Since around April 1st 2013, Kenneth Bell, the Receiver for Rex Venture Group, aka Zeek Rewards, aka Zeekler sent out a Voluntary Subpoena to over 1200 Zeek Rewards Net Winners (Click Here To Read Editorial). What we did not know then was what criteria was used to determine how much a former Zeek Rewards Affiliate much have won, to come under the watchful eye of Kenneth Bell and his team. We learned this and much more last Friday June 28th, 2013. You can review all Rex Venture Group aka Zeek Rewards Court Documents By Clicking Here!
RECEIVER’S MOTION TO APPROVE SETTLEMENT AGREEMENTS AND FOR LEAVE TO SETTLE CERTAIN CLAIMS AGAINST NET WINNERS
The following are excepts from the above linked Court Document!
In an attempt to resolve as many of the claims against net winners as possible prior to litigation, the Receiver has encouraged the Zeek “net winners” to voluntarily enter into settlement discussions with the Receiver. Most recently, after consultation with SEC counsel, the Receiver sent an email on April 2, 2013 to all those who won over $1000 notifying them of the upcoming litigation and offering to discuss settlement of the claims against them on or before May 31, 2013.
In the above, and as mentioned on PatrickPretty.com, for maybe the first time in current history, and specially in regaurds to the Rex Venture Group aka Zeek Rewards case, the receiver is going after net winners with as little as $1000 in winnings!
Patrick Pretty pointed out in his editorial the following…
URGENT >> BULLETIN >> MOVING: (UPDATED 8:05 P.M. EDT U.S.A.) From the standpoint of avoiding financial accountability, it may have become more difficult for serial scammers who foist HYIP scams on the international public to thumb their noses at law enforcement and the courts. The court-appointed receiver in the Zeek Rewards Ponzi scheme case has revealed the threshold dollar number used to determine who received emails offering a settlement: That number, according to filings by receiver Kenneth D. Bell, was only $1,000.
The lowness of the number could send shockwaves across the HYIP Ponzi universe. On well-known Ponzi-scheme forums such as TalkGold and MoneyMakerGroup, serial HYIP scammers routinely pooh-pooh court actions and claim that neither the government nor receivers will bother to seek recoveries from low-level players and “winners” in scams.
Confident that they’ll never be held accountable, some purveyors move from one HYIP fraud scheme to another.
Let’s look at a few other highlights from the above Court Document…
When claims are brought against Ponzi scheme investors, “the general rule is that to the extent innocent investors have received payments in excess of the amounts of principal that they originally invested, those payments are avoidable as fraudulent transfers.
Donell v. Kowell, 533 F.3d 762, 770 (9th Cir. 2008); In re United Energy C01p., 944 F.2d 589, 596 (9th Cir. 1991) (Ponzi scheme winners should not be permitted to “enjoy an advantage over later investors sucked into the Ponzi scheme who were not so lucky.”) See also SEC v. Infinity Group Co., 993F. Supp. 324, 331-32 (E.D. Pa. 1998), affd, 212 F.3d 180 (3d Cit. 2000) (disgorging innocent third parties’ gains in a Ponzi scheme for distribution to defrauded investors).1
1 Indeed, several courts have ordered that winning investors’ profits and principal should be divided pro rata among all investors. See SEC v. George, 426 F.3d 786,798-99 (6th Cir. 2005) (ordering winning investors to return profits and principal because “hundreds of other investors were victimized by this scheme, yet they will recover only 42 percent of the money they invested, not the 100 percent to which the relief defendants claim to be entitled”); SEC v. Credit Bancorp, Ltd., 290 F .3d 80, 89 (2d Cir. 2002) (“[T]he use of a pro rata distribution has been deemed especially appropriate for fraud victims of a ‘Ponzi scheme,’ … in which earlier investors’ returns are generated by the influx of fresh capital from unwitting newcomers rather than legitimate investments.”)
I have received many contacts from folks who have been scared, feeling that people will think they were criminals or trying to do something illegal. In the above paragraphs, it is clear, that being called a “net winner” doesn’t necessarily mean one was knowingly part of an illegal ponzi. However, it does make it clear, that when one is part of the winning class of an illegal ponzi scheme, they will need to give up their winning profits.
Each of the settlements recites the acknowledgement of the Zeek winner that he or she received a fraudulent transfer from Zeek, although there is no admission of personal wrongdoing.
Many people have asked “if I accept agreement does it mean I have done something wrong. In the above paragraph, it is clear the receiver, in accepting agreements, is more interested in recovering assets of the estate, than trying to cause undo mental or financial harm against any Zeek Reward net winner.
Now, I am not sure the same will be said against those who have not willingly come forward to work with the Receiver. As this case proceeds, and the new subpoenas come out, the Receiver has made it clear, NO MORE DEAL! Now I think he is going to play hardball.
2 Some of the settlement agreements involve family members with two or more accounts where some of the accounts won money and the others lost. In those situations, the losing account holders have agreed to forego their opportunity to make a claim as a Zeek victim (or make a claim in a limited amount) in return for the Receiver’s agreement to offset a portion of that claim against the liability of their relative’s winning account. These settlements are referred to as “walk away” agreements in the list of settlements attached as Exhibit 2.
Many former Zeek Rewards Affiliates have mentioned additional accounts under the names of friends and family. Some have even said they gave cash and financial instruments to their upline sponsors. Well in the above paragraph we can at least see that the receiver, is not allowing anything to slip through the cracks. He and his team are looking at every possible way net winners might manipulate the claims process to keep some of the profits.
The Zeek Ponzi Scheme will likely give rise to numerous claims and causes of action on behalf of victims and the Receivership Entities, including claims against numerous defendants seeking to avoid and recover fraudulent and preferential transfers made as part of the scheme. The Receiver believes that RVG’s basic legal claims to recover net winnings from those who profited from Zeek are strong and straightforward; yet, Zeek itself was an extraordinarily large and complex scheme which will unavoidably create complexity in the litigation to· assert those claims. The Receiver intends to pursue those claims both individually and as class claims in the manner that will be most efficient. But, litigation against thousands of net-winners will still involve substantial costs. So, while the Receiver believes there is a significant likelihood of success, the path to obtaining Judgments against the Zeek “net-winners” may not be quick or easy, and early settlement of at least sonie of the claims without the expense of litigation is worthwhile.
Notice in the above paragraph one very important sentence… “The Receiver intends to pursue those claims both individually and as class claims in the manner that will be most efficient. Maybe for the first time we can see the Receiver is indicating he will go after the remaining Zeek Rewards Net Winners “individually and as a class.” This will make for an interesting situation for those who feel they can escape justice, may find that Kenneth bell and his team will not sleep until they know they have done all they can to make things right for the net losers.
As discussed, the proposed Settlement Agreements will minimize the risks, costs, and delay of litigation with the settling “net-winners” and the costs and risks of collection. The Receiver believes the settlements reached as part of the negotiation process are fair and equitable and that even with the expenditure of additional funds to obtain a judgment there is not a likelihood of a materially increased recovery for the eventual distribution to the Zeek victims. Further, these settlements minimize the burdens on the Court and the “net-winners” who want to resolve the claims against them promptly and fairly. In sum, these settlements provide an immediate and concrete benefit to the RVG estate in a fair and efficient manner.
Although, there are actions that have been allowed under law, that I question, such as the depositing of certified funds by the receiver after the closure of Rex Venture Group, I have to commend his move in doing all he can to preserve and add to the estate through the above mentioned settlements.
There have been millions of lives disrupted by the Zeek Rewards sage, and at least hundreds of thousands who have been financially effected in one way or another. So the faster this case can come to a close and the net losers made whole the better for all.
Click Here to Review EXHIBIT 2