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Tag: Kenneth D. Bell

  • BULLETIN: Zeek Receiver Sues Alleged ‘Winners’ In United Kingdom

    breakingnews72BULLETIN: (3rd update 7 p.m. ET March 6 U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case has sued “alleged winners” with addresses in the United Kingdom.

    Receiver Kenneth D. Bell identified the defendants as:

    Shaun Smith, Bridgnorth, $262,900.31; Peter William Bennett, Wokingham, $257,573.30; Mark Anthony Ferrie, Abergavenny, $212,072.60; Gary Bryan Morris, Abergavenny, $342,405.01; Kalpesh Patel, Newham, London, $140,842.47; Parvis Parvizi, Macclesfield, $90,518.83; Cathal Lambe, Omagh, $90,311.21; Adrian John Hibbert, Sully, $82,103.51; John Noakes, Croydon, London, $59,850.62.

    The action against the U.K. defendants is believed to be the second against residents of Europe. Bell sued alleged Zeek winners from Norway last month. The receiver previously sued U.S. residents and residents of Australia, New Zealand, Canada and the British Virgin Islands.

    Zeek, an MLM “program,” operated from Lexington, N.C. At least three Zeek executives have been charged criminally. Court filings alleged the far-reaching scam that operated over the Internet gathered about $897 million in less than two years.

    The SEC sued Zeek in August 2012, alleging a massive fraud scheme involving the sale of unregistered securities.

    Bell contends the winners must return their Zeek hauls because they “won” money from victims “in an unlawful combined Ponzi and pyramid scheme.” The case against the U.K. defendants is filed in U.S. District Court for the Western District of North Carolina.

    NOTE: Our thanks to the ASD Updates Blog.

  • Lawyer For T. LeMont Silver, Wife, Shell Company Wants Out Of Zeek Clawback Case

    Florida “Expat” and Zeek Rewards Ponzi-scheme figure T. LeMont Silver yuks it up in the Dominican Republic. Source: YouTube.
    Florida “Expat” and Zeek Rewards Ponzi-scheme figure T. LeMont Silver yuks it up in the Dominican Republic. Source: YouTube.

    UPDATED 10:24 P.M. ET U.S.A. Zeek Rewards “winner” T. LeMont Silver, his wife Karen and a Silver shell company known as Global Internet Formula Inc. allegedly hauled more than $2.3 million out of the shuttered MLM “program.”

    Receiver Kenneth D. Bell sued them in February 2014, alleging their gains had come from victims of the Zeek Ponzi- and pyramid scheme.

    But now a North Carolina attorney and law firm for the Silvers and Global Internet say they never paid a $5,000 retainer and have racked up other unpaid legal bills. The attorney, Bruce Simpson, of James McElroy & Diehl of Charlotte, says he and the firm want out.

    And it’s not just because of unpaid bills, Simpson advised Senior U.S. District Judge Graham C. Mullen today in court filings.

    On June 27, 2014, a San Antonio lawyer by the name of W. James Jonas III contacted the firm, seeking “local counsel” for the Silvers and Global Internet. Jonas would serve as lead counsel and “be responsible for all the heavy lifting,” according to Simpson.

    James McElroy & Diehl was to be paid a $5,000 retainer by the Silvers and Global Internet, but the retainer was not paid, Simpson told the judge. Part of the agreement was that the clients regularly would pay for legal fees and expenses once the retainer was consumed.

    The Silvers and Internet “have failed to pay any of the legal fees and expenses” and have been “generally unavailable,” Simpson said.

    Moreover, “at several critical junctures related to the representation, Jonas has reported that needed activity or responses related to the lawsuit could not proceed because he was unable to obtain needed payment, cooperation and information from Mr. and Mrs. Silver and Global.”

    The only information James McElroy & Diehl have on the Silvers and Global is that they can be reached through a San Antonio address for Jonas, according to Simpson.

    Post-Zeek, the Silvers appear to have transplanted themselves from Florida to the Dominican Republic. They even were featured in a video about the “ExPat” lifestyle.

    A $5,000 retainer is about 0.21 percent of the alleged haul of the Silvers and Global Internet.

    Bell has raised concerns that Silver and some other MLMers are “serial” promoters of fraud schemes. Beginning in August 2014, Silver promoted a murky scheme known as Bitclub Network.

    Jonas, a onetime Republican lobbyist, has had an interesting career. In 2010, the Houston Chronicle reported his life was in “ruins” after his then-wife caught him in 2007 having an affair with a “network marketing consultant.” During the following year Barack Obama won the Presidency and Democrats added seats in the Congress, causing the lobbying business of Jonas to take a serious hit.

    Before long, he was involved in a messy divorce and behind on child-support payments, and a judge put him in jail, the Chronicle reported.

    Jonas appears to have rebounded by 2013. The San Antonio Express-News reported he was paid “big city dollars” as the attorney for Crystal City, a small Texas town of 7,200.

    Some Crystal City officials reportedly believed the city was grossly overspending on Jonas’s fees.

    NOTE: Our thanks to the ASD Updates Blog.

  • Woman Listed As ‘Winner’ In Zeek Rewards Scheme Asks Court For Help In Getting Back ‘Achieve Community’ Money, Raises Questions Over 1099 Form

    achieveinvestor
    From U.S. court files. Redactions by PP Blog.

    EDITOR’S NOTE: This story was updated at 6:35 a.m. on Feb. 27.

    **______________________**

    It happened in the Zeek Rewards pyramid- and Ponzi case in 2012 — and now it has happened in the “Achieve Community” case filed earlier this month.

    A woman has contacted the court presiding over the Achieve case to solicit help in getting back her money. The six-page filing by Arla Mendenhall, who identified herself as an Achieve investor, further questions how Achieve treated her for tax purposes.

    A similar situation at Zeek, according to court filings, led to a 2014 criminal charge of tax-fraud conspiracy against Zeek operator Paul R. Burks. Prosecutors alleged that Burks failed to file corporate tax returns and accused him of issuing “fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.”

    Mendenhall claimed in a communication to the court presiding over the Achieve case that she received a 1099 that asserted she was paid $6,000 by Achieve, even though “I only withdrew $800.00.”

    The remaining $5,200 was “reinvested in the business,” she advised the court.

    All in all, Mendenhall contended she plowed $8,450 into Achieve.

    Records in the Zeek case list her as a “winner” of a Zeek sum in excess of $1,000, meaning she’s a defendant in a class-action clawback case filed by Zeek receiver Kenneth D. Bell in 2014. Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina granted class certification earlier this month.

    Bell previously has raised concerns about “serial” promoters in MLM/network-marketing schemes.

    Separately, posters at the RealScam.com antiscam forum have linked Mendenhall to cash-gifting schemes such as The People’s Program and Blessing Gold Club.

    In 2013, the PP Blog reported that certain Blessing Gold Club promoters were promoting Better-Living Global Marketing and its Zeek-like Bidders Paradise arm. BLGM purportedly operated offshore, giving rise to questions about whether U.S. members involved in Zeek later had moved to a new venue in an effort to continue to pick fruit from a poisonous tree.

    BLGM reportedly now is under criminal investigation in Hong Kong.

    On Feb. 12, U.S. District Judge Robert E. Blackburn of the District of Colorado froze Achieve Community assets after the SEC contended Achieve was a pyramid- and Ponzi scheme that had gathered more than $3.8 million.

    “I had no knowledge of anything illegal when I joined this Business,” Mendenhall said in her filing today.

    Much of the information submitted by Mendenhall appears to have originated in her Achieve Community back office.

    Alleged Achieve operators Troy Barnes and Kristi Johnson have invoked their Fifth Amendment right not to incriminate themselves in the SEC’s civil case. Barnes has claimed he faces a criminal investigation.

    NOTE: Our thanks to the ASD Updates Blog.

  • BULLETIN: Zeek Receiver Sues Alleged ‘Winners’ In Norway

    breakingnews72BULLETIN: (5th update 8:31 p.m.) Zeek Rewards receiver Kenneth D. Bell has sued more than a dozen alleged “winners” with residencies in Norway. These are believed to be the first cases against defendants in Europe. Bell previously has sued U.S. residents and residents of Australia, New Zealand, Canada and the British Virgin Islands.

    As is the case against other clawback targets, Bell contends Norwegian defendants must return their Zeek hauls because they “won” money from victims “in an unlawful combined Ponzi and pyramid scheme.”

    The alleged Norwegian defendants were identified as:

    • Geir Vidar Pleym, Oslo, $256,917.29.
    • Roger Guldahl, Halden, $200,271.51.
    • Anne Liv Dale, Kristiansand, $158,896.14.
    • Fredrik Skjoldt, Oslo, $97,694.27.
    • Robert Ulvberget, Elverum, $72,569.11.
    • Stian Alexander Karlsen, Oslo, $65,000.94.
    • Pia Cecilie Fore, Heggedal, $62,115.13.
    • Knut Fore, Asker, $60,436.49.
    • Fredrik Harald Skjoldt, Oslo, through CMS Huset AS, an alleged shell company, $57,586.54. (Note: “individually or collectively with Morten Skaar.”)
    • Morten Skaar, Oslo, through CMS Huset AS, $57,586.54.
    • Odd Steinar Nordlien, Faaberg, Lillehammer, $55,019.09.
    • Anne-Mette Helland, Mandal, through Vita-min AS, an alleged shell company, $53,428.51.

    Zeek is alleged to have gathered on the order of $897 million in less than two years of operation. It was shut down by the SEC in August 2012.

    The case against the Norwegian defendants is filed in U.S. District Court for the Western District of North Carolina.

    Just yesterday the SEC announced it had charged a “program” known as “Achieve Community” with operating a combined pyramid- and Ponzi fraud that had gathered more than $3.8 million in less than a year of operation. No receiver has been appointed in that case, which remains under investigation.

    NOTE: Our thanks to the ASD Updates Blog.

  • BULLETIN: Zeek Receiver Sues Alleged ‘Winners’ In New Zealand And British Virgin Islands

    breakingnews72BULLETIN: (9th update 9:57 p.m. ET U.S.A.) Zeek Rewards receiver Kenneth D. Bell has sued alleged “winners” with residencies in New Zealand and the British Virgin Islands.

    One BVI winner is alleged to have gained more than $2 million from Zeek’s combined Ponzi- and pyramid scheme. Bell identified her as Agnita Solomon of Road Town, Tortola.

    Susan Forbes, of Tortola, the largest island, is alleged by Bell to have won more than $603,000. No specific town is listed for her.

    Hamish Brownie appears to be Zeek’s largest alleged winner in New Zealand. Bell listed a sum of more than $507,000 for Brownie, who resides in Christchurch.

    Road Town, the capital of the BVI, possibly was a Zeek stronghold. Of the five BVI residents sued, three listed Road Town addresses, according to Bell’s lawsuit. Besides Solomon, the other two were identified by Bell as Marcus Drigo and Patrice Harewood.

    Drigo allegedly won more than $70,000; Harewood allegedly received nearly $60,000.

    Marguerite D. Hodge, another BVI resident, was alleged to have won more than $115,000. No specific city or island was listed for her.

    The other alleged New Zealand winners sued by Bell were identified as Praveen Kumar of Auckland and David Ian MacGregor Fraser, also of Auckland.  Kumar is alleged to have won more than $115,000; MacGregor Fraser received more than $89,000, Bell alleged.

    The lawsuits against the BVI and New Zealand defendants are filed in U.S. District Court for the Western District of North Carolina. The actions mark at least the third time Bell has sued international alleged winners.

    Bell previously sued winners with addresses in Canada and Australia. He has sued about 9,400 individuals or entities with U.S. addresses, most of them via a class action.

    The actions against U.S. domestic alleged winners and their international Zeek colleagues likely represent the largest undertaking by a receiver in an HYIP case in U.S. history.

    Cross-border MLM HYIP schemes operating over the Internet have emerged as a considerable problem. Zeek may have involved on the order of 800,000 participants, the vast majority of them alleged losers of a combined sum in the hundreds of millions of dollars.

    Court filings in the TelexFree bankruptcy case alleged that $1.8 billion was driven to that cross-border scheme, which potentially involved more than 1 million participants globally.

    The SEC shut down Zeek in August 2012, with three key figures later charged criminally. TelexFree declared bankruptcy on a Sunday night in April 2014, just as regulators were preparing to file actions.

    Two TelexFree figures later were charged criminally. There also are TelexFree-related civil and criminal investigations in Brazil, perhaps TelexFree’s main stronghold. The U.S. Department of Homeland Security and the FBI are involved in the TelexFree probe.

    In the actions against the BVI and New Zealand alleged Zeek winners, Bell said this: “Because Zeek’s net winners ‘won’ (the victims’) money in an unlawful combined Ponzi and pyramid scheme, the net winners are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims.”

    NOTE: Our thanks to the ASD Updates Blog.

     

  • BULLETIN: Judge In Zeek Clawback Cases Grants Receiver’s Motion To Certify Class Of 9,400 Alleged Winners; Todd Disner Faces Default; Phil Piccolo May Be Background Player

    breakingnews72BULLETIN: (Updated 11:11 p.m. ET U.S.A.) Senior U.S. District Judge Graham C. Mullen has certified a class of more than 9,000 alleged “winners” of more than $1,000 in the Zeek Rewards scheme.

    Receiver Kenneth D. Bell sued more than 10 named “winners” in February 2014 in a case styled “Kenneth D. Bell v. Todd Disner, et al.” The suit included class claims against about 9,400 winners of smaller sums.

    The ruling by Mullen effectively means the winners of the smaller sums are now defendants who will be represented by the same lawyers representing the larger winners. Bell “proposed that one or more of the following named Defendants serve as Class Representatives: Trudy Gilmond and Trudy Gilmond, LLC; Jerry Napier; Darren Miller; Rhonda Gates; Innovation Marketing, LLC; Aaron Andrews; Shara Andrews; Global Internet Formula, Inc.; T. LeMont Silver; Karen Silver; and Durant Brockett,” Mullen wrote.

    Disner is facing a default judgment of more than $2 million, but is trying to get it reversed.

    Bell asked for the class certification in July 2014, explaining that he “asked that the Court appoint one or more of the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the Net Winner Class.”

    Mullen agreed today with that logic.

    “If the Receiver herein was forced to file separate actions against the 9,400 Defendants, he would certainly be risking inconsistent and varying adjudications,” Mullen wrote. “If one court found that a fraudulent transfer occurred, but another court did not, then those inconsistent decisions would place the Receiver in a stalemated or conflicted position. If the Receiver attempted to enforce a valid judgment against a particular Defendant, that Defendant might refuse to pay because other Defendants similarly situated were not held to be liable for the same underlying conduct related to ZeekRewards. An additional layer of inconsistency would arise if the Receiver attempts to settle a lawsuit, but the Net Winner Defendant is not willing to compromise since that Defendant is already aware of the inconsistent adjudication based on the same set of facts. These anomalous results would leave the Receiver in an untenable position and circumstances such as these are precisely why class actions exist.”

    Mullen specifically found that, with 9,400 defendants, Bell had satisfied the “numerosity requirement” to make a class-action reasonable and efficient. He also found that Bell had established a “commonality factor” in that the smaller winners had things in common with the larger ones.

    These included questions about “whether ZeeksRewards’ operation was a Ponzi and/or pyramid scheme,” Mullen wrote.

    And, he noted, “[a]ll class members had or controlled usernames and accounts with ZeekRewards through which they received funds from [Zeek operator Rex Venture Group]. Further, each class member received more money from RVG than they paid into RVG (their ‘net winnings’) during the course of their participation as affiliates in the ZeekRewards program. There is also a common question of law, that is: whether the payments from ZeekRewards to class members are fraudulent transfers that must be disgorged and repaid.”

    Bell also satisfied a “typicality” requirement that examines whether “the claims or defenses of the representative parties are typical of the claims or defenses of the class,” Mullen ruled.

    At the same time, the judge ruled, Bell had shown that the class of 9,400 would receive “fair and adequate representation.”

    “Here, the proposed Class Representatives’ interests are not antagonistic to, but rather aligned with, the interests of the unnamed class members because they share the common objective to defend against having to return funds received from ZeekRewards as demanded by the Receiver. Thus, there is no conflict which would defeat adequacy of representation.”

    Mullen rejected contentions that the defendants did not have enough in common for the matter to proceed as a class action.

    He also rejected contentions that the largest winners “simply cannot afford to represent the Net Winner Class, noting that “their protestations of poverty ring hollow in light of the fact that together they won over $11 million in profits from ZeekRewards.”

    Regardless, Mullen observed, the “Court has repeatedly made it clear that the Receiver will be required to help fund the defense of the class.”

    A footnote in the ruling reads (italics added):

    That Court is mindful that despite the large winnings of the Named Defendants, it is possible that much of the net winnings has been dissipated. As stated at the last status conference in this matter, the Court fully expects that the Named Defendants will 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. Such financial transparency will not only aid the Court in its determination as to what extent the Receiver shall be required to fund the defense of the class, but will also undoubtedly aid in any settlement discussions.

    Disner, who pitched both the AdSurfDaily Ponzi scheme and Zeek, is now listed as a “Black Diamond” member on the website of an MLM program known as Lumaxa.

    Lumaxa sells Nyloxin, a pain-relief product made from cobra-venom. Longtime MLM huckster Phil Piccolo has been linked to the Nyloxin program once sold through MyNyloxin.com and may be a Zeek winner. Another business with a Piccolo tie was known as Text Cash Network or TCN. It operated from the area of Boca Raton, Fla.

    As the PP Blog reported in December 2011, the name of Rex Venture Group once appeared on TCN’s website.

    An entity known as “TCN CUSTOMER SERVICE INC” of Boca Raton is listed as a Zeek winner.

    Lumaxa, the company to which the MyNyloxin domain now rotates, may be facing some challenges, a source with knowledge of the “program” told the PP Blog.

    “The company is sounding desperate to have people keep their money invested, and in fact giving more, higher rates of interest to cancel their withdrawals and earn more,” the source said.

    Rod Cook, the “MLM Watchdog,” reported last year that Piccolo was scamming sellers of Nyloxin.

    Scott Miller, who pushed the TelexFree “program” now alleged to be a $1.8 billion pyramid scheme, also is listed as a Lumaxa “Black Diamond.”

    Also see August 2014 BehindMLM.com report.

    NOTE: Our thanks to the ASD Updates Blog.

  • Court Filings Show Self-Identified Church Sent $10,000 To Zeek Rewards 9 Days Before Collapse; 2 Other Checks From An Individual Were Marked ‘Blessing’

    This exhibit in the Zeek rewards Ponzi- and pyramid case shows that an an "E.C. Church" sent $10,000 to Zeek just days before in collapse in August 2012. (Masking by PP Blog.)
    This exhibit in the Zeek Rewards Ponzi- and pyramid case shows that an “E.C. Church” sent $10,000 to Zeek just days before the “program” collapsed in August 2012. (Masking by PP Blog.)

    UPDATED 8:42 P.M. ET U.S.A. Members of the faith community joining MLM HYIP schemes is a problem. It happened with the $119 million AdSurfDaily Ponzi scheme and the $72 million Legisi scam in 2008, for example.

    It’s happening currently with the “Achieve Community” scheme. Earlier, members of TelexFree  — an alleged $1.8 billion pyramid scheme — traded on the words and images of faith, including the Christ the Redeemer statue in Brazil.

    The WCM777 and Profitable Sunrise schemes also traded on images of the statue. Promoters of the schemes targeted people of faith. Those schemes likely generated more than $100 million.

    There’s also evidence that people of faith were targeted in the $897 million Zeek Rewards scheme brought down by the SEC in 2012.

    New filings by the court-appointed receiver in the Zeek case show that an entity that identified itself as an “E.C.” (Evangelical Congregational) church sent $10,000 to Zeek operator Rex Venture Group LLC on Aug. 8, 2012. The payment was in the form of a cashier’s check.

    The PP Blog is declining to identify the church because details of its precise geographic whereabouts could not be learned immediately. But the check was drawn on an Alabama bank that allegedly later stopped payment.

    Zeek receiver Kenneth D. Bell is seeking a court order for the bank — BBVA Compass Bank — to turn the $10,000 over to the receivership. BBVA Compass also allegedly unlawfully halted payment on 23 other cashier’s checks sent to Zeek. These totaled $73,800, meaning Bell is seeking $83,800 from the bank.

    Those checks were receivership assets, and the bank’s decision to stop-payment after the receiver presented them to be paid violated the asset freeze in the Zeek case, Bell alleged.

    From the receiver’s filings yesterday (italics added/light editing performed):

    At the commencement of the SEC Action on August 17, 2012, RVG possessed thousands of cashier’s checks and teller’s checks received from RVG Affiliates that had not been deposited or presented for payment. Upon entry of the Agreed Order, the Receiver collected cashier’s checks from RVG’s offices and deposited them in accounts opened for the Receivership Estate.

    Twenty-four (24) of the items collected from the RVG offices and deposited into the Receiver’s accounts were cashier’s checks payable to RVG issued by Compass. . . . On information and belief, between August 21 and August 29, 2012, Compass’s customers requested that Compass stop payment on the twenty-four Compass cashier’s checks previously delivered to RVG.”

    These halts by the bank were unlawful under the Uniform Commercial Code, Bell alleged.

    “Compass wrongfully accommodated its customers by stopping payment on all twenty-four cashier’s checks when it was not legally permitted to do so under the Uniform Commercial Code,” Bell contended.

    Although the filing is not on the subject of affinity fraud, documents within the filing suggest that the E.C. entity had company at Zeek among the faithful. Two checks among the 24 were drafted on behalf of an individual whose Zeek username included the word “blessing.” These checks totaled $2,300.

    Religious entities and people of faith getting recruited into HYIP schemes may not be the only problem. In the AdSurfDaily case, for instance, evidence surfaced that individuals had created purported nonprofits and religious entities into which to deposit their Ponzi winnings.

    Bell alleged in late 2012 that he “has obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

    In 2014, Bell asked a court to take “judicial notice” of certain videos on YouTube.

    MLM may have a problem with “serial participants” in Zeek-like schemes to defraud, Bell suggested.

    NOTE: Our thanks to the ASD Updates Blog.

  • Zeek Figure Robert Craddock’s Fun Club USA Severely Sanctioned In Trademark-Infringement Case; Judge Orders Default For Failure To Follow Court Order

    OfferHubb.net Inc. sued Zeek Rewards figure Robert Craddock in February 2014, alleging Craddock “immediately” embarked on a web-based disparagement campaign after OfferHubb chose in July 2013 not to renew a contract with Craddock and Craddock’s Fun Club USA Inc.

    Co-defendants included Craddock’s wife, Sylvia Salgado Craddock, and Fun Club.

    Craddock was accused in the complaint of cybersquatting, trademark infringement, wrongful use of a computer, misappropriation of trade secrets, wrongful interference with economic relations, breach of contract, unjust enrichment, defamation and hiding behind a shell company.

    Now, a federal district judge in Nevada — following the October recommendation of a magistrate judge   — has ordered sanctions.  This includes the striking of the answer Fun Club filed in February. It also includes a default order against the enterprise.

    Why? Fun Club’s “failure to comply with this Court’s Order to obtain counsel,” Judge Richard F. Boulware II said in the order.

    Boulware also ordered the clerk to enter judgment and close the case. The financial fallout was not immediately clear.

    As the PP Blog reported in October (italics added):

    Fun Club and Craddock are referenced in a blistering memo filed in the Zeek Ponzi- and pyramid-scheme case by the SEC on Dec. 17, 2012. In the memo, the SEC accused Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver. The SEC further alleged that Craddock was spreading misinformation about how the agency viewed its own case against Zeek and that Fun Club appeared to have been formed 11 days after the SEC emergency action against Zeek on Aug. 17, 2012.

    Craddock has not been charged by the SEC with wrongdoing . . .

    The trademark-infringement claim may be particularly concerning to the MLM trade, given that Craddock has asserted he works as a copyright and trademark agent on behalf of MLM “programs.”

    On July 22, 2012, while purportedly working as a “consultant” for Zeek, Craddock filed a copyright- and trademark-infringement complaint against a HubPages website operated by Zeek critic K. Chang. K. Chang, who also posts on publications such as the PP Blog and BehindMLM.com, ultimately prevailed in the action brought by Craddock.

    Less than a month later, the SEC brought the Ponzi- and pyramid action against Zeek.

    Earlier this year, a website known as Changes Worldwide identified Craddock as its copyright agent. Filings by the SEC in June 2014 alleged that Faith Sloan, accused in April 2014 of securities fraud by the agency in its Ponzi- and pyramid complaint against the TelexFree “program,” sent more than $15,000 to an entity known as Changes Worldwide LLC after an asset freeze was imposed against Sloan in the TelexFree case.

    Sloan also was a Zeek affiliate. Whether proceeds that originated in Zeek and/or TelexFree made their way into Changes Worldwide is unclear.

    Craddock also was sued for trademark infringement and other alleged offenses by a firm known as BTG180, which accused Craddock of using the alleged Fun Club “shell corporation” to engage in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

    NOTE: Our thanks to the ASD Updates Blog.

  • Network-Marketing Pitchman Camps Out At SEC Website, Produces Commercial For Achieve Community, Unison Wealth And Trinity Lines; ‘They’re Passive . . . You Just Kind Of Put Your Money Down’ And Receive Payouts

    EDITOR’S NOTE: The screen shots below show that Rodney Blackburn ends his “Unison Wealth” promo at the 8:29 mark of a 14:27 video. At the 8:30 mark, the website of the SEC becomes the feature and remains so for nearly the next six minutes as Blackburn touts Achieve Community, Unison Wealth and Trinity Lines, Ponzi-board “programs” one and all. It is Saturday. The PP Blog did not immediately hear back from the SEC on a request for comment.

    1. From ‘Unison Wealth’ . . .

    achievecommunityblackburnunisonwealth829sceensmall

    2. . . . To The SEC

    achievecommunityblackburnunisonwealth830sceensmall

    “We’re leaving the markets of these crazy MLM companies, and there are people like the Achieve Community, Trinity Lines, Unison Wealth, many of these other companies are coming out. And they are making programs that are very simplistic, they’re passive, they’re residual incomes. They’re just so simple you just kind of put your money down.” — Rodney Blackburn, Jan. 9, 2015.

    A 14:27 YouTube video from an “Achieve Community” member now promoting at least two other Ponzi-board schemes includes nearly six minutes of continuous footage from the website of the U.S. Securities and Exchange Commission.

    The latest promo by Rodney Blackburn focuses on “Unison Wealth” and has a publication date of Jan. 9, 2015. It is titled “Network Marketing & MLM Programs Are Getting Better!!!” The promo suggests that ordinary MLM creates an environment in which 97 percent of participants lose and that new, smarter, better schemes are emerging to replace them.

    “You don’t have to do any marketing, for the most part,” he says of the purported new way of network marketing. “You don’t have to jump through any hoops and recruit people. You don’t have to go through any of these things.”

    In short, Blackburn says, in the new way of network marketing, participants “just kind of put [their] money down” and payouts flow back to them. What’s more, he implies, the SEC doesn’t have jurisdiction, despite mountains of evidence to the contrary, including several concurrent active prosecutions involving network-marketing or MLM schemes with passive components.

    Blackburn even dares individuals to complain to the SEC about the “programs” he’s promoting.

    “There’s people on here who think that the SEC can shut companies down,” Blackburn says as part of his narration. “Guys, [the] SEC is designed for, again, Securities and Exchange Commission, what they do — it shows it right here in back and white.”

    Blackburn proceeds to click on an “ABOUT” tab and a “What We Do” subtab at the SEC website. He then cherry-picks a quote from the agency’s site, wholly ignoring sections on SEC enforcement that detail various cases brought against network-marketing or MLM schemes.

    “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets,” Blackburn says, reading from the SEC site.

    That’s true, of course — but the cherry-picking ignores the much larger whole.

    Had Blackburn simply typed “MLM” into the search box in the upper-right corner of the SEC site, he’d have gained instant access to information that undermines his jurisdiction theory.

    Without perusing the enforcement section that has information on recent schemes such as Zeek Rewards, TelexFree, WCM777, eAdGear, Zhunrize, CKB168 and others, Blackburn switches back to his personal narrative.

    “Guys, it’s about investors,” Blackburn continues, apparently concluding that the SEC would have no interest in the schemes he’s promoting. “It’s about efficient markets. If others of you who want to complain to your governments about these companies that are out there — you know what, go right ahead. It’s not going to do any good, unless they’re doing illegal activity. Unless you have substantial, proven evidence that any of these companies — any of them, OK — are doing anything illegal, it’s futile. You’re just blowing fear out there to the rest of us, OK, because it’s not going to do any good. Come up with something better. Come up with a fact.”

    It is a fact that the SEC, on Oct. 1, 2013, issued an “Investor Alert” titled “Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs.” As part of its outreach, the SEC warned about schemes with “Promises of high returns in a short time period” and “Easy money or passive income.”

    Meanwhile, it is a fact that Achieve Community has been positioned as a “passive” program with an 800 percent ROI in as few as 55 days. It’s also a fact that a Dec. 27, 2014, promo for Unison Wealth published on YouTube by Blackburn is titled, “Unison Wealth – Review 100% Passive Automated Play for just $40!”

    Blackburn’s Jan. 9 video appears to be a compendium of two, with the first 8:29 focused on Unison Wealth. When Blackburn’s Unison pitch ends, the scene shifts abruptly to the SEC website. SEC visuals appear continuously for nearly the next six full minutes as Blackburn discuses his “programs.”

    Even as Blackburn tries to make the case that the “programs” are outside the purview of the SEC, he tells his audience that he prefers “passive” programs.” Somehow lost by Blackburn in all of this is that the passivity of a scheme and how it behaves in practice are what confer jurisdiction on the SEC.

    This has been the law in the United States since at least 1946.

    Less than a year ago — on Feb. 28, 2014 — the court appointed receiver in the Zeek Rewards Ponzi- and pyramid case as brought by the SEC in a highly publicized action in August 2012 — alleged that “ZeekRewards succeeded be cause it promoted a lucrative ‘compensation plan,’ offering large amounts of passive income to entice individuals to participate in the scheme.”

    Kenneth D. Bell, the receiver, is suing thousands of individuals for the return of hundreds of millions of dollars, saying their “winnings” came from hundreds of thousands of victims defrauded by Zeek.

    Resources

    Aug. 17, 2012, SEC News Release on Zeek action. (Headline: “SEC Shuts Down $600 Million Online Pyramid and Ponzi Scheme.”)

    Oct. 17, 2013, SEC News Release on CKB168 action. (Headline: “SEC Halts Pyramid Scheme Targeting Asian-American Community.”

    April 17, 2014, SEC News Release on TelexFree action. (Headline: “SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants.”

    March 28, 2014, SEC News Release on WCM777 action. (Headline: “SEC Halts Pyramid Scheme Targeting Asian and Latino Communities.”

    Sept. 26, 2014, SEC News Release On eAdGear/Zhunrize actions. (Headline: “SEC Announces Cases Targeting International Pyramid Scheme Operators.”

  • Battling Zeek-Related Malpractice Claim, MLM Attorney Kevin Grimes Now A New Partner At Thompson Burton

    “It is the biggest announcement I’ve ever made in my career.” — MLM attorney Kevin Thompson on the hiring of Kevin Grimes, Jan. 9, 2015.

    2nd UPDATE 5:35 p.m. ET U.S.A. Zeek Rewards receiver Kenneth D. Bell accused Idaho MLM attorney Kevin Grimes last year of providing “substantial assistance” to Zeek’s Ponzi scheme and, in effect, attempting “to put lipstick on the ZeekRewards pig.”

    Grimes, formerly of the now-defunct Grimes & Reese law firm, is battling Bell’s contentions that he engaged in legal malpractice, created a “bogus ‘compliance course’” and participated in “leadership calls” that helped sanitize Zeek.

    It is against this backdrop that Grimes, whom Bell is suing for $100 million, has landed at suburban Nashville’s Thompson Burton as a new partner after being flown in to discuss joining the firm. The announcement was made by managing partner Kevin Thompson in both text and video forms. The news appears first to have been published elsewhere on the MLMHelpDesk Blog of Troy Dooly.

    Dooly also encountered trouble owing to alleged Zeek ties.

    Thompson appears only to make an allusion to Zeek in the 4:28 YouTube video announcing the hire. But he mentions it directly in a Blog post at the Thompson Burton site.

    Grimes, whose qualities include experience and depth, is a good person and good lawyer who fosters at-risk teens and is “very open about his faith” and “very passionate about serving people,” Thompson said.

    A well-known MLM lawyer in a field often associated with PR blunders, Thompson appears not to be concerned that his 16-member firm whose practice isn’t limited to MLM could take a hit by bringing on Grimes with Zeek matters still unresolved. Three Zeek executives were charged with federal crimes in the aftermath of SEC civil actions in 2012 and 2013.

    “I’m excited for what this means,” Thompson said of the hiring of Grimes. “I think in the industry, iron sharpens iron. He can make me better; I can make him better. There’s some things that he’s not doing very well, such as communicating. He’s hasn’t communicated at all.  Most of you don’t even know who he is. We’ve got to fix that. So, you’re going to get to know him better. He’s going through some issues right now, and he’s dealing with them.  And there going to be a day when he’s not dealing with them and he can focus on doing what he does best. He’s been practicing for close to 25 years without any single bar complaints. So, he knows what he’s doing.”

    Grimes has not been named a defendant in the SEC’s civil actions and has not been charged with a crime. But Bell, the Zeek receiver, has alleged in court filings that Grimes missed important clues that something was seriously amiss at Zeek.

    The SEC has described Zeek as a combined Ponzi- and pyramid scheme that gathered hundreds of millions of dollars. Zeek insiders Paul Burks, Dawn-Wright-Olivares and Daniel Olivares have been charged criminally, with Wright-Olivares and Olivares already entering guilty pleas.

     

  • BULLETIN: Zeek Receiver Sues Nearly 2 Dozen Aussies

    breakingnews72BULLETIN: (10th Update 11:20 p.m. ET U.S.A.) Zeek Rewards receiver Kenneth D. Bell has sued nearly two dozen Australians, alleging they were “winners” in the Zeek Ponzi- and pyramid scheme and that money they received came from victims.

    Bell previously sued winners in the United States and Canada.

    One Aussie is alleged to have received nearly $827,000 through Zeek, a sum on par with some of the alleged top U.S. winners.

    All in all, the top Australian winners allegedly received a combined sum of more than $3.14 million.

    Here is a list of Australian defendants and their alleged winnings:

    Gert Bjerring, Gold Coast, Queensland, though a shell company known as Dancon Pty. Ltd., $826,801.73 under one or more usernames, including “globalvision1.”

    David Mitchell, Tyalgum, New South Wales, $298,802.10 under one or more usernames, including “davemitchell.”

    Nicola Holloway, Hope Island, Queensland, $273,009.36 under one or more usernames, including “globalnetworks.”

    Sam Fawahl, Melbourne, Victoria, $232,564.55 under one or more usernames, including “TeamUnited.”

    Warren Hickey, Hope Island, Queensland, through a shell company known as Health and Success Pty. Ltd., $159,757.73 under one or more usernames, including “GlobalProfitShare.”

    Lars Frederiksen, Willetton, Western Australia, $139,365.49 under one or more usernames, including “perth.”

    Paul Mandelt, Hillarys, Western Australia, $128,913.02 under one or more usernames, including “sunray.”

    Kelvian Hansen, Gold Coast, Queensland, $111,799.43 under one or more usernames, including “Kellil.”

    Anni Thompson, Yandina Creek, Queensland, $95,566.00 under one or more usernames, including “teamliberty.”

    Ann Audrey Hickey, Hope Island, Queensland, $83,487.05 under one or more usernames, including “GlobalProvenPattern.”

    R&J Thumm Family P/L as Trustee for Thumm Investment Trust, (R&J), a proprietary limited company organized under the laws of Australia, $80,130.26 under one or more usernames, including “GlobalWealthSystems.”

    David Cane, Hope Island, Queensland, through a shell company known as Karanda Holdings Pty. Ltd., $77,296.57 under one or more usernames, including “GlobalCashFlow.”

    Donna Walton, Beaudesert, Queensland, $76,730.36 under one or more usernames, including “Candyamore.”

    Michael Georghiou, Cheltenham, Victoria, $74,968.93 under one or more usernames, including “4ever.”

    Thomas von Eitzen, Brisbane, Queensland, $74,854.07 under one or more usernames, including “tomve.”

    Bradley Ferries, Hope Island, Queensland, $72,325.96 under one or more usernames, including “GlobalAdvantage.”

    Robin Reid, Hope Island, Queensland, $61,114.41 under one or more usernames, including “Globalstar.”

    Linda Welch, Lower Beechmont, Queensland, $60,274.22 under one or more usernames, including “DailyReward.”

    Maureen Fisher, Dicky Beach, Queensland, $55,797.49 under one or more usernames, including “Globalsuper.”

    Barry Goodsell, Bertram, Western Australia, $53,650.26 under one or more usernames, including “barryandsue.”

    David Joseph, Mount Claremont, Western Australia, $52,581.70 under one or more usernames, including “dkjoseph.”

    Birthe Seaton, Goulburn, New South Wales, $52,477.31 under one or more usernames, including “jobiperry.”

    NOTE: Our thanks to the ASD Updates Blog.

     

    More . . .