Zeek Rewards Court Update: First Claims Filed & Judge Denies Motion For Examiner

LegalPerspective

Back in November of 2012, Fun Club USA, Inc., David Sorrells, David Kettner and Mary Kettner (“Movants”) file this Motion to Appoint Representative for the Affiliates of Rex Venture Group, LLC., aka Zeek Rewards, aka Zeekler because they felt that the Receiver, Kenneth Bell might do something sneaky. They asked the judge to appoint their personal attorney to represent both the “net winners” and the “net losers” in the case. This week the Judge ruled on this motion denying it! Jordan Maglich has written a solid piece explaining what has taken place.

Below is the perspective Jargan Maglich wrote…

Zeek Judge Denies Request For Appointment of Examiner, Has ‘Utmost Confidence in Receiver’s Efforts’

In a terse but strongly-worded order issued earlier today, the federal judge overseeing the $600 million ZeekRewards Ponzi scheme refused to appoint a separate examiner to essentially supervise the court-appointed receiver’s efforts, finding such an action would be duplicative and “cause unnecessary and significant depletion” of receivership assets. A group of ‘net winners’ – those who were fortunate enough to profit off their Zeek investment – had filed a motion seeking the appointment of, ironically, their own lawyer as a purported “voice” of all investors. However, United States District Judge Graham C. Mullen summarily rejected this request, noting that it would be impossible for an examiner to represent the interests of both the net winner and net loser affiliates.

As examined in depth in this Ponzitracker article, the ‘victims group’ Fun Club USA had sought to have their attorney, Michael Quilling, appointed as an examiner and compensated out of the receivership estate. As examiner, Quilling would essentially act as a voice for all interested parties. As I explained previously, and as Judge Mullen implies, this could represent a serious conflict of interest, as the best interests of those who profited from their investment are, not surprisingly, much different than those who lost some or all of their investment:

A potential issue with the Examiner Motion lies with the choice of Fun Club’s attorney, Michael Quilling, as Examiner. Quilling has already entered his notice of appearance in the SEC enforcement proceeding on behalf of Fun Club, which is comprised of several individuals widely thought to have profited from their participation in Zeek. Thus, those ‘net winners’ obviously have contrasting positions to those ‘net losers’ whose hopes of a full recovery rest in large part on the successful recovery of those ‘false profits’ paid to net winners. This apparent conflict of interest is magnified when considering that the Examiner’s recommendation to the Court of the position of investors could, at the least, be questioned as having any apparent or direct bias towards those previous (or current) individuals who have opposed the Receiver’s efforts to pursue clawback litigation.

Additionally, the appointment of an examiner would also cause the unnecessary duplication of efforts currently being performed by the receiver, Kenneth Bell. Compounded with the fact that the examiner would be compensated with funds out of the receivership estate – which would reduce dollar-for-dollar those funds available for eventual distribution to victims – such a move would seem to have no real purpose but to complicate the receiver’s efforts and line the examiner’s pockets. Judge Mullen echoed this opinion, expressing confidence in Mr. Bell’s efforts thus far and noting his diligence in preserving and maximizing assets.

Indeed, the move to appoint an examiner should be seen for what it truly was – a thinly-veiled attempt by those who profited from Zeek to delay, stall, and further avoid their day of judgment. While those net winners are content to employ a variety of tactics to frustrate the receivership’s efforts, many fail to make the connection that efforts by the receiver and his team to defend these tactics not only divert manpower away from legitimate issues, but only add to the legal costs of the receivership. Further, and perhaps most ironic, the war chest funding these efforts has likely been funded through the solicitation of more than $100,000 from victims in the immediate aftermath of Zeek’s closing for the vague cause of fighting the Receivership and restoring Zeek.

A link to Judge Mullen’s Order is here.

A special thanks to ASDUpdates, which maintains a comprehensive Zeek blog and database of court filings available to the public.

Zeek Rewards News: Receiver Kenneth Bell Holding Public Q and A Call

Kenneth D Bell

Kenneth Bell the Receiver appointed to oversee the liquidation of what has been called the world’s largest ponzi based on the fact over 2.2 million people joined Zeek Rewards to market the penny auction known as Zeekler.com, has called a special public question and answer call next Monday December 17th, 2012 at 5:00pm Eastern time.

Zeek Rewards News Flash: Special Q &A Call By Receiver

Zeek Rewards News: New Motion Filed To Un-Freeze eWallets – Seems To Be a Day Late Due To Mis-Communication Issues?

lawyers

The attorneys for Robert Cradock, Fun Club USA, David Sorrells, David Kettner, and Mary Kettner filed a motion yesterday December 11th, 2012 to stop the transfer of funds from the eWallets of Sorrells, Kettner and all other former Zeek Rewards affiliates. However, what is interesting is that NXSystems has been keeping each account holder informed on the facts. (Click Here to Read.)

Click Here For More Info On This Special Call Next Monday, December 17th, 2012 at 5pm Eastern. 

To read the current Motion and supporting Briefs and all the other Court Documents (Click Here)

 

I also one of friends who had just joined Zeek Rewards has been keeping me informed on their personal situation.

—–Original Message—–
From: Information Center [mailto:info@nxpay.com]
Sent: Tuesday, December 11, 2012 1:28 PM
To: (Edited By Troy Dooly)
Subject: NEW Notification for: (Edited by Troy Dooly)

More info for you Troy…

Here’s confirmation funds were transferred from Rex Venture Group and made available in my NXPay account for transfer back to my bank account….. Whoo hoo!!!!! J

Rex Venture Group has transferred funds to your account.

Account Number: (Edited By Troy Dooly)

Amount : 9999.50 USD

Thank You for choosing us

Please do not reply to this email address; for any questions or support issues please visit http://www.nxpay.com/client/ClientSupport.jsp

The Next Email…

From: (Edited By Troy Dooly)
Sent: Tuesday, December 11, 2012 5:10 PM
To: Troy Dooly
Subject: RE: More News for You!!! FW: NEW Notification for: “Name Removed”
Importance: High

Troy,

Here’s the last bit of information I have for you, which confirms the transfer of my funds associated with RX Venture Group to my bank account. 🙂 Important to note these funds were never used to purchase any goods and services from ZeekRewards.

I hope this information will be of some value to you…and will give your readers some hope that things are slowly moving forward.

This is what I had to agree to before transferring my funds associated with RX Venture Group to my bank account:


ACH AUTHORIZATION

By clicking submit, you hereby authorize NxSystems®, Inc. to initiate a one-time electronic transfer of funds via the Automated Clearing House (ACH) system between your NxPay® Account to the bank account at your Financial Institution as identified, and in the amount specified, below. In order to complete this transaction, you must: (1) be the owner or authorized signer on both the NxPay® Account and your bank account at your Financial Institution; and (2) you must agree to the terms and conditions of this ACH Authorization.

You understand and acknowledge that the sole purpose of this electronic transfer is to return funds that you placed in your NxPay® Account and did not use to purchase any goods and services from ZeekRewards. In the event you believe in good faith that you have a legitimate claim to any additional funds that are or were located on your NxPay® Account for goods and services purchased from ZeekRewards, including, but not limited to, commission payouts, fees or charges, or chargebacks, we encourage you to seek reimbursement from the Temporary Receiver of ZeekRewards’ assets. You can initiate this process throughhttp://www.zeekrewardsreceivership.com/.

You expressly understand and acknowledge that in consideration for this electronic transfer of funds, you will unconditionally abide by the terms and conditions of that certain User Agreement, by and between NxSystems®, Inc., located at NxPay.com®, which, among other things, specifically provides that: (1) you will not initiate any chargebacks against your NxPay® Account; and (2) in the event you do initiate a chargeback, NxSystems®, Inc. has the right to retrieve any disputed funds by bank transfer along with a penalty fee. In addition, you agree to indemnify, hold NxSystems®, Inc. harmless, and waive all rights to file or have filed any legal action of any type against the Company, its owners, officers, or members, employees, and affiliates and you shall never seek additional monetary reimbursement from NxSystems®, Inc. in any shape, form, or fashion in regards to processing payments. This authorization is to remain in full force and effect for this electronic transaction only. If you wish to rescind this authorization and cancel this deposit, or the amount deposited is different than the amount authorized herein, you may call 503-513-9900 during the following business hours: Monday through Friday, 8 am – 5 pm.

Date: 2012-12-11

The Next Email…

From: Troy Dooly
Sent: Tuesday, December 11, 2012 5:31 PM
To: (Edited By Troy Dooly)
Subject: RE: More News for You!!! FW: NEW Notification for: “Name Removed”

Can you tell me if you would be classified a net winner or net loser based on the current case?

I want to make sure I report correctly?

T,

I guess, all in all, a net loser.

I base this on the fact I purchased the Platinum membership package and paid the one time membership fee via credit card. Then I started the 5-7 process of transferring my “initial” funds of $10,000 to participate in the program. My funds were classified as “pending” status in NXPay for 5 to 6 days, then the day RVG was shut down (approximately 3 hours before the news hit the internet), the funds changed to “available” status. For some reason, (and I’m still not sure why), I didn’t immediately act on transferring the funds to RVG. Must have been an angel watching over me that day because I was so close to hitting transfer to RVG several times within the 3 hour window before finding out the news.

Hope this info helps in some way…. 🙂

-t

End of Email…

Now there is no way until the Court decides to hear this motion, what the interpretation of the eWallet issues will be.

But from this reporters viewpoint, it seems that the regular course of business has taken place and those who should never have had their accounts frozen are not getting them released.

The outstanding question that is still here is… “Will the frozen funds of the “Net Winners”, those above and others get their funds released, or will they find an official Subpoena not showing up on their front porch?