ASDUpdates.com

My Journal of Internet Schemes/Scams and things that really annoy me

Zeek Rewards: US Attorney Press Release, Paul Burks Indicted!!!

Posted by ASDUpdates on October 24th, 2014

ZeekRewards President Indicted On Federal

Charges For Operating $850 Million Internet

Ponzi Scheme

FOR IMMEDIATE RELEASE
October 24, 2014
United States Attorney Anne M. Tompkins Western District of North Carolina

CHARLOTTE, N.C. – The president of ZeekRewards, Paul Burks, has been indicted on federal charges for operating an Internet Ponzi scheme that took in more than $850 million dollars, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The criminal indictment was returned today by a federal grand jury sitting in Charlotte, charging Burks, 67, of Lexington, N.C., with wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy.

Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join U.S. Attorney Tompkins in making today’s announcement.

According to allegations contained in the indictment, from January 2010 through August 2012, Paul Burks was the owner of Rex Venture Group, LLC (RVG), through which he owned and operated Zeekler, a sham Internet-based penny auction company, and its purported advertising division, ZeekRewards (collectively “Zeek”). The indictment alleges that Burks and his conspirators induced victims – including over 1,500 victims in the Charlotte area – to invest in their fraudulent scheme, by falsely representing that Zeekler was generating massive retail profits from its penny auctions, and that the public could share in such profits through investment in ZeekRewards. Indeed, the indictment alleges that Burks and others claimed, at one point, that investors would be guaranteed a 125% return on their investment.

The indictment alleges that Burks and his conspirators represented that victim-investors in ZeekRewards could participate in the Retail Profit Pool (RPP), which supposedly allowed victims collectively to share 50% of Zeek’s daily net profits. The indictment alleges that Burks and his conspirators did not keep books and records needed to calculate such daily figures, and that Burks simply made up the daily “profit” numbers. The indictment further alleges that, contrary to the conspirators’ claims, the true revenue from the scheme did not come from the penny auction’s “massive profits.” Instead, approximately 98% of all incoming funds came from victim-investors, which were then used to make Ponzi-style payments to earlier victim investors.

In addition to promising massive returns on investments, the indictment alleges that the conspirators also used a number of ways to promote Zeek to current and potential investors. For example, according to the indictment, the conspirators hosted weekly conference calls and leadership calls, where participants could call in listen to Burks and others make false representations intended to encourage victim-investors to continue to invest money and to recruit others to invest in Zeek. The indictment further alleges that Burks also organized and attended “Red Carpet Events,” where victim investors came to hear details of the scheme in person. During these events, according to the indictment, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. The conspirators also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.

The indictment alleges that as the Ponzi scheme grew in size and scope, it began to unravel as the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. According to the indictment, by August 2012, the conspirators fraudulently represented to the collective victims that their investments were worth approximately $2.8 billion, but had no accurate books and records to even determine how much cash on hand was available to pay such liability. According to the indictment, by August 17, 2012, Burks and his conspirators had only $320 million (or approximately 11% of $2.8 billion) available to pay out investors. The indictment alleges that over the course of the scheme, Burks diverted approximately $10.1 million to himself.

Burks is also charged with tax fraud conspiracy for failing to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, the indictment alleges, for tax year 2011, Burks issued fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.

The court has issued a summons against Burks and he is expected to appear in federal court for his initial appearance in the coming days. The wire and mail fraud conspiracy charge, the mail fraud charge and wire fraud charge each carry a maximum prison term of 20 years and a $250,000 fine. The tax fraud conspiracy charge carries a maximum prison term of five years and a $250,000 fine.

The details contained in this indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Two of Burks’ conspirators, Dawn Wright Olivares, Zeek’s Chief Operating Officer, and her step-son and Zeek’s Senior Technology Officer, Daniel C. Olivares, pleaded guilty in December 2013 to investment fraud conspiracy. Dawn Wright Olivares also pleaded guilty to tax fraud conspiracy. Both defendants await sentencing.

In making today’s announcement, U.S. Attorney Tompkins thanked the U.S. Secret Service and IRS-CI for investigating the case, and the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance with the investigation.

The prosecution is handled by Assistant United States Attorneys Jenny Grus Sugar, Corey Ellis and Mark T. Odulio of the U.S. Attorney’s Office in Charlotte.

Additional information and updated court filings about this and related cases filings can be accessed at the district’s website: www.justice.gov/usao/ncw/ncwvwa.html.

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Posted in MLM, Online Marketing, Other Ponzi Scams, Pyramid Schemes, SEC Press Release, Securities/Bonds, Serial Promoters, Tax Dodgers, Zeek Crazy Stuff, Zeek Rewards Federal Court Cases | No Comments »

Zeek Rewards: Announcement from Receiver, Paul Burks Indicted!!!

Posted by ASDUpdates on October 24th, 2014

PaulBurksToday, a federal grand jury returned a criminal indictment against Paul Burks. The indictment alleges four felony counts, including conspiracy to commit wire and mail fraud, wire fraud, mail fraud, and conspiracy to commit tax fraud.

The press release is available here.

The bill of indictment is available here.

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Posted in Zeek Rewards Federal Court Cases | No Comments »

Zeek Rewards: Receiver’s Announcement for October 22, 2014

Posted by ASDUpdates on October 22nd, 2014


ANNOUNCEMENT FROM THE RECEIVER – October 22, 2014

I want to address the question many of you are asking about why a percentage was withheld from some distribution checks.

On September 30, 2014 we mailed more than 90,000 checks to claimants as part of the first partial interim distribution. These payments were calculated to equal 40% of an accepted claim using the rising tide method of distribution previously ordered by the Court. For those claimants to whom checks were mailed that did not provide an IRS Form W-9 (for US residents) as requested on the claims portal we withheld a certain percentage for tax purposes. For non-US claimants a percentage was withheld whether or not an IRS Form W-8 was provided. I have heard from many of you that this withholding should not have been made because these distributions are not taxable. The tax laws on this issue are not entirely clear. We have attempted to get a definitive opinion from the IRS but have not yet been able to do so. Given this uncertainty we acted on the side of caution and made the withholding.

If and when we receive assurance that withholding from distributions to Affiliates is not necessary we will send additional checks to those claimants from whom a withholding was made in the first interim partial distribution in the amounts that were withheld. For US residents, online completion of an IRS Form W-9 will allow us to send an additional check in the amount that was initially withheld. Click here to provide tax form.

While I am gratified that we were able to send 90,000 Affiliates a distribution, there were approximately 48,000 claimants to whom I wanted to send a check but was not permitted to pursuant to the Court’s orders. If you have received a letter of determination, in order to be sent your first partial interim distribution, you must accept the determination (or have had an objection resolved) and complete the release and OFAC certification provided on the claims portal. At the end of January 2015 we will make a first partial interim distribution to those claimants with allowed claims who were not mailed a distribution check on September 30, if these steps are taken by December 31, 2014.

Approximately 12,000 Affiliates with approved claims were not mailed a check because the amount would have been less than $100. It was not cost efficient for the receivership to mail these checks at this time. At the end of the receivership Affiliates holding approved claims due a payment of less than $100 will be mailed a distribution check.

If you have questions regarding whether your claim determination has been issued, the general status of your claim or to provide the required release and OFAC certification, please log into the following website: https://cert.gardencitygroup.com/zrwdet/fs/home.

I want to re-emphasize that these distributions are the first, and partial, distributions I believe you will receive. We continue to pursue and recover additional funds that will be distributed on later dates.

Kenneth D. Bell
Receiver


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Posted in HYIP, MLM, Online Marketing, Other Ponzi Scams, Pyramid Schemes, Scams, Securities/Bonds, Serial Promoters, Zeek Clawbacks, Zeek Rewards Federal Court Cases | No Comments »

Zeek Rewards: Receiver Responds in Opposition to Gilmond et al Stay of Discovery Motion; Gilmond Files Reply in Support

Posted by ASDUpdates on October 20th, 2014

The Receiver, though his attorney has filed Opposition to the Motion to Stay Discovery in the “Bell v Disner, et al” civil case. Part way down the fist page, we have this:

Over four months later and after receiving an agreed good faith extension of 30 days to provide their discovery,1 the Gilmond Defendants have moved (just before their discovery responses were due) to stay discovery until the Court resolves the pending motions to dismiss. Also, they have in effect unilaterally granted themselves the stay they have requested by refusing to produce the requested documents by the October 6 deadline in violation of the Scheduling Order, the Court’s specific oral directives at the case management conference, and the Federal Rules of Civil Procedure. The Receiver has conferred with Gilmond Defendants’ counsel and requested that they reconsider their position and refusal to produce documents in light of the Court’s clear prior statements, but those efforts were unsuccessful. The Court should deny the motion to stay and require the moving defendants to produce the requested documents immediately.

A bit farther down it says:

Defendants base their motion on their argument that there may be no need for discovery because the Court may find that it must unwind the entire RVG Receivership because of an argued lack of subject matter jurisdiction. (Doc. No. 83 at 4). As explained in detail in the Receiver’s filings on this issue, see (Doc. No. 78-1), this argument is meritless because federal courts plainly have jurisdiction over SEC actions that make claims under federal securities laws and can appoint equity receivers in those matters. 3 Consequently, there is no reason to stay discovery until the Court acknowledges its clear jurisdiction to appoint a Receiver in this matter.

There’s more and I have uploaded this filing and a Hearing Transcript attached to it onto the Files website.


And we also have a filing from the “Gilmond Defendants”, better known as Trudy Gilmond, Trudy Gilmond, LLC, Jerry Napier, and Darren Miller which postulates:

  • The Receiver’s Response does not provide legal justification for denying the Defendants’ Motion to Stay Discovery, and a favorable resolution of the Nexsen Pruet Defendants’ Motion to Dismiss would eliminate the need for discovery.
  • The discovery that the Receiver served on the Nexsen Pruet Defendants is principally relevant to his prosecution of the class claims. Therefore, the Nexsen Pruet Defendants should not bear the cost of responding to it.
  • Although (without a stay) the Receiver can conduct unbridled discovery, the Defendants cannot yet conduct discovery on behalf of a potential class. This is not equitable.
  • A stay of further discovery will not delay case resolution.

While I am not an attorney nor have I portrayed one on TV, it all sounds like complete blathering; but them, not of their filings make little sense to me. Lucky for them, I am not deciding this case.

I have uploaded this filing, which has a copy of the Receiver’s First questions and Document Production attachment with it. Lots of good info there.

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Posted in MLM, Online Marketing, Pyramid Schemes, Scams, Zeek Crazy Stuff, Zeek Rewards Federal Court Cases | No Comments »

Ponzitracker: More on the Opposition to Zeek Rewards Attorney Liens

Posted by ASDUpdates on October 19th, 2014

Ponzitracker.com has an article up about the recent Opposition to Attorney Charging Liens, a motion made by an attorney representing some Zeek affiliates and who filed claims for them, after getting them to sign a contract with him. This is the same attorney that represented the “Belsome Appeal” group.

It is well worth reading, here’s the link.

 

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Posted in Zeek Crazy Stuff, Zeek Rewards Federal Court Cases, Zeek Rewards Suits | No Comments »

TelexFree: More Of The Usual Nonsense

Posted by ASDUpdates on October 19th, 2014

I wish I could say that this misinformation is something new within the growing Ponzi-scape, but it is not. Every scam under investigation by any Enforcement agency has published claims that they were “cleared of any and all wrongdoing” and since the TelexFree civil and criminal case are still ongoing, the below claim is Baseless Speculation (BS).


(This is translated from Facebook and the original Portuguese)

STRONG Telexfree VICTORY IN THE UNITED STATES

Telexfree FINANCIAL PYRAMID IS NOT.

Our Director Carlos Costa has always had the TOTAL REASON and never lacked the TRUTH of the facts, Telexfree NEVER WAS AND NEVER BE A FINANCIAL PYRAMID.

American Court stated that the company does not practice financial pyramidand appointed a receiver, Stephen B. Darr, who shall initiate the process of bankruptcy, it has autonomy to liquidate or keep running the business.

This request for extension of expertise is a proof that the company is not a financial pyramid.


Neither the Trustee (not receiver) nor the American Courts have stated any such thing, you prevaricating bastard.

Bankruptcy trustee, Stephen Darr, has publicly stated he has no intention or reorganizing or reopening TelexFree, so the Facebook post above is complete “BS”.

If this wasn’t sufficiently nauseating, former Pimps of TelexFree are now trying to herd their former affiliates into a new scam named “iFreeX” so they can once more take their money; I certainly hope former TelexFree affiliates have learned their lesson, but if history is any teacher, I doubt they have.

For more information on this endless promotional idiocy, see PatrickPretty.com for his take on TelexFree and these new developments.

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Posted in HYIP, iFreex, MLM, Money Laundering, Online Marketing, TelexFree | No Comments »

More Problems for Robert Craddock

Posted by ASDUpdates on October 16th, 2014

We have 2 Orders entered by the District of Nevada against Fun Club USA and its figurehead, Robert Craddock; the first is an ORDER to show cause:

This matter is before the Court on Defendant Fun Club USA, Inc.’s failure to retain new
counsel. This Court’s Order (#23) gave Defendant until August 25, 2014 to retain new counsel.
To date, the Defendant has not complied. Accordingly,

IT IS ORDERED that Defendant Fun Club USA, Inc. shall show cause, in writing, no later
than October 6, 2014, why sanctions should not be imposed for the failure to comply with this
Court’s prior order. Failure to timely respond to this Order to Show Cause may result in the
imposition of sanctions up to and including a recommendation to the District Judge to strike
Defendant’s Answer and enter a default judgment against Defendant for violation of the Court’s
order.

And, surprise, surprise, Fun Club USA did not comply with that Court ORDER, so there’s this:

FINDINGS AND RECOMMENDATION AND  ORDER

This matter is before the Court on the Order to Show Cause (#25), filed September 24,
2014, wherein this Court ordered Defendant Fun Club USA, Inc. to show cause, in writing, no later
than October 6, 2014, why sanctions should not be imposed for its failure to comply with this
Court’s prior order (#23) to retain counsel. To date, Defendant Fun Club USA, Inc. has failed to
comply. Accordingly,

RECOMMENDATION
IT IS RECOMMENDED by the undersigned United States Magistrate Judge that the
Answer of Defendant Fun Club USA, Inc. should be stricken and its default entered based on
Defendant’s failure to comply with this Court’s Order to obtain counsel.

ORDER
IT IS HEREBY ORDERED that the Clerk of the Court shall mail a copy of this Findings
& Recommendation and Order to Defendant Fun Club USA, Inc., c/o Robert Craddock, xxxx
Baron Court, Port Orange, Florida 32128.

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Posted in Fun Club USA, Zeek Crazy Stuff | No Comments »

SEC Press Release, October 16, 2014

Posted by ASDUpdates on October 16th, 2014

SEC’s FY 2014 Enforcement Actions Span Securities Industry and Include First-Ever Cases

New Investigative Approaches and Innovative Use of Data and Analytical Tools Help Drive Successful Enforcement Year

FOR IMMEDIATE RELEASE
2014-230

Washington D.C., Oct. 16, 2014 —The Securities and Exchange Commission today announced that in fiscal year 2014, new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.

In the fiscal year that ended in September, the SEC filed a record 755 enforcement actions covering a wide range of misconduct, and obtained orders totaling $4.16 billion in disgorgement and penalties, according to preliminary figures.  In FY 2013, the Commission filed 686 enforcement actions and obtained orders totaling $3.4 billion in disgorgement and penalties.  In FY 2012, the Commission filed 734 enforcement actions and obtained orders totaling $3.1 billion in disgorgement and penalties.

The agency’s enforcement actions also included a number of first-ever cases, including actions  involving the market access rule, the “pay-to-play” rule for investment advisers, an emergency action to halt a municipal bond offering, and an action for whistleblower retaliation.

“Aggressive enforcement against wrongdoers who harm investors and threaten our financial markets remains a top priority, and we brought and will continue to bring creative and important enforcement actions across a broad range of the securities markets,” said SEC Chair Mary Jo White.  “The innovative use of technology – enhanced use of data and quantitative analysis – was instrumental in detecting misconduct and contributed to the Enforcement Division’s success in bringing quality actions that resulted in stiff monetary sanctions.”

“Time and again this past year, the Division’s staff applied its tremendous energy and talent, uncovered misconduct, and held accountable those who were responsible for wrongdoing,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “I am proud of our excellent record of success and look forward to another year filled with high-impact enforcement actions.”

In addition to the first-ever cases, Chair White noted that the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative was an important effort that began in the last fiscal year.  The SEC reached a settlement with a California school district for charges of misleading bond investors, making it the first settlement under the initiative targeting municipal disclosure.

Director Ceresney added that, going forward, the Enforcement Division will continue to bring its resources to bear across the entire spectrum of the financial industry, from complex accounting fraud and market structure cases, to investment adviser and municipal securities cases, microcap fraud, insider trading, and cases against gatekeepers.

SEC Enforcement in Fiscal Year 2014

Combatting Financial Fraud and Enhancing Issuer Disclosure

To read the full Press Release, click here.

 

 

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Posted in Other News, SEC Press Release, Securities/Bonds | No Comments »

Zeek Rewards: Receiver Opposes Attorney’s Charging Liens

Posted by ASDUpdates on October 14th, 2014

RECEIVER’S OBJECTION TO COUNSEL’S NOTICE OF ATTORNEY’S CHARGING LIEN AND REQUEST FOR ORDER IN AID OF DISTRIBUTION

Kenneth D. Bell, Court-appointed Receiver (“Receiver”) of Rex Venture Group, LLC d/b/a ZeekRewards.com (“RVG” or “Receivership Defendant”), by and through counsel, respectfully submits this Objection to Marc R. Michaud’s “Notice of Attorney’s Charging Liens” (the “Notice”). 1 (Doc. No. 258). The Receiver respectfully requests that the Court strike the Notice and the liens asserted therein from the docket or, in the alternative, decline to rule on the validity of these liens and confirm that the Receiver may distribute the proceeds free and clear of any third-party claim.
The Notice appears to be an attempt by Mr. Michaud to circumvent the Court’s prior orders regarding this issue and insert himself as the recipient of money that belongs to victims. In directly rejecting Mr. Michaud’s prior attempts to obtain this money before his clients, the Court determined that the Receiver should distribute this money directly to victims without regard to any interest asserted by a third-party. Order Approving Claims Process (Doc No. 199 at 9); Order Granting Motion for Reconsideration and/or Clarification (Doc No. 221 at 1–2). As set forth more fully below, this case is simply not the appropriate forum for the resolution of third-party claims to distribution proceeds.

Mr. Michaud represents the “Belsome Plaintiffs” in Belsome v. Rex Venture Group LLC, No. 3:12-cv-800 (W.D.N.C. 2012). That action was transferred from Eastern District of Louisiana and then stayed by order of this Court.

Additionally, the Receiver respectfully requests that the Court enter an order directing Mr. Michaud to immediately and without any further delay provide the Receiver with the addresses of those victims whom he purports to represent. The Court has already addressed this issue when, in addressing Mr. Michaud’s most recent motion regarding the distributions, the Court specifically directed claimants to “amend the address on the Claim Portal to provide the claimant’s actual address.” (Doc No. 221 at 1). Three months have passed since the Court entered this Order and only eight claims have been amended to provide the claimant’s actual address. Hundreds of other claims continue to list Patrick Miller LLC (Mr. Michaud’s law office) as their mailing address. Although Mr. Michaud has repeatedly maintained that his representation of these victims includes helping them navigate the claims portal, he apparently does not consider complying with this Order and changing these addresses within the scope of such representation. Unfortunately for these victims, because these addresses were not changed, they did not receive their portion of the first distribution. 2

2Mr. Michaud’s refusal to comply with the Court’s Order and provide these claimants’ addresses through the Claims Portal may constitute a violation of both the Louisiana and North Carolina Rules of Professional Conduct. It appears that Mr. Michaud refused to provide these addresses in the hopes of securing a lien on the proceeds before it was distributed to claimants. However, both the Louisiana and North Carolina Rules of Professional Conduct prohibit attorneys from placing their own financial interests before those of their clients.

I have uploaded the full filing here.

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Posted in HYIP, MLM, Online Marketing, Other Ponzi Scams, Pyramid Schemes, Scams, Zeek Crazy Stuff, Zeek Rewards Federal Court Cases | 2 Comments »

Zeek Rewards: Judge Approves Settlements with Insiders and Net Winners

Posted by ASDUpdates on October 14th, 2014

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Posted in HYIP, Online Marketing, Pyramid Schemes, Scams, Serial Promoters, Tax Dodgers, Zeek Rewards Federal Court Cases | No Comments »