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URGENT >> BULLETIN >> MOVING: Zeek Receiver Files Clawback Lawsuits Against Residents Of Brazil, Israel, France, Sweden, Denmark, Germany, Ireland, Netherlands

URGENT >> BULLETIN >> MOVING: (10th Update 10:59 p.m. EDT U.S.A.) Zeek Rewards’ receiver Kenneth D. Bell has filed clawback lawsuits against alleged “winners” with addresses in Brazil, Israel, France, Sweden, Denmark, Germany, Ireland and the Netherlands.

The winners are alleged to have received illicit gains from Zeek’s Ponzi- and pyramid scheme. Alleged sums won range from tens of thousands of dollars to hundreds of thousands of dollars, according to eight complaints filed in U.S. District Court for the Western District of North Carolina.

The subheads below contain info on the alleged winners, where they live and how much they won.

Brazil

Eduardo Borges de Aguiar, Niteroi, Rio de Janeiro, $692,366.97. Username: “ZRBrasil.”

Denise Marchon Monteiro Bernardes, Niteroi, Rio de Janeiro, $159,930.77. Username: “denisemarchon.”

Fernando Eneas Lessa, Rio de Janeiro, $121,768.53. Username: “ZRRioDeJaneiro.”

Luis Claudio Lima Trindade, Ananindeua, Para, $101,129.02. Username “convite.”

Hygson Assef Pereira da Rocha, Rio de Janeiro, $95,776.73. Username: “hygson.”

Edson Tadeu Tobias, Sao Paulo, $87,682.07. Username: “nabisart.”

Daniel Elias Neves, Praia Grande, Sao Paulo, $85,747.32. Username: “danielneves.”

Israel

Hagit Rockah, Rishon LeZion, $316,584.31. Username: “bsd.”

Jacob Stiner, Netanya, $184,120.22. Username: “steiner.”

Tzahi Rozental and Itzhak Harel, Rishon LeZion, $183,164.93. Username: “2000dollar.” “Upon information and belief, Rozental and Harel received payments from ZeekRewards under the name Itzhak Harel.”

Pnina Soraski, Beitar Illit, $181,881.12. Username: “pnina.”

Hava Lipcer, Beit She’an, $173,049.21. Username: “success180.”

Sigalit Rahat, Rishon LeZion, $169,053.14. Username: “sigalitrahat.”

Demyan Michaeli, Holon, $153,074.10. Username: “demyan.”

Erez Shaked, Tel Aviv, $98,352.27. Username: “Erezmora.”

Menahem Lipcer, Beit She’an, $69,907.85. Username: “sucess180M.”

Rivka Haimovitz, Jerusalem, $69,646.49. Username: “dynemic.”

Oshrit Marciano, Mevaseret Zion, $68,419.10o. Username: “oshritmarciano.”

Baruch Heyman, Jerusalem, $68,165.19. Username: “arrowhead.”

Shemuel Cohen, Akko, $67,066.64. Username: “muli.”

Ilan Doron, Kochav Yair, $54,472.84. Username: “ilandoron.”

Meshulam Shapira, Jerusalem, $53,219.36. Username: “bracha.”

France

Suzanna Dreyer, La Valettedu-Var, $446,613.38. Username: “InterestedPeople.” (Also see BehindMLM.com story on “GooBets,” plus these PP Blog stories: “GooBets,’ Cross-Border Fraud Scheme, Emerges” and “After Seeing Photos Of Its Players On ‘GooBets,’ National Basketball Association To Turn Matter Over To ‘Legal Department.”)

Sweden

Nils Ove Marcelind, Torslanda, $131,051.06. Username: “spanien.”

Ola Persson, Orebro, $84,359.67. Username: “sunseeker.”

Rolf Ostlund, Gavle, $82,469.10. Username: “gate1.”

Lars Apelthun, Uppsala, $81,083.80. Username: “go2gate.”

Anders Brunnegard, Tvarred, $51,675.54. Username: “uniq.”

Denmark

Eric Mortensen, Kastrup, $563,452.84. Username: “mysecretcircle.”

Joergen Stegler Lorentzen, Vestervig, Thisted, $64,610.97. Username: “Thybo.”

Leda Rasmussen, Copenhagen, $53,652.76. Username: “bmw4me2.”

Germany

Marit Kafurke, Scheessel, $161,981.95. Username: “turbolady.”

Frank Astheimer, Martinsthal, $146,740.05. Username: “goldteam.”

Yovanka Mirich, Dusseldorf, $58,905.93. Username: “europe1.”

Jan Wrobel, Weil am Rhein, $53,450.17. Username: “team.”

Ireland

Michal Gach, Carrigaline, County Cork, $191,450.01. Username: “thebestrewards.”

Elena Avdeeva, Waterford, $126,221.45. Username: “brand.”

Vivian Akoh, Waterford, $102,670.75. Username: “greatauctions.”

Ngozi Nwamara, Waterford, $80,338.90. Username: “leadauctions.”

Ints Priekulis, Waterford, $77,330.24. Username: “in1.”

Kate Favour Iwuoma, Cork, $56,035.32. Username: “favourauctions.”

The Netherlands

Remco Boom, Delft, $103,695.82. Username: “oppsincome.”

Renze Deelstra, Aalsmeer, $68,787.17. Username: “turboteam2012.”

NOTE: Our thanks to the ASD Updates Blog.

May 6, 2015
Zeek Rewards’ Dawn Wright-Olivares Loses ‘Several Motor Vehicles’ To Receiver In Cross-Border Ponzi Case; More Actions Coming Against International ‘Winners’ And Vendors

More lawsuits against international “winners” in the Zeek Rewards cross-border Ponzi-and pyramid-scheme case are coming, receiver Kenneth D. Bell has advised a federal judge.

Bell also signaled to Senior U.S. District Judge Graham C. Mullen that lawsuits may be coming against alleged international Zeek vendors such as Payza and SolidTrustPay, both of which earlier were involved in the AdSurfDaily Ponzi scheme and are Ponzi-forum darlings.

The U.S. Attorney’s Office for the District of Columbia has been soliciting information on Payza since at least December 2013. Last month, the U.S. Securities and Exchange Commission identified SolidTrustPay as a vendor for the alleged CashFlowBot (Dollar Monster) Ponzi scheme that operated out of the U.S. state of Georgia.

On another front, Zeek’s former COO — Dawn Wright-Olivares — doesn’t get to keep her cars.

“In the first quarter, the Receiver also took possession of several motor vehicles as part of the settlement with Defendant Dawn Wright-Oliveras,” Bell informed Mullen. “The Receiver has retained an auctioneer and intends to liquidate these vehicles during the second quarter of 2015.”

Wright-Olivares, an alleged Zeek “insider,” has been charged criminally and civilly by U.S. authorities. She has settled the federal civil charges and pleaded guilty in the criminal case. In addition, she faced litigation from Bell.

Bell’s forensic team has tracked Zeek money all over the world. The receiver already has sued alleged “winners” with addresses in the United Kingdom, Canada, Australia, New Zealand, the British Virgin Islands and Norway.

It won’t end there, he advised Mullen in a quarterly update to the court filed yesterday.

“The Receiver expects to file lawsuits against foreign net winners in additional countries during the second quarter of 2015,” he wrote.

Bell has raised concerns that some MLMers/network-marketers are pitching one fraud scheme after another.

News that Bell intended to expand his efforts to gather money for an estimated 800,000 victims of Zeek’s cross-border scheme was received while the nation of Thailand was squaring off against UFunClub/UToken, yet another scheme pushed by MLMers/network-marketers.

UFunClub/UToken possibly gathered more than $1.17 billion, according to reports in Thai media. Questions have been raised about whether North American “sovereign citizens” were involved in the “program” and a separate venture known as SVM Global Initiative.

So-called “sovereigns” were involved in the $119 million AdSurfDaily Ponzi scheme in 2008. ASD was pushed in part by Frederick Mann, the purported operator of multiple fraud schemes. Mann appears to have had sympathy for Francis Schaeffer Cox, an Alaskan “sovereign” and militia man implicated in a plot to murder public officials.

A scheme known as Profitable Sunrise also appears to have been pushed in part by “sovereign citizens.”

NOTE: Our thanks to the ASD Updates Blog.

May 1, 2015
BULLETIN: Receiver Seeks Default Judgments Against Key Zeek Rewards’ Clawback Defendants

BULLETIN: (6th Update 8:34 p.m. EDT U.S.A.) Zeek Rewards’ receiver Kenneth D. Bell has gone to federal court in the Western District of North Carolina, seeking default judgments against key clawback defendants and alleged “winners” Trudy Gilmond and Jerry Napier, a figure in the AdSurfDaily Ponzi-scheme story.

Bell is seeking more than $2.129 million from Gilmond. He is seeking more than $2.041 million from Napier.

Both Gilmond and Napier failed to defend the actions against them — with Gilmond missing an April 3 deposition in Vermont and Napier missing an April 2 deposition in Detroit, Bell wrote in a court filing.

In the alternative, Bell is asking Senior U.S. District Judge Graham C. Mullen to force Gilmond and Napier to appear in Mullen’s North Carolina courtroom no later than May 15 to “show cause as to why default judgment should not be entered against” them.

This is from Bell’s assertions against Gilmond (italics added/light editing performed):

In granting the Receiver’s Motion for Class Certification, the Court held that all Named Defendants, including Ms. Gilmond and her company, would need to “provide the Receiver with any and all evidence of their financial status and the location of all net winnings received from ZeekRewards, including deposition testimony as to the same.” . . .

Pursuant to this Order, the Receiver noticed Defendants’ deposition for April 3, 2015 in Vermont, Ms. Gilmond’s state of residence, in compliance with the Federal Rules of Civil Procedure. See Ex. 1, Notice of Deposition of Trudy Gilmond and Trudy Gilmond, LLC. The Notice was served on Defendants’ counsel via U.S. mail, hand delivery and email on February 27, 2015. Id. And, after Defendants’ counsel withdrew from the case, the Notice was also sent directly to Ms. Gilmond via email at an email address provided by her now former counsel.

In spite of the Court’s Order and repeated notice, Ms. Gilmond has refused to appear for her noticed deposition.

Largely the same assertion was made against Napier.

Zeek Rewards is believed to be one of the largest MLM/network-marketing Ponzi- and pyramid schemes in U.S. history. The “program” allegedly gathered $897 million.

The SEC shut down Zeek Rewards in August 2012.

Even being “flexible on the logistics” of the Gilmond and Napier depositions was not enough to get them to appear, Bell contended.

From the receiver’s assertions against Napier (italics added):

In sum, it seems clear that Mr. Napier does not intend to appear for a deposition or produce the related requested documents. He has offered no explanation for his refusal to appear or otherwise defend the action. Accordingly, it is appropriate for the Receiver to move the Court for judgment against Mr. Napier and the alternative relief requested.

Largely the same assertion was made against Gilmond.

In the earliest days of the SEC’s action, Gilmond litigated aggressively. She continued to do so as Bell pursued clawbacks from more than 9,000 alleged Zeek winners.

Why she apparently isn’t doing so now is unclear.

Bell has expressed concerns that some MLMers/network marketers are moving from one fraud scheme to another.

NOTE: Our thanks to the ASD Updates Blog.

Apr 24, 2015
Lawyer Linked To Zeek Rewards Scheme Disbarred

A California attorney alleged to have stolen at least $800,000 that originated in Zeek Rewards while serving as counsel for a Zeek financial vendor has been formally disbarred.

The California Supreme Court issued the order against Scott Stone Mehler on Feb. 23, according to the docket of the case.

Mehler was an attorney for Plastic Cash International (PCI), a vendor sued by Kenneth D. Bell, the court-appointed receiver in the SEC’s pyramid- and Ponzi case filed against Zeek in August 2012. Zeek operated through Rex Venture Group LLC of North Carolina.

Although the Zeek case is referenced in documents prepared by the State Bar of California, the disbarment order against Mehler is tied to a swindle he carried out against the operators of a sheet-metal business. He has been ordered to pay restitution of $647,795.37 in that case.

Whether a separate Bar prosecution is pending against him specifically for Zeek-related actions is unclear. Also unclear is whether a criminal investigation is under way. Mehler asserted his Fifth Amendment right against self-incrimination, according to a July 2014 Bar report.

Bell is pursuing PCI for the return of millions of dollars alleged to be Zeek assets. PCI contends it is a victim of both Zeek and Mehler and was rendered insolvent owing to its business relationship with Zeek.

NOTE: Our thanks to the ASD Updates Blog.

Apr 13, 2015
‘Bacon’ Crumbles — And Yet Props Up MAPS

EDITOR’S NOTE: The interconnectivity of fraud schemes is one of the core dangers of the HYIP sphere. Stolen proceeds continually cycle between and among scams, making banks and payment vendors virtual warehouses for cross-border criminals and their serial enablers. The problem may be intensifying. More and more HYIP schemes appear to be using script kits — essentially prefabricated websites — in which emerging schemes simply plug in their information and graphics. These kits allow schemes to show ads for other schemes, including competitive schemes.

Simply put, modern scams are driving business to other modern scams.

As the story below illustrates, the cycle may not be broken even if a particular scheme suspends payouts.

**____________________**

“Bring The Bacon Home,” a Ponzi-board “program” popularized in part by Achieve Community hucksters, reportedly has crumbled.

The circumstance surrounding the collapse, however, demonstrates that BTBH is contributing to ongoing harm. Indeed, the “program” continues to publish ads for other HYIP schemes, including “MyAdvertisingPays.”

MAPS, as it is known, is referenced in a prospective class-action complaint filed against multiple TelexFree figures and financial vendors in U.S. District Court for the Southern District of New York in December 2014.

TelexFree was alleged by the SEC last year to have been a combined pyramid and Ponzi scheme. The trustee in the TelexFree bankruptcy case says the cross-border “program” may have gathered as much as $1.8 billion.

TelexFree and MAPS are known to have had promoters in common. It was learned last month that Shaun Smith, an alleged “winner” in the Zeek Rewards scheme broken up by the SEC in 2012, also is promoting MAPS.

Zeek receiver Kenneth D. Bell is suing Smith and more than 9,000 other alleged “winners,” amid claims they are in possession of proceeds that flowed from a Ponzi scheme.

Despite the reported collapse of BTBH, it continues not only to publish ads for MAPS, but other schemes.

BTBH, which had claimed $40 turned into $1,800, encountered a failed launch in January. The “program” then embarked on a self-styled “relaunch,” but that, too, appears now to have failed — leaving investors holding the bag.

Before Achieve Community collapsed under the weight of an SEC investigation announced in February in which the agency alleged Achieve was a combined Ponzi- and pyramid scheme that had gathered $3.8 million, any number of Achieve promoters also were promoting other cross-border scams.

Another of the scams currently advertised on BTBH is “MooreFund,” as the screen shot below demonstrates. MooreFund also was promoted by Achieve members.

As the PP Blog reported on Feb. 24 (italics added):

Like Achieve, MooreFund has a presence on well-known Ponzi-scheme forums such as MoneyMakerGroup and TalkGold. The “program” purports to offer four investment plans. These promise absurd daily interest rates of between 1.5 percent and 3 percent, with “compounding” available on three of the four plans and tiered recruitment commissions offered on all four.

MooreFund, in turn, was promoted online alongside a “binary options” scheme known as SpotFN that recently became the subject of a cease-and-desist order in Missouri.

See April 12 report on BTBH at BehindMLM.com.

Apr 12, 2015
In Asking Court To Reject Proposed Herbalife Class-Action Settlement, Objectors Point To Clawback Actions Flowing From Zeek Case

EDITOR’S NOTE: Clients of attorney Douglas M. Brooks object to the proposed Herbalife-class-action settlement on a number of grounds. This story focuses on only one of them: one that cites “clawback” actions flowing from the Zeek Rewards’ Ponzi- and pyramid case. The Zeek clawback actions underscore the litigation dangers MLM distributors may encounter after harrumphing for a mother ship alleged to be a fraud.

Risk may be particularly elevated if distributors emerged with a profit or if they offered deceptive “leads” or “training” programs . . .

The PP Blog accessed the objections of Brooks’ clients through the website of TruthInAdvertising, which also is objecting to the proposed Herbalife settlement. The link appears at the bottom of this story . . .

Source: Screen shot from federal court filing.

At least 18 individuals objecting to a proposed class-action settlement in Dana Bostick v. Herbalife International of America Inc et al say the $17.5 million settlement, as stipulated by both sides, could shield “high-level distributors” from “clawback” lawsuits.

All of the objectors have filed complaints against Herbalife with the Federal Trade Commission, according to their Bostick declarations. They are represented by Massachusetts attorney Douglas M. Brooks.

Brooks has litigated against Herbalife in the past and has advocated the position that “The Multi-Level Marketing Industry Causes Substantial Injury to Consumers.”

In their objections, Brooks’ clients specifically argue that “The Release in the Settlement Stipulation is too broad in that it will release claims against high level Herbalife distributors.” As examples of the types of Herbalife distributors who could be sued for return of winnings, the objectors cite “leads” providers and providers of “training” courses.

Although the Bostick case was not brought by the government, the FTC has been investigating Herbalife since March 2014. “[S]everal state Attorneys General” also are investigating the company, the objectors contend.

Made “under penalty of perjury,” their affidavits in Bostick list complaints to the attorneys general of Illinois, Nevada and Connecticut.

Should one or more agencies bring a case against Herbalife, lawsuits against certain individual distributors could provide an additional compensation remedy. This particular route to recovery would be blocked under the current stipulated settlement agreement, the objectors say.

They also say the current pot of $17.5 million is far too small and that the stipulated agreement is defective in other ways.

Objectors Cite Zeek, Fortune Hi-Tech Cases

“The potential for claims against Herbalife’s high level distributors is not merely theoretical,” the objectors contend. “For example, in an action by the receiver arising out of the SEC’s prosecution of a multilevel marketing firm known as Zeek Rewards, the court recently certified a defendant class comprised of the ‘net winners.’”

The case is known as Bell v. Disner. Kenneth D. Bell, a North Carolina attorney and the court-appointed receiver in the SEC’s Ponzi- and pyramid case against Zeek filed in August 2012, is suing more than a dozen individuals for a combined sum in the millions of dollars. He’s also suing certain alleged shell companies used by distributors to harvest illicit profits from Zeek.

At the same time, Bell is suing more than 9,000 other individuals or business entities in a defendant class-action case that already has been certified by a federal judge. The class consists of U.S. Zeek affiliates who allegedly received sums in excess of $1,000 from Zeek.

These actions combined pursue the recovery of about $283 million Zeek allegedly paid out to top promoters in an environment in which “over 92% of the money paid in to Zeek came from net losers.”

Zeek appears to have created approximately 800,000 losers, according to court filings

“[B]ecause ZeekRewards’ net winners ‘won’ (the victims’) money in an unlawful Ponzi and pyramid scheme, they are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims,” Bell wrote in March 2014.

Since that time, he also has sued dozens of alleged Zeek winners with addresses in Australia, New Zealand, the United Kingdom, the British Virgin Islands, Canada and Norway. The actions also seek the return of millions of dollars.

But the Zeek clawbacks are not a unique example of the type of litigation that may surface if an MLM company is accused of fraud, the Herbalife objectors represented by Brooks say.

“In an action by the Federal Trade Commission and four state Attorneys General against the multilevel marketing firm Fortune Hi-Tech Marketing, the court-appointed receiver recently received approval to commence litigation against ‘highly compensated representatives,’” they say.

NOTE: Access objection through TruthInAdvertising.org.

Apr 6, 2015
BULLETIN: Receiver Sues USHBB Inc., Maker Of Zeek Videos — And Ties Firm To AdSurfDaily Ponzi Scheme
9th UPDATE 9:01 P.M. EDT U.S.A. Indianapolis-based USHBB Inc. and three of its principals — James A. Moore, Robert Mecham and Oscar H. Brown — have been sued by the court-appointed receiver in the Zeek Rewards Ponzi- and pyramid-scheme case.

Receiver Kenneth D. Bell alleges USHBB, a producer of videos, also did work for the AdSurfDaily Ponzi scheme “and one or more other failed MLM operations.”

Though not referenced specifically in the complaint, one of those operations was “NarcThatCar,” a bizarre pyramid scheme that collapsed in 2010.

Bell raised concerns months ago that some MLMers or network marketers simply were proceeding from scheme to scheme to scheme. The receiver previously tied alleged Zeek winner Todd Disner to the ASD Ponzi scheme.

Not only did USHBB and its principals mine $676,848 from Zeek for producing videos and marketing materials that duped vast numbers of Zeek participants, Moore, Mecham and Brown piled up hundreds of thousands of dollars in illicit profits as Zeek affiliates, Bell charged.

Brown, better known as O.H. Brown, used “ushbb” as his Zeek affiliate name and amassed $168,642.70, Bell alleged.

Moore scored $109,130.64 under multiple usernames, including “geniweb” and “ttm,” Bell alleged.

Mecham piled up “at least $868,542.17 through his shell companies Five Star Marketing, LLC and The End Media, LLC, under multiple usernames, including ‘napier2’ and ‘theend,’” Bell alleged.

Moore resides in Indianapolis, according to the complaint. Mecham is a resident of Bountiful, Utah, and Brown lives in Mount Pleasant, S.C.

Mecham and Brown received transfers of $25,000 each from a Zeek “insider” in August 2012, the same month Zeek collapsed, according to the complaint.

Brown, according to the complaint, potentially knew that the SEC was looking at Zeek in June 2012 and dashed off a panicked email to Zeek executive Dawn Wright-Olivares.

What appears to have happened, according to the complaint, was that a technology company with which USHBB did business was contacted by the SEC, prompting Brown to tell Olivares:

“Heads up!!!! Our IT partners, RMR development received a telephone call from the SEC today regarding yougetpaidtoadvertise and what organizations were associated. This was a very short call I am told. Not sure what will come of this but this is an alarm at least that the government is looking. We need to get squeaky clean and quick!”

Olivares, charged civilly by the SEC and criminally by federal prosecutors in the Western District of North Carolina in 2013, allegedly shared inside information with USHBB and Brown.

From the receiver’s complaint (italics added):

Further, the Defendants were involved in the Zeek scheme’s operation and the Insiders’ decisionmaking. For example, in August 2011, ZeekRewards adjusted some of the terminology it used publicly in an attempt to disguise the “Compounder” as a legitimate retail profit sharing mechanism. The Compounder’s name was changed to the “Retail Profit Pool,” but the substance of this investment vehicle did not change. USHBB was or should have been fully aware of this deceitfulness in which it participated.

In a June 24, 2011 email, Dawn Wright-Olivares wrote to O.H. Brown regarding a webinar that USHBB had created for Zeek: “I started to do minor edits . . . ([Y]ou’ll see them where I started to say Retail Profit Pool) lol instead of Compounder . . . . ” She further wrote to Brown: “the silent cap [for bid expiration] reality will be 125% but we can’t SAY it as you know.”

Wright-Olivares pleaded guilty to investment-fraud conspiracy and tax-fraud conspiracy in February 2014.

Consistent with USHBB’s “dubious track record” in ASD and other schemes, the company and its principals “assisted the ZeekRewards scheme by creating multiple videos that served as promotional tools for ZeekRewards,” Bell alleged.

Titles included:
- “One Penny Billionaire.”
- “You Get Paid to Advertise.”
- “Got 20 Seconds.”
- “The Dog Gone Truth.”
- “Spin the Wheel.”
“The videos were carefully produced to mislead and deceive victims into participating in the scheme, convincing victims that with minimal effort they could earn significant financial returns from the Zeek scheme,” Bell alleged.

And, he alleged, “These videos assisted the Insiders in promoting the alleged ease with which affiliates could earn passive profits by investing in the scheme and selling membership in the scheme to others. Affiliates were told to mention the ZeekRewards program to a prospective affiliate or advertise it on a web page, and then email or otherwise provide them a link to the USHBB videos, which upon information and belief convinced other unwary victims to sign on . . .

“The videos were a key component in proliferating the RVG Ponzi scheme, causing significantly more victims and financial loss than otherwise would have occurred absent Defendants’ actions.”

RVG stands for Rex Venture Group, the alleged operator of Zeek. It was controlled by Paul R. Burks of Lexington, N.C. Burks also has been charged criminally.

ASD was a $119 million Ponzi scheme broken up by the U.S. Secret Service in 2008. NarcThatCar was a “program” that purported to pay MLM “program” members to recruit other members and to record the license-plate numbers of vehicles parked at restaurant chains, big-box retailers, universities, doctors’ offices and throughout neighborhoods from coast to coast.

The information purportedly would be entered into a database that could assist the U.S. Department of Homeland Security locate terrorists and lenders repossess automobiles. The bizarre scheme disappeared after it caught the attention of the Better Business Bureau and investigative journalists.

Bell is seeking treble damages and the return of ill-gotten gains from the USHBB defendants.

NOTE: Our thanks to the ASD Updates Blog.
Mar 27, 2015
Zeek Receiver Posts ‘Notice Of Certification Of Defendant Class Action’; Document Pertains To Thousands Of Alleged ‘Winners’

What once was only theoretical in the context of MLM HYIP schemes — that a receiver appointed by a court could simultaneously sue thousands of “winners” from disparate locations for return of funds received from an alleged Ponzi or pyramid scheme — is now a reality.

This reality was cemented today by the posting of a “Notice of Certification of Defendant Class Action” by Zeek Rewards receiver Kenneth D. Bell. The four-page document is posted on the receivership website.

Bell is suing more than 9,000 individuals in the United States alleged to have received more than $1,000 from the “program.”

Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina certified the defendant class of alleged winners last month. On March 11, Mullen approved Bell’s plan to notify the defendants on the receivership website and through the email addresses they used for Zeek or the receivership.

Here is the notice. (Because the PP Blog could not precisely duplicate the formatting, some of the formatting below is approximate.)

NOTICE OF CERTIFICATION OF DEFENDANT CLASS ACTION

On February 10, 2015, Judge Graham C. Mullen, United States Judge for the Western District of North Carolina issued an ORDER granting the motion of Kenneth D. Bell, the court-appointed Receiver for Rex Venture Group, LLC (“RVG”), to certify a Defendant Class (the “Net Winner Class”) in this action comprised of all persons and entities who were Net Winners of more than $1000 in ZeekRewards. A copy of this ORDER is attached. This notice is being provided to notify you that according to RVG’s records you are a member of the Net Winner Class and inform you about certain important information related to the Net Winner Class and the legal process going forward.

1. In this lawsuit against the named Defendants and the Net Winner Class, the Receiver alleges that because ZeekRewards’ Net Winners “won” (the victims) money in an unlawful Ponzi and/or pyramid scheme, the Net Winners are not permitted to keep their winnings and must return the fraudulently transferred winnings to the Receiver for distribution to the ZeekRewards’ victims. Specifically, the Receiver has asserted claims for relief for: (1) Fraudulent Transfer of RVG Funds in violation of the North Carolina Fraudulent Transfer Act; (2) Common Law Fraudulent Transfer; and (3) Constructive Trust.

2. Net Winners are defined in the Complaint as those who received more money from ZeekRewards than they paid in. Therefore, the Net Winner Class includes all persons and entities who participated in ZeekRewards and received at least $1000 more in money from ZeekRewards than they put into the program. RVG’s records show that you are a member of the Net Winner Class. Your membership in the Net Winner Class depends solely on the amount of your net winnings. It does not depend on whether or not you believed ZeekRewards was lawful, your level of knowledge concerning the program or whether you still have the money you received.

3. The Court has not yet ruled on the merits of the claims in this lawsuit; however, when it does so, its orders will be legally binding upon you and all other members of the Net Winner Class. The Court has noted that the common questions related to the Net Winner Class are “whether ZeekRewards operated as a Ponzi and/or pyramid scheme and whether net winnings received by the Defendants should be returned to the Receiver.” The Court has further held that the details of each class member’s participation in ZeekRewards do not need to be addressed in answering these common and controlling questions. The ongoing legal proceedings in the case will answer these common questions.

4. You are not required to and there should be no need for you to participate in the legal proceedings related to answering the common questions for the Net Winner Class. The Court has determined that the named Defendants, who the Court noted collectively won more than $11 million in profits from ZeekRewards, “inevitably share the same defenses against liability for repayment of the alleged fraudulent transfers made to the class, which does not depend on the personal circumstances of particular affiliates” and that those Defendants and their counsel “are able to fairly and adequately represent the interests of the defendant class.” Also, all pleadings and other papers filed in this action are available for your inspection in the office of the Clerk of Court for the Federal Court in the Western District of North Carolina in Charlotte, North Carolina, and on the Federal Court PACER electronic public access service that allows users to obtain case and docket information online at https://www.pacer.gov/.

5. You will, however, have an opportunity to participate in the process if the Net Winner Class is found to be required to repay their net winnings. If liability is found, the Receiver intends to seek a court Judgment against each class member in the amount of their individualized net winnings plus interest at least from August 17, 2012, when ZeekRewards was shut down and the Receiver appointed. The final amount of each Net Winner Class member’s net winnings and any Judgment against them will be set later in the proceedings after the liability of the class has been established. While the specifics of the process for determining those amounts has not yet been decided, the Receiver intends to seek a process that will notify you of the amount of your net winnings according to the RVG records, allow you a reasonable opportunity to provide a response (supported by relevant documentation if you disagree with the calculation) and then either reach an agreement on the amount or have the amount determined by a judicial process. It is likely to be several months or longer before this process begins so you do not need to take any action at this time either with the Receiver or counsel for the named Defendants related to determining the amount of your net winnings. This is true even if you believe that you are not a member of the Net Winner Class because you did not receive more than $1000 more from ZeekRewards than you put in (you will have an opportunity to make that argument at the appropriate time). However, if you have not already done so, you are advised to gather and preserve any documents or information (including electronic files) related to the amount you paid into and received from ZeekRewards so those documents and that information can be used in the later process to determine the amount of your net winnings.

6. CONTACT INFORMATION REQUIRED – This notice has been sent to the last known electronic address for each member of the Net Winner Class and published on the Receivership website, the Court’s docket and other forums. For purposes of future communications to the Net Winner Class it is important that the Court have updated contact information for all class members. Therefore, please provide your Name, Residential Street Address (or Business address for an entity), Email Address and Phone Number to:

Kenneth D. Bell
McGuireWoods LLP
ATTN: ZeekRewards Class Action
201 North Tryon Street, Suite 3000
Charlotte, North Carolina 28202
Or
zeekrewardsclassaction@mcguirewoods.com

Please be advised that the failure to provide current contact information will not allow you to avoid any liability or obligation related to this matter.

7. Since early in the Receivership, the Receiver has expressed a willingness to consider voluntary settlements on the Receiver’s claims with ZeekRewards’ net winners and others against whom the Receiver has claims. To date, there have been numerous settlements approved by the Court in which net winners and the Receiver agreed on an amount to be repaid, often with payment terms that allowed the net winner to repay the agreed amount over a number of months. Net Winners are still permitted to discuss a potential settlement of the Receiver’s claims against them even though they have become members of the Net Winner Class. If you desire to discuss a settlement of the Receiver’s claims against you, please communicate with the Receiver at zeeksettlement@mcguirewoods.com.

8. This notice is intended to inform you about the Net Winner Class and answer basic questions regarding the Receiver’s claims and the legal process.

PLEASE CONSIDER THIS NOTICE CAREFULLY BECAUSE YOU WILL BE LEGALLY BOUND BY FUTURE ORDERS OF THE COURT IN THIS ACTION. IF YOU ARE UNSURE OF WHAT COURSE TO FOLLOW OR IF YOU HAVE ANY QUESTIONS ABOUT YOUR SPECIFIC CIRCUMSTANCES, YOU MAY WISH TO CONTACT YOUR OWN ATTORNEY. PLEASE DO NOT CONTACT THE RECEIVER, THE COURT OR COUNSEL FOR THE NAMED DEFENDANTS WITH GENERAL QUESTIONS ABOUT THE NET WINNER CLASS OR YOUR PARTICULAR SITUATION OTHER THAN IF YOU WANT TO DISCUSS A POTENTIAL SETTLEMENT WITH THE RECEIVER AS DESCRIBED ABOVE.

Read the notice on the receivership website.

Visit the receivership website.

NOTE: Our thanks to the ASD Updates Blog.

Mar 17, 2015
BULLETIN: To Hinder Recovery, Zeek Assets Were Funneled To Cook Islands And Used To Purchase Property In Turks And Caicos, Receiver Says

Zeek receiver Kenneth D. Bell has filed a land claim in the Turks and Caicos Islands on behalf of Zeek victims, according to this evidence exhibit in U.S. District Court for the Western District of North Carolina. (Masking by PP Blog.)

BULLETIN: The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case says millions of dollars in Zeek assets were transferred from the United States to the Cook Islands in the South Pacific by a former Zeek vendor known as Preferred Merchants Solutions LLC. At least part of the money allegedly then was used to purchase and renovate a “water-view vacation home” in the Turks and Caicos Islands in the North Atlantic.

Receiver Kenneth D. Bell hired local counsel in the Turks and Caicos to bottle up the property through the filing of a “Caution,” which Bell says “forbids any action with respect to the title of the Turks & Caicos Property” until the matter is resolved in the United States.

Senior U.S. District Judge Graham C. Mullen has frozen the island property, which Bell said he intends to sell to benefit Zeek victims.

Zeek was operated by Paul R. Burks through Rex Venture Group LLC. Preferred is operated by Jaymes Meyer of Napa, Calif.

Events that led to the island freeze involve a bizarre circumstance that allegedly occurred in June 2012, when tens of millions of dollars in undeposited checks — enough to fill six to eight mail bins — had backed up at Zeek, starving the Rex enterprise for cash during a period in which Zeek was having banking problems in North Carolina and its alleged Ponzi was crumbling.

As the PP Blog reported in October 2014, Burks allegedly hired Preferred to solve the problem and also to provide trust services. Bell contends that Preferred effectively transferred Zeek Ponzi cash to itself after it learned from the SEC on Aug. 16, 2012, that an order freezing Zeek assets was imminent.

Bell now says Preferred Merchants, “a single-member LLC owned entirely by Jaymes Meyer, transferred $7,737,402 of RVG assets from an RVG trust account . . . for which Preferred Merchants served as trustee. Prior to receiving the RVG Trust Funds, Preferred Merchants had a total of $2,790 in its bank account on August 1, 2012. Preferred Merchants is Meyer’s only source of income.”

The SEC moved against Zeek on Aug. 17, 2012, securing an asset freeze.

“On October 5, 2012,” according to Bell, “Meyer transferred $300,000 from Preferred Merchants to a Scottrade account held in the name of Fidus, LLC, a Delaware entity for which Meyer is the managing member, but was owned by ‘The Spiritum Holdings Irrevocable Trust,’ . . . a ‘Cook Islands Trust’ that Meyer set up in September 2012” after the Zeek freeze.

“On October 9, 2012, Meyer transferred an additional $6,100,000 from Preferred Merchants to the Scottrade Fidus account,” Bell said. “All or nearly all of the money held or transferred by Preferred Merchants or Meyer to the Scottrade Fidus account were RVG Trust Funds.”

More asset-shielding shenanigans occurred as 2013 was getting under way, months after the court-imposed freeze in August 2012, Bell alleged.

“On February 21, 2013, Meyer wired $6,000,000 from the Scottrade Fidus account to an account owned by the Spiritum Trust at Capital Security Bank Limited located in the Cook Islands,” Bell alleged. “On July 3, 2013, Meyer wired the $400,000 remaining in the Scottrade Fidus accounts to the same Spiritum Trust account in the Cook Islands.

“On or about June 28, 2013, Bella Vita Ltd., an entity in the Turks & Caicos Islands that was created and owned by the Spiritum Trust, purchased real property in the Turks & Caicos Islands designated as Title # 60609/24/Norway & Five Cays Section / Providenciales Island (‘Turks & Caicos Home’).”

What are the specs on the home?

It “is described as a 5 bedroom 5 bath home, which Meyer testified has views of the water,” Bell said. “The money used to purchase this real property were RVG Trust Funds that Meyer had deposited into various accounts owned by the Spiritum Trust.”

What else did Zeek victims allegedly pay for?

“Since the purchase of the Turks & Caicos Home, Meyer has coordinated and supervised improvements and renovations to the home and property, purchased furniture and fixtures, and purchased a boat, scuba equipment, and other personal property to be used with the Turks & Caicos Home . . .

“Meyer claims that over $1.5 million . . . has been spent ‘renovating’ the property and making these additional purchases,” Bell said. “All of these purchases were made with RVG Trust Funds that had come directly or indirectly from the Spiritum Trust or Meyer. However, Meyer and Preferred Merchants disclaim any ownership interest or control over Bella Vita, Ltd. or the Turks & Caicos Property.”

Bell has asked Mullen to “impose and enforce an equitable lien by ordering transfer of title to the Turks & Caicos Property to the Receivership Estate to ensure that there is no more evasion or hindrance of the Receiver’s recovery of these assets by Preferred Merchants and Meyer. The Receiver can then sell the Turks & Caicos Property to collect additional funds for the benefit of the victims of the ZeekRewards scheme.”

NOTE: Our thanks to the ASD Updates Blog.

This map, created by the PP Blog through ZeeMaps, depicts the headquarters of Zeek Rewards in Lexington, N.C., the headquarters of of Preferred Merchants Solutions LLC in Napa, Calif., the Cook Islands’ island of Rarotonga in the South Pacific, and the island of Providenciales (Turks and Caicos) in the North Atlantic.

Mar 13, 2015
[PART 2]: ‘MyAdvertisingPays’ Scheme Referenced In TelexFree-Related Class-Action Complaint That Alleges Racketeering — A Zeek Tie, Too

EDITOR’S NOTE: Part 1 of this two-part PP Blog series covered allegations against an alleged New York City-based TelexFree promoter . . .

**__________________**

2ND UPDATE 9:42 A.M. EDT U.S.A. Though not charged as a defendant, the emerging “MyAdvertisingPays” (MAPS) scheme is referenced in a proposed class-action lawsuit filed against multiple TelexFree figures and financial vendors in U.S. District Court for the Southern District of New York in December 2014.

Because both New York’s Southern District and Eastern District are key centers of prosecutions against U.S. financial fraudsters, the proposed TelexFree class-action — now transferred to Massachusetts federal court — leads to questions about whether other “programs” such as MAPS could become the subjects of prosecutions.

Those odds might increase because Staten Island-based Daniil Shoyfer, alleged by the TelexFree plaintiffs “to have been the largest single Promoter in the greater New York area,” also is promoting MAPs, according to a YouTube site in his name.

Beyond that, Shaun Smith, alleged by the receiver in the Zeek Rewards Ponzi- and pyramid case to be one of the largest Zeek “winners” in the United Kingdom, also is promoting MAPs. Receiver Kenneth D. Bell is suing Smith and other alleged U.K. Zeek promoters for return of the funds, alleging they are Ponzi proceeds that came from Zeek victims.

Bell has expressed concern about MLMers or network marketers moving from one fraud scheme to another.

The TelexFree-related class action describes MAPS as a “120% ROI advertising-based Ponzi scheme.”

MyAdvertisingPays (MAPS) is referenced in this TelexFree-related class-action complaint. Red highlight by PP Blog.

The MAPS website purports to have “110676+ Users” and to be “GROWING FAST!” MAPS is the subject of a long thread at the RealScam.com antiscam forum. (Also see BehindMLM.com review of MAPS, also known as MAP.)

From the BehindMLM.com review (italics added):

Using the familiar advertising credit + Ponzi scheme business model, MyAdvertisingPays simpl[y] shuffle new affiliate money around to pay off existing investors.

The business model of MAPS is similar to the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008. MAPS purports to operate from George Hill, Anguilla, a British overseas territory in the Caribbean.

In the proposed TelexFree class action, the reference to MAPS appears in a section that alleges various TelexFree financial vendors enabled the fraud. Some of the vendors are alleged to have engaged in racketeering activity.

At least one Zeek vendor has claimed it was rendered insolvent, owing to its Zeek ties.

On its website, MAPS claims it does not accept PayPal because PayPal “has a bad habit of freezing or limiting members accounts for little or no reason at all.” Instead, it encourages prospects to use SolidTrustPay, a vendor used by both the Zeek and ASD schemes.

MAPS also says it uses something called “VX Gateway,” which purports to operate out of Panama.

Mar 9, 2015
‘Achieve Community’ Domains Disconnected

From an Achieve promo playing on YouTube. Masking by PP Blog.

Two domains linked to the alleged “Achieve Community” pyramid- and Ponzi scheme appear to have been disconnected. On Feb. 17, the PP Blog reported that the domains — ReadyToAchieve.com and TheAchieveCommunity.com — were displaying “Account Suspended” messages.

ReadyToAchieve appears still to have DNS servers, but now displays nothing and will not return a ping. TheAchieveCommunity, meanwhile, displays a “no nameserver” message in registration data.

In a complaint filed under seal in U.S. District Court for the District of Colorado on Feb. 12, the SEC described Achieve as a pyramid- and Ponzi scheme operated by Kristine L. Johnson of Colorado and Troy A. Barnes of Michigan. The agency announced the case on Feb. 18, after the seal was lifted.

Both Johnson and Barnes have asserted their Fifth Amendment rights not to incriminate themselves in the SEC case. Barnes reportedly has claimed he’s under criminal investigation, although it is unclear where and by whom. Both ASD Updates and BehindMLM.com have reported Johnson is the subject of a criminal investigation by the office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina.

Tompkins is leaving her post today, after nearly five years on the job. North Carolina is a banking center, and Tompkins has become known for her role in bringing cases involving multimillion-dollar investment schemes, securities fraud and mortgage-fraud conspiracies.

One such case was the criminal prosecution of three figures associated with Zeek Rewards, an alleged Ponzi scheme said to have gathered on the order of $897 million. Why Johnson, a Colorado resident charged civilly by the SEC in Colorado federal court last month in the Achieve case, is under criminal investigation in North Carolina is unclear.

Zeek receiver Kenneth D. Bell has raised concerns about network marketers proceeding from one fraud scheme to another. At least one filing in the Achieve case in Colorado suggests Zeek and Achieve had promoters in common, given that the woman who filed the document asking for her Achieve money back also is listed by Bell as a “winner” in the Zeek scheme broken up by the SEC and the U.S. Secret Service in 2012.

As the PP Blog reported on Aug. 17, 2012, the date news of the Achieve probe became public (italics added):

The Secret Service leads a multiagency electronic crimes Task Force in Charlotte, N.C. The Charlotte Task Force is known by the acronym CMECTF.

One promo for Achieve claimed its members had the “God given universal right” to spend their money however they pleased and were choosing “not to sell out to the banking system.” Among other things, Achieve claimed $50 turned into $400.

In court filings, the SEC said it has examined at least five Achieve-related bank accounts. The filings also suggest Achieve polluted the commerce stream at at least least nine points of contact: three banks, one credit union, four payment processors and one brokerage firm.

Johnson is alleged to have provided $10,000 to a church. One or more churches sent money to Zeek Rewards, according to court filings.

Because an untold number of Achieve members received debit cards that could be used at ATMs to offload “earnings,” fraudulent proceeds had the potential to flow through many hundreds of towns and cities, effectively turning local banks into dispensaries for Ponzi schemes or warehouses for them. Achieve is said to have had between 9,000 and 14,000 members.

Ads for other fraud schemes were displayed when Achieve members accessed the “program’s” private forum, contributing to concerns that fraudulent proceeds are circulating between and among scams.

Mar 9, 2015