ORDER APPROVING MOTION TO AUTHORIZE FIRST INTERIM DISTRIBUTION, ESTABLISH RECORD DATES AND SET FIRST INTERIM DISTRIBUTION DATE
This matter is before the Court upon the Receiver’s Motion for an Order Approving his motion to (i) authorize an interim distribution on account of allowed class 3 claims, (ii) establish a record date for eligibility to receive the First Interim Distribution on the First Interim Distribution Date, (iii) set the First Interim Distribution Date, and (iv) establish 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 (the “Motion”).1 Non-party Plastic Cash International, LLC (“PCI”) filed a response objecting to the Receiver’s motion.
1 Capitalized terms used, but not defined herein, shall have the meanings ascribed them in the Motion.
This Court, having reviewed and considered the Motion, and upon all of the proceedings had before this Court, and after due deliberation and sufficient cause having been shown, the Court hereby GRANTS the Motion in all respects. The Court specifically notes that this Order does not purport to determine the validity or priority of PCI’s claim. The PCI Claim will be addressed through the Claim Determination process and separate litigation.
IT IS HEREBY FOUND, DETERMINED, ORDERED, ADJUDGED, AND DECREED, AS FOLLOWS:
1. The notice of the Motion sent via electronic mail to all entities that fully submitted claims on the Claims Portal via the electronic mail address provided in the Claim submission process by such entity constitutes good and sufficient notice of the Motion and all the relief sought therein.
2. The Receiver is authorized, but not directed, to make the First Interim Distribution directly to the Claimants who hold Allowed Claims in Class 3 pursuant to the Distribution Plan.
3. The First Interim Distribution Record Date shall be August 15, 2014.
4. The First Interim Distribution Date shall be September 30, 2014.
5. The first Subsequent Record Date for the First Interim Distribution shall be December 31, 2014.
6. Additional Subsequent Record Dates for the First Interim Distribution shall occur on each of the last business days of each calendar quarter subsequent to the first Subsequent Record Date.
7. The first Subsequent Distribution Date for the First Interim Distribution shall be January 30, 2015.
8. Additional Subsequent Distribution Dates for the First Interim Distribution shall occur on the last business day of the calendar month that directly follows a Subsequent Record Date.
9. The methodology for determining the amount of reserves to be held by the Receiver for the holders of Class 3 Claims that are not allowed by the First Distribution Record Date, but have not been disallowed, is proper. The amount to be reserved by the Receiver for the holders of Class 3 Claims that are not allowed as of the First Distribution Record Date shall be determined and held in the manner set forth in the Motion.
10. The Receiver shall establish a reserve on account of Class 3 Claims that are not allowed as of the First Distribution Record Date in the aggregate amount of the First Interim Distribution Amount that would be necessary to pay such Class 3 Claimant based on the amount that such Class 3 Claimant asserted in the Claim Process, after applying Rising Tide to the First Interim Distribution Amount in accordance with the Distribution Plan.
On March 3, 2014, I announced the filing of a lawsuit to obtain the return of the money paid out to net winners in the ZeekRewards scheme in excess of the amount they paid into RVG. In that lawsuit, Kenneth D. Bell v. Todd Disner, et al., Civil Action No. 3:14-cv-91, I made claims against more than 10 of ZeekRewards’ largest “net winners” in the United States asking that the Court order them to repay the net winnings they received from the scheme. I also made class action claims against approximately 9,400 ZeekRewards net winners in the United States who each won more than $1,000.
Today, I have filed with the Court a motion asking the Court to certify this Net Winner Class and asked that the Court appoint one or more of the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the Net Winner Class. Proposed Net Winner Class members are not required to file any response to the motion, but may, of course, discuss this matter with legal counsel if they choose to do so. The deadline for the named defendants to respond to the motion has been set for August 18, 2014.
A copy of the Motion to Certify the Net Winner Class and the Memorandum of Law in Support of the Receiver’s Motion to Certify the Class can be found here: Motion and Memorandum. Also, a list of those individuals whom the Receiver believes won more than $1,000 and therefore would be included in the Net Winner Class can be found here.
ELECTRONIC Clerk’s Notes for proceedings held before Magistrate Judge David H. Hennessy:Arraignment as to James Matthew Merrill (2) Count 1,2-9 held on 7/30/2014, Case called, Counsel & Defendant appear, Defendant notified of rights, charges & maximum penalties, Not Guilty Plea entered by James Matthew Merrill on counts 1-9, Automatic Disc. to be exchanged by August 27, 2014, Initial Status Conf. scheduled for September 10, 2014 at 2:00 pm, Time to be excluded through September 10 in the interest of justice, Orders to issue. Further Motion Hearing as to James Matthew Merrill held on 7/30/2014 re 55 MOTION for Release of Funds filed by James Matthew Merrill. The Court GRANTS portion of the motion asking for evidentiary hearing for the reasons as stated on the record, and, Counsel are to notify the clerk of mutually convenient dates, Defendant previously released on conditions, and, remain in effect. (Attorneys present: Flashner, Goldstein. )
Among the filings today, this one bears some reading. I have included it below:
RECEIVER’S MOTION FOR CLASS CERTIFICATION
Kenneth D. Bell, as the Receiver for Rex Venture Group, LLC (“Receiver” or “Plaintiff”), and through his undersigned counsel, respectfully moves this Court to certify a defendant class in this action pursuant to Federal Rules of Civil Procedure 23(a) and (b)(1)(A) and (B). The requested class is comprised of all persons or entities who were Net Winners (i.e. received more money than they paid) in the ZeekRewards Ponzi and/or pyramid scheme of more than one thousand dollars ($1,000) (the “Net Winner Class”). As described in detail in the Receiver’s Memorandum of Law in Support of Receiver’s Motion for Class Certification, class certification is particularly appropriate in this action because there are approximately 9,400 class members whose liability rests on the central question of whether the Receiver may recover funds fraudulently transferred to the Net Winner Class in connection with the ZeekRewards scheme. The Receiver will notify the Net Winner Class of this motion by email and publication on the public website maintained by the Receiver (www.zeekrewardsreceivership.com).
WHEREFORE, the Receiver respectfully requests that this Court certify the Net Winner Class for all appropriate purposes, appoint one or more of the individual defendants in this action as class representatives, approve the Receiver’s precertification notification to the proposed class and enter such other and further orders as may be necessary to effect the proper administration of the Net Winner Class.
Dated: July 30, 2014
There is a supplement to this filing,
“MEMORANDUM OF LAW IN SUPPORT OF RECEIVER’S MOTION FOR CLASS CERTIFICATION”
We also have this filing today from Kenneth Bell in which he responds in opposition to the Motions to Dismiss for for “Failure to State a Claim”, and for “Lack of Jurisdiction” as filed by
Trudy Gilmond, and Trudy Gilmond, LLC
Aaron Andrews, Shara Andrews, Rhonda Gates, and Innovation Marketing LLC)
T. Lemont Silver, Karen Silver, and Global Internet Formula, Inc. (“GIF”)
Brief Summary of Argument
Defendants each received up to $1,875,000 in the ZeekRewards scheme. Also, two of ZeekRewards’ principal operators have already admitted that ZeekRewards was a massive Ponzi and pyramid scheme and agreed to plead guilty to securities fraud. Under long established law, money paid out in connection with a Ponzi and/or pyramid scheme is a fraudulent transfer that must be paid back (less money paid in). So, the Receiver’s right to recover the money paid to the Defendants as detailed in the Complaint is clear.
Unable to credibly challenge the fact that they received money from ZeekRewards, that ZeekRewards was a Ponzi and/or pyramid scheme, and that there was a resulting fraudulent transfer as a settled matter of law, Defendants have responded to the Complaint with strident attacks on this Court’s obvious jurisdiction, the very existence of the Receiver and each of the well-pleaded claims against them. None of these attacks has merit.
Also, to the extent Defendants challenge the Receiver’s right to recover the fraudulent transfers they received from ZeekRewards under the NCUFTA, the Receiver has properly pleaded an alternate claim for common law fraudulent transfer. Finally, the Receiver has properly requested a constructive trust be imposed on the money the defendants received from the Ponzi and/or pyramid scheme. In North Carolina, a request that a constructive trust be imposed is very often alleged as a claim for relief despite its general remedial nature. But, regardless of whether it is technically considered a claim or a remedy, Defendants have “obtained …. property which [they] ought not, in equity and good conscience, hold and enjoy,” so the Receiver is entitled to the imposition of a constructive trust on the money received by the Defendants from ZeekRewards.
Therefore, as discussed in more detail below, Defendants’ various motions to dismiss1 – which are responded to in this consolidated response in the interests of efficiency and clarity2 – should be denied.
1 The Defendants have collectively filed four motions to dismiss: Doc No. 21 (Gilmond, Trudy Gilmond LLC, Miller, and Napier); Doc. No. 23 (Brockett); Doc. No. 24 (A. Andrews, S. Andrews, Gates, and Innovation Marketing LLC); and Doc. No. 36 (T. Silver, K. Silver, and Global Internet Formula, Inc. (“GIF”)). All of these defendants except the Silvers and GIF filed a joint memorandum of law in support of their motions (Doc. No. 25), while the Silvers filed a separate memorandum of law in support of their motion (Doc. No. 37). Defendants David and Mary Kettner filed an Answer to the Complaint (Doc. No. 20), but did not file a motion to dismiss. Defendants Todd Disner, David Sorrells and Michael Van Leeuwen did not file an Answer to the Complaint, and default has been entered against them.
2 Rather than present a response of up to 25 pages to each of the motions to dismiss, the Receiver respectfully submits this expanded consolidated response as requested in the Receiver’s Motion for Leave to File Response in Excess of Page Limitation filed July 29, 2014.
The filing goes on to highlight the Legal Analysis, main points as follows:
This Court Has Subject Matter Jurisdiction Over This Action
This Court Has Ancillary Subject Matter Jurisdiction
Each of The Receiver’s Claims States a Valid Cause of Action
The Receiver Has Stated a Claim for Relief under theNCUFTA
The Complaint contains copious allegations in support of the NCUFTA claim against each of the moving Defendants, and the motion to dismiss this claim should be denied.
The Receiver Has Properly Asserted a Claim for Common Law Fraudulent Transfer
The Complaint Properly Requests a Constructive Trust
I have uploaded the lengthy filing onto the Files Website, Doc 67.
Below is the opening statements from Kenneth Bell’s filing today, in which he opposes Todd Disner’s
RESPONSE IN OPPOSITION TO MOTION TO SET ASIDE DEFAULT
The Receiver, through the undersigned counsel, provides the following Response in Opposition to Defendant Todd Disner’s Motion to Set Aside Default. For the reasons set forth below, the Court should deny the Motion.
The Court should not find “good cause” exists to set aside Mr. Disner’s existing default. After failing to file an answer despite having personally received the Complaint three months ago and filing a notice of appearance in the action nearly a month before the default, Mr. Disner now seeks to avoid the default. But, he fails to suggest legitimate circumstances that might constitute good cause for his failure to plead or defend. This Court should not grant Mr. Disner’s belated request when he was served with the Complaint roughly three months ago and has significant litigation experience involving another Ponzi scheme. Also, allowing Mr. Disner additional time to file an answer despite there being no good cause to set aside the default would delay this case as to all parties involved and create additional and unnecessary costs to the Receivership.
The filing goes on to say:
As previously set forth in the Receiver’s Application for Entry of Default, Defendant Todd Disner was personally served with the Summons and Complaint by means of a process server on April 16, 2014. (Doc. No. 41-1). Disner does not dispute the date and manner of this service (although he has lied about it as discussed below). The Receiver heard nothing from Disner for nearly two months. Then, Disner filed with the Court a “Notice of Appearance” providing notice to the Court and parties that he was appearing pro se on behalf of himself and the Kestrel Spendthrift Trust. (Doc. No. 18). This notice is dated May 21, 2014 but was not mailed until two weeks later, on June 5, 2014, as indicated in the postmark on the envelope enclosing the notice. (Doc. No. 18-1). The notice was filed by the Clerk of Court on June 10, 2014.
Disner filed nothing further with this Court, nor did he contact the Receiver. As a result, after the extended June 30, 2014 deadline for filing an answer had passed, the Receiver filed a Motion for Entry of Default against Disner on July 2, 2014, citing his failure to plead or otherwise defend the lawsuit. (Doc. No. 41). The Clerk of Court entered default against Disner on July 3, 2014. (Doc. No. 44).
The Receiver filed a Motion for Default Judgment against Disner on July 8, 2014, which requests that the Clerk of Court enter judgment against Disner pursuant to Rule 55(b)(1) for the sum certain amount of $2,079,757.88, which includes $1,800,037.06 in principal, and prejudgment interest at the North Carolina statutory rate from the date of the last transfer (July 30, 2012) to the date the motion was filed in the amount of $279,720.82.
It was a banner day for filings from Kenneth D. Bell, the Receiver for Rex Ventures. Among these are answers to the counterclaims filed by :
Innovation Marketing, LLC, Aaron Andrews, and Shara Andrews
Darren Miller and
Trudy Gilmond and Trudy Gilmond, LLC
Mr. Bell filed a Motion (59-main) which states the following:
CONSOLIDATED MOTION TO DISMISS DEFENDANTS’ COUNTERCLAIMS
Kenneth D. Bell, in his capacity as court-appointed Receiver for Rex Venture Group, LLC d/b/a ZeekRewards.com (“the Receiver”), through the undersigned counsel, moves the Court pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss each of the counterclaims asserted by Defendants in this action. See (Doc. Nos. 22, 27, 32, 52, 53, and 54). Defendants Jerry Napier, Trudy Gilmond, and Trudy Gilmond LLC (“Gilmond LLC”) assert counterclaims for breach of contract and setoff (Doc. Nos. 52 and 54); Defendant Darren Miller asserts counterclaims for breach of contract, tortious interference, conversion, and setoff (Doc. No. 53); and Defendants Durant Brockett, Aaron Andrews, Shara Andrews, Innovation Marketing LLC (“Innovation Marketing”), and Rhonda Gates assert identical versions of counterclaims for breach of contract, tortious interference, money had and received, 42 U.S.C. § 1983, and unfair trade practices (Doc. Nos. 22, 27, and 32).
Pursuant to Rule 12(b)(6), for the reasons set forth in the accompanying Memorandum in Support of Receiver’s Consolidated Motion to Dismiss Defendants’ Counterclaims, the Court should dismiss with prejudice each of the counterclaims asserted by Defendants Gilmond, Gilmond LLC, Miller, Napier, Aaron Andrews, Shara Andrews, Innovation Marketing, Brockett, and Gates.
Wherefore, the Receiver respectfully moves the Court to dismiss each of the counterclaims asserted by Defendants in this action.
Translated story (thanks to our readers): http://www.noticiassin.com/2014/07/marranzini-auspicia-defensoria-para-victimas-de-telexfree-en-rd/?utm_source=twitterfeed&utm_medium=twitter
Marranzini sponsors advocacy for victims of TelexFree in RD
SANTO DOMINGO, Dominican Republic -. Celso Marranzini The businessman, former president of the National Council of Private Enterprise (Conep), announced the formation of a team of lawyers to provide legal assistance free of charge to citizens cheated by pyramid scheme and were TelexFree as economic victims.
Marranzini considered painful as hundreds of people lost their homestead, “public promoters of the scam TelexFree from radio and newspaper columns to” have not been investigated by the prosecution authorities, who have in their hands a tough response ” this great deception. “
He said that justice must not be indifferent or deaf ear to those who proclaimed from recognized radio stations TelexFree was a foreign investment came to Dominican Republic to stay, accompanying Dominican citizens in their development.
“There is no greater evidence of complicity, and nerve con apañamiento this” Marranzini said, noting: “I do not know how they can sleep, look into the eyes of your children, family and friends, having led people unwary to fall into poverty TelexFree betting their heritage. “
The businessman said that these pyramidal business cycle and landed in the country after generating many economic damages are diluted, leaving helpless masses economically. “And worse, at least in the case of TelexFree, is that cheating has found support lobbyists who use their media power.”
Marranzini asked the German Miranda Villalona magistrate in charge of the investigations into the scam TelexFree not faint at the location of the perpetrators and accomplices, since the only way to deter crime of this nature is putting to work the system consequences.
James Merrill is scheduled for an arraignment hearing tomorrow at 2PM. It could prove interesting as Mr. Merrill now has 8 more felony counts against him than he did when he was originally granted bail.