Zeek Rewards: Judge Orders Darryle Douglas to Return Receivership Property

ZeekThe Order below originates from a posting on Facebook. I have no idea why people post things on the internet without realizing that one day, it may come back to haunt you, and never goes away even if you delete it. Sometimes, braggadocio doesn’t work out so well. And, it’s a bit silly to think the Feds are not watching the serial promoters. Here’s what the receiver had to say:

“It has come to the attention of the Receiver that Mr. Douglas has begun promoting a new investment scheme known as “Auction Attics” and intends to use a copy the ZeekRewards affiliate database to solicit investors into this new scheme.”

In addition, the Facebook page contains a long statement from Mr. Douglas which reports he will use his “business database” which contains “over 2 million plus contacts,” of which “[o]ver 90% . . . have already bought bids before!”

 

Judge Mullen agreed with the Receiver and issued the Order:

THIS MATTER is before the Court on the Receiver’s Motion for Order Requiring Return of Receivership Property, Deposition, and Production of Records. The Court has considered the Receiver’s Motion and finds in its equitable discretion that the measures requested are appropriate.
It is, therefore, ORDERED, that Darryle Douglas shall:

1. return the ZeekRewards affiliate database along with all copies of such database to the Receiver  and cease using it;
2. submit to a deposition by the Receiver at a mutually convenient time and location no later than September 24, 2015; and
3. produce to the Receiver all financial records from November 1, 2011 to the present for his personal and business-related accounts prior to such deposition.

TelexFree: Trial Date Set For James Merrill

telexfree-logoAlmost as an aside on the docket for the TelexFree criminal case, there was a brief mention that a Jury trial date has been set for April 4, 2016, at 9 AM, in Courtroom 2, Worcester. Mass.

His co-defendant, Carlos Wanzeler, fled to Brazil like a frightened school girl.

carlos-wanzeler-and-james-merrill-telexfree-management-criminals

Pictured here are Wanzeler (l) and Merrill (r), the two alleged Ponzi/Pyramid operators of the estimated 1.8 Billion dollar scam known as TelexFree.

Zeek Rewards Receiver Continues Going After Assets

True to form, Zeek receiver, Kenneth D. Bell, is pursuing a group of banking institutions who have failed Zeekto transfer Receivership assets, including cashiers checks.

Around the end of August, Zeek alleged winner, Darryle Douglas, was the subject of a :”MOTION for Order Requiring Return of Receivership Property, Deposition, and Production of Financial Records “, because of a new scam he is involved with and that he plans on using the Zeek database to recruit and fill his pockets once again. Douglas has already received a default judgment against him in the amount of $2,271,239.20.

Motions to Show Cause have been filed against:

  • NXPay (NXSystems) who were later ordered to pay the amount of $9,069,446.52 to the  Receiver
  • BBVA Compass Bank, which was later withdrawn following an undisclosed agreement
  • Peoples Bank of Alabama – Cashiers Checks around $30,000
  • Chino Commercial Bank – later withdrawn after undisclosed agreement
  • BankFinancial FSB – Cashiers Checks around $3,500
  • Valley National Bank – Cashiers Checks around $29,000
  • Northwest Georgia Bank – Cashiers Checks around  $11,500
  • M&T Bank – Cashiers Check around $41,900
  • Newton Federal Bank – Cashiers checks around $7,000
  • Bank of Alapaha – Cashiers Checks around $6,000

 

 

TelexFree: Status Report and Change in Status Conference

telexfree-logoFilled on June 11th, we have a Combined Interim Status Report, Joint Motion to Adjourn Upcoming Status Conference and for the Exclusion of time under the Speedy Trial Act as it relates to the TelexFree criminal case. Since the last status report, the government has provided the following discovery:

  • Data from Hotmail email accounts for Wanzeler and Costa
  • Data from Apple email for Wanzeler
  • Various recordings made by HSI agents
  • Copies of Search and Seizure Warrants for Amazon Web Services
  • Translated and untranslated interview reports from Brazilian Federal Police
  • Court order on Government’s Motion to Amend Sealing Orders
  • Ernst and Young Forensic Accounting Report
  • Copy of the application package for and order pursuant to 18 United States Code §2703(d) Orders for records from iBasis Inc.(Sealed case)

The Motion goes on to state: “In light of the above, and in keeping with the Court’s designation of this matter as a “complex case” under 18 U.S.C. s 3161(h)(7)(B)(ii), the government suggests an interim status conference in approximately 60 days to August 14, 2015.”

Zeek Rewards: NXSystems Files Motion for Partial Relief from June 1st Order

NXSystems is asking the Court to reconsider its June 1st Order “directing NxPay to pay $9,069,446.52zeekrewards to the Receiver within 5 days to be frozen in a segregated account pending final disposition of the dispute.”

The Motion goes on to say that NXSystems has voluntarily turned over around $22 Million dollars to the Receiver, does not have possession of any the claimed additional funds, and are financially unable to meet the Order of the Court.

In order to “comply” with the Court’s Order, they have made arrangements to transfer $1 million dollars to the Receiver’s account today.  Sounds a bit short of $9 million dollars to me, but NXSystems believes it to be “substantial”, and that they still believe there are no funds owed to the receivership. They also say this payment presents a significant financial hardship for them because their business has declined steadily since being associated to the Zeek case and RVG’s wrongdoing.

They included a Declaration from Michael Busher, Chairman of the Board of NXSystems, Inc. in an effort to buttress the Motion for Partial Relief. Additionally, he repeats their interpretation for not owing any more money and that they merely acted as a go-between, that RVG deposited money into an account holder’s account, so they are therefore not the guilty party, RVG is. Good luck with that.

Many more claims are made in this Declaration, which you can read on the Files website, ZeekDoc368-1.

We also have a “Memorandum In Support” of this Motion, stating that NXSystems in incapable of paying the $9 million dollars. It is also on the Files website.

 

Zeek Rewards: Orders Issued Today Relating to NXSystems and PCI

NXSystems (emphasis added)

The Court finds that NxPay’s due process rights can and will be fully protected in a summary proceeding within the context of the contempt motion as requested by the Receiver. The Motion necessarily involves the interpretation and application of the Agreed Order, and requiring the Receiver to file a separate action would be costly and inefficient.

The parties are directed to appear for a status conference before the Court on June 24, 2015, at 10:30 a.m. in Courtroom 2-2 of the United States District Court in Charlotte. The parties should be prepared to discuss the scheduling of the contempt hearing and whether any discovery is necessary prior to the hearing.

Moreover, the Court finds it appropriate to freeze and safeguard these assets until a final disposition can be made. Accordingly, NxPay is directed to pay the amount of $9,069,446.52 to the Receiver within five days of the date of this Order to be held in a segregated account. The Receiver shall consider these funds to be frozen funds not to be used or distributed in any manner until a final resolution of this Motion or further Order of the Court.

PCI (Plastic Cash International)

The Receiver, Plastic Cash International (“PCI”), Brian Newberry and BBN Holdings LLC have agreed to the following statement:

The Receiver and his representatives have thoroughly investigated PCI and its principal, Brian Newberry. PCI entered into a written agreement with Rex Venture Group (“RVG”) on May 30, 2012 and transacted business with RVG until at least August 13, 2012. PCI received at least $9,018,912 from participants in the ZeekRewards scheme as “monthly payments” made in the course of and in furtherance of their participation in the scheme (“Zeek Program Funds”). As of August 18, 2012, the day after the Freeze Order was entered, PCI retained at least $8,000,000 of the Zeek Program Funds. PCI and Mr. Newberry acknowledge that they became aware of the SEC Action and Receivership in August 2012 and now agree that the funds held by PCI at the time of the Freeze Order were subject to the Freeze Order. However, at the time they first became aware of the SEC Action they were advised by their counsel that PCI had no obligation to communicate with the Receiver or take any action to freeze the funds. On the advice of and in reliance on their legal counsel, PCI did not timely contact the Receiver or freeze the remaining Zeek Program Funds. Also, following the entry of the Freeze Order, PCI made payments to, or offsets were taken by, SecureNet, Visa, Vantage Payments, HPC and others out of or against the funds that were subject to the Freeze Order. Prior to the payment of these funds, PCI had discussed the fact of RVG’s shut down and the existence of the SEC Action with these entities so they demanded and accepted (or directly took from PCI’s accounts) these funds with knowledge of the SEC Action.

Based on what it has learned in this investigation and PCI’s and Newberry’s representations and sworn testimony, the Receiver now accepts PCI’s and Mr. Newberry’s long held position that they entered into PCI’s agreement with RVG in the good faith belief that RVG was a legitimate business based on the representations of RVG’s executives and agents. The Receiver withdraws any claim or assertion that PCI or Mr. Newberry intentionally or knowingly perpetuated, participated in or aided or abetted any fraud or breach of fiduciary duty or intended not to comply with any court order or law. Indeed, it appears that Mr. Newberry and PCI suffered significantly as a result of their involvement with RVG.

Zeek Rewards: Government Motion for Peremptory Trial Setting

In a Motion filed May 15th, the government made a Motion for Peremptory Trial Setting for November 2015. The motion mentions the following:

  • it is approximately one year from Defendants arraignment
  • the amount of data is so large that every page cannot possibly be reviewed; it will be necessary to conduct searches of computerized data
  • Defense counsel is abundantly familiar with the case and has worked for Burks since before the federal criminal investigation
  • Defense counsel was familiar enough with the evidence to negotiate a settlement  between Burks and the SEC in August of 2012, in 3:14-cv-89
  • The discovery is voluminous but not overly complicated; the details of the data are largely immaterial to the conduct set forth in the indictment
  • The conduct took place almost wholly between January 2010 and August 2012; Tin Fulton represented Burks for at least 8 months prior to government’s seizure
  • This case involves an incredible number of victims for whom a Special Master has been appointed by the Court.
  • A speedy trial is also important to preserve the memories of witnesses. Defendant Burks – who is not detained – is incentivized to delay the trial for as long as possible.

Zeek Rewards: Receiver Adds 10 New Defendants in British Virgin Islands “Winners” Suit

The original complaint, filed on February 13th, listed 5 alleged “winners”, all of which are in the British Virgin Islands;

  • Agnita Solomon, “net winner” of $2,057,355.61
  • Marguerite D. Hodge, “net winner” of $115,776.29
  •  Susan Forbes “net winner” of $603,288.30
  • Marcus Drigo,  “net winner” of $70,262.52
  • Patrice Harewood, “net winner” of $59,940.74

The Amended Complaint filed today lists 10 more Defendants:

  • Vernon Lettsome, “net winner” of $2,036,742.37
  • Trevor Potter, “net winner” of $293,221.85
  • Simon Potter,  “net winner” of $230,570.61
  • Esther Potter, “net winner” of $187,990.96
  • Elcina Frett, “net winner” of $148,000.22
  • Hercules Fraser, “net winner” of $67, 201.35
  • Kishma Reefe, “net winner” of $55,149.26
  • Ruth Matthew,  “net winner” of $136,277.95
  • Wesley Legair, “net winner” of $117,079.49
  • Sophia Richards, “net winner” of $96,238.79

The new Defendants raise the amount of claw-backs in this civil suit to $ 6,275,096.31

Zeek Rewards: Joint Motion to Continue And For Status Hearing

On May 7th, Paul Burks, through his attorney Noel Tin, filed the above Joint Motion which has the following points:

1. Mr. Burks was named in a four-count indictment returned on October 24, 2014. He made his initial appearance on November 13, 2014, at which time he was arraigned. The Court has continued docket call in this matter three times. [Docs. 11, 24, 27]
2. Docket call is currently scheduled for May 18, 2015.
3. The parties agree a further continuance is appropriate for reasons outlined in previous motions to continue. To date, the government has produced over 7.9 million documents to the defense. The government is also in the process of producing an additional 11 terabytes of data. Potential witnesses are numerous and spread over a wide geographic area which includes other countries.
4. Given the amount of discovery involved, the degree of preparation necessary for trial, witness travel and document management issues, the parties further agree that a peremptorily set trial date is necessary.
5. While the parties agree a peremptory setting is necessary, they also disagree on the appropriate length of continuance and trial date. The parties are therefore asking the Court to set this matter for a status hearing which will allow the parties to present their respective positions, after which the Court can peremptorily set this matter for trial.

Not at all surprising, the delays are multiplying; 11 TB of information is extremely mind boggling, especially when one considers how shabby scammers keep records of their miscreant ways. I look forward to the trial, no telling what will be revealed.

 

Zeek Rewards: Orders Granting Defaults and Order to Show Cause

Today we have 2 Orders from Senior Judge Graham C.Mullen, in which he Grants the receiver’s Motionzeekrewards for Default Judgments against Jerry Napier and Trudy Gilmond, and also Orders both individuals to appear and Show Cause why judgment should not be entered. I would guess that neither one will show for this either.


 

ORDER
THIS MATTER is before the Court on the Receiver’s Motion for Default Judgment for Failure to Defend or, in the Alternative, Motion for Order Requiring Jerry Napier to Personally Appear and Show Cause.
For good cause shown, it is ORDERED that the Receiver’s Motion is GRANTED and Defendant Jerry Napier is hereby ORDERED to personally appear in court in the Western District of North Carolina on May 27, 2015 at 11:00 AM and SHOW CAUSE as to why judgment should not be entered against him as requested by the Receiver. If Defendant does not personally appear at such hearing, judgment will be immediately entered against him in the amount of $$2,041,356.19.
SO ORDERED.


ORDER
THIS MATTER is before the Court on the Receiver’s Motion for Default Judgment for Failure to Defend or, in the Alternative, Motion for Order Requiring Trudy Gilmond to Personally Appear and Show Cause.
For good cause shown, it is ORDERED that the Receiver’s Motion is GRANTED and Defendant Trudy Gilmond is hereby ORDERED to personally appear in court in the Western District of North Carolina on May 27, 2015 at 11:00 AM and show cause as to why judgment should not be entered against her as requested by the Receiver. If Defendant does not personally appear at such hearing, judgment will be immediately entered against her and Trudy Gilmond, LLC in the amount of $2,129,522.27.
SO ORDERED.