Archives on January, 2013

More from the Final Liquidation Plan and the Retail Profit Pool

Posted by ASDUpdates on January 31, 2013One Comment

can_of_worms_ahead

When you consider and absorb the way these two paragraphs are worded, it becomes clear that the Ponzi argument will fly if the Court agrees with the receiver’s assessment.  Mr.Bell has made it very clear in previous communications that he feels he can easily prove Zeek Rewards to be a Ponzi and if this is the case, it opens up a can of worms for certain insiders and  “potential claims against third-party advisors of the Receivership Defendant, and vendors or other service providers that knew or should have known of the inappropriate nature of RVG’s activities and yet facilitated those activities for their own gain.”  I would hate to be them once the litigation begins.

The 2 paragraphs below appear above the Conclusion and make it clear how these “VIP Points” will be handled: (emphasis added)

In sum, Affiliates generated and accumulated VIP Points by perpetuating the multi-level marketing program that was created by the Receivership Defendant. The vast majority of the funds used to pay for an Affiliate’s cash “award,” which was based on the Affiliate’s VIP Points balance, were funds invested in the Receivership Defendant by other Affiliates. In other words, there was little, if any, legitimate business revenue of the Receivership Defendant that was used to pay any amount due or alleged to be due to a creditor or an Affiliate of the Receivership Defendant. Instead of funding distributions from the multi-level marketing program with funds generated through actual business operations, the multi-level marketing program merely redistributed payments made by one Affiliate to another. The Retail Profit Pool was the mechanism used by the Receivership Defendant to redistribute cash among the Affiliates. The exact nature of the redistribution of these amounts is still under review by the Receiver Team.

In examining these facts, the Receiver has determined that because the VIP Points aspect of the multi-level marketing program did nothing more than redistribute funds among Affiliates, points generated and/or accumulated by Affiliates will not be an includable part of an Affiliate’s claim for purposes of receiving a distribution from the Receivership Estate. Including any of these points as part of any claim of an Affiliate would merely effectuate a continued redistribution of funds from one Affiliate to another Affiliate based upon the multi-level marketing program instituted by the Receivership Defendant. In other words, it would merely perpetuate the multi-level marketing program that gave rise to the SEC Enforcement Action in this case. Instead, the Receiver has determined that an Affiliate’s claim should be based upon the amount of cash that the Affiliate paid to the Receivership Defendant.

I doubt that anyone needs the above interpreted; the wording is plain and to the point.  That is one of the many things I like about Mr. Bell.

Kenneth Bell files Final Liquidation Plan

Posted by ASDUpdates on January 31, 2013One Comment

The Final Liquidation Plan was filed this afternoon. Here are the high points; the full filing is on the Files website:

  • Known Receivership Real Property
    • Appraisal
    • Sale/Auction
  • Known Receivership Personal Property
    • Appraisal
    • Sale.Auction
  • Receivership Liquid Assets
    • As of January 31, 2013, available Receivership Assets totaled $312.1 million. As outlined in the Receiver’s Status Report for the Fourth Quarter 2012, the Receiver is also investigating additional potential Receivership Assets including approximately $4.0 million to $7.0 million in funds held by e-wallets, and funds held in foreign accounts, including one account that holds or held approximately $12 million.
  • Potential Litigation Claims
    • The Receiver Team has been evaluating options and strategies for pursuing funds fraudulently transferred by the Receivership Defendant.  In addition, the Receiver is investigating potential claims against certain professionals, contractors, financial institutions, and vendors that may be liable to the Receivership Defendant.
    • Identifying and Pursuing Fraudulently Transferred Funds Held by Net-Winner Affiliate-Investors – To date, the Receiver estimates approximately $295.5 million of Receivership Assets may have been fraudulently transferred to net-winners and potentially subject to fraudulent transfer claims (“clawback” claims).
    • While the pursuit of clawback claims against these foreign net winners raises various other challenges, the Receiver intends to include these winners as parties to domestic litigation based on their contacts with the ZeekRewards Program in the United States so long as doing so will not delay the litigation against domestic winners. The Receiver will also pursue cost-effective foreign litigation to establish the repayment obligation and/or to collect judgments where necessary and appropriate.  Further, the Receiver has been in discussions with multiple net-winners regarding possible settlement of the Receiver’s claims against them. The Receiver will seek the Court’s approval for proposed settlements if those negotiations are successfully concluded.
  • Investigating Claims against Receivership Defendant Insiders
    • The Receiver is also considering potential claims against Receivership Defendant insiders including employees, contractors, or other RVG agents who played an active role in furthering the Scheme.2 The forensic resources needed for these claims will be similar to those needed for fraudulent transfer claims. Potential claims against insiders include fraudulent transfer, breach of fiduciary duty, fraud, conversion, negligence, and other common law claims.
  • Investigating Claims against the Receivership Defendant’s Third-Party Advisors and Others
    • Potential claims include breach of fiduciary duty, negligence, professional negligence, and breach of contract, among other common law claims.
  • Privilege Issues and Taint Team
    • Certain third parties have asserted various claims of attorney-client privilege and work product protection for communications and electronic documents in the Receiver’s possession.
  • Claims Proceedings
    • Because of the gravity of this expense and the need for the process to be done properly in the first instance, the Receiver has enlisted numerous members of the Receiver Team to formulate this process, including lawyers at MW and advisors at FTI and The Garden City Group (“GCG”), the claims agent recently retained by the Receiver.
      • Timeline and Steps for the Claims Process
        • Online Claims Submission Process and Electronic Noticing Procedures
        • Bar Date for Claims
        • Claims Determination Process
      • Basis for the Online Claims Submission Process and Electronic Noticing Procedures
      • Consideration of Retail Profit Pool Points in the Affiliate Claims Process

 

There is an exhibit along with this Final Liquidation Report that details the proposed Claims Website.

 

Patty Andrews, the last of the fabled Andrews Sisters, dead at 94

Posted by ASDUpdates on January 31, 2013No Comments

I was born in the early 1950’s and my Mom loved the Big Band and Swing stuff,  she could “cut a rug” as they used to say.  I got to where I liked the sound as well, and the Andrews Sisters were part of it.  Patty, Maxine and Laverne were instrumental (pun intended) in keeping the morale of our troops lifted during WW II.  They toured, sold war bonds, and were part of a bygone era.  I still love to listen to them, their harmonies are amazingly crisp.

Rest in Peace Patty, Maxine and Laverne

Here are the Andrews Sisters in the Abbott and Costello movie, “Buck Privates”

Zeek Receiver Files Quarterly Report

Posted by ASDUpdates on January 30, 20135 Comments

In the Quarterly Report, the Receiver detailed several aspects of the receivership:

  • marshaling of assets
  • cashiers checks
  • funds held in E-wallets
  • foreign accounts
  • jurisdiction in all districts
  • validating records
  • preservation of hard copy and electronic data
  • attorney-client privilege assessments
  • Federal tax issues
  • communications with affiliates and creditors
  • employee issues
  • Litigation in the SEC Enforcement Action
  • the claims process

I have uploaded the filings to the Files website, along with the financial reports filed.  I am sure that someone will take offense to something the receiver filed, as usual. I have never heard of any of these programs keeping accurate records, mostly because they know they will be caught eventually.  However, the forensic accountants looking into this will unearth things that were thought to be buried deeply.  The money spent to dig though this stuff is not the Receiver’s fault, it is the fault of RVG and Paul Burks; snow cone carts keep better records.

But one thing that was pointed out contrary to what Craddock of Fun Club said, being off shore does not make you inaccessible; the receiver plans on going after foreign money, something that has been done many times before. Why people still tell folks that the Justice system cannot go after you outside of the US is just plain incorrect.

ASD 2nd Remission Claim Forms

Posted by ASDUpdates on January 30, 20137 Comments

My last communication with the D.C. US Attorney’s Asset Forfeiture & Money Laundering Section indicates that it may be another month before the claim forms are sent out. I am not sure what is delaying them, but I bet there is a really good reason.

If I hear anything new, I will let you know.

Another “Opportunity” Surfaces To Replace Zeek, What The Hell Are They Thinking?

Posted by Don on January 29, 20133 Comments

Since Zeek was closed  down back in August 2012, there has been a frenzy of “new opportunities” being presented by the top-level Zeek sponsors.  I got an email today, allegedly originating from Dave and Mary Kettner, that contained some information on a new Penny Auction that promises to be much larger than Zeek.  Today’s “program du jour” is something called  Vicesus.biz, still in pre-launch.  Of course, they are offering “Founder” positions that get you a percentage of all company profits on top of all the other stuff.

This is the home page on the website:

Vicesus has been working closely with top MLM attorney Kevin Grimes, and has put together a 100% legal and compliant penny auction business.

The compensation plan consists of a weekly bonus pool, a 2×20 matrix, a unilevel, retail commissions, and even commissions when customers on your team win items.

This company has a very sound business model and is poised to be a huge success.

The cost to join is $79, which includes your first months payment, a prepaid debit mastercard, a compliance course, and more.

It is then just $10/month to be a member of Vicesus.

There is also a Founder opportunity. The cost to be a Founder is $499, which includes all of the regular member fees.

There will only be 1,000 Founders, and among other perks, these Founders will share in 2% of all company revenue.

If you are looking to get involved in a penny auction business, this is THE business to join!

Don’t hesitate, register for FREE to lock in your spot in the 2×20 matrix!

Wow, that makes me feel so much better to know that the same guy that handled Zeek Rewards compliance issues is now sanitizing yet another “matrix” program, also known as a Pyramid Scheme. He did such a good job with Zeek Rewards!  I would also question the “sound business model”, especially if they are using the same one that Zeek used as that could turn problematic sooner than later.

I am always amazed that these serial promoters recycle these programs when the parent or step-parent program is in litigation or soon will be.  I have lost track of the total number of offerings sent out to the Zeek affiliates, and I imagine they are not highly receptive to their sponsors pimping MORE programs.  But then, that is what serial promoters do.

The website is registered to:

Administrative Contact                       WhoisGuard
Administrative Contact Address1:             11400 W. Olympic Blvd. Suite 200
Administrative Contact City:                 Los Angeles
Administrative Contact State/Province:       CA
Administrative Contact Postal Code:          90064
Administrative Contact Country:              United States
Administrative Contact Country Code:         US
Administrative Contact Phone Number:         +1.6613102107

Yet another red flag, the operators/owners of this scheme are hidden.  And then there is this, the Domain was registered yesterday,   Domain Registration Date: Mon Jan 28 06:07:57 GMT 2013

That’s about as new as a program can get, I would think.  I hope that all former Zeek affiliates do not flock to join this thing, considering the events of yesterday. The Fortune High Tech Marketing (FHTM) was shut down by the FTC and 3 state Attorneys General as a Pyramid scheme. FHTM had problems before but this seems the death-blow.

People really need to pay very close attention to this closure.  Ponzi, Pyramid or whatever, the arm of the law reaches very far and will soon reach even more schemes in the very near future.  The new head of the SEC, Mary Jo White, is a fierce former Federal Prosecutor; I would hate to be on her ‘bad side’.

This is not a good time to start a new matrix scheme, not at all.

Federal and State Regulators shut down FHTC “Pyramid” scheme

Posted by ASDUpdates on January 28, 20134 Comments

From USA Today:                                                                                                You can read the full article here.

The Federal Trade Commission and three state attorneys general announced Monday that they shut down a national multilevel marketing company they called a “global pyramid scheme” because recruiting others was the only way to make money.

Fortune Hi-Tech Marketing of Lexington, Ky., and its top two executives were sued by the FTC and the attorneys general of Kentucky, North Carolina and Illinois for “unfair and deceptive actions” that violated state and federal laws. Among the charges: misrepresenting that the company is “a good way for average people to make substantial income and achieve financial independence.”

“Today’s actions are the beginning of the end for one of the most prolific pyramid schemes operating in North America,” said Kentucky Attorney General Jack Conway.

The Lexington headquarters and a warehouse for Fortune Hi-Tech Marketing were raided Monday morning and the contents confiscated by a receiver appointed by the U.S. District Court for the Northern District of Illinois. The receiver, Robb Evans, and his firm met with FHTM employees and sent most home.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

“The fact that they targeted people who just wanted to better themselves in this economy is unconscionable,” Conway said in an interview.

More than 85% of the compensation paid is from recruiting new members, the complaint said. The compensation plan is designed so the majority of people will spend more than they earn. As Conway noted in an interview, about 90% of people made less than $15 a year, yet were asked to spend about $1,500 a year on products and membership fees.

FHTM’s “Presidential ambassadors” averaged $1,240,992 in income a year, yet made up just 0.07% of the company’s representatives, according to a financial disclosure Fortune filed as part of its April 2010 settlement with Montana. The statement also showed 30% of Fortune representatives make nothing, and 54% of those with earnings averaging just $93 a month, before costs. More than 99% of those who make money earn less than $31,524 a year.

The FTC has set up a hot line to answer questions from former Fortune representatives, who are no longer allowed to sell or recruit for the company. English and Spanish options are available at 202-326-2643.

27th Anniversary of the Challenger Shuttle Disaster

Posted by Don on January 28, 2013No Comments

The space shuttle Challenger was one of NASA’s greatest triumphs. It was the second shuttle to reach space, in April 1983. It successfully completed nine milestone missions.

But Challenger was also NASA’s darkest tragedy. On its 10th launch, on Jan. 28, 1986, the shuttle exploded 73 seconds after liftoff, killing the seven crew members. The accident changed the space program forever.

GPN-2000-001867-EDIT

Here, Challenger’s last crew – members of the STS-51L mission – stand in the White Room at Pad 39B following the end of a launch dress rehearsal (L to R) Teacher in Space Participant, Sharon “Christa” McAuliffe, Payload Specialist, Gregory Jarvis, Mission Specialist, Judy Resnik, Commander Dick Scobee. Mission Specialist, Ronald McNair, Pilot, Michael Smith and Mission Specialist, Ellison Onizuka.

Ronald Reagan said it best, “The crew of the space shuttle Challenger honored us by the manner in which they lived their lives. We will never forget them, nor the last time we saw them — this morning, as they prepared for their journey, and waved good-bye, and ‘slipped the surly bonds of earth’ to ‘touch the face of God.'”

Leroy “Sugarfoot” Bonner dead at 69

Posted by Don on January 28, 2013No Comments

Leroy “Sugarfoot” Bonner, frontman for the hit-making funk music band the Ohio Players, has died. He was 69.

The Ohio Players, known for their brassy dance music, catchy lyrics and flamboyant outfits, topped music charts in the 1970s with hits such as “Love Rollercoaster,” ”Fire,” ”Skin Tight” and “Funky Worm.”

I miss the 70’s,  mostly because I do not remember them..

OfferHubb recruiting former Zeek members

Posted by ASDUpdates on January 25, 20136 Comments

I received this in my email, which seems to have originated from Cynthia Woods, former Zeek affiliate and presumed ASD member.  The subject of the email is “Rags 2 Riches…OMG!! HURRY DON’T MISS THIS ONE!”.  The email showcases the lackadaisical attitude the top Zeek sponsors have to the current Zeek legal situation and/or the legality or ethics of getting people involved in these schemes. It seems to have little effect on them recruiting and migrating everyone over to a new “Better than Zeek” program.

The problem I see is this program is probably just as illegal as Zeek Rewards and uses some of the enticement tactics used by other now failed  “Advertising” opportunities that were deemed as Ponzi schemes.  I think the sponsors realize all of this but their reasoning is clouded by visions of getting wealthy on the backs of others without really caring about the consequences.

And here we have the opening salvo:

OfferHubb1

Part of the sign-up stuff includes these:

  • $99.99 Sign Up/Annual Fee
  • Pre-Purchased Advertising (Optional)
    •  $500-$10,000
  • Auto-Ship Advertising Packages (ASAP – Optional)
    $19.99, $49.99, or $99.99 per month

    •  $19.99 provides a single user or merchant the ability to advertise an offer on the OfferHubb system which is valid for redemption over any two (2) day period and Affiliates will earn 20 monthly Auto-Ship Points (ASP).
    • $49.99 provides a single user or merchant the ability to advertise an offer on the OfferHubb system which is valid for redemption over any five (5) day period and Affiliates will earn 50 monthly Auto-Ship Points (ASP).
    • $99.99 provides a single user or merchant the ability to advertise an offer on the OfferHubb system which is valid for redemption over any ten (10) day period and Affiliates will earn 100 monthly Auto-Ship Points (ASP).

Adding to the obvious, there is this disclaimer:

If you make a purchase from OfferHubb you are purchasing advertising space on OfferHubb’ website and mobile applications. You are NOT purchasing stock or any other form of “investment” or equity. You MUST actually use the advertising that you purchase, sell the advertising, or allocate it to potential advertising customers to help grow your business.

I always laugh when I read disclaimers like this in these programs. Similar disclaimers did not help BizAdSplash, AdViewGlobal, Ad Surf Daily (ASD), or any of the other “advertising” scams of the past.  It reminds me of “Star Wars” when Obi Wan said, “These are not the droids you are looking for”.  These people are not Jedi nor can they perform Jedi mind tricks, but they do seem to get this past a lot of people dead set on making money any way possible.

The “OfferHubb Compensation Plan” says:

Representatives of the Company will have the opportunity to receive compensation in FIVE WAYS!
1. Sales Commissions (15%) on your direct sales
2. Commission overrides on any Affiliates you sponsor (10%) and Affiliates they sponsor (5%) 3. A Bonus Point Pool of 50% of daily profits – Currently 5X Points Bonus
4. 20% commissions on Auto-Ship Advertising Packages personally sold
5. Potentially very large Auto-Ship Matrix bonuses

This is the program that Craddock has mentioned on calls and keeps eluding to in his recent updates.  It is a safe bet that all of the big-name former Zeek sponsors and Diamond Affiliates will be lining up to join this new “opportunity” along with their downlines.  I hope people have some sense and stay away from OfferHubb as it will soon suffer the same fate of Zeek.  Having a similar business model as Zeek or ASD is an absolute guarantee that the Feds will be watching you.

The recent appointment of a former Federal Prosecutor as the new head of the Securities and Exchange Commission forces one to envision that the future of these “advertising” and other investment scams are highly limited; that’s a good thing.  No matter how one restructures a questionable program/scam’s business model it will not sanitize it beyond the reach of Law Enforcement.

Lipstickpig

You can put lipstick and a different dress on a pig, but it is still a pig.   The Feds need to file RICO charges on these serial promoters.  Only then will they take notice.