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Tag: Zeek Rewards

  • Indicted Payza Announces ‘Restructuring’

    As one of its operators sits in a Michigan federal prison and the other is listed “at large” by U.S. authorities, Payza today announced a purported “restructuring” as a “European service” that has ceased serving U.S. customers.

    “This means that no transactions are allowed for US members at this time and Payza will no longer be servicing businesses registered in the US, neither providing US payout services or US based withdrawals,” Payza said in a Blog post accessible via Twitter.

    Precisely who is running things at the company is unclear. The Blog post had a byline of “Payza Writer.”

    Ferhan Patel, 37, is listed as an inmate at the federal correctional institute in Milan, Mich. He was arrested Sunday in Detroit. Firoz Patel, his brother and co-defendant in a major money-laundering case announced Tuesday by U.S. prosecutors, appears neither to have surrendered or been arrested. Firoz Patel is 43. The brothers are citizens of Canada and reportedly lived in the Montreal area.

    The office of U.S. Attorney Jessie K. Liu of the District of Columbia confirmed Wednesday that Payza’s dotcom domain had been seized.

    Prosecutors said Payza had helped fuel Ponzi schemes, pyramid schemes, a child-porn site and other criminal activities. Homeland Security Investigations is leading the probe.

    Payza and a predecessor company known as AlertPay have been referenced in Ponzi-scheme litigation dating back at least to 2008’s AdSurfDaily Ponzi scheme, a $119 million fraud. More recent “programs” with ties to Payza include Traffic Monsoon and Zeek Rewards.




  • Zeek’s Paul Burks Now In Federal Custody

    Paul Burks, the 70-year-old operator of the Zeek Rewards Ponzi scheme, now is listed as prisoner No. 29723-058 at FMC Lexington. The facility is an administrative security federal medical center with an adjacent minimum security satellite camp in Lexington, Ky.

    After being sentenced in February to more than 14 years, Burks was ordered to report to the facility no later than yesterday. He reportedly is suffering from significant medical issues.

    Burks has become the third and senior-most Zeek executive sent to jail. Dawn Wright-Olivares and Daniel Olivares earlier began serving respective terms of 7.5 years and two years.

    U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina was the sentencing judge in all of the cases against the Zeek braintrust.

    Zeek’s operations were similar to the AdSurfDaily Ponzi scheme, which sent ASD President Andy Bowdoin to federal prison in 2012. Bowdoin, now 82, is scheduled to be released in February 2018. He is listed as a prisoner at Butner Medium FCI in Butner, N.C. The Butner prison also has a medical facility. Bowdoin, like Burks, had health issues prior to sentencing.

    Like ASD, Zeek was a Ponzi-board “program.”

    Troy Barnes, one of the principals of “The Achieve Community” (TAC) scam, was sentenced in April to 33 months in prison. TAC also was a Ponzi-board “program.”

    Barnes’ Achieve colleague Kristi Johnson was sentenced to 21 months.




  • SEC Charges Zeek Figure Keith Laggos With Publishing Fake News To Sanitize Ponzi/Pyramid Scheme

    In December 2013, these plaques of Network Marketing Business Journal Zeek puff pieces were put up for auction by the court-appointed receiver for Zeek. On March 22, 2017, the SEC charged former NMBJ publisher Keith Laggos with securities fraud.

    Keith Laggos, an AdSurfDaily Ponzi scheme figure and the onetime publisher of Network Marketing Business Journal, has been charged by the SEC with securities fraud for illegally touting the Zeek Rewards scheme and using NMBJ to sanitize the egregious fraud that gathered hundreds of millions of dollars.

    Among the agency’s allegations is that “Laggos’s favorable editorials of the scheme contained material misstatements and omissions. Laggos published theses misstatements despite being made aware of their inaccuracy and otherwise being in a position as a paid consultant for ZeekRewards to know of their falsity.”

    The former .com site for NMBJ now is showing a “For Sale” sign.

    Plaques commemorating NMBJ’s Zeek puff pieces on Zeek were listed as auction items by the court-appointed receiver for Zeek in December 2013.

    From an SEC statement on March 23, 2017 (italics added):

    The SEC alleges that, from at least June 2011 through July 2012, Laggos, through NMBJ and while acting a paid consultant for ZeekRewards, was paid at least $64,000 for publishing several editorials providing crucial publicity to the ZeekRewards scheme. These publications promoted ZeekRewards as the “company of the month” and touted, among other things, the scheme’s supposed record earnings and opportunity to generate income for participants. Laggos failed to disclose the fact that he was paid for the favorable editorial coverage, the amount that he was paid, and that he was a paid consultant for ZeekRewards.

    Laggos, a prior defendant in an SEC touting case, agreed to pay $79,190.68 to settle the Zeek matter, the SEC said. In addition, he agreed to a permanent injunction from future violations of Sections 17(a) and 17(b) of the Securities Act, from participating in future securities offerings and from providing paid publicity to securities.

    The SEC moved against Zeek on Aug. 17, 2012. (See Aug. 12, 2012, PP Blog editorial that references Laggos: “Karl Wallenda Wouldn’t Do Zeek.”)

    See BehindMLM’s March 25, 2017, story on the charges against Laggos.

    See the SEC’s litigation statement.

    Whether other outlets that publish fake news to sanitize fraudulent MLM schemes would learn from the case against Laggos was not immediately clear.




  • BULLETIN: Paul Burks Of Zeek Rewards Sentenced To More Than 14 Years; Judge Comments On ‘Cheerleaders’

    3RD UPDATE 4:52 P.M. ET U.S.A. Paul Burks, the principal behind the $939 million Zeek Rewards Ponzi- and pyramid scheme broken up by the SEC and the U.S. Secret Service in August 2012, has been sentenced to 176 months in federal prison, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said moments ago.

    U.S. District Judge Max Cogburn Jr. presided over sentencing court for Burks, 70.  Zeek was an MLM scam that created hundreds of thousands of victims globally.

    “But anyone could have seen what was going to occur outside himself and his (marketing) cheerleaders,” the judge said in court, according to the Winston-Salem Journal.

    In clawback lawsuits, Zeek receiver Kenneth D. Bell has triumphed over thousands of net winners in the scheme.

    When Burks was indicted in October 2014, the grand jury alleged that Burks and others offered a “bogus 125% return on investment” through a “sham internet-based penny auction company.”

    Bell earlier alleged that some of the winners he sued were “serial” participants in Zeek-like schemes to defraud. Among the clawback defendants were Todd Disner, a figure from the AdSurfDaily Ponzi scheme, and T. LeMont Silver, a promoter of multiple Ponzi schemes.

    “Programs” such as Zeek and ASD often try to sanitize themselves by calling themselves revenue-sharing schemes.

    Burks also was sentenced to make restitution in the amount of $244 million and to serve three years’ probation after his prison release. There are media accounts today that suggest Burks is in poor health.

    Though 176 months is a lengthy term, there has been speculation that Burks would receive an even longer term, given the enormous size of Zeek and the number of victims.

    Said Bell, the receiver, in a statement dated Feb. 13. “Judge Cogburn cited the need to balance the harm caused by Mr. Burks’ conduct against Mr. Burks’ extremely poor health and [the fact he is] 70 years of age.”

    From a statement today by prosecutors (italics added):

    At sentencing, Judge Cogburn stated that for the defendant’s scheme to work would have required a miracle on the order of the “loaves and fishes.” Judge Cogburn stated that a significant sentence was necessary to promote respect for the law, provide just punishment, and also deter others considering committing fraud. Judge Cogburn further noted that the scheme was “almost breathtaking” and emphasized that the defendant had time to stop it.

    Dawn Wright-Olivares and Daniel Olivares of Zeek also have been sentenced to prison.



  • Zeek Net-Winner Notifications Expected To Begin Soon; Receiver To Establish ‘Net Winnings Determination Response Portal’

    If you’re a net winner in the massive Zeek Rewards’ Ponzi- and pyramid scheme, your notice that you must return your ill-gotten haul with interest may arrive as early as next week.

    Under the terms of a court order by Senior U.S. District Judge Graham C. Mullen, the notice will apply to more than 9,000 alleged winners of at least $1,000 and will arrive via email. At least with respect to Zeek, the days of MLMers profiting from scams while the operators go to jail are over.

    In a Feb. 2 announcement, Zeek receiver Kenneth D. Bell said the receivership will establish a “Net Winnings Determination Response Portal” through which winners are “required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification.”

    Bell successfully sued the winners in a defendant class-action case. The trustee in the TelexFree case is following a similar path, further demonstrating that winnings from MLM scams simply are not safe.

    FTI Consulting Inc., the Zeek receiver’s expert, found that Zeek’s net losers lost more than $822 million and the net winners hauled away more than $282 million. Ninety percent of Zeek entrants lost money, according to the findings. which defense experts were unable to refute.

    Here is Bell’s Feb. 2 announcement (italics added):

    ANNOUNCEMENT FROM THE RECEIVER – February 2, 2017

    As I previously announced, I continue to pursue Final Judgments requiring each member of the Net Winner Class of those who won at least $1000 in ZeekRewards to repay their net winnings to the Receivership for distribution to victims of the scheme. On January 27, 2017, United States District Judge Graham Mullen entered an Order on Process for Determining the Amount of Final Judgments Against Net Winner Class Members, which sets forth the process for determining the amount of the net winnings received by each member of the Net Winner Class. That amount plus prejudgment interest will then become the amount of the Final Judgment to be entered against the net winner. I intend to pursue collection of these judgments vigorously, and expect the ultimate amount collected, while uncertain, will be a substantial sum.

    The Court’s Order, which describes the process in detail, may be viewed by following this link. The first step in the process – notifying each Net Winner of the amount of their net winnings – is expected to begin next week. After notification, each Net Winner is required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification using a website Net Winnings Determination Response Portal. More information and links to the Response Portal will be sent to the Net Winner Class members in the notification email. If a Net Winner does not receive their notification by February 13, 2017 then he or she should email netwinningsresponse@zeeknetwinnerclass.com to receive instructions on how to obtain the notification.

    Throughout the Receivership, the Receiver has expressed a willingness to consider voluntary final settlements with ZeekRewards’ Net Winners to efficiently resolve the claims against them. Hundreds of settlements have been negotiated with Net Winners and approved by the Court. If a Net Winner wants to discuss a settlement of the Receiver’s claims prior to Final Judgment being entered, please communicate with the Receiver at zeeksettlement@mcguirewoods.com.

     

    Visit the receivership website.




  • BULLETIN: TelexFree Trustee Moves For Default Judgments Against Dozens Of Alleged Overseas ‘Winners’

    BULLETIN: TelexFree Trustee Stephen B. Darr has moved for assessments of damage and default judgments against dozens of alleged overseas “winners” in the massive Ponzi- and pyramid scheme. The motion before Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts asks for millions of dollars from about 33 TelexFree promoters with non-U.S. addresses who did not enter defenses after being properly served Darr’s class-action complaint brought in January 2016 and subsequently amended.

    Like the class-action lawsuit and individual actions brought by receiver in the Zeek Rewards’ case, the action by the TelexFree trustee demonstrates that “winners” in corrupt MLM schemes will be pursued to return their gains, plus interest, to the hundreds and hundreds of thousands of “losers” created by such cross-border fraud capers.

    Kenneth D. Bell, the receiver in the Zeek case, now is moving to perfect millions of dollars in judgments.

    Hoffman has set a May 3 hearing in Boston on Darr’s motion.

    Read Darr’s motion.

    One of the alleged overseas winners pursued by Darr received more than $2.92 million, according to a court exhibit. Seven others received at least $1 million. Others still received tens or hundreds of thousands of dollars.

    In other corrupt MLM schemes, new recruits were encouraged to pay their sponsor directly, rather than paying the company directly. This also was the case at TelexFree, a situation that led to money not being forwarded to the firm, contributing to the deepening of the Ponzi.




  • Zeek Receiver Solicits Victim Letters For Feb. 13 Sentencing Of Paul Burks

    Paul Burks will be sentenced Feb. 13 for his criminal role in Zeek Rewards, and the court-appointed receiver is soliciting letters from victims of the combined Ponzi- and pyramid scheme that affected hundreds of thousands of people.

    Zeek gathered hundreds of millions of dollars in a massive fraud scheme broken up by the SEC and the U.S. Secret Service in 2012.

    From receiver Kenneth D. Bell in an announcement dated Jan 19, 2017  (italics added):

    Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

    • Becoming insolvent;
    • Filing for bankruptcy under the Bankruptcy Code;
    • Suffering substantial loss of a retirement, education, or other savings or investment fund;
    • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
    • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
    • Suffering substantial harm to his or her ability to obtain credit.

    I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

    Bell also is special master of the criminal case against Burks.

    Burks, then 67, was indicted in 2014 on charges of wire and mail fraud, wire- and mail-fraud conspiracy and tax-fraud conspiracy. He was convicted by a jury in July 2016 at age 69 on all charges and potentially faces decades in federal prison.

    Two of Burks’ former Zeek colleagues — Dawn Wright-Olivares and her stepson Daniel Olivares — previously pleaded guilty and now are listed as federal prisoners.




  • Zeek Receiver To Make Third Distribution To Ponzi Victims, Says A Fourth Is Possible

    In an announcement dated Jan. 12, 2017, Zeek receiver Kenneth D. Bell said he’ll make a third distribution to Ponzi victims and that a fourth is possible.

    After the third distribution,  victims will have received about 75 percent of their losses, Bell said. The third distribution is set for March 15.

    Let us note here that these results are remarkable. Many Ponzi victims receive only pennies on the dollar, if anything at all. Quick action by the SEC and the U.S. Secret Service in 2012 no doubt benefited the receivership and, in turn, the victims.

    A series of clawback lawsuits and other actions initiated by Bell against Zeek net winners and others may return even more to the estate.

    Here is Bell’s Jan. 12 announcement in full (italics added):

    ANNOUNCEMENT FROM THE RECEIVER – January 12, 2017

    I am pleased to announce that we will be making a third partial interim distribution to all Affiliates who hold Allowed Claims on March 15, 2017. When made, combined with the first and second partial interim distributions and the amounts paid by ZeekRewards to such Affiliates before it was shut down, the third partial interim distribution will have returned to victims with Allowed Claims a total of at least 75% of their losses using the rising tide method.

    If you previously have received payment from the Receivership, or receive a payment for the first time during the January 31 distribution, you will be issued another payment on March 15, 2017. If you had recovered more than 60% from ZeekRewards prior to its shutdown, but less than 75%, you will receive a distribution as part of the third partial interim distribution.

    The funds used to make the third partial interim distribution will be taken from the reserves that I previously held for those Affiliates whose claims were disallowed and forfeited pursuant to the Court’s November 16, 2017 Order that required these claimants to provide their Release and OFAC certification by December 31, 2016. Their failure to do so has permitted me to release these reserves and to pay the third partial interim distribution to Affiliates that hold Allowed Claims.

    Finally, we do not have authority to accept new claims and are not considering further requests to amend previously allowed claims. The time to file claims or to amend claims has passed.

    I am confident that we will make a further distribution in the future. I ask you for your patience, and thank you for your continuing support.




  • Zeek Figures Wright-Olivares, Olivares Listed As Federal Prisoners

    Dawn Wright-Olivares

    The landing spots for two key Zeek Rewards figures now are known. Former Zeek COO Dawn Wright-Olivares is listed as inmate 29336-058 at FMC Carswell in Fort Worth, Texas. The facility is a Federal Medical Center for female offenders and has an adjacent minimum security satellite camp, according to the Federal Bureau of Prisons website.

    Daniel C. Olivares, the stepson of Wright-Olivares and the former senior technology officer at Zeek, is listed as inmate 29335-058 at CI Taft, a contracted correctional institution operated by a private corporation in Taft, Calif., according to the BOP website.

    Wright-Olivares and Olivares were sentenced in September 2016 by U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina. Both defendants had agreements with prosecutors and pleaded guilty in February 2014.

    Cogburn imposed a term of seven and a half years on Wright-Olivares. Olivares was sentenced to two years. Each defendant pleaded guilty to investment-fraud conspiracy, with Wright-Olivares also pleading guilty to tax-fraud conspiracy.

    The Winston-Salem Journal is reporting this morning that Zeek operator Paul Burks tentatively is scheduled to be sentenced Feb. 13.

    Zeek was one of the largest combined Ponzi- and pyramid schemes in U.S. history.

    Wright-Olivares and Olivares were not immediately sentenced to prison after their guilty pleas. Their situation was not unique, and some defendants are given time to report after their formal sentencing.




  • URGENT >> BULLETIN >> MOVING: Judge Begins Process Of Ordering Judgments Against Zeek Net Winners; Millions Awarded So Far, Millions More Pending

    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.
    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.

    URGENT >> BULLETIN >> MOVING: At long last, there is a spectacular crack in the ceiling of MLM HYIP Ponzi Land!

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has begun the process of ordering judgments against Zeek Rewards’ winners sued by receiver Kenneth D. Bell, according to the docket of the clawback case.

    Millions of dollars in final judgments have been awarded so far, with millions more awaiting Mullen’s signature. Bell, for example, is pushing for a judgment of more than $3.1 million against veteran HYIP huckster T. LeMont Silver, his wife and a Silver shell company.

    The Silver amount includes more than $2.3 million in winnings, plus more than $802,000 in prejudgment interest. Pending the judge’s signature, any Zeek income derived by the Silvers will become attachable, with the prospect of Mullen also awarding postjudgment interest.

    Final judgments against the Silvers and several other Zeek winners could be entered by the end of the year.

    Mullen already has issued final judgments against Zeek and AdSurfDaily Ponzi scheme figure Jerry Napier ($2.349 million, including prejudgment interest of more than $600,000); Darren Miller ($2.198 million, including more than $561,000 in prejudgment interest; Aaron Andrews, Shara Andrews and an Andrews shell company ($1.359 million, including more than $347,000 in prejudgment interest).

    Longtime HYIP hucksters, Aaron and Shara Andrews were known as Team Aaron Shara.

    Each of the orders Mullen already has signed includes this language (italics added):

    The Court confirms this amount is the Final Judgment of the Court against this Defendant and hereby authorizes the Receiver to pursue appropriate collection proceedings.

    On Nov. 29, Bell won against the named winners and a defendant class of more than 9,400 other winners in summary judgment, meaning the judge rejected arguments they were entitled to keep more than $200 million in Ponzi proceeds.

    “How much of that we will be able to collect for distribution to claimants with allowed claims is uncertain at this time,” Bell wrote on Nov. 29. “However, we will pursue collection of these judgments vigorously, and expect the ultimate amount collected will be a substantial sum.”

    The money will go to the Zeek losers who filed the appropriate paperwork and whose claims were approved.

    Stephen B. Darr, the trustee for TelexFree, has followed Bell’s lead in pursuing net winners from MLM HYIP fraud schemes. Darr effectively has sued more than 93,000 alleged TelexFree winners.

    Other receivers in HYIP cases potentially could follow the leads of both Bell and Darr in pursuing clawback litigation against alleged winners.

    NOTE: Our thanks to the ASD Updates Blog.




  • REPORT: Nicholas Smirnow, Pathway To Prosperity Operator, Sentenced To Prison In Canada

    Nicholas Smirnow: From INTERPOL.
    Nicholas Smirnow: From INTERPOL.

    Nicholas Smirnow, the operator of the Pathway To Prosperity Ponzi-board “program” charged with fraud by U.S. authorities in 2010, has been sentenced in Canada to seven years in prison.

    News of the sentence appeared Sept. 30 at MuskokaRegion.com.

    Smirnow was arrested in Canada for P2P-related crimes in 2014. The United States has submitted an extradition request.

    INTERPOL’s wanted notice for Smirnow is still active. It lists his age as 59 and says he faces charges of conspiracy, securities fraud, wire fraud and money-laundering in the United States.

    In June 2010, the U.S. Department of Justice pointed to P2P as an example of international mass-marketing fraud that occurs on the Internet. The “program” was a Ponzi-forum darling. MoneyMakerGroup and TalkGold are referenced in P2P-related filings in the United States as places from which Ponzi schemes are promoted.

    P2P operated in all the  “permanently inhabited continents of the world,” a member of the U.S. Postal Inspection Service said in 2010.

    Losses were pegged at about $70 million.

    Ponzi forums and social media continue to drive traffic to hideous schemes. Recent examples of Ponzi-board programs include Traffic Monsoon, Zeek Rewards and TelexFree. There are many more.

    NOTE: Thanks to a reader for the heads-up on Smirnow’s sentencing in Canada.