Zeek Rewards: T. Lemont Silver’s Lawyer Requests Removal for Non-Payment

Say it isn’t so!!  T. Lemont Silver, Ponzi Pimp/Profiteer and Serial Promoter, has just lost legal representation for not paying the $5,000 retainer his attorney required. It would seem that Mr. Silver, his spouse and the entity he operates had agreed to pay $5,000 plus all related expenses and legal fees at normal hourly rates.

The attorney, James Jonas, had started working, garnered some expenses, but Mr. and Mrs. Silver reneged on repeated promises to pay. Not only that, but the Silvers have made themselves “unavailable” and were not even bothering to cooperate with their attorney, and the attorney believes he cannot properly or reasonably represent clients who fail to pay, reply, or provide information to further their case.

Adding insult to financial injury, the Silvers would not even reply to the request to be removed as Counsel of Record.

According to the receiver’s information found in the original Complaint in this case, the Silvers collected the following personally or by entity:

  • more than $773,000
  • more than $943,000
  • more than $600,000

That’s over $2.3 Million, folks…. and they cannot pay their attorneys??

TelexFree: Criminal Case Status Report by USA

On Monday, the USA filed their “Interim Status Report” and a “Joint Motion to Adjourn Upcoming Status Conference”.  The parties want to adjourn the status conference set for today (Feb 12) in light of the report and the unavailability of counsel.telexfree-logo

The Report begins by saying the government has produced around 100 GB of additional information from a database seized back in April 2014 and another 75 GB from a Trustee overseeing TelexFree’s affairs (I am guessing the Bankruptcy Trustee).

Certain materials remain to be produced, either because (a) they are still being processed for electronic production, or (b) the government anticipates receiving the materials from outside sources. As to the former, the government has experienced some delays in processing and producing materials because of technical errors committed by outside vendors and the diversion of resources (paralegals and litigation technical support staff) to the ongoing Marathon bombing litigation.

At this stage, the following discovery remains to be produced:

• Approximately 45 GB of material recently received from Google (YouTube) in response to a search warrant.
• Data contained in two Hotmail email accounts and one Apple email account, also received in response to a search warrant. Production of this material has been delayed by errors in the data as produced by the email providers.
• Data the government anticipates receiving in response to a search warrant submitted to the Court this week.
• In March 2015, the government will receive a large amount of material, both hard copy and electronic, from the Brazilian government. Law enforcement authorities in that country have been independently investigating TelexFree for fraud and securities offenses. TelexFree was partly based in Brazil and had hundreds of thousands of Brazilian investors. Moreover, the third owner of TelexFree (the other two being defendants Merrill and Wanzeler), lives in that country. To date, the Brazilian government has executed about nine search warrants and seized approximately $450,000,000.
• Various recordings made by undercover HSI agents at TelexFree conference and in conversations with a TelexFree promoter.

The US government is suggesting an interim status conference in approximately 60 days, or some other date that reflects their anticipated acquisition of materials from Brazil in March 2015.

Zeek Rewards: Receiver Replies in Opossition to Todd Disner’s Motion to Set Aside Judgment

As expected, Kenneth Bell has replied to the recent Motion filed by Todd Disner to set aside the default judgment entered against him, a judgment entered because Disner never bothered to address the lawsuit for a variety of inane reasons. In today’s filing, Mr. Bell had the following to say:

Mr. Disner has failed to meet the threshold showing necessary to succeed on a Rule 60(b) motion, as this Court previously ruled when deciding Mr. Disner’s motion to set aside the entry of default. Furthermore, he has failed to clearly establish any of the grounds necessary to allow the default judgment against him to be vacated. The Receiver does not believe the motion warrants further substantive argument, however, if the Court desires a supplemental analysis or explanation why the motion should be denied, the Receiver respectfully requests the opportunity to supplement this memorandum before the Court renders a decision.

Zeek Rewards: Todd Disner Files Pro Se Motion to Set Aside Judgement (??)

True to form, Todd Disner has filed a Pro Se “Motion to Reopen Judgement in Light of the Courts’ Ruling and Order on His Co-Defendants’ Motion to Dismiss”.  Disner issues the following nonsense in the opening paragraph:

On December 9, 2014 the Court issued its decision and order on the co-defendants’ motion to dismiss, establishing the law of the case. In light of the Court’s ruling, the judgment and order of the Court, against the undersigned defendant violates the law of the case as articulated by the Court and must therefore be set aside for the following reasons:

Disner the lists a plethora of further incongruous “reasons”, such as

  • If the Zeek Rewards business were found to be or was a legitimate business, the amounts the plaintiff has determined as received by the defendant, as a cash basis taxpayer, would have been treated as follows;
    • The defendant would be entitled to business expense tax deductions, but has directed Zeek Rewards to transfer and give away to third parties in order to promote and grow the defendant’s business…
    • If the exposure to the trustee (Receiver) does not mirror the exposure to the IRS, the defendant would unjustly enrich the Trustee since the defendant is now exposed to pay back an amount of money that he never had possession and control over…
    • The Court’s discussion of “constructive trust” on page 14 of its decision is particularly applicable to the basis upon which the Court is obligated to reopen and set aside the Judgment against the defendant.
    • If the Court’s judgment is allowed to stand while depriving the defendant of the knowledge and ability to have an action taken over against those who were given permission and control over a portion of the judgment the defendant did not receive in case, (paraphrased here) both they and the trustee are unjustly enriched. (Bullshit, I say!!)
    • The entry of judgment violates both the spirit and the letter of the Court’s decision, (Again with the unjust enrichment)

There are several more idiotic assertions made along these same lines, which you may read on the Files website. If anyone here was unjustly enriched, it was Todd Disner, which is probably why he sat down and made up all of this nonsense.

I seriously doubt the Court will set aside the judgment based on these ludicrous assertions.

 

Zeek Rewards: Judge Denies “Net Winners” Counterclaims Against Receiver

Below are a few paragraphs from this ORDER, it was merely a matter of time until it was denied, as it was specious from its beginning.

Defendants Gilmond, Trudy Gilmond, LLC, and Napier assert counterclaims for breach of contract and setoff; Defendant Miller asserts counterclaims for breach of contract, tortious interference, conversion, and setoff; and Defendants Aaron Andrews, Shara Andrews, Innovation Marketing LLC, Brockett, and Gates assert identical versions of counterclaims for breach of contract, tortious interference, money had and received, 42 U.S.C. § 1983, and unfair trade practices. The Receiver has moved to dismiss all counterclaims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim.

——

Defendants Aaron Andrews, Shara Andrews, Innovation Marketing, Brockett, and Gates all assert identical counterclaims for tortious interference (with contract). Defendants allege that they each had a contract with NxPay, and that the Receiver somehow “interfered” with that contract by accepting the funds that NXPay turned over to the Receivership pursuant to this Court’s Order. (SEC Action, Doc. No. 146). The Receiver, however, cannot be liable for tortious interference simply by doing his job as Receiver as ordered and authorized by this Court.

——

Defendants Gilmond, Gilmond LLC, Miller and Napier claim they are entitled to a setoff for (1) amounts they paid to RVG to purchase bids and participate in the Affiliate program; (2) the amount of the costs and expenses they incurred as a Zeek Affiliate; (3) the reasonable value of their time in performing or operating as a Zeek Affiliate; and (4) the amount of taxes they paid on income they received as a Zeek Affiliate.

This claim fails for several reasons. First, the Complaint in this matter is clear that the Receiver is seeking Defendants’ net winnings, which are by definition the amount they received from RVG less the amount they paid in to RVG. The dollar amount provided in the Complaint as to each named Defendant represents that Defendant’s net winnings, and so the Receiver has already set off the amount these Defendants paid in to RVG. There is nothing further to set off in this regard. Second, as to the Defendants’ purported costs and expenses and the reasonable value of their time for performing as a Zeek Affiliate, these requests for payment needed to be filed with the Receiver in the Claims Process, as discussed above. Since they were not, and the Bar Date has passed, these items may not be included in a setoff as a matter of law.

——-

IT IS THEREFORE ORDERED that the Receiver’s Consolidated Motion to Dismiss Defendants’ Counterclaims. (Doc. No. 59) is hereby GRANTED.

Zeek Rewards: Over $2 Million Default Judgement Ordered Against Todd Disner!!

Today Senior Judge Graham Mullen issued a 5 page Order in which he granted Default Judgement, denied Disner’s Motion to Set Aside and Motion to Strike. Judge Mullen ordered the Clerk to enter a default judgement pursuant to Federal Rule of Civil Procedure 55(b)(1). The Clerk of Court has entered the Ordered judgment against Disner which will cost him about $2,079,757.88.

In his ORDER, Judge Mullen states the following:

The Court finds that Disner has failed to act with reasonable promptness. He was personally served with the Summons and Complaint three months before he finally filed a substantive document in this lawsuit, which was a request to set aside the default. Moreover, it is clear that he had notice of the action and claims against him and the knowledge to act on his own behalf because he filed a Notice of Appearance to appear pro se nearly a month before the answer was due. Disner states that he “had not received any responsive pleadings from any of his co-Defendants” as an excuse for his failure to file an answer. (Doc. No. 49 at 2). He further suggests in a general fashion that he was seeking to obtain counsel. However, Disner never contacted the Court or the Receiver to request additional time. His assertions fall short of excusing his failure to act with reasonable promptness.

Furthermore, Disner fails to assert a meritorious defense. He does nothing more that state in a conclusory fashion that he “believes that he has a valid defense to the Plaintiff’s complaint . . . .” (Doc. No. 49 at 3, ¶ 8). This vague statement falls well short of asserting a meritorious defense. See Consolidated Masonry, 383 F.2d at 251.

Disner is personally responsible for his failure to plead. He has had previous experience with Ponzi scheme litigation and filed a twenty-nine page pro se Complaint for Declaratory Relief against the federal government in late 2011 claiming wrongful seizure of his Ponzi scheme winnings in another Ponzi scheme.

[The other Ponzi scheme mentioned above was AdSurfDaily (ASD)]

Judge Mullen also was not pleased with Disner’s lack of expedience:

To allow a single, unresponsive Defendant to proceed on a different track than the rest of the Defendants, or to delay the entire proceeding as to all parties due to Mr. Disner’s dilatory filings, would cause additional costs and burdens upon the Receivership Estate, including increased legal fees.

You can read the Order and Clerk’s Order here.

 

Zeek Rewards: Judge Denied Motions to Dismiss in Bell v Disner, et al

Today’s ORDER from Judge Mullen contains these interesting and perhaps precedence-like phrases: (emphasis added)

This matter is before the Court upon Named Defendants Trudy Gilmond, Trudy Gilmond, LLC, Jerry Napier, Darren Miller, Durant Brockett, Rhonda Gates, Innovation Marketing LLC, Aaron Andrews, Shara Andrews, Global Internet Formula, Inc., T. Lemont Silver, and Karen Silver’s Motions to Dismiss…..       This matter is now ripe for consideration by the Court.

——————–

The Court finds that the Defendants predominantly relied on the managerial “efforts of others” ―namely Burks and Rex Venture― to generate profits.

———————-

Defendants’ argument that they should not be subjected to the imposition of a constructive trust because their own fraud is not the subject of the complaint fails. The Complaint sets forth allegations sufficient to show that “some other circumstance” makes it inequitable for these Defendants to retain the funds they received. See id. This “other circumstance” is that Defendants received the funds from an admitted Ponzi and pyramid scheme, 3 and that the funds are nothing more than other people’s money wrongfully diverted from RVG. Therefore, Defendants have received property which they “ought not, in equity and good conscience, hold and enjoy.” Id.

(From the Amended Order)   3  “To be clear, the Defendants themselves have not admitted that ZeekRewards was a Ponzi or pyramid scheme. However, the principal, Paul Burks, and certain insiders have made such an admission. In addition, management insiders Dawn Wright-Olivares and Danny Olivares have pleaded guilty to engaging in a securities fraud conspiracy.”

————————

Defendants, as some of the top-dollar ZeekRewards net winners, were early adopters of the ZeekRewards scheme. As a result, these named Defendants may have already dissipated much of their net winnings, which without a constructive trust would be impossible for the Receiver to trace and secure. The Receivership will likely never be able to pay victims of the ZeekRewards scheme the full amount of their losses. Without a constructive trust and the ability to trace fraudulently transferred Receivership Assets, the Receiver’s remedy at law is inadequate. Therefore, the Complaint contains sufficient allegations to warrant the imposition of a constructive trust against the Defendants.

Definition:

Constructive Trust

A relationship by which a person who has obtained title to property has an equitable duty to transfer it to another, to whom it rightfully belongs, on the basis that the acquisition or retention of it is wrongful and would unjustly enrich the person if he or she were allowed to retain it.

————————-

You can read the full 16 page Order here.

Footnote 3 (above) was Amended in this ORDER.

Zeek Rewards: Criminal Case, 14-CR-208, USA v. Burks

There have been some additions to the docket in USA v Burks recently and they have been added to the Files website and these are:

  • Motion to Continue – The Defense needs more time to prepare
  • ORDER – Granting Motion to continue; case is moved to the January 2015 Calendar
  • Motion to Appoint Special Master – appoint Special Master with powers of federal Receiver
  • ORDER Appointing Special Master –
    • IT IS, THEREFORE, ORDERED that the government’s Motion to Appoint Special Master (#12) is GRANTED, and Kenneth D. Bell is appointed as Special Master in accordance with 18 U.S.C. §§ 1956(b)(4) and 3664(d)(6), and shall accomplish the following tasks: (1) identify victims; (2) provide notification to such victims pursuant to 18 U.S.C. §§ 3771(b)(1) and 3771(c)(1); (3) fashion a proposed restitution order; and (4) receive restitution payments for appropriate distribution to victims in accordance with the court’s restitution order.

 

Zeek Rewards: Receiver Files Motion Aimed at PCI, and Belsome Files Appeal

There is some recent activity in the original SEC case against RVG, 12-cv-519, with the Receiver trying to get over $8,000,000 from Plastic Cash International (PCI). Below is a portion of ZeekDoc286-main, and with it are 3 Proposed Orders: (These are added to the Files Website)

Kenneth D. Bell, Court-appointed Receiver (“Receiver”) of Rex Venture Group, LLC d/b/a ZeekRewards.com (“RVG” or “Rex Venture Group”), respectfully submits this motion for an order directing Plastic Cash International, LLC (“PCI”) and Brian Newberry (together, the “PCI Parties”) to turn over Receivership assets and/or find them in contempt of the Court’s Agreed Order Appointing Temporary Receiver and Freezing Assets of Defendant Rex Venture Group, LLC.
For the reasons set forth in the supporting Memorandum of Law, the Court should grant this Motion, order the PCI Parties to pay to the Receiver at least $8,323,673 of Receivership Assets they failed to freeze and return to the Receivership Estate and/or find the PCI Parties in contempt for violating the Court’s August 17, 2012 Agreed Order Appointing Temporary Receiver and Freezing Assets of Defendant Rex Venture Group, LLC, as amended on August 30, 2012, (“Agreed Order” or “Freeze Order”).

In the alternative, the Court should order the PCI Parties to deposit at least $8,323,673 with the Receiver to be held in a segregated account pending final resolution of this dispute to safeguard the funds for the protection of all parties and the RVG victims. The Receiver also requests that the Court award the Receivership the costs and fees incurred in having to bring the present Motion.

And true to form, the group known as the “Belsome, et al” has filed an Appeal against the Order striking the Attorney’s Charging Lien from the case Docket.  So far, this case has not appeared on the Appellate Court’s docket. I will add it to the Files website when it does.

AP Reports: Paul Burks Pleads NOT GUILTY, Wants Jury Trial

ZeekRewards Founder Released On $25,000 Bond

CHARLOTTE, N.C. — A North Carolina man who prosecutors say masterminded an $850 million Internet-based Ponzi scheme is pleading innocent to charges of wire and mail fraud, conspiracy and tax fraud.

Paul Burks appeared Thursday in federal court in Charlotte, where he was released on $25,000 bond.

Burks was president of ZeekRewards and the online penny auction site Zeekler.com. The company was shut down by the U.S. Securities and Exchange Commission in 2012. Prosecutors say Burks and his conspirators had used the promise of massive profits to lure more than 1 million investors, including nearly 50,000 in North Carolina.

Authorities say Burks diverted more than $10 million to himself. The former nursing-home magician told The Associated Press last year he never asked people to invest more money than they could afford.

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Paul Burks, center, flanked by his attorneys Noell Tin and Melissa Owen