Panel Discussion re. Zeek – Google Hangout

The panel discussion regarding Zeek Rewards last week was a huge success. Surprisingly, there were hardly any glitches with the technology. We got over an hour of solid content locked down in the video below. It was a great discussion with multiple lawyers and professionals familiar with the Zeek Rewards case. As many of you know, the Receiver sent out approximately 1,200 subpoenas recently requesting information from many of the “net winners.” This batch of subpoenas re-ignited a host of questions from both the winners and losers affiliated with Zeek. It’s my strong professional opinion that the needs between the winners and losers are unique and at odds with one another. The “net losers” want the receiver to recover as much money as possible so as to maximize the payout to the victims. In order to make the cash pot larger, the receiver is compelled to recover funds from the people that earned more from Zeek than they “invested” / spent into the program. In other words, the net losers want / need clawback litigation to occur. On the other hand, the people that earned more money than what they invested / spent, they’ll likely want to hold onto the cash. They’re going to argue that they earned the money, spent the money, etc. Both sides have unique issues. With lawyers positioned on both sides of the issue, we compiled a panel to answer the following questions:

Can the receiver pursue Zeek participants that reside overseas?
When does it make economic sense for a receiver to sue a net winner?
If a receiver gets a judgment against a net winner, what can he do with it?
What does the claims process look like for the net losers?
When can people expect a distribution of cash?
If an affiliate paid taxes on the income, how do they get the tax money back?
And we address a host of other question.

In the Hangout, we had the following participants

+Kevin Thompson, (MLM lawyer)
Jordan Maglich (Ponzi Tracker)
Len Clements (Market Wave)
Troy Dooly (MLM Help Desk)
Walt Burton (Commercial Real Estate attorney)
Phillip Young (Corporate Litigator / Bankruptcy Lawyer)

The information is free of charge. We hope you find the video informative. Also, as a reminder, if you’d like to unsubscribe to these updates, there’s an “Unsubscribe” button on the bottom of this email.


If you’re not able to play the video in your inbox, click here.

Update From Zeek Receiver: Outside Lawsuits Likely To Be Stayed

Disclaimer: The information and materials on this blog are provided only for general informational purposes. No attorney-client relationship is formed nor should any such relationship be implied. By using this website or subscribing to our Zeek e-mail alerts, you acknowledge that your receipt and use of such information does not create an attorney-client relationship. In the future, we may make formal offers for legal representation; however, at this time it is our opinion that litigation and/or other action is premature.

This post is authored by Jordan Maglich, Forbes contributor, associate at Wiand Guerra King and creator of the Ponzi Tracker website.

In the wake of the SEC’s shutdown of ZeekRewards and the court’s appointment of a receiver, many have expressed frustration at the perceived lack of progress. In an apparent effort to “jumpstart” the recovery, at least one class action lawsuit has been filed by investors against ZeekRewards and Paul Burks. On another front, a group of Zeek affiliates appear to be soliciting “donations” from investors to fund litigation against the Securities and Exchange Commission in an effort to “reinstate” Zeek. While victims may mean well, it is likely that neither suit will yield any benefits.

When the North Carolina federal court appointed Ken Bell as receiver, it issued an “Order Appointing Receiver” (the “Order”) that spelled out Mr. Bell’s duties and responsibilities. Among these, Mr. Bell was directed to marshal and preserve all of Zeek’s assets. Additionally, the Western District of North Carolina was designated as the exclusive forum for any claims brought against Zeek or Burks. Besides giving Mr. Bell the sole authority to bring claims on behalf of the receivership entities, Paragraphs 32 – 34 of the Order also specifically stayed any litigation involving the Receiver, Receivership Property, the Receivership Entities, or previous employees. Courts in which those actions are filed must defer to the exclusive jurisdiction of the Western District of North Carolina before proceeding.

The Receiver also brought this up during his conference call with various members of the media today. I was fortunate enough to be permitted to listen. While stating that he had not been provided with any copies of the filed lawsuits, Mr. Bell alluded to the court-imposed litigation stay, opining that the stay likely encompassed those actions. Mr. Bell’s viewpoint is likely shared by Judge Mullen, as receivership courts do not take lightly to encroachments on their jurisdiction. If you’re wondering what a court-imposed “Stay” means, it’s a ruling by the court that halts further legal process in a case.

During the conference call today, Mr. Bell was clear that he intended to recover every possible source of funds for eventual return to victims, and the existence of competing litigation for these funds is not likely to sit well with both Mr. Bell and the federal judge presiding over the case. In addition to the unambiguous language in the Order, principles of equity also require that a small group of investors should NOT be allowed to essentially “leapfrog” the rest of investors to recover funds that rightfully belong to the receivership estate. The goal of a receivership is to treat similarly-situated victims alike, and allowing some investors to recoup a larger part of their total investment than others is contrary to this vision. If people are encouraging you to “unionize” and demonstrate “strength in numbers,” it’s certainly within your rights. However, I feel it will not yield any meaningful benefits that you are not already entitled to receive.

In short, investors are urged to have patience as Mr. Bell completes his initial investigation. A court is very unlikely to allow outside litigation to proceed that has the professed goal of enriching some investors to the detriment of others. Additionally, any funds recovered from Zeek Rewards and/or Burks are the property of the Receivership Estate for the benefit of all victims, and not just a select subset. Victims must simply sit tight while the receiver’s investigation continues and stay tuned for future updates.

In a future post, we’ll explain the likelihood of Clawback Litigation against some of the investors that actually profited from the program. Based on the receiver’s comments, it seems possible that Ken Bell will pursue this avenue to bolster the cash accounts at Zeek. In the meantime, if you have not done so already, please subscribe to receive our email updates.

Zeek Recovery, update 1

On Sunday, our law firm first published a form to solicit information from anyone negatively impacted by Zeek Rewards and seeking answers.  In response, over the last 5 days, you and over 15,000 other individuals submitted personal information to us regarding the details of your investment.  The stories are heartbreaking.  While some of you were aware of the risk, it appears that the vast majority of you were simply trusting friends and peers who introduced you to Zeek as an investment opportunity.  Some of you cashed in your 401(k)s, some of you invested college tuition money, and others invested their life savings in search of investment returns.

Many of you are personally devastated.  “Ok, now what?”

Before assembling this list of Zeek participants, we thought our role in this process would be to “get involved” by charging a small fee to each of you for legal representation.  After much consideration and debate, the answer has become crystal clear.  You’ve been through enough and probably don’t want to spend anymore of your hard earned money at this point.

During the last few days, we’ve consulted numerous professionals, including a renowned class action attorney, a ponzi scheme specialist, and a bankruptcy and receivership attorney, regarding development of a strategy to seek recovery of your investment in Zeek Rewards.  At this point, the consensus is that there is no clear legal course of action that will yield a more favorable result for you than cooperating with the receiver.  We will continue to monitor the receiver’s actions closely and will notify you immediately if we think a different course of action is needed.

With this in mind, we’ve created the Zeek Recovery site, which can be a trusted resource to assist you during your journey through the receivership process.  As part of this endeavor, we’ve assembled a roster of professionals, all agreeing to provide information free of charge on the site, as follows:

Our Commitments

  • We’re never going to charge for the information on this site.  Based on what you’ve endured, it’s just not fair.  We’re going to provide the information, free of charge, no strings attached;
  • We’re never going to provide your information to anyone, ever.  The information that you submitted on the form and continue to submit will remain strictly confidential.  Our firm, Thompson Burton, has possession of the list, and we’re not going to provide it to anyone without your permission;
  • We’re going to make it easy for you to stay informed.  All updates will be sent via email, unless you unsubscribe from this list.  We will provide you with consistent updates on Zeek, including information about the claims process, interpreting messages from the receiver, explaining court filings, important deadlines, etc.  While the receiver has published a website, it will likely only include court filings and occasional updates.  We intend to dive deeper and help you make sense of it all with interesting articles and useful information.  The receiver’s website can be found here; and
  • We’re going to provide resources to help you complete the Proof of Claim Forms.  This is the most important document in the process.  If there are any discrepancies between the receiver’s data and what you report, it gives the receiver an opportunity to reject your claim and you may not get paid.  If you would like assistance with this part of the process, you can retain us for a small fee to assist you on an individual basis.

We are humbled by your responses to our online form, and we sincerely appreciate the trust that you have placed in us.  We’re deeply sorry for the struggles many of you are enduring, and we hope to shed some positive light during this time.