Archives on December, 2015

TelexFree: Civil Case Stayed, but Sann Rodrigues in Civil Contempt of Court Order

Posted by ASDUpdates on December 21, 2015One Comment
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Rodrigues

newtelexfreelogoBack in August of 2015, the SEC filed a Motion to find Sann Rodrigues in Civil Contempt (1:14-cv-11858 Mass.) for repeated violations of the Temporary Restraining Order, Order Freezing Assets, and Order for Other Equitable Relief entered as to all defendants on April 14, 2014. After this filing, we have many documents filed by both the Plaintiff and Sanderley Rodrigues; many of Rodrigues’ filings were seemingly fabricated, like his inability to speak English even after he made several Youtube videos in English and his repeated insistence that he cannot provide the Ordered accounting without incriminating himself.

Judge Nathaniel Gorton has responded to this matter of Civil Contempt and has issued his “Memorandum and Order”:

This lawsuit has been stayed pending the resolution of a parallel criminal proceeding brought by the U.S. Department of Justice against two of Rodrigues’s co-defendants (U.S. v. Wanzeler, 14-cr-40028-TSH). Despite the stay, two orders currently remain in place against Rodrigues freezing his assets and requiring him to provide the SEC with a full accounting of his assets and transactions. On August 12, 2015 the SEC filed a motion to hold Rodrigues in contempt (Docket No. 313), claiming that Rodrigues has yet to comply with either order.

In its motion to hold Rodrigues in contempt, the SEC alleges that Rodrigues has violated the temporary restraining order and preliminary injunction in numerous ways, including: 1) conducting financial transactions through several shell companies, 2) withdrawing money from his personal accounts, 3) using an online payment service provider to conduct transactions with assets from accounts subject to the freeze, 4) opening new accounts at different banks and conducting
transactions through those accounts, 5) selling and purchasing luxury automobiles and 6) transferring real estate to a shell company.

The SEC alleges that Rodrigues was able to conduct those transactions in spite of the freeze because he had also violated the Court order requiring him to provide an accounting of all of his assets. That order required defendant to disclose to the SEC all bank accounts and other assets that were subject to his direct or indirect control as of the date of the original asset freeze. As a result of Rodrigues’s failure to comply with the accounting order, the SEC alleges, it was unaware of many of his assets and was unable to notify the custodial institutions.

On April 16, 2014, a Temporary Restraining Order was issued and required all defendants to submit an accounting identifying all assets or transfers larger than $500. Rodrigues failed to submit such information. The May 8th Preliminary Injunction reiterated this requirement and Rodrigues once again failed to submit the required accounting.

More than one year later, this Court entered the June 10, 2015 Order (“Order to Provide Accounting”) (Docket No. 304) . That order required Rodrigues to submit the original accounting, provide a list of current assets and describe all transactions over $500 that he had conducted since the TRO was entered. Rodrigues finally submitted an accounting on July 30, 2015.

While Rodrigues did provide “an accounting”, the SEC maintained the information he provided was “deficient in several ways”. The SEC somehow obtained the required information “through other means and therefore no longer seeks an order to have Rodrigues provide this information”.

Judge Gorton then addressed the Contempt Motion:

The Court may hold a party in civil contempt if the movant has shown that (1) the party to be held in contempt had notice of the violated order, (2) the order is clear and unambiguous, (3) the party to be held in contempt had the ability to comply with the order and (4) the party to be held in contempt actually violated the order. The moving party must prove these four points by clear and convincing evidence.

In this case, Rodrigues was notified of each of the orders entered against him. Those orders contained detailed and specific language as to the assets that were frozen and the information that Rodrigues was to provide in his accounting. The orders require defendant to leave untouched accounts under his direct or indirect control and to provide information on accounts under his control. The SEC has also provided numerous exhibits of documentary and testimonial evidence demonstrating specifically how defendant violated the orders.

Rodrigues tried to raise several arguments, disputing that he had actual notice of the orders, the first prong of defense. He also asserted that he was unable to comply with these orders because to do so he would have to waive his Fifth Amendment Rights against self-incrimination.

He further contends that if the Court were to hold him in contempt, he would be unable to purge the contempt without waiving his Fifth Amendment right.

Judge Gorton then eviscerates Rodrigues’ absurd arguments with this:

First, he asserts that the TRO and preliminary injunction are very complex and thus he was unable to understand them. Consequently, he avers, he was left without notice of the orders and therefore unable to comply with them. Second, defendant explains that he was unable to understand the orders due to his limited comprehension of English. Finally, he declares that he did not have assistance of counsel to aid him in understanding the orders until the deadlines for compliance with both the TRO and the preliminary injunction had passed, as evidenced by the fact that his counsel did not enter an appearance until June 13, 2014.

His arguments are unconvincing. Rodrigues was subject to a very similar temporary restraining order and preliminary injunction in a 2006 civil enforcement action also brought by the SEC. Thus, however complex were the requirements of the orders in this case, they were not unfamiliar. Furthermore, the fact that Rodrigues assented to the Order to Provide Accountings and Carve-Out demonstrates that he had sufficient notice. As to the language barrier, the SEC submitted an affidavit of a bank manager who frequently interacted with Rodrigues stating that Rodrigues speaks fluent English. It also submitted videos of Rodrigues speaking English.

While Rodrigues did not retain counsel until after the temporary restraining order and preliminary injunction had been entered/ he was represented at the time he consented to the Order to Provide Accountings. Thereafter, it took him more than 13 months to file his first response and even then he did not restore all of the assets removed in violation of the asset freeze. Thus, lack of  representation does not suffice as an excuse for his lack of compliance.

In a supplemental memorandum submitted to the Court, Rodrigues has also argued that he did not have actual notice of the April 23, 2014 and April 25, 2014 extensions of the TRO. Because the Court, at a hearing held on October 16, 2015, made a finding of fact that Rodrigues had actual notice of those extensions, that argument will be discredited here.

Judge Gorton next addresses the Fifth Amendment Privilege argument (I skipped the case law references and went straight to the decision): {emphasis added}

Finally, by signing the Order to Provide Accountings, defendant waived his Fifth Amendment privilege against production with respect to certain potentially incriminating asset information. Because defendant has already agreed to disclose that information, he may not raise a Fifth Amendment
defense against such disclosure through different means. Thus, defendant has also waived his Fifth Amendment privilege with respect to the restoration of assets dissipated in violation of the TRO and the May 8, 2014 Preliminary Injunction. By restoring such assets, Rodrigues would reveal only the same information that would have been revealed by the accounting
which he agreed to provide.

Although the Order to Provide Accountings did not address Rodrigues’s separate obligation related to the asset freeze, his consent to provide the information in the accounting waived his Fifth Amendment privilege with respect to that information regardless of the means through which it is disclosed. It is therefore iiranaterial that the SEC no longer requests that the
Court hold defendant in contempt for his failure to provide an accounting. Ordering Rodrigues to purge his contempt of the asset freeze by restoring dissipated assets will not force him to divulge protected information because he has already waived his right to protection under the Fifth Amendment with respect to that information.

The Court finds that the legal standard for civil contempt has been met and that defendant is not entitled to assert a Fifth Amendment privilege in support of his noncompliance with existing orders.

ORDER
In accordance with the foregoing, plaintiff’s motion to hold defendant Sanderley Rodrigues de Vasconcelos in contempt (Docket No. 313) is ALLOWED. Sanctions will, however, be held in abeyance for the time being.

Defendant shall, on or before January 15, 2016, restore all funds and other assets transferred or disposed of in violation of the asset freeze as follows:

(a) restore the following funds that he dissipated either through removing cash from accounts or selling cars:

(i) $211,473   withdrawn from JP Morgan account XXXX7958,
(ii) $ 21,600 withdrawn from BMO Harris accounts for SMA Logistics and ZVX Investment,
(iii) $ 22,200 received with respect to the sale of the 2007 Mercedes Benz CLS and
(iv) $ 79,700 received with respect to the sale of the Ferrari F340;
$334,973 Total; and

(b) with respect to the wrongfully transferred properties in West Palm Beach, Florida at 1103 18th Street 1, 1014 17th Street and 711 Division Ave., defendant shall either obtain the reconveyance of those properties, remit funds equal to the market value thereof or provide the Court with a detailed plan as to how he will otherwise cure his contempt in relation to the transfer of those properties.

In default of full compliance with the provisions of sub-paragraphs (a) and (b) hereof, defendant’s bail will be revoked and he will be incarcerated for contempt of orders of this Court.

Zeek Rewards: Judge Mullen Approves Settlement with Nehra and Waak

Posted by ASDUpdates on December 17, 2015No Comments

ORDER APPROVING SETTLEMENT
This matter is before the Court upon the Receiver’s Motion to Approve Settlement Agreement filed December 11, 2015. The Court has reviewed the motion and proposed settlement and finds that the proposed settlement is in the best interests of the Zeek victims. Accordingly, the Court will grant the motion.

IT IS, THEREFORE, ORDERED, ADJUDGED, AND DECREED that:
1. the Receiver’s Motion to Approve Settlement Agreement is hereby GRANTED;
2. the Settlement Agreement attached to the motion is approved, and the Receiver is hereby authorized to perform according to the terms of that Settlement Agreement;

Signed: December 17, 2015

Zeek Rewards: Judge Mullen Approves Receiver’s Settlement with NXSystems for $3.5 Million

Posted by ASDUpdates on December 16, 2015No Comments

ZeekThis is hot off the docket:

This matter is before the Court upon the Receiver’s Motion to Approve Settlement Agreement with NxSystems, Inc. filed December 11, 2015. The Court has reviewed the motion and proposed settlement and finds that the proposed settlement is fair and equitable and is in the best interests of the Zeek victims. Accordingly, the Court will grant the motion.

ORDER
IT IS, THEREFORE, ORDERED, ADJUDGED, AND DECREED that:

1. the Receiver’s Motion to Approve Settlement Agreement with NxSystems, Inc. is hereby GRANTED; and

2. the Settlement Agreement attached to the motion is approved, and the Receiver is hereby authorized to perform according to the terms of that Settlement Agreement.

Signed: December 16, 2015

Zeek Rewards: Canadian “Net Winner” Sandra Gavel Files Similar “Pro Se Letter”

Posted by ASDUpdates on December 15, 2015No Comments

ZeekAlmost identical to the letter sent to Clerk of the Court Frank Johns, we have a Pro Se letter which mimics the one sent in by Katherine Parker, also “a private person”. Both letters begin with “Dear Frank” as if they are personally acquainted with the Clerk. Perhaps it is just their attempt to be personable? Probably not…..

Gavels letter starts out with notifying the Clerk that she believes this to be a fraudulent process, and also mentions the “Fraudulent/Non-existent Court Name and Undefined Status of Respondent”. And, there are the same versions of the name of the District Court, capitalized and not. And, the claim that these names “do not  appear to exist in law anywhere”. Plus, there is the “discrepancy/change in the entire style of cause used in the various court documents which created confusion and ambiguity”. There is also a mention of the “common law court” and changing the case into some “undeclared jurisdiction”. Ms. Gavel does not consent to the “change in jurisdiction out of common law court” or “the diminution of private rights”.

Gavel also claims that she “did not receive the invitation in time to attend the conference”; she refers to the Initial Attorneys Conference held on January 26, 2015. Gavel claims she mailed correspondence to the Clerk and Attorneys but they failed to respond to her questions and for clarification as to why the have proceeded in what she believes is a fraudulent process.

There is more nonsense similar to Parker’s letter, so I will not go into it further. You can read the filing by clicking here.

 

Zeek Rewards: Receiver’s Motion for Settlement with NXSystems

Posted by ASDUpdates on December 14, 2015One Comment

Kenneth Bell has filed a Motion to Approve Settlement with NXSystems,

Following settlement discussions, the Parties entered into a Settlement Agreement with the effective date of October 21, 2015 for the purpose of resolving these disputed matters and to avoid the cost and expense of further litigation. The Receiver believes this settlement, which recovers at least $3,500,000 for the Receivership estate and includes a Confession of Judgment for $9,069,446 (the full amount of the Receiver’s claim), is in the overall best interests of the victims of the scheme and in fulfillment of the Receiver’s duties.

Here is a link to this Settlement Agreement.

 

Zeek Rewards: More Pro Se Nonsense from Canada’s Katherine Parker

Posted by ASDUpdates on December 14, 2015No Comments

In much the same style as her previous “Pro Se” filing, in the form of “sovereign citizen” rhetoric, Katherine Parker of Ontario, Canada has filed her notice of “Fraudulent Process”. Yeah, it’s fairly standard nonsense used by these folks, and starts out like this:

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This is an often used argument by these folks, ‘let’s stress whether words should be capitalized or not’, as it makes all kinds of difference to the actual meaning of the words, if only to them for the sake of arguing about it.

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Yep, the Court Clerk always answers questions about his Oath of Office. If only tepidly arguing with a federal court actually worked.

Next, Parker asks yet another barrage of inane questions such as ‘Is this claim against me in my private capacity, or some representative capacity, or in the capacity of a trustee of an undeclared trust, or in the capacity as a beneficiary of an undeclared trust, or in the capacity of an agent of an undeclared trust?’  I wonder if she left anything out?

Then we have this added absurdity-

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  1. I do not consent to contract in the unrecognized at law court that you filed this matter in,
  2. If you have a lawfully valid claim with a harmed man or woman in a lawful common law court and wish to bring me into a lawful court, I will accept and participate in a common law court process if it is a court where common law and equity is heard and recognized,
  3. if you are trying to take me to a court other than common law or equity, I do not consent,
  4. If you continue to pursue this matter which appears to be fraudulent then I will be compelled to file a formal complaint against you as Clerk, defined in 28 USC 751.

She gives the Clerk 3 days to contact her and to enter into “good faith discussions”.  The document was filed onto the docket on December 10th and was sent on December 7th.

I believe the 3 days are up, Ms. Parker. Let’s see what good going after the Court Clerk does for you.

Zeek Rewards: Receiver’s Motion to Approve Settlement Agreement with Gerald Nehra

Posted by ASDUpdates on December 11, 2015One Comment

zeeklerKenneth Bell, the Zeek Receiver, is asking the Court to approve a Settlement agreement to resolve the civil case filed against Gerald Nehra, paid legal compliance mouthpiece for sanitizing alleged Ponzi schemes. The Motion starts like this: (emphasis added)

“Following settlement discussions, the Parties have entered into a Settlement Agreement with the effective date of December 8, 2015 for the purpose of resolving this matter and to avoid the cost and expense of further litigation. The Receiver believes this settlement, which recovers $100,000 for the Receivership estate based on the defendants’ financial condition and includes a Confession of Judgment for $100 million and an acknowledgement that “RVG in fact operated an unlawful Ponzi and pyramid scheme,” is in the overall best interests of the victims of the scheme and in fulfillment of the Receiver’s duties.”

The Motion goes on to mention the “Likelihood of Success and Complexity of Litigation”, the “Difficulty of Collection”, and that “Settlement is in the Best Interests of Victims”.

Accordingly, the RVG Receiver respectfully requests the Court enter an order approving the Settlement Agreement attached as Exhibit 1, authorizing the RVG Receiver to perform according to the terms of the Settlement Agreement and granting such further and other relief as the Court deems just and equitable.

Respectfully submitted this 11th day of December, 2015

Here is a link to the Settlement Agreement  Exhibit 1 .

Zeek Rewards: Darryle Douglas Found In Civil Contempt, Arrest Warrant Issued!!

Posted by ASDUpdates on December 11, 2015One Comment
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Douglas

Alleged “Net winner” Darryle Douglas is in some trouble with the Court following his failure to appear, as Ordered, at a Show Cause Hearing held on December 3rd. The Hearing was for him to show cause why he should not be found in contempt of a Court order issued on September 15, 2015 which required him to return to the Receiver the Zeek Rewards database in his possession, to produce certain financial records, and to submit to a deposition by the Receiver..

The Court was satisfied that Douglas (right) had received the September 15th Order and that he has violated that Order. The Court also found that: (emphasis added)

“the Receivership has suffered and will continue to suffer harm because of Mr. Douglas’ violation of the Order. Mr. Douglas was previously found liable for more than $2 million to the Receivership in the form of fraudulent transfers and prejudgment interest, and under the Agreed Order in this matter, these are Receivership Assets belonging to the Receivership Estate. Mr. Douglas’s failure to return the database and these Receivership Assets not only harm the Receivership, but they also violate the Agreed Order in obstructing the Receiver’s efforts.

It is, therefore, ORDERED, that Darryle Douglas is in civil contempt for violation of this Court’s Order.

It is further ORDERED that Mr. Douglas shall be incarcerated until he agrees to comply in full with the Court’s Order dated September 15, 2015.

The United States Marshal is hereby DIRECTED to issue and execute a warrant for Mr. Douglas’ arrest and incarceration until he can be brought before this Court and until he agrees to comply with the Order in question.”

Zeek Rewards: SEC Files Suit Against Trudy R. Gilmond !!

Posted by ASDUpdates on December 8, 2015No Comments

sec-logoU.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23421 / December 8, 2015

Securities and Exchange Commission v. Trudy R. Gilmond, U.S. District Court for Western District of North Carolina (Civil Action No. 3:15-CV-00591)

SEC Charges ZeekRewards Pyramid-Ponzi Scheme Promoter

On December 4, 2015, the Securities and Exchange Commission filed suit in the United States District Court for the Western District of North Carolina against Trudy R. Gilmond for her participation in the fraudulent unregistered offer and sale of securities through Rex Venture Group LLC d/b/a ZeekRewards.com, an internet-based combined Ponzi and pyramid scheme. According to the Complaint, from approximately January 2011 until August 2012, when the ZeekRewards website was shut down, Rex Venture Group raised more than $850 million from approximately one million internet customers nationwide and overseas through the website.

The Complaint alleges that Gilmond solicited investors through the Internet and other means to participate in the ZeekRewards program, a self-described “affiliate advertising division” for the companion website, Zeekler.com, through which the company operated penny auctions. The ZeekRewards program offered customers several ways to earn money, two of which – the “Retail Profit Pool” and the “Matrix” – involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.

According to the Complaint, Gilmond and others lured investors to ZeekRewards by promising investors a share of the company’s daily net profits in the form of daily profit share awards. The company’s purported calculations consistently resulted in daily award averaging approximately 1.5 percent per day, fraudulently conveying the false impression that the company was extremely profitable. In fact, the daily award percentage was fabricated and investor payouts bore no relation to the company’s net profits. Approximately 98% of ZeekRewards’ total revenues and the “net profits” paid to investors were comprised of funds received from new investors in classic Ponzi scheme fashion. When the company was shut down in August 2012, it was teetering on collapse.

The Complaint further alleges that Gilmond was one of the most successful and prolific promoters of ZeekRewards. From at least September 2011 until ZeekRewards was shut down in August 2012, Gilmond worked closely with the company founders and served as a senior “field liaison” to promote the scheme, persuading scores of unsophisticated retail investors to buy ZeekRewards securities upon the promise of profit sharing. Gilmond also helped conceal from investors and regulators the true nature of the ZeekRewards scheme. She policed affiliate advertisements and communications to ensure they did not use investment-related terms that otherwise may have triggered regulatory scrutiny. Gilmond reaped more than $1.7 million in transaction-based commissions and bogus profit-sharing for her recruiting efforts.

The Commission alleged that Gilmond offered and sold securities in violation of the registration provisions of Section 5 of the Securities Act, acted as an unregistered broker-dealer in violation of Section 15 of the Exchange Act, and violated the antifraud provisions of the Section 17 of the Securities Act. The Complaint requests a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.

The SEC’s investigation is continuing.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2015/lr23421.htm