Zeek Rewards: Judge Mullen Approves Settlement with Nehra and Waak

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

SEC Testifies Before Subcommittee

Testimony on “Oversight of the SEC’s Division of Enforcement”

Andrew Ceresney, Director Division of Enforcement

March 19, 2015

Chairman Garrett, Ranking Member Maloney, and Members of the Subcommittee:

Thank you for inviting me to testify on behalf of the U.S. Securities and Exchange Commission (“SEC” or “Commission”) about the Division of Enforcement (“Enforcement” or “Division”).

The SEC’s mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.  The Division furthers this mission by, among other things, investigating and bringing charges against violators of the federal securities laws.  A strong enforcement program is at the heart of the Commission’s efforts to ensure investor trust and confidence in the nation’s securities markets, and the Division is committed to the swift and vigorous pursuit of those who have broken the securities laws.

In FY 2014, the Commission brought the highest number of enforcement actions to date, 755, and obtained monetary remedies at our highest level, totaling over $4.16 billion.  More importantly, these actions addressed significant issues, spanned the entire spectrum of the securities industry, and included numerous first-of-their kind actions.  We punished securities law violators, returned funds to injured investors, and sent important messages of deterrence.  Our investigative efforts have been assisted by industry experts and by new tools developed to harness data, including trading and financial data.  The Division also maintained its strong litigation record and implemented a new approach of requiring admissions in certain cases.

(continued)


 

Here’s the link to the full testimony

BehindMLM: TelexFree Bank to Pay $3.5 Million Settlement

TelexFree bank to pay $3.5 million settlement

Over two years of operations, TelexFree has employed multiple financial accounts, including domestic and international bank accounts and various online payment processors, to facilitate the fraudulent offer or sale of securities in Massachusetts.

Almost all financial institutions have terminated their relationship with TelexFree after only a few months of business.

Recently, frantic emails between TelexFree management and financial institutions paint an entirely bleak picture of continuing TelexFree financial operations.

TelexFree operations have become a risk that financial institutions are no longer willing to bear.

As described by one financial institution, “no US bank or processor… will accept your [TelexFree] business given that you are on month five of the Visa Chargeback monitoring program. You are only one of three merchants in the USA on month five so you are a real hot-potato as they say.”

-TelexFree is a “billion dollar Ponzi scheme” lawsuit, filed by Massachusetts Securities Division (April 2014)

telexfree-logoAgainst the backdrop of ongoing banking issues due to the problematic nature of their business model, TelexFree hopped from one bank to another in a desperate bid to keep the company’s financial channels open.

Around August 2013, TelexFree co-owner James Merrill approached Fidelity Bank for help and was permitted to open up two accounts. That approval stretched to the granting of permission to open a third account in September.

Despite multiple banks shutting down TelexFree’s accounts after the sheer number of volumes raised alarms, it seemed TelexFree had found a long-lasting relationship in Fidelity.

Just one small problem…

The President of the bank was James Merrill’s brother, John F. Merrill.

[Continue reading…]

Zeek Rewards: Reply in Support of Motion for Class Certification

In the case entitled “Bell v Disner, et al” (14-cv-00091) we have this:

REPLY IN SUPPORT OF RECEIVER’S MOTION FOR CLASS CERTIFICATION

The Receiver, through the undersigned counsel, provides the following Reply in support of his Motion for Class Certification. In their response, Defendants all but concede that a class action is the only means to reasonably and efficiently resolve the Receiver’s claims against the more than 9,400 Net Winners at issue, but argue – primarily based on arguments related to the irrelevant individual details of each Net Winners’ participation – that the rules do not allow this beneficial class to be certified. For the reasons set forth below, the Court should reject Defendants’ arguments, grant the Receiver’s Motion and certify a defendant class pursuant to Federal Rule of Civil Procedure 23.

…..

Instead of arguing that the core Ponzi scheme and fraudulent transfer issues are not common to the class, Defendants argue there may be differences in the Net Winners’ “relationships with insiders,” potential counterclaims related to funds in electronic accounts,1 possible reliance on the advice of counsel, potential third party claims or other issues related to the details of each net winner’s participation in the scheme. However, Defendant’s Response cited little to no case law in support of their argument and, as discussed above, even if there were some individual issues that does not mean that the core common class issues do not satisfy the “commonality” requirement.

……

Defendants further suggest that individual counterclaims might defeat class certification, but the facts and case law do not support their argument. First, as a factual matter, Defendants argue that the named Defendants’ counterclaims might somehow be different from the potential counterclaims of the other class members. However, the counterclaims asserted so far focus on common issues involving NxPay funds and breach of contract issues.3 Second, as a matter of law, the Fourth Circuit has recognized the effect of a counterclaim in and of itself “simply does not create the kind of conflict” that would defeat class certification.

I have uploaded this filing onto the Files website, Doc 82.

Zeek Rewards: Kenneth Bell Responds to Kaplan’s Motion to Dismiss

ZeekRESPONSE IN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS

Kenneth D. Bell (the “Receiver”), through the undersigned counsel, provides the following Response in Opposition to the Defendant’s Motion to Dismiss. For the reasons set forth below, the Defendant’s Motion should be denied.

Summary of the Argument

Howard Kaplan is an attorney who was hired by RVG to provide accurate legal advice to RVG concerning tax matters. Instead of fulfilling this important fiduciary duty, he gave RVG bad legal advice and actively participated in promoting a Ponzi and pyramid scheme that caused RVG enormous harm. As a result, RVG’s Receiver has brought this action against him. In response, Kaplan argues that despite his wrongful conduct he is effectively immune from liability because the court appointed Receiver for the company cannot bring claims against him. However, Kaplan’s claimed defense of “in pari delicto” does not bar a federal equity Receiver from asserting claims on behalf of the company he is appointed to oversee. Indeed, there is a public policy exception to “in pari delicto” defenses in North Carolina law that does not allow those – like Kaplan – who failed their fiduciary duty and assisted company insiders in harming the company to evade justice.

Further, the Receiver has adequately stated a claim for each of the causes of action asserted against Kaplan. Accepting as true the facts alleged in the Complaint that Kaplan failed to give accurate legal advice, Kaplan was at least negligent in providing legal services to RVG and thus committed professional malpractice / breach of fiduciary duty under North Carolina law. Also, under the law of Nevada, RVG’s state of incorporation, (which applies to RVG’s internal corporate duties under North Carolina’s choice of law rules) Kaplan aided and abetted RVG’s insiders’ breach of their fiduciary duties by giving RVG and its victims bad legal advice as a cover for the Ponzi scheme and otherwise assisting in promoting the unlawful scheme. Finally, the Complaint states a claim for constructive trust against Kaplan because it would be inequitable for Kaplan to retain the funds that he received for his participation in promoting the Ponzi scheme and prolonging its existence. Because Kaplan has received property which he “ought not, in equity and good conscience, hold and enjoy” a constructive trust should be imposed on the funds Kaplan received.

Therefore, Kaplan’s motion to dismiss should be denied in all respects.

I have uploaded the 24 page document onto the Files website.

Zeek Rewards: Receiver Replies in Support of Consolidated Motion to Dismiss

Today, Kenneth Bell, through his attorneys, filed a Reply in support of his Consolidated Motion to Dismiss the Defendants’ Counterclaims. In this reply, he states (in part):

  • The Defendants seek to save their breach of contract claims by arguing the false premise that the Court cannot somehow consider its own prior orders in determining a motion to dismiss. However, their position ignores the well-established case law to the contrary.
  • Pursuant to the relevant Order, the Defendants are barred from asserting their breach of contract claims.
  • The Defendants suggest that the Receiver wishes to rely upon the stay of litigation to avoid the adjudication of their counterclaims. This is incorrect. The Receiver is seeking immediate dismissal of the Defendants’ counterclaims as a matter of law.
  • As explained in the Receiver’s initial memorandum, Defendants’ non-contractual counterclaims are all barred by the Court’s previous Order requiring NxPay to return Receivership funds to the Receiver. Ignoring this Order, Defendants ask the Court to wear blinders and view only the four corners of their pleadings. However, as explained above, the Supreme Court and Fourth Circuit have instructed that relevant matters of public record should be judicially noticed and considered in determining a motion to dismiss.
  • Defendants have mischaracterized what the Receiver obtained from NxPay pursuant to the Court’s Order. As this Court held, “the Court Orders the RVG funds being held by NxPay® to be turned over to the Receiver.” (Id. at 4). As made clear by the Order and by the Affidavit of Kenneth Mitchell-Phillips of NxPay (SEC Action, Doc. No. 129-1), not all funds frozen in affiliates’ NxPay accounts were RVG funds.
  • Again in this response as they have repeatedly done elsewhere, Defendants oppose the
    Receiver’s requested relief on the grounds that the Receiver was supposedly wrongfully appointed and thus this Court does not have subject matter jurisdiction over the Receiver’s claims. This issue of subject matter jurisdiction has continued to be muddled by the Defendants’ insistent and erroneous focus on the question of whether or not the ZeekRewards scheme involved the sale of “securities,” which is not at all relevant to this action (which seeks the return of fraudulent transfers to the Defendants regardless of whether the scheme involved securities) and not determinative of jurisdiction in the underlying SEC Action.
  • Defendants do not (and cannot) challenge a federal equity Receiver’s right to bring federal actions or the Court’s jurisdiction to hear claims brought by a duly appointed Receiver within the scope of his appointment. And, there is no dispute that pursuing claims seeking the return of fraudulent transfers from the ZeekRewards Ponzi scheme is at the core of this Receiver’s authorized duties. Rather, the Defendants claim that the Court did not have the authority to appoint the Receiver in the first place because the Court allegedly lacked jurisdiction over the SEC Action.

I have uploaded this filing onto the Files website.

Ponzitracker: A New Ponzi Scheme Uncovered Every 118 Hours??

PZ logo

Ponzi Schemes Remain Prevalent In 2014; Over $1 Billion In New Schemes Uncovered

Jordan D. Maglich Thursday, August 21, 2014 at 9:26AM

Nearly six years after the word “Ponzi scheme” became a household name thanks to Bernard Madoff, Ponzi schemes continue to proliferate and leave a trail of financial destruction in their wake as demonstrated by newly-compiled data showing more than $1 billion of newly-uncovered schemes and over 600 years in prison sentences handed down in the first half of 2014.  In the first six months of 2014, at least 37 Ponzi schemes were uncovered, with a total of more than $1 billion in potential losses.  This equated to the discovery of a Ponzi scheme (1) more than once per week, (2) every 4.9 days, or (3) every 118 hours. Included in this list are at least three Ponzi schemes with estimated losses of at least $100 million or more, with the estimated $300 million in losses in the alleged TelexFree Ponzi scheme ranking as the largest Ponzi scheme exposed in the first half of 2014.

The data, permanently housed in this database and also displayed below, is presented as a reminder that Ponzi schemes remain rampant in the United States and worldwide despite mounting government and regulatory efforts.  Indeed, the 37 schemes discovered during the first half of 2014 suggest that at least 74 schemes will be discovered in 2014 – approximately 10% more than the 67 schemes unearthed in 2013.

Read the rest of the story here

Zeek Rewards: Net Winners Oppose Dismissing Their Counterclaims

And the silliness continues….. it seems the civil suit entitled “Bell v Disner et al” has some recent activity from the people who took a ton of money out of Rex Ventures and who do not want to have to cough it up.

The Motions filed are “Oppositions to the Receiver’s Consolidation to Dismiss Counterclaims” that these defendants pieced together from bits of string, bird poop and other sources.

These defendants are Durant Brockett, Rhonda Gates, Aaron Andrews, Shara Andrews and Innovation Marketing, LLC., Trudy Gilmond, Trudy Gilmond, LLC, Jerry Napier and Darren Miller.

I have uploaded these nonsensical filings onto the Files Website.

 

Zeek Rewards: Judge Signs Order Allowing International Net Winner Actions

BREAKING NEWS:

The receiver filed a “REQUEST FOR LEAVE TO INSTITUTE ACTIONS AGAINST INTERNATIONAL NET WINNERS” today and Judge Mullen granted it. Here is part of what Kenneth Bell filed:

The Receiver has previously filed actions against the insiders who created and operated ZeekRewards, the net winners who won more than $1000 (asserting claims against the largest net winners as individual defendants / class representatives and a defendant class of the remaining net winners) and certain attorneys involved in advising RVG and promoting the scheme. By this request, the Receiver seeks leave to file one or more actions in this Court and in foreign courts to pursue claims for the return of fraudulently transferred money and disgorgement of net funds received against significant “net winners” who reside outside the United States. The foreign “net winners” to be pursued all won at least $1000, the threshold previously approved by this Court. With due regard for the interests of efficiency, cost and judicial economy, the Receiver intends to consolidate cases against net winners from each foreign country and from more than one country when possible and appropriate.

Judge Mullen approved this action thus:

ORDER

THIS MATTER is before the Court upon the Receiver’s Request for Leave to Institute Actions Against International Net Winners. The Receiver alleges that these persons and entities won money in the ZeekRewards program and should be required to pay their net winnings back to the RVG for the benefit of ZeekRewards’ victims. 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 actions for which leave has been requested.

Zeek Rewards: Receiver Files 2014 Second Quarter Expenses

Filed today are about 296 pages of documents and exhibits from Kenneth Bell detailing his “Application for Fees and Expenses for 2nd Quarter 2014“.  I did not get all of the Exhibits as it was about $12.00; I will check the receiver’s website as he should be posting them in a few days for free.

I have uploaded the filing onto the Files Website, case 12-cv-519.