Zeek Receiver Posts “Subpoena FAQ” for Clawback Targets

Yesterday, the court-appointed receiver tasked with gathering assets for victims of the$600 million ZeekRewards Ponzi scheme provided various updates on the claims process, asset recoveries, and his intention to pursue those who actually profited off the scheme.  Kenneth Bell, the receiver, indicated he would begin sending out subpoenas this week as part of his plan to institute “clawback” litigation against those “net winners” that, according to Mr. Bell, withdrew hundreds of millions of dollars in profits from Zeek.  As Mr. Bell stated, the first batch of subpoenas would be sent out this week, and “thousands” more would follow in the coming weeks.

The Receiver has now added a “Subpoena FAQ” to his website established for scheme victims, www.zeekrewardsreceivership.com.  Under the tab, the Receiver lists nine commonly asked questions, and in doing so, provides several new details on the clawback process.  First, he indicates that a possible target of a subpoena can include an affiliate, participant, agent, or employee of Zeek Rewards, suggesting that he is not limiting the search to just participants in the scheme.  Second, it appears as if the scope of the subpoenas is more broad than simply the turnover of financial documents, as electronic documents and communications are being sought.  Thus, in addition to bank statements, the Receiver is also likely seeking any communications those “net winners” may have had with the Receiver or possibly other affiliates.  Finally, as speculated yesterday, the Receiver confirms that the first batch of the subpoenas are indeed sent to those “the Receiver currently believes may have won the most money.”

The FAQ’s also contain a section not only for those who have received a subpoena and do not want to proceed with litigation, but also for those who wish to avoid receiving a subpoena in the future (i.e., profited from the scheme but were not the recipient of the first batch of subpoenas).  FAQ # 9 provides that those who wish to reach an arrangement with the receiver to return those profits without “the necessity of lengthy and expensive legal action” may contact the Receiver at[email protected] to discuss the possibility of a settlement.  There is no explicit mention of a slight discount as an incentive to settle, but the wording does suggest that there may be some wiggle room.  Of course, if there is a discount offered, it would likely be an ‘across-the-board’ discount to avoid the appearance of favoritism or unfairness.

A link to the FAQ’s is here.

About Jordan Maglich

Jordan Maglich is an attorney at Wiand Guerra King, P.L. in Tampa, Florida. He is considered an expert on Ponzi schemes and white collar crime, and his practice includes complex commercial litigation, receiverships, Foreign Corrupt Practices Act litigation, and civil regulatory matters, with a focus on securities and financial services litigation. He represents securities broker/dealers, investment advisors, and their associated persons in federal and state court and in arbitration. Additionally, Jordan is currently part of the team that represents the court-appointed receiver nominated by the SEC in the Arthur Nadel $400 million Ponzi scheme. Jordan authors the Ponzitracker blog, and is also a contributor at Forbes.com where he writes about white collar crime.