Zeek’s penny auction traded on themes of liberty and wealth, but was actually a cross-border fraud scheme that fleeced investors of hundreds of millions of dollars, prosecutors say.
A North Carolina lawyer for a Michigan MLM law firm and MLM attorneys Gerald Nehra and Richard Waak advised a federal judge yesterday that a settlement was possible among her clients and the court-appointed receiver in the Zeek Rewards’ Ponzi- and pyramid-scheme case.
Receiver Kenneth D. Bell sued the lawyers and the firm in September, alleging legal malpractice, negligence, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment and constructive trust.
In an uncontested motion to extend the time to answer Bell’s complaint, attorney Amanda A. Mingo advised Senior U.S. District Judge Graham C. Mullen that the “parties are discussing details of a settlement and expect to reach an agreement shortly.
“If no agreement is reached by the end of November, Defendants will file responsive pleadings,” Mingo wrote.
A settlement with Nehra, Waak and the firm would mark the second such accord Bell has struck with well-known MLM lawyers and firms that performed work for Zeek, a “program” believed to have gathered $897 million in about two years while creating hundreds of thousands of victims across the world and triggering lawsuits against scores of pitchmen for return of gains alleged to be ill-gotten.
Nehra, a figure in the 2008 AdSurfDaily Ponzi-scheme story who opined ASD was not a Ponzi scheme, later became a figure in both the Zeek and TelexFree stories.
“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.
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.
EDITOR’S NOTE: Kevin Grimes, MLM Compliance VT LLC and the Grimes & Reese law firm have argued that the claims against them should be dismissed. Zeek’s receiver argues otherwise, saying a “bogus ‘compliance course’” advanced by Grimes helped dupe the Zeek masses. Zeek affected hundreds of thousands of people, the SEC has said.
Legal malpractice and other claims against MLM attorney Kevin Grimes, his entity MLM Compliance VT LLC and the Grimes & Reese law firm should stand, the court-appointed receiver in the Zeek Rewards Ponzi- and pyramid-scheme case said in court filings yesterday.
One of the reasons, receiver Kenneth D. Bell argued in a motion to Senior U.S. District Judge Graham C. Mullen, is that the defendants “in effect attempted to put lipstick on the ZeekRewards pig.”
Another reason is that Grimes participated in at least three affiliate “leadership calls” with Zeek insiders and “actively assisted the Insiders in promoting and legitimizing the scheme,” Bell said.
“Grimes allowed his name and his firm’s name to be used to promote the scheme,” Bell said.
Mullen should reject bids by the defendants to have the claims dismissed, Bell argued.
BULLETIN: (2nd update 9:54 p.m. EDT U.S.A.) MLM attorney Kevin Grimes and a companion entity known as MLM Compliance VT LLC received $843,000 from the Zeek Rewards pyramid- and Ponzi scheme through the sale of a “bogus compliance course,” receiver Kenneth D. Bell has alleged in an amended complaint.
The amended complaint, filed yesterday, includes MLM Compliance as a defendant. The original complaint filed last month did not. Also new in the amended complaint is the figure of $843,000. The original complaint did not specify a specific sum.
Co-defendants also include Grimes and the Grimes & Reese law firm.
“In total, Grimes and MLM Compliance received approximately $843,000 from RVG for the bogus course,” Bell alleged. “The final payment from [Zeek operator Rex Venture Group] to Grimes and MLM Compliance was, upon information and belief, a check rushed to and indorsed by Kevin D. Grimes for $342,510, which posted on August 13, 2012, less than a week prior to ZeekRewards’ shutdown.”
The course, Bell alleged, served as “window dressing” for the Zeek fraud. The SEC shut down Zeek on Aug. 17, 2012.
Some MLMers immediately raced to other fraud schemes — after participating not only in Zeek, but in the AdSurfDaily MLM Ponzi scheme and other “programs.”
Zeek gathered on the order of $850 million in a combined pyramid- and Ponzi scheme that operated for about two years. It was “an internet based so-called ‘MLM’ (multi-level marketing) program,” Bell said.
Grimes and MLM Compliance engaged in “Unfair and Deceptive Trade Practices” by creating the course, which “served to bolster what they knew to be an unlawful scheme,” Bell alleged.
Bell is suing Grimes and the Grimes and Reese firm for a sum in excess of $100 million, alleging they were unjustly enriched and engaged in Legal Malpractice, Negligence, Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty.
From a promo for Zeek online in 2012. The “program” operated through Rex Venture Group and later was charged by the SEC with selling unregistered securities as investment contracts.
EDITOR’S NOTE: On Feb. 5, 2014, Zeek figures and alleged insiders Dawn Wright-Olivares and Daniel Olivares pleaded guilty to federal crimes. Wright-Olivares pleaded guilty to investment-fraud conspiracy and tax-fraud conspiracy. Olivares pleaded guilty to investment-fraud conspiracy. Federal prosecutors in the Western District of North Carolina are maintaining an information site here.
Kenneth D. Bell, the court-appointed receiver in the SEC civil case, also is the special master in the criminal prosecution. The charging document in the criminal case references unnamed “co-conspirators” who are “known and unknown” to federal prosecutors.
UPDATED 5:10 P.M. EDT U.S.A. In court filings apt to find favor in MLM HYIP Ponzi Land, some alleged “winners” in the Zeek Rewards “program” have tried to turn the tables on the court-appointed receiver by claiming he owes them “treble” damages for alleged violations of the North Carolina Unfair and Deceptive Trade Practices Act.
Similar claims were made from the sidelines of the AdSurfDaily MLM Ponzi scheme in 2008. Some ASD members contended that then-Florida Attorney General Bill McCollum should be charged with Deceptive Trade Practices, apparently for having the temerity to bring a pyramid-scheme action against ASD.
Other ASD members contended at the time that federal prosecutors and a U.S. Secret Service agent should be investigated and charged with crimes for their roles in the ASD Ponzi prosecution.
Among the alleged winners in Zeek who’ve filed a counterclaim against receiver Kenneth D. Bell are Rhonda Gates of Nashville, an alleged winner of more than $1.425 million; Durant Brockett of Las Vegas, an alleged winner of more than $1.72 million; and Aaron and Shara Andrews of Lake Worth, Fla., alleged winners of more than $1 million through a Florida shell entity known as Innovation Marketing.
In addition to claiming Bell owes them damages for Deceptive Trade Practices, the counterclaimants assert Bell interfered in contracts with payment processors such as Payza and NXPay and violated their rights under the Fourth Amendment to the U.S. Constitution.
Bell sued them in late February, alleging in a clawback action that their gains were illicit because Zeek was illicit. He also sued several other Zeek alleged winners, including former ASD members Todd Disner of Miami and Jerry Napier of Owosso, Mich. Disner allegedly received more than $1.875 million through Zeek; Napier allegedly received more than $1.745 million.
Disner, in 2011, sought unsuccessfully to sue the United States for alleged violations of his Fourth Amendment rights in its prosecution of the ASD Ponzi case. His co-plaintiff in the case was Dwight Owen Schweitzer, whom filings by Bell described as a Zeek winner of more than $1,000. Several alleged Zeek winners ventured into the “program” after earlier stints at ASD, including Terralynn Hoy, a Florida MLMer who moderated a forum that called purported “sovereign” being Curtis Richmond a “hero” for his efforts to derail the civil-forfeiture action against ASD-related assets.
Richmond, a Californian, was a member of a “sham” Utah “Indian” tribe that once sought to have U.S. Marshals serve bogus arrest warrants against federal judges. ASD figure Kenneth Wayne Leaming later was arrested by an FBI Terrorism Task Force, after allegedly harboring federal fugitives from a separate home-business caper, being a felon in possession of firearms and filing false liens against a judge and prosecutors involved in the ASD case.
Other alleged Zeek winners sued by Bell in clawback litigation include Trudy Gilmond of St. Albans, Vt. (more than $1.75 million); Darren Miller of Coeur d’Alene, Idaho (more than $1.635 million); Michael Van Leeuwen, also known as “Coach Van” of Fayetteville, N.C. (more than $1.4 million); David Sorrells of Scottsdale, Az. (more than $1 million); T. Le Mont Silver Sr. of Orlando, Fla. (more than $773,000 under at least two user names, and more than $943,000 through a Florida shell entity known as Global Internet Formula Inc. with one or more Zeek user names); Karen Silver, Silver’s wife (more than $600,000); David and Mary Kettner of Peoria, Az. (more than $930,000 via one or more user names and shell companies known as Desert Oasis International Marketing LLC and Kettner & Associates LLC); and Lori Jean Weber of Land O’Lakes, Fla. (more than $1.94 million through a shell company known as P.A.W.S. Capital Management LLC.)
Whether other alleged winners would join Gates, Brockett and Aaron and Shara Andrews in asserting claims for damages against Bell was not immediately clear.
What is clear is that a legal war has broken out over Zeek, with alleged winners challenging Bell’s clawback claims by asserting Zeek wasn’t selling unregistered securities as alleged in 2012 by the SEC, that they worked for the money they received or were due, that the alleged winners were not investors, that the SEC’s case against Zeek cannot withstand scrutiny under the “Howey Test” for what constitutes a security, that the SEC had a duty to catch Zeek much earlier — and, in any event and if all else fails, attorneys Bell sued last week and Bell himself are to blame for the unpleasantness.
From Brockett’s June 30 “affirmative defenses” to the receiver’s clawback claims (italics added):
The Receiver has filed suit against two attorneys who provided legal advice to [Zeek operator Rex Venture Group] and Affiliates, including Brockett. Brockett relied on that advice in concluding that RVG was a legitimate business and in committing over $100,000 in his personal resources to grow his now defunct business. Because Brockett’s damages were caused in part by the conduct of the two lawyers, Brockett is entitled in equity at and at law to a credit for all money the Receiver recovers from the two attorneys as a result of his claims against them.
Also from Brockett’s “affirmative defenses” (italics added):
On information and belief, the SEC knew or should have known of the RVG Ponzi scheme, but delayed unreasonably in its prosecution of claims against RVG. Alternatively, the SEC knew for some time that RVG was operating as a Ponzi scheme but intentionally delayed disclosing that information to Affiliates and to the public. That unreasonable delay has prejudiced Brockett because he has paid taxes on the money he earned working on behalf of RVG, contributed a significant portion of his earnings to his retirement plan, and has incurred business expenses as a part of his work on behalf of RVG. The Receiver in this action stands in the SEC’s shoes and also delayed to Brockett’s detriment and now seeks return of all monies Brockett earned in connection with RVG, with no credit for the taxes or business expenses that Brockett legitimately paid, but that could have been avoided had the SEC or the Receiver timely advised Brockett of RVG’s true nature or acted in a more expeditious manner.
And from Brockett’s counterclaims against the receiver (italics added/editing for space performed):
On information and belief, RVG was not involved in the sale or marketing of any securities, so the SEC was without jurisdiction and the Court did not have subject matter jurisdiction over the SEC Action. Consequently, the appointment of the Receiver was void and of no effect, and all of the Receiver’s actions in his capacity as receiver for RVG have been unlawful and without justification . . .
RVG’s and the Receiver’s conduct described above and in the Complaint constitutes unfair methods of competition, unfair trade practices, and deceptive trade practices in violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. GEN. STAT. § 75-1.1, et seq.
The conduct was illegal, offends public policy and is immoral, unethical, oppressive, unscrupulous, and deceptive.
Bell, the Zeek receiver, is a former federal prosecutor who once received a prestigious award from the U.S. Department of Justice for his work prosecuting a Hezbollah terrorist cell operating in North Carolina.
But some of the alleged Zeek winners now describe him with adjectives that could peel paint.
And as they do this, they seek to gut or circumvent the SEC’s authority to prosecute HYIP schemes while contending the agency fumbled the ball in investigating and prosecuting Zeek — that is, if anything was worth investigating and prosecuting at all.
It is a narrative apt to go over well in MLM HYIP Ponzi Land, the latest major expression of which is TelexFree, a rabbit hole case if ever there was one.
URGENT >> BULLETIN >> MOVING: (11th Update 9:43 p.m. EDT U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case has sued MLM attorney Kevin Grimes and the Grimes & Reese law firm, alleging malpractice, negligence and breach of fiduciary duty.
In the Grimes action, the receiver is seeking “an amount in excess of $100 million.”
In another action concerning a professional who worked for Zeek or was associated with purported “opportunity,” the receiver has sued attorney and tax consultant Howard N. Kaplan. Zeek operated an MLM “program” tied to a purported penny auction.
As is the case in the Grimes action, the receiver is seeking a sum of more than $100 million against Kaplan for alleged damages.
Both Kaplan and Grimes should have known better, but nevertheless helped Zeek thrive while helping Zeek gain unwarranted credibility by lending their professional reputations to a fraud scheme that gathered hundreds of millions of dollars, receiver Kenneth D. Bell alleged.
“By virtue of his knowledge of [Zeek operator Rex Venture Group] and ZeekRewards and his legal expertise, Grimes knew or should have known that RVG was perpetrating an unlawful scheme which involved a pyramid scheme, an unregistered investment contract and/or a Ponzi scheme. Despite this knowledge, Grimes actively encouraged investors to participate in the scheme by creating a so-called ‘compliance’ program that provided a false façade of legality and legitimacy and knowingly allowed his name to be used to promote the scheme,” Bell said in the complaint against Grimes.
Bell accused Grimes of turning a “blind eye” to markers of fraud at Zeek such as unusually consistent payout percentages.
“This fake consistency should have, at a minimum, caused reasonably diligent legal counsel to inquire further about the validity of the alleged profits,” Bell alleged. “Indeed, the program publicly advertised historical average returns of 1.4% per day, which no legitimate investment could accomplish. But, Grimes deliberately turned a blind eye to these incredible claims and chose not to seek further information.”
And Kaplan, Bell alleged, “knew or should have known that insufficient income from the penny auction business was being made to pay the daily ‘profit share’ promised by ZeekRewards.
“Kaplan knew or should have known that the money used to fund ZeekRewards’ distributions to Affiliates came almost entirely from new participants rather than income from the Zeekler penny auctions,” Bell continued. “Further, Kaplan knew or should have known that the alleged ‘profit percentage’ was nothing more than a number made up by [Zeek operator Paul R.] Burks or one of the other Insiders. Rather than reflecting the typical variances that might be expected in a company’s profits, the alleged profits paid in ZeekRewards were remarkably consistent, falling nearly always between 1% and 2% on Monday through Thursday and between .5% and 1% on the weekends, Friday through Sunday.”
From Bell’s complaint against Kaplan (italics added):
Instead of properly informing Affiliates of the different tax implications they would face if their Zeek payments were properly characterized as coming from an ‘investment’ rather than a ‘trade or business,’ Kaplan failed to inform Affiliates, either on the calls or in his FAQs, of the material fact that payments to Affiliates should be characterized as investment income for tax reporting purposes.
For example, in the FAQs that he drafted and allowed ZeekRewards to post to its website, Kaplan advised that Affiliates should use IRS Schedule C (“Profit or Loss from Business”) to record their income, making no mention of the fact that they shoulduse IRS Schedule D (“Capital Gains and Losses”) . . . If Kaplan had candidly disclosed the material fact that Affiliate income would be properly characterized by the IRS as capital gains, the obvious negative tax implications would have caused many Zeek Affiliates to remove their cash earnings from the program rather than reinvesting them, short-circuiting the scheme much earlier. Since he did not, Affiliates were placated in their misguided belief that ZeekRewards was a lawful program.
It has been a remarkably awkward time for MLM attorneys. Gerald Nehra, Richard Waak and their law firm have been accused by plaintiffs in TelexFree-related litigation with racketeering and violations of the federal securities laws. TelexFree plaintiffs have asserted Nehra also counseled Zeek.
From the Zeek receiver’s complaint against Grimes and Grimes & Reese (italics added):
Defendants played an indispensable role in the scheme. Because of the lucrative, seemingly ‘too good to be true’ claims being made by RVG and ZeekRewards, many potential investors were skeptical of whether the scheme was legal and legitimate. So, RVG enlisted the aid of Grimes and other legal counsel to assist in promoting and legitimizing the scheme.
Grimes helped in several ways. First, despite his knowledge that ZeekRewards was a fundamentally flawed and unlawful pyramid and/or Ponzi scheme and was selling unregistered securities, Grimes offered to create and did create a so-called ‘compliance course’ specifically designed to encourage investors and potential investors to believe that if they satisfied the course then it would be a lawful enterprise.
Thus, Grimes knowingly allowed Zeek to portray a false appearance of legality through his bogus ‘compliance’ course.
Grimes profited personally from the compliance courses while allowing ZeekRewards yet another source of investor money. Upon information and belief, Grimes received payments from ZeekRewards not only for his legal counsel, but also for sales of his compliance course to Affiliates. Upon information and belief, Grimes provided the compliance course to ZeekRewards for $5 per affiliate, while allowing ZeekRewards to charge affiliates $30 each for the course, personally profiting from it and allowing RVG yet another means of extracting money from unsuspecting Affiliates.
Zeek collapsed in August 2012. The SEC and federal prosecutors now say the “program” gathered on the order of $850 million in less than two years. Two months after the collapse, two members of Zeek sent Senior U.S. District Judge Graham C. Mullen a copy of the “compliance” certification allegedly provided by Grimes (pictured below):
Both Grimes and Kaplan were aware that the Zeek “program” raised issues about the sale of unregistered securities, but nevertheless marched forward, Bell alleged.
In February 2012, Bell said, Grimes emailed a Zeek adviser, saying, “I am still in the process of getting my arms around its program, but I have some SERIOUS concerns that it very likely meets the definition of an ‘investment contract.’ It may have other issues as well, but I’m still reviewing their documents.”
By June 2012, according to Bell, a Zeek participant contacted Grimes, saying, “I have completed your compliance course with Zeek and really loved it. I am a great advocate of Zeek and have signed up 31 people whom I feel responsible for. . . . One of my downline is asking questions . . . there is a tremendous amount of income going into Zeek and he is concerned the profit share is coming from the new affiliates – which would make it a ponzi scheme. Can you direct me as to what is the best way to confirm this is not a ponzi scheme[?]”
In response, Grimes emailed Zeek executive Dawn Wright-Olivares, stating, “Do you want me to forward these types of communications to you or anyone else, or would you prefer that I simply discard them? I get several of these each week.”
Grimes, Bell alleged, appeared to have “no concern” about the affiliate’s email.
The MLM lawyer “took advantage of the situation, creating and marketing a compliance training course as window dressing for this illegitimate scheme, allowing the course to be sold to the Affiliates for his own profit,” Bell alleged.
UPDATED 7:36 P.M. ET (U.S.A.) Let’s say you’re out there feverishly flogging the TelexFree MLM even as the pyramid-scheme probe moves forward in Brazil, a judge and prosecutor have been threatened with death and TelexFree executive Carlos Costa is pulling an Andy Bowdoin and telling the world that God used him to bring the purported opportunity to the flock.
There’s always risk associated with HYIP schemes. Now, however, it seems those risks are becoming even greater.
Here is a key fact: The sender used an IP based in France that has been associated by Project Honeypot with comment-spamming — pitches for porn sites and sites that purport to give you a good price on designer goods in advance of a predicted “downturn,” for example. (Basic message: You can look wealthy even if you’re not, even after the economy tanks. Buy your knockoffs now and look good when the sky is falling on your life.)
The sender, now adding HYIP schemes to the porn and designer-good mix from that specific IP, used a handle that incorporated the word “Silver” within its overall handle and sought to plant a URL at the PP Blog to a Panamanian venture that advertises a custody service for precious metals. The PP Blog is declining to publish the URL and the name of the enterprise which, among other things, reproduces on its website the logos of an internationally famous insurer based in London and an internationally famous accounting firm based in Chicago. The site also publishes various contact phone numbers in the United States, Panama, New Zealand, Australia, Switzerland, the United Kingdom and Hong Kong. Although there is a chance that the service is legitimate, the PP Blog questions why someone or some thing is spamming links to the precious-metals site and loading them up further with links to “positive” coverage of seemingly unrelated HYIPs.
For the purposes of this PP Blog post, the Panamanian venture is a sidebar tidbit. Far more interesting was the body content of the spam, which appears to be a compendium of gushing affiliate pitches for TelexFree that appear on the net. The spam appears to have been cobbled together by a human scraper or scraping device of some sort that had visited one or more TelexFree-related websites. Links embedded in the spam are the “real story” in the context of this PP Blog post.
So, for starters, TelexFree’s name is being used as part of a bid to drive traffic to a precious-metals website on which visitors curiously are told they must provide 15 days’ notice if they wish to visit the office in Panama City. The PP Blog likely was targeted by the spammer simply because the word “TelexFree” appears here many times in reports about TelexFree-related events in Brazil and the United States.
The spammer — be it bot or human — appears to have made the calculation that TelexFree members might be the perfect customers for the precious-metals venture. Contained within the spam were three links: One to a site styled TelexFreeUnitedStates and two to a URL-shortening service that redirected visitors to Photobucket, the popular image-hosting and story-sharing website.
Here’s where the story really begins . . .
One of the picture stories told at at the Photobucket site was told inside a subfolder of a folder labeled “aaronsharazeek.” (Emphasis added.) The subfolder was slugged “First Zeek Red Carpet Event April 18th 2012.” Zeek conducted a Red Carpet event on that date.
The SEC moved against Zeek on Aug. 17, 2012. On the same date, the Secret Service said it also was investigating Zeek. Court records suggest the SEC began the Zeek probe at least by April 17, 2012, one day before the April 18 Zeek Red Carpet event highlighted within the “aaronsharazeek” folder on Photobucket.
On April 17, 2012, according to court filings, the SEC tasked an IT specialist to “conduct Website/video capture” of ZeekRewards.com.
Paul Burks appears to have been in deep thought on April 18, 2012, one day after the SEC tasked an IT specialist to capture content from Zeek Rewards.com. This is a slice of a photo from a larger photo that appears on Photobucket in a folder labeled “First Zeek Red Carpet Event April 18 2012.”
Precisely when Zeek operator Paul R. Burks found out about the SEC probe remains unclear. But photos inside the “First Zeek Red Carpet Event April 18th 2012” subfolder at the Photobucket site show a Burks who appears to be in deep thought. One can only wonder what 66-year-old Burks was thinking about on that date. His health? His wife’s stress level, given the noise Zeek was creating in the small town of Lexington, N.C.? His ability to keep Zeek going? The prospect that investigators were closing in?
There are 18 other photos in the Red Carpet event subfolder, some showing Zeek luminaries such as former SEC defendant Keith Laggos, former Zeek COO Dawn Wright-Olivares, former Zeek videographer OH Brown (looking happy), former Zeek trainer Peter Mingils (identified in one photo as the “V.P. of the Association of Network Marketing Professionals”). Other photos of Zeek personalities/staffers appear in the folder, as do photos showing attendees.
Absent the “Silver”/TelexFree spammer, the PP Blog likely never would have seen these photos.
Also within the “aaronsharazeek” folder at Photobucket is a subfolder slugged “Zeek Trip,” and subfolders slugged “Banners Broker” and “telexfree.” The “Zeek Trip” folder appears to contain four photos of Zeek-related real estate in Lexington, N.C. (In the ASD Ponzi case, affiliates suggested that ASD couldn’t possibly be illegitimate because ASD had an office. The same thing has been asserted by TelexFree promoters.)
Meanwhile, the “Banners Brokers” folder contains a video of a sales pitch, and the “telexfree” folder contains images of government documents from the state of Massachusetts and the country of Brazil that appear to have been designed to plant the seed that TelexFree couldn’t possibly be a scam.
Taken as a whole, the various folders and photos demonstrate the interconnectivity of MLM HYIP schemes, regardless of who actually controls the Photobucket site. It is known from other sources that some Zeekers also were in the JSSTripler/JustBeenPaid scam and the exceptionally murky Profitable Sunrise scam shut down by the SEC and various state regulators earlier this year.
Banners Broker is an uber-bizarre Ponzi-board program. On July 2, 2013, the PP Blog reported that MLM attorney Kevin Thompson said that the name of his law firm had been used by scammers in a bid to dupe members of Banners Broker and Profit Clicking, the JSS/JBP-associated “program” linked to Frederick Mann that may have ties to the extremist “sovereign citizens” movement. The July 2 PP Blog post was titled, “Law Firm’s Name Used In Bid To Dupe Members Of Banners Broker, Profit Clicking, MLM Attorney Says.”
Within the July 2 post, the PP Blog reported that it had received menacing messages in apparent “defense” of Banners Broker. As the Blog reported at the time (italics added):
WARNING: The next paragraph includes quoted material from one of the Jan. 18, 2013, spams, and the PP Blog is reproducing it to illustrate the bizarre and often menacing nature of the HYIP sphere. Indeed, the apparent Banner’s Broker supporter wrote (italics added):
” . . . I am Big Bob’s cock meat sandwich. Your mom ate me and made me do press ups until I threw up . . . I am gonna report you. When you make false accusations, you can get done. Maybe you will be seen in court soon . . .”
It is as ugly today as it was on the January date the PP Blog received the communication.
Why “programs” such as TelexFree, Zeek Rewards, BannersBroker and ProfitClicking become popular with people of faith is one of the head-scratching mysteries of current times. Gold fever, of course, is nothing new; it’s been around for centuries. What’s at least relatively new in the Internet Age is that the gold- and silver-sellers appear to be piggybacking off HYIP pitchmen, apparently hoping to rope in customers for shiny-object schemes.
This “comment” sent to the PP Blog on Nov. 22 sought to drive traffic to a precious-metals site by planting a link to the site and also planting links related to TelexFree.
On Oct. 25, the PP Blog reported that an alleged shiny-object scheme had taken root in Zeek’s back yard in North Carolina. On June 19, the PP Blog reported that the receiver in the Legisi HYIP Ponzi case was going after assets linked to E-Bullion, a collapsed payment processor with shiny-object woo. James Fayed, E-Bullion’s operator, is sitting on death row in California after a jury found him guilty of arranging the brutal contract slaying of his own wife.
The Legisi scheme was targeted at Christians, and E-Bullion’s cheerleaders included the Canadian clergyman Brian David Anderson, who was sent to U.S. federal prison in 2010 for the Frontier Assets Ponzi scheme. Anderson also was linked to the Flat Electronic Data Interchange (FEDI) HYIP scheme that put Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” in federal prison after his September 2009 convictions for financing terrorism and fleecing FEDI investors.
Yes, financing terrorism.
Alishtari traded on his purported ties to prominent politicians, just like ASD’s Andy Bowdoin. At least one of the schemes linked to Alishtari and Anderson used the term “rebates,” just like ASD. The narrative surrounding FEDI read like impossibly outrageous fiction, a mind-bending example of a shiny-object scheme. Ten members of purported “Royal families” in the Middle East were said to have set aside “50 Billion in Gold” ($5 billion each) to advance the scheme. Another entity in the Middle East was said to have supplied a “total of 100 Billion in Gold.” Still another entity was said to have put up “500 Million dollars in liquid gold assets.”
FEDI marks were solicited to purchase what effectively were trading desks that somehow would enable them to profit on the coattails of Middle East royals interested in escrowing huge sums to fund worldwide construction projects, with money purportedly flowing to the “labor” force. If that weren’t enough, the scheme purportedly was married to a venture that purportedly would put vending machines in at least 50,000 locations. The vending machines purportedly would sell debit cards, and were purportedly backed by $150 billion in gold and an insurance policy in Canada.
In March 2012, the PP Blog reported on FTC allegations that three Florida companies and a Florida man had roped customers into a shiny-object scam, a precious-metals boondoogle allegedly carried out by telemarketers.
Imagine what would happen if a scamming telemarketing firm had the customer lists for TelexFree, Zeek, Banners Broker, Profit Clicking, AdSurfDaily, Legisi and others.
If the MLM industry seeks to win favor on Main Street and stop being the brunt of jokes, it needs to act forcefully to eradicate these schemes. MLM attorneys need to stop permitting schemes to trade on their names, thus potentially setting the stage for prospects to believe that no scam could be occurring because no lawyer would permit his name to be used in this fashion.
But even today, what does one get when one visits the website of TelexFree? A pitch in which the alleged TelexFree pyramid scheme announces its pride at having MLM lawyer Gerald Nehra on board.
Zeek traded on the name of MLM attorney Kevin Grimes, who comes off in Red Carpet Day shots as a Zeek crowd prop, and also the name of Nehra. Bidify traded on Kevin Thompson’s name. The lawyers should not permit this to happen. And they should stop making personal appearances at “opportunity” events and start questioning why so many of these “programs” are targeted at people of faith and promise or suggest the likelihood of absurd returns.
Profitable Sunrise — perhaps recognizing that an MLM scheme can be made to appear legitimate if affiliates simply are provided the name of a purported lawyer — appears to have conjured up an attorney’s name out of thin air. It then allegedly proceeded to run off with millions and millions of dollars. When ASD’s Bowdoin switched from the two scams that eventually put him in prison (ASD and AdViewGlobal) and began pitching the alleged OneX pyramid scheme, one of the first things he did was assure the former ASD members he was pitching in a webinar that OneX had an “attorney,” adding that the venture was a great fit for college students. Bowdoin, mixing in God talk during the October 2011 webinar, never identified the purported lawyer by name. Neither did a former ASD pitchwoman pitching the OneX scheme alongside Bowdoin.
In the absence of self-imposed, self-regulatory restraints in the MLM industry — lawyers restraining themselves from becoming accidental or purposeful stage props and sanitizers of “programs,” for example — MLM prospects may be well-advised to view any MLM “program” with the highest degree of skepticism, regardless of the programs’ wares.
Every single one of the “programs” referenced in this story has ridden on the coattails of a deity and lawyers. It did not matter whether the lawyers were real or imagined.
And it did not matter that the Gods of many faiths were observing it all, perhaps mournfully wondering how the precious Children of the Earth had come to view MLM money as the maximum deity.
