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  • URGENT >> BULLETIN >> MOVING: Zeek Rewards Claims Process Approved By Federal Judge

    breakingnews72URGENT >> BULLETIN >> MOVING: A federal judge has approved the claims process in the Zeek Rewards Ponzi scheme case.

    The order approving the process was signed today by Senior U.S. District Judge Graham C. Mullen, meaning that claims must be submitted within 120 calendar days from today. Zeek Rewards receiver Kenneth D. Bell submitted his plan to the court on March 29.

    Mullen, consistent with Bell’s recommendation, ordered the receivership to publish notice of the claims process on certain MLM sites and also in the Wall Street Journal, USA Today, the Charlotte Observer, the Lexington Dispatch and through certain financial-industry trade groups.

    The information also will be made available on the receivership website. Based on the order, it is expected that the receiver’s web portal for the submission of claims will become available within 14 days and that claims submitted prior to the opening of the portal will be disallowed.

    The process calls for affiliates to provide documentation of their claims. There will be a reconciliation process by which the cash outlay to Zeek will be balanced against the money affiliates may have received from Zeek.

    Claimants will not be compensated for Zeek’s so-called “Retail Profit Points” (RPP). Bell advised Mullen in March that the points “aspect of the multilevel marketing program did nothing more than redistribute funds among Affiliates in Ponzi-scheme fashion.”

    Read Mullen’s order. (Thanks to the ASD Updates Blog.)

  • FOR ZEEKERS: Court-Appointed Receiver Asks Federal Judge To Approve Claims Process, Bar Date — And More

    “In examining these facts, the Receiver has determined that because the VIP Points aspect of the multilevel marketing program did nothing more than redistribute funds among Affiliates in Ponzi-scheme fashion, points generated and/or accumulated by Affiliates will not be an includable part of an Affiliate’s claim for purposes of receiving a distribution from the Receivership Estate. Including any of these points as part of any claim of an Affiliate would merely effectuate a continued redistribution of funds from later-investing Affiliates to earlier-investing Affiliates. In other words, these Retail Profit Points were an instrument for the perpetration of the Scheme and will, therefore, not be honored as claims by the Receiver. Instead, the Receiver will solely recognize the actual cash paid to ZeekRewards by or for the benefit of an Affiliate, not Retail Profit Points accumulated by such Affiliates that were ‘earned’ through the perpetration of the Scheme.” — Kenneth D. Bell, court-appointed receiver in the Zeek Rewards Ponzi scheme case, March 29, 2012

    recommendedreading1In a Good Friday filing, the court-appointed receiver in the Zeek Rewards Ponzi-scheme case has asked a federal judge to approve the claims process and a procedure by which claimants will be notified.

    Receiver Kenneth D. Bell also asked Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina to set a deadline for claims to be filed (the “bar date”).

    The claims process is largely designed to be handled over the Internet because there may be more than 800,000 claimants, nearly all of whom had an existing electronic relationship with Zeek, Bell advised Mullen.

    It is likely to be a bittersweet day for many Zeek affiliates. Some may be be happy because the approval motion means the receivership is advancing the ball down the field, meaning a key milestone has been met in the process of putting money back in victims’ hands. But it also may be a day that brings Zeek’s alleged fraud into fuller focus, causing winces among affiliates who trusted the “program” and their purported upline leaders.

    Here is the wince — and it’s one that occurs in Ponzi scheme after Ponzi scheme carried out on the Internet:

    Bell advised Mullen that claimants should not be compensated for Zeek’s so-called “Retail Profit Points” (RPP), saying the points “aspect of the multilevel marketing program did nothing more than redistribute funds among Affiliates in Ponzi-scheme fashion.”

    And, Bell advised Mullen, “these Retail Profit Points were an instrument for the perpetration of the Scheme and will, therefore, not be honored as claims by the Receiver. Instead, the Receiver will solely recognize the actual cash paid to ZeekRewards by or for the benefit of an Affiliate, not Retail Profit Points accumulated by such Affiliates that were ‘earned’ through the perpetration of the Scheme.”

    The process calls for affiliates to provide documentation of their claims. There will be a reconciliation process by which the cash outlay to Zeek will be balanced against the money affiliates may have received from Zeek, Bell advised Mullen.

    Visit the receiver’s “Case Documents” page to read the motion to approve the claims process and other filings. (The approval motion is titled, “Receiver’s Motion for Order Seeking Approval of (1) Claims Process, (2) Setting of Bar Date, and (3) Certain Notice Procedures.”

    Bell also published a “Letter from the Receiver” today. Read it here. (It is dated 3-29-13.)

    In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid scheme that had duped people into believing they were earning an average of 1.5 percent a day on their money legitimately.

    It may be an especially introspective Easter weekend for some Zeek affiliates, given they also were involved with Profitable Sunrise, now the subject of Investor Alerts or cease-and-desist orders in at least 34 U.S. states or provinces in Canada. The United Kingdom and New Zealand also have issued warnings on Profitable Sunrise, whose website has gone missing.

  • Nearly $2 Million Allegedly At Stake For 3 Arizona Zeek Affiliates Who Received Subpoenas, Filings Say

    “[Zeek operator Paul] Burks is solely responsible for determining the amount of ‘net profits’ to share in the Retail Profit Pool . . . Defendants represent that daily awards are calculated by dividing ‘up to 50%’ of daily net profits by the number of Profit Points outstanding among all Qualified Affiliates. This calculation results in a daily dividend paid to each Qualified Affiliate that consistently has averaged approximately 1.5% per day . . . In fact, the dividend bears no relation to the company’s net profits. Instead, Burks unilaterally and arbitrarily determines the daily dividend rate so that it averages approximately 1.5% per day, giving investors the false impression that the business is profitable.” — From the SEC complaint in the Zeek Rewards Ponzi scheme case, Aug. 17, 2012

    “The most successful Affiliates worked the hardest, placed numerous ads, and explained the Zeekler.com penny auction to groups of people several times a month. Some of the Movants, for example, traveled extensively to maintain contact with their network of peers and to educate them, among other things, on how to be successful in the program. These Movants’ successes were a direct result of the amount of time and effort they poured into the effort to promote the penny auction.” — Zeek Affiliates Dave Kettner, Mary Kettner and David Sorrells, Dec. 11, 2012

    Although the SEC accused Rex Venture Group LLC/Zeek Rewards operator Paul R. Burks in August of conducting a massive Ponzi scheme and duping members into believing he was presiding over a business that created enormous profits legitimately, three members of the MLM “program” with potentially millions of dollars in ill-gotten gains subject to clawback aren’t buying it.

    At stake for Dave Kettner, Mary Kettner and David Sorrells of Arizona is at least $1.94 million they allegedly earned in the “program” through hard work, according to court filings.

    Zeek was a legitimate venture, they argued in filings dated Dec. 11. And it was no Ponzi scheme, they advised Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina. Mullen is presiding over the Zeek Ponzi scheme case brought by the SEC Aug. 17.

    It was not immediately clear whether the Kettners and Sorrells were the recipients of payouts from Zeek’s Retail Profit Pool (RPP) or commissions for sponsoring new members — or some combination of both. The RPP also is known as the Retail Points Pool.

    What is clear, according to their filings, is that each received a letter and subpoena from Zeek Receiver Kenneth D. Bell that paint them as potential clawback targets. The information about the sums Bell is seeking is contained within exhibits filed by the Kettners and Sorrells.

    Zeek records, according to letters from Bell cited by the trio, suggest Sorrells received $945,539 from Zeek while paying in only $1,695. Dave Kettner received $537,577.95 while paying in only $1,378, and Mary Kettner received $465,866.67 while paying in only $1,495.

    Bell has said Zeek created approximately eight losers for each winner. The SEC described Zeek as a $600 million Ponzi and pyramid scheme that potentially defrauded more than 1 million people.

    The PP Blog is working on a related story about assertions by the Kettners and Sorrells that significant sums of money that belong to them effectively are trapped in NxPay, a payment processor used by Zeek. More later . . .