by on August 20, 2013 Leave a Comment

SUBMIT YOUR CLAIM FORM!

keep-calm-and-please-hurry-upThis is likely going to be our last post / email blast regarding Zeek Rewards. It has been a little over a year since the company was shut down by the SEC. I know the company’s demise resulted in a lot of frustration, anger and pain. I’ve talked with people that literally lost their entire life savings. I’ve even talked with people that walked away with six figures in earnings and blew it all on frivolous expenses, stressing over ways to pay it back. Bottom line: it was bad for a lot of people.

But for those of you that lost money, there’s an opportunity to get most of it back. SUBMIT YOUR CLAIM! The receiver is charged with doling out the funds to the net losers in a fair and equitable fashion. He’s not able to do it unless you submit your claim. The deadline for the submissions is September 5. In his most recent letter sent two weeks ago, Ken Bell said,

If you have not completed and fully submitted a claim through the Receiver’s online Claim Portal or through alternative means expressly authorized by me in writing prior to 11:59pm prevailing Eastern Time on September 5, 2013, your claim will not be counted and you will not receive a distribution on account of any amounts that Zeekrewards may owe you.

The official website for the claims process is: http://www.zeekrewardsreceivership.com/. There’s a “FILE A CLAIM” button right in the middle of the site. Push it. Since it’s in electronic format, the submission process could not be any simpler. This firm actually considered helping participants file their claims. But the online portal is so simple, there’s just not much for us to do. Please submit your claims before the deadline. According to the receiver, hundreds of thousands of participants have not filed their claims. And when you submit your claims, try to follow the instructions as closely as possible. If you miscalculate your investments in Zeek, it may result in serious delays and / or a rejection of the claim.

Promises Made / Promises Kept

When we first created this site, we made four commitments: (1) we were going to provide the information for free; (2) we were never going to use your email address for anything other than posts from this site; (3) we were going to make it easy for you to stay informed; and (4) we were going to help with the claims process. The 4th commitment is a moot point. The online claim portal is simple. We’ve honored the other three. I want to send a special thanks to all of the contributors on this site: Walt Burton, my law partner; Jordan Maglich, Ponzi Tracker; Phillip Young, bankruptcy attorney and receivership specialist; and Len Clements, MLM consultant.

If you want to stay informed on what’s happening in the MLM industry, please provide your email address below. I’d love for us to stay in touch. If you’re getting this message via email, please click the link to subscribe to my newsletter.


Sincerely,

+Kevin Thompson

Ken Bell’s most recent update can be found below. If you’re reading this in your email inbox, it can be found here.

Filed Under: Blog, Claim Form, Ponzi Scheme, Receivership Tagged With: , , ,
by on March 29, 2013 Leave a Comment

Zeek Receiver Seeks Approval of Claims Process, Notice Procedures, and Proof of Claim Form

The court-appointed receiver overseeing the $600 million ZeekRewards Ponzi scheme has filed a motion seeking approval of a claims process to compensate what could be nearly 1 million victims.  In a 21-page motion (the “Motion”), the receiver, Kenneth Bell, seeks court approval for the proposed procedures and manner of filing claims to be used by victims, as well as the use of an online claims submission form. Victims would be notified by email, would have 120 days from the Order approving the Motion to submit their claims, and any late-filed claims would be disallowed in their entirety.

The Proposed Claims Process

In the Motion, the Receiver estimates that while approximately 1 million affiliates paid money into Zeek, over 800,000 suffered losses, and the remainder were fortunate enough not only to recoup their principal investment but may also have profited.  Should the Court approve the Motion in its current form, the Receiver proposes that he will provide notice to all interested parties via several methods:

  1. Making the Claims Process publicly available on the Reeiver’s website at a soon-to-be-functional Claims Portal;
  2. Emailing all known affiliates through email addresses obtained from Receivership records and collected at the Receiver’s website;
  3. By U.S. Mail to trade creditors and other known, non-affiliate creditors; and
  4. Publishing the Receiver’s Notice on the Receiver’s website, certain multilevel marketing sites, certain newspapers, and sending the Notice to certain trade groups in the financial industry.

As previously alluded to in earlier articles on Ponzitracker, the Receiver cites the “great cost” of serving the over-2 million claimants by any other method and seeks court approval for the proposed notice procedures.  As a last resort, should an email be found to be no longer valid, the Receiver will attempt service of the notice by an alternative method, which includes a different email address or postcard to the last known address.

Within 14 days of court approval of the Motion and included in the court-approved notice to claimants, the Receiver proposes to have a Claims Portal active on his website, www.zeekrewardsreceivership.com.  According to the Receiver, the Portal is “designed to capture the claims of all Claimants…in the most cost effective way possible.”  Thus, all claimants, whether affiliates or non-affiliates, should files claims at the Claims Portal.  Indeed,

Failure to submit a validly completed claim on the Claim Portal (or by alternative means that are agreed to between such Claimant and the Receiver prior to the Bar Date) will preclude a Claimant from receiving a distribution from the Receivership Defendant regardless of the validity of the Claimant’s claims.

The Receiver proposes that, if a Valid Proof of Claim is not received by any claimant within 120 days from the date of the Order approving the claims process, that claim shall be forever barred and precluded from sharing in any distribution.  As the Receiver has already collected over half of what he estimates are the $500-$600 million in losses, this could be a substantial penalty for those who fail to timely follow the claims procedures.

The Claim Form will allow each claimant to upload supporting documentation, if any, for its claim that may be helpful to the Receiver and his team.  The failure to provide any documentation will not automatically cause that claim to be disallowed, but could delay approval – and payment – of the claim. Before submitting any claim, each claimant will be required to attest under penalty of perjury that the supplied information is accurate.

VIP Points Not Allowed

One issue of note is the Receiver’s proposal to omit any inclusion of “Retail Profit Points” or “VIP Points” in the calculation or determination of any claim.  Akin to interest, the VIP Points were accrued by purchasing sample or VIP bids and then re-distributing them to retail customers or back to Zeek.  The VIP Points then allowed the affiliate to participate in the daily percentage payout from Zeek, which averaged approximately 1.5%.  As is universally understood in other receiverships, victims of Ponzi schemes are entitled only to their lost principal balance, and not to any fictitious interest (or, in this case, points) that they may have accumulated.  Indeed, especially since the vast majority of Ponzi schemes are unable to accomplish a total return of victim losses, allowing interest as part of a valid claim would reward some victims at the expense of others.

A copy of the Motion is here.

See below for a copy of the proposed online Claim Form. If you’re reading this via email, click this link to see the claim form.

Filed Under: Blog, Claim Form, Ponzi Scheme, Receivership Tagged With: , , ,
by on December 18, 2012 2 Comments

Zeek Receiver Updates Investors On Recovery Efforts, Has Harsh Words For Opposition

NOTE: The domain for the Thompson Burton Zeek Recovery site has been relocated to: www.thompsonburton.com/zeekrecovery. If you’re receiving updates via email, nothing will change. Jordan Maglich provides a great update below about receiver’s conference call with Zeek participants. In summary, the information presented on this site has been accurate to date. Zeek Rewards is not coming back. If you are a net winner, ignoring the subpoena or fighting the receivership is ill-advised. Lawsuits WILL be filed. If you lost more than you spent, organizing with net-winners is not in your best interest. As stated by Ken Bell, there’s an obvious conflict. The needs of the net winners and net losers are completely different. +Kevin Thompson

Zeek Receiver Updates Investors on Recovery Efforts

The receiver appointed to recover assets for victims of the massive $600 million ZeekRewards Ponzi scheme hosted an hour-long conference call earlier this evening in which he provided new updates on the eve of the four-month anniversary of his appointment.  In the call, Receiver Kenneth Bell revealed a wealth of new information, including estimates on total recoveries, the establishment of a claims process, and the number of victims and clawback targets.  Mr. Bell also addressed several recent filings challenging his authority and the legitimacy of the receivership, dismissing them as “absurd.”

With the benefit of now having several months to comb through financial records and other documents detailing the inner-workings of Zeek, Mr. Bell provided an update on loss and victim figures.  First, Mr. Bell estimated that approximately 840,000 affiliate ID’s invested more with Zeek than they withdrew.  Conversely, Mr. Bell estimated that 77,000 affiliate ID’s were fortunate enough to withdraw an amount in excess of their total investment.  In total, and in adherence with previous estimates, Zeek investors suffered collective losses of approximately $500 million to $600 million.  Since his appointment, Mr. Bell has secured the recovery of over $300 million – with a majority of that recovery consisting of funds returned from various financial institutions.

Claims Process

One of the most popular topics was the establishment of a claims process in which investors could eventually be permitted to receive distributions based on their loss amounts.  Mr. Bell stressed that he is working strenuously to institute a claims process, which would first require the submission of a proposed claim form and procedure to United States District Judge Graham Mullen.  According to Mr. Bell, he has set an internal deadline of submitting this information to Judge Mullen by January 31, 2013.  Once the claims form and procedure receives court approval, the claims form will likely be posted to the website and distributed to victims, who will have until a court-imposed deadline by which to submit relevant requested information.  The claim form will also specify what proof is required to substantiate claims. Upon the approval of claim forms and submission by victims, Mr. Bell also indicated his preference to proceed with an ‘interim’ distribution rather than waiting to make one final distribution at the end of the Receivership.

Clawbacks

Another popular topic was the issue of “clawbacks” against those ‘net winners’ that were fortunate enough to profit off their investment by withdrawing funds in excess of their investment.  The Receiver sent out a first wave of 1,200 subpoenas to those ‘net winners’ that were deemed to have profited most off Zeek.  According to Mr. Bell, “scores” of investors responded in a cooperative manner seeking to pay back their false profits.  However, a “whole lot” of recipients have also fought back against the requests for information.  If the Receiver is not able to reach an amicable resolution with each clawback target, he will likely proceed with the filing of a lawsuit.  The Receiver took steps last week to ensure that he may properly bring clawback lawsuits in various federal districts around the United States by filing a copy of the SEC Complaint and the Order Appointing Receiver in districts where clawback suits are likely under 28 U.S.C. 754.

Opposition Efforts

Mr. Bell also addressed the various recent filings that have sought to both contest his authority as receiver and challenge the SEC’s decision to shut down Zeek in the first place.  This included the filing by Fun Club USA of a motion seeking the appointment of an examiner, as well as a filing by several clawback targets seeking to dissolve the Receivership.  Mr. Bell saved his harshest words for these efforts, calling them “absurd” and disputing their accuracy.  As to the motion for appointment of examiner, Mr. Bell pointed out (as Ponzitracker did here) the inherent conflict of interest that would present itself since the nominee for examiner currently represents “several hundred net winners,” as well as the implications of paying such an examiner out of receivership funds.  Mr. Bell also indicated he will oppose the  motion seeking the dissolution of the receivership, saying that the “receivership is here to stay,” and represented the only and best way to make victims whole.

In closing, Mr. Bell stated that his goal was to ensure that the Receivership was the most cost-effective Receivership to date, and urged victims to regularly check his website, www.zeekrewardsreceivership.com, for updates.  A copy of the conference call is expected to be available on the website as well.

Filed Under: Blog, Claim Form, Ponzi Scheme, Receivership Tagged With: ,
by on November 4, 2012

Receiver’s Zeek Liquidation Plan

Update from Thompson Burton

One of our contributors, Phillip Young, has provided great insights about the Receiver’s recent communications. Soon, approximately 1,200 subpoenas will be sent to the “net winners” in Zeek Rewards. These subpoenas will request information about their involvement in the program and likely contain a demand for a return of the gains. In our opinion, there’s a conflict if a firm represents both the net winners (people that made more than what they spent / invested) and the net losers (people that made less). The conflict exists because the net losers want the cash pot to be as large as possible for purposes of the distribution i.e. they need the net winners to pay into the pot. On the other hand, the net winners want to maintain their funds. This is normal in this sort of matter.

Phillip Young has served as a Receiver on several occasions and he’s uniquely positioned to help the “net winners” served with a subpoena negotiate a settlement and/or fight against the clawback actions. As for our firm, Thompson Burton, we made the decision months ago to focus on helping the net losers recover their funds by way of the claims process. When the Receiver publishes a claim form for the Zeek participants, which should be soon, we’ll offer the valet service to help with the recovery process.

One final update: we made a commitment on day 1 to maintain your information in the strictest of confidence. If you completed a form and provided your information to us, the information has never been shared with anyone, including with any of the other contributors. The information is being used solely to assess the damages and build a subscription list for this site only. +Kevin Thompson

Receiver’s Zeek Liquidation Plan

On October 8, the Zeek receiver filed what he called a “Preliminary Liquidation Plan.” In reality, it was more like an analysis of the company and a status update rather than a liquidation plan. Nevertheless, there were several interesting tidbits buried in the 26-page pleading:

• There were approximately 2.2 million users in the ZeekRewards system, 1 million of which paid money into the program.

• The receiver has recovered $293.7 million in cash for the Zeek receivership estate, plus he has seized two commercial properties in North Carolina which Zeek owned free-an-clear. The value of this real estate is unknown.

• The receiver indicates that there is at least one foreign bank account holding an unknown amount that has not been seized.

• The receiver has disbursed approximately $56,000 for ordinary operating expenses (such as payroll, utilities, taxes, etc.) and he anticipates distributing another $922,000 for operating expenses incurred by Zeek prior to the receivership. This does not include the expenses of the receiver or his legal counsel, which will be very significant.

• Since the receivership began, the receiver has attempted to deposit over 60,000 payments from Zeek investors, totaling approximately $100 million. Almost 20% of those attempted deposits were dishonored by the banks, primarily because the check makers issued a stop payment on them. The receiver reports in his update that, with court authority, he is re-presenting these checks for payment and expects all banks to honor those checks.

• The receiver made clear in his update that he will aggressively pursue legal claims against third parties, including officers, employees, participants, professionals and others who benefitted from this ponzi scheme.

• The receiver goes into some detail about his pursuit of clawback claims, against “net winners” (i.e. those Zeek participants who received more in returns than they paid into Zeek). It is clear that these clawback claims are receiving much immediate attention. (For a more complete discussion of the clawback claims, see “What does this mean for net winners” below).
The receiver’s recent update gives us some idea as to the size of the receivership, assures us that there should be assets available for distribution to creditors, and allows us a glimpse into what the receiver views as his most pressing duties. As far as what this update means, it means different things to different classes of Zeek participants.

WHAT DOES THIS MEAN FOR NET WINNERS?

A “net winner” is someone who received more money from Zeek in returns than he/she originally invested. For example, if you invested $10,000 into Zeek and received distributions of $12,000, you are a net winner on your investment. The receiver’s “Preliminary Liquidation Plan” is all bad news for the net winner. The receiver clearly considers any positive returns on a Zeek investment to be a fraudulent transfer, and his pleading indicates that he plans to immediately pursue the return of those funds. In fact, as of the writing of this article, we believe that over 1200 demands have been sent out to net winners, with accompanying subpoenas. If you are a net winner, you should expect to receive a demand letter from the receiver with a threat of litigation. While I have not seen the demand letter, it is likely that the receiver is demanding the immediate return of all or a substantial portion of the “return on investment” received by a net winner. Having represented receivers and bankruptcy trustees frequently, it is my experience that a receiver will begin with a very aggressive demand accompanied by a threat of litigation in hopes that he can scare a large portion of potential defendants into an immediate settlement. Often, the receiver will negotiate down from that aggressive demand. If you receive a demand letter from the trustee, you should carefully consider your options. Should you immediately pay the trustee’s demand and avoid future litigation expenses, or should you refuse and hope to negotiate a more favorable settlement as the process unfolds? These are options you should discuss with your legal counsel, especially if you receive a demand for a significant sum of money.

WHAT DOES THIS MEAN FOR NET LOSERS?

A “net loser,” as I will use that term in this article, means someone who invested more money into Zeek than he/she received in return. For example, if you invested $10,000 into Zeek but only received distributions of $5,000 in return, you are a net loser on your investment. The receiver’s “Preliminary Liquidation Plan” provides good news / bad news for the net loser. First the bad news: If you sent a payment to Zeek which you later attempted to freeze or stop payment, chances are that your bank is going to honor that check. The receiver asked for (and was granted) approval from the court to force banks to honor dishonored checks, as many of us anticipated. If you attempted to stop an uncashed check, you should contact your bank to determine whether it has been, or will be, honored.

Now for the good news: it seems very likely that there will be significant assets available for distribution to Zeek creditors, including net losers. There is no indication that creditors will be paid in full, but the receiver has already collected nearly $300 million before what seems to be rather aggressive litigation (which could result in more assets). While the claim process has yet to be established by the receiver, net losers should begin collecting bank records, credit card records, Zeek statements, and any other documents that will assist them in proving the amount of loss they have suffered as a result of Zeek investments. After all, it will be the creditor’s duty to prove the losses he/she has suffered. If a net loser’s losses are significant, he/she might want to consider retaining legal counsel to assist in preparing the proof of claim and its supporting documentation. The receiver has offered little guidance on how or when he plans to conduct the claims process.

Filed Under: Blog, Receivership Tagged With: , , ,
by on September 13, 2012

SEC Admissions Of Weakness In Zeek Case “Inaccurate”; Tactics and Motivations of Zeek Victim Group Questioned

The update below was prepared by Zeek Recovery contributor, Jordan Maglich. In summary, we strongly encourage everyone to be patient with the process. Zeek Rewards is NOT coming back. There’s no value in donating money to cover someone else’s legal bill. This is especially true if you lack information regarding the personal benefits of the effort (assuming there are any), lack information regarding how the money is spent and lack information regarding the law firm being retained. If it’s possible, we suggest you request a refund for your donation made pursuant to this effort. As we’ve written in the past, there’s no benefit for a group of people to retain a law firm and negotiate en masse. The receiver is going to treat all victims equally, regardless if a few hundred or thousand have retained a similar lawyer. In the event of class action litigation, the benefits will be distributed evenly to the entire class, regardless if the victims have “donated” to the effort. +Kevin Thompson

Jordan’s article is below:

On August 17, 2012, the Securities and Exchange Commission (“SEC”) filed an emergency enforcement action to shut down ZeekRewards (“Zeek”), calling it a massive $600 million Ponzi scheme.  According to the SEC, while Zeek promised participants a daily payout of “net profits,” these profits were nearly exclusively derived from the funds of new investors – the classic hallmark of a Ponzi scheme.  At the SEC’s request, the court then approved the appointment of Ken Bell as the receiver, who would be tasked with gathering and safekeeping assets for eventual distribution to victims. 

Emotions have run high since Zeek’s shutdown, as many lament their losses amid what was such a promising operation that seemingly defied the age-old “if it’s too good to be true..” mantra.  However, a select (and growing) group has taken their dissatisfaction to another level, soliciting the assistance of other victims to fight the “illegal” and “unlawful” actions taken by the SEC.  While their rousing rhetoric is critical of the SEC, recent representations made regarding the SEC’s handling of the case may have crossed the line from opinion to misrepresentation.  Indeed, an SEC official briefed on the claims by Ponzitracker explicitly refuted such allegations.

Shortly after the SEC stepped in, several groups, including “Zeek Rewards Affiliates United Against The SEC” and “Zteambiz” were formed, and appear to operate in tandem.  Zteambiz describes itself on its website, www.zteambiz.com, as “a professional organization designed to secure competent legal counsel to prevent further damage caused by the actions of the SEC actions against Rex Venture Group aka, Zeek Rewards.”  Dave Kettner and Robert Craddock are several of the individuals behind these sites, as evidenced by multiple postings attributed to them.  Using the site, both have solicited Zeek victims to “donate” towards a fund being set up to retain a top law firm to fight the SEC’s allegations and reopen Zeek.   A September 5, 2012 update from Kettner implored victims to donate if possible to be added to the “protected group.”  The response seems to have been positive, and on August 30, 2012, a notice was posted indicating that SNR Denton, a well-known international law firm, had been retained:

“Important notice:

SNR Denton US LLP represents Fun Club USA and all inquiries about this representation should be directed to Fun Club USA at xxxxxxxxx. SNR Denton’s legal representation is limited to Fun Club USA; SNR Denton does not represent and does not have an attorney-client relationship with affiliates of Zeek, Zeek Rewards, Rex Venture Group LLC or with any individual or party that chooses to provide funds to Fun Club USA.”

The notice is seemingly at odds with representations contained in the “People Helping in the Legal costs” tab on Zteambiz, which indicated that those who had donated – numbering over 6,000 as of September 1, 2012 when it was last updated – were “now being represented by counsel, to protect their moneys (sic) earned by Zeek Rewards and monies currently held by Zeek Rewards.”  The notice, which has since been removed, was clear that “SNR Denton’s legal representation is limited to Fun Club USA.”  A quick search on Florida’s Division of Corporations website yielded a “Fun Club USA Inc.” registered on August 28, 2012.  The President of Fun Club, as shown on its Articles of Incorporation  Robert Craddock. 

Zteambiz has been vocal in its criticism of the SEC, alleging that “all the pages that were submitted…by the SEC that froze the assets of Rex Venture Group, LLC has all been one sided and what we believe to be a misrepresentation of the truth and facts of what Zeek Rewards was as a viable and legal business.”  Additionally, Zteambiz claimed that “the SEC mislead (sic) the judge” in securing an emergency asset freeze.

This past Saturday, an email from “Dave” updated recipients based on information recently learned from Craddock.  One of the first revelations was that SNR Denton had decided to no longer represent Zeek, reportedly due to the “tons of calls” received by the firm from victims that interfered with Denton’s “entire law firm operations.”  A new law firm was said to be in the works, whose identity would remain a secret until court filings were unveiled “early next week.”  What piqued the interest of many, however, were the representations made immediately after.  The paragraph is reproduced below:

Here is the great news…The law firm has already talked to the SEC and the NC DOJ. On Thursday, Robert got a call from one of our attorneys regarding the conversation that he had with the SEC. Here
is what he said:

The SEC acknowledged that there are a couple of problems with the case against Zeek Rewards and Rex Venture group. Here are the problems:
1.    We (the SEC) are not able to find a victim in this case. We are not able to find anybody at this time that has been harmed by Zeek Rewards.
2.    We (the SEC) are having a hard time finding a security. In the complaint, it said that Zeek was selling securities and was an investment scheme.
Based on their (the SEC) new knowledge of the Zeek Rewards business model, they are having a hard time moving forward in making their case. And they are now looking for a path or way to back out of this.

These apparent admissions by the SEC quickly spread over the internet, with dozens of websites frequented by the multi-level marketing community accepting the statements as fact and quickly proclaiming that the SEC was close to capitulating.  

The claims seem skeptical for several reasons.  First, it is highly unlikely that these kind of admissions would be made to a potentially adversarial party and/or attorney.  Second,  both Rex Venture Group and Paul Burks have each already entered into a consent judgment agreeing to waive any right of appeal, and, in Burk’s case, paying a $4 million civil penalty.  Further, a link to an information page established by the SEC now features prominently on the SEC’s homepage, www.sec.gov.  

These suspicions were confirmed today after Ponzitracker spoke with a top SEC official familiar with the case.  After reviewing the allegations, the official, who declined to be named, labeled the statements as “inaccurate” and “false”.  Additionally, it would be highly impractical for the SEC to make such moves and statements without allowing the receiver to complete his initial investigation and make appropriate recommendations.

Filed Under: Blog, Ponzi Scheme, Receivership Tagged With: , , ,
by on August 28, 2012 1 Comment

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.

Filed Under: Blog, Ponzi Scheme, Receivership Tagged With: , , , , ,