme, and T. LeMont Silver, a promoter of multiple Ponzi schemes.

    “Programs” such as Zeek and ASD often try to sanitize themselves by calling themselves revenue-sharing schemes.

    Burks also was sentenced to make restitution in the amount of $244 million and to serve three years’ probation after his prison release. There are media accounts today that suggest Burks is in poor health.

    Though 176 months is a lengthy term, there has been speculation that Burks would receive an even longer term, given the enormous size of Zeek and the number of victims.

    Said Bell, the receiver, in a statement dated Feb. 13. “Judge Cogburn cited the need to balance the harm caused by Mr. Burks’ conduct against Mr. Burks’ extremely poor health and [the fact he is] 70 years of age.”

    From a statement today by prosecutors (italics added):

    At sentencing, Judge Cogburn stated that for the defendant’s scheme to work would have required a miracle on the order of the “loaves and fishes.” Judge Cogburn stated that a significant sentence was necessary to promote respect for the law, provide just punishment, and also deter others considering committing fraud. Judge Cogburn further noted that the scheme was “almost breathtaking” and emphasized that the defendant had time to stop it.

    Dawn Wright-Olivares and Daniel Olivares of Zeek also have been sentenced to prison.



  • Zeek Net-Winner Notifications Expected To Begin Soon; Receiver To Establish ‘Net Winnings Determination Response Portal’

    If you’re a net winner in the massive Zeek Rewards’ Ponzi- and pyramid scheme, your notice that you must return your ill-gotten haul with interest may arrive as early as next week.

    Under the terms of a court order by Senior U.S. District Judge Graham C. Mullen, the notice will apply to more than 9,000 alleged winners of at least $1,000 and will arrive via email. At least with respect to Zeek, the days of MLMers profiting from scams while the operators go to jail are over.

    In a Feb. 2 announcement, Zeek receiver Kenneth D. Bell said the receivership will establish a “Net Winnings Determination Response Portal” through which winners are “required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification.”

    Bell successfully sued the winners in a defendant class-action case. The trustee in the TelexFree case is following a similar path, further demonstrating that winnings from MLM scams simply are not safe.

    FTI Consulting Inc., the Zeek receiver’s expert, found that Zeek’s net losers lost more than $822 million and the net winners hauled away more than $282 million. Ninety percent of Zeek entrants lost money, according to the findings. which defense experts were unable to refute.

    Here is Bell’s Feb. 2 announcement (italics added):

    ANNOUNCEMENT FROM THE RECEIVER – February 2, 2017

    As I previously announced, I continue to pursue Final Judgments requiring each member of the Net Winner Class of those who won at least $1000 in ZeekRewards to repay their net winnings to the Receivership for distribution to victims of the scheme. On January 27, 2017, United States District Judge Graham Mullen entered an Order on Process for Determining the Amount of Final Judgments Against Net Winner Class Members, which sets forth the process for determining the amount of the net winnings received by each member of the Net Winner Class. That amount plus prejudgment interest will then become the amount of the Final Judgment to be entered against the net winner. I intend to pursue collection of these judgments vigorously, and expect the ultimate amount collected, while uncertain, will be a substantial sum.

    The Court’s Order, which describes the process in detail, may be viewed by following this link. The first step in the process – notifying each Net Winner of the amount of their net winnings – is expected to begin next week. After notification, each Net Winner is required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification using a website Net Winnings Determination Response Portal. More information and links to the Response Portal will be sent to the Net Winner Class members in the notification email. If a Net Winner does not receive their notification by February 13, 2017 then he or she should email netwinningsresponse@zeeknetwinnerclass.com to receive instructions on how to obtain the notification.

    Throughout the Receivership, the Receiver has expressed a willingness to consider voluntary final settlements with ZeekRewards’ Net Winners to efficiently resolve the claims against them. Hundreds of settlements have been negotiated with Net Winners and approved by the Court. If a Net Winner wants to discuss a settlement of the Receiver’s claims prior to Final Judgment being entered, please communicate with the Receiver at zeeksettlement@mcguirewoods.com.

     

    Visit the receivership website.




  • BULLETIN: TelexFree Trustee Moves For Default Judgments Against Dozens Of Alleged Overseas ‘Winners’

    BULLETIN: TelexFree Trustee Stephen B. Darr has moved for assessments of damage and default judgments against dozens of alleged overseas “winners” in the massive Ponzi- and pyramid scheme. The motion before Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts asks for millions of dollars from about 33 TelexFree promoters with non-U.S. addresses who did not enter defenses after being properly served Darr’s class-action complaint brought in January 2016 and subsequently amended.

    Like the class-action lawsuit and individual actions brought by receiver in the Zeek Rewards’ case, the action by the TelexFree trustee demonstrates that “winners” in corrupt MLM schemes will be pursued to return their gains, plus interest, to the hundreds and hundreds of thousands of “losers” created by such cross-border fraud capers.

    Kenneth D. Bell, the receiver in the Zeek case, now is moving to perfect millions of dollars in judgments.

    Hoffman has set a May 3 hearing in Boston on Darr’s motion.

    Read Darr’s motion.

    One of the alleged overseas winners pursued by Darr received more than $2.92 million, according to a court exhibit. Seven others received at least $1 million. Others still received tens or hundreds of thousands of dollars.

    In other corrupt MLM schemes, new recruits were encouraged to pay their sponsor directly, rather than paying the company directly. This also was the case at TelexFree, a situation that led to money not being forwarded to the firm, contributing to the deepening of the Ponzi.




  • Zeek Receiver Solicits Victim Letters For Feb. 13 Sentencing Of Paul Burks

    Paul Burks will be sentenced Feb. 13 for his criminal role in Zeek Rewards, and the court-appointed receiver is soliciting letters from victims of the combined Ponzi- and pyramid scheme that affected hundreds of thousands of people.

    Zeek gathered hundreds of millions of dollars in a massive fraud scheme broken up by the SEC and the U.S. Secret Service in 2012.

    From receiver Kenneth D. Bell in an announcement dated Jan 19, 2017  (italics added):

    Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

    • Becoming insolvent;
    • Filing for bankruptcy under the Bankruptcy Code;
    • Suffering substantial loss of a retirement, education, or other savings or investment fund;
    • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
    • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
    • Suffering substantial harm to his or her ability to obtain credit.

    I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

    Bell also is special master of the criminal case against Burks.

    Burks, then 67, was indicted in 2014 on charges of wire and mail fraud, wire- and mail-fraud conspiracy and tax-fraud conspiracy. He was convicted by a jury in July 2016 at age 69 on all charges and potentially faces decades in federal prison.

    Two of Burks’ former Zeek colleagues — Dawn Wright-Olivares and her stepson Daniel Olivares — previously pleaded guilty and now are listed as federal prisoners.




  • Zeek Receiver To Make Third Distribution To Ponzi Victims, Says A Fourth Is Possible

    In an announcement dated Jan. 12, 2017, Zeek receiver Kenneth D. Bell said he’ll make a third distribution to Ponzi victims and that a fourth is possible.

    After the third distribution,  victims will have received about 75 percent of their losses, Bell said. The third distribution is set for March 15.

    Let us note here that these results are remarkable. Many Ponzi victims receive only pennies on the dollar, if anything at all. Quick action by the SEC and the U.S. Secret Service in 2012 no doubt benefited the receivership and, in turn, the victims.

    A series of clawback lawsuits and other actions initiated by Bell against Zeek net winners and others may return even more to the estate.

    Here is Bell’s Jan. 12 announcement in full (italics added):

    ANNOUNCEMENT FROM THE RECEIVER – January 12, 2017

    I am pleased to announce that we will be making a third partial interim distribution to all Affiliates who hold Allowed Claims on March 15, 2017. When made, combined with the first and second partial interim distributions and the amounts paid by ZeekRewards to such Affiliates before it was shut down, the third partial interim distribution will have returned to victims with Allowed Claims a total of at least 75% of their losses using the rising tide method.

    If you previously have received payment from the Receivership, or receive a payment for the first time during the January 31 distribution, you will be issued another payment on March 15, 2017. If you had recovered more than 60% from ZeekRewards prior to its shutdown, but less than 75%, you will receive a distribution as part of the third partial interim distribution.

    The funds used to make the third partial interim distribution will be taken from the reserves that I previously held for those Affiliates whose claims were disallowed and forfeited pursuant to the Court’s November 16, 2017 Order that required these claimants to provide their Release and OFAC certification by December 31, 2016. Their failure to do so has permitted me to release these reserves and to pay the third partial interim distribution to Affiliates that hold Allowed Claims.

    Finally, we do not have authority to accept new claims and are not considering further requests to amend previously allowed claims. The time to file claims or to amend claims has passed.

    I am confident that we will make a further distribution in the future. I ask you for your patience, and thank you for your continuing support.




  • URGENT >> BULLETIN >> MOVING: Judge Begins Process Of Ordering Judgments Against Zeek Net Winners; Millions Awarded So Far, Millions More Pending

    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.
    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.

    URGENT >> BULLETIN >> MOVING: At long last, there is a spectacular crack in the ceiling of MLM HYIP Ponzi Land!

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has begun the process of ordering judgments against Zeek Rewards’ winners sued by receiver Kenneth D. Bell, according to the docket of the clawback case.

    Millions of dollars in final judgments have been awarded so far, with millions more awaiting Mullen’s signature. Bell, for example, is pushing for a judgment of more than $3.1 million against veteran HYIP huckster T. LeMont Silver, his wife and a Silver shell company.

    The Silver amount includes more than $2.3 million in winnings, plus more than $802,000 in prejudgment interest. Pending the judge’s signature, any Zeek income derived by the Silvers will become attachable, with the prospect of Mullen also awarding postjudgment interest.

    Final judgments against the Silvers and several other Zeek winners could be entered by the end of the year.

    Mullen already has issued final judgments against Zeek and AdSurfDaily Ponzi scheme figure Jerry Napier ($2.349 million, including prejudgment interest of more than $600,000); Darren Miller ($2.198 million, including more than $561,000 in prejudgment interest; Aaron Andrews, Shara Andrews and an Andrews shell company ($1.359 million, including more than $347,000 in prejudgment interest).

    Longtime HYIP hucksters, Aaron and Shara Andrews were known as Team Aaron Shara.

    Each of the orders Mullen already has signed includes this language (italics added):

    The Court confirms this amount is the Final Judgment of the Court against this Defendant and hereby authorizes the Receiver to pursue appropriate collection proceedings.

    On Nov. 29, Bell won against the named winners and a defendant class of more than 9,400 other winners in summary judgment, meaning the judge rejected arguments they were entitled to keep more than $200 million in Ponzi proceeds.

    “How much of that we will be able to collect for distribution to claimants with allowed claims is uncertain at this time,” Bell wrote on Nov. 29. “However, we will pursue collection of these judgments vigorously, and expect the ultimate amount collected will be a substantial sum.”

    The money will go to the Zeek losers who filed the appropriate paperwork and whose claims were approved.

    Stephen B. Darr, the trustee for TelexFree, has followed Bell’s lead in pursuing net winners from MLM HYIP fraud schemes. Darr effectively has sued more than 93,000 alleged TelexFree winners.

    Other receivers in HYIP cases potentially could follow the leads of both Bell and Darr in pursuing clawback litigation against alleged winners.

    NOTE: Our thanks to the ASD Updates Blog.




  • Payments To 41,000 Zeek Participants At Risk

    If you were a claimant in Zeek Rewards — and if you did not submit the required OFAC certification and release — you are at risk of not receiving a payment from the court-appointed receiver.

    OFAC stands for the Office of Foreign Assets Control. As receiver Kenneth D. Bell explained on the FAQs section of the receivership website long ago (italics added):

    United States law makes it illegal to transact business with, or send money to, certain persons or entities. We have received more than 170,000 Claims from Claimants in 157 countries. We are requesting this information so we can ensure that distributions made to Claimants are legally permitted to receive distributions under applicable law. The OFAC Certification we are requesting is a form certifying that neither you nor any person or entity for whom you may be acting is a person or entity with whom it is illegal for a United States entity to transact business because (a) of sanctions administered by the Office of Foreign Assets Control, (b) the person or entity is listed on or is included in a category enumerated on the list of Specially Designated Nationals and Blocked Persons, or (c) other applicable regulations prohibit such transactions. Information on the Office of Foreign Asset Control may be found by clicking the following link: http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx. Information on the list of the Specially Designated Nationals and Blocked Persons may be found by clicking the following link: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx.

    In an announcement dated Oct. 5, 2016, Bell said more than 41,000 claimants had not filed the required certification and release.

    And, he noted, “The ZeekRewards Receivership cannot pay a claimant with a recognized claim unless the claimant submits an OFAC certification and release. Failure to submit an OFAC certification and release may result in these claims being forfeited.

    “The Receiver anticipates filing a motion to obtain confirmation from the Court that, subject to certain limited exceptions, any claimant that has not electronically submitted its OFAC certification and release by December 31, 2016 will be deemed to forfeit his/her claim in the ZeekRewards Receivership. Once approved by the Court, the funds held in reserve for the forfeited claims will be released from the reserve for payments to claimants with allowed claims in this case.

    “The Receiver has and will continue to contact all claimants that hold one of these more than 41,000 claims regarding the forfeiture of their claim.”

    NOTE: Bold type added by PP Blog.




  • Dawn Wright-Olivares Of Zeek Rewards Sentenced To 7.5 Years In Federal Prison

    Dawn Wright-Olivares.
    Dawn Wright-Olivares.

    BULLETIN: Dawn Wright-Olivares, the former COO of Zeek Rewards, has been sentenced to seven and one-half years in federal prison. The sentence was imposed by U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina. The office of U.S. Attorney Jill Westmoreland Rose prosecuted Wright-Olivares for investment- and tax-fraud conspiracy.

    Daniel Olivares, the stepson of Wright-Olivares and Zeek’s key programmer, also was sentenced today. Cogburn imposed a two-year prison term against Olivares, who was charged with investment-fraud conspiracy.

    Both defendants had agreements with prosecutors and pleaded guilty in February 2014, more than two years in advance of the trial of Zeek operator Paul Burks. Burks, 69, was convicted by a jury in July 2016 on charges of mail fraud, wire fraud, conspiracy to commit both and tax-fraud conspiracy. No sentence date has been set.

    Prosecutors said Zeek was a cross-border fraud that had gathered hundreds of millions of dollars operating over the Internet. Hundreds of thousands of victims were defrauded. Only TelexFree, another cross-border MLM “program,” may be larger when measured by the number of persons fleeced.

    In addition to the criminal charges, Wright-Olivares, 48, and Olivares, 34, both of Clarksville, Ark., faced serious civil litigation from the SEC and from the court-appointed receiver in the Zeek case. The SEC accused them of keeping Zeek participants in the dark about a federal investigation and Zeek’s “imminent collapse” while accepting “substantial sums of money from the scheme.”

    In the end, Wright-Olivares and Olivares ended up with nothing.

    Before its August 2012 collapse in a pile of Ponzi rubble, Zeek tried to dupe people into believing they were not making an investment. Any number of current schemes are doing the same thing.

    Among other things, the Zeek case shows that key executives aren’t the only people who risk prosecution for pushing online fraud schemes. In December 2015, the SEC charged alleged Zeek promoter Trudy Gilmond with fraud.

    Separately, Kenneth D. Bell, the Zeek receiver, has been pursuing hundreds of millions of dollars in clawback claims against alleged net winners globally. Bell said he’d be in court today to present the sentencing judge letters from Zeek victims.

    Jaymes Meyer, a Zeek payment vendor, last month was sentenced to 15 months in prison for obstruction of justice.

  • Zeek Receiver Has $104K Judgment Against TrafficMonsoon Pitchman Now Pushing TrafficPowerline

    Screen shot from federal court files. Masking by PP Blog.
    Screen shot from federal court files. Masking by PP Blog.

    On Oct. 14, 2015, the federal court clerk for the Western District of North Carolina signed a judgment of $104,743.55 against Adrian John Hibbert of Sully, United Kingdom. The judgment was in favor of Zeek Rewards’ receiver Kenneth D. Bell, records show.

    Bell had sued Hibbert and other U.K. residents in March 2015 for return of their alleged Ponzi scheme winnings, plus interest. The SEC shut down Zeek in August 2012, alleging a massive cross-border fraud that had gathered hundreds of millions of dollars.

    Hibbert appears not to have entered a defense to Bell’s claims that he had received more than $82,000 from Zeek and that those winnings constituted Ponzi proceeds that must be returned to victims.

    Instead, he pushed other cross-border, online schemes such as Traffic Monsoon, shut down by the SEC in July after allegedly gathering more than $207 million. With Traffic Monsoon facing a Sept. 23 hearing in Utah, Hibbert has turned his attention to Traffic Powerline, according to promos on YouTube.

    The development shows that money tainted by fraud may be flowing between and among schemes.

    Bell has raised the issue of MLMers moving from one fraud scheme to another.

    BehindMLM.com has reported TrafficPowerline is related to a recently collapsed Ponzi scheme known as MoBrabus.

    Pearse Donnelly of both TrafficPowerline and MoBrabus has been threatening BehindMLM.

    NOTE: Thanks to the ASD Updates Blog.




  • Zeek Receiver Establishes Victims’ Email Address In Advance Of Sentencing Next Month For Dawn Wright-Olivares and Daniel Olivares

    Dawn Wright-Olivares, former Zeek COO.
    Dawn Wright-Olivares, former Zeek COO.

    2ND UPDATE 12:53 P.M. EDT U.S.A. With sentence court set next month for Zeek Rewards’ figures Dawn Wright-Olivares and Daniel Olivares, Zeek receiver Kenneth D. Bell has established an email address for victims who wish to tell their story to the court.

    “Victims of these offenses are entitled to be heard at sentencing,” Bell wrote in an Aug. 29 announcement on the receivership website. “If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.”

    Sentencing is set for 9:30 a.m. on Sept. 13, Bell wrote.

    Wright-Olivares and Olivares pleaded guilty in February 2014 to the criminal charges against them. Zeek operator Paul Burks was found guilty on criminal charges last month. No sentencing date has been announced for him.

    Under the terms of her plea agreement, Wright-Olivares faces a maximum of 10 years for investment-fraud conspiracy and tax-fraud conspiracy. Olivares face a maximum of five years for investment-fraud conspiracy.

    Bell wrote that “the Court would like to hear about any of the below circumstances”:

    • Becoming insolvent;
    • Filing for bankruptcy under the Bankruptcy Code;
    • Suffering substantial loss of a retirement, education, or other savings or investment fund;
    • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
    • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
    • Suffering substantial harm to his or her ability to obtain credit.

    Burks potentially faces 65 years in federal prison.




  • EDITORIAL: Arguments Of Zeek Winners Continue La-La Land Narrative, But Come As No Surprise In MLM’s HYIP Wing

    Zeek receiver Kenneth D. Bell.
    Zeek receiver Kenneth D. Bell.

    Many people in the antiscam community applauded Kenneth D. Bell, the receiver for Zeek Rewards, when he sued more than 9,000 individuals more than two years ago for return of their gains from the scheme. Those gains — more than $200 million — came from Ponzi proceeds, Bell alleged.

    And he pointed out that the money rightfully should go to the hundreds of thousands of Zeekers globally who were “affiliate victims.” Court filings later would show that Zeek gathered on the order of $940 million in less than two years. Only TelexFree, another MLM HYIP scheme that was disintegrating when Bell announced his lawsuit against the Zeek “winners” in March 2014, may be bigger.

    More than 90,000 (gulp!) alleged TelexFree winners now are being sued by Trustee Stephen B. Darr. TelexFree infamously caused angry affiliates to pour into the company’s billion-dollar broom closet in Massachusetts. It was a good thing police were there to keep order.

    Thanks to the willful blindness and serial disingenuousness brought to you by serial MLM HYIPers such as Todd Disner, T. LeMont Silver and “Ken Russo,” huge class-action cases in which “winning” promoters of MLM securities schemes are named defendants now are a reality.

    Bell, unfairly maligned among some MLM HYIPers and even some apparent “sovereign citizens,” deserves a lot of credit for trying to bring a measure of financial justice to the hundreds of thousands of individuals ripped off by Zeek and for establishing a sort of blueprint for how Darr could proceed.

    This blueprint also is there in case the Traffic Monsoon receiver needs it. Traffic Monsoon, an alleged $207 million scheme, was broken up by the SEC last month. There already is evidence that Traffic Monsoon had promoters in common with TelexFree.

    It is true that the number of potential defendants across the HYIP sphere is staggering. But it is equally true that the number of victims of these cross-border schemes is even more staggering. This number is in the millions. The global losses are in the billions. Absent actions such as those brought by Bell and Darr, however, there would be virtually no financial accountability. Society would be saying that it’s OK to profit through the promotion of online Ponzi schemes.

    For years, the PP Blog has raised questions about the national-security implications of cross-border HYIP schemes. The narratives surrounding such schemes typically are bizarre, with anonymous Ponzi-board pitchmen typically beginning with “I am not the admin” of the “program.” It all goes recklessly downhill from there.

    To those who feel a chill every time one of these schemes gains a head of steam, it came as no surprise that the alleged Zeek “winners” are arguing they should get to keep their hauls. It is simply the natural progression of the HYIP narrative.

    Bell, a former federal prosecutor, is having none of this. Indeed, his is the voice of common sense.

    From his argument (italics/bolding added):

    Defendants still act as if Zeek was a legitimate business and Defendants were “internet marketing specialists” entitled to be paid as employees rather than investors in the scheme, all of which is of course pure fiction.

    Specifically, Defendants ask the Court to absolve the scheme’s net winners from their obligation to repay the victims’ money because of an alleged “limitation” on the timing of future claims included in the scheme’s website’s “Terms of Service” (or “TOS”), which in any event do not limit the Receiver’s claims against Defendants. The Court should resist Defendants’ invitation to create the dangerous loophole of allowing a fraudster to use the terms implementing a Ponzi scheme to limit the right of a subsequently appointed Receiver to recover funds paid to the winners of the fraudulent scheme. While such a rule would be a great recruiting tool for future Ponzi scheme operators, it is surely an unacceptable legal rule and public policy.

    Also, Defendants urge the Court to rule that by purchasing bids, posting online advertisements (which Zeek boasted would take only three to five minutes a day), and recruiting thousands of victims to the scheme, they provided “reasonably equivalent value” to ZeekRewards such that they get to keep the victims’ money that they won in the scheme. In other words, Defendants claim that those Defendants who spent the most time successfully promoting the scheme and multiplying the number of its victims should be given the most credit against the Receiver’s claims to recover their fraudulently transferred winnings. In fact, in arguing that they were supposedly rightly paid for their “services,” Defendants stretch to compare themselves to the utility company, which among many other differences does not invest money in their customers’ businesses hoping to share in compounding profits of 125% every ninety days.

    NOTE: Our thanks to the ASD Updates Blog.