Tag Archives: Gilmond

Zeek Rewards: Judge Mullen Grants Default Judgement in ‘Bell v Disner et al’

zeekrewardsIn case filed by the Zeek Receiver, Kenneth Bell, the receivership filed  civil suit against what were called “Net Winners” in the Zeek scam which garnered $1000 or more from the scheme. The list of Defendants included a large number of serial promoters of this type of pyramid/Ponzi scheme such as:

Todd Disner, Trudy Gilmond, Jerry Napier, Daren Miller, Rhonda Gates, David Sorrells, Aaron and Shara Andrews, T. Lemont Silver, Karen Silver, Michael Van Leeuwen, Duran Brockett, David and Mary Kettner and a “Defendant Class of Net Winners”.

Several of the individuals above were involved in ASD and other scams prior to promoting Zeek and bilking thousands of people on the false hopes of becoming rich with little or no effort. The majority of these defendants have already received judgments which resulted in them having to return monies to the receivership to be distributed to the victims.

The problem with scams like Zeek is the money was actually made from recruiting others, not from sales of products of services. Sadly, a new one pops up almost every day.

You can read the 27 page order, wherein the Judge details the reasons for his decision and a background on the scam by clicking the link. There is also a list of the “Net Winners” on the site.

Zeek Rewards: “Net Winner Class” Defendants File Reply to Complaint

zeekrewardsIn case 14-cv-91, Bell v Disner ,et al, the “Defendant Class of Net Winners” by and through their Texas attorney, James Kevin Edmundson, have filed a “Defendants’ Answer to Complaint and Affirmative Defenses” in reply to the original complaint filed back on February 28, 2014.

The very first 2 sentences are this:

1. The statement that RVG operated as a Ponzi scheme is a legal conclusion to which no response is required. Defendants lack knowledge or information sufficient to form a belief as to the truth of the remaining allegations of paragraph 1.

2. Defendants deny the allegations of paragraph 2 because, among other reasons, they have no information leading them to believe that RVG was a “scheme” or that they or others were somehow “net winners” as opposed to individuals who worked diligently for the income they earned in connection with Zeek.

I suppose even though a legal decision has been made as to whether Zeek was a Ponzi or a “scheme”, following the conviction on all counts of Paul Burks in the criminal trial, one would surmise that these positions by the Net Winners would be somewhat untenable. But, it gets even better with their Affirmative Defenses: (Pay particular attention to “C”, emphasis added)

AFFIRMATIVE DEFENSES
A. Defendants devoted significant time and money working on behalf of RVG, which was performed pursuant to a contract between Defendants and RVG by which RVG agreed to pay Defendants for the work that they performed. Defendants performed as agreed and were owed the compensation that RVG promised to pay.
B. If RVG was a Ponzi scheme, Defendants had no knowledge of that fact. If RVG was a Ponzi scheme, then all of the other affiliates who participated in RVG have unclean hands as a result of their participation in a fraudulent scheme.
C. On information and belief, the SEC knew or should have known of the RVG Ponzi scheme, but delayed unreasonably in its prosecution of claims against RVG. Alternatively, the SEC knew for some time that RVG was operating as a Ponzi scheme but intentionally delayed disclosing that information to Affiliates and to the public. That unreasonable delay has prejudiced Defendants because t h e y h a v e paid taxes on the money they earned working on behalf of RVG and have incurred business expenses as a part of their work on behalf of RVG. The Receiver in this action stands in the SEC’s shoes and also delayed to Defendants’ detriment and now seeks return of all monies Defendants earned in connection with RVG, with no credit for the taxes or business expenses that Defendants legitimately paid, but that could have been avoided had the SEC or the Receiver timely advised Defendants of RVG’s true nature or acted in a more expeditious manner.
D. The Receiver’s claims in this case against Defendants are barred by the equitable doctrine of laches.
E. Defendants accepted compensation in connection with RVG in good faith, in exchange for reasonably equivalent value and in accordance with the terms of the contract between Defendants and RVG.
F. Defendants are entitled to a setoff for the amounts they paid to RVG for the purchase of bids and to otherwise participate in the Affiliate program, the amount of any and all expenses they incurred in operating their business for the benefit of RVG, for the amount of all taxes they paid and for the value of the funds the Receiver wrongfully misappropriated from Defendants’ e-wallet accounts. Defendants are also entitled to a setoff to the extent of any judgment on their counterclaims.
G. The Receiver has filed suit against two attorneys who provided legal advice to RVG and Affiliates, including Defendants. Defendants relied on that advice in concluding that RVG was a legitimate business and in committing significant personal resources to grow their now defunct business. Because Defendants’ damages were caused in part by the conduct of the two lawyers, Defendants are entitled in equity and at law to a credit for all money the Receiver recovers from the two attorneys as a result of their claims against them.
H. Plaintiff’s claims are time-barred pursuant to the express terms of the agreement between RVG/ZeekRewards and Defendants.

Zeek Rewards: Receiver Asks for Summary Judgment Against Class of “Net Winners”

Filed on the virtual eve of the Burks criminal trial which begins on July 5th, the Receiver has filed a ZeekMotion for Summary Judgment in Bell v Disner, et al, along with a supporting memorandum of Law and a group of Exhibits.  The Motion lists the “Named Defendants” like this:

The named defendants in this action are among the largest net winners of the ZeekRewards scheme, with winnings for each reaching as high as $1,875,000. The Court already has entered Judgments against several of these named defendants – who either failed to answer or cooperate in the action. See supra at n.1 and Doc. Nos. 76, 93, 95 and 119. Two defendants, Lori Jean Webber and P.A.W.S. Capital Management LLC, have reached a settlement with the Receiver.

 

 

The remaining named defendants are: Jerry Napier (Owosso, Michigan; a “net winner” of more than $1,745,000); Durant Brockett (Las Vegas, Nevada; a “net winner” of more than $1,720,000); Darren Miller (Coeur d’Alene, Idaho; a “net winner” of more than $1,635,000); Rhonda Gates (Nashville, Tennessee; a “net winner” of more than $1,425,000); T. Le Mont Silver Sr. (Orlando, Florida / Dominican Republic; a “net winner” of more than $773,000; Mr. Silver also used Global Internet Formula, Inc., which is, upon information and belief, incorporated in Florida, as a shell company through which he was a ZeekRewards “net winner” of more than $943,000); Karen Silver (T. Le Mont Silver’s wife; a “net winner” of more than $600,000); Aaron and Shara Andrews (Lake Worth, Florida; the Andrews used Innovation Marketing LLC, a Florida shell company to win more than $1,000,000) and David and Mary Kettner (Peoria, Arizona; “net winners” of more than $930,000 using the shell companies named Desert Oasis International Marketing, LLC and Kettner & Associates, LLC as nominal payees). See Exhibit C (Expert Report of David S. Turner) (hereinafter “Turner Report”)at Ex. F.

Default judgments have already been ordered against:

    • Michael Van Leeuwen – $1,617,444.99
    • Todd Disner – $2,079,757.88
    • David Sorrells – 1,197,241.12
    • Trudy Gilmond – $2,129,522.27

 

Also listed are the “net Winner Class” which was already certified by the Court.

On September 14, 2015, the Court appointed Kevin Edmundson as class counsel and subsequently the Court authorized the defendant class to engage an expert witness,
Berkeley Research Group (“BRG”), at the primary expense of the Receivership. See
Doc. Nos. 117, 125.

Their own expert witness, BRG concluded the following:

In its initial report dated January 18, 2016, BRG agreed that it was able to “replicate the exhibits in the Turner Report, within a reasonable margin of difference.” Then, in its “Phase II” report, BRG reached two conclusions (bolded in the report):
a) [B]ased upon a preliminary analysis, it does not appear that the magnitude
of profit from the auction business would materially impact the assessment of
whether or not the business, taken as a whole, operated as a Ponzi scheme.
b) As a result of our testing in Phase II, we have not found evidence that
definitively disproves that the business as a whole operated as a Ponzi scheme.

Addressing the Burks and his not so successful endeavors, the receiver had this to say:

Beginning at least as far back as 2000, Paul Burks operated a number of generally
unsuccessful multi-level marketing businesses through Rex Venture Group, LLC (and
related entities) with names such as Go-Go Hub, Free Store Club, My Bid Shack, New
Net Mail and Signed and Numbered International. See, e.g., Bell Aff. at Ex. 2, 3;
Douglas Dep. at pp. 50, 54-55, 71, 78; Exhibit D (Excerpt of Durant Brockett Deposition)
(hereinafter “Brockett Dep.”) at pp.18-19, 30. In 2010, RVG launched Zeekler.com, a
so-called “penny auction” website where items ranging from personal electronics to cash
were auctioned to bidders. See id.

 

However, bids bought through ZeekRewards rather than as retail bids were more valuable because purchasing those bids gave the affiliates “points” that supposedly entitled Affiliates to a portion of the profits from the business. This was the real (and only) reason Affiliates would pay $1 for auction bids they could buy for $.65. See Brockett Dep. at 77-78. As one Affiliate told Burks, “I know how the system works mathematically and you know I know. Whether you call the bids bids or hamburgers makes no difference. People are not joining Zeek to get hamburgers, orauction bids; they are joining Zeek to make money….” Bell Aff. at Ex. 6.

Also mentioned are the Wright-Olivares and how they knew what they were doing:

From the beginning, RVG intended to use “bids” in ZeekRewards not as a product but as a proxy for money deposited into the program. Dawn Wright-Olivares was very clear about the plan, telling Danny Olivares on January 21, 2011: “We’re just going to use bids as currency.” Bell Aff. at Ex. 9(a). On another occasion, Dawn Wright-Olivares referred to the compounding bids as “Monopoly money.” Bell Aff. at Ex. 9(b). Quickly, RVG’s focus changed from Zeekler to ZeekRewards, which was the source of nearly all the company’s income. Relative to ZeekRewards, little or no money was made in the Zeekler “penny auction” business.

Burks and the other Insiders were aware that the payouts to Affiliates would be funded by new participants rather than retail profits from the penny auctions. Dawn Wright-Olivares excitedly told Burks early in the scheme, “I think we can blow this OUT together- we’ve already attracted a great many big fishes.” Bell Aff. at Ex. 4.

As you go farther down the Memorandum, it details the “Compensation Plan”, the “Compounder” and how the money magically multiplied. And it seems everyone at the top knew all along that it was not exactly above board and could not really explain the voodoo behind the ROI and how it was calculated:

Burks deliberately evaded affiliate questions asking how the RPP was calculated. In a Skype chat with an affiliate, he said: “[a] proprietary system is used to determine the amount of profit sharing that is done each day. We do not divulge the details of how those numbers are determined. Our stated target of minimum of 1% weekdays (Mon-Thur) and .5% weekends (Fri-Sun) has always been met and exceeded. It is clearly not directly tied to the number of auctions in a particular day. It is the overall average that counts.” Bell Aff. at Ex. 9(d).

Behind the scenes, the Insiders were not even subtle about the fake earnings numbers. Often, the company simply used the previous week’s daily RPP percentages. For example, on one occasion, Danny Olivares sent a text message to multiple insiders stating, “Need a % for rpp when you can.” Dawn Wright-Olivares responded, “Do whatever was last Monday.” Bell Aff. at Ex. 40. Or, from Paul Burks: “Hey Dan. Sorry about last night. What percent did you use?” Danny Olivares: “Same as last Friday. 0.009.” Bell Aff. at Ex. 23.

There are a ton more revelations in this filing, too many to detail here. You can click here to look at the 139 page filing, including all of the Exhibits.

Zeek Rewards: Trudy Gilmond Files Pro Se Response to Complaint

Talk about short and sweet…..  Most other Defendants respond to complaints by mentioning each paragraph which they summarily deny.

As a reminder, Ms. Gilmond has a $2,129,522.27 default judgment against her from another Zeek case. Maybe she just couldn’t afford the ink to reply to every paragraph of the Complaint.

 

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

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

Zeek Rewards: Gilmond Default Judgement

Judge Mullen is becoming one of my favorite Federal Judges….

ORDER

THIS MATTER is before the Court on the Receiver’s Motion for Default Judgment for Failure to Defend or, in the Alternative, Motion for Order Requiring Trudy Gilmond to Personally Appear and Show Cause. On May 11, 2015, the Court entered an Order directing Trudy Gilmond to personally appear before the Court on May 27, 2015 at 11:00 a.m. to show cause why judgment should not be entered against her as requested by the Receiver. Ms. Gilmond failed to appear as directed. Indeed she advised the court by letter that she refused to do so.

IT IS THEREFORE ORDERED that the Receiver’s Motion is GRANTED and judgment is hereby ENTERED against Defendants Trudy Gilmond and Trudy Gilmond LLC in the amount of $2,129,522.27.

Signed: May 28, 2015

Zeek Rewards: Orders Granting Defaults and Order to Show Cause

Today we have 2 Orders from Senior Judge Graham C.Mullen, in which he Grants the receiver’s Motionzeekrewards for Default Judgments against Jerry Napier and Trudy Gilmond, and also Orders both individuals to appear and Show Cause why judgment should not be entered. I would guess that neither one will show for this either.


 

ORDER
THIS MATTER is before the Court on the Receiver’s Motion for Default Judgment for Failure to Defend or, in the Alternative, Motion for Order Requiring Jerry Napier to Personally Appear and Show Cause.
For good cause shown, it is ORDERED that the Receiver’s Motion is GRANTED and Defendant Jerry Napier is hereby ORDERED to personally appear in court in the Western District of North Carolina on May 27, 2015 at 11:00 AM and SHOW CAUSE as to why judgment should not be entered against him as requested by the Receiver. If Defendant does not personally appear at such hearing, judgment will be immediately entered against him in the amount of $$2,041,356.19.
SO ORDERED.


ORDER
THIS MATTER is before the Court on the Receiver’s Motion for Default Judgment for Failure to Defend or, in the Alternative, Motion for Order Requiring Trudy Gilmond to Personally Appear and Show Cause.
For good cause shown, it is ORDERED that the Receiver’s Motion is GRANTED and Defendant Trudy Gilmond is hereby ORDERED to personally appear in court in the Western District of North Carolina on May 27, 2015 at 11:00 AM and show cause as to why judgment should not be entered against her as requested by the Receiver. If Defendant does not personally appear at such hearing, judgment will be immediately entered against her and Trudy Gilmond, LLC in the amount of $2,129,522.27.
SO ORDERED.


Zeek Rewards: Judge Approves Class Certification Notice

Below is the text of this Order:

ORDER

THIS MATTER comes before the Court upon the Receiver’s Motion to Approve Notice of Class Certification (Doc. No. 103). For the reasons set forth in the Receiver’s Motion, the Court finds that in the interests of keeping the defendant class members apprised of the certification and definition of the class, the nature of the action and claims against them, and preemptively and efficiently answering common questions that the class members may have about the litigation, the Court will approve the proposed Notice of Class Certification attached as Exhibit A to the Receiver’s Motion.

IT IS, THEREFORE, ORDERED that the Receiver’s Motion to Approve Notice of Class Certification is hereby GRANTED and the proposed Notice of Class Certification attached as Exhibit A to the Receiver’s Motion (Doc. No. 103-1) is approved by the Court. It is further ORDERED that the Receiver shall send the Notice to the class members using their email addresses registered with ZeekRewards or the Receivership and that he shall also post the Notice of Class Certification on the Receivership website at http://www.zeekrewardsreceivership.com.

Signed: March 11, 2015

Zeek Rewards: Receiver Files Motion for Class Certification Notice

In the case entitled “Bell v Disner, et al” the Receiver has filed for Court approval on a Notice to send to all affiliates within the Class recently certified by Senior Judge Mullen.

The filing lists these individuals and entities as Defendants:

TODD DISNER, in his individual capacity and in his capacity as trustee for Kestrel Spendthrift Trust;
TRUDY GILMOND; TRUDY GILMOND, LLC; JERRY NAPIER; DARREN MILLER; RHONDA GATES; DAVID SORRELLS; INNOVATION MARKETING, LLC; AARON ANDREWS; SHARA ANDREWS; GLOBAL INTERNET FORMULA, INC.; T. LEMONT SILVER; KAREN SILVER; MICHAEL VAN LEEUWEN; DURANT BROCKETT; DAVID KETTNER; MARY KETTNER; P.A.W.S. CAPITAL MANAGEMENT LLC; LORI JEAN WEBER; and a Defendant Class of Net Winners in ZEEKREWARDS.COM

Here is a copy of the Proposed Order, ZeekDoc103-1.

Zeek Rewards: Judge Denied Motions to Dismiss in Bell v Disner, et al

Today’s ORDER from Judge Mullen contains these interesting and perhaps precedence-like phrases: (emphasis added)

This matter is before the Court upon Named Defendants Trudy Gilmond, Trudy Gilmond, LLC, Jerry Napier, Darren Miller, Durant Brockett, Rhonda Gates, Innovation Marketing LLC, Aaron Andrews, Shara Andrews, Global Internet Formula, Inc., T. Lemont Silver, and Karen Silver’s Motions to Dismiss…..       This matter is now ripe for consideration by the Court.

——————–

The Court finds that the Defendants predominantly relied on the managerial “efforts of others” ―namely Burks and Rex Venture― to generate profits.

———————-

Defendants’ argument that they should not be subjected to the imposition of a constructive trust because their own fraud is not the subject of the complaint fails. The Complaint sets forth allegations sufficient to show that “some other circumstance” makes it inequitable for these Defendants to retain the funds they received. See id. This “other circumstance” is that Defendants received the funds from an admitted Ponzi and pyramid scheme, 3 and that the funds are nothing more than other people’s money wrongfully diverted from RVG. Therefore, Defendants have received property which they “ought not, in equity and good conscience, hold and enjoy.” Id.

(From the Amended Order)   3  “To be clear, the Defendants themselves have not admitted that ZeekRewards was a Ponzi or pyramid scheme. However, the principal, Paul Burks, and certain insiders have made such an admission. In addition, management insiders Dawn Wright-Olivares and Danny Olivares have pleaded guilty to engaging in a securities fraud conspiracy.”

————————

Defendants, as some of the top-dollar ZeekRewards net winners, were early adopters of the ZeekRewards scheme. As a result, these named Defendants may have already dissipated much of their net winnings, which without a constructive trust would be impossible for the Receiver to trace and secure. The Receivership will likely never be able to pay victims of the ZeekRewards scheme the full amount of their losses. Without a constructive trust and the ability to trace fraudulently transferred Receivership Assets, the Receiver’s remedy at law is inadequate. Therefore, the Complaint contains sufficient allegations to warrant the imposition of a constructive trust against the Defendants.

Definition:

Constructive Trust

A relationship by which a person who has obtained title to property has an equitable duty to transfer it to another, to whom it rightfully belongs, on the basis that the acquisition or retention of it is wrongful and would unjustly enrich the person if he or she were allowed to retain it.

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You can read the full 16 page Order here.

Footnote 3 (above) was Amended in this ORDER.

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