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Tag: Wandering Phoenix LLC

  • SPECIAL REPORT: Attorney Linked To Zeek’s Wright-Olivares Has Record Of Disbarment And Suspensions; Possible Co-Agent Spent Time In Federal Prison For Credit-Card Swindle And Was Charged In Arkansas With Theft And Making False Statements To Securities Commissioner; Corporate Registrations Of 2 Firms Linked To Zeek COO And Purported Marketing Maven Revoked

    Zeek's Dawn Wright-Olivares
    Zeek’s Dawn Wright-Olivares

    SPECIAL REPORT: (Updated 5:48 a.m. Jan. 7, U.S.A.) N. Donald Jenkins Jr., an Arkansas attorney listed as a registered agent for Wandering Phoenix LLC, a firm federal prosecutors have linked to Zeek Rewards’ figure Dawn Wright-Olivares, was ordered disbarred on May 30, 2013, records show.

    He thrice previously was ordered suspended from the practice of law and has a thick disciplinary history with the Arkansas Supreme Court Committee on Professional Conduct dating back to 2003. His full name is Newton Donald Jenkins Jr.

    Jenkins Jr. once worked as the city attorney and prosecutor for Van Buren, Ark. He was paid an annual salary by the small town of more than $56,000 while maintaining a private law practice that repeatedly landed him in trouble.

    A long string of corporate revocations accompanies the name of Jenkins Jr. as a registered agent in Arkansas, a state in which the most common reason for revocation is a corporation’s failure to pay franchise tax. The string includes at least 125 names of revoked business entities. One of the revocation casualties was Jenkins Law Firm PLLC, the lawyer’s own firm.

    Another revocation casualty, according to Arkansas records, was Wandering Phoenix, the business entity linked to Wright-Olivares through which prosecutors say she received Zeek payments. Either Wright-Olivares or Wandering Phoenix received $7.2 million, according to a federal charging document. Franchise tax nevertheless remained unpaid.

    One law-license suspension order against Jenkins Jr. was stamped and docketed on Aug. 17, 2012, the same date the SEC moved against Zeek and the U.S. Secret Service announced it, too, was investigating the North Carolina-based MLM entity. Neither Zeek nor Wright-Olivares is referenced in the disbarment and suspension orders.

    Did Wright-Olivares Have Business Relationship With Felon?

    Records suggest — but do not demonstrate conclusively — that Wright-Olivares also had a business relationship with the late father of Jenkins Jr.: tax accountant N. Donald Jenkins, apparently also known as Donald Jenkins Sr. and Newton Don Jenkins Sr. “N. Donald Jenkins” — with no designation as either Jr. or Sr. — is listed alongside Jenkins Jr. as a registered agent for Wandering Phoenix. Meanwhile, “N. Donald Jenkins” also is listed as an officer and “Incorporator/Organizer” of Wandering Phoenix.

    Wright Olivares was a 95-percent owner of Wandering Phoenix, according to criminal charges filed against her in North Carolina on Dec. 20. She has agreed to plead guilty to tax-fraud conspiracy and investment-fraud conspiracy, federal prosecutors said last month.

    In the mid-1990s, Jenkins Sr. hatched a scheme by which he duped a man who’d approached him for advice about opening a computer business, according to federal records. Jenkins Sr., who was convicted on federal charges in 1999, encouraged the man to open a bank account and give him limited Power of Attorney.

    The man complied, according to court records. After that, Jenkins Sr. entered into a merchant agreement with an Arkansas bank and defrauded the bank by depositing “over $78,000 in credit card slips reflecting sales purportedly made” by the computer business.

    The slips “were drawn on credit cards recently issued to Jenkins [Sr.], his relatives” and the man who’d approached Jenkins Sr. for advice, according to court records.

    But the man who’d approached Jenkins Sr. testified that the firm “never sold a computer, and that he never applied for or knew of the credit cards issued in his name,” according to court records.

    “After the sales amounts were credited to the account, Jenkins [Sr.] would withdraw money through checks and ATM transactions,” according to court records.

    In 1988, Jenkins Sr. was implicated by the state of Arkansas in a securities swindle and was arrested on criminal charges of theft by deception and lying to the Arkansas Securities Commissioner. The final outcome of the case could not immediately be determined. On March 23, 2009, ArkansasBusiness had this (and plenty more) to say about Jenkins Sr. (italics added):

    Jenkins came to our attention way back when investors across Arkansas began accusing him of defrauding them of hundreds of thousands of dollars in elaborate investment schemes. Those civil lawsuits by angry investors drew the attention of criminal investigators, which culminated in Jenkins receiving a 27-month prison sentence following his August 1999 conviction.

    The identities of the person or persons who owned the remaining 5 percent of Wandering Phoenix are unclear. What is clear is that Arkansas has revoked its corporate registration.

    Enter/Exit ‘Wandering Rex’

    Arkansas records also link Wright-Olivares to an entity known as Wandering Rex LLC. The registration of Wandering Rex also has been revoked.

    Zeek operated through a North Carolina-based entity known as Rex Venture Group LLC, controlled by Zeek operator Paul R. Burks of Lexington. Why Wright-Olivares also had a “Rex” entity in Arkansas is unclear.

    Wright-Olivares, 45, also appears to have controlled another Zeek-related entity known as Zeeklers.com. The Ozark, Ark., street address for the Zeeklers.com web domain is the same address listed in corporate records for Wandering Phoenix, one of the two revoked entities linked to Wright-Olivares, Zeek’s former COO.

    Both Jenkins Jr. and his father were active in Republican politics in Arkansas. Jenkins Jr., for example, has a listing on the website of the Republication National Lawyers Association (RNLA) that identifies him as “Asst. Legal Counsel Republican Party of Arkansas.” The listing includes a link to the website of his law firm, but the domain is generating a “timed out” error message.

    Meanwhile, the obituary for Jenkins Sr. as published in October 2012 at swtimes.com notes that he “served in various positions with federal, state and local candidates and Republican groups, including as chairman over the first and fourth Congressional districts, and chairman for Ronald Reagan for President. He was a true American patriot who held very strong opinions about people who tailgated him on the road.”

    Disciplinary History Of Jenkins Jr.

    How Wright-Olivares came to use the registered-agent services of Jenkins Jr. is unclear. It’s also unclear if Jenkins Sr. ever did any accounting work for her or if she knew him personally.

    What is clear is that Jenkins Jr. has a long history of disciplinary action in Arkansas and that at least one of his other clients (a married couple) contracted with Jenkins Jr. after meeting with Jenkins Sr. in Jonesboro, Ark.  The couple later filed a complaint against Jenkins Jr. for alleged inaction after he’d been hired to address a wage-garnishment issue with the IRS. In 2007, the state issued a formal reprimand known as a “CAUTION” against Jenkins Jr., finding that he “failed to return the messages” of his garnishment clients. The state also ordered Jenkins Jr. to apologize to the clients and to return their $900 retainer.

    The 2007 “CAUTION” was the second against Jenkins Jr. The first was issued in 2003, after a client accused him of never informing the client that a lawsuit he’d filed on behalf of the client had been dismissed. Records say the lawsuit had been filed in the wrong county. The state ordered Jenkins Jr. to pay a $500 fine and pay the client $250 in restitution.

    In February 2010, the state ordered the law license of Jenkins suspended for three months, after allegations surfaced that he’d improperly served yet-another client, had maintained “a frivolous proceeding” on behalf of the client in a disability case and had falsified court records. Later in 2010, the state reprimanded Jenkins, amid allegations he’d butchered yet-another client’s bankruptcy case.

    On Aug. 17, 2012 — the same date as the Zeek action — the Arkansas Supreme Court Committee on Professional Conduct docketed a two-year suspension of the law license of Jenkins Jr. He was accused in that proceeding of filing a bankruptcy case in the wrong state, using the wrong state when filing 2008 tax returns for two clients and not filing 2009 tax returns for the clients, another married couple who had hired him.

    One of the suspensions of the law license of N. Donald Jenkins Jr. was docketed on Aug. 17, 2012, the same day the SEC moved against Zeek Rewards. (Red highlight by PP Blog.)
    One of the suspensions of the law license of N. Donald Jenkins Jr. was docketed on Aug. 17, 2012, the same day the SEC moved against Zeek Rewards. (Red highlight by PP Blog.)

    Jenkins’ overall disciplinary history shows at least six actions: three suspensions, two “CAUTIONS” and one “REPRIMAND.”

    In May 2013, Jenkins Jr. was disbarred. A special judge “found that, in the disbarment proceedings alone, Respondent had committed at least eight violations for conduct involving dishonesty, deceit, fraud, or misrepresentation.” And the special judge also observed that Jenkins Jr. had a prior disciplinary history of numerous other violations for serious conduct involving dishonesty, deceit, fraud, or misrepresentation.”

    View the disciplinary record here.

    View the disbarment order at Leagle.com

     

     

  • URGENT >> BULLETIN >> MOVING: Zeek Rewards Figures Dawn Wright-Olivares And Daniel Olivares Charged Criminally, Sued Civilly

    Dawn Wright-Olivares. Source: Cropped section of 2012 online promo for Zeek.
    Dawn Wright-Olivares. Source: Cropped section of 2012 online promo for Zeek.

    URGENT >> BULLETIN >> MOVING: (21st update 5:49 p.m.) Zeek Rewards figures Dawn Wright-Olivares and Daniel Olivares of Clarksville, Ark., have been charged criminally by federal prosecutors in the Western District of North Carolina and sued civilly by the SEC.

    Among the criminal allegations are tax-fraud conspiracy and investment-fraud conspiracy, according to a charging document. Wire fraud also is alleged. Zeek’s Zeekler arm is called a “sham internet based penny auction company” in the charging documents. Zeek’s Zeek Rewards arm is called a “purported advertising division.”

    Wright-Olivares has agreed to plead guilty to investment-fraud conspiracy and to tax-fraud conspiracy, federal prosecutors said this afternoon. Daniel Olivares has agreed to plead guilty to investment-fraud conspiracy.

    Daniel Olivares is the 31-year-old stepson of Wright-Olivares, 45. Zeek operated from Lexington, N.C., with Wright-Olivares at one time serving as its COO. The court docket in the criminal case notes a plea agreement.

    Information published by the government suggests Daniel Olivares had been in plea negotiations with prosecutors since at least July 29, 2013, before finalizing a deal yesterday. Wright-Olivares, meanwhile, appears to have finalized a deal on Nov. 22, 2013.

    The deals suggest that Wright-Olivares could be sentenced to a maximum of 10 years in federal prison and Olivares five years. Both deals contemplate cooperation from the defendants. Wright-Olivares, according to plea papers, is represented by Brian S. Cromwell and Sarah F. Hutchins. Olivares is represented by S. Frederick Winiker III. All three attorneys are specialists in white-collar defense.

    Zeek operated through Paul R. Burks and Rex Venture Group LLC. A “P.B.” is referenced in the Wright-Olivares/Olivares charging documents as an “Un-indicted co-conspirator.”

    Wright-Olivares allegedly received Zeek and Rex payouts through an entity known as Wandering Phoenix LLC, according to the charging documents.

    “Wright-Olivares was a marketing and operational mastermind behind the scheme and Olivares was the chief architect of the computer databases they used,” said Stephen Cohen, an associate director in the SEC’s Division of Enforcement.  “After they learned ZeekRewards was under investigation by law enforcement, they accepted substantial sums of money from the scheme while keeping investors in the dark about its imminent collapse.”

    Wright-Olivares has settled the civil action by agreeing to “pay at least $8,184,064.94,” the SEC said.

    Olivares settled by agreeing “to pay at least $3,272,934.58,” the SEC said.

    The settlement amounts, the SEC said, “represent the entirety of their ill-gotten gains plus prejudgment interest.”

    Meanwhile, the SEC said that the Zeek fraud “raised more than $850 million from approximately one million investors worldwide.”

    The dollar sum is about $250 million higher than the SEC’s original estimate in August 2012.

    From the SEC complaint (italics/bolding added):

    [Zeek operator Paul] Burks provided the daily dividend rate to Olivares, who then entered it into the ZeekRewards databases to establish each affiliate investor’s daily award (communicated to affiliates through the ZeekRewards website). Wright-Olivares and Olivares learned that the daily dividend rate was fabricated by Burks and not actually calculated based on “daily net profits” or any actual company earnings, as represented to investors. In fact, in several instances when Burks was unavailable, Wright-Olivares instructed Olivares to enter daily dividend rates to mimic the payout from a prior week, without any regard for the company’s actual earnings.

    Precisely when Wright-Olivares and Olivares allegedly learned that Burks had fabricated the daily payout rate is unclear. In a bizarre radio interview in June 2012, Wright-Olivares maintained that Burks “manages all that.”

    In the criminal charging document, prosecutors say that Zeek employed a so-called “80/20 VIP Bid Strategy” to keep adequate cash on hand to “make the daily Ponzi payments to victim-investors.” Under such 80/20 plans, investors are encouraged to keep 80 percent of their money in an enterprise and to withdraw no more than 20 percent in cash.

    Zeek’s 80/20 program, prosecutors said, caused liabilities to mushroom in August 2012 to approximately $2.8 billion. Zeek, however, had only about 11 percent of that sum on hand. The SEC said in an emergency enforcement action in August 2012 that Zeek was teetering on collapse because of ever-accumulating, unfunded liabilities.

    Meanwhile, according to the criminal charging documents, Rex, Zeek Rewards and Zeekler failed to file any corporate tax returns or any corporate tax payments to the IRS.

    And for the 2011 tax year, according to the charging documents, “P.B.,” Wright-Olivares and others reported to the IRS that Zeek investors had received more than $108 million from the scheme when Zeek had paid out only about $13 million.

    This caused Zeek victims to file “false tax returns with the IRS reporting phantom income that they never actually received,” according to the charging documents.

    Zeek used the “false tax notices to perpetuate the Ponzi scheme,” according to the charging document.

    “This case shows that the appearance of success can be a mask for a tangled financial web of lies” said Richard Weber, chief of IRS Criminal Investigation. “The underlying structure can fall apart at any time and leave many investors in financial ruin.”

    Added Paul Morrissey, assistant director of investigations for the U.S. Secret Service: “As today’s technology continues to evolve, cybercriminals use these advances and enhancements to perpetrate an expanding range of crimes. As we have seen with this case, even with the increasing complexity of online Ponzi schemes, it remains difficult for criminals to remain anonymous. The Secret Service continues to seek new and innovative ways to combat emerging cyber threats.”

    U.S. Attorney Anne M. Tompkins is supervising the criminal prosecution. The Zeek investigation is ongoing, her office said in a statement.

    As part of the criminal case, prosecutors are seeking the forfeiture of $850 million.

    NOTE: Our thanks to the ASD Updates Blog.