Ponzitracker has confirmed that victims of the alleged $1 billion TelexFree Ponzi/pyramid scheme no longer face an August 13, 2014 deadline to submit any claim for alleged losses, and that a new deadline will likely be set for late 2014. TelexFree LLC, TelexFree, Inc., and TelexFree Financial Inc. (collectively, “TelexFree”), which initially filed bankruptcy in a Nevada Bankruptcy court, currently face allegations from state and federal securities regulators that their voice-over-internet-protocol (“VOIP”) business was a massive Ponzi and pyramid scheme that took in hundreds of millions of dollars from U.S. investors alone. The proceedings were subsequently transferred to a Massachusetts Bankruptcy court where civil and criminal proceedings are also pending, and an independent trustee was recently appointed.
An attorney for the independently-appointed trustee, Stephen Darr, has confirmed to Ponzitracker that the August 13, 2014 deadline established by the Nevada Bankruptcy court to file a Proof of Claim is no longer valid as a result of the transfer of the proceedings to Massachusetts. Rule 3002 of the Federal Rules of Bankruptcy Procedure provides that a proof of claim is timely filed when done so within 90 days after the first date of the meeting of creditors known in Bankruptcy parlance as the “341 Meeting.” Shortly after TelexFree’s April bankruptcy filing, a notice appeared on the court docket setting the 341 Meeting for May 15, 2014 and providing that the Proof of Claim filing deadline was 90 days after that date – resulting in a claim deadline of August 13, 2014.
However, the originally-scheduled 341 Meeting was never held, as a Court ordered the transfer of the proceedings to a Massachusetts Bankruptcy court on May 6, 2014. Recently, Ponzitracker spoke with an attorney for Trustee Stephen Darr, who confirmed that:
You can disregard the bar date set by the Bankruptcy Court in Nevada.
Thus, until the Court reschedules the 341 Meeting, the Proof of Claim deadline will not take effect.
This change was also recently reflected on the official website maintained for TelexFree interested parties, with the Proof of Claim Form section modified to state that:
Please note that a modified Proof of Claim Form specific to the TelexFree cases will be available in the near future. A Bar Date has not been set.
Thus, while the August 13, 2014 claim deadline is no longer valid, victims should still continue to gather appropriate documents that will allow them to submit an accurate claim, including bank documents showing their investment, documents from TelexFree or any promoter confirming their investment, and documents showing any funds received from TelexFree after their investment. With the number of estimated victims likely to be in the tens of even hundreds of thousands, any discrepancy in a submitted Proof of Claim could potentially delay any eventual recovery.
Ponzitracker will report on when a new bar date is made public, and will provide a detailed instruction guide for understanding and completing the Proof of Claim form at an appropriate time.
Previous Ponzitracker coverage of TelexFree is here.
On the docket today were entries regarding Merrill’s Conditions of release, along with a signed “Arrest Warrant in Abeyance”. I guess that it is good to be prepared for violating Curfew or any other condition. You may read the new documents here.
In addition, there is an entry regarding the $900,000 Bond secured by 3 properties, a Motion for Release of Funds and a record of Mortgage on one of the properties held for Bond.
The Motion to release Funds mentions that the Order to freeze assets on May 9, 2014 included:
Middlesex Savings Bank, $10,643.00
Middlesex Savings Bank, $104,988.64
Waddell & Reed, $3,985,097.33
Waddell & Reed, $79,684.28
Merrill is asking the Court to release funds so he can pay for his legal defense, since the Court found him to be “indigent” based on his money was frozen and inaccessible. The Motion goes on to say that:
On or about June 18, 2014, with the assent of the Securities and Exchange Commission, Mr. Merrill moved for the release of certain accounts subject to a freeze order issued by Judge Gorton in the SEC litigation. Attorneys for the SEC assented to the release of the accounts, concluding that they did not contain a sufficient nexus to TelexFree. Judge Gorton has since allowed the motion. The following accounts have been ordered released by Judge Gorton, only the last of which is covered by the seizure warrants identified above:
Waddell & Reed, IRA $91,692
Waddell & Reed IRA $158,289
Waddell & Reed 401K $80,272
In the first group of numbers above, Merrill has around $4.1 million dollars in frozen assets and only has that little pittance set aside for his children’s education? And his “retirement” savings amount to around $ 375,000?
Maybe it’s just me but Merrill seems to need to reevaluate his priorities, especially since he can lose it all if convicted. Maybe it is not such a good idea to run a Ponzi/Pyramid scheme?
How long will these nimrods take to figure this out??
In today’s Zeek Rewards filings, we have several Defendants/affiliates who have responded to the original Complaint and filed a Counterclaim against Kenneth Bell, the court-appointed Receiver.
The first of three (3) Counterclaims was filed by one Durant Brockett, in which he asserts the following five (5) Claims For Relief:
Breach of Contract
RVG and Brockett had an enforceable contract pursuant to which Brockett performed services for the benefit of RVG. In return, RVG was obligated to compensate Brockett as RVG had promised for the services Brockett performed.
The Receiver, acting as RVG, and by confiscating the funds in Brockett’s RVG NXpay account, has failed and refused to pay Brockett for the services that Brockett performed.
The conduct of the Receiver, acting as RVG, constitutes a breach of contract. Brockett has been damaged in an amount to be determined at trial for the Receiver’s/RVG’s breach of contract.
A valid contract existed between Brockett and NXpay relating to Brockett’s RVG NXpay account. That contract gave Brockett the exclusive right to withdraw funds from his RVG NXpay account.
On information and belief, the Receiver had knowledge of Brockett’s contractual relationship with NXpay.
The Receiver intentionally induced NXpay not to perform its contract with Brockett and, in violation of the contractual agreement between NXpay and Brockett, either (i) to deliver the funds in Brockett’s RVG NXpay account to the Receiver or (ii) not to pay the funds to Brockett as NXpay’s contract with Brockett obligated it to do.
The Receiver’s conduct described above was willful and undertaken on behalf of RVG. Brockett is entitled to punitive damages against the Receiver and RVG in accordance with N.C. GEN. STAT. § 1D-1, et seq.
Money Had and Received
The Receiver is in receipt of funds which do not in equity and good conscience belong to him.
Brockett is the rightful owner of the funds the Receiver received from Brockett’s RVG NXpay account.
Brockett is entitled to an order compelling the Receiver to turn over to Brockett all funds the Receiver received from Brockett’s RVG NXpay account.
Civil Action Pursuant to 42 USC Section 1983 for Deprivation of Constitutional Rights, or, Alternatively Common-Law Claim for Violation of Fourth Amendment Rights
The Receiver was acting under the color of law when he caused NXPay to refuse to honor the terms of its contract with Brockett and when he caused NXPay to turn over to the Receiver Brockett’s funds in his RVG NXpay account.
As a result of the Receiver’s conduct, Brockett has been wholly deprived of the value, use and benefit of the funds in his RVG NXpay account.
Pursuant to 42 U.S.C. § 1983 and the Fourth Amendment of the United States Constitution, the Receiver is liable to Brockett for redress for Brockett’s damages resulting from the loss of use of his funds.
Unfair Trade Practices
RVG’s and the Receiver’s conduct described above and in the Complaint constitutes unfair methods of competition, unfair trade practices, and deceptive trade practices in violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. GEN. STAT. § 75-1.1, et seq.
The conduct was illegal, offends public policy and is immoral, unethical, oppressive, unscrupulous, and deceptive.
As a result of the conduct, Brockett has suffered damages.
The use by RVG and the Receiver of unfair methods of competition and unfair and deceptive trade practices entitles Brockett to recover (a) three times his actual damages and (b) attorneys’ fees and costs pursuant to N.C. GEN. STAT. § 75-16.1.
The almost identical Counterclaims have been brought by Innovation Marketing LLC, Shara Andrews, Aaron Andrews and Rhonda Gates. Mr. Brockett is using noted legal mouthpiece Rodney Alexander.
As some of you will recall, Rodney Alexander was previously retained by Robert Craddock, of “Fun Club USA” and “Zteambiz” infamy, in a half-hearted and highly questionable attempt to intervene in the RVG case (it didn’t work out as he planned, of course). Craddock accepted donations of which no one is sure how or where they were used, similar to the “ASD Justice” group of Todd Disner and Dwight Schweitzer who gathered money for a legal bid to intervene in the ASD/AdSurfDaily federal civil case, which also amounted to absolutely nothing.
Mr. Alexander also filed a “Motion to Dismiss for Failure to State a Claim / MOTION to Dismiss for Lack of Jurisdiction” for Defendants Aaron Andrews, Shara Andrews, Durant Brockett, Rhonda Gates, Trudy Gilmond, Innovation Marketing LLC, Darren Miller, Jerry Napier, and Trudy Gilmond, LLC.
The other two “Answers to Complaint/Counterclaims” were filed by attorney James Edmundson on behalf of Defendants Innovation Marketing LLC, Shara Andrews, Aaron Andrews and Rhonda Gates.
I will keep an eye on these filings; it will be interesting to see how the Judge deals with them. Mr. Bell filed in every Federal District in the land so that he DID have jurisdiction to pursue clawbacks; how the Defendants now believe Bell does not have jurisdiction to sue them is likely just a matter of legal posturing and trying to get out of a bad situation.
For the sake of brevity, I will post the Docket entries. You may find the complete documents on the Files website (14-cv-00089) and (14-cv-00091)
U.S. District Court
Western District of North Carolina (Charlotte)
CIVIL DOCKET FOR CASE #: 3:14-cv-00089-GCM
NOTICE of Appearance by Mark Patrick Foster, Jr on behalf of Darryle Douglas
NOTICE by Darryle Douglas Affiliated Companies and Counsel (Foster, Mark)
MOTION to Withdraw as Attorney by Darryle Douglas. (Foster, Mark)
ORDER granting 25 Motion to Withdraw as Attorney. Attorney Mark Patrick Foster, Jr terminated. Signed by Senior Judge Graham Mullen on 6/16/2014. (eef)
MOTION to Dismiss for Failure to State a Claim , MOTION to Dismiss for Lack of Jurisdiction by Beth C. Plyler, James L. Quick.Responses due by 7/17/2014
ANSWER to 1 Complaint with Jury Demand by Beth C. Plyler, James L. Quick.(Martinez, Michael)
AFFIDAVIT re 27 MOTION to Dismiss for Failure to State a Claim MOTION to Dismiss for Lack of Jurisdiction , 28 Answer to Complaint by Beth C. Plyler, James L. Quick (Martinez, Michael)
ANSWER to 1 Complaint with Jury Demand by Alexandre de Brantes.(Turner, James)
U.S. District Court
Western District of North Carolina (Charlotte)
CIVIL DOCKET FOR CASE #: 3:14-cv-00091-GCM
NOTICE of Appearance by Richard W. Wilson on behalf of Trudy Gilmond, Darren Miller, Jerry Napier, Trudy Gilmond, LLC (Wilson, Richard)
Pro Se ANSWER to 1 Complaint by David Kettner, Mary Kettner.
MOTION to Dismiss for Failure to State a Claim , MOTION to Dismiss for Lack of Jurisdiction by Trudy Gilmond, Darren Miller, Jerry Napier, Trudy Gilmond, LLC.Responses due by 7/17/2014
ANSWER to 1 Complaint & Motion Pursuant to Rules 12(b)(1), 12(b)(6) and 9(b) to Dismiss, COUNTERCLAIM against Kenneth D. Bell by Durant Brockett.(Alexander, Rodney)
MOTION to Dismiss for Failure to State a Claim , MOTION to Dismiss for Lack of Jurisdiction by Durant Brockett. (Alexander, Rodney)
MOTION to Dismiss Pursuant to Rules 9, 12(b)(1) and 12(b)(6) by Aaron Andrews, Shara Andrews, Rhonda Gates, Innovation Marketing LLC.Responses due by 7/17/2014 (Edmundson, James)
MEMORANDUM in Support re 21 MOTION to Dismiss for Failure to State a Claim MOTION to Dismiss for Lack of Jurisdiction , 24 MOTION to Dismiss Pursuant to Rules 9, 12(b)(1) and 12(b)(6), 23 MOTION to Dismiss for Failure to State a Claim MOTION to Dismiss for Lack of Jurisdiction by Aaron Andrews, Shara Andrews, Durant Brockett, Rhonda Gates, Trudy Gilmond, Innovation Marketing LLC, Darren Miller, Jerry Napier, Trudy Gilmond, LLC. (Alexander, Rodney)
Appendix by Aaron Andrews, Shara Andrews, Durant Brockett, Rhonda Gates, Trudy Gilmond, Innovation Marketing LLC, Darren Miller, Jerry Napier, Trudy Gilmond, LLC. Appendix re: 21 Motion to Dismiss/Failure to State a Claim, Motion to Dismiss/Lack of Jurisdiction, 23 Motion to Dismiss/Failure to State a Claim, Motion to Dismiss/Lack of Jurisdiction, 24 Motion to Dismiss (Alexander, Rodney)
ANSWER to 1 Complaint and Affirmative Defenses to Complaint and, COUNTERCLAIM against All Plaintiffs by Innovation Marketing LLC, Shara Andrews, Aaron Andrews.(Edmundson, James)
MOTION for Leave to Appear Pro Hac Vice as to W. James Jonas, III Filing fee $ 276, receipt number 0419-2356891. by Global Internet Formula, Inc., Karen Silver, T. Lemont Silver. (Simpson, Bruce)
MOTION to Dismiss for Failure to State a Claim by Global Internet Formula, Inc., Karen Silver, T. Lemont Silver.Responses due by 7/17/2014 (Simpson, Bruce)
MEMORANDUM in Support re 29 MOTION to Dismiss for Failure to State a Claim by Global Internet Formula, Inc., Karen Silver, T. Lemont Silver. (Simpson, Bruce)
Corporate Disclosure Statement by Global Internet Formula, Inc., Karen Silver, T. Lemont Silver (Simpson, Bruce)
ANSWER to 1 Complaint ,Affirmative Defenses, and, COUNTERCLAIM against Kenneth D. Bell by Rhonda Gates.(Edmundson, James)
I did not get Doc 26 (above) as it was 198 pages of “declarations”. Perhaps one of the many people I send these things to will help out with the PACER bill. I have no ads on this website and want to keep it that way
We have this Assented To motion filed today, as follows:
Defendant Steven M. Labriola (“Labriola”), with the assent of plaintiff Securities and Exchange Commission (“the Commission”) and hereby moves this Court to modify the Consent Order entered by this Court on May 9, 2014 in the manner set forth in the proposed Order attached hereto as Exhibit A. The modification is necessary to permit Mr. Labriola (a) to withdraw $5,000 to cover his living expenses and child support obligations for the coming month and (b) to establish a new bank account that is not subject to the Consent Order into which he will deposit earnings from his new job, which is completely unrelated to the operations of TelexFree, Inc. or TelexFree, LLC.
The motion is followed with the usual “Proposed Order”, but since the Court has been similarly disinclined to do “Carve-outs” of money for other defendants (like Faith Sloan), Labriola may not get his money.
The spectacle of the battle between one of the industry’s most prolific Ponzi pimps and the SEC continues.
Hat in hand and convinced that, despite her determination to flout recent court orders against her, Faith Sloan approached the Massachusetts District and demanded $15,800 in frozen funds be made available to her.
Additionally, the Judge hearing the case ruled on May 7th that “no carve-outs” (of money) would be issued to defendants who did not comply with orders to declare their assets to the SEC.
Without even so much as an explanation, yesterday saw Sloan’s request wholly denied. On a photocopied page from Sloan’s original request, the words “motion denied” are scribbled along with Judge Gorton’s signature. [Continue reading…]
BREAKING NEWS: Today’s docket comes as a big surprise! Two new lawsuits are added as related cases to the Zeek Rewards lawsuit, 12-cv-519. They are 14-cv-351 and 14-cv-352, Malpractice suits against 2 Zeek Rewards legal counsels. Here is what Kenneth Bell filed, and got an order the same day to proceed.
RECEIVER’S REQUEST FOR LEAVE TO INSTITUTE ACTIONS
On August 17, 2012, this Court entered an Agreed Order appointing Kenneth D. Bell as a Receiver to investigate, pursue and recover all potential claims and other assets of the Rex Venture Group, LLC (“RVG”) receivership estate. Pursuant to paragraph 43 of that Agreed Order, the Receiver requests leave of this Court to institute actions for the benefit and on behalf of the Receivership Estate against certain individuals and entities that failed to provide competent legal counsel to RVG and otherwise assisted in promoting and perpetrating the ZeekRewards Ponzi and pyramid scheme.
Since his appointment, the Receiver has thoroughly investigated RVG and the ZeekRewards scheme. After careful analysis of RVG’s written and electronic records, extensive document review and numerous interviews with relevant witnesses, the Receiver has concluded that two attorneys hired by RVG (and their related entities) caused significant damages to RVG by their negligent and other wrongful conduct. The Receiver proposes to file separate actions against the two attorneys.
In accordance with the Agreed Order, the Receiver has provided prior notice to Counsel for the Securities and Exchange Commission.
Thus, the Receiver respectfully requests leave to institute the actions described above in this Court. 1
1 If requested, a copy of the two Complaints that the Receiver intends to file to begin the actions will be made available to the Court for its in camera review.
Judge Mullen responded with this:
THIS MATTER is before the Court on the Receiver’s Request for Leave to Institute Actions against two attorneys hired by RVG. The Receiver alleges that these proposed defendants caused significant damages to RVG because of negligent and other wrongful conduct. For good cause, the Court will grant the Receiver’s request.
IT IS, THEREFORE, ORDERED that the Receiver is hereby GRANTED leave to file the two referenced actions.
I have added both of these new cases onto the Files website, as new Zeek civil cases.
Famous “MLM Attorney” Gerald Nehra has gotten an attorney to represent him for RICO charges stemming from the Bankruptcy case and a class action inferring that Nehra knew all along that he was helping to promote a scam, kinda like he did with ASD and other efforts to sanitize schemes with the mere present of his name as “legal counsel”.
Yesterday saw a hearing for TelexFree Trustee Stephen Darr’s request for permission to subpoena several companies associated with TelexFree. Darr had also requested permission to conduct depositions with individuals from said companies, with the court granting him permission to proceed.
Five such motions were filed by Darr, with three of them granted as proposed. Alvares and Marsal (financial consultants to TelexFree) objected only to having to share emails between the firm and its legal counsel.
Darr agreed to this on condition that he reserves the right to request the emails, if needed, at a later date. A & M consented on condition they retain the right to appeal any such requests.
At the time of publication, no order has been made public regarding Darr’s request to subpoena TelexFree’s law firm Greenberg Traurig, however news reports suggest permission was granted on all five subpoena requests.