Zeek: Order Issued on Final Judgement Process for “Net Winner Class”

In the case entitled “Bell v Disner, et al”, we have the Judge’s Order on a Motion to set up a process for determining Final Judgments against Zeek “Net Winners”. Here are a few highlights, there are 25 sections within the Order:

  • The amount of net winnings shall be calculated in the same manner as the Final Judgments entered against the named Net Winners in this action. “Specifically, Net Winnings shall be calculated as total cash paid-out by RVG less outside cash (excluding reinvested funds generated as part of the ZeekRewards Program) used to purchase VIP bids, retail bids, and subscriptions (VIP bids + Retail bids + Subscriptions)”
  • On or before January 31, 2017, the Receiver shall notify each Net Winner Class member of the amount of their ZeekRewards Net Winnings as reflected in the available books and records of the RVG Receivership.
  • The Receiver shall notify each member of the Net Winner Class of the amount of their Net Winnings by email to the email address provided by the net winner in connection with any account included in determining the amount of Net Winnings as well as any other email address that has been provided by the net winner following the appointment of the Receiver. The Receiver shall also post a link on the Receivership website that allows class members to receive notification of the amount of their Net Winnings. In the event that the notice cannot be delivered to any email address provided by the Net Winner, the Receiver shall send a letter to the last known physical address of the Net Winner informing the Net Winner of the proceedings and the availability of the amount of his or her Net Winnings on the Receivership website.
  • Class Counsel for the Net Winner Class shall (i) post a notice on the Net Winner Class website describing the process set forth herein and (ii) communicate to the Net Winner Class the availability from the Receiver of the Net Winnings amount for each class member.
  • On or before March 31, 2017 (or at least 60 days following the initial email transmittal of the Net Winning amounts to class members if the Receiver’s email notice occurs after January 31, 2017), each class member shall, if they choose to do so, respond to the calculation of their Net Winnings from the RVG records.
  • Final Judgment shall be entered against any Net Winner Class member who does not respond to the Receiver’s calculation of their Net Winnings on or before the response deadline in the amount of their Net Winnings as calculated by the Receiver plus prejudgment interest, calculated at the North Carolina statutory rate of 8% per annum from August 17, 2012, which is on or after the date of the last fraudulent transfer payment to each Defendant, to November 29, 2016, the date of the Summary Judgment Order in this action.

I have uploaded the complete Order here.

 

TelexFree: Feds Release Photo of $20 Million in Box Spring

Photo of $20M seized in box spring following arrest of Brazilian national in scheme to launder proceeds of TelexFree

The owner of this mattress, Cleber Rocha, a Brazilian national,  is being detained due to being a flight risk.

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: Receiver Proposes Final Judgment Process For “Net Winners”

Zeek Receiver, Kenneth Bell, has filed a Motion to Enter and Order for determining the amount of Final Judgment against the “Winner Class” members. The Court had entered an Order granting a Summary Judgment and Partial Summary Judgment against the Net Winner Class on November 29, 2016. The Court found that the Net Winner Class received “fraudulent tranfers” that must be repaid to the Receiver.

The only issue now remaining before the Court with respect to the Net Winner Class is how to fairly and efficiently determine the amount of the Final Judgment (ZeekRewards net winnings plus pre-judgment interest) to be paid by each of the over 9000 members of the class.

Attached to the Motion is an Exhibit containing the proposed process

that will give each class member individual notice of the amount of his or her “net winnings” according to RVG’s records, an opportunity to respond to that amount with evidence of a different amount and access to a fair and expedient process to resolve any cases in which the Receiver and Net Winner cannot agree on the amount of the Final Judgment. Counsel for the Receiver has conferred with Counsel for the Net Winner Class, and Counsel for the Net Winner Class has stated that the Net Winner Class has no objection to the Receiver’s proposed process.

Part of the proposal is notification “on or before January 31, 2017” of the amount of “Net Winnings” as indicated in RVG’s records and the records of the Receivership.

The amount of net winnings shall be calculated by the Receiver (through his expert witness) in the same manner as the Final Judgments entered against the named Net Winners in this action.

The process proposed is rather lengthy, so here is a link to it on the ASDUpdates Files website. Also listed is the Proposed Order.

Zeek Rewards: Paul Burks Sentencing Set For Mid-February

Judge Cogburn has issued the following Order:

THIS MATTER is before the court on the parties’ Joint Motion to Continue Sentencing (#119). Having considered the motion and reviewed the pleadings, the court enters the following Order. The court notes that the parties have requested that the court continue the sentencing hearing to or after January 30, 2017 and have reported that February 9th, 2017 is a known conflict for the counsels’ schedules.

ORDER
IT IS, THEREFORE, ORDERED that the parties’ Joint Motion to Continue Sentencing (#119) is GRANTED, and the Clerk of Court is instructed to place this matter on the next appropriate sentencing calendar.

The case docket sets a tentative date:

Sentencing set for 2/13/2017 09:30 AM in Courtroom, 401 W Trade St, Charlotte, NC 28202 before District Judge Max O. Cogburn Jr.

Zeek Rewards: Announcement From Receiver

 

 

ANNOUNCEMENT FROM THE RECEIVER – January 12, 2017

I am pleased to announce that we will be making a third partial interim distribution to all Affiliates who hold Allowed Claims on March 15, 2017. When made, combined with the first and second partial interim distributions and the amounts paid by ZeekRewards to such Affiliates before it was shut down, the third partial interim distribution will have returned to victims with Allowed Claims a total of at least 75% of their losses using the rising tide method.

If you previously have received payment from the Receivership, or receive a payment for the first time during the January 31 distribution, you will be issued another payment on March 15, 2017. If you had recovered more than 60% from ZeekRewards prior to its shutdown, but less than 75%, you will receive a distribution as part of the third partial interim distribution.

The funds used to make the third partial interim distribution will be taken from the reserves that I previously held for those Affiliates whose claims were disallowed and forfeited pursuant to the Court’s November 16, 2017 Order that required these claimants to provide their Release and OFAC certification by December 31, 2016. Their failure to do so has permitted me to release these reserves and to pay the third partial interim distribution to Affiliates that hold Allowed Claims.

Finally, we do not have authority to accept new claims and are not considering further requests to amend previously allowed claims. The time to file claims or to amend claims has passed.

I am confident that we will make a further distribution in the future. I ask you for your patience, and thank you for your continuing support.

USFIA: Consent to Enter Final Judgment

You can find the entire document here 194.

(emphasis added)

orders the Entity Defendants to pay disgorgement in the amount of $135,598,118.47, plus prejudgment interest thereon in the amount of $9,811,646.50, the payments of which will be deemed satisfied by the amounts recovered and distributed by the court-appointed receiver as set to be set forth in the receiver’s final report and accounting to the Court.

TelexFree – Brazilian National Hid $20 Million in Box Spring

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Thursday, January 5, 2017

Agents Seize Approximately $20 Million and Arrest Brazilian National in Scheme to Launder TelexFree Funds

BOSTON –Approximately $20 million in cash hidden inside a box spring in a Westborough, Mass. apartment, was seized late yesterday, and a Brazilian man was arrested in connection with conspiring to launder proceeds of the massive TelexFree pyramid scheme.

Cleber Rene Rizerio Rocha, 28, was charged in a criminal complaint with one count of conspiring to commit money laundering. Rocha was detained following an appearance today before U.S. District Court Magistrate Judge Judith G. Dein.

According to the complaint, in April 2014, federal agents searched the headquarters of TelexFree, Inc., in Marlborough, Mass. Later that day, Carlos Wanzeler, one of the founders of the company, allegedly fled to Brazil, his native country, where he has remained. Wanzeler and TelexFree co-founder James Merrill were indicted in July 2014 on charges that they operated TelexFree as a massive pyramid scheme. Merrill pleaded guilty to those charges in October 2016 and is awaiting sentencing.

The complaint alleges that an intermediary working on Wanzeler’s behalf contacted an associate for help transferring millions of dollars of TelexFree money – still hidden in the greater Boston area – from the United States to Brazil. The associate, who subsequently became a cooperating witness for the government, allegedly arranged with Wanzeler’s nephew in Brazil to launder the cash through Hong Kong, convert it to Brazilian reals, and transfer it to Brazilian accounts.

According to court documents, Rocha, acting as a courier for Wanzeler’s nephew, flew from Brazil to JFK Airport in New York City a few days ago. Yesterday, Rocha met the cooperating witness at a restaurant in Hudson, Mass., and allegedly gave him $2.2 million in a suitcase. After the meeting, agents followed Rocha to an apartment complex in Westborough, Mass., and later arrested him. That night, federal agents searched an apartment at the Westborough complex and seized a massive stockpile of cash hidden in a box spring. The cash appears to total approximately $20 million.

The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz and Matthew Etre, Special Agent in Charge of Homeland Security Investigations in Boston, made the announcement today. Assistant U.S. Attorneys Andrew E. Lelling and Neil J. Gallagher, Jr., of Ortiz’s Economic Crimes Unit are prosecuting the case.

The details in the complaint are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

USFIA – Judge Orders Summary Judgment Against Steve Chen

Although this document was entered on December 8th, I was asked to post a link for those interested in its contents. The SEC made a Motion for Summary Judgment and Injunctive Relief was Granted, including the following:

Chen is permanently restrained and enjoined from violating Section 5(a) and (c) of the Securities Act [15 U.S.C. § 77e] directly or indirectly

this Order by personal service or otherwise: (a) Chen’s officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Chen or with anyone described in (a).

Chen is

permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder  by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security.

 

 

Defendant shall pay disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. The Court shall determine the amounts of the disgorgement and civil penalty upon motion of the Commission.

Here’s a link to the full document.


On December 19th, there was a PreTrial Conference held with Judge Klausner presiding. Here’s the Minutes from that Conference:

Case called. Court and counsel confer. Also present are Thomas A. Seamon, Receiver and David R. Zaro, counsel for the Receiver.

The Court will not vacate Order on Motion for Summary Judgment. The Court orders counsel to meet and confer to discuss further settlement and to return at 10:15 a.m.

Case recalled. The Court and counsel confer. Settlement was not reached. Jury Trial shall remain on calendar for January 10, 2017 at 9:00 a.m. Counsel shall file aw witness list pertaining to the issue of damages only.

 

 

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