Zeek Rewards: Sentencing for the Dawn Wright-Olivares and Daniel Olivares

zeekrewardsHere is the latest update from Kenneth Bell, Zeek Receiver. He has included an email address for victims to provide information that may be used at the Sentencing Hearing:

 

ANNOUNCEMENT FROM THE RECEIVER – August 29, 2016

On September 13, 2016 at 9:30 AM Dawn Wright-Olivares and Daniel Olivares will be sentenced in United States District Court for the Western District of North Carolina for their roles in the ZeekRewards Ponzi and pyramid scheme. The sentencing hearings are open to the public and will be held at the Federal Courthouse at 401 W. Trade Street, Charlotte, NC.

Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

  • Becoming insolvent;
  • Filing for bankruptcy under the Bankruptcy Code;
  • Suffering substantial loss of a retirement, education, or other savings or investment fund;
  • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
  • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
  • Suffering substantial harm to his or her ability to obtain credit.

I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

Zeek Rewards: Receiver Replies to Class Defendants

zeekrewardsJust filed today, Kenneth Bell has replied to the Class Defendant’s (Rhonda Gates, Innovation Marketing, LLC, Aaron Andrews, Shara Andrews, and Durant Brockett) response to his initial Motion for Summary Judgment and Partial Summary Judgment against the Net Winner Class. It seems that Jerry Napier, Darren Miller, T. Le Mont Silver, Global Internet Formula, Inc., Karen Silver, and Dave and Mary Kettner did not respond to the Receiver’s motion.

Under “Summary of Argument”, the Reply states that after more than a year and considerable cost to the Receivership engaging a defense expert to investigate the question of whether or not Zeek operated as a Ponzi that the

Defendants have conceded—without a single reference to their own expert—that ZeekRewards was a Ponzi scheme which intentionally defrauded hundreds of thousands of victims out of hundreds of millions of dollars. Indeed, since the filing of the Receiver’s motion Paul Burks, the mastermind of the ZeekRewards scheme, has been found guilty by a Federal court jury of three counts of securities fraud and one count of tax fraud related to the Ponzi scheme. So, the fact that ZeekRewards was a Ponzi scheme has now been established as a matter of undisputed facts and law.

Despite this concession that Zeek was a Ponzi, the Defendants argue that they can avoid returning their “net winnings” based upon the TOS (Terms of Service) which

can limit the Receiver’s rights to assert claims and that they should be given credit for recruiting victims to the scheme. Defendants still act as if Zeek was a legitimate business and Defendants were “internet marketing specialists” entitled to be paid as employees rather than investors in the scheme, all of which is of course pure fiction.

The Court should resist Defendants’ invitation to create the dangerous loophole of allowing a fraudster to use the terms implementing a Ponzi scheme to limit the right of a subsequently appointed Receiver to recover funds paid to the winners of the fraudulent scheme. While such a rule would be a great recruiting tool for future Ponzi scheme operators, it is surely an unacceptable legal rule and public policy.

The Defendants urge the Court to rule that purchasing bids, posting online advertisements (which only took 5 minutes a day) and recruiting thousands of victims somehow means they provided “reasonable equivalent value” such that they get to keep the victim’s money.

Bell goes on to eviscerate the Defendant’s attempt to legitimize their actions:

In other words, Defendants claim that those Defendants who spent the most time successfully promoting the scheme and multiplying the number of its victims should be given the most credit against the Receiver’s claims to recover their fraudulently transferred winnings. In fact, in arguing that they were supposedly rightly paid for their “services,” Defendants stretch to compare themselves to the utility company, which among many other differences does not invest money in their customers’ businesses hoping to share in compounding profits of 125% every ninety days. Whether or not innocent third-party trade creditors of a Ponzi scheme could be subject to a clawback action is not at issue in this case. Here, Defendants—all active participants and investors in the scheme—provided no value to ZeekRewards as a matter of law and fact; instead, as a result of their efforts the company became liable for hundreds of millions of dollars in losses incurred by the victims they recruited to the scheme.

You can read the full Response, the Zeek Terms Of Service and the Purchase/Subscription Agreement here.

Zeek Rewards: “Net Winner Class” Defendants File Reply to Complaint

zeekrewardsIn case 14-cv-91, Bell v Disner ,et al, the “Defendant Class of Net Winners” by and through their Texas attorney, James Kevin Edmundson, have filed a “Defendants’ Answer to Complaint and Affirmative Defenses” in reply to the original complaint filed back on February 28, 2014.

The very first 2 sentences are this:

1. The statement that RVG operated as a Ponzi scheme is a legal conclusion to which no response is required. Defendants lack knowledge or information sufficient to form a belief as to the truth of the remaining allegations of paragraph 1.

2. Defendants deny the allegations of paragraph 2 because, among other reasons, they have no information leading them to believe that RVG was a “scheme” or that they or others were somehow “net winners” as opposed to individuals who worked diligently for the income they earned in connection with Zeek.

I suppose even though a legal decision has been made as to whether Zeek was a Ponzi or a “scheme”, following the conviction on all counts of Paul Burks in the criminal trial, one would surmise that these positions by the Net Winners would be somewhat untenable. But, it gets even better with their Affirmative Defenses: (Pay particular attention to “C”, emphasis added)

AFFIRMATIVE DEFENSES
A. Defendants devoted significant time and money working on behalf of RVG, which was performed pursuant to a contract between Defendants and RVG by which RVG agreed to pay Defendants for the work that they performed. Defendants performed as agreed and were owed the compensation that RVG promised to pay.
B. If RVG was a Ponzi scheme, Defendants had no knowledge of that fact. If RVG was a Ponzi scheme, then all of the other affiliates who participated in RVG have unclean hands as a result of their participation in a fraudulent scheme.
C. On information and belief, the SEC knew or should have known of the RVG Ponzi scheme, but delayed unreasonably in its prosecution of claims against RVG. Alternatively, the SEC knew for some time that RVG was operating as a Ponzi scheme but intentionally delayed disclosing that information to Affiliates and to the public. That unreasonable delay has prejudiced Defendants because t h e y h a v e paid taxes on the money they earned working on behalf of RVG and have incurred business expenses as a part of their work on behalf of RVG. The Receiver in this action stands in the SEC’s shoes and also delayed to Defendants’ detriment and now seeks return of all monies Defendants earned in connection with RVG, with no credit for the taxes or business expenses that Defendants legitimately paid, but that could have been avoided had the SEC or the Receiver timely advised Defendants of RVG’s true nature or acted in a more expeditious manner.
D. The Receiver’s claims in this case against Defendants are barred by the equitable doctrine of laches.
E. Defendants accepted compensation in connection with RVG in good faith, in exchange for reasonably equivalent value and in accordance with the terms of the contract between Defendants and RVG.
F. Defendants are entitled to a setoff for the amounts they paid to RVG for the purchase of bids and to otherwise participate in the Affiliate program, the amount of any and all expenses they incurred in operating their business for the benefit of RVG, for the amount of all taxes they paid and for the value of the funds the Receiver wrongfully misappropriated from Defendants’ e-wallet accounts. Defendants are also entitled to a setoff to the extent of any judgment on their counterclaims.
G. The Receiver has filed suit against two attorneys who provided legal advice to RVG and Affiliates, including Defendants. Defendants relied on that advice in concluding that RVG was a legitimate business and in committing significant personal resources to grow their now defunct business. Because Defendants’ damages were caused in part by the conduct of the two lawyers, Defendants are entitled in equity and at law to a credit for all money the Receiver recovers from the two attorneys as a result of their claims against them.
H. Plaintiff’s claims are time-barred pursuant to the express terms of the agreement between RVG/ZeekRewards and Defendants.

Zeek Rewards: Verdict Sheet, Burks Criminal Trial

Clipboard04

 

Tax Crimes Handbook, SECTION 4 CONSPIRACY TO COMMIT OFFENSE OR TO
DEFRAUD THE UNITED STATES – 18 U.S.C. § 371

Overt Act:
[b] In furtherance of the conspiracy. The government must prove that the commission of
the overt act was in furtherance of the conspiracy. Grunewald v. United States, 353 U.S. 391,
396-397 (1957); Braverman v. United States, 317 U.S. 49, 53 (1942); United States v.
Provenzano, 615 F.2d 37, 45-46 (2d Cir.), cert. denied, 446 U.S. 953 (1980); Castro v. United
States, 296 F.2d 540, 542-543 (5th Cir. 1961). The overt act must have been calculated to
achieve some goal or objective of the conspiracy. Grunewald, 353 U.S. at 414-15.

 

Zeek Rewards: Latest Docket Entries in Burks’ Trial

This is all that was on the docket today:  zeekrewards

Full docket text:  (July 15)
Minute Entry: JURY TRIAL as to Paul Burks held before District Judge Max O. Cogburn, Jr.. Evidence continued. Jury Trial set for 7/18/2016 09:30 AM in Courtroom 2-1, 401 W Trade St, Charlotte, NC 28202 before District Judge Max O. Cogburn Jr.Government attorney: Jenny Sugar, Corey Ellis. Defendant attorney: Noell Tin, Jacob Sussman, Melissa Owen. Court Reporter: Cheryl Nuccio. (chh)

Full docket text: (July 14)
Minute Entry: JURY TRIAL as to Paul Burks held before District Judge Max O. Cogburn, Jr.. Evidence continued. Jury Trial set for 7/15/2016 09:00 AM in Courtroom 2-1, 401 W Trade St, Charlotte, NC 28202 before District Judge Max O. Cogburn Jr.Government attorney: Jenny Sugar, Corey Ellis. Defendant attorney: Noell Tin, Jacob Sussman, Melissa Owen, Isham Reavis. Court Reporter: Cheryl Nuccio/Laura Andersen. (chh)

No new motions have been added to the docket file in the past few days, and Judge Cogburn has not made a ruling on the prosecution’s motion to preclude the testimony of the defendants “expert witnesses”.

Zeek Rewards: Government Rests Its Case

zeekrewardsI checked the docket a little while ago and saw this entry for July 13th:

Full docket text: (emphasis added)
Minute Entry: JURY TRIAL as to Paul Burks held before District Judge Max O. Cogburn, Jr.. Evidence continued. Government rested. Oral Rule 29 Motion by defendant is denied by court. Jury Trial set for 7/14/2016 09:00 AM in Courtroom 2-1, 401 W Trade St, Charlotte, NC 28202 before District Judge Max O. Cogburn Jr.Government attorney: Jenny Sugar, Corey Ellis. Defendant attorney: Jacob Sussman, Isham Reavis, Melissa Owen, Noell Tin. Court Reporter: Cheryl Nuccio/Laura Andersen. (chh)

Here is the definition of Rule 29 from the Cornell Law website:

Rule 29. Motion for a Judgment of Acquittal

(a) Before Submission to the Jury. After the government closes its evidence or after the close of all the evidence, the court on the defendant’s motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction. The court may on its own consider whether the evidence is insufficient to sustain a conviction. If the court denies a motion for a judgment of acquittal at the close of the government’s evidence, the defendant may offer evidence without having reserved the right to do so.

Judge Cogburn didn’t find that there was insufficient evidence to sustain a conviction; I like this guy.

So far, Judge Cogburn has not ruled on a few defense motions and there is no entry for the government’s motion to preclude Burks’ expert witnesses.

I wish we had someone in the courtroom for all of this. The docket entries are minimal at best.

Zeek Rewards: Prosecution Seeks to Limit or Preclude Reliance Witnesses

Jill Westmoreland Rose, United States Attorney, has filed a motion in limine to preclude Paul Burks from zeeklerintroducing “irrelevant testimony” through Nehra & Waak, Keith Laggos, Kevin Grimes, Howard Kaplan, Gregory Caldwell, and Greer & Walker.

A motion in limine is a motion made at the start of a trial requesting that the judge rule that certain evidence may not be introduced in trial.

The Motion goes on to say:

On or about April 11, 2016, Defendant notified the United States that he may assert a reliance defense in his response (Doc. 52) to the Government’s Motion in Limine regarding the reliance defense (Doc. 47), though no specific individuals upon whose advice the Defendant relied were named. On or about June 26, 2016, the defense again repeated that he may assert a reliance defense in its trial brief. (Doc. 86, page 6.) Again, no specific individuals were named. Moreover, Defendant’s trial brief asserts that his purported reliance defense is based upon the assertion that he made changes to the (already existing and implemented) program in good faith based on the advice of experts. That is, by his own admission Defendant did not seek advice about potential future conduct, but instead about his ongoing conduct.

Burks also appears to net be able to keep his dates straight:

In particular, Defendant has asserted that he first sought advice from the following individuals during the following months:
• Nehra & Waak – April 2011 (though this appears to be an error and should be June 2011)
• Keith Laggos – June 2011
• Kevin Grimes – December 2011
• Howard Kaplan – January 2012
• Gregory Caldwell – January 2012
• Greer & Walker – March 2012

The prosecution contends that at trial, they will establish that Zeek Rewards launched in January 2011 and promised a 125% return. Additional evidence will show that Burks and his co-conspirators “were aware that compounding bids purchased by affiliates in Zeek rewards were ‘debt bids’ creating exponential debt to the company well beyond 125% and driving away retail customers.”

Though cosmetic changes were later made to the program, it continued to essentially function in the exact same manner as it had before any consultants or attorneys were employed: money came in largely from affiliates (who were supposed to be the “advertising” force for Zeekler.com the penny auction); those affiliates received a purported “profit-share” equivalent to approximately a 125% return on their bid purchases in a 90 day period (later as a Retail Profit Pool percent averaging 1.43% per day); and Defendant Burks promoted the program as sharing the profits from the penny auctions.

Next, they establish how the testimony would be irrelevant:

Even if Defendant can establish “that he disclosed all material facts to [the counsel or expert] and that he acted strictly in accordance with [the counsel or expert’s] advice,” to establish a reliance defense, he must establish that he obtained that advice prior to and with regard to future conduct.

 

 

Simply, “a defendant who takes ‘significant steps’ toward the completion of his criminal action cannot avail himself of later-received advice of counsel respecting the lawfulness of that action.” Id.

 

 

Put another way, “[t]he party must also consult the attorney as to the lawfulness of his possible future conduct and may not consult an attorney after he has already manifested an intent to act unlawfully in an attempt to retroactively protect himself from the consequences of his illegal conduct.”

 

 

Defendant Burks had formed intent and taken significant steps in the scheme prior to the time he sought counsel.

The Conclusion says it all:

Without evidence presented that Defendant (1) obtained the advice of counsel or expert (1) prior to engaging in the conduct and then (2) relied upon the instructions or advice of a particular “expert,” there can be no reliance defense. See Pearrell, 1996 WL 10284 at *2; Polytarides, 584 F.2d at 1352. Here the evidence already establishes that Defendant did not seek advice until after he had manifested the intent to commit his crimes and taken significant steps in furtherance of his scheme. Thus, there can be no reliance defense, and the testimony of Defendant’s “Advice of Counsel/Expert” witnesses should be precluded as irrelevant, as their testimony would not make any fact of consequence more or less probable.

 

The prosecution believes that is these “expert witnesses” are allowed to testify, the “minimal relevance will be outweighed by the risk of confusing the issues and misleading the jury.”

Zeek Rewards: Opening Day in Burks Trial

This comes from The Dispatch in Lexington N.C.

Burks, 69, is the founder of an alleged Ponzi scheme called ZeekRewards that took $939 million from its “affiliates,” or people who paid into the company in hopes to see a return on their money. He is on trial for four counts of fraud, and Burks has pleaded not guilty. If convicted, he could be sentenced to up to 65 years in prison and pay a fine of $1 million.

The prosecution made its opening statement:

Corey Ellis, First Assistant United States Attorney, spoke and began his address by simply stating how the prosecution viewed this case.

“This case is about the defendant telling lies in order to get money, it is as simple as that,” Ellis said. “Every fraud has a fairy tale, and this one started with a penny auction site.”

 

 

Ellis went on to explain why prosecutors believe they have a case against Burks. Among the reasons listed was the fact that the prosecution could not find any ledgers or accounting books that kept records of the money ZeekRewards was rapidly accumulating.

According to the prosecution, these affiliates bought the bids under the promise that they would see 125 percent returns on their money, money that was allegedly up to 50 percent of the daily profits from the penny auction site Zeekler. However, they allege Burks used the money to pay the older affiliates or investors.

 

 

 

“Our purpose is not to demonize or villainize anyone. … He is on trial for his actions,” Ellis said.

Then we have Noell Tin, Burks’ long time attorney:

Burks’ defense lawyer, Noell Tin, led the defense’s approximately 45-minute opening statement. Tin used his time to strip the history of Burks and his company to what he referred to as “the bare bones.”

He touched on Burks’ personal and professional history before describing in great detail how ZeekRewards was meant to work.

 

 

Tin explained Burks created the ZeekRewards website as a way to generate traffic for Zeekler. He said ZeekRewards acted as a multi-level marketing branch of the business, allowing anyone to buy bids and post ads to bring more people to the auctions.

 

 

The defense repeatedly contested the use of the word “investor” during the trial, and said those who paid money in were buying nonrefundable bids that had no monetary value on their own.

Tin disputed the allegations that Burks had no books to account for the money coming in and out of his business. He said Burks had over a terabyte’s worth of company data online.

 

 

Tin also explained Burks and his company always planned to “make good on their promise.”

“Even on the day (ZeekRewards) closed it had enough money to fill its obligations,” Tin said.

 

 

“Paul Burks’ dream was that everyone wins …” Tin said. “Everyone has things clearly explained to them and were not lied to.”

Then there were 4 witnesses called:

After opening statements, the jury heard from three separate witnesses called by the prosecution. The first two, Wilma Gray and Thomas Harding, were affiliates who had put in $10,000 and approximately $8,000, respectively, into ZeekRewards and saw none of their promised returns.

The third was Lisa Christensen, a former NewBridge Bank employee who filed three separate suspicious activity reports, or SARS, regarding Burks after he began depositing substantial sums into his account. Burks had an account with NewBridge until April 18, 2014.

“We didn’t know where the money was coming from,” Christensen said. “… We like for our customers to have money, but we have to make sure there is no illegal or suspect activity.”

 

 

The day ended with the fourth and final witness, Dan Olivares. Olivares is indicated as a coconspirator in the case. He has pleaded guilty to investment fraud conspiracy and taken a plea deal that involved his honest testimony in the Burks trial. Olivares was the software developer for both Zeekler and ZeekRewards.

He was able to give a brief history of how ZeekRewards was created as an advertising avenue for Zeekler because the site, according to Olivares, was not doing well at the end of 2010.

 

 

Court will resume Thursday morning with the rest of Olivares’ testimony and cross examination by the defense.

Our thanks to The Dispatch and Julia Hudgins for keeping up informed about the Burks trial.

Zeek Rewards: Receiver Asks for Summary Judgment Against Class of “Net Winners”

Filed on the virtual eve of the Burks criminal trial which begins on July 5th, the Receiver has filed a ZeekMotion for Summary Judgment in Bell v Disner, et al, along with a supporting memorandum of Law and a group of Exhibits.  The Motion lists the “Named Defendants” like this:

The named defendants in this action are among the largest net winners of the ZeekRewards scheme, with winnings for each reaching as high as $1,875,000. The Court already has entered Judgments against several of these named defendants – who either failed to answer or cooperate in the action. See supra at n.1 and Doc. Nos. 76, 93, 95 and 119. Two defendants, Lori Jean Webber and P.A.W.S. Capital Management LLC, have reached a settlement with the Receiver.

 

 

The remaining named defendants are: Jerry Napier (Owosso, Michigan; a “net winner” of more than $1,745,000); Durant Brockett (Las Vegas, Nevada; a “net winner” of more than $1,720,000); Darren Miller (Coeur d’Alene, Idaho; a “net winner” of more than $1,635,000); Rhonda Gates (Nashville, Tennessee; a “net winner” of more than $1,425,000); T. Le Mont Silver Sr. (Orlando, Florida / Dominican Republic; a “net winner” of more than $773,000; Mr. Silver also used Global Internet Formula, Inc., which is, upon information and belief, incorporated in Florida, as a shell company through which he was a ZeekRewards “net winner” of more than $943,000); Karen Silver (T. Le Mont Silver’s wife; a “net winner” of more than $600,000); Aaron and Shara Andrews (Lake Worth, Florida; the Andrews used Innovation Marketing LLC, a Florida shell company to win more than $1,000,000) and David and Mary Kettner (Peoria, Arizona; “net winners” of more than $930,000 using the shell companies named Desert Oasis International Marketing, LLC and Kettner & Associates, LLC as nominal payees). See Exhibit C (Expert Report of David S. Turner) (hereinafter “Turner Report”)at Ex. F.

Default judgments have already been ordered against:

    • Michael Van Leeuwen – $1,617,444.99
    • Todd Disner – $2,079,757.88
    • David Sorrells – 1,197,241.12
    • Trudy Gilmond – $2,129,522.27

 

Also listed are the “net Winner Class” which was already certified by the Court.

On September 14, 2015, the Court appointed Kevin Edmundson as class counsel and subsequently the Court authorized the defendant class to engage an expert witness,
Berkeley Research Group (“BRG”), at the primary expense of the Receivership. See
Doc. Nos. 117, 125.

Their own expert witness, BRG concluded the following:

In its initial report dated January 18, 2016, BRG agreed that it was able to “replicate the exhibits in the Turner Report, within a reasonable margin of difference.” Then, in its “Phase II” report, BRG reached two conclusions (bolded in the report):
a) [B]ased upon a preliminary analysis, it does not appear that the magnitude
of profit from the auction business would materially impact the assessment of
whether or not the business, taken as a whole, operated as a Ponzi scheme.
b) As a result of our testing in Phase II, we have not found evidence that
definitively disproves that the business as a whole operated as a Ponzi scheme.

Addressing the Burks and his not so successful endeavors, the receiver had this to say:

Beginning at least as far back as 2000, Paul Burks operated a number of generally
unsuccessful multi-level marketing businesses through Rex Venture Group, LLC (and
related entities) with names such as Go-Go Hub, Free Store Club, My Bid Shack, New
Net Mail and Signed and Numbered International. See, e.g., Bell Aff. at Ex. 2, 3;
Douglas Dep. at pp. 50, 54-55, 71, 78; Exhibit D (Excerpt of Durant Brockett Deposition)
(hereinafter “Brockett Dep.”) at pp.18-19, 30. In 2010, RVG launched Zeekler.com, a
so-called “penny auction” website where items ranging from personal electronics to cash
were auctioned to bidders. See id.

 

However, bids bought through ZeekRewards rather than as retail bids were more valuable because purchasing those bids gave the affiliates “points” that supposedly entitled Affiliates to a portion of the profits from the business. This was the real (and only) reason Affiliates would pay $1 for auction bids they could buy for $.65. See Brockett Dep. at 77-78. As one Affiliate told Burks, “I know how the system works mathematically and you know I know. Whether you call the bids bids or hamburgers makes no difference. People are not joining Zeek to get hamburgers, orauction bids; they are joining Zeek to make money….” Bell Aff. at Ex. 6.

Also mentioned are the Wright-Olivares and how they knew what they were doing:

From the beginning, RVG intended to use “bids” in ZeekRewards not as a product but as a proxy for money deposited into the program. Dawn Wright-Olivares was very clear about the plan, telling Danny Olivares on January 21, 2011: “We’re just going to use bids as currency.” Bell Aff. at Ex. 9(a). On another occasion, Dawn Wright-Olivares referred to the compounding bids as “Monopoly money.” Bell Aff. at Ex. 9(b). Quickly, RVG’s focus changed from Zeekler to ZeekRewards, which was the source of nearly all the company’s income. Relative to ZeekRewards, little or no money was made in the Zeekler “penny auction” business.

Burks and the other Insiders were aware that the payouts to Affiliates would be funded by new participants rather than retail profits from the penny auctions. Dawn Wright-Olivares excitedly told Burks early in the scheme, “I think we can blow this OUT together- we’ve already attracted a great many big fishes.” Bell Aff. at Ex. 4.

As you go farther down the Memorandum, it details the “Compensation Plan”, the “Compounder” and how the money magically multiplied. And it seems everyone at the top knew all along that it was not exactly above board and could not really explain the voodoo behind the ROI and how it was calculated:

Burks deliberately evaded affiliate questions asking how the RPP was calculated. In a Skype chat with an affiliate, he said: “[a] proprietary system is used to determine the amount of profit sharing that is done each day. We do not divulge the details of how those numbers are determined. Our stated target of minimum of 1% weekdays (Mon-Thur) and .5% weekends (Fri-Sun) has always been met and exceeded. It is clearly not directly tied to the number of auctions in a particular day. It is the overall average that counts.” Bell Aff. at Ex. 9(d).

Behind the scenes, the Insiders were not even subtle about the fake earnings numbers. Often, the company simply used the previous week’s daily RPP percentages. For example, on one occasion, Danny Olivares sent a text message to multiple insiders stating, “Need a % for rpp when you can.” Dawn Wright-Olivares responded, “Do whatever was last Monday.” Bell Aff. at Ex. 40. Or, from Paul Burks: “Hey Dan. Sorry about last night. What percent did you use?” Danny Olivares: “Same as last Friday. 0.009.” Bell Aff. at Ex. 23.

There are a ton more revelations in this filing, too many to detail here. You can click here to look at the 139 page filing, including all of the Exhibits.

Zeek Rewards: Receiver Update for July 1st

 

ANNOUNCEMENT FROM THE RECEIVER – July, 1, 2016

The trial of Paul Burks in United States District Court, Western District of North Carolina (Charlotte) is scheduled to begin on July 5, 2016. The trial is open to the public. We will be monitoring the trial and will keep you updated. The indictment against Mr. Burks can be viewed at this link.

Also, yesterday we filed a motion for summary judgment, a memorandum in support of the motion and exhibits in the litigation against named defendants and the defendant class of net winners in the United States. By this motion we are asking the Court to rule as a matter of law that ZeekRewards operated as a Ponzi and pyramid scheme, and to find that the net winnings received by the net winners must be returned to the receivership for distribution to claimants with recognized claims. The motion, memorandum and exhibits may be viewed at this link.

The defendants will have an opportunity to respond to this motion. Thereafter, the Court may schedule a hearing. If the Court rules in our favor and grants our motion, the liability of the named defendants and class members will be established. We will then ask the Court to approve a process to determine the amount of judgment, or money owed, by each of the defendants to the receivership. This process will take several months, but the filing of this motion is a significant event for the receivership and claimants. The face value of these claims is in excess of $200 million. How much of that we will be able to collect for distribution to claimants with recognized claims is uncertain at this time. However, we will pursue collection of these judgments vigorously, and expect the ultimate amount collected will be a substantial sum.