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Tag: Rex Venture Group LLC

  • UPDATE: As Proposed Money-Saving Measure, Zeek Receiver Asks Judge To Treat Oct. 8 Preliminary Liquidation Plan As Status Report; Meanwhile, Yet Another Zeek Member Declares Herself A Fraud Victim

    A woman who described herself as a Zeek victim filed copies of postal receipts in federal court today. Source: Screen shot of federal court files. Redaction by PP Blog.

    UPDATED 8:26 A.M. EDT (OCT. 31, U.S.A.) Saying it would save money, the court-appointed receiver in the Zeek Rewards Ponzi scheme case has asked a federal judge to treat the receiver’s Oct. 8 preliminary liquidation plan as a status report. (See Oct. 9 PP Blog story.)

    Separately, yet another Zeek member has declared herself a victim of the alleged $600 million Zeek fraud scheme operated by Paul R. Burks and Rex Venture Group LLC. Two other Zeek members effectively did the same thing earlier this month. On Aug. 17, the SEC alleged that Zeek was a massive Ponzi- and pyramid scheme that potentially fleeced more than 1 million people.

    In August, Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina ordered receiver Kenneth D. Bell to file the first status report in the case by Oct. 30. Among other things, status reports inform judges about the efforts under way to recover proceeds linked to alleged fraud schemes and return them to victims.

    In the Zeek case, status reports are due within 30 days of the end of a quarter — for example, the third quarter of the calendar year ended Sept. 30, making the first Zeek status report due Oct. 30. The second is due Jan. 31, 2013, a month after the end of the fourth quarter of the calendar year on Dec. 31, 2012.

    Bell said in court filings today that the information in the Oct. 8 report included “the same information” due today.

    “Given that a separate Quarterly Status Report would be redundant, and in the interest of preserving Receivership assets, the Receiver respectfully requests that the Court order that the Preliminary Liquidation Plan be treated as the Receiver’s First Quarterly Status Report,” Bell petitioned Mullen.

    Mullen had not acted on the request by late this afternoon, according to the docket of the case.

    How Zeek enthusiasts on Ponzi-scheme boards such as TalkGold and MoneyMakerGroup will react to Bell’s request was not immediately clear. One-percent-a-day (or more) schemes such as Zeek gain a head of steam in part because willfully blind scammers who populate the Ponzi cesspits position the “programs” as legitimate.

    The demonization of Bell on the Ponzi boards and elsewhere began shortly after the SEC brought the Zeek case. As was the case in the AdSurfDaily prosecution brought by the U.S. Secret Service in 2008, some Zeek members have claimed that the government is manufacturing victims where none exist. The ASD and Zeek Ponzi schemes fetched a combined sum of at least $719 million, nearly three-quarters of a billion dollars, according to court filings.

    Both frauds operated as classic Ponzi schemes that recycled money from members to create the illusion of sustainability and profitability, according to investigators.

    Both Zeek and ASD were promoted on forums listed in federal court filings as places from which Ponzi schemes are promoted. Earlier schemes promoted on the forums include Legisi and Pathway To Prosperity, which gathered a combined sum of more than $140 million and affected tens of thousands of people, according to court filings.

    Legisi operator Gregory McKnight faces sentencing next month in his Ponzi scheme case. Alleged Pathway To Prosperity operator Nicholas Smirnow, meanwhile, is listed by INTERPOL as a wanted fugitive. As was the case with Zeek, the SEC and Secret Service led the Legisi probe. The U.S. Postal Inspection Service brought the Smirnow/Pathway to prosperity case, saying the scam affected individuals in 120 countries.

    ASD operator Thomas A. “Andy” Bowdoin is serving a 78-month prison sentence. He was sentenced in August 2012.

    Despite claims that Zeek created no victims, at least three individuals already have claimed in court filings to have been scammed by Zeek.

    In a filing docketed today, Maria Aide Gomez claimed she sent North Carolina-based Zeek parent Rex Venture Group five postal money orders for $1,000 each in May and paid an additional $300 to maintain her Zeek membership.

    Gomez described herself as a “Victim of fraud and deception” on the part of Zeek, Rex Venture Group and Paul R. Burks, the operator of Zeek and Rex Venture. The money orders Gomez sent to Zeek were purchased at a post office in Washington state, according to exhibits that accompanied the filing.

    Bell, the receiver, is experienced as both a defense attorney and a prosecutor. The U.S. Department of Justice lauded Bell a decade ago for his successful prosecution of a Hezbollah terrorist cell operating in the United States.

  • BULLETIN: Zeek Mystery Deepens: Receiver Says He Discovered ‘Foreign’ Account That Has NOT Been Seized; Meanwhile, $5 Million In Cashier’s Checks From Single U.S. Bank Found At Zeek Headquarters; Firm’s Records Described As ‘Inadequate Or Incomplete’; Secret Service Has Recovered Lion’s Share Of $293 Million Found So Far

    BULLETIN: (5TH UPDATE 6:13 P.M. EDT) The court-appointed receiver in the Zeek Rewards Ponzi scheme case says he discovered that Zeek has “at least one foreign account” that has not been seized.

    It was “not clear” whether the funds would be recoverable despite the fact the bank that holds the account has been served with a freeze order, receiver Kenneth D. Bell said in court filings yesterday.

    Bell did not name the bank or its home country in the filings. Nor did he say how he discovered the account.

    But Bell advised Senior U.S. District Graham C. Mullen of the Western District of North Carolina that he was working with the SEC, the U.S. Secret Service and federal prosecutors to determine “the most efficient and cost effective manner to recover the funds from the entity that controls or the bank that holds this account so that the funds can be used in the distribution plan for this case.”

    The amount allegedly held in the account was not disclosed. Zeek was operated by North Carolina-based Rex Venture Group LLC and Paul R. Burks, the SEC said in August. The agency described Zeek as a $600 million Ponzi- and pyramid fraud operating domestically and internationally.

    Whether Zeek had silent partners or a special class of members is just one of the many mysteries still surrounding the purported “opportunity.”

    Receiver May Have Cooperation Of Certain Insiders

    Bell’s filings yesterday — on the Columbus Day holiday in the United States — made it plain that certain individuals associated with Zeek were cooperating in the receivership probe, sometimes through lawyers. The names of those individuals were not disclosed. Nor was the degree of their cooperation.

    Filings, however, at least hinted that some people close to Zeek had stories to tell.

    “Initial interviews of the Receivership Defendant’s employees and officers who were willing to be interviewed, as well as communications with various third parties, have revealed the identities of numerous other individuals and entities that might have relevant information regarding the Scheme, including potential business associates and investors of the Receivership Defendant and its principals,” Bell advised Mullen.

    Moreover, the report revealed that the U.S. Secret Service largely was responsible for recovering the lion’s share of more than $293 million in Zeek-related financial accounts.

    Forensic Accounting Firm Hired

    Mullen ordered Bell in August to submit a preliminary liquidation plan by Oct. 8 that would update the court on the receivership’s efforts to date and lay out the early groundwork on how Zeek members could file claims.

    Bell described his investigation as “still in its preliminary stages” and “ongoing.”

    During the receivership’s first 52 days, Bell advised Mullen, it was learned that Zeek had about 2.2 million “affiliates,” but that some of those affiliates appeared to have “more than one user id.”

    Approximately 1 million affiliates “paid money into the Zeek Rewards Program,” Bell advised Mullen.

    Bell has hired FTI Consulting Inc., a forensic accounting firm, to assist in the receivership probe, according to yesterday’s receivership filing.

    Meanwhile, the McGuireWoods law firm is counsel for the receiver. Kroll Ontrack is assisting with data recovery and storage, and Gilardi & Co. is hosting the receivership website and providing a means for Bell to communicate with potentially millions of individuals affected by the alleged epic fraud, Bell said in the filing.

    Zeek’s Aug. 17 shutdown by consent after the SEC brought the Ponzi allegations did not stop bills from coming in, Bell said.

    The estate, for example, already has disbursed more than $55,000 for payroll and benefits due employees, “taxes due the United States, North Carolina, and Arkansas” and for property rent and certain ongoing business expenses.

    During the preliminary examination, Bell identified more than $922,000 in accounts payable, including “certain invoices for professional services,” according to the filing.

    Bell advised Mullen that he still was “in the process of determining the validity and amounts of these accounts payable” and ascertaining the priority in which expenses will be paid.

    Zeek Documentation ‘Inadequate Or Incomplete’

    In a passage that may read like a familiar refrain to HYIP Ponzi analysts, Bell advised Mullen that certain Zeek-related financial documentation “has been found to be inadequate or incomplete.”

    Examining paperwork and data will be time-consuming because of “the significant lack of documentation and the organization of this data,” Bell advised the judge.

    Regardless, Bell said, the receivership team would follow the trail “to identify additional assets, trace the proceeds of any fraudulent conduct, evaluate claims of creditor and investors, and identify potential claims against former employees, third parties (including Affiliate-Investors), and others that may have received assets of the Receivership Estate.”

    As the receiver’s probe moves forward and more evidence is gathered and analyzed, clawback claims will be contemplated under “applicable fraudulent transfer statutes against those who ran the operations and ‘net winner’ participants . . .” Bell said.

    Bell envisions an approach that would “first offer those who are required to return money to the Receivership Estate the opportunity to do so cooperatively in an effort to avoid costly litigation for all concerned,” according to yesterday’s filing.

    Below a subhead of “Miscellaneous Assets Recovered,” Bell advised Mullen that $5 million in cashier’s checks from BB&T Bank were located in [Rex Venture Group’s] main office.”

    Zeek mysteriously announced on May 28 — Memorial Day — that it was closing its BB&T account, along with an account at NewBridge Bank. Why Zeek allegedly was in possession of $5 million in cashier’s checks that originated at BB&T was unclear in the receiver’s filing.

    Despite Zeek’s claim online that it was closing the accounts and its prompt to affiliates to cash or deposit Zeek commission checks drawn on the banks before June 1 or they would bounce, court records show that NewBridge still had $11.64 million in Zeek-related funds on deposit.

    Some observers have speculated that events that led to the August collapse of Zeek began in May, with the report from Zeek that it was closing the accounts voluntarily. If the account closures were less than voluntary, however, it may suggest that the banks had become suspicious of Zeek and that the Rex Venture-owned “opportunuity” was engaged in a scramble to find vendors to accept and maintain deposits.

    Court records claim that Zeek used at least 15 domestic and offshore vendors, including Canada’s AlertPay and SolidTrustPay.

    As of Oct. 8, the court-appointed receiver has identified these U.S. domestic companies as providers of services for Rex Venture Group LLC, the operator of the alleged Zeek Rewards Ponzi scheme. The receiver noted in court filings that “certain of the accounts listed above were closed, inactive or had a zero balance” before his August appointment.

    ‘Professionals’ To Receive Scrutiny

    Bell advised Mullen in yesterday’s filing that he also planned to “investigate potential claims against professionals and others” involved with Zeek to determine “who may be liable for the role they played in facilitating the operation.”

    Claims against the unidentified “professionals” and others will be pursued, if warranted, Bell advised the judge.

    Bell further advised Mullen that the receivership would “streamline” operations as much as possible so that Zeek victims and other creditors could receive a disbursement as soon as possible. He did not rule out the possibility of a “preliminary distribution” from seized proceeds.

    No specific timetable was laid out in the filings, but the task of formulating a claims process that potentially needs to accommodate 1 million or more people has begun, Bell said.

    Read the receiver’s filing for more details. (Document provided courtesy of the ASDUpdates Blog.)

     

  • Month After Zeek Ponzi Complaint By SEC, ASD Figures (And Zeek Pitchmen) Todd Disner And Dwight Owen Schweitzer Accuse Judge Who Dismissed Their ASD-Related Lawsuit Of ‘Sophistry’; Duo Tries To Reopen Case And Have Judge Removed

    MLM pitchmen and AdSurfDaily figures Todd Disner and Dwight Owen Schweitzer — both of whom went on to become promoters of the alleged Zeek Rewards Ponzi scheme — have accused a federal judge of “sophistry.”

    Sophistry, according to Dictionary.com, means “a subtle, tricky, superficially plausible, but generally fallacious method of reasoning.”

    Disner turned to MLM after his days as a founder of the Quiznos sandwhich franchise. Schweitzer is a former attorney whose license was suspended in Connecticut. Both men live in southern Florida.

    The curious assertion by Disner and Schweitzer against U.S. District Judge Rosemary Collyer appeared on Collyer’s court docket in the District of Columbia on Sept. 17, one month to the day after the SEC alleged in the western District of North Carolina that the Zeek Rewards MLM “program” was a $600 million Ponzi scheme and pyramid fraud that potentially had affected more than 1 million people.

    Senior U.S. District Judge Graham C. Mullen of the western District of North Carolina is presiding over the Zeek case. Kenneth D. Bell is the court-appointed receiver.

    Zeek and ASD are known to have members in common.

    The ASD Ponzi scheme, which collapsed in 2008, affected at least 97,000 people and created at least 9,000 victims, federal prosecutors said.

    Disner and Schweitzer also were pitchmen for ASD, which federal prosecutors in the District of Columbia have described as a $119 million Ponzi scheme marketed MLM-style. The ASD duo sued the United States in November 2011, claiming their records in ASD’s database were private and thus unlawfully seized and accusing federal prosecutors and a U.S. Secret Service agent of presenting a “tissue of lies” when bringing the civil- forfeiture case against $65.8 million in the bank accounts of ASD President Andy Bowdoin in August 2008.

    On Aug. 29, Collyer sentenced Bowdoin to 78 months in federal prison. Bowdoin, 77, pleaded guilty to wire fraud in May 2012, admitting in a statement of offense that ASD was a Ponzi scheme and that his business never operated lawfully from its inception in 2006.

    Collyer dismissed the Disner/Schweitzer complaint on the same day she sentenced Bowdoin.

    But Disner and Schweitzer now claim Bowdoin’s admission “was a necessary part of his plea bargain” with the government. They further assert that Bowdoin’s admission was the “coerced confession of an 80 year old man.”

    In court filings in May, however, Bowdoin said this:

    “I have read this Plea Agreement and discussed it with my attorneys, Michael McDonnell, Esq. and Charles Murray, Esq. I fully understand this Plea Agreement and agree to it without reservation. I do this voluntarily and of my own free will, intending to be legally bound. No threats have been made against me nor am I under the influence of anything that could impede my ability to understand this Plea Agreement fully. I am pleading guilty because I am in fact guilty of the offense(s) identified in this Plea Agreement.” (Italics/bolding added by PP Blog.)

    In the filing docketed Sept. 17, Disner and Schweitzer claim the Secret Service “manufactured” events to ensure that the ASD case was heard by Collyer. Earlier, Disner and Schweitzer advanced a theory that undercover agents who joined ASD in 2008 had a duty to identify themselves to ASD management.

    Even after Bowdoin pleaded guilty in May, Disner and Schweitzer contended that the government’s case was a “house of cards,” according to court filings.

    Disner and Schweitzer now have asked for their lawsuit to be reopened and to have Collyer removed from the case. In ASD-related litigation, Collyer has ordered the forfeiture of more than $80 million.

    The bid by Disner and Schweitzer to have Collyer removed from ASD-related litigation is at least the third. In 2009, purported “sovereign” being Curtis Richmond unsuccessfully sought to have Collyer removed. So did Bowdoin.

    Disner is now involved with purported Zeek Rewards consultant Robert Craddock in an effort to raise money to challenge either the SEC or the court-appointed receiver in the Zeek case.

    Among the early theories advanced by Craddock was that Mullen — the judge in the Zeek case — was playing politics by appointing Bell’s firm as the receiver to enable the firm to gorge itself on fees.

    Both ASD and Zeek were accused of selling unregistered securities as investment contracts. The U.S. Secret Service brought the ASD case, with the SEC bringing the Zeek case.

    The Secret Service confirmed on Aug. 17 that it also was investigating Zeek. The SEC said that, since January 2011, Zeek had “raised more than $600 million from approximately 1 million investors nationwide and overseas by making unregistered offers and sales of
    securities through the ZeekRewards website in the form of Premium Subscriptions
    and VIP Bids.”

    Zeek was an arm of North Carolina-based Rex Venture Group LLC and was operated by Paul R. Burks, the SEC said.

    In their filing accusing Collyer of sophistry, Disner and Schweitzer appear to suggest that Collyer needs a lesson in MLM from purported MLM expert Keith Laggos and MLM attorney Gerald Nehra.

    Laggos, an  SEC defendant in a 2004 case that alleged he issued laudatory press releases without disclosing he was being compensated, is listed in court records as a Zeek consultant. Laggos settled the 2004 SEC case without admitting or denying liability but agreeing to pay more than $30,000, including a $19,500 civil penalty.

    Laggos once opined that ASD was not a Ponzi scheme. Nehra also opined that ASD was not a Ponzi scheme. Richard W. Waak, Nehra’s law partner, is listed in court filings by Zeek as an attorney for the firm.

    Read the Disner/Schweitzer motion to remove Collyer.

    Screen shot of section of motion by ASD figures Todd Disner and Dwight Owen Schweitzer to remove Judge Collyer for alleged "cause."

  • SEC Says Zeek Probe ‘Is Continuing’; Agency Updates Information Page

    UPDATED 10:05 P.M. EDT (U.S.A.) The SEC today updated its information site on the Zeek Rewards Ponzi scheme case, noting its investigation “is continuing” and pointedly adding language that “ZeekRewards and [Paul R.] Burks immediately consented to an asset freeze, the appointment of a receiver over their assets, and the payment of a $4 million penalty.”

    Although the agency gave no specific reason for the update, it occurred against the backdrop of an ongoing effort by Zeek figure Robert Craddock to intervene in the case after collecting donations from individual members of Zeek.

    1.

    Screen shot of section from Google cache. This is how this section of the SEC's Zeek information page looked prior to today's update.

    2.

    Screen shot: The red highlights were added by the PP Blog and show today's change to the SEC's Zeek info site.

    Blogger Jordan Maglich of PonziTracker.com noted yesterday that Craddock reportedly had been subpoenaed to appear before the SEC.

    From PonziTracker (italics added):

    While the SEC did not provide the reason for the subpoena, some have speculated that recent comments attributed by Craddock to the SEC concerning purported admissions of fault in the SEC’s case against Zeek which were later refuted may have piqued the SEC’s interest.

    On Sept. 23, the PP Blog reported that Craddock’s name did not appear on a Sept. 17 list of “EMPLOYEES, OTHER PERSONNEL, ATTORNEYS, ACCOUNTANTS & OTHER AGENTS/CONTRACTORS” submitted by Zeek to Senior U.S. District Judge Graham C. Mullen even though Craddock identified himself in July as a Zeek “consultant.”

    Craddock also was present on separate fundraising calls last month with Todd Disner, a Zeek pitchman and a member of the AdSurfDaily 1-percent-a-day Ponzi scheme, and with T. LeMont Silver. Silver was described on a Zeek website in June as a Zeek “employee.”

    Among other things, Silver was a pitchman for OneX, which federal prosecutors in the District of Columbia described in April as a “fraudulent scheme” and “pyramid” that was cycling money in ASD-like fashion. Jailed ASD Ponzi scheme operator Andy Bowdoin also was a OneX pitchman.

    ASD was a Ponzi scheme that gathered at least $119 million, according to federal prosecutors. Zeek’s business model was very similar to ASD’s business model.

    Zeek was a Ponzi scheme that gathered $600 million, according to the SEC.

    See Sept. 19 PP Blog story.

    Visit the SEC’s Zeek infomation page.

  • ZEEK: Part Of The Backstory — In Pictures

    UPDATED 4:20 P.M. EDT (U.S.A.) Unsolved mysteries remain in the Zeek Rewards Ponzi scheme case. Among the unanswered questions are these:

    • How many members did Zeek have in common with AdSurfDaily, a predecessor 1-percent-a-day scam to the Zeek scheme?
    • Why do some Zeek “defenders” appear to be engaged in bizarre bids to harass and menace Zeek critics?
    • Why did Zeek list certain ASD members or story figures as employees on its website — and why does some of the employee information published on Zeek’s website in June appear to be at odds with employee information contained in court filings by Zeek last week?
    • How much connectivity did Zeek have with scams such as NarcThatCar, AdViewGlobal, OneX and JSSTripler/JustBeenPaid, a “program” that may have ties to the “sovereign citizens” movement?

    On June 7, the PP Blog reported that a Zeek Rewards MLM “program” website was listing the names of 16 Zeek “employees,” including the name of Terralynn Hoy, a mainstay in the AdSurfDaily Ponzi scheme story. Also included was the name of OH Brown, an executive at a company (USHBB Inc.) that produced ads for the NarcThatCar pyramid scheme. This information is reflected in screen shots Nos. 1 and 2. Notes by the PP Blog also are included.

    Hoy participated in at least one conference call for Zeek, as did Brown. Zeek’s 1-percent-a-day-plus business model was very similar to the business model of ASD, which the U.S. Secret Service described in 2008 as a massive online Ponzi scheme that had gathered tens of millions of dollars. Zeek launched after the collapse of ASD and had members and/or figures in common with ASD and AdViewGlobal, a collapsed 1-percent-a-day “program” federal prosecutors linked in April 2012 to ASD.

    1.

     

    2.

    ADDITIONAL NOTES: T. LeMont Silver, identified by Zeek in June as an employee, also was a pitchman for “OneX.” In April, federal prosecutors in the District of Columbia described OneX as a “fraudulent scheme” and “pyramid” that was recycling money in AdSurfDaily-like fashion. ASD was a $119 million Ponzi scheme operated by the now-jailed Andy Bowdoin, who also was a OneX pitchman.

    Among Silver’s OneX claims was that OneX positions being given away were worth $5,000. Bowdoin declared OneX an excellent “program” for college students.

    Even though Zeek claimed Silver, Hoy, Catherine Parker, Brown, Trudy Gilmond and Marie Young Cain as “employees” in June, they are not referenced as “EMPLOYEES, OTHER PERSONNEL, ATTORNEYS, ACCOUNTANTS & OTHER AGENTS/CONTRACTORS” in a Sept. 17 court filing by Rex Venture Group LLC/Zeek operator Paul R. Burks.

    Also absent from Burks’ Sept. 17 list of Rex/Zeek employees/contractors is Robert Craddock, who identified himself in July as a Rex “consultant.” In July, prior to the SEC’s Ponzi allegations against Zeek, Craddock sought to disable the Hub of Zeek critic “K. Chang” by filing a complaint for purported copyright/trademark infringement and libel with HubPages.com. Craddock was successful briefly, but HubPages eventually restored the “K. Chang” Hub. Craddock later became involved in a purported effort to raise funds to “protect” Zeek affiliates from the SEC and/or the court-appointed receiver in the Zeek Ponzi case.

    Gilmond once pitched Regenesis2x2, a “program” that became the subject of a U.S. Secret Service investigation in 2009. The Secret Service also is investigating Zeek. The SEC described Zeek last month as a $600 million Ponzi- and pyramid scheme.

    Precisely how and when Rex/Zeek hired or replaced/dismissed employees is unclear. The names of a number of individuals listed by Zeek as employees in June do not appear on the list Burks filed in court last week.

    NarcThatCar effectively collapsed in 2010, after coming under scrutiny by the Better Business Bureau and investigative reporters. Narc operated from Texas — and yet did part of its banking in North Carolina at one of the banks used by Zeek. Both Narc and Zeek used USHBB Inc. to produce ads for their respective “programs.” Both Narc and Zeek scored “F” grades with the BBB — and when the BBB published negative information about the respective “programs,” some affiliates of the respective “programs” claimed the BBB was a fraud.

    Zeek ‘Defender’ Stalks PP Blog, Starts Disinformation Site After HubPages Restores ‘K. Chang’ Site Targeted By Craddock

    The PP Blog is reporting today that, after the SEC described Zeek as a $600 million fraud and after HubPages restored the “K. Chang” Hub critical of Zeek and targeted by Craddock, a purported Zeek “defender” used the Internet repeatedly to send harassing communications to the PP Blog. Dated Aug. 28, one such communication was an announcement that the PP Blog and “K. Chang” had been targeted in a retaliation campaign for their respective reporting on Zeek.

    3.

    4.

    The Blog’s stalker created more than a dozen bogus usernames and email addresses to send harassing (and bizarre) communications to the PP Blog.

    Here is one from Aug. 31 (italics added):

    Watch out for the Romney lover namely KSChang!!!! He was saw holding hands with Mitt, caressing the presidential candidate, while surfing PatrickP’s amazing, smart, funny, and romantic blog.

    Mitt Romney is the Republican nominee for President of the United States.

    For reasons that remain known only to the PP Blog’s cyberstalker, the individual also sent a one-word harassing communication — “Pussy” — to the thread below this Aug. 29 PP Blog guest column by Gregg Evans. Separately, the cyberstalker sent a communication that planted the seed Evans would get sued for his Aug. 29 PP Blog column.

    “Are you willing go toe to toe with a lawyer on your claims and back up this article?” the cyberstalker wrote.

    On Aug. 31, the cyberstalker — who’d been banned under multiple identities — sent this harassing communication to the PP Blog:

    “What happened to your face dude, looks like you got ran over by an ugly truck.”

     

     

     

  • ZEEK UPDATE: Thousands Of Records Filed Under Seal

    An entry from the court docket in the Zeek Ponzi scheme case.

    UPDATED 4:20 P.M. EDT (U.S.A.) Attorneys for accused Ponzi schemer Paul R. Burks of the Zeek Rewards MLM “program” operated through North Carolina-based Rex Venture Group LLC have filed thousands of records under seal.

    On Sept. 17, Burks’ attorneys sought the approval of Senior U.S. District Judge Graham C. Mullen to file the documents under seal.

    The “anticipated filing contains account and financial information concerning not only Rex Ventures Group, LLC d/b/a ZeekRewards.com, but also thousands of individuals who either paid funds to and/or received funds from Receivership Defendant since January 1, 2010,” the attorneys said in advance of the massive filing.

    Mullen permitted the attorneys to submit the documents under seal. The filings now have been made and will remain under seal until further order of the court. The precise form of the filings is unclear because they are not available to the public.

    As things stand, the records will be available to Burks, the SEC and to Kenneth D. Bell, the court-appointed receiver in the Zeek case.

    Zeek was described Aug. 17 by the SEC as a Ponzi- and pyramid scheme that had gathered $600 million.

    The sheer complexity of Ponzi-scheme cases often leads to spectacular paper chases because of the enormous number of records that must be reviewed. But the Zeek case could set a new standard for volume because Zeek used as many as 15 financial vendors and perhaps ensnared between  1 million and 2 million victims while operating over the Internet between January 2011 and August 2012.

    Visit the ASD Updates files site to view Zeek-related court documents. Visit the ASD Updates Blog.

     

  • BULLETIN: Zeek Had $20.7 Million In AlertPay/Payza And $20 Million In SolidTrustPay

    Screen shot: Accused Ponzi schemer Paul R. Burks of Rex Venture Group LLC advised Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina today about Zeek's relationships with various financial vendors. The alleged Zeek Rewards Ponzi scheme operated through Rex Venture..

    BULLETIN: (UPDATED 9:18 P.M. EDT U.S.A.) New court filings by accused Ponzi schemer Paul R. Burks of Rex Venture Group LLC show that Zeek Rewards had more than $40 million in offshore payment processors.

    Included in that sum is $20.765 million in Canada’s AlertPay/Payza, and $20 million in Canada’s SolidTrustPay.

    Today’s filing also shows $10 million on deposit at Bank of America. Court filings in the AdSurfDaily Ponzi scheme case brought by the U.S. Secret Service in 2008 show that ASD also banked at Bank of America.

    On Aug. 17, the SEC alleged that North Carolina-based Zeek was a massive online Ponzi- and pyramid scheme that had gathered $600 million since January 2011. Filings by Burks today suggest Zeek did it all with fewer than 40 employees, including part-time contractors such as attorneys and consultants in areas such as payroll, accounting, compliance and marketing.

    Included among the consultants listed by Burks was Keith Laggos, a purported MLM expert. Laggos once opined that AdSurfDaily was not a Ponzi scheme. ASD President Andy Bowdoin later admitted that it was. Bowdoin was sentenced last month to 78 months in federal prison.

    Visit the ASD Update Blog’s files site to read Zeek-related court filings.

    Visit the website of Kenneth D. Bell, the court-appointed receiver in the Zeek case. Read the FAQs on the receiver’s website.

  • William J. Wise, International ‘Mastermind’ Of $129.5 Million Ponzi Fraud Involving CDs, Pleads Guilty To 18 Felonies; Top U.S. Attorney Says Federal Prosecutors ‘Around The Country’ Have Identified ‘Unprecedented Rise’ In Investment Fraud Schemes With ‘Staggering Losses’

    “The fraudsters prey upon vulnerable victims, do not respect local or even state boundaries, and often loot the victims’ life savings.” — Melinda Haag, U.S. Attorney for the Northern District of California, Sept. 13, 2012

    It featured confidence-boosting names: Millennium Bank, United Trust of Switzerland and Sterling Bank and Trust.

    But it was a cross-border Ponzi scheme that operated for 10 years. Its international “mastermind” controlled each of the entities and duped investors into purchasing at least $129.5 million in “bogus CDs,” federal prosecutors in two U.S. districts said this week.

    William J. Wise, the mastermind, was a resident of Canada. But he also operated in the region of Raleigh, N.C., luring investors with tales of outsize returns made possible by profitable overseas investments, prosecutors said. In 2009, the SEC said Wise was assisted by Kristi M. Hoegel of Napa, Calif.

    Hoegel, the SEC said at the time, used as many as five aliases. One proved to be the name under which she was charged criminally in February 2012: Jacquline Hoegel.

    On Wednesday, Wise pleaded guilty to 18 felonies, prosecutors said. He potentially faces decades in prison.

    Here is a breakdown of the Wise guilty pleas: one count of conspiracy to commit mail and wire fraud; twelve counts of mail fraud; three counts of wire fraud; one count of money laundering; and one count of tax evasion.

    “The United States Attorneys around the country have identified an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses,” said U.S. Attorney Melinda Haag of the Northern District of California. “The fraudsters prey upon vulnerable victims, do not respect local or even state boundaries, and often loot the victims’ life savings. This case is an example of U.S. Attorneys working together – from the Northern District of California to the Eastern District of North Carolina – to identify the schemes, find the perpetrators and bring them to justice.”

    Haag was backed by Thomas G. Walker, the U.S. Attorney for the Eastern District of North Carolina.

    “The individuals who commit these crimes have no regard for the well-being of their victims – only the desire to make a quick buck,” Walker said. “United States Attorney’s offices, along with federal, state and local law enforcement officials, work diligently each and every day to see that those who commit these crimes are the ones who pay.”

    Prosecutors stressed that “[t]he Sterling Bank and Trust referred to in the indictment and plea agreement is not affiliated with the Sterling Bank & Trust headquartered in Southfield, Michigan, with thirteen branches in the San Francisco Bay Area.”

    It is not unusual for scammers to trade on the name of a well-known entity or to cherry-pick parts of a well-known name to sanitize a fraud scheme and create comfort in the minds of investors. The Trevor Cook Ponzi scheme in Minnesota, for example, cherry-picked the name of UBS and also used names that sounded regal.

    Ponzi-forum hucksters often do the same thing, dazzling investors with tales of fantastic “offshore” profits and using names that instill comfort and confidence.

    Prosecutors noted pointedly this week that Wise “agreed to work with the government and the Receiver appointed by the Texas District Court to obtain control over any remaining investor funds in bank accounts in the United States or in foreign countries. ”

    North Carolina was rocked Aug. 17 with SEC allegations that Zeek Rewards, an MLM “program” married to a penny-auction site known as Zeekler and operated by Paul R. Burks of Rex Venture Group LLC, was a $600 million Ponzi- and pyramid scheme that may affect more than 1 million people.

    Kenneth D. Bell, the court-appointed receiver in the Zeek case, now says there may be 2 million victims. Zeek used as many as 15 financial vendors, including offshore vendors, the SEC said.

    Court records strongly suggest Burks was cooperating with the SEC before the agency’s civil charges became public. The U.S. Secret Service said last month that it also was investigating Zeek.

    The SEC said last month that Burks had agreed to cooperate with the receiver.

    The Wise case resulted from “a lengthy investigation by the IRS-Criminal Investigations Division,” prosecutors said.

     

  • DEVELOPING STORY: Zeek Receiver Says He Has Secured Nearly $300 Million; ‘There May Be Tens Of Millions Of Dollars More Of Recoverable Assets’; Clawbacks May Be In The Offing As Receiver Raises Specter Of Claimants Circulating ‘False Information’

    Kenneth D. Bell, the court-appointed receiver in the Zeek Rewards Ponzi scheme case, said in a statement today that he had recovered nearly $300 million and that “[t]here may be tens of millions of dollars more of recoverable assets.”

    On Aug. 17, the SEC described Zeek as a $600 million Ponzi- and pyramid scheme that had affected more than 1 million people.

    Securing receivership assets has been his “first priority” since his Aug. 17 appointment by Senior U.S. District Judge Graham C. Mullen, Bell said.

    Bell’s statement appeared today on the receiver’s website. He noted that clawback actions may be in the offing, although he didn’t specify when.

    “Among those from whom we intend to recover assets are those affiliates who took more out of Rex Ventures than they put in,” Bell said.

    Rex Venture Group LLC is North Carolina-based Zeek’s parent company.

    “Many of you received little or nothing from this enterprise,” Bell said. “In order to make everyone as whole as possible, those who profited from participating should surrender their gains.”

    And Bell said he was aware that bogus information about Zeek was spreading online.

    “Finally,” Bell said, “I read in many emails and web postings that some affiliates claim to have spoken to me or the SEC. False information is being circulated by these claimants. I have not spoken to any of those claiming to have done so. I will communicate with you through this web site. If I could answer all of the hundreds of thousands of emails and calls from you I would, but obviously I can’t. I also recommend that you consider only what the SEC posts on its web site for its position on this matter.”

    In an Aug. 27 statement, Bell said that his “early investigation shows that the number of victims could be double” the SEC’s Aug. 17 estimate of 1 million.

    “By sheer number of victims, this is one of the largest, if not the largest, Ponzi scheme to go into receivership in U.S. history,” Bell said in the Aug. 27 statement.

    Visit the receiver’s website.  Read the Sept. 13, 2012, statement from the receiver.

  • UPDATE: Teetering ‘Wealth4AllTeam’ Scheme Reportedly Was Using I-Payout, Same Facilitator Cited By ‘OneX’ Scheme In July

    Screen shot: I-Payout website showing logos of "Global Strategic Partners." Ponzi-forum reports surfaced yesterday that the Wealth4AllTeam HYIP scheme was using I-Payout. In July, a scheme known as "OneX' that federal prosecutors previously described as a fraud and a "pyramid" announced that it was transitioning to I-Payout.

    UPDATE: Wealth4AllTeam, one of the many HYIP schemes pushed by Zeek Rewards “I Got Paid” cheerleader “Ken Russo,” reportedly was using I-Payout as a payment facilitator, according to new Ponzi-forum reports.

    Wealth4AllTeam appears to have suspended operations, leaving the Ponzi forums in an uproar amid claims that it is transitioning to a new business model that incorporates something called “Project Genesis.”

    Earlier this year, Wealth4AllTeam planted the seed that it would sue the RealScam.com antifraud forum  for publishing information unfriendly to Wealth4AllTeam.

    “I-payout quick links has been removed….all the attached bank account has been deactivated..there is no option left to deposit or withdraw…Looks like W4all have a hold on I-payout,” MoneyMakerGroup poster “jhakas22” claimed yesterday.

    If the report is true — and MoneyMakerGroup poster Tobwithu claimed that he (or she) “can confirm that all links at i-payout are gone!’ — then it means that Wealth4AllTeam was using the same facilitator to which the mysterious “OneX’ scheme claimed it was transitioning.

    In April, federal prosecutors described the purported OneX “program” as a “fraudulent scheme” and “pyramid” pushed by former AdSurfDaily President Andy Bowdoin. ASD was a $119 million Ponzi scheme. In August, Bowdoin was sentenced to 78 months in federal prison.

    On July 19, the PP Blog reported that OneX claimed it had dropped SolidTrustPay — a Canada-based processor linked to fraud scheme after fraud scheme — in favor of I-Payout. That announcement was made by “J.C.,” later identified by federal prosecutors as James C. Hill.

    I-Payout’s website publishes the logos of HSBC, Deutsche Bank, Barclays and other “Global Strategic Partners,” including Bank of America.

    “J.C.” made the OneX I-Payout announcement on July 17, the same day the U.S. Senate Permanent Subcommittee on Investigations was grilling HSBC executives on HSBC’s anti-money-laundering practices, including an executive who announced his resignation in front of the panel.

    (Also see June 20 PP Blog report about OneX claim that it was working with a processor with a tie to Bank of America. Given events that occurred after the dropping of Bank of America’s name and the appearance of the bank’s name on the I-Payout site, it appears “J.C.” was alluding to I-Payout in June.)

    Any number of ASD Ponzi-scheme pushers used Bank of America’s name to sanitize the ASD fraud. In raising Bank of America’s name in June and announcing the I-Payout transition in July, OneX appears to have been doing the same thing.

    Name-dropping to sanitize fraud schemes is common in the HYIP sphere. So are lawsuit threats and other bids to chill websites that publish information critical of HYIPs.

    In July, Robert Craddock, a purported “consultant” for Rex Venture Group LLC — the operator of the Zeek Rewards MLM scheme — sought to have a HubPages site operated by Zeek critic “K. Chang” removed from the web by filing a complaint with HubPages about purported copyright and trademark infringement and libel. Craddock’s efforts succeeded temporarily.

    In a bizarre Blog post on Aug. 4, Zeek claimed that “all” criticism of Zeek was unfair and planted the seed that unspecified “North Carolina Credit Unions” were circulating a purported “internal memo” that allegedly was “at once unfavorable to Zeek Rewards and false.”

    The Zeek post, attributed to then-acting COO Gregory J. Caldwell, complained the credit unions were slandering Zeek and warned Zeek members to toe the company line.

    Thirteen days later, the SEC filed an emergency court action that described Zeek as a $600 million Ponzi- and pyramid scheme.

    Craddock now is involved in a purported effort to defend Zeek affiliates from clawback actions by the court-appointed receiver in the SEC’s Zeek case. That effort began after the SEC’s actions against Zeek and also included name-dropping. During a pitch for Zeek members to send in money, Craddock dropped the name of former Florida Attorney General (and former U.S. Rep.) Bill McCollum.

    McCollum, now a partner at the SNR Denton law firm, no longer is in public office. Precisely why Craddock mentioned McCollum’s name is unclear, although Craddock initially said that the Zeek affiliates were hiring SNR Denton. That effort appears now to have fallen through.

    As Florida’s Attorney General, McCollum sued ASD for fraud in August 2008. Some ASD members countered that McCollum should be sued for Deceptive Trade Practices for holding the view that ASD was a fraud. Although McCollum’s office later dropped the ASD lawsuit, it said it had gathered names of ASD fraud victims and provided them to the U.S. Department of Justice, which had established a remissions process through which ASD victims could receive compensation from proceeds seized by the U.S. Secret Service in the ASD Ponzi case filed at the federal level in the District of Columbia.

    Zeek is known to have members in common with the ASD Ponzi scheme. Some Zeek members also promoted OneX, the scheme promoted by ASD’s Bowdoin after his December 2010 arrest by the U.S. Secret Service on Ponzi-related charges of wire fraud, securities fraud and selling unregistered securities.

    Bowdoin told prospects that OneX was good for “college students.”

    “Ken Russo” also is known as “DRdave.”

  • DISTURBING: ‘ProfitClicking’ Thread At MoneyMakerGroup Ponzi Forum Used In Zeek-Related Disinformation Campaign That Delivers Traffic To Troy Dooly’s Blog While Creating Brand Confusion And Opportunity To Harvest Leads For Poster Known As ‘freezeekler’

    EDITOR’S NOTE: The PP Blog sought comment from Troy Dooly of MLMHelpDesk this morning (Sunday) on the disturbing Zeek- and Ponzi forum-related developments reported in our story below. (Story appears below screen shots.) Dooly has not responded as of the time of this post, but the PP Blog will publish his comment if and when received. (UPDATE 10:24 p.m. Dooly has responded to the request for comment. His comment has been added to the story below.)

    Various efforts to mislead Zeek members and the public about the SEC’s Aug. 17 action against Zeek Rewards amid allegations that Zeek was a $600 million Ponzi- and pyramid fraud now are under way online. If you’ve received an email attributed to Zeek member Dave Kettner that claims “[t]he SEC acknowledged that there are a couple of problems with the case against Zeek Rewards and Rex Venture group,” it almost certainly is best to be extremely skeptical of the claims. Similar claims were made by apologists for the AdSurfDaily Ponzi scheme.

    These are among the claims attributed to Zeek-member Kettner, who is using the pronoun “we” when referring to the SEC:

    1. We (the SEC) are not able to find a victim in this case. We are not able to find anybody at this time that has been harmed by Zeek Rewards.
    2. We (the SEC) are having a hard time finding a security. In the complaint, it said that Zeek was selling securities and was an investment scheme.

    Beginning in August 2009, dozens of AdSurfDaily members flooded the docket of U.S. District Judge Rosemary Collyer with claims the government had produced no “VICTIMS” in the ASD Ponzi case. The pleadings appear to have been based on a template shared by one or more ASD downline groups. Included among the filers was Todd Disner, then an emerging figure in the ASD story and now an emerging figure in the Zeek story.

    Collyer rejected each and every one of the claims. In September 2011, the U.S. government announced it had identified at least 8,400 ASD victims. Two months later — in November 2011 — Disner filed a lawsuit against the government that alleged it had produced a “tissue of lies” and that ASD was a legitimate enterprise. About seven months later — in May 2012 — ASD operator Andy Bowdoin pleaded guilty to wire fraud and admitted ASD was a Ponzi scheme and that the company never had operated lawfully. The government now says it has identified at least 9,000 ASD victims.

    Justia.com has archived Collyer’s ASD docket and the related filings here. Disner’s unsuccessful filing is Docket No. 91. The ruling rejecting his claim (and others) is Docket No. 96. Despite the denials, other ASD members continued to use the same no “VICTIMS” argument, which incorporated a conspiracy theory that government evil was afoot. Collyer eventually issued en masse denials.

    Disner, Kettner and Zeek figure Robert Craddock are known to be involved in an effort to raise funds purportedly to defend Zeek affiliates while taking the SEC to task. The effort has been marked by shifting stories, contributing to an atmosphere of confusion. PP Blog guest columnist Gregg Evans wrote about some of that confusion here. The SNR Denton law firm, once presented by Craddock as the attorneys for Zeek affiliates, now appears to have withdrawn its representation. Meanwhile, a website known as ZTeamBiz that was gathering funds for the purported Zeek defense has been blocked by PayPal, a development ZTeamBiz blamed on purported fear of competition by eBay. eBay owns PayPal.

    RealScam.com (GlimDropper) now is reporting that ZTeamBiz is soliciting money via “electronic check drafts” and potentially putting contributors’ banking information at risk.

    Meanwhile, it’s worth pointing out that the U.S. Secret Service confirmed on Aug. 17 that it was investigating Zeek. Beyond that, the office of North Carolina Attorney General Roy Cooper has confirmed it is investigating Zeek. At least two proposed class-action lawsuits also have been filed against Zeek. The SEC is hardly Zeek’s only worry.

    Here, now, our story about how a Ponzi-board poster appears to be causing Dooly’s MLMHelpDesk.com to load beneath a different URL in an apparent bid to create confusion about the SEC’s Zeek action while also leeching off Dooly’s work product to gather “leads.”

    1.

    "freezeekler," a MoneyMakerGroup Ponzi forum poster in the "ProfitClicking" thread, is using his (or her) forum signature to help disinformation about Zeek spread online. ProfitClicking may have ties to the "sovereign citizens" movement.

    2.

    The redirect from the signature of "freezeekler" at the MoneyMakerGroup Ponzi forum causes Troy Dooly's MLMHelpDesk.com Blog to load under a URL styled "draftsforcash.com."

    3.

    On the MoneyMakerGroup Ponzi forum, "freezeekler" says his (or her) plan with the "ProfitClicking" program is to "withdraw at least until I have my investment back."

    UPDATED 10:24 P.M. EDT (U.S.A.) TO ADD FIRST COMMENT FROM TROY DOOLY. UPDATED AT 11:25 P.M. TO REFLECT COMMENT FROM DOOLY THAT THE OFFENDING PAGE DESCRIBED BELOW HAS BEEN REMOVED. UPDATED 9:13 A.M. (SEPT. 10) TO FIX REDUNDANCY IN THIRD PARAGRAPH.

    Efforts to spread disinformation about the SEC’s action in the Zeek Rewards Ponzi case intensified on the web yesterday. One such bid occurred within the thread on the “ProfitClicking” scam-in-progress at the MoneyMakerGroup Ponzi forum, where a poster known as “freezeekler” is using the following “signature” line (italics added):

    Hot! ZEEK REWARDS Coming Back, NOT GUILTY? NEW updated information!

    “freezeekler” apparently also is in “ProfitClicking,” given his (or her) MoneyMakerGroup comment about a plan to “withdraw at least until I have my [ProfitClicking] investment back.”

    MoneyMakerGroup is listed in U.S. federal court filings as a place from which Ponzi schemes are promoted. Records show that five major scams promoted on the forum in recent years — Zeek, AdSurfDaily, Legisi, Pathway To Prosperity and Imperia Invest IBC — allegedly gathered a combined sum of at least $868 million. By contrast, the 2013 budget for the city of Las Vegas is $468.8 million, according to a May report in the Las Vegas Sun. The population of Las Vegas is approximately 590,000.

    In terms of the number of victims — currently estimated at between 1 million and 2 million — Zeek may be the largest Ponzi scheme ever investigated by U.S. law enforcement. Its membership base may be at least 10 times larger than ASD, whose base was estimated by the U.S. Department of Justice at 97,000. Zeek’s estimated cash-drawing power of $600 million appears to have been approximately five times larger than ASD’s.

    When “freezeekler’s” signature link is clicked, a redirect kicks in and visitors are taken to a URL styled “draftsforcash.com” and a page styled “zeekrewards.” (draftsforcash.com/zeekrewards.) When visitors move their mouse, a lead-capture ad then loads for a 60-minute “webinar” for an unspecified program that asks viewers to submit  their name, email address and phone number.

    Although visitors may believe they are at the “draftsforcash” site’s Zeek Rewards page, they’re actually at the site of Troy Dooly’s MLMHelpDesk.  MoneyMakerGroup’s “freezeekler” appears to have caused the redirect to Dooly’s Blog to occur without causing the URL for MLMHelpDesk to appear in the location bar. Visitors unfamiliar with Dooly could come to believe he is the owner of “draftsforcash.”

    That domain, however, is registered on the name of Bargain Crusader Inc., according to a whois search. When the “zeekrewards” page is stripped from the “draftsforcash.com/zeekrewards” URL, visitors see Blog whose sole story appears under a headline of “Daily, and Weekly fantasy sports leagues.”

    The “skin” for the one-post Blog, according to a link at the site, is provided by “online casino uk site in cooperation with play roulette for fun weblog.”

    Dooly tonight expressed concern about the Ponzi-forum development.

    “This is nuts,” he said in an an initial email to the PP Blog. “Thank you for sharing this info with me. I will do a post tomorrow on this issue.”

    In a second email to the Blog, Dooly said his company took quick action to ensure the offending page was taken down.

    “My COO jumped on the issue as soon as I sent it to him,” Dooly said.

    ProfitClicking is an ASD-like autosurf formed from the carcass of the JSS Tripler/JustBeenPaid “program” that suddenly went missing last month amid reports of the sudden “retirement” of Frederick Mann, the purported operator of JSS/JBP.

    Mann is a former pitchman for the ASD Ponzi scheme. JSS/JBP claimed to have more than 1 million members. Its cash-sucking power remains unclear.