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Tag: Zeek Rewards

  • PAYZA TO ZEEK RECEIVER: Don’t Blame Us

    ponzinews1Payza, an HYIP-friendly payment processor that recently bragged on Twitter about its attendance at an event for the teetering TrafficMonsoon scheme, has advised a federal judge that it is not responsible for millions of dollars that allegedly went missing in the Zeek Rewards’ scheme taken down by the SEC in 2012.

    Zeek receiver Kenneth D. Bell alleged in February that Payza and an outfit known as Payment World “facilitated” the epic cross-border Zeek Ponzi- and pyramid scheme. The PP Blog reported on Feb. 21 that the money at issue — about $13.1 million — may have ended up in one or more collapsed Russian banks after being transferred out of VictoriaBank in Moldova.

    Payza acknowledged it was a business partner with Payment World, but maintained the account in Moldova was Payment World’s alone and that it has sued Payment World for more than $20 million because it, too, had been ripped off.

    In response to Bell, who is seeking a contempt sanction and to hold Payza jointly liable with Payment World and VictoriaBank for return of the cash, Payza says it never had “dominion and control” over the money and thus should not be held liable.

    Payza, which operates out of Canada as part of a company known as MH Pillars of the United Kingdom, further contends with worked cooperatively and proactively with Bell and U.S. authorities tracking the money. The defense filing by Payza was docketed yesterday in the Western District of North Carolina and also claims Payza performed due diligence on Rex Venture Group, the operator of Zeek. The filing contained a declaration by MH Pillars Executive Vice President Firoz Patel.

    In a May 15 Twitter post, Payza said Patel was a speaker at a May 15 event in New York for the Traffic Monsoon program.

    The Tweet made no due-dilignce claims about Traffic Monsoon, which reportedly is under investigation by PayPal and has been blocked from a sum totaling on the order of $60 million.

    NOTE: Our thanks to the ASD Updates Blog.

    Also see TaraTalks site.




  • Alleged Zeek ‘Winner’ Repeatedly Invokes Fifth Amendment In Clawback Case

    UPDATED 3:07 P.M. EDT U.S.A. Darren Miller, an alleged winner of more than $1.635 million in Zeek Rewards and one of the lead defendants in a civil class-action clawback lawsuit filed by Zeek receiver Kenneth D. Bell, repeatedly has invoked his Fifth Amendment right not to incriminate himself, according to new court filings by Miller.

    In response to Bell’s 2014 clawback action in which the receiver seeks return of the winnings plus interest, Miller, of Coeur d’Alene, Idaho, also marked “sic” next to mentions of himself as a defendant. Bell is suing Miller and more than 9,000 alleged Zeek “winners.” The case is styled Bell v. Disner.

    Miller appears to have invoked the Fifth Amendment 41 times in response to 41 inquiries from Bell — 14 questions and 27 requests for documents.

    His response provides an overview of the sorts of questions Bell asked alleged “winners” through interrogatories. It also provides an overview of the type of documents sought from defendants by the receiver. Zeek was part of Rex Venture Group or RVG, alleged by the SEC and federal prosecutors to have been a North Carolina-based Ponzi- and pyramid scheme that gathered hundreds of millions of dollars before the SEC shut it down in August 2012.

    The Zeek clawback litigation itself shows the perils of pushing MLM schemes authorities deem to be fraudulent. Not only is money received from a “program” at great risk of clawback, expensive and emotionally draining legal proceedings on multiple fronts may ensue.  Some defendants even may fear criminal prosecution.

    At the same time, the Zeek clawback actions may provide something of a preview of what’s in store for tens of thousands of TelexFree “winners” pursued by the trustee in that Massachusetts case for return of their gains. TelexFree also was an MLM scheme.

    Pictured below is the first of 14 interrogatories advanced by Bell, according to Miller’s response:

    Question 1 of the Zeek interrogatories.
    Question 1 of the Zeek interrogatories.

    As you can see above, Bell not only asked about Miller’s involvement, he also asked about the involvement of others, potentially including upline sponsors. Here’s how Miller answered Question 1 and 13 others. (Only minor variations such as the Interrogatory number were present.)

    Darren Miller's answer to the first Zeek interrogatory.
    Darren Miller’s answer to the first Zeek interrogatory.

    For years now, the SEC has expressed concern about scams spreading on social media. Bell also had a question about that — in this case, in Interrogatory 14 (as show below):

    The Zeek receiver asked about social-media accounts. There has been a longtime concern about scams spreading on Faceek, Twitter, YouTube and other sites.
    The Zeek receiver asked about social-media accounts. There has been a longtime concern about scams spreading on Facebook, Twitter, YouTube and other sites.

    In the interrogatories, Bell wanted to know when an individual’s participation began and when it ended. The receiver also was interested in dates and sums and outcomes — such as when money was paid to Zeek and when money was received from the “program” and how it was spent or kept.

    Individuals also were asked to name people who had information “related to your defenses or claims,” according to Miller’s response. Meanwhile, they were asked if they contended Zeek was not a Ponzi or pyramid scheme and to provide the names of individuals who could back up the claim.

    Bell previously expressed concern that some MLMers were moving from one fraud scheme to another in serial fashion.

    On the document front, Bell had 27 specific requests for production, according to Miller’s response. Here is how Miller answered a request to produce documents used “in connection with recruiting persons to participate” in Zeek.

    Miller's response to a request for document production by the receiver.
    Miller’s response to a request for document production by the receiver.

    Miller’s response to the 26 other requests for documents was substantially similar.

    Also see PP Blog editorial from July 1, 2014: On The War In Zeekland And HYIP Rabbit Holes.

    NOTE: Our thanks to the ASD Updates Blog.




  • URGENT >> BULLETIN >> MOVING: TelexFree Trustee Sues MLM Attorney Gerald Nehra

    newtelexfreelogoURGENT >> BULLETIN >> MOVING: (6th Update 8 p.m. EDT U.S.A.) TelexFree Trustee Stephen B. Darr has sued MLM attorney Gerald Nehra and the Nehra and Waak law firm, alleging they were “actively involved” in promoting TelexFree’s Ponzi scheme and “duping” participants.

    Nehra and the firm have asked for more time to respond to the April 1 complaint, saying through court filings that they “anticipated participation in criminal proceedings related to the case.”

    Chief Bankruptcy Judge Melvin S. Hoffman extended the response deadline until June 1. The original deadline was May 2.

    Whether Nehra or the firm considered themselves potential TelexFree criminal defendants was unclear in the response. TelexFree principals James Merrill and Carlos Wanzeler are the sole criminal defendants to date.

    Separately, prosecutors in the Zeek Rewards’ criminal case against Paul Burks said in court filings in the Western District of North Carolina Monday that Nehra and law partner Richard Waak may be called as witnesses in the case against Burks.

    Nehra and Waak have settled with Zeek receiver Kenneth D. Bell, who alleged they “encouraged investors to participate in the [Zeek] scheme by knowingly allowing their names to be used in providing a false façade of legality and legitimacy and gave improper legal advice that allowed the scheme to continue far longer than it would have without the Defendants’ support.”

    Darr wants Nehra and the firm to return all legal fees paid to them by TelexFree between May 2012 and April 2014 — about $24,000. Hoffman has ruled TelexFree a Ponzi- and pyramid scheme, and Darr contends neither Nehra nor the firm provided any “compensable advice” during the two years they represented TelexFree.

    The trustee further contends that Nehra appeared in a YouTube video promoting TelexFree.

    MLM attorney Gerald Nehra at a TelexFree rah-rah event in California in 2014. Source: YouTube.
    MLM attorney Gerald Nehra at a TelexFree rah-rah event in California in 2014. Source: YouTube.

    Representing Zeek and TelexFree created incredible problems for the two lawyers. At least three of their MLM clients have been charged criminally and a mountain of litigation has been filed against Nehra and the firm, including actions by Darr, Bell and class-action attorneys.

    In the settlement with Bell, Nehra and Waak agreed to a confession of judgment for $100 million. They contended “that they acted in good faith as legal counsel,” but now “acknowledge and agree that, based on their current knowledge, during the period they served as counsel RVG in fact operated an unlawful Ponzi an pyramid scheme involving an unregistered investment contract that caused hundreds of millions of dollars in losses to innocent victims of the scheme,” according to filings from Bell.

    Government attorneys handing the Burks’ criminal case quoted the settlement language in their May 2 filing. RVG, or Rex Venture Group, was the operator of Zeek.

    Zeek and TelexFree combined allegedly gathered on the order of $3.9 billion while creating hundreds and hundreds of thousands of victims globally.

    A TelexFree video featuring Nehra appeared on YouTube in August 2013, according to Darr’s complaint. That’s two months after authorities in Brazil called TelexFree a pyramid scheme.

    Also in August 2013, MLM attorney Jeffrey Babener advised TelexFree that it was operating a pyramid scheme, Darr alleged in September 2014.

    TelexFree nevertheless continued to gather money until it collapsed in bankruptcy in April 2014, Darr alleged. The last payment to Nehra and the Nehra and Waak firm was made on April 3, 2014, just 10 days before the implosion, according to Darr.

    Read Darr’s complaint against Nehra and the firm.

    NOTE: Our thanks to the ASD Updates Blog.

     




       

  • Payza Reports Web Outage

    This message was on the Payza website on April 25, 2016.
    This message was on the Payza website on April 25, 2016.

    Payza, an HYIP-friendly payment processor currently under fire from the receiver in the Zeek Rewards Ponzi- and pyramid-scheme case, is reporting on Twitter that it is experiencing a web outage.

    At the time of this PP Blog post, the outage appears to be more than four hours old. A post with no timestamp at the Payza Blog says the processor expects “everything to be back to normal within 18 hours. You may experience some interruptions and connection errors until that time on our website, member’s area, and Customer Support Pages.”

    Members of the Traffic Monsoon “program” are complaining on Facebook about the outage. Traffic Monsoon is a purported “advertising” venture reportedly served by Payza and shut off by PayPal.

    “Hello, what is going on with PAYZA?” one Monsooner asked. “I can’t get to the site and therefore I cannot buy more adpacks with the money I have on the account.”

    Another Monsooner ventured. “I saw other people have the same problem than me. Paya acknowledged they have problems but don’t say what kind of problems. Isn’t this worrying? First Paypal, now Payza, and still no news of the bank in Dubai.”

    The PP Blog observed a message from Incapsula when it tried to load Payza’s website.

    “You’ve requested a page that currently is on the Incapsula network,” the message read. “Incapsula was unable to connect to the server.”

    Incapsula provides DDoS protection. Whether a DDoS attack was responsible for the Payza outage was unclear.

    More may be known later this month on an investigation involving Payza and the Obopay payment processor by the U.S. Department of Homeland Security.

    UPDATE 4:23 P.M. EDT U.S.A. Payza says on Twitter that “Our website is back up and running smoothly, thank you for your patience.”




  • Banners Broker Figure May Be Using ‘Sovereign Citizen’ Tactics On Canadian Court Officials

    From a purported "Cease and Desist" order by Banners Broker figure Rajiv Dixit.
    From a purported “Cease and Desist” order by Banners Broker figure Rajiv Dixit. Red highlights by PP Blog.

    Remember when Simon Stepsys — now with the cross-border MyAdvertisingPays scheme — was pushing the uber-bizarre Banners Broker cross-border scheme?

    New court filings in Canada by the receiver and liquidators in the Banners Broker case now estimate the total haul of the alleged double-your-money pyramid scam at more than $156 million. That’s up from an earlier estimate by Toronto police of $93 million. If the $156 million figure proves correct, it would make Banners Broker a bigger fraud than the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008.

    Like MAPS, which currently is operating, ASD and Banners Broker purported to be “advertising” companies. The ASD case threw down the gauntlet on securities companies trying to evade the law by pretending to be “advertising” firms.

    But the apparent upstaging of ASD by Banners Broker in dollar volume in the purported “advertising” trade is not the only news.

    Rajiv Dixit, one of the Banners Broker figures who helped put Stepsys in the position of getting rich from online fraud schemes, was arrested in Canada in December 2015.

    Filings April 4 by the receiver and liquidators in the case show that Dixit may be trying to use “sovereign citizen” courtroom tactics against them in Canadian proceedings. In the United States, AdSurfDaily figure Kenneth Wayne Leaming tried the same thing in that case.

    The Banners Broker receiver and liquidators have reported Dixit’s alleged activities to the court.

    Specifically, they say Dixit, who calls himself  “the man master rajiv of the family dixit” [sic] and his targets “interlopers,” is trying to foist a bogus “Cease and Desist” order on them that threatens a fine of $36 per second if they don’t back off from their judicially mandated duties. Dixit apparently wants to be paid in “silver dollars.”

    From the receiver/liquidators (italics added):

    The Cease and Desist Notices go on to state that if the Court Officers and their counsel do not cease and desist “all actions and claims against Mr. Rajiv Dixit and or Rajiv Dixit forthwith” Dixit will invoice them $47,304,000.00 silver dollars “[p]lus, for each second starting at 12:00:01 AM until the cease and desist is complied with, each Respondent will be charged an additional $36.000 per second.”

    Leaming, a “sovereign citizen” now in a U.S. federal prison in part for harassing officials who played a role in the ASD case, once sent a bill demanding payment of 208,000 ounces of “99.9% fine silver” from a judge.

    Court filings in other cross-border cases — including Zeek Rewards and DFRF Enterprises — have signaled that “sovereigns” also were involved in those schemes.

    With Banners Broker, Dixit called his affiliates “stupid,” according to the new filings by the receiver and liquidators.

    Visit the RealScam.com antiscam forum to read the filings.




  • RECEIVER: (1) Zeek Defendant Class Action May Conclude This Year; (2) Some Claimants Still Haven’t Signed Required Release; (3) $10 Million Settlement With NewBridge Bank

    This promo for Zeek promised "passive" income. The SEC has warned about such schemes for years.
    This promo for Zeek promised “passive” income. The SEC has warned about such schemes for years.

    Three significant pieces of news from Kenneth D. Bell, the receiver in the Zeek Rewards’ Ponzi- and pyramid-scheme case:

    In a March 28 announcement on the receivership website, Bell wrote that a defendant class-action lawsuit against more than 9,000 alleged Zeek winners in the United States may conclude this year.

    “We hope to bring to a conclusion in 2016 our class action against more than 9,000 net winners, which will be a significant milestone,” Bell wrote.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina certified the defendant class of alleged U.S. winners last year. The class includes “all persons and entities who participated in ZeekRewards and received at least $1000 more in money from ZeekRewards than they put into the program.”

    The winnings came from Ponzi proceeds and must be returned, Bell contended.

    A successful conclusion to the class action could mean more money for Zeek victims, Bell has said.

    TelexFree Bankruptcy Trustee Stephen B. Darr has filed similar litigation in that scheme. Darr’s action may affect nearly 100,000 alleged TelexFree winners.

    Bell has raised concerns about some MLMers moving from fraud scheme to fraud scheme. The SEC has raised concerns about the “whack-a-mole” nature of some fraudulent schemes.

    Meanwhile, Bell wrote yesterday that tens of thousands of people who are eligible for a distribution from the receivership estate have not received a check because they haven’t filled out the required forms. Such individuals should “log into the claims portal and electronically sign the Court required Release and OFAC Certification.”

    “At some point, I will be required to distribute the funds that have been reserved for these claimants to other Affiliates who have completed the process and, therefore, hold Allowed Claims,” Bell wrote.  “I don’t want any claimant with a recognized claim to lose out on receiving a distribution simply because they did not complete all of the steps required by the Court’s Orders.”

    Bell also highlighted a $10 million settlement with NewBridge Bank, a Zeek vendor. Zeek operated through Rex Venture Group.

    “The settlement arose out of claims the receivership had against NewBridge Bank for its continuing to provide banking services to Rex Venture Group after mid-April 2012, by which time the receivership alleged that the bank and its executives knew or should have known that Paul Burks and RVG were using their accounts to conduct an illegal Ponzi and pyramid scheme,” Bell wrote.

    Details of the receivership’s potential claims and the settlement with NewBridge are available through links in the receiver’s March 28 announcement.




  • URGENT >> BULLETIN >> MOVING: Zeek Vendor Pleads Guilty To Obstructing Probe

    From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.
    From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.

    URGENT >> BULLETIN >> MOVING: (12th Update 2:57 p.m. EDT U.S.A.) In what may be a warning shot fired across the bow of payment vendors who hope to profit from Ponzi schemes, Zeek Rewards’ vendor Jaymes Meyer of Preferred Merchants Solutions LLC has pleaded guilty to a criminal charge of obstructing investigators in the Zeek Ponzi- and pyramid-scheme case.

    Meyer, 47, of Napa, Calif., was charged criminally March 10 by federal prosecutors in the Western District of North Carolina. They alleged he hatched an “elaborate obstruction of justice scheme to conceal millions of dollars from the Government using a series of domestic and foreign nominees and related bank and brokerage accounts.”

    He was specifically accused of impeding the SEC’s Zeek probe beginning in 2012 and later lying to a federal judge and Zeek receiver Kenneth D. Bell.

    Senior U.S. District Judge Graham C. Mullen is presiding over the SEC’s Zeek case.

    As the PP Blog reported in October 2014, Bell accused Meyer of directing a $4.8 million transfer from a Rex Venture Group trust account to Preferred Merchants’ account “just 19 minutes after the SEC told them about the asset freeze and imminent shutdown of RVG” on Aug. 16, 2012.

    Rex, or RVG, was the operator of Zeek. It was under the control of accused Zeek Ponzi schemer Paul R. Burks. Burks is scheduled to go on trial in July.

    By March 2015, Bell and investigators had tracked Zeek money that flowed through Preferred to the Cook Islands and real estate in the Turks and Caicos. Prosecutors’ allegations against Meyer include a notice of forfeiture of $4.8 million.

    U.S. Magistrate Judge David S. Cayer accepted the guilty plea from Meyer on March 22. Certain documents in the case remain sealed. One document shows Meyer withdrew $195,000 in Zeek money in cash.

    At least two other payment vendors may be in Bell’s sights. On Feb. 21, 2016, the PP Blog reported that millions of dollars that originated through Zeek-related transactions involving Payza and Payment World may have ended up in a collapsed Russian bank.

    NOTE: Our thanks to the ASD Updates Blog.




     

  • BULLETIN: Darryle Douglas, Alleged Zeek Insider, Arrested

    BULLETIN: (4th update 9:11 p.m. ET U.S.A.) Alleged Zeek Rewards’ insider Darryle Douglas has been arrested in Riverside, Calif.

    Court filings docketed March 7 in the SEC’s civil case against Zeek say Douglas, whose age was not listed, was arrested March 2 by the U.S. Marshals Service.

    On Dec. 10, 2015, Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina ordered marshals to arrest Douglas for civil contempt of court. On Jan. 5, 2016, marshals said they had not located him and that Douglas was the subject of an ongoing investigation.

    He is believed to reside in Orange County, Calif., an area close to Riverside in the southern part of the state.

    Word of the arrest was received tonight. The warrant issued by Mullen in December specified that Douglas was to be brought to North Carolina. The PP Blog could not immediately determine this evening if a transport had taken place.

    Douglas, who allegedly had access to Zeek’s database and did not return it as ordered, may be involved with a nascent scheme known as Auction Attics, the PP Blog reported last year. Others have said Auction Attics was morphing into something called Auction Addicts.

    Zeek was a penny-auction fraud that gathered on the order of $900 million, the SEC has said.

    NOTE: Our thanks to the ASD Updates Blog.




  • At Chicago Symposium, SEC Highlights Pyramid Scheme Task Force And Notes ‘Whack-A-Mole’ Nature Of Online Scams

    “These frauds are easily duplicated, and at times, we find ourselves playing ‘whack-a-mole,’ chasing the same set of fraudsters who, after feeling a bit of heat, simply close down one scheme and quickly set up a new one under a different name.” — Andrew Ceresney, SEC Enforcement Division director, March 2, 2016

    EDITOR’S NOTE: Type “whack-a-mole” into the PP Blog’s search box near the upper-right corner to find our stories that touch on frauds rising to replace other frauds. Examples include so-called “programs” that claim to be “advertising” companies or to have an “advertising” component — for example, Zeek Rewards, TelexFree, Banners Broker and AdSurfDaily. If you’re in an “advertising” program such as MyAdvertisingPays (MAPS) or TrafficMonsoon, you should asking some serious questions and thinking about whether serial fraudsters are whacking you.

    When one scheme collapses, another quickly rises to replace it. Many such schemes operate simultaneously, drafting the unwary into multiple miseries. Ill-gotten gains or losses pile up in the billions of dollars. Yes, billions.

    Of course, “whack-a-mole” is not limited to “advertising” schemes. There are “cycler” schemes such as “The Achieve Community” and its Ponzi-board equivalents. Meanwhile, there are HYIP schemes such as “Profitable Sunrise” and its Ponzi-board equivalents. MoneyMakerGroup and TalkGold are examples of Ponzi boards. The scammers now have added social media such as YouTube, Facebook and Twitter to their arsenal. Vulnerable people and population groups are constant targets.

    Scams such as WCM777 that claim to have a “product” also are part of “whack-a-mole.”

    **________________________________**

    cautionflagLet’s begin by encouraging you to read Andrew Ceresney’s opening remarks at a joint symposium today sponsored by the SEC and the University of Illinois at Chicago. (Link at bottom of story. Also see Twitter links.)

    UIC promoted the event on its website, titling it “How to Detect and Combat Fraudsters Who Target Our Immigrant Groups and Affinity Communities Through Pyramid and Ponzi Schemes.” The institution notes it is “one of the most ethnically and culturally diverse universities in the country,” so it was a perfect place to host such a confab.

    Ceresney is the SEC’s director of enforcement. One of the things the PP Blog noted while reading the text of his remarks is that it included a subhead titled “Pyramid Schemes and Multi-Level Marketing.”

    This reflected on ongoing effort by the SEC to educate the public that the presence of a “product” in a scheme does not necessarily mean no scam is under way. Many MLMers erroneously believe that a “product” (or purported one) offered for sale cures all ills. That is simply not the case. A year ago in Congressional testimony, the director spoke about a “coordinated effort” to disrupt pyramid schemes.

    Ceresney today provided more details on a new Task Force that is combating pyramid fraud. Here is part of his remarks (italics/bolding added):

    After seeing an increase in complaints regarding pyramid schemes and affinity fraud, the SEC formed a nationwide Pyramid Scheme Task Force in June 2014 to provide a disciplined approach to halting the momentum of illegal pyramid scheme activities in the United States. The goal of the Task Force is to target these schemes by aggressively enforcing existing securities laws and increasing public awareness of this activity.

    The Division is deploying resources to disrupt these schemes through a coordinated effort of timely, aggressive enforcement actions along with community outreach and investor education. More than fifty SEC staff members are part of the nationwide Task Force, which is enhancing its enforcement reach by collaborating with other agencies and law enforcement authorities. We are also using new analytic techniques to identify patterns and common threads, thereby permitting earlier detection of potential fraudulent schemes.

    Collaboration with other regulators, including criminal authorities, is an important goal of the Task Force. To advance this goal, the Task Force has hosted an interagency summit attended by over 200 representatives from other federal and state agencies and has presented at local trainings and agency-specific conferences. And, of course, we have partnered with other regulators and criminal authorities to bring high-impact actions in this space. For example, one month after we filed our enforcement action against the operators of the TelexFree pyramid scheme, two of TelexFree’s principals were charged by the criminal authorities.

    Will the “program” you’re currently pitching become the subject of a “high-impact action?” Time will tell.

    In 11 SEC actions since 2012 involving pyramid operators, the damage resulted in ill-gotten gains or losses totaling more than $4.2 billion, Ceresney said today.

    Read his opening remarks at today’s Chicago symposium.

  • SPECIAL REPORT: Zeek Money May Be In Collapsed Russian Bank

    From the PP Blog archives: April 2012.
    Funds from Zeek, which once auctioned sums of U.S. currency, may have ended up in a collapsed Russian bank. Graphic from the PP Blog archives: April 2012.

    EDITOR’S NOTE: For background, see Feb. 17 PP Blog story: RECEIVER: Payza And Payment World ‘Facilitated’ Zeek Ponzi Scheme; Whereabouts Of $13.1 Million An ‘Open Question’

    (Updated 11:14 a.m. ET U.S.A.) Money due victims of Zeek Rewards from transactions involving Payza and Payment World may have been transferred from VictoriaBank in Moldova to JSC TusarBank in Russia in violation of an asset freeze imposed in 2012 by a U.S. court, according to court filings by Zeek receiver Kenneth D. Bell.

    Meanwhile, OboPay’s name now has surfaced in filings by Bell. This is in the form of an October 2012 email from a Payment World official to a Payza official questioning Payza’s relationship with OboPay. The U.S. Justice Department last year announced a criminal investigation involving Payza and OboPay. The specific reason behind the probe and the targets are unknown.

    TusarBank collapsed in September 2015 and has been recommended for criminal investigation, according to the press office of Russia’s central bank. The bank’s website is beaming a “not available now” message.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina last week lifted the seal on Bell’s 258-page filing in which Bell alleged Payza, Payment World and VictoriaBank enabled Zeek’s Ponzi scheme shut down by the SEC in 2012. The filing consisted of a 26-page motion and 232 pages of exhibits, including emails between Payza and Payment World. As noted above, one of the exhibits raises the name of OboPay.

    Mullen imposed the asset freeze in August 2012.

    Whether the possible transfer of Zeek-related funds from Moldova to Russia is part of the Russian probe is unclear.

    Adding to the international intrigue is that a second Russian bank that somehow might have been involved in the Payment World-related money flow reportedly collapsed in 2013. This institution is known as Master Bank and is described in Bell’s exhibits as a “sponsoring bank” of a Payment World entity in Hong Kong.

    A sponsoring bank provides processors access to Visa or MasterCard networks

    On Sept. 13, 2015, just prior to the collapse of TusarBank, the Moscow Times listed Master Bank as one of “Russia’s Biggest Banking Crashes of the Last 2 Years.” This crash occurred in 2013 and was notable for something beyond the 31.3-billion-ruble bailout.

    As the Moscow Times reported (italics added):

    Even having Igor Putin, a cousin of President Vladimir Putin, on the board of directors could not save Master Bank. The lender’s license was revoked in November 2013 with the Central Bank alleging the bank had violated money laundering legislation and processed large suspicious transactions.

    In 2012, just prior to the collapse of Zeek, Zeek figure Keith Laggos claimed he had helped Zeek move payment operations offshore, including to Hong Kong. Specific details of that asserted move are unknown. Zeek had about 15 financial vendors, according to court filings.

    Payza, under the leadership of Firoz Patel, has claimed it conducted due diligence on Zeek, according to Bell’s filings. Even if true, it somehow appears to have missed that Zeek was offering an outrageous and unusually consistent return averaging about 1.5 percent a day and also claimed “compounding” was possible.

    The SEC has described Zeek as a cross-border Ponzi scheme that gathered nearly $900 million while operating from North Carolina.

    From Bell’s filing (italics added):

    On August 29, 2010, Paul Burks [of Zeek] onboarded an account with Payza (then, known as AlertPay) in the name of Rex Venture Group LLC that was associated with two websites: www.zeekrewards.com and www.zeekler.com. Prior to the boarding of the account, Payza purportedly conducted due diligence, collecting and reviewing information about Paul Burks and the business. According to Payza, during the course of the relationship, it monitored and mitigated risk. Despite these procedures, Payza did not identify or address the red flags indicating that ZeekRewards was a Ponzi scheme and, instead, together with PaymentWorld and VictoriaBank [of Moldova], facilitated access and payment to and from ZeekRewards by numerous affiliates worldwide.

    Bell’s 258-page filing is available on the landing page of the receivership website. It is styled, “Memorandum in Support of the Receiver’s Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets.”

    NOTE: Our thanks to the ASD Updates Blog.




  • RECEIVER: Payza And Payment World ‘Facilitated’ Zeek Ponzi Scheme; Whereabouts Of $13.1 Million An ‘Open Question’

    Zeek was a purported penny auction.
    Zeek was a purported penny auction.

    Zeek Rewards’ receiver Kenneth D. Bell has gone to federal court in the Western District of North Carolina, alleging that the Payza and Payment World payment processors “facilitated” the epic cross-border Zeek Ponzi- and pyramid scheme.

    More than $13.1 million in funds from North Carolina-based Zeek that could be used to compensate victims ended up in VictoriaBank in Moldova, owing to a processing relationship among Payza, Payment World and the bank, Bell alleged.

    Now, Bell contends, “based on recent developments in the Receiver’s investigation, there is an open question as to whether the Receivership Assets held on Reserve at VictoriaBank remain or were transferred from the account.”

    The disturbing allegations are part of a motion in which Bell seeks to hold Payza, Payment World and VictoriaBank in contempt. They come as federal prosecutors in the District of Colombia and the U.S. Department of Homeland Security are conducting a criminal investigation involving Payza and OboPay, another payment processor.

    Prosecutors haven’t revealed the target of the criminal probe. It is unclear whether there is any nexus with the Zeek case, alleged overall to involve $897 million. Zeek, a Ponzi forum “program,” allegedly created tens and tens of thousands of victims worldwide.

    Payza is a Ponzi-forum darling. Its predecessor, AlertPay, is referenced in court filings in the 2008 AdSurfDaily Ponzi case. Scores of Ponzi-board “programs” claim to accept Payza, including an emerging scheme known as Traffic Monsoon.

    Bell accused Payza, Payment World and VictoriaBank of violating an asset-freeze order issued in 2012 by Senior U.S. District Judge Graham C. Mullen.

    In a novel legal maneuver, Bell has persuaded Mullen to freeze a correspondent account VictoriaBank holds on U.S. soil at Bank of New York Mellon. Mullen authorized the freezing of more than $13.1 million in the account.

    If the account proves not to hold that sum, VictoriaBank must deposit with the receivership the difference between the frozen sum and the $13.1 million Bell claims as receivership assets, according to the order.

    Bell signaled on Feb. 1 that the receivership would pursue Payza, Payment World and VictoriaBank.

    Moldova is situated in Eastern Europe. It shares a border with Ukraine, a world hot spot.

    NOTE: Thanks to the ASD Updates Blog.