As a reminder to the “Net Winners” in the Zeek Rewards scheme, here is a portion of the Receiver’s April 1st letter:
The time for court action is drawing closer. I am sending this message to make sure that net-winners understand that there is an opportunity for settlement, but that the window for the opportunity is closing. To allow a reasonable time for all those who would like to pursue a settlement to do so, I am going to continue to make my team available to negotiate settlements for at least 60 more days. Therefore, if net winners want to pursue a settlement they should contact us by no later than May 31, 2013. After that date, I will assume that all net-winners that want to avoid the legal process by discussing settlement have done so, and I will move forward with court action, likely in June 2013, against the remaining net-winners.
I believe that non-party movants David Sorrells, David Kettner and Mary Kettner are lumped into the “Net Winner” category and the recent Denial of their Motion to Release Third Party Funds is a harbinger of what is to come. It’s not like they can say they were never warned of impending legal actions.
And, whatever happened to Robert Craddock, self-appointed Savior of all Zeek Affiliates?? He has been silent for a long time, the last entry made on his Zteambiz.net website was on February 6th, 2013. I wonder what he did with all the money he collected for the non-existent battle he was going to have to reverse the Zeek Rewards surrender to the SEC. I heard a rumor that he used $50K to repair his aircraft.
Either he hasn’t anything to say or he realized he was digging himself deeper and deeper into a hole from which he could not escape. Maybe the SEC wanting to talk to him had an effect on his glowing personality. I hope they go after him vigorously, especially since he started a Zeek-like clone called OfferHubb, using the same illegal business model and Penny auction scam.
Along with the Denial of Motion today, we have this request for Continuance:
PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION FOR CONTINUANCE OF HEARING ON MOTION TO INTERVENE
Plaintiff Securities and Exchange Commission (the “Commission”) hereby requests a continuance of a hearing on the pending Motion to Intervene and for an Order Dissolving the Appointment of a Temporary Receiver (the “Motion to Intervene,” Docket No. 84), filed by non-parties Trudy Gilmond and Kellie King (collectively “Movants”) on December 14, 2012. A hearing on the Motion to Intervene is currently scheduled for June 5, 2013. The Commission requests a continuance of ten (10) days because undersigned counsel is trial counsel for the United States in U.S. v. Farha, et al., Case No. 8:11-CR-115-T-30MAP, a criminal case currently being tried before the U.S. District Court for the Middle District of Florida in Tampa, Florida. The jury in U.S. v. Farha will continue deliberations beginning on Monday, June 3, 2013. Undersigned counsel will be on call in Tampa, Florida, to respond to jury questions and receive the verdict, and jury deliberations may continue through June 5, 2013.
Receiver Kenneth D. Bell, Esq., and non-party Movants do not oppose the requested continuance.
Based on the foregoing, the Commission respectfully asks the Court to grant a continuance of ten (10) days with respect to a hearing on the Motion to Intervene.
Respectfully submitted this 30th day of May, 2013.
/s/John J. Bowers
John J. Bowers (NC Bar No. 23950)
Stephen L. Cohen
J. Lee Buck, II
Brian M. Privor, Alfred C. Tierney
U.S. Securities and Exchange Commission
Not completely unexpected, at least by most of us, the Motion has been denied by Senior Judge Mullen and was, posted on the docket today. The Order denying the motion starts off with this:
This matter is before the Court upon an “Emergency Motion for an Order Requiring Release of Third-Party Assets Frozen in Response to this Court’s August 17, 2012 Order and Request for Evidentiary Hearing” filed by non-party movants David Sorrells, David Kettner and Mary Kettner (“Movants”). Both the Receiver and the SEC have filed a response in opposition to this motion. No Reply has been filed.
Movants are each former affiliates of ZeekRewards.com and each an owner of an e-wallet account at NxPay® which has been frozen. Movants contend that similar to funds in a normal bank account, any funds in their NxPay® accounts are owned by them and that the Receivership Defendant does not have an interest in the accounts and has no right to access the funds by charge-back or otherwise.
Each individual who signed up with NxPay® entered into a user agreement (“User Agreement”) governing his or her relationship with NxPay®. The User Agreement describes the nature of the services provided by NxPay® as follows: “The Services are issued by and all funds are held by the Company for processing only. These are not bank held accounts. You acknowledge and agree your balance is not a deposit, does not bear interest and is not insured by any government agency.” Moreover, when funds are being processed through NxPay®, the party paying the money can still control those funds. The User Agreement states at Paragraph 5, “If your Card or Account is funded by a third party, you authorize us to reverse such payment upon request of the third party.”
Movants’ argument that funds in their NxPay® accounts were like funds in normal bank accounts is belied by the plain language of the User Agreement. The User Agreement establishes that RVG retained control over funds that it had placed in the Movants’ accounts which were not withdrawn by Movants. Accordingly, NxPay® properly froze the accounts and the funds determined to be RVG funds must be returned to the Receiver pursuant to the Agreed Order.
IT IS THEREFORE ORDERED that the “Emergency Motion for an Order Requiring Release of Third-Party Assets Frozen in Response to this Court’s August 17, 2012 Order and Request for Evidentiary Hearing” filed by non-party movants is hereby DENIED, and the Court Orders the RVG funds being held by NxPay® to be turned over to the Receiver.
And there you have it. I wonder why these 3 “Movants” never replied to the responses from the Receiver and the SEC. It gives the appearance that they knew it was a futile venture, or they gave up hope of it coming to fruition. Either way, they have until tomorrow to enter into a settlement or face certain litigation to recover Receivership assets.
Three members of the company are in custody, friends claim that they are being held without a warrant
Three members of network marketing company TVI Express are set to be tried next month.
Three members of network marketing company TVI Express are set to be tried next month.
Ahmed Ali, who is also involved in the company, said his colleagues were arrested without a warrant. “The lawyers do not understand why they are being held,” he said.
TVI Express is a London-based company that specialises in the tourism sector, Ali said. It still does not have an office in Cairo. “Instead of meeting at cafés, we decided to hold our meetings in business centres,” Ali said.
Almost three weeks ago, a police officer specialising in public funds investigations showed up to a meeting and asked four people accompany him to a police station. Eventually he let two of them go but when a third person from the company interfered to try to secure the release of the two who were kept in custody, he was also detained.
The three were ordered to remain in custody on remand for 15 days which was set to be renewed on Tuesday. “The judge, however, said that he had only received this case Tuesday morning,” Ali said.
The judge announced a verdict would be determined on 11 June.
Ali and others held a peaceful protest to show solidarity with the three detainees on Tuesday. On Wednesday morning, they learned that the detainees had been moved to Tora Prison.
“We are a network marketing company,” Ali said. “We do not use a pyramid scheme.”
After taking in who knows how many hundreds of thousands (millions?) of dollars from affiliates who were urged to “purchase as many JubiBucks as (their) resources allow(ed)“, recruit as many “low-hanging fruit” affiliates from rival revenue-sharing companies and months and months of reassurance that their revenue-sharing compensation plan was “100% compliant”, JubiRev announced today two major changes to the plan.
In a webinar that went live just a few hours ago, JubiRev announced that they would be abolishing the automatic (and mandatory) re-investment component of the daily ROI paid out to affiliates, as well as the introduction of a “Customer Quality” score.
Why Was Liberty Reserve Shut Down: How Anonymous Money Transfer Systems Are Exploited By Terrorists and Criminals
Liberty Reserve was a digital currency service based in Puerto Rico (Central America) that claimed to be the oldest, safest, and most popular payment processor in the world. It is that, but its relatively anonymous nature made it untenable in the modern age of terrorism and criminalism, when money are laundered on the Internet. However, even so, its abrupt shutdown in late May 2013 was a surprise to many, when at first the domain resolved to “site unreachable”, then became “domain was seized” 3 days later. Then the full indictment was made public.
In this article, we will discuss what is Liberty Reserve, how it enabled both legitimate eCommerce as well as money laundering by criminals, and why it must be shut down. And finally, we will discuss some possible alternatives.
A Short History of Liberty Reserve
Liberty Reserve, ran out of Costa Rica, is actually NOT a single company, but a series of shell companies owned or operated by Arthur Budovsky Belanchuk, specifically organized to confuse and obstruct investigations into possible money laundering. It primarily operated out of multiple offices in cities of Santa Ana and Escazu Costra Rica, though Budovsky was in the process of moving operations to Europe when he was arrested in Spain in May of 2013.
Liberty Reserve arrests are causing ‘pain’ to criminals
By Leo Kelion Technology reporter
The takedown of the Liberty Reserve digital cash exchange has caused “pain” to criminals who used the facility, according to a leading security expert.
Brian Krebs said he had seen comments on crime-linked restricted access forums suggesting many had suffered “steep losses”.
US prosecutors published an indictment against the site’s staff on Tuesday.
It says they deliberately helped users “distribute, store and launder the proceeds of their illegal activity”.
Costa Rica-based Liberty Reserve had essentially functioned as a “black market bank” which had “allegedly processed 55 million separate financial transactions, and laundered a staggering $6bn [£4bn] in criminal proceeds”, said Preet Bharara, Attorney for the Southern District of New York, at a press conference.
He added that about $25m had been seized following the arrest of Liberty Reserve’s founder Arthur Budovsky in Madrid, Spain.
Four others have also been arrested and at least a further two men are being sought. In addition, computer servers used by the firm in Costa Rica and Switzerland are being examined.
According to the indictment, Liberty Reserve was estimated to have had “more than one million users worldwide”, a fifth of whom were in the US.
However, since the site is accused of failing to verify its members’ identities, it is unknown how many accounts were registered to identical individuals.
“Short-term it will cause quite a bit of pain,” Mr Krebs told the BBC.
“If you’re running a cybercrime operation and you lose half or three-quarters of your capital that can hurt and put a dent in your overall ability to perpetuate your business or whatever you are doing.
“The medium to long-term impact is going to hinge largely on what law enforcement is able to glean from the data it has taken from Liberty Reserve.
“It may lead them to be able to identify people who are ringleaders in cybercriminal activity. That said, it’s very likely that information is heavily encrypted, and [based on the experience of other cases] the government is going to need the co-operation of the people they’ve arrested.”
Manhattan U.S. Attorney Announces Charges Against Liberty Reserve, One Of World’s Largest Digital Currency Companies, And Seven Of Its Principals And Employees For Allegedly Running A $6 Billion Money Laundering Scheme
FOR IMMEDIATE RELEASE
Tuesday, May 28, 2013
Liberty Reserve Allegedly Processed at Least 55 Million Illegal Transactions for at Least One Million Users Worldwide Facilitating Global Criminal Conduct
Investigation and Takedown Believed to Be the Largest International Money Laundering Prosecution in History, Involving Law Enforcement Actions in 17 Countries
Preet Bharara, the United States Attorney for the Southern District of New York, Mythili Raman, the Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice (“DOJ”), Steven G. Hughes, the Special Agent-in-Charge of the New York Office of the U.S. Secret Service, Richard Weber, the Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and James T. Hayes, Jr., the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), announced today the unsealing of an indictment charging LIBERTY RESERVE, a company that operated one of the world’s most widely used digital currency services, and seven of its principals and employees with money laundering and operating an unlicensed money transmitting business. LIBERTY RESERVE is alleged to have had more than one million users worldwide, including more than 200,000 users in the U.S, who conducted approximately 55 million transactions – virtually all of which were illegal – and laundered more than $6 billion in suspected proceeds of crimes including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking.
Five defendants were arrested on May 24, 2013, including ARTHUR BUDOVSKY, the principal founder of LIBERTY RESERVE, who was arrested in Spain; VLADIMIR KATS, the co-founder of LIBERTY RESERVE, who was arrested in Brooklyn, New York; AZZEDDINE EL AMINE, a manager of LIBERTY RESERVE’s financial accounts, who was arrested in Spain; and MARK MARMILEV and MAXIM CHUKHAREV, who helped design and maintain LIBERTY RESERVE’s technological infrastructure, who were arrested in Brooklyn, New York, and Costa Rica, respectively. Two other defendants, AHMED YASSINE ABDELGHANI (“YASSINE”) and ALLAN ESTEBAN HIDALGO JIMENEZ (“HIDALGO”), are at large in Costa Rica.
In addition to the criminal charges brought in the Indictment, five domain names were seized, namely, the domain name of LIBERTY RESERVE and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites (see attached list) seeking the forfeiture of the exchangers’ domain names because the websites were used to facilitate the LIBERTY RESERVE money laundering conspiracy and constitute property involved in money laundering. The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with LIBERTY RESERVE and were listed on LIBERTY RESERVE’s website as “pre-approved exchangers.” The investigation and takedown involved law enforcement action in 17 countries, including Costa Rica, the Netherlands, Spain, Morocco, Sweden, Switzerland, Cyprus, Australia, China, Norway, Latvia, Luxembourg, the United Kingdom, Russia, Canada, and the U.S.
In a coordinated action, the U.S. Department of the Treasury and its Financial Crimes Enforcement Network today announced that LIBERTY RESERVE has been named as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. This action includes a notice to the Federal Register proposing to prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving LIBERTY RESERVE.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”
Acting Assistant Attorney General Mythili Raman said: “As charged, Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace. The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system. By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, forfeiting domain names, and seizing servers in countries around the globe, our message is clear: money launderers can run, but they can’t hide from the U.S. justice system. Combating the threat of global illicit finance requires using every tool we have at our disposal, and today we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”
Secret Service Special Agent-in-Charge Steven G. Hughes said: “These arrests are an example of the Secret Service’s commitment to investigate and apprehend criminals engaged in the misuse of virtual currencies to conduct global monetary fraud. Cyber criminals should be reminded today that they are unable to hide behind the anonymity of the Internet to avoid regulated financial systems. We are grateful to our many law enforcement partners throughout the world for assistance in this investigation, especially in Costa Rica, Spain and the Netherlands.”
IRS-CI Chief Richard Weber said: “We are now entering the cyber age of money laundering. Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity. What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world.”
ICE HSI Special Agent-in-Charge James T. Hayes, Jr. said: “The actions of the U.S. Secret Service, IRS, and HSI in dismantling the Liberty Reserve operation are critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection. HSI is proud of its partnership through the Global Illicit Financial Team and will continue to aggressively target financial institutions that deliberately enable businesses and individuals to evade global financial systems in furtherance of criminal schemes.”
Well, it looks like things are getting worse and worse for Liberty Reserve, a well known “PIMP”. One can only hope the US DOJ and US Treasury Department go after all the Ponzi Payment Processors and soon.
Below are links to the filings and a press release from the Treasury Department
I suppose that any semblance of “good news” it grasped tightly by the former Zeek affiliates, especially the “Net Winners”. And true to previous statements they have made, accuracy is not their strong suit. here’s the email, leading to a “fight for Zeek” website. To the left is a group photo with King, Burks and Gilmond. Ira Sorkin works for King and Gilmond, not average Zeek Affiliates. Remember Robert Craddock and how he was going to fix everything related to SEC v Zeek rewards??? Exactly!
Well Praise the Lord , we have a hearing scheduled for June 5 ,2013 in North Carolina before Judge Mullins.
The judge requested that Ira Sorkin, his top assistant and Kenneth Bell appear before him to present oral arguments about the SEC not having any jurisdiction to shut down Zeek.
(it’s odd that they failed to mention the SEC will also be involved in the hearing)
Please look at the web site www.fightforzeek.com and get information, I can’t possibly answer all your e-mails, so I apologize in advance. Remember this is a decision that can BENEFIT ALL OF US THAT WAS IN ZEEK. This isn’t just about NET WINNERS, it’s about the majority of people that never had the chance to take anything out of ZEEK REWARDS and have become NET LOSERS because the SEC shut down Zeek before they could become NET WINNERS.
(What a load of horse crap! It’s the usual “If one of us wins, we all win” mentality. See “ASD Justice” to see how that ends.)
We all worked hard to build our businesses and people were in different degrees of building their businesses, let’s pray for the TRUTH AND JUSTICE TO PREVAIL and that we can continue to build ZEEK. We need to pray for wisdom and discernment for Judge Mullins in making his decision.
(Be careful what you ask for… Justice may be not what you believe it to be. Just because there is a Hearing doesn’t mean it will go in your favor.)
Please consider donating whatever you can to help fund this fight, I know that the majority of people don’t have a lot to donate, however if all of us just gave what our budget would allow we can sustain this fight and possibly get ZEEK back up. Lots of people didn’t BELIEVE we had a chance and we may still lose, I don’t know the out come will be. The one thing I do know is if we don’t stick together and support this effort we will definitely lose.
(Well, so much for the “we never asked for donations” as I was last told by Zeek apologists)
I believe in America and that their are still some great people in our country, but we have to make our voices heard and fight for at least our day in court. Here’s the latest update on Zeek and our attorney. Please pass this website information out to your leaders. www.fightforzeek.com thanks!! Greg Baker
It amazes me that there are still people believing Zeek was legal and that Paul Burks gave the store away too soon. We have heard identical stuff from many Ponzi’s before Zeek and will hear it after Zeek. Some things never change.
I hope none of you are foolish enough to send them any money. Gilmond and King made HUGE money in Zeek, let them spend it on lawyers!!