Darryle Douglas hit with $2.2M default judgement
For his part in stealing $1,971,374.27 from Zeek Rewards affiliate investors, the Receivership initiated clawback litigation against Darryle Douglas back in March.
For reasons unknown (“the money is mine!”), Douglas failed to respond to the clawback litigation served on him, leaving the Receivership no option but to request default judgement.
Default judgement was granted against Douglas in early July, with a Western District Court of North Carolina yesterday specifying the amount the Receivership is now entitled to collect.
On top of the $1.97 million Douglas (right) stole from investors, he’s also required to pay $299,864.93 ‘in prejudgment interest from August 15, 2012 to July 10,
2014‘.
Postjudgement interest will also be added to the amount Douglas now owes, and will accrue from the date of judgement (September 4th) until the amount has been paid back in full.
From the Receivership’s earlier clawback litigation,
Darryle Douglas is, upon information and belief, a resident of Orange, California and was part of Zeek’s senior level management involved with affiliate communications and relations.
Prior to Zeek, he worked with Burks in other multi-level marketing businesses. Mr. Douglas received more than $1,975,000 from Zeek under one or more usernames, including “dd.”
Officially credited as Zeek Rewards’ “Sales Director”, Douglas was a prominent figure within the company until he abruptly disappeared a few weeks before the SEC shut Zeek down in August 2012.
The official reason cited by Zeek management at the time was that Douglas went into hiding due to “health reasons”. He has to date not been seen or heard from publicly since.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Darryle Douglas “Default Judgement Order”.
This Order was signed by the Clerk….not the Judge.
Fed Rules of Procedure Rule 55… states
“The clerk’s entry of default indicates only that the clerk’s office has verified that proof of service is on file and that no responsive pleading was filed. If the presiding judge disagrees with the clerk’s assessment, the judge may vacate the clerk’s entry of default.”
Secondarily, should the “class” of defendant’s prevail against the Receiver’s Complaint then Douglas being in identical circumstances would also “prevail” and thus be entitled to have his default vacated upon request.
In other words Bell must still win his case to make this stick.
55(c) Setting Aside a Default or a Default Judgment. The court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b).
Rule 60 (b) = Many and various reasons.
That’s probably because it’s a default judgment signed by the Clerk, exactly what Bell had requested.
It’s a valid judgment, based on that the party have completely failed to respond.
I was unaware that Bell’s requests were always approved “exactly” as “requested.”
Yes its a valid judgment but subject to being set aside per Rule 60(b).
So was I (unaware of that). But the Order was about “ORDER granting 34 Motion for Default Judgment, Darryle Douglas”. Doc-34 = “MOTION FOR DEFAULT JUDGMENT BY CLERK OF COURT, Darryle Douglas”.
My comment was about your statement “This Order was signed by the Clerk….not the Judge”. It could easily be misunderstood, so I simply clarified that it was a valid Order signed by the Clerk of the Court [following Fed. Rules for Civ. Pr., Rule 55(a)]. It was also exactly what Kenneth Bell had requested in his Motion for default judgment.
How could the statement that the Order was signed by the Clerk and not the Judge be misunderstood?
I simply clarified that it was a valid Order, signed by the Clerk of the Court [following Fed. Rules for Civ. Pr., Rule 55(a)]. It was also exactly what Kenneth Bell had requested in his Motion for default judgment.
It could be understood as a “missing signature”, e.g. “not properly signed by the Judge, only signed by the Clerk of the Court”.
“Missing signature” = “not a valid judgment”, indicating that it will first need to be reviewed and approved by the Judge before the judgment can become final.
I pointed out that it actually is a valid judgment, it’s not about a “missing signature from the Judge”. The Clerk of the Court can clearly sign some types of court orders without first having them reviewed and co-signed by a judge. A default judgment against a party is one of those types.
DEFENSE STRATEGY
In Darryle Douglas’ case, the lack of response can be a part of a defense strategy.
* He has not been personally summoned.
* The Complaint was sent electronically to his attorney, May 12.
* His attorney requested to be removed as a defense lawyer due to lack of payment, June 13.
In short, it can seem like his lack of response has been intentional rather than unintentional. His attorney has properly informed the court about that his client has not been personally summoned = one of the arguments that can be used to seek relief from a default judgment under Rule 60(b).
“Lack of payment” is an argument the attorney can use to request being removed from the case immediately, where the attorney won’t need to “close the case” (e.g. the attorney will not need to invest more time and efforts, e.g. by sending the Complaint to his client). The court will need to find another solution for how to summon his former client.
Not if one read and understood the original post which quoted Rule 55.
By statute Douglass has one year (with extensions) to file a motion with the court to set aside the Clerk’s default. That is to say that the “validity” of the default judgment is still subject to attack and set aside.
That’s one of the reasons for why it could be misunderstood. I didn’t find the quoted part in Rule 55. That doesn’t mean the quoted information was incorrect, but it wasn’t what it pretended to be.
Can’t help ya.
Try reading the entire post before responding.
That won’t make much sense? You have probably misinterpreted something.
The quoted part didn’t seem to exist anywhere in Rule 55, Federal Rules for Civil Procedure. I did however find it another place on the internet.
http://www.txnd.uscourts.gov/filing/EntryDeflt.html
(back to topic)
I simply tried to clarify that an entry for default, signed by the Clerk, is a part of normal procedure. It’s not about a “missing signature from the Judge”. It’s a valid and final judgment.
“Valid and final” doesn’t mean the judgment can’t be corrected, e.g. by the Court itself or by an appellate court.
BTW, “Bell v RVG et al” is about individual named defendants. It doesn’t have a class of unnamed defendants.
You cite LR55 which is local rule 55 Federal District in Texas NOT the Fed Rules of Procedure Rule 55 which is what I quoted in post #1.
This is post 13 and you still can not find the “quoted part.” Why not look for quotation marks?”
Its immaterial. The default judgment was for the amount Bell alleged Douglas received in fraudulent transfers as a net winner under user name dd.
If it is determined that the Bell vs Disner et al defendants and the class members are not subject to clawbacks because they did not receive fraudulent transfers or that Zeek was not a Ponzi then it follows that Douglas in his individual capacity would have no more liability to the estate than all the others involved. In such an event he could file a motion with the court and expect that the default judgment would be set aside.
Then maybe you should LINK to your source?
Something similar can be found in Rule 55(c):
Rule 55(c) isn’t specifically about default judgments signed by the Clerk. It proves my point about that the statement in post #1, “This Order was signed by the Clerk….not the Judge”, easily could be misunderstood.
I tried to clarify that part, by pointing out that a default judgment signed by the Clerk was exactly what Bell had requested. It’s also a normal procedure, legitimized in Rule 55(a) etc.
Here’s Rule 55:
NOLINK://www.law.cornell.edu/rules/frcp/rule_55
Not my fault you didn’t know the difference between a Local Rule and the Federal Rules of Procedure. Perhaps now you understand that the LR implements the Fed Rule.
Yes it is. The Clerk is required to sign default judgments per Rule 55 and “c” is a subsection of 55.
For your reading enjoyment http://en.wikipedia.org/wiki/Default_judgment
Well I hope that you now understand that that a default judgment can be signed by EITHER the Clerk or the Judge and in this instance the “Order was signed by the Clerk….NOT the Judge” in accordance with Fed Rule 55(a) and 55 (b)just as I originally said.
If you or others concluded that the Judge’s signature was “missing” then your misunderstanding was due to your own faulty assumptions, not my comments.
True, and if this is your point then there should have been no misunderstanding surrounding whether the Judge needed to sign or that the judge’s signature was “missing” Thank you for confirming this.
That’s what I have claimed all the time, from my first post.
Post #3 (answer to the statement in post #1, “This Order was signed by the Clerk….not the Judge”:
I haven’t tried to blame you for that either? I pointed out that IT could be easily misunderstood, but I didn’t try to blame anyone.
It would probably have been much easier if you had agreed to the clarification, e.g. if you had added your own clarification rather than discussing all sorts of details.
I’m not able to recognize that?
I have never mentioned any Local Rules in this discussion. You have mentioned Local Rules a couple of times, but I haven’t. I haven’t quoted any Local Rules, and I haven’t specifically linked to any Local Rules either.
Since I’m not able to recognize it, I can’t contribute to the discussion either. I can only point out that I’m not able to recognize it.
You cited them and linked to them. LR55 means Local Rule 55.
I have clearly not cited any Local Rules. I have neither mentioned LR55 nor Local Rules. But I can see where you probably have picked up that idea in post #12.
That actually proves my point about that “communication can easily be misunderstood”.
Probably because you linked to a page on the District Court of Northern Texas website that displayed the local rule pertaining to Fed Rule 55. Maybe that had something to do with it? Ya think maybe that’s where I got the impression?
Correct, but that part of the post was about rather off-topic information. It was about whether or not something easily could be misunderstood. So you indirectly proved my point.
(post #12)
“The quoted part didn’t seem to exist anywhere in Rule 55, Federal Rules for Civil Procedure” wasn’t about that I didn’t find the quote in post #1.
(post #1)
I didn’t find any match in the SOURCE for that quote. Your quote in post #1 didn’t match the source you stated = “Fed Rules of Procedure Rule 55… states”.
(partial solution)
It means you must check your OWN post #1 first, and identify exactly which source you used for the quote.
* Rule 55 is cited in post #15.
* If you used another source, then please identify which source.
You seem to be saying that I did not quote Rule 55 accurately, if so you are full of crap. You were looking at a District of Northern Texas local rule. You linked to the same local rule and this discussion is too stupid to continue.
I stand corrected, I did not quote Rule 55 in Post 1. I quoted a note that stated the further implications of the clerk’s entry of default under Fed Rule 55. Post 2 was the direct quote from Rule 55
You win this round.
(Continue to analyse something started in post #8)
Here’s a list of the court documents and dates:
Most lawyers will recommend their clients to “follow the rules”, e.g. to respond correctly to the required documents in a lawsuit. They will look for solutions “inside the box”.
Douglas’ lawyer have filed:
* a statement from Douglas, identifying him as “legal representative” (the one to send summons and other court documents to).
* The necessary formal document, “notice of appearance”
* The necessary formal documents, e.g. “affiliated companies”
It ended there. The next documents are “MOTION to Withdraw as Attorney” and “ORDER granting 25 Motion to Withdraw as Attorney”.
“Motion to withdraw as attorney” stated very clearly that Douglas hadn’t been personally served = one of the valid arguments people can use against default judgments.
The lawyer would personally inform his client by sending copy of the motion and the order – by e-mail to Douglas. He didn’t promise to send ANY other documents, i.e. Douglas has probably not formally received the most relevant case documents.
“Lack of payment” is normally considered to be “voluntarily cancelled by the client”.
The lawyer has properly informed the court about the new situation. It will be up to the court to handle that correctly.
TEMPORARY CONCLUSION
My impression here is that the lack of responses leading to the default judgment is a type of “legal defense strategy”. A default judgment can be set aside for several reasons, and Darryle Douglas’ lawyer have focused relatively clearly on some of those reasons (e.g. “Clerical mistakes”, “not personally served”, etc.).
Most clients will MEET their lawyers and DISCUSS their own cases, relatively early in a case. Darryle Douglas made close to $2 million from ZeekRewards, so he clearly could afford spending some money on legal advice long before he actually was sued.
That was one of the main reasons for my “could easily be misunderstood” argument. I tried seriously to find it in Rule 55. I then decided to google the first sentence of the quote.
It was there I found an exact match in the link in post #12. The link wasn’t about LR55, but about the exact match (the “NOTE” at the bottom of the page).
Posts #1 and #2 had several issues. That’s why I specified that a default judgment signed by the Clerk actually is the correct procedure. The judgment entered that way will both be valid and final (in the legal meaning of it).
The quote in post #1 was of type “additional information”, e.g. something you can expect to find in a FAQ.
“Final and “valid”
There wasn’t any dispute about the validity of a judgment signed by the Clerk.
You had some objections to how “final” the judgment was. Judgments from a court ARE final, unless they clearly state otherwise (e.g. a TRO is clearly limited, it will normally be replaced by a permanent order or be vacated within a specific date or a certain event).
“Judgments from a court are final, unless they clearly state otherwise” is a primary rule, i.e. we don’t need to apply complicated theories. If you want to apply any theories then they will need to include that rule.
Final = enforceable. Bell does NOT need to win a case against the other defendants first, he will NOT need to wait 1 year for a potential objection from Darryle Douglas.
Enforceable = he can make an ATTEMPT to collect money. It will probably result in a response from Douglas through the court, e.g. “I have not received the information I was entitled to receive”.