Tag Archives: sentencing

Zeek Rewards: Paul Burks Sentenced to Over 14 Years

Department of Justice
U.S. Attorney’s Office
Western District of North Carolina

FOR IMMEDIATE RELEASE
Monday, February 13, 2017

Former ZeekRewards CEO Sentenced To More Than 14 Years For Operating $900 Million Internet Ponzi Scheme

CHARLOTTE, N.C. – U.S. Attorney Jill Westmoreland Rose announced today that U.S. District Court Judge Max O. Cogburn, Jr. sentenced the former CEO of ZeekRewards to 176 months in prison for operating a $900 million Internet Ponzi scheme. Paul Burks, 70, of Lexington, N.C. was also ordered to serve three years of supervised release and to pay $244,000,000 as restitution. A federal jury convicted Burks in July 2016 of wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy following a three-week trial.

Michael Rolin, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join U.S. Attorney Rose in making today’s announcement.

According to filed court documents, evidence introduced at Burks’ trial and today’s sentencing hearing:

From January 2010 through August 2012, Paul Burks was the owner of Rex Venture Group, LLC (RVG), through which he owned and operated Zeekler, a sham Internet-based penny auction company, and its purported advertising division, ZeekRewards (collectively “Zeek”). Burks and his conspirators induced more than 900,000 victims – including over 1,500 victims in the Charlotte area – to invest in their fraudulent scheme, by falsely representing that Zeekler was generating massive retail profits from its penny auctions, and that the public could share in such profits through investment in ZeekRewards. Burks and his conspirators, including Zeek’s former Chief Operating Officer Dawn Wright Olivares and her step-son and Zeek’s Senior Technology Officer Daniel C. Olivares, claimed at one point that investors would be guaranteed a 125% return on their investment.

Burks and his conspirators represented that victim-investors in ZeekRewards could participate in the Retail Profit Pool (RPP), which supposedly allowed victims collectively to share 50% of Zeek’s daily net profits. Burks and his conspirators did not keep books and records needed to calculate such daily figures. Instead, Burks simply made up the daily “profit” numbers. Contrary to the conspirators’ claims, the true revenue from the scheme did not come from the penny auction’s “massive profits.” Instead, approximately 98% of all incoming funds came from victim-investors, which were then used to make Ponzi-style payments to earlier victim investors.

In addition to promising massive returns on investments, Burks and his conspirators used a number of ways to promote Zeek to current and potential investors. For example, the conspirators hosted weekly conference calls and leadership calls, where participants could call in listen to Burks and others make false representations intended to encourage victim-investors to continue to invest money and to recruit others to invest in Zeek. Burks also organized and attended “Red Carpet Events,” where victim investors came to hear details of the scheme in person. During these events, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. They also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.

As the Ponzi scheme grew in size and scope it became unsustainable and it eventually began to unravel as the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. By August 2012, Burks and his conspirators fraudulently represented to the collective victims that their investments were worth nearly $3 billion, but had no accurate books and records to even determine how much cash on hand was available to pay such liability. Contrary to representations made to victim investors, at that time, Burks and his conspirators had only $340 million available to pay out investors. Over the course of the scheme, Burks diverted approximately $10.1 million to himself.

Burks also failed to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, for tax year 2011, Burks issued fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.

At sentencing, Judge Cogburn stated that for the defendant’s scheme to work would have required a miracle on the order of the “loaves and fishes.” Judge Cogburn stated that a significant sentence was necessary to promote respect for the law, provide just punishment, and also deter others considering committing fraud. Judge Cogburn further noted that the scheme was “almost breathtaking” and emphasized that the defendant had time to stop it.

Burks will be ordered to report to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility. All federal sentences are served without the possibility of parole.

Burks’ co-conspirators, Dawn Wright Olivares, Zeek’s Chief Operating Officer, and her step-son and Zeek’s Senior Technology Officer, Daniel C. Olivares, were previously sentenced to 90 and 24 months in prison and three years of supervised release, respectively, for their involvement in the scheme.

In making today’s announcement, U.S. Attorney Rose thanked the U.S. Secret Service and IRS-CI for investigating the case, and the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance with the investigation.

The prosecution is handled by Assistant United States Attorneys Jenny Grus Sugar and Corey Ellis of the U.S. Attorney’s Office in Charlotte.

Additional information and updated court filings about this and related cases filings can be accessed at the district’s website: http://www.justice.gov/usao/ncw/ncwvwa.html.

Updated February 13, 2017

Zeek Rewards: Receiver Asks For Victims to Write Sentencing Hearing Letters

 


ANNOUNCEMENT FROM THE RECEIVER – January 19, 2017

On February 13, 2013, Paul Burks will be sentenced in United States District Court for the Western District of North Carolina for his role in the ZeekRewards Ponzi and pyramid scheme. The sentencing hearing is open to the public and will be held at the Federal Courthouse at 401 W. Trade Street, Charlotte, NC.

Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

  • Becoming insolvent;
  • Filing for bankruptcy under the Bankruptcy Code;
  • Suffering substantial loss of a retirement, education, or other savings or investment fund;
  • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
  • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
  • Suffering substantial harm to his or her ability to obtain credit.

I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

Zeek Rewards: Sentencing for the Dawn Wright-Olivares and Daniel Olivares

zeekrewardsHere is the latest update from Kenneth Bell, Zeek Receiver. He has included an email address for victims to provide information that may be used at the Sentencing Hearing:

 

ANNOUNCEMENT FROM THE RECEIVER – August 29, 2016

On September 13, 2016 at 9:30 AM Dawn Wright-Olivares and Daniel Olivares will be sentenced in United States District Court for the Western District of North Carolina for their roles in the ZeekRewards Ponzi and pyramid scheme. The sentencing hearings are open to the public and will be held at the Federal Courthouse at 401 W. Trade Street, Charlotte, NC.

Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

  • Becoming insolvent;
  • Filing for bankruptcy under the Bankruptcy Code;
  • Suffering substantial loss of a retirement, education, or other savings or investment fund;
  • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
  • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
  • Suffering substantial harm to his or her ability to obtain credit.

I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

BehindMLM: Phil Ming Xu Sentenced in WCM777 Ponzi

Phil Ming Xu sentenced in WCM777 Ponzi case

wcm777-logoIt’s game over for Phil Ming Xu, with court documents uploaded to the WCM777 Receivership website sometime over the last few days revealing his sentence in the WCM777 Ponzi case.

Neither confirming or denying the SEC’s allegations (which is code for “if I fight this I will lose” in Ponzi litigation), Xu has been “permanently restrained and enjoined from violating, directly or indirectly” various sections of the Securities Exchange Act.

[Continue reading…]

Powerful Words From A Sentencing Order

As I was looking around the website for the Western District of Washington, I ran across a Sentencing Order in a case involving a plot to explode a bomb at LAX airport.  What struck me was the Conclusion of the Order, which is the third time the Judge has sentenced Mr. Ressam due to the US appealing twice for too light of a sentence based on their own guidelines.

What Judge Coughenour said makes so much sense and should give us pause :

CONCLUSION

Mr. Ressam, I’m speaking now to you personally. There is a school of thought that believes our essence is defined by our actions alone.2  By that logic, the identity of a man, a religion, or a nation is nothing more than its history. If a nation has a history of aggression, the logic goes, it must be an aggressive nation. If a religion has a history of intolerance, it must be an intolerant religion. And if a man has a history of violence, he must be, to his core, a violent man.

These judgments overlook one thing: we can choose daily to remake that essence. A belligerent nation can choose to beat its swords into plowshares. An intolerant religion can choose to reinterpret its dogma. And a violent man can choose to work for peace. In so doing, the character of each of these things is altered and improved.

2 Jean-Paul Sartre, if anyone asks.

Ex-Stanford execs get 20 years for $7B swindle

By JUAN A. LOZANO – Associated Press

HOUSTON —     The last two defendants convicted for helping disgraced financier R. Allen Stanford bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history were each sentenced to 20 year prison terms by a federal judge on Thursday.

Lawyers for Gilbert Lopez Jr., the ex-chief accounting officer for one of Stanford’s companies, and Mark Kuhrt, the ex-global controller for another company, had asked for lesser prison terms, saying their clients were not as culpable as two other former executives who received significantly smaller sentences.

Jack Zimmermann, Lopez’s attorney, told U.S. District Judge David Hittner that his client was “down the chain” of Stanford’s business empire and “had no decision making authority in any of the things that ran this fraud.”

Richard Kuniansky, Kuhrt’s attorney, said his client had believed Stanford legitimately borrowed investor funds and was going to pay the money back.

Lopez and Kuhrt were both convicted at trial last year of conspiracy to commit wire fraud and nine counts of wire fraud. Hittner sentenced each defendant to 20 years for each count, to be served at the same time. The judge also fined Lopez $25,000, but waived a fine for Kuhrt.

Lopez, 70, covered his face with his hands after being sentenced, while Kuhrt, 40, stared down at the floor with his eyes closed. Family members who were in the courtroom cried after the sentences were announced. Lopez’s attorney had asked for a three-year prison term, asking for leniency in part based on his client’s age. Kuhrt’s attorney had asked for five years.

Prosecutors said Stanford, a one-time billionaire, persuaded investors to buy certificates of deposit from his bank on the Caribbean island nation of in Antigua, then used that money to bankroll a string of failed businesses and his lavish lifestyle, which included yachts, a fleet of private jets and sponsorship of cricket tournaments. Authorities said Stanford and others in his companies lied to investors from more than 100 countries, telling them their funds were being safely invested in stocks, bonds and other securities.

Prosecutor Jeffrey Goldberg told Hittner that both Lopez and Kuhrt helped hide the massive fraud by misrepresenting to investors in reports and other documents that their money was safe and Stanford’s bank was on solid financial ground.

Goldberg also said neither former executive had expressed remorse and added that lengthy prison terms would send a message to other senior corporate executives that “they too will face criminal liability if they implement fraudulent orders.” Goldberg had asked for 25-year prison terms for each defendant, saying their actions had caused many victims to be “robbed of their retirements.”

“Gil Lopez and Mark Kuhrt were working behind the scenes to prop up Allen Stanford’s lies,” he said.

Both Zimmerman and Kuniansky said their clients were remorseful for what happened. Neither Lopez nor Kuhrt gave a statement before being sentenced.

Stanford, 62, was convicted last year on 13 fraud-related counts and sentenced to 110 years in prison.

Two other former executives with Stanford’s now dismantled business empire – which stretched from the U.S. to Latin America and the Caribbean – were sentenced previously after pleading guilty.

James M. Davis, the former finance chief for Stanford’s various companies and the prosecution’s star witness at Stanford’s trial, received a five-year prison term. Former chief investment officer Laura Pendergest-Holt was sentenced to three years in prison.

The remaining defendant in the case, a former Antiguan financial regulator, awaits extradition to the U.S.

A Video Trip Down ASD Memory Lane – “Andy’s Fundraising Army”

I was rooting around the PC and ran across this video made by Andy Bowdoin prior to his pleading Guilty to Wire Fraud and being sentenced to 78 months in prison.  This video is a real piece of work, Andy paid someone to make this video in the hopes of gathering over $500,000 to pay for his legal expenses.  He fell drastically short of that goal and decide to promote another scam (OneX) and thereby violated his conditions of release, got him arrested, and jailed prior to his trial.

I have the video on the website, click here

Disclaimer:

Everything that Andy Bowdoin says in this video is complete bullshit.  He did not keep fighting,  and he admitted that ASD was a Ponzi all along. He refers to the right to do business and make money, all the while knowing he was doing something illegal and continues to lie through those thin snake lips of his.  His referring to God, blessings, prosperity and faith are just tools in his scam arsenal to get people on his side so he can get his hands on their money.

None of the points he tried to make in the video did him any good because he pleaded out to lesser charges.  The “Evil guberment” is not the problem,  people like Andy Bowdoin are !!

Final Order of Forfeiture for Last of Andy Bowdoin’s money, 10-cv-02147

The Plaintiff (DOJ) has filed a “Motion for Entry of a Partial Judgement and for Final Order of Forfeiture”.  In this case, it is the remaining $496,505.34 for which Bowdoin recently released all of his claims as part of his plea/sentencing agreement. Along with Bowdoin’s money, several other key ASD pimps in this case had monies forfeited:

  • Funds totaling $96,525.47 seized from bank accounts in the name of Robyn Lynn LLC
  • Funds totaling $153,087.28 seized from a bank account in the name of Carpe Diem or Erma Seabaugh (the “Webroom Lady”)
  • Funds totaling $48,600.00, which were turned over to the United States Secret Service

Judge Rosemary Collyer (my most favorite Federal District Judge of all time!) said the following in Her order

Bowdoin gets 78 months!!! Judge Collyer orders remissions!!!!

Andy Bowdoin in better days

 

Andy Bowdoin has been sentenced to 78 months, according to sources. I will post the documents once they appear on PACER.  The ORDER below comes from PACER as of an hour ago

 

Judge Rosemary Collyer orders victim compensation!!!!

Two New Documents in Bowdoin Criminal Case, Remission and Objection to Sentencing

We have two new additions onto the Andy Bowdoin Criminal docket file, (1) a government motion asking for remissions and (2) Defendants response and opposition to government sentencing recommendations. Here are some excerpts from these 2 documents, the full document is on the files website, Docs 60 and 61.

(Doc 60)

GOVERNMENT’S MOTION SEEKING PERMISSION TO COMPENSATE VICTIMS THROUGH THE REMISSION PROCESS PURSUANT TO 18 U.S.C. § 3663A(c)(3) AND MEMORANDUM OF LAW IN SUPPORT THEREOF

The United States, by and through its attorney, the United States Attorney for the District of Columbia, hereby respectfully moves the Court for a finding that restitution is impractical in this matter, thus permitting the compensation of victims through the Department of Justice’s forfeiture and remission process. The government is committed to the distribution of forfeited assets to the victims in this case as soon as possible. As discussed more fully below, based on the difficulties presented in the record of defendant’s fraud and victim loss in this case, the government moves the Court for an Order, pursuant to 18 U.S.C. § 3663A(c)(3), finding that an order of restitution would be impracticable and that, instead, the United States should be permitted to compensate the fraud victims with forfeited assets through the remission process. Such a ruling would trigger recompense to the victims of the defendant’s offenses through the well-established process of forfeiture and remission administered by the United States Department of Justice. The defendant does not oppose such a ruling.

Since Judge Collyer has ordered Remissions before, it’s not a far stretch that Her Honor will do it again.

(Doc 61)

DEFENDANT’S SENTENCING MEMORANDUM AND OBJECTIONS TO THE PRE SENTENCE INVESTIGATION REPORT

As submitted herein, Mr. Bowdoin requests that he be sentenced on the basis of accurate information and that upon resolving his objections, that this Court impose a sentence that is “sufficient, but not greater than necessary,” to achieve the four purposes of sentencing set forth in § 3553(a)(2)—retribution, deterrence, incapacitation, and rehabilitation. Above all, Mr. Bowdoin begs for mercy from the Court for his wife and himself.

In handing down its punishment, Mr. Bowdoin asks this Court to consider factors unique to him in arriving at a sentence that is sufficient but not greater than necessary to achieve the goals of sentencing under § 3553(a)(2). These factors include his remorse and acceptance of responsibility for his crime. His plea of guilty has resulted in a devastating blow to his family, personally and financially. The Court should also take into consideration Mr. Bowdoins’ advanced age and health problems. Not only will his age and poor health make his prison experience more onerous than younger and healthier individuals, it also opens him up to the increased likelihood of victimization while incarcerated.

Additionally, and more important to Mr. Bowdoin, is the fact that he is the primary caretaker to his wife, who is currently suffering from Alzheimer’s disease and other health problems. He fears that if he is incarcerated, his wife will no longer have his daily assistance and her condition will worsen. Thus, a sentence of imprisonment
results in a likely death sentence for both Mr. Bowdoin and his wife.

(Maybe he should have thought about that before he started ASD, an admitted Ponzi!! I realize that Mr. McDonnell is merely defending his client, but what Andy did to so many people is simply indefensible. )

The “objections” continue regarding all of the failed companies the Government pointed out in their Sentencing recommendations, lots of back peddling from Bowdoin, such as:

Mr. Bowdoin objects to paragraph 81 of the PSR. Mr. Bowdoin asks that the paragraph be modified to include additional information. Specifically, Mr. Bowdoin was a 20% shareholder in American Cell Phone, Inc. Although he held the title of “President”, he would point out that he was not the CEO of the corporation. Additionally, Mr. Bowdoin would point out that based on legal advice he and the company received, he believed his activities and association with American Cell Phones, Inc., were legitimate.

No matter the position in the company, Bowdoin has always claimed to be the brains behind all of his “Successful Businesses” and in one of them, his own son said Andy scammed his own Mother.

Mr. Bowdoin objects to paragraph 101 of the PSR. Mr. Bowdoin submits that the Government has stipulated that the appropriate guideline range is 168 to 210 months imprisonment.

Wow, that’s a bit more than the 78 month term (6.5 years) that has been bantered about.  The above is from 14 to 17.5 years.

As indicated in the PSI, Mr. Bowdoin is nearly 78 years of age with serious health problems that accompany reaching that age. He is facing a sentence under the plea agreement of up to 78 months imprisonment — a term of incarceration that essentially means that he will die in prison. In addition to being elderly, Mr. Bowdoin suffers from coronary artery disease, diabetes type II, hypertension, esophageal reflux, hyperlipidemia, Transient Ischemic Attack (TIA), and an enlarged prostate. And, without adequate medical treatment he will surely suffer
and die a terrible death in prison.

Given Mr. Bowdoin’s advanced age, incarceration will likely exacerbate his health problems. Further, because of his age and health problems, his term of incarceration will be more onerous than other defendants. Accordingly, he merely requests that this Court take into consideration his advanced age, poor health, and the affect incarceration will have on his health in determining the punishment to impose on him at sentencing. While Mr. Bowdoin has committed a serious crime, he does not deserve to die in prison.

No matter how many times Bowdoin’s attorney brings up his advanced age and poor health, his age and health were good enough for him to scam and rob people of their life savings and any hope for a decent financial future. Some even mortgaged their houses and likely lost them due to this multiple Felon perpetual scam artist.

He will get no sympathy from me.

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