UPDATE FROM THE RECEIVER – May 29, 2014
On May 1, 2014 I told you that I would file a motion with the Court asking permission to make an interim, partial distribution on allowed claims. Yesterday, May 28, 2014, we filed a motion seeking to make distributions at an amount equal to 40% of each affiliate’s allowed claim using the “rising tide” method of calculation previously approved by the Court. If the Court approves this motion affiliates with allowed claims will initially receive 40% of their investment in Zeek Rewards, minus any money received from Zeek Rewards prior to my appointment as receiver. We anticipate that this motion will be addressed by the Court in June. You can read the motion here.
Let me emphasize that this is only a first distribution. I am entirely confident that we will make another distribution once we have recovered all assets possible. As you know, we have sued the former insiders (Paul Burks, Dawn Wright-Olivares and others) and more than 9,000 individuals in the United States who took more money out of Zeek Rewards than they put in. This money rightfully belongs to affiliates with allowed claims. We will also sue foreign net winners in the near future. Also, I believe we will recover several millions of dollars more from financial institutions still holding receivership assets.
Despite our best efforts to make a distribution in mid-summer, logistical issues regarding the payment to what may be more than 150,000 affiliates required us to ask permission of the Court to make the first interim, partial distributions on allowed claims on September 30, 2014. We also asked that August 15, 2014 be the date for determining whether a claim is allowed and payable on September 30, 2014. This means that if you have an allowed claim on August 15, 2014, and your distribution would be in excess of $100.00, the first interim, partial distribution will be mailed to you on September 30, 2014.
In order for your claim to be allowed, you must have received your claim determination, agreed to that claim determination (or resolved any objection you made to such claim determination and agreed to a claim determination), and provided the required release and OFAC certification requested on the claim portal. If you have received your claim determination, but have not agreed to the determination or have not provided the required release and OFAC certification, your claim is not yet allowed. Please submit this information as soon as possible. Without it, we are not permitted by the Court’s orders to include you in the September 30, 2014 interim, partial distribution.
If your claim is not allowed or has not been determined before August 15, 2014, you will be eligible to receive your first interim, partial distribution on a later distribution date after your claim has been allowed. These later distribution dates will occur quarterly. You will receive distributions in the same total amount you would have received if your claim was allowed on August 15, 2014.
If you have not received your claim determination, please be patient; it is coming. If you have already received a claim determination, or when you do, I encourage you to respond as soon as you are able so that we can provide you with your first interim, partial distribution.
Our efforts on your behalf continue. Thank you for your continued support and patience.
Kenneth D. Bell
Senior District Judge Graham C. Mullen has issued an ORDER approving the appointment of retired Judge Frank W. Bullock, Jr. of the United States District Court for the Middle District of North Carolina as Special Master to oversee certain claim dispute proceedings.
On today’s docket, we have this new Motion, which opens with this:
The Receiver,1 by and through his undersigned counsel, files this motion (the “Motion”)
seeking an order of this Court authorizing the Receiver to pay an interim distribution to certain
victims of the Zeek Rewards Scheme (defined below) who hold Class 3 2 Allowed Claims and
establishing related record and distribution dates to fairly implement this distribution.
Specifically, as described below, the Receiver seeks an order (i) authorizing an interim
distribution on account of Class 3 Allowed Claims (the “First Interim Distribution”), (ii)
establishing a record date for eligibility to receive the First Interim Distribution on the First Interim Distribution Date, (iii) setting the First Interim Distribution Date, and (iv) establishing
Subsequent Record Dates and Subsequent Distribution Dates for making the First Interim
Distribution to Class 3 Claimants whose Claims are allowed prior to a Subsequent Record Date.
For the reasons discussed below and in the best interests of the Receivership Estate, the Receiver
respectfully submits that the Motion should be granted.
1 Capitalized terms used, but not defined herein, shall have the meanings ascribed them in the Receiver’s Motion for an Order Approving Distribution Procedures and Certain Other Related Relief (the “Distribution Plan Motion”) [ECF No. 170].
2 Claims classified in Class 3 are the Claims of Affiliate Investors and subrogees of Affiliate Investors on account of losses based on the investments they made in the ZeekRewards Scheme. All descriptions of the Classes of Claims in this Motion are for descriptive purposes only and are qualified in their entireties by the Distribution Plan Motion and the Distribution Plan.
You can see the full document here: ZeekDoc210
The initial complaint restricted the definition of TelexFree to that of an “illegal pyramid scheme”, with the new complaint kicking things up a notch. Much of the amended complaint reads the same as the original complaint (filed on April 17th), however there is some new information that’s worth going over.
One of Carlos Costa’s favourite arguments, and indeed that of the company’s top investors and those they continue to lie to, is that TelexFree was a bastion of retail activity surrounding VOIP service sales.
In their amended complaint, armed with actual facts and figures, the SEC completely destroy this argument once and for all.
Any objections TelexFree might have had to the proceedings were swept away:
A Massachusetts bankruptcy judge on Tuesday signaled he will move quickly to appoint a Chapter 11 trustee to take control of TelexFree LLC.
Judge Melvin Hoffman of the U.S. Bankruptcy Court in Worcester, Mass., said that once additional paperwork is on file, he would approve the appointment of the trustee, an independent outsider who will replace the company’s current management.
And with that, Stuart MacMillan’s short stint as TelexFree’s CEO in hiding is all but over. Ditto Labriola (the rest of TelexFree management had already been dismissed or terminated from their positions by MacMillan).
I have no idea how badly MacMillan might have needed the $300,000 TelexFree dangled in front of him to accept the position, but now at the cost of his entire professional career, it hardly seems worth it.
Meanwhile TelexFree’s initial reaction to the ruling is somewhat puzzling:
The SEC filed an Amended Complaint (Doc 128) which appeared on the docket today. I have uploaded the 54 page document onto the Files website.
PatrickPretty has an article up about this new development, including how Carlos Wanzeler spent millions (in cash) to buy properties, exotic cars and a yacht. This is money he stole from people who could not afford to lose it. Carlos Wanzeler, and those like him, are the lowest form of life on this planet.
This is a follow-up story regarding the person captured during the kidnapping of a TelexFree promoter in Peru. This is the translated version; the link to the story (in Spanish) is below:
Detained kidnapper charged when extortion money in Juliaca
Type: Calla Lourdes Torres | Police – 24 May 2014
An alleged hijacker identified as Ismael Sacaca Zamata ( 27) was arrested by Radio Patrol , when forced to a citizen who was kidnapped along with other subjects for two days, to pay $ 128,000 in exchange for his freedom, his intervention came yesterday in the Credit Bank located on Jiron Tupac Amaru in Juliaca.
The grievant Luque name Vladimir Paredes ( 37 ) , said last May 22 at 8 o’clock in the morning was the victim of kidnapping and extortion of a dozen people between men and women, while in a pharmacy located at the corner of Jiron Tumbes and Carabaya .
According kidnapped the property was cited by Ronald Canaza who do not know , but went and was admitted to a room within the pharmacy, where people physically assaulted after asking for $128,000 to release him .
On May 23 in the afternoon took him to the Bank of Credit where the man was going to shell out the money and pay them, but when he was near the window triggered the alarm the victim bank , mobilizing staff Águilas Negras.
After hearing the case, the police managed to speak to one of the alleged hijackers who has been transferred to the Criminal Investigation Section of Juliaca.
Colonel Juan Fernando Olaya Sarango , head of the Police Division of Juliaca , arranged for his staff to work on the identification and capture of the others involved
A reader sent me the link to this, the story is in Spanish and this comes from Google translate:
Promoter kidnapped scammed TelexFree
Saturday, May 24, 2014 | 4:30 a.m.
Juliaca. A group of people kidnapped Luque Vladimir Paredes ( 37 ) promoter of the company “Telexfree International” , accused of defrauding hundreds of people with the tale of Internet advertising organization. They sought to recover their investment and the multinational is bankrupt.
According to police, Vladimir was held in a van Thursday afternoon . The kidnappers demanded him over $ 128,000 to reimburse the amount they lost.
Yesterday at 9:30 am the defendant agreed to deliver the money in a bank , but the nervousness of the raptors members activated the security alarm.
Personal Radio Patrol captured Sacaca Zamata Ismael ( 27) , and the rest of people fled the scene. While retained denounced the kidnapping to the Seincri .
Sacaca told police he participated in the kidnapping because he wanted to recover $ 5,000 invested in that company. ß
This comes from the Boston Globe: (emphasis added)
Wanzeler, the wife of Carlos Wanzeler, is required to stay in Massachusetts and her passports were taken, according to one of the people briefed on the matter.