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Tag: Kenneth D. Bell

  • Zeek Receiver In Process Of Sending Large Batch Of Claim-Determination Notices; ‘Program’ Operated ‘Like World’s Biggest Chain Letter,’ Likely Created Losers On Unprecedented Scale And Resulted In Ill-Gotten Gains In All 94 Federal Districts, Receiver Says

    Zeek receiver Kenneth D. Bell at a Dec. 13, news conference in Lexington. N.C. Source: Screen shot from video at receivership website.
    Zeek receiver Kenneth D. Bell at a Dec. 13 news conference in Lexington, N.C. Source: Screen shot from video at receivership website.

    The court-appointed receiver in the Zeek Rewards Ponzi-scheme case has announced he is in the process of sending a batch of more than 80,000 Notices of Claims Determination. This is the first batch of such notices, which the receiver began to issue yesterday. The first batch is expected to take through Dec. 31 to be fully sent.

    Zeekers not included in the first group of 80,000 should remain calm.

    “Not receiving a Claim Determination notice at this time does not mean that your Claim is not valid,” receiver Kenneth D. Bell said in an update posted on the receivership website and dated Dec. 27. “Certain Claims will take additional time to evaluate and may require us to make further contact with you before we issue a Claim Determination. We are and will be working hard to reconcile all Claims and send all Claims Determination as soon as we are able to do so.”

    More than 175,000 claims were filed in the Zeek case, Bell said in Dec. 13 letter.

    The sending of the first batch of notices, though good news, does not mean that a distribution from the receivership estate is imminent. What it means is that individuals who receive a notice can log into the Claim Determination Portal to review the determination and follow the instructions provided to either accept or object to the determination. (Read the Dec. 27 update at the receivership website.)

    “We’ll be able to get, I think, more than 50 cents on the dollar back to people,” Bell said at Dec. 13 news conference.

    One or more distributions may come from the receivership. The first is contemplated for the first quarter of 2014, though more reconciliation work needs to be done before it is scheduled, Bell said.

    Top Ponzi Winners’ Alleged Hauls

    On the clawback front, Bell said on Dec. 13 that Zeek’s Top 10 net winners each received at least $900,000 from the Ponzi scheme.

    The biggest net winner received on the order of $1.8 million, Bell said.

    Clawback lawsuits are contemplated against roughly 9,000 net winners in the United States alone, Bell said.

    “They’re in all 94 U.S. District Courts, they’re in every state in the country,” Bell said. He noted that the U.S. winners have combined clawback exposure on the order of $200 million.

    Another 6,000 or so net winners are not U.S. residents and may have exposure of “several tens of millions of dollars,” Bell said.

    “We are trying to figure out who we can sue and where,” Bell said of Zeek’s international winners.

    Zeek operated through Rex Venture Group LLC of Lexington, N.C.

    ‘Like The World’s Biggest Chain Letter’

    “This Ponzi scheme is just fascinating to me in a lot of ways,” Bell said of Zeek. “It only lasted for about 20 months, from January 2011 [to] mid-August of 2012. During that time, it brought in something north of $800 million from about 900,000 people from 100 countries around the world. I mean, it’s like the world’s biggest chain letter, if you will.”

    The AdSurfDaily Ponzi scheme exposed by the U.S. Secret Service in 2008 brought in about $120 million and ensnared about 100,000 participants, also in less than two years of operation. Zeek, which launched after ASD was exposed and had promoters in common with ASD, appears to have brought in more than seven times the dollar volume of ASD while roping in about nine times the number of participants.

    More than $850 million was directed at Zeek, the SEC said last week.

    Zeek and ASD both operated MLM “programs” and had strikingly similar business models. Although ASD posed logistical challenges to the U.S. courts and victims seeking restitution, Zeek’s enterprise appears to have established an unprecedented challenge.

    Bell has called Zeek “one of the largest — if not the largest — Ponzi and pyramid schemes in history.”

    On Dec. 20, federal prosecutors charged former Zeek COO Dawn Wright-Olivares and former Zeek programmer Daniel Olivares criminally, marking the first criminal prosecutions in the case. The SEC sued Wright-Olivares and Olivares civilly on the same day. The former Zeek pair settled with the SEC, agreeing to pay more than $11.4 million.

    On the criminal side of things, Wright-Olivares agreed to plead guilty to investment-fraud conspiracy and tax-fraud conspiracy. Olivares agreed to plead guilty to investment-fraud conspiracy.

    The SEC sued Zeek operator Paul R. Burks in 2012.

    Various Zeek probes are ongoing, investigators said last week.

    Bell said that most individuals who filed Zeek claims “did an excellent job.” He added, however, that some individuals filed “fraudulent claims” and that some “net winners” appear to have filed claims that state losses.

    “We want to make sure we’re not paying claims to people who ought to be paying the money back to the receivership,” Bell said.

  • URGENT >> BULLETIN >> MOVING: Judge Approves Filing Of Lawsuits Against Alleged Zeek Insiders, Winners

    breakingnews72URGENT >> BULLETIN >> MOVING: (2nd update 3:21 p.m.) Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has issued an order authorizing the court-appointed receiver to file lawsuits against alleged Zeek insiders and winners.

    Receiver Kenneth D. Bell asked for the order last week. He is expected to file the complaints soon.

    Mullen has scheduled an initial conference for the parties Jan. 27 at 2 p.m. in Courtroom 3 of the Charles R. Jonas Federal Building in Charlotte. He further ordered parties to preserve evidence, including “documents, data and tangible things.”

    Visit the ASD Updates Blog. Read the order.

  • TOMORROW (DEC. 17) AT THE ZEEK AUCTION: Branded Ponzi History Up For Bid: Coffee Mugs, Water Bottles, Key Chains, Refrigerator Magnets — And Plaques Of Network Marketing Business Journal Puff Pieces

    zeeknmbjIt won’t be quite like buying Bonnie and Clyde’s fateful getaway car, but it still will represent a purchase of American crime or fraud history. In Lexington, N.C., tomorrow — on the second and final day of the court-approved Zeek Rewards auction — pieces of MLM Ponzi-scheme history will be put up for bid.

    And in Zeek’s case, it’s branded history: cases of water bottles with Zeekler.com branding, cases of coffee mugs with ZeekRewards branding, cases of key chains with Zeekler branding, cases of refrigerator magnets with Zeekler branding.

    The taglines on the Zeek coffee mugs read, “save money — make money.”

    Auctioneers also have put something called the “Zeek-Israel Jerusalem Trophy” up for bid.

    Also on the auction list are plaques of Zeek puff pieces that appeared in the July-August 2011 edition of Network Marketing Business Journal. Here’s the headline: “Record savings, record earnings with Zeekler’s entertainment shopping experience.”

    NMBJ is published by Keith Laggos, a touting defendant in a 2004 SEC case who later became a figure in both the Zeek Ponzi-scheme story and the AdSurfDaily Ponzi story.

    About a year after the July-August 2011 NMBJ article appeared, the SEC alleged that Zeek was a $600 million Ponzi and pyramid fraud. ASD was a $119 million Ponzi scheme exposed by the U.S. Secret Service in 2008.

    Plenty of gift cards, furniture, computer equipment and other items linked to Zeek also are up for bid tomorrow.

    In terms of the number of victims — somewhere on the order of 800,000 — Zeek is believed to be the largest Ponzi scheme in U.S. history.  Kenneth D. Bell is the court-appointed receiver.

    See PP Blog story from earlier today on Day 1 of the Zeek auction.

    The Day 2 auction begins at 9 a.m. ET tomorrow, Dec. 17, 2013.

     

  • Watch Bidding Action In The Zeek Auction LIVE!

    Zeek Rewards auction
    Item from the Zeek Rewards auction

    UPDATED 5:14 P.M. ET U.S.A. The court-approved auction in the Zeek Rewards Ponzi scheme case is being conducted today and tomorrow. Bidding already is under way — and you can observe it live.

    We just observed bidding for an autographed poster of Loretta Lynn start out at $100. Competitive bids flowed in, and the poster appears to have been sold for $170.

    To observe the live bidding today, go here. You’ll proceed to a page at IronHorseAuction.com in which the words “VIEW BIDS” appear on the left side near the top. Click on those words. You’ll then proceed to a page at ProxiBid.com. An “ENTER LIVE AUCTION” button will appear. Click on that, and you’ll be able to see live bids until today’s auction runs its course.

    Check here tomorrow (Dec. 17) and follow the procedure outlined above.

    Zeek is believed to have created more victims than any other Ponzi scheme in U.S. history. The auction is part of a court-appointed receiver’s efforts to gather money for victim’s of Zeek’s alleged $600 million fraud.

    Kenneth D. Bell is the receiver.

  • URGENT >> BULLETIN >> MOVING: Lawsuits Against Zeek Insiders, Winners Believed Imminent; Paul Burks, Dawn Wright-Olivares, Darryle Douglas Among Alleged Insiders; AdSurfDaily Figures Todd Disner And Jerry Napier Among Alleged Winners; Prospective Defendants’ List Also Includes Legendary HYIP Hucksters T. LeMont Silver And Aaron/Shara

    breakingnews72URGENT >> BULLETIN >> MOVING: (UPDATED 5:27 P.M. ET DEC. 16 U.S.A. ) The court-appointed receiver in the Zeek Rewards Ponzi scheme case has advised a federal judge that he intends to sue Zeek operator Paul R. Burks and five alleged insiders, amid allegations they developed and operated a colossal fraud, breached their fiduciary duties, converted and wasted corporate assets and enriched themselves unjustly.

    Included with Burks as alleged insiders are former Zeek COO Dawn Wright-Olivares, Daniel Olivares, Roger Plyler, Darryle Douglas and Alexandre “Alex” De Brantes. De Brantes and Wright-Olivares are husband and wife.

    Receiver Kenneth D. Bell suggested the lawsuit could be filed within days and has asked Senior U.S. District Judge Graham C. Mullen to approve the filing of the complaints.

    And in a move that could send shockwaves across the HYIP Ponzi landscape, Bell advised Mullen that he intends to sue alleged net winners Todd Disner and Jerry Napier, both of whom were AdSurfDaily Ponzi pitchmen. Disner, Bell advised the court, is associated with an entity known as Kestrel Spendthrift Trust and will be sued in his individual capacity and in his capacity as trustee for Kestrel.

    How a spendthrift trust somehow became involved in Zeek could not immediately be determined. Such trusts typically exist to protect the assets of individuals who may be irresponsible with money.

    Also on Bell’s defendants’ list are legendary hucksters T. LeMont Silver, Aaron Andrews and Shara Andrews. The Andrews are known as “Team Aaron Shara.”

    Other alleged Zeek winners Bell advised the court he intends to sue include Trudy Gilmond, Trudy Gilmond LLC, Darren Miller, Rhonda Gates, David Sorrells, Innovation Marketing LLC, Global Internet Formula Inc., Karen Silver, Michael Van Leeuwen, Durant Brockett, David Kettner and Mary Kettner.

    Lawsuits will not be limited to just these 17 alleged winners, Bell advised the court. The plan, he said, was to sue “those who received at least $1,000 more from ZeekRewards than they paid in.”

    Their profits “came from the scheme’s victims,” Bell said, proposing to the judge that they be treated as a “defendant class of the remaining ‘net winners.’”

    The final list of defendants is expected to include many names. Bell has asked the court to impose the rules of complex litigation and to order an initial conference to be held as early as Jan. 13.

    Gilmond’s clawback exposure may exceed $1.364 million, according to court filings in December 2012. Sorrells’ exposure may exceed $943,000. The Kettners may have exposure that exceeds $1 million.

    How much exposure the other prospective defendants have was not immediately clear.

    What is clear is that Zeek’s alleged $600 million Ponzi- and pyramid scheme that was popularized in part on infamous Ponzi forums could land promoters in court soon.

    After the U.S. Secret Service exposed the $119 million ASD Ponzi scheme in 2008, Disner sued the United States — and lost. Disner’s lawsuit was filed even as he was promoting Zeek, a “program” that planted the seed it paid out even more than ASD’s 1 percent a day. Alongside the SEC, the Secret Service also is investigating Zeek.

    Among Disner’s contentions when he sued the government over its ASD-related actions was that the Ponzi case was a “house of cards” and a “tissue of lies.”

    ASD operator Andy Bowdoin, however, later admitted ASD was a Ponzi scheme and that his company never operated lawfully from its inception in 2006 through its collapse in 2008.

    Bowdoin, now 79, was sentenced in August 2012 to 78 months in federal prison. He pleaded guilty to wire fraud in May 2012, after prosecutors produced evidence that Bowdoin had participated in at least two other MLM fraud schemes while out on signature bond and awaiting trial in the ASD Ponzi case.

    NOTE: Our thanks to the ASDUpdates Blog.

     

  • If The Good Lord’s Willing And The Creek Don’t Rise, Be At The Zeek Rewards Auction On Dec. 16 And 17

    This commemorative poster of the concert Hank Williams never made it to is among dozens of items up for auction in the Zeek Rewards Ponzi scheme case.
    This commemorative poster of the concert Hank Williams never made it to is among dozens and dozens of items up for auction in the Zeek Rewards Ponzi scheme case.

    UPDATED 7:42 P.M. ET (U.S.A.) Not only is the court-appointed receiver in the Zeek Rewards Ponzi-scheme case selling Zeek’s old headquarters (with attached coin-operated laundry) in Lexington, N.C., he’s also selling a hefty collection of country-music memorabilia and other entertainment keepsakes. Among them is a “Saturday Night Live Script featuring Johnny Cash and musical guest Elton John from April 17th 1982.”

    There’s also a “Slam” grand piano with no working components and no top. The wooden shell is signed by Jerry Lee Lewis, a legendary keyboard pounder known as rock ‘n’ roll’s first wild man and “The Killer.” (Expect the piano to have “minor wood damage,” the receiver’s auctioneer says.)

    The screen shot above is taken from an image of just one of the items up for auction: a framed poster advertising an appearance by legendary country performer Hank Williams in Canton, Ohio, on New Year’s Day 1953. (The poster appears to be a Hatch Show Print commemorative, rather than an original show promo. Even so, some collectors might want it to round out their Williams collection or for discussion value: Williams died on the way to his scheduled Canton performance, and the “if the good Lord’s willing and the creek don’t rise” line is a classic American idiom.)

    Iron Horse Auction Company Inc. is conducting the auction for Zeek receiver Kenneth D. Bell. (See Day 1 auction items; see Day 2 auction items.)

    The live auctions will open in Lexington on Dec. 16 and 17 and will be simulcast online. Bidders must register at the site of proxibid. The catalog for Day 1 is here; the catalog for Day 2 is here.

    Day 1 items are described by Iron Horse as real estate (former buildings associated with Zeek), and as “Memorabilia from numerous country music artist[s], to include stage costumes by Nudie, autographed  pictures & prints of NASCAR personalities, shadow boxes, reproduced Hatch Show Prints; record label awards & more

    “Porter Wagoner, George Strait, Alabama, Willie Nelson, Kenny Rogers, Barbara Mandrell, Dolly Parton, Waylon Jennings, Charlie Daniels, Alan Jackson, Brooks and Dunn and many more.”

    Day 2 items are described by Iron Horse as “Like new bedroom suites, couches, living room furniture, office furniture, electronics and more.”

    Read receiver’s announcement of the auction. Visit receiver’s website.

  • BULLETIN: ‘First Clawback Claims Are Now Imminent,’ Zeek Receiver Says

    breakingnews72BULLETIN: The court-appointed receiver in the Zeek Rewards MLM Ponzi scheme case says in new court filings that clawback claims against alleged net winners “are now imminent, and a lawsuit against multiple named defendants along with a class of net winners will be filed during the fourth quarter of 2013.”

    Zeek winners received an estimated $283 million through “fraudulent transfers,” receiver Kenneth D. Bell said in a quarterly report to the court dated yesterday.

    North Carolina-based Zeek’s international winners also are on the hook to return ill-gotten gains through clawbacks, Bell said.

    The report is styled “Quarterly Status Report – Q3 2013.” It is available at the receiver’s website.

  • Zeek Claims-Filing Deadline Is Thursday, Sept. 5, 2013; Only 2 Days Left

    The deadline for filing claims in the Zeek Rewards Ponzi-scheme case is 11:59 p.m. prevailing Eastern time on Thursday, Sept. 5, 2013. That’s only two days from today.

    A “File a Claim” button is accessible on the website of the court-appointed receiver. The receiver is Kenneth D. Bell.

    The Garden City Group is the authorized claims administrator working for the Receiver Team, according to the receiver’s website.

    “This is the only legitimate, Court-approved claims form,” the receivership website notes.

    Visit the receiver’s Claims FAQs page.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina is presiding over the Zeek case. North Carolina is in the U.S. Eastern Time Zone, the prevailing time zone for Zeek claims.

    On May 8, 2013, Mullen approved the claims process, set the bar date and approved the receiver’s method of administering the process. The claims portal opened on schedule on May 15. Claims submitted after the Sept. 5 deadline “are automatically disallowed pursuant to the Order approving the Claims Process,” according to the receiver.

  • Only 2 Weeks Left To File Zeek Claim; Deadline Is Sept. 5, 2013

    recommendedreading1As of today, there are only two weeks left to file a claim in the Zeek Rewards Ponzi scheme case. The deadline to file is 11:59 p.m. (prevailing Eastern time) on Sept. 5, 2013.

    Kenneth D. Bell is the court-appointed receiver in the Zeek case. The Zeek receivership website is here. The claims portal is accessible through the receiver’s website and also has a separate URL. The claims portal opened May 15, more than three months ago.

    Bell said this in an Aug. 2 letter from the receiver (italics added):

    To date, while more than 100,000 claims have been submitted or are in the process of being submitted through the Claims Process, hundreds of thousands of affiliates of ZeekRewards and other entities that hold potential claims against ZeekRewards have not filed claims.

    Perhaps you are one of these affiliates who has not submitted a claim because you believe that fully completing and submitting a claim will take too much time, the Claims Process is too complex, the amount of your claim is too small, or that your potential recovery will not be in a large enough amount to make the effort of pursuing your claim worthwhile.

    Regardless of these concerns, I would encourage you to submit your claim prior to the close of the Claims Process if you believe ZeekRewards owes you money for amounts that you invested in ZeekRewards. I anticipate that a substantial percentage of valid claims will be refunded. Moreover, I have made every effort to make the Claims Process as simple and user friendly as possible for all claimants and have only sought the information necessary to enable us to establish the amount each claimant is owed by ZeekRewards. Please also remember that even if you do not have all of the information requested, you may still complete and fully submit your claim. Any deficiencies with a particular claim will be addressed in the claim determination process.

     

  • Receiver Estimates That $290 Million In Fraudulent Transfers Occurred At Zeek; Clawback Litigation May Begin In Third Quarter; U.S. Domestic And ‘Foreign Winners’ Will Be Pursued; Victims Already Have Filed Claims Seeking $287 Million — With More Expected To Follow Before Sept. 5 Deadline

    breakingnews72The court-appointed receiver in the Zeek Rewards Ponzi-scheme case is reporting “significant progress” in securing assets for return to victims and says the estate has gathered approximately $325.1 million since the receivership began in August 2012.

    As of 5 p.m. on July 29, Zeek victims had filed claims seeking about $287 million. The claims portal accessible though the receivership website will close Sept. 5, meaning the number could grow even higher — potentially by the tens of millions.

    An estimated $290 million in fraudulent transfers occurred at Zeek, and receiver Kenneth D. Bell says he intends to file clawback litigation against both Zeek’s U.S. domestic and “foreign winners,” beginning as early as this quarter.

    Bell advised the court that, on June 28, he deposited about $2.5 million seized by the U.S. Secret Service from Solid Trust Pay, one of Zeek’s ewallet providers. Another $3.6 million from NxPay is expected to be deposited soon — “and the Receiver is working with [the Secret Service] to investigate and secure additional Receivership assets that NxPay identified and are being held by its payment processor, LST Financial, Inc.”

    Moreover, Bell said, the receivership — working with the Secret Service — recovered about $5 million from ePaymentAmerica and about $800,000 from PlasticCash.

    Meanwhile, a “foreign account” that may contain $9.5 million still is under investigation by the receivership, and two other foreign accounts that may hold Zeek assets were discovered in the second quarter, Bell said. Those accounts also are under investigation.

    Zeek operated as part of Rex Venture Group LLC of North Carolina. Court filings suggest that Zeek money flowed through at least 16 domestic and foreign accounts, not including the accounts of individual participants. Those accounts may number in the thousands.

    Bell said he also may have claims against certain Zeek “third party-advisors, vendors and other service providers that knew or should have known” about Zeek’s inappropriate activities “and yet faciliated those activities for their own gain.”

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina is presiding over the Zeek case, which was brought by the SEC last year.

  • Judge Approves Settlements With Zeek Receiver, Says Agreements Are In ‘Best Interests Of The Zeek Victims’

    “The Court has reviewed Receiver’s brief and proposed settlement and finds that the proposed settlement is fair and equitable and is in the best interests of the Zeek victims.” — Senior U.S. District Judge Graham C. Mullen, July 26, 2013

    breakingnews72UPDATED 9:43 P.M. EDT U.S.A. If you’re from the camp that claims Zeek Rewards victimized no one, a federal judge set you straight today.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has approved a motion by the court-appointed receiver to settle with certain Zeek winners at discounts. The judge deemed the agreements “fair and equitable” and “in the best interest of the Zeek victims.”

    Mullen’s order applies to at least 136 winners who entered successful prelitigation settlement negotiations with receiver Kenneth D. Bell, who said the agreements provided immediate and concrete benefits to the receivership estate.  The order is expected to cause about $1.8 million to flow into the Zeek estate over time, some of it immediately. Bell listed the “Settlement as % of Winnings” at 56.12 percent in a June 28 filing.

    Bell is marshaling Zeek assets for return to victims.

    Zeek “winners” of $1,000 or more who bypassed the springtime opportunity to settle now face the prospect of clawback litigation beginning sometime this summer. Records show that even some winners of less than $1,000 settled with Bell

    In August 2012, the SEC described Zeek as a $600 million pyramid and Ponzi scheme. The purported Zeek “opportunity” operated through Rex Venture Group LLC, a North Carolina MLM firm.

    Rex and Rex/Zeek operator Paul R. Burks duped members into believing that payouts averaging about 1.5 percent a day were legitimate, the SEC alleged.

    Zeek’s business model was similar to AdSurfDaily, which the U.S. Secret Service and federal prosecutors described as a $119 million Ponzi scheme operating from Florida. The Secret Service raided ASD in 2008.

    The Zeek scam created hundreds of thousands of victims, according to Bell. In April, he warned winners of ill-gotten gains that the time for court action is drawing closer.

    See June 29 PP Blog story and Comments thread.

    NOTE: Our thanks to the ASD Updates Blog.