SEC sues top Zeek Rewards promoter Trudy Gilmond
Trudy Gilmond was one of the top earners in the Zeek Rewards Ponzi scheme.
For her efforts, Gilmond was named a net-winner and was sued by the court-appointed Zeek Rewards Receiver.
The Receiver sought $1.7 million from Gilmond, which would see her return all of the money she stole from investors.
Gilmond responded to the Receiver’s lawsuit with a motion to dismiss, a demand for $140,000 (plus interest) and payment of court costs.
Gilmond’s motion to dismiss was denied, with the counter-claims against the Receiver dismissed shortly after.
In April of this year the Receiver filed for default judgement against Gilmond, with a $2.1 million dollar judgement granted in May.
Separately, the SEC has now filed its own lawsuit against Gilmond.
According to the SEC, Gilmond (right)
was one of the most successful and prolific promoters ofZeekRewards. 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.
Through “Team Fired Up”, Gilmond
attract(ed) followers and new recruits to join her “downline” in numerous MLM programs (several of which ultimately collapsed in a fashion similar to ZeekRewards).
What the SEC are otherwise very politely stating, is that Gilmond is a serial scammer.
Following her profiting in similar Ponzi schemes to Zeek, Gilmond was recruited into Zeek Rewards by Dawn Wright-Olivares in January 2011.
Gilmond operated a full-time business soliciting new affiliates and helping her “downline” recruits to solicit even more investors as “customers.”
She purchased customer leads, posted advertisements, and distributed business cards to identify new investors-customers.
She also spoke at company events and hosted live promotional and training conference calls with Wright-Olivares and other ZeekRewards insiders to pitch the ZeekRewards scheme to prospective investors and to guide new affiliates in their own recruiting efforts.
She helped enroll investors as “affiliates,” entitling them to share in the scheme’s purported profits.
Zeek Rewards must have been a dream for Gilmond, who went on to hit the Ponzi jackpot with the scheme.
Through a marketing campaign devoid of ethics and morals, Gilmonds time at Zeek saw her prey on the uneducated and desperate.
Neither Gilmond nor any RVG personnel made any effort to determine if investors in fact had:
(1) the financial wherewithal to invest (e.g., sufficient income and assets); or
(2) experience with complex investments before offering them the opportunity to invest in ZeekRewards.
In fact, thousands of ZeekRewards investors lacked significant financial resources and were financially unsophisticated.
With respect to Gilmond’s specific role within Zeek Rewards, the SEC assert:
As a combined Ponzi and pyramid scheme, ZeekRewards depended on promoters like Gilmond to persuade new investors to join as affiliates to maintain a constant influx of new capital to be paid to prior investors.
Gilmond directed members of her “Team Fired Up” and other prospective investors to the ZeekRewards website, which made false representations about daily net profits and daily dividends paid to Qualified Affiliates.
Based on Gilmond’s efforts and the misstatements on the website, many of Gilmond’s team members ultimately purchased the ZeekRewards securities, earning Gilmond substantial commissions.
As a field liaison, Gilmond had access to portions of ZeekRewards’ internal electronic investor database so that she could make adjustments to individual accounts to address her affiliates’ concerns or complaints.
Having worked closely with the company founders and insiders to promote the scheme in her role as a senior field liaison, and given her prior experience with similar MLM programs that ultimately collapsed, Gilmond knew or should have known that the ZeekRewards scheme’s outsize returns (averaging 1.5% per day) were too good to be true and could not be sustained.
Nevertheless, Gilmond worked full time for at least a year touting the potential fortunes that could be made by becoming a ZeekRewards affiliate.
Gilmond’s sales pitch involved explaining the mechanics of the ZeekRewards program, its compensation structure, and the supposed merits of the investment.
No doubt Gilmond knew exactly what Zeek Rewards was, but ultimately didn’t care.
The SEC go on to lay out a series of facts that identify Gilmond as an insider of the scheme, with perks well above and beyond what average Zeek investors had access to.
Gilmond developed close ties with Wright-Olivares and other ZeekRewards insiders, which gave her unique access and insight not available to a typical investor.
Among other things, Gilmond had the ability to adjust the number of “points” earned and could assign downline recruits to certain affiliates, both of which impacted the measure of profit sharing or commissions paid to those affiliates.
New investors typically signed up for ZeekRewards through Gilmond’s website; Gilmond also worked with Wright-Olivares to ensure that Gilmond received credit (and, ultimately, commissions) for affiliate investors that she recruited but who failed to identify Gilmond as their sponsor.
Gilmond often helped investors she recruited to sign up and arrange payments (using credit cards, online payment systems, or checks payable to Gilmond for the investors’ bid purchases); she also frequently helped them navigate problems with their personal electronic accounts to ensure daily dividends were credited to their accounts.
Gilmond was also instrumental in Zeek Rewards’ pseudo-compliance efforts to mask Ponzi fraud:
Gilmond helped conceal from investors and regulators the true nature of the ZeekRewards scheme.
To that end, Wright-Olivares and others directed, and Gilmond helped implement, several superficial or nominal changes to certain ZeekRewards features.
This included removing any references on the website to the terms “investment” and “ROI”; substituting a daily award percentage that in the aggregate approximated 125% every 90 days rather than “guaranteeing” a 125% return; and requiring investors to give away VIP bids to foster the illusion of contributing efforts to the enterprise.
Gilmond helped police affiliate advertisements and communications to ensure they did not describe ZeekRewards as a passive “investment” or refer to any “guarantees,” “ROI,” or similar investment-related terms.
Gilmond also reported to ZeekRewards insiders (typically Wright-Olivares) whenever affiliates improperly employed such taboo terminology.
Gilmond’s pivotal role within Zeek Rewards and close ties to Dawn Wright-Olivares, saw her rewarded with the signing of a “consulting agreement” in May, 2012.
How much this agreement was worth is not specified but, through her insider role in the scheme, Gilmond
received $461,964 in Matrix commissions based on investments made by her downline recruits. Gilmond also received an additional $1,300,074 in daily dividend payments and bonuses.
As Zeek Rewards edged closer to collapse in 2012, Gilmond’s insider knowledge saw her maximise profitability at the expense of others.
Aware that ZeekRewards was under investigation by several law enforcement agencies and that the business was in serious trouble in 2012, Gilmond and others withdrew substantial sums of money from the scheme before it was shut down, without advising investors that the scheme was likely to collapse.
For Gilmond’s part in the orchestration of one of the largest MLM Ponzi schemes to date, the SEC’s lawsuit lists three claims of relief against her;
- The unregistered offer and sale of securities in violation of the Securities Act
- Failure to register as a broker-dealer in violation of the Exchange Act and
- Fraud in the offer or sale of securities in violation of the Securities Act
The SEC argue that unless Gilmond is restrained and enjoined, she
will continue to violate, the registration, broker-dealer registration, and anti-fraud provisions of the federal securities laws.
Gilmond is (also) likely to engage in future violations of the federal securities laws.
To that end the SEC has asked the court to grant a permanent injunction against Gilmond, along with ‘disgorgement with prejudgment interest, and civil penalties‘.
This is on top of the $2.1 million dollar default judgement the Receiver has already been granted.
The SEC’s lawsuit against Gilmond is interesting as it marks the first civil lawsuit by the regulator against a non-executive Zeek Rewards insider.
Whether or not the Gilmond lawsuit is a one-off or if other Zeek insiders will be sued by the SEC remains to be seen.
Meanwhile with the lawsuit filed over three years after the SEC’s Zeek Rewards shutdown, you gotta wonder wonder what lawsuits we might see in other major MLM Ponzi busts yet.
Update 16th January 2016 – A reply from Trudy Gilmond was filed on the 15th of January.
It reads:
In response to the complaint filed by the SEC against Trudy Gilmond… the defendant generally denies each and every paragraph of the complaint.
Gilmond appears to be representing herself in the case.
Update 29th June 2017 – On June 21st the SEC was granted Final Judgement against Trudy Gilmond.
The Final Judgement order will see Gilmond pay back $1,752,673.47 in disgorgement, $169.084 in prejudgment interest and a $150,000 civil penalty.
And here folks, is when the SEC goes after top Ponzi players NOT a part of the exec team.
Last time they did so in Burnlounge it took them a LOT of appeals, and ultimately semi-bungled the case as they can’t document how much profit he had to disgorge.
This time, they won’t make the same mistake. Gilmond got insider deals and and she’ll go down as co-conspirator. Imagine that on her credit report.
Considering what happened to serial HYIP promoter Matt Gagnon:
one would think Ms Gilmond should be worried
so, trudy gilmond gets her comeuppance.
fair enough, if you stick your head out you have to be ready to face the consequences. the net winner class [led by gilmond and others] face off with receiver bell, is funded by the receiver’s funds [to a large extent].
in this individual suit that SEC has filed against gilmond, she will have to finance her litigation herself, and this may take some wind out of her sails.
gilmonds response will be very interesting to see.
IIRC in the class action suit, gilmond and the net winners have chiefly argued, that they were not liable for clawback by the receiver, as the receiver was appointed under SEC vs RGV/burks, but as zeek was not selling securities, the SEC did not have jurisdiction in this case, and hence the receiver could have no claims against the net winners.
the argument that the SEC had no jurisdiction over net winners, was based on the premise that zeek was not selling securities as in ‘investment contracts’, because investors had to put in ‘work’ for receiving returns from zeek.
surprisingly, this case SEC vs gilmond, is going to great lengths to document the efforts put in by gilmond:
the SEC does not allege that gilmond was the ‘management/staff’ of zeek, but that she was ‘close to management’. gilmond was herself an investor, expecting to profit from zeek, and putting in ‘full time’ effort to get those returns.
so, if the SEC itself believes that gilmond was putting in so much effort, why should gilmond have known she was selling ‘securities’ which would have required minimal effort from her to receive returns?
and if gilmond put in so much effort to create and maintain a downline of say 100,000 [wild guess] people, then how can it be said that the person who had 10,000 or 1000 people did not exert any efforts?
with no retail, zeek had only promoters, who like gilmond, put in varying degrees of efforts?
the SEC also states that as a top promoter, gilmond even had access to ‘management functions’:
^^this flies in the face of the requirement of an ‘investment contract’ which requires no managerial role from participants.
also what does ‘field liason’ mean? was it an official post on company rolls or just a honorary title for a top promoter? if gilmond was receiving any ‘separate compensation’ for being ‘field liaison’ then of course the SEC ‘s arguments stand on firm ground.
this ‘consulting agreement’ definitely changes the complexion of gilmonds role in zeek, from being a ‘investor-promoter’ to a ‘vendor’ of some sort.
but, before may 2012, if gilmonds assertion is that she believed she was not selling ‘securities’, as zeek in the SEC’s words, ‘depended on promoters like Gilmond to persuade new investors to join as affiliates to maintain a constant influx of new capital to be paid to prior investors’, then the debate before the court is indeed interesting, if it goes through to the end.
She had at least one signed contract with Zeek Rewards. The SEC complaint doesn’t go into further detail.
As usual, Anjali is inserting her own conclusions into the event.
Gilmond has been charged with:
So, according to the SEC, Gilmond was:
1) acting as an unregistered dealer broker
2) offering and selling unregistered securities
3) fraud
You simply cannot accept reward for promoting an illegal opportunity UNLESS you can demonstrate you have sought and received (qualified) legal opinion as to the legality/s of the opportunity.
The fact she “worked” at it or was or wasn’t part of “management” is irrelevant
The fact few people have been charged in this manner is also irrelevant.
The charges are standalone.
* Did she register as a dealer broker ???
* Did she offer and sell securities ??
* Did she commit fraud in doing so ??
* Did she get independent legal advice before she accepted reward ??
She was acting as a securities Broker-Dealer without a license. As such, under securities law she is ineligible to receive compensation.
The fact that she did, suggests she will be ordered to disgorge her earnings back to the payor (the RVG estate.)
The SEC and Bell have her in a crossfire. One alleging she received fraudulent transfers under NC law and the other arguing that Federal law prohibits the payment of compensation to a securites dealer who is not licensed.
duh, what conclusion?
wasn’t grimes&reese hired by zeek to assure participants that the zeek opportunity was above board? grimes&reese were a reputable MLM legal firm and participants would be influenced by their endorsement of zeek.
^^this is the pertinent question. the whole world and its uncle knows that zeek was a fraud, but was it selling ‘securities’?
we have recently seen the ACCC vs lyoness case thrown out on technicalities, even though the judge noted its skewed sales data.
we have recently seen the fifth circuit appeals court reject an MLM class action, based on technicality even though it noted data which points to a pyramid scheme.
in zeek, there appears to be a technical discrepancy in the description of an ‘investment contract’, and the court will decide the issue. that’s what courts are for.
‘She was acting as a securities Broker-Dealer without a license’– IF– zeek was selling securities.
the primary question remains whether zeek was selling ‘securities’. all other conclusions rely on this primary question.
hoss: god made the mountains and the little birds.
anjali: god made the mountains and the little birds– IF– there is a god.
Those two cases are about separate legal issues. Or you’re probably looking at 3 different cases.
SEC v. Paul Burks and RVG
Trudy Gilmond’s Motion To Intervene was denied. She doesn’t have any unresolved disputes about the existence of securities based on that intervention.
The primary issue there was about whether she had the right to intervene as an “affected party”, e.g. whether her rights would be seriously and irrepairable harmed.
Bell v. Disner et al
Trudy Gilmond’s Motion To Dismiss was denied. She doesn’t have any unresolved disputes about the existence of securities based on that.
SEC v. Trudy Gilmond
She can of course bring up a variation of the same theory in that case, e.g. in a Motion To Dismiss.
The fact Anjalitroll says there appears to be a discrepancy doesn’t mean there IS a discrepancy.
It’s a perfect example of the “strawman” argument used by fraud apologists and promoters.
Anjalitroll proposes there’s a discrepancy, then spends countless hours debating and point scoring, when no such discrepancy exists.
So what?
The existence of securities is based on how ZeekRewards operated in reality, e.g. the daily profit share and the investment in VIP sample bids and VIP Points — the CORE of the scheme and its primary component.
Nearly all the work was done by the organizers, not by the investors themselves. It was really a “passive investment”, e.g. the investors didn’t need to recruit anyone or sell anything to earn a profit from the scheme.
So the answer to your “primary question” seems to be relatively clear.
When are they going to go after that disgusting scammer Tracy Davison? Who claims he made over a Million Dollars from Zeek, and is still hiding out in Manila, Philippines.
The question isn’t about ANY TYPE of effort. There must be a clear relation between the work and the profit, and the profit will need to be real and legitimate.
The act of bringing in other investors didn’t really generate any profit for RVG. The fact that Zeek paid some rewards for the work doesn’t make the profit become “legitimate payment for work”.
So you will need to correct your own ideas first. The idea that ANY TYPES of efforts will count simply doesn’t reflect the reality.
That’s easy: Howey Test — investment of money from an expectation of profits arising from a common enterprise depending solely on the efforts of a promoter or third party.
Translation: You put money that someone else do something to the money and pay you back some money which hopefully leads to profit.
Yep, Zeek’s an investment contract.
Her May 2012 “Special payment” wasn’t based on that. 🙂
She received $184,747.97 in compensation for her efforts as a consultant, “field liaison” etc. — divided into two separate payments of $135,400 and $49,300 — paid out on June 1st and June 6th.
* No investment of money, i.e. no profit arising from it either — and no expectations of profits arising from any investment.
Trudy Gilmond has tried two different legal theories …
1. Motion To Intervene … For A Motion To Dissolve The Temporary Receivership.
It was based on the theory that SEC didn’t find any securities. Paul Burks simply consented to the order, the facts were never tried in a trial.
It was also based on that Trudy Gilmond had been harmed by that process, e.g. that she had lost an income source. That part didn’t have enough substance.
2. Motion To Dismiss
It was based on the theory that the court didn’t have the correct subject matter jurisdiction, that ZeekRewards didn’t involve the sale of securities in the form of investment contracts but was based on legitimate work. It has already been concluded by the court.
The current case is primarily about her work as a promoter.
Right. There’s been no final ruling on the security issue.
the MTI was denied, the existence of securities was Raised but Not Addressed in that case, with the judge instructing the SEC and the receiver to address the question of securities in the clawback action.
the MTD was denied, which means that the clawback case proceeds to trial, and the issues raised by the defendants [including the existence of securities] will be Addressed at trial.
gilmond has not yet filed her reply to the SEC case against her personally, but yes, she may try the same argument about ‘existence of securities’, in this case too.
Trudy Gilmond received a default judgment in late May 2015, so her jurisdiction dispute has been resolved. She actively refused to attend a court hearing to defend herself. She also fired her attorney.
So there shouldn’t be any “missing final ruling” in that case on the securities issue — nothing she can refer to as an “unresolved issue”.
Her Motion To Intervene was denied, and her Motion To Dismiss was denied. They don’t circulate around somewhere in the court system waiting to be resolved.
If Gilmond wants to fight the “securities” issue in civil / administrative court, fine, good luck to her.
It’s her money and time to waste as she wishes.
it can be argued that the organizers mainly ‘managed the money’ but the ‘money itself’ was brought in [sales] by the ‘efforts’ of the investors themselves.
the [false] profits were generated by the money brought in mainly by the efforts of the investors, and not the management. without these fresh investor funds brought in by efforts of the investors, zeek could not make payouts[false or not], as it had no other source of income to rely on.
the definition of ‘investment contract’ does not address ‘fraudulence’ ie, whether the investors were expecting or receiving ‘real profits’.
IIRC the RPP had a passive investment option and a recruitment option [which increased your earning]. the matrix required recruitment.
show me where the test for ‘investment contract’ ie the howey test, addresses the ‘legitimacy’ of the profit?
gilmond received the default judgement, because she did not defend herself in this matter, this does not mean her jurisdiction dispute has been resolved.
the jurisdiction issue will be debated in the class action trial, and the enforceability of the default judgment will depend on the outcome of the trial.
Wrong question. It doesn’t need to be specified in the Howey test to be valid legal reasoning.
I got most of my information from the ZeekRewards shutdown, e.g. from the videos published by MLM.com.
(1:45 – 3:45 is most relevant part)
youtu.be/4tSSmsZwVOs?t=1m45s
They had another video adding some additional details about work, e.g. he gave an example of unrelated work — that it isn’t about ANY TYPE of work, it must be a clear relation between the money, the work and the profit — the profit must arise primarily from the work rather than from the investment itself.
The example he gave was “if I give money to somebody else, and then agree to paint his house — then the work won’t be related to the investment itself, it will only be some random work”.
“Legitimacy of work and profit”
People can’t use their own wrongdoing as defense arguments, e.g. the expenses incurred during wrongdoing can not be deducted in a judgment. BurnLounge cross appeal 2013.
“Bell v. Disner et al” used similar reasoning in Motion To Dismiss Counter Claims (in the order derived from that motion).
I didn’t find that video, so it was probably from a different source — but about the same type of interview with an attorney.
SEC knows all she did was provide social proof for recruiting, which falls under fraud, rather than securities.
wrong reasoning. you are confusing several issues and not applying linear logic or legal reasoning.
zeek is alleged by the SEC to have been selling 1]unregistered 2] securities in a 3] ponzi and pyramid scheme
1]unregistered – zeek was ‘unregistered’ because we know it was not registered with the SEC. i mean obvious is obvious.
[being unregistered is illegal but not fraudulent]
2] securities – to check whether zeek was selling ‘securities’, it has to be tested against the howey test. this is the test used by federal courts, and if a scheme satisfies the 4 prongs of the howey test it is deemed to be a ‘security’.
the court does not use any other reasoning outside these four prongs. the howey test does not address the ‘legitimacy’ of the profits expected by investors.
[being a ‘security’ means you are liable to be registered with the SEC, it is not a comment on the legality or fraudulence of a scheme]
3] ponzi and pyramid scheme – this is where fraudulence is tested for the first time. was the profit expected by the investors in the above proved ‘security’ legitimate? if the profits were fraudulently generated by robbing peter to pay paul, in a ponzi and pyramid scheme , then it follows that such profits have to be returned.
so, you FIRST prove that zeek was selling securities and SECONDLY you prove that this security was a fraudulent ponzi and pyramid, and hence money has to be returned.
you are mixing up point 2] and 3]. basically, you’re saying that since zeek was fraudulent and the profits were false, the efforts of the investors cannot be recognized. this is muddled logic.
please walk through point 2] fair and square, and address point 3] only when you get there.
Where did you get the idea that SEC was instructed to address that question in a clawback litigation?
From the transcript of the hearing.
The court clearly didn’t instruct SEC to address the question. It didn’t instruct the Receiver to bring it up either.
here is the transcript of the hearing of the MTD. read from the bottom of page 25 through to page 27.
the court made the SEC and receiver verbally confirm that the defendants could bring up the jurisdiction issue at clawback.
my usage of the word ‘instructed’ may be severe,- the court ‘made it clear’ that the jurisdiction issue could be raised in the clawback action and decided on ‘merits’, – will be more correct.
as we know, the defendants gilmond etc, have asserted in their response to the clawback action, that the SEC did not have jurisdiction as there were no securities. they filed a motion to dismiss [MTD] the class action.
the MTD was denied and the clawback suit has to now be decided on ‘merits’ at trial.
so, this jurisdiction issue will be decided on ‘merits’ at the trial in the clawback suit.
mlmhelpdesk.com/wp-content/Docs/Zeek/ZeekDoc154.pdf
Which has nothing at all to do with the civil / administrative charges filed by the SEC
maybe gilmond can plead for this SEC case against her to be stayed, pending the determination of the existence of ‘securities’ in the clawback trial?
because, whether she sold unregistered securities or not, depends upon the existence of securities in zeek.
whaddya say LRM??
You are begging the question. Nobody has ever said the judge directed the SEC or Bell to “bring it up.”
Yes, that states the case correctly.
I think you explained this part very well.
I surmise the defense must address Howey using logic of this sort:
We, the affiliates collectively invested in and worked to promote the Zeek’s auction business, the success and profitability of which was inextricably connected to our investment in and promotion of it…therefore we did not invest in or deal in securities.
Let’s go to trial.
Maybe if my aunt had testicles, she’d be my uncle.
More hypotheticals, Anjalitroll ??
Why don’t we just stick with what we know ??
Then we can agree on that SEC hasn’t been instructed to address the question in the clawback litigation?
I don’t think they specified that? “SEC did not have jurisdiction”, etc.?
You use “as we know” as a method to bring in your own theory there, to bring in something that isn’t known.
It seems to be based on the theory that the issue has been “brought forward” from one case to another — from the Motion To Intervene to the clawback litigation — that SEC was “instructed” by the court to address that issue in the clawback litigation.
I am encouraged to see the SEC go after this Scammer. But, what is going on to sue the other top Zeek promoters?
Scammers all and most are back in ponzi deals all over again. Where is the justice system in America?
PLEASE if you lost money to these scammers call your Congressman or Senators.
Here in South Carolina at least 5 of these guys are laughing at the SEC and have gone into 2 or 3 more Ponzi scams since Zeek.
They need to be prosecuted and sent to Federal Prison.
The defendants asserted that the court did not have jurisdiction, and in this case that is tantamount to saying that the SEC did not have jurisdiction, (or more accurately, standing to bring the case.)
The court rejected the assertion that it did not have jurisdiction when it denied the Motion to Dismiss, but that is not a final ruling on the merits. If the SEC fails to maintain standing during the clawback litigation then the Court will have no choice but to dismiss the cases.
You have cited the default judgments as proof that the issues surrounding securities and SEC standing are resolved but you are wrong. If the SEC fails to maintain standing during the course of the trial on the merits the defaults and judgments upon which you base your opinion would be vacated.
I believe we are derailing into details here.
The court didn’t instruct SEC to address the jurisdiction question. It didn’t instruct the Receiver either. Trudy Gilmond’s Motion To Intervene was denied, but her right to bring up that issue in the clawback litigation wasn’t denied.
“Bring up that issue” is about that we can’t clearly identify it from the transcript alone. The court didn’t order anyone to specifically address the issue in any specific way.
The court only made sure that Trudy Gilmond would have the right to bring it up later — that denying the MTI wouldn’t harm her legal rights.
DIFFERENT THEORIES
I have used a different legal reasoning than you and Anjali, e.g. in that I have identified it as 3 separate cases.
1. “SEC v. RVG and Paul Burks” is one case. Motion To Intervene belongs under that case. “SEC’s jurisdiction” and “RVG didn’t involve securities” belong under the MTI. I see the MTI as “concluded” — it doesn’t have any remaining issues that will need to be resolved.
2. “Bell v. Disner et al” is another case. Motion To Dismiss was a part of that case. It focused on the court’s jurisdiction rather than on SEC’s jurisdiction, i.e. the issue had been modified to match the new case. I see the MTD as “concluded” — it doesn’t have any remaining issues that will need to be resolved.
3. “SEC v. Trudy Gilmond” is a third case, the current one. Questions about “SEC’s jurisdiction” may not be very relevant in that case.
I believe that is the most rational way to organize it.
I haven’t claimed that. But I was unable to identify any clear ideas in the different “Answers To Complaint”. The defendants deny almost all legal allegations and most of the facts.
I used the default judgment as a proof for that Trudy Gilmond’s case has been concluded — with a monetary judgment of $2,129,522.27. So she doesn’t have any legal issues waiting to be resolved in a trial.
A maxim of law reads, “Equity abhors a forfeiture.” If the defendants in Bell v Disner et al were to prevail, the court would vacate the default judgment against Gilmond … because it would not be fair to enforce it.
Why do you think none of these major net winner defendants have spent funds to defend themselves by answering? Its because the The judgments are meaningless if the net winner class wins at trial.
Far from having concluded, Gilmond’s case has not even begun. She has a default judgment because she did not answer but it may be vacated and overturned if the net winners prevail at trial.
I didn’t understand that “logical reasoning”. 🙂
I can agree on that Motion To Dismiss was about that same issue. It questioned the existence of securities. It didn’t question “SEC’s jurisdiction” or “SEC’s standing”.
“SEC’s standing” isn’t very relevant as an argument in “Bell v. Disner et al”. SEC is neither a plaintiff nor a defendant there, and the case isn’t about securities law violations but about fraudulent transfer.
this is what the MTD in the clawback alleged:
so, the correct legal term is ‘subject matter jurisdiction’ which can be loosely translated in layman language as, the SEC did not have ‘jurisdiction’ or ‘standing’ to bring the case SEC vs RGV/burks, from which the receiver derives his authority.
since the question of ‘securities’ has been clearly raised in the clawback action it will have to be answered.
as receiver bell will argue ‘fraudulent transfers’ and does not ave the authority to answer the questions regarding ‘securities’, i suppose the SEC will have to reply to the defendants claim at trial. receiver bell could very well invite an SEC ‘expert’ to address the ‘securities’ issue.
no, she would just be a bloody medical marvel 🙂
apart from ‘settlements’ with various parties, the zeek clawback litigation is in a preliminary stage.
It did by implication because if there are no securities at issue the SEC has no authority to bring suit on matters outside its jurisdiction)…and unless a matter is within the SEC’s jurisdiction the agency has no standing to bring and maintain a lawsuit.
Yeah, I may have overstated the case, the point being that the issues she has with the Receivership are not “concluded”.
They’re questioning the court’s subject matter jurisdiction. SEC doesn’t have that.
The court was clearly talking about its own jurisdiction.
“The court finds that it clearly has subject matter jurisdiction”.
It has been raised in the MTD, and probably also in “Answers To Complaint”. So something will need to be tried in court. But I’m not sure that “something” will be about “SEC’s jurisdiction” or the existence of securities.
duh. of course ‘one of the somethings’ that needs to be tried will be – the existence of securities – hence the SEC’s jurisdiction – hence the courts subject matter jurisdiction.
all roads lead to rome.
One problem here is that your primary source is your own ideas and theories, with very few references to external sources.
Anjali posted the relevant part of 90.pdf in post #40:
It’s based on exactly the same factors as the MTI = “RVG was not involved in the sale or marketing of any securities” and “The SEC action, from which the Receiver derives this authority …”.
From my POV, it has been modified to match Rule 12(b)(1) — one of the types of arguments defendants can use in a Motion To Dismiss.
“SEC’s standing” and “SEC’s jurisdiction” don’t have any function in that context. It isn’t something people can dispute in a Motion To Dismiss. The court’s own subject matter jurisdiction does have a function — it can be disputed.
The court DID test the existence of securities. It DID test its own subject matter jurisdiction. But it DIDN’T test SEC’s jurisdiction.
One of those roads DIDN’T lead to Rome.
c’mon norway, this ^^ is just inane hair splitting. ‘securities’ fall under the regulation of the SEC, so testing for the ‘existence of securities’ automatically means testing for SEC jurisdiction.
but you can play word games all day long.
And the SEC prefers CRIMINAL securities fraud charges how, exactly ??
According to the FBI which both investigates and prosecutes CRIMINAL securities fraud:
Hmmnn, who are we to believe when it comes to understanding the exact definition of what constitutes a “security” in both civil and criminal matters ??
“MAYBE” the SEC should have consulted with Anjalitroll before they filed the “CIVIL” charges which are the subject of this thread.
yes, FBI under the DOJ has the jurisdiction to investigate and prosecute securities FRAUD criminally.
this^^ does not mean that ‘SECURITIES’ are ‘regulated’ by the FBI or under the ‘jurisdiction’ of the FBI. that is the SEC’s role.
“MAYBE” you should write to the SEC recommending my services….hey, don’t be shy 🙂
C’mon, Anjallitroll, now who is engaging in inane hair splitting ??
Here we are many months after the closure of Zeek.
The SEC has been inside Zeeks’ accounts and computers and is armed with the testimonials of Olivares et al, and only now has decided to file civil charges against Gilmond and we are supposed to believe the worlds’ leading Speak Asia expert has come up with a technicality which will allow her to walk away ???
Only if she was Caitlyn Jenner
Then why have people argued that there’s an unresolved dispute about SEC’s jurisdiction and the existence of securities?
I’m not saying that the defendants can’t bring up any disputes. They can most likely find factors they can dispute.
Here you can get an answer to your “wrong question”.
Example for type of work not recognized:
Recruitment efforts among participants in a pyramid scheme don’t qualify as “counter proof” against the existence of securities.
A securities fraud will still be a securities fraud even if you add a recruitment component to it — if you reward investors for bringing in other investors.
The opposite idea — the idea that organizers can make a securities fraud become legitimate if they add some work to it — will be rather absurd.
Plenty of pyramid ponzis seems to be based on make-work.
I remember one, all you had to do was to pay your autoship, recruit others, and type in 10 license plates a week.
it is good that zeek is closed and we dont have to worry about it perpetuating its fraud anymore.
the issue of whether zeek sold securities in an investment contract is however, still a pending question before the court, and it is an interesting question which affects the future regulation of pyramid schemes.
today, vemma has been disallowed to use self qualifying autoship in its compensation plan, but the issue of whether self qualifying autoship will become ‘illegal’ across the board for MLM, remains to be seen at trial.
so, the action against vemma has not made the ‘issues’ surrounding it, ‘settled’ or ‘undeserving of interest’.
i have no bloody idea or interest in what the court will do with trudy gilmond, i just want to see how the court applies ‘investment contract’ and ‘howey test’ to the zeek pyramid. i mean, excuse my enthusiasm and all.
the two published court opinions in the MLM industry which are [mainly] relied on for finding ‘securities’ in a pyramid scheme are:
ninth circuit court, SEC vs glenn turner [DTBG] : the company officials consummated sales Themselves. distributors had to take acquaintances to opportunity meetings and their role ended there.
fifth circuit court, SEC vs koscot: the company officials consummated sales at opportunity meetings with the distributors ‘helping sometimes’. distributors were not allowed to explain the koscot scheme to prospects, they had to just bring them to the meeting.
in the few cases where distributors were allowed to explain the scheme, they had to read from a company prepared script. the role of the distributors in consummating the sale was very limited.
in zeek IMO, distributors were selling the scheme to prospects quite independently.you did not need any help or intervention from the company to sign your neighbor into zeek.
so, whether the zeek court will stretch the howey test to cover even such ‘independent’ efforts of distributors in a pyramid scheme to find a ‘security’, is an interesting and important ‘technical’ question.
uh, because the dispute is pending to be resolved at trial. there’s no final decision yet.
please remember that the ninth circuit courts ‘opinion’ in omnitrition was an ‘interim order’ [not caselaw], reversing the summary judgement of the district court [which was in favor of omnitrition].
this ‘order’ merely found that the question of whether omnitrition was ‘pyramid’ or sold ‘securities’ was a ‘triable issue’ and needed a trial by jury, for a final determination of these issues.
the issue of whether omnitrition was indeed a ‘pyramid’ or sold ‘securities’ never went to trial and was never finally resolved. omnitrition continued to operate after this case [was the case settled?].
another ‘finding’ of this omnitrition opinion from the ninth circuit was that ‘If Koscot is to have any teeth, such a sale [internal] cannot satisfy the requirement that sales be to “ultimate users” of a product’.
this ^^ ‘finding’ was not accepted in burnlounge as ‘not being supported by caselaw’.
so while ‘omnitrition’ is an important ‘opinion’, it is not settled caselaw, unlike the DTBG and koscot rulings of the circuit courts which found the presence of ‘securities’.
read this para from the omnitrition order;
1] the court noted the ‘limited’ role of participants in DTBG
2] the court did not conduct a detailed investigation into the efforts of participants in the omnitrition program
3] the court says ‘If Omnitrition’s program involves the sale of securities..’
so, the omnitrition order was an ‘interim order’ detailing WHY there was a ‘triable issue’ in the omnitrition case. it is not a final determination of any issue.
You have got a valid answer in post #56, referring to the order denying motion to dismiss.
It’s enough to show relevant case law — that courts will not recognize ANY type of work as argument for “it wasn’t an investment, we had to work hard for the money”.
I can ignore your idea. It had some serious flaws, e.g. you boldly state that the court does not use any other reasoning outside those 4 prongs. That idea is rather dysfunctional.
Since I already had ignored point #2, then I could also ignore point #3.
If we try to keep it short … you believe judge Graham C. Mullen has referred to incorrect case law?
That’s possible. He referred to Omnitrition Int’l, Inc. v. Adkins (not Webster v. Omnitrition). I haven’t checked his legal sources, so I can’t guarantee anything.
But my method is correct enough. I have ignored your “linear logic” and have referred to relevant case law.
goody.
of course not.
judge mullen did not say ‘ caselaw has established….’
instead judge mullen said ‘Indeed, courts have held that the “efforts of others”…’
when judge mullen did not say ‘caselaw’ why are you imputing it?
it’s the same case as far as i can tell :
For the life of me, I can’t work out what all this talk about pyramids, MLM, Koscot,FTC, caselaw etc, etc, etc has to do with the CIVIL case being brought against Trudy Gilmond by the SEC.
This is turning into the worlds’ longest running perpetuation of a strawman argument
“Referred to case law” is the same as “quoted from and identified cases by name”.
Example:
Since courts generally refer to the arguments used by the parties, then “incorrect case law” can be relatively common.
You’re absolutely correct. Judge Mullen didn’t say “caselaw has established”. Instead he said ‘Indeed, courts have held that the “efforts of others”…’.
There hasn’t been any disputes about it. I don’t think anyone have imputed it either?
The SEC alleges that Gilmond was compensated as an unlicensed securities dealer, so the existence, or non-existence, of securities is of primary importance. Its worth noting that if Gilmond was peddling secuties then all of the other affiliates were doing the same.
Due to the expense of responding there is virtually no chance Gilmond will defend against the SEC complaint, but she can hope that the securities issue is addressed and resolved in the affiliate’s favor during the Bell v Disner clawback action.
Even if Bell failed to prove the affiliate’s received fraudulaent transfers, a finding that securities were being peddled by the affiliates would permit the court to order disgorgment of compensation received from unlicensed Broker-dealer activity.
All the other affiliates didn’t have the same type of contract with RVG as Trudy Gilmond had. So it’s possible to single out Trudy Gilmond as a “special case”.
He can’t suddenly introduce a new legal idea if the first one fails.
She may be unique in some respect but I see no substantive difference in what she was doing compared to all the other affiliiates.
SEC managed to see it. It’s covered in the article.
She received $184,747.97 in “May 2012 Special Compensation” — in addition to what she earned as an affiliate. That’s one difference, one of many.
True, Bell can’t do it. The SEC would have to for it is they who have the authority to enforce security laws (as Gilmond is finding out.)
I am only saying that obtaining disgorgement of unlicensed Broker Dealer compensation is an alternative way of recovering assets for the estate if for some reason Bell’s fraudulent transfer approach failed.
In SEC v Gilmond her disgorgement would not be paid to the SEC but to the actual payor (RVG.) Could the same apply to all net winners? I think so but only if they were peddling securities.
Were they securities? Some say yes, some say no. Some say it doesn’t matter. All I can say is that if the SEC wants to obtain disgorgment from Gilmond…it matters.
Is the SEC seeking disgorgement of just the “Special Compensation?” which would indicate that was the only compensation she received as an unlicensed broker dealer or not?
I only mentioned it as “one of the differences, one of many”. Most other differences have been covered in the article.
It was a reply to the statement “She may be unique in some respect but I see no substantive difference …”. I pointed out that SEC had managed to see some differences, and I mentioned one as an example.
Everything the SEC itemized is included in their calculation of compensation paid to an unlicensed broker-dealer. Don’t lose sight of that.
I had a quick look at the complaint. I only found two amounts mentioned — in the GILMOND’S ROLE IN THE FRAUDULENT SCHEME section of the complaint — part of FACTUAL ALLEGATIONS.
“Prayer for relief” didn’t specify anything.
Add it all up and the SEC complaint states:
I have tried to say that Gilmond and every other affiliate net winner is alike in one very important respect, which is that they all sold and promoted securities and received compensation for doing so without a license, which is a violation of Section 15(a) of the Exhange Act…FAILURE TO REGISTER AS A BROKER-DEALER.
The Complaint makes it clear that ALL Gilmond’s compensation came “as a result of her promoting and facilitating the distribution of ZeekRewards securities.” The same applies to every net winner. There is no substantive difference between one and the other.
Amendment for clarification The Complaint states her violation was to “induce or attempt to induce, the purchase or sale of securities, without being registered as a broker or dealer or associated with an entity registered as a broker or dealer in accordance with Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).”
Induce or ATTEMPT to induce…” By that measure every affiliate who posted daily ads (presumably all of them did as this was a requisite for getting paid) violated securities law which makes them subject to disgorgement.
I have already told you that you can find some of the differences in the article, and I also gave one example.
If we’re talking about real lawsuits then the differences can be more important than the similarities.
If we’re talking about imaginary ones then neither the similarities nor the differences will be important. Imaginary lawsuits won’t need much substance or resources to be “won”. If one theory fails then it can always be replaced with a new one.
Do you have a point of view or are just cutting and pasting random shit?
OK, you read the article. So did I and the complaint…twice.
The fact that she signed a contract is not the point… its just background. The important point is she promoted Zeekler securities fraudulently and without a license. The point is that she may be forced to disgorge all that she took.
You on the other hand are twinkle eyed about few itemized payments that she received and have missed the important parts entirely.
Random differences tell us nothing and that is all you have emphasized.
no. caselaw is derived from published final judgments in a case, and create ‘Precedent’. other cases/orders may be “quoted from and identified by name”, but they do not constitute caselaw and cannot be used as precedent.
but, this has meandered off topic.
suffice to say that the ‘opinion’ of the ninth circuit in omnitrition is not caselaw and is not binding as precedent.
SEC vs glenn turner and SEC vs koscot are caselaw precedents which relate to the existence of securities in a pyramid scheme.
so, no separate compensation was received by gilmond for being ‘field liaison’ or ‘consultant’. these were ‘titles’ in name only and don’t really differentiate gilmond from the rest of the zeek affiliate base.
correct.
The question was about “show me where the test for ‘investment contract’ ie the howey test, addresses the ‘legitimacy’ of the profit?” (post #21).
I have showed you a court order where judge Mullen denied to accept a wrong type of work.
The question was rather meaningless, because “the howey test does not address the ‘legitimacy’ of the profits expected by investors”. You knew it and I knew it.
You also introduced some “linear logic” ideas in post #26.
“the court does not use any other reasoning outside these four prongs” is simply not true. I can’t give meaningful answers if you insist that they MUST contain rather dysfunctional ideas.
* A court must first identify relevant facts. You will normally find some lengthy sections with all the relevant background information.
* It will then identify the legal issue, what the dispute is about, e.g. “subject matter jurisdiction … based on …”.
* And then it will identify the relevant legal sources, e.g. statutory rules, Howey test, other relevant sources.
And then it will identify how to understand or interpret the test. That section will contain some important information. Here’s a shortened version.
Etc.
Courts do no follow your ideas. You will typically focus on some “legal theory”, and you will usually have very low focus on the facts of the case. If you focus on facts then you will typically focus on some minor details.
The Howey test isn’t some type of Bible. A court will often use additional legal sources to check the relevance of the test.
This court didn’t follow your “linear logic” ideas. It identified it as a potential Ponzi / pyramid scheme before it applied the test. It didn’t first test the existence of securities.
“The dispute is pending” was primarily based on the idea that Judge Mullen “instructed” SEC and the Receiver about something.
The CASE is pending. But that doesn’t mean that the dispute about “SEC’s jurisdiction / the existence of securities” is pending.
You pointed correctly out that if the court has looked into the existence of securities then it has also indirectly looked into SEC’s jurisdiction — even if the conclusion was about its own jurisdiction.
That’s correct enough. But it also means that the court has addressed all the relevant elements from the MTI. There’s no remaining dispute there “waiting to be resolved”. The court has indirectly concluded that SEC had jurisdiction.
I have simply looked at the realities.
* Trudy Gilmond has been “singled out” from the group of net winners.
* SEC has identified some factors relevant to her role, but not relevant to the whole group.
* I haven’t tried to analyse any law theories, but I have looked into a couple of your arguments.
There’s not enough information available to determine whether Trudy Gilmond has been singled out as the only one, as one of a few or as one of many net winners. Currently she’s the only one.
There’s not enough information available to determine whether information is “just background information” or “important factor”. I haven’t looked into similar cases, i.e. some of the legal understanding is missing.
I agree that the SEC had the right to bring any action it believes involves securities (the SEC has jurisdiction to do so.) This is what gave it standing to bring the Burks suit. The Court acknowledged it had jurisdiction in SEC v Burks without opposition because Burks consented to it.
Burks’ relinguishment of control over RVG permitted an unopposed appointment of a Receiver (Gilmond was “too late” to oppose.) and…
More recently the Court ruled that it has subject matter jurisdiction in Bell v Disner.
Logically it would say so since both Bell and the SEC have made prima facie cases that fraud took place in North Carolina and that the affiliates received money as a result.
What I have never seen is the Court saying it has has personal jurisdiction over the affiliates. Perhaps I missed it or don’t understand, so my question is what would give the court personal jurisdiction, and secondarily what do securities have to do with it…if anything?
Observation: Fraudulent transfers are not dependent on the Howey Test and the Bell v Disner case seeks the disgorgement of fraudulent transfers not the disgorgment of compensation received from promoting securities without a license.
Gracias
That’s more than I did. I only looked briefly at the complaint, and I haven’t exactly “studied” the article in detail.
Your main idea seems to revolve around that there’s enough similarities for lawsuits against multiple net winners — that the definitions used in the lawsuit against Trudy Gilmond also can be applied to similar lawsuits against multiple net winners — even the whole group (post #76).
I tried to separate between real lawsuits and imaginary ones (post #78). I’m not sure whether you’re talking about real ones or imaginary ones.
so, we agree that the howey test does Not address the legitimacy of the profit. good.
judge mullens’ Interim Order dismissing the MTD, is an ‘interpretation’ based on the omnitrition Interim Order and is not a final judgement in the case and is not based on precedent.
in both the precedents i have mentioned, ie DTBG and koscot, the court found the ‘efforts of others’ prong of howey to be satisfied, not because they refused to accept ‘a wrong type of work’ but because they found the work ‘insufficient’ to affect the overall success of the scheme, since the recruitment ‘sales’ were mainly controlled by the management of these companies.
as i see it the DTBG and koscot precedents established this:
recruitment schemes CAN involve securities..
..where..
..the recruitment effort is actively managed and controlled by the management.
no case law has found that : All pyramid recruiting involves sale of a security.
see the difference?
the court has addressed all the relevant elements from the MTD, and found that the MTD should be dismissed, and the case should Proceed To Trial to Resolve the Disputes.
judge mullens order dismissing the MTD in the zeek clawback, is similar to the omnitrition order remanding the omnitrition case back to trial, and both orders are not a final resolution of the disputes of the parties.
here is an example to illustrate my point.
the burnlounge appeal order threw up an important precedent:
self consumption by affiliates CAN BE sales to ultimate users under the koscot test.
^^this does not establish that ALL self consumption has been declared to be bonafide product sales to ultimate users.
similarly, DTBG and koscot determined that :
pyramid recruiting CAN BE a sale of securities under howeys test.
^this does not establish that ALL pyramid recruiting has been declared to be sales of securities.
That also explains why your question was meaningless — “wrong question”.
You brought in that idea yourself that the Howey test was the only valid source, even if you knew it wasn’t. I didn’t refer to the Howey test in my arguments about “not all work will be recognized as valid” (as proof for something).
If we should discuss Koscot, Omnitrition or other cases — then it must first have some relevance to this case — something that can prevent the discussion from derailing. I tried to make my reply short when you quoted from case documents from other cases.
Judge Mullen has most likely made a decision based on the facts of the case, supported by legal arguments. It’s very unlikely that he has made a decision based solely on legal sources. It doesn’t really matter whether it’s precedent or other sources.
“The facts of the case” includes the factual allegations presented in the complaint. Your “linear logic” focused on a different idea. It ignored the facts.
The rest of your post is about “law theory” — about other cases (DTBG, Koscot, etc.).
I don’t think I have said that all pyramid scheme cases involve the sale of securities. So what’s your point there?
I see the decision as case specific based on the facts of the actual case. You seem to focus on law theory, where the decision is based on “Word of God” types of material.
uh, the howey test IS the valid test used by federal courts to test for the presence of securities in the form of investment contracts.
your “not all work will be recognized as valid” is an argument and idea invented by yourself, and has not be utilized in either koscot or DTBG. both those cases focused on the ‘sufficiency’ of the work and not the ‘validity’ of it.
since your “not all work will be recognized as valid” has no basis in caselaw, i get to ignore it! booyah.
I was only trying to limit the case — trying to remove the idea that SEC had been instructed to something in the oral hearing — that there are some unresolved issues from the MTI (Motion To Intervene, Trudy Gilmond and Nellie King).
You pointed correctly out that if the court has found the existence of securities, then it has also established that SEC had jurisdiction — even if it didn’t specifically say so.
So the argument about SEC’s jurisdiction has actually been shot down (or at least it will be difficult to implement that argument in a new legal theory).
I haven’t checked that case recently, but there seem to be some major differences here. The comparison doesn’t seem to be very relevant.
“Sending a case back to trial” is about a decision from an appellate court — a reversal of a decision. It’s usually based on arguments like “the trial court erred in that decision”.
Motion To Dismiss is about some initial, pre-trial defenses — not about “sending a case back to trial” (the order denying the MTD). The MTD is an attempt to have the case thrown out of court without any trial.
I haven’t disputed the validity of the Howey test, only the validity of your ideas.
You introduced the Howey test as a condition in one of your questions — “show me where the test for ‘investment contract’ ie the howey test, addresses the ‘legitimacy’ of the profit?” (post #21).
It isn’t possible to give meaningful answers to questions like that. You can’t limit the scope to “I will only accept answers if they refer to that source alone”.
The initial argument goes like this (post #13). It’s focused on the realities of the ZeekRewards case. It doesn’t refer to any law theory.
The court may simply reject to accept Trudy Gilmond’s claim about “worked long hours” as a valid proof against the existence of securities.
I have shown that this court didn’t accept it, but the claim was too vague to be fully rejected.
Here’s the relevant legal logic.
“Validity” was about “as proof for something”.
It was specified in the post, to avoid misunderstandings about it.
the comparison was relevant because both the clawback MTD order and the omnitrition order, were pre trial orders and both were interim orders and not final judgments.
anyways norway, i think we have consumed all the meat of his topic and we’re just toying with the leftovers now.
my basic case is that:
– SEC vs trudy gilmond is based on the premise that zeek sold securities
– this ^^ premise is disputed and awaiting resolution in the clawback trial
– precedent in the cases of the SEC vs MLM [DTBG, koscot], may not technically cover the ‘extent’ of the efforts of the participants in zeek. further, omnitrition is not precedent and should not be viewed as one.
i rest my case.
besides, i am a good girl who wont go around kicking OzEdit’s ass awake 🙂
Hmmnn,
“I worked hard at perpetuating a fraud”
” I worked hard promoting an illusion”
Nah,
….Prove it.
Prove what ???
I have no need to prove anything.
I’m quite willing to wait for the inevitable to happen without engaging in endless speculation and strawman building.
Zeek was a fraud and Gilmond “knew or ought to have known” before she accepted money.
So wait. Comment as you will, but no one is forcing you to read or engage.
Oh, I’m sorry, did I inadvertently use the word “forcing” without realizing I had done so ??
Personally, I find it bloody amusing to watch such earnest
point scoringdiscussion about what is a slam dunk for the prosecutors.You simply don’t get to run a multi million dollar fraudulent scheme in 2015 in the USA and walk away.
Here’s Broker-Dealer activities, as seen by regulators.
I still believe that Trudy Gilmond has been singled out — not because of the similarities but because of the differences — as “the one and only” or as “one of a few”.
I don’t believe that details in her personal involvment are “just background, nothing of importance”.
Here’s a list of top net winners (USA).
* Net winnings from the complaint, “Bell v. Disner et al”.
* “Sweet 16” from entries of default judgment.
* “May 2012 Special Payout” from entries of default judgment.
There are several “big fish” in that list, but only a few of them had any special position in the system.
Net winner outside USA (BVI):
Yes there is a difference in her level of involvement and the amount she received.
She appears to be an energetic team leader and maybe the SEC wants to decapitate the team, but in any event, there were many affiliates similarly engaged, trying to build teams, misrepresenting Zeek, and peddling securities without a license. Maybe she is to serve as an object lesson for all of them because her activities while different in degree were no different in kind.
In any event I was only trying to illustrate why the securities question was relevant since LRM said he couldn’t “work out what all this talk about pyramids, MLM, Koscot, FTC, caselaw etc, etc, etc has to do with the CIVIL case being brought against Trudy Gilmond.”
Hopefully he understands now if he is still reading along.
I don’t know what you are trying to illustrate Norway. Do you want us all to understand that Trudy is different than Darryl Davis or Joe Schmo. Yes she is, but the laws she was breaking are the same.
The Broker-dealer article was worth reading.
Oh good grief. The two major compliance attorneys for Zeek just admitted that Zeek was a Ponzi and illegal pyramid scheme.
It was part of their settlement agreement with the Receiver. They will pay $100,000 but admitted to a judgment of $100 Million Dollars. Nehra was the one running around saying that Rex Venture Group was not operating illegally.
If any of you still think that the SEC will not be able to prove that Zeek was selling unregistered securities, I have a bridge to sell you real cheap.
All Trudy Gilmond, and those like her are trying to do, is throwing enough mud against the wall hoping something will stick.
If you think that Trudy is the last one that will be charged by the SEC, think again. They are just warming up.
You can bet all the major pimps of this are sweating bullets right now thinking they are next. The best news is they are probably right. Couldn’t happen to a nicer bunch of Ponzi pimps.
Start prosecuting the Pimps and this cancer will come to a screeching halt.
I wonder what all those who doubt the SEC can prove Zeek was selling unregistered securities will say when it is proven they were. I can hear it now: miscarriage of justice, Zeek was railroaded, the net winners were railroaded, the evil government doesn’t want the little guy to get ahead, everything is a Ponzi if you really get down to it, yada, yada, yada.
Yep, the SEC always goes into court knowing they are going to lose the case, and just hope and pray that the defense attorneys will not realize they don’t have a case and actually take them to court.
I have tried to identify some — based on the idea that Trudy Gilmond is one of a few. The next one on that list seems to be T. Le Mont Silver Sr., but I’m not sure about the others.
Most of them simply haven’t been visible enough in court documents to draw any conclusion about how involved they were.
As did Dawn Wright-Olivares AND disclosed all she knew as part of her plea agreement AND prosecutors have had access to the inner workings of Zeek / RVG for months AND prosecutors have already described Zeek / RVG as containing elements of both pyramid AND ponzi schemes
IOW, there’s no surprises to be had.
As I said: “slam dunk”
..and these attorneys got a pretty sweet deal in return for making such an admission. a court cannot declare a scheme to be illegal just because someone ‘admits’ it was illegal. such a finding can only be made on the basis of merit.
yes that’s possible.
but industry followers may also say, – o, so the fourth prong of the howey test has been expanded further, to cover ‘independent’ efforts of affiliates in MLM. wow, that’s a new precedent with long term effects!
Seriously ???
You’re going to suggest what “industry followers” say has any relevance whatsoever ???
You really do watch too much TV
(Oh, BTW, SpeakAsia management called and they need your expert opinion)
yes, i’m seriously suggesting that industry followers will find court rulings about MLM litigation very relevant. why not?
as if. TV never discusses the ‘application of the howey test to MLM recruitment’.
aw. too late.
I’ll be extremely charitable and assume that is a purely rhetorical question or you’re being deliberately ironic.
The opinions of HYIP ponzi “industry” followers have about as much relevance to the outcome of the slam dunk Zeek Rewards / AVG case/s as those of the Brothers Grimm or Hans Christian Anderson
In the blue corner we have the SEC, Secret Service, IRS, DoJ, U.S. Attorney’s Office in Charlotte and The President’s Financial Fraud Enforcement Task Force, all of whom have complete access to the inner workings of Zeek and RVG and two years of investigation.
in the red corner, we have:
Anjali, Hoss and assorted HYIP industry “followers”
Hmmnn, I wonder whose corner threw that towel into the middle of the ring ??
there you go.
i said ‘industry followers’ and you went and added ‘HYIP ponzi’ industry followers, all by yourself, to corrupt my statement.
IM[humble]O, the application of the howey test to MLM, has implications beyond zeek, and i’m going to be charitable and suggest, that you probably cannot fathom this because you are um, restricted to reading the Brothers Grimm or Hans Christian Anderson.
now you’re just ‘name dropping’ for puffery.
only the SEC and its allegation of ‘securities’ is relevant in SEC vs gilmond and bell vs disner et all.
That’s a new one. “The application of the Howey test to MLM recruitment” seems to be about an extended use of the test.
“TV never discusses it” sounds reasonable enough. 🙂
So, the SEC isn’t going to use any of the information it received during the course of it’s and the other agencies’ investigations ???
Damn, I thought the whole point of being a member of a task force was the sharing of information among its’ members to crack down on crime.
Thank goodness we have Anjalis’ extensive experience of law to put us straight.
The normal way is to apply the Howey test to the facts of the case — relevant parts of the test to relevant facts. Only disputed parts will need to be tested.
1. investment of money
2. in a common enterprise
3. with an expectation of profit
4. that arises primarily from the efforts of others (third party promoter, agent, organizer, etc.)
Trudy Gilmond’s “worked long hours” failed because “how ZeekRewards operated in reality” was a relevant part of the facts. Paul Burks played a much more significant role in the distribution of profit than Trudy Gilmond.
duh. of course the SEC can and will use information collected by any investigating agency.
but, the ‘Relevant’ question remains whether zeek sold securities or not.
judge mullen is hardly going to say : o well, since so many agencies have put in their time, lets just go ahead and make a finding of securities!
nope.
the contentious issue in the application of howeys test to MLM is whether ‘recruitment work’ [in varying degrees of effort], is sufficient work or not, to satisfy the definition of an investment contract.
howeys test does not ask who ‘distributed’ the profit but rather who’s efforts chiefly contributed to ‘creating’ that profit.
Good grief yourself.
Do you know what a strawman argument is Lynndel? You just asserted about a dozen of them in the form of “IF you think this, then HA, take that!” As a matter of fact,I don’t think anyone here believes any of what you suggest they might.
If you have an opinion or would like to forecast the future by all means do so, but please don’t make negative inferences and then build little “if you think” strawmen so you look knowledgeable and brilliant refuting what no one even said.
You forgot the best one, used to explain the owner of Adusrf Daily, Andy Bowdoins’ failure to appear:
“Andy Bowdoin is too honest to testify”
The irony here is that you (and maybe Lyddell) seem to be the only HYIP “followers” participating in the discussion.
None of which has the slightest thing to do with how the State will prove that Gilmond was acting as a broker-dealer.
Right. Obviously right. The duh factor seems to increase in direct proportion to Andy Bowdoin references. Why is that?
That’s why I started with a specific statement about the facts of the case. Neither of them “created” any profit — any real profit.
Paul Burks created false profit statements each day, but some days he only gave instructions to Danny Olivares or to Dawn, and sometimes he gave them the formula for a whole week.
Without those false profit statements none of the investors would have received any daily profit share = Paul Burks played a much more significant role in the creation of profit (false profit) than Trudy Gilmond.
If so, then Gilmond and everyone else was peddling securities and it should be proveable.
since Anjali and Hoss keep harping on about it, there must be some doubt securities are involved.
Quit trolling.
Calling an $850 million dollar combination ponzi / pyramid scheme fraudulent and it’s enablers guilty is hardly trolling.
That’s why you will need to start with the facts first.
You can’t blindly select a rule or a test and assume that it will give meaningful answers to everything.
Whether recruitment of investors can qualify as counter-proof against the existence of securities is probably about “relevance of evidence” rules. It may not be relevant as evidence.
If the factual allegations in the complaint say that the investors participated in a Ponzi pyramid hybrid where they were partially paid from the investment itself / partially paid from recruitment of other investors — then the argument “we were paid for recruitment” will be rather meaningless if used as a counter argument.
Yeah your trolling, and that is all. Like I said nobody is forcing you to read our comments. If you don’t like the discussion, get lost.
I have tried to separate between real lawsuits and imaginary ones. So I came up with “one of a few” as the most realistic answer.
T. Le Mont Silver Sr. (“field liaison”)
Jerry Napier
Durant Brockett
Darren Miller
Todd Disner
From the complaint, “Bell v. Disner et al”.
We have 2 “field liaisons”. All the others were described as “affiliates” and “net winners”. Lori Jean Weber was only described as “net winner” (not affiliate).
Not hard to do I hope.
Real lawsuits will require some resources, and they are generally more risky than imaginary ones. So I made the list quite short, based on that SEC doesn’t have infinite resources but must carefully pick legal battles.
SEC has 5 people working on the Trudy Gilmond lawsuit.
Imaginary lawsuits don’t have limitations like that.
From the oral hearing, the MTI, page 24 — only 3 people handling the “SEC v. Burks and RVG” case.
I believe that “limited resources” will be a relevant factor.
SOME NET WINNERS
Trudy Gilmond was active 3 months before ZeekRewards launched, from September 2010. She was one of the “Sweet 16” founding members, and acted as a “field liaison”. She was paid $184,700 in “May 2012 Special Payout” (113-3.pdf).
Jerry Napier first became active in April 2011. Jerry Napier received $52,600 in “May 2012 Special Payout” (114-3.pdf).
Todd Disner first became active in March 2011 (45-1.pdf).
David Sorrells first became active in May 2011 (46-1.pdf).
Michael Van Leeuwen first became active in April 2011 (47-1.pdf).
yes, i think there is legitimate doubt about whether securities are involved due to the ‘limited findings’ in available federal court precedent.
there is no need to hyperventilate just because a ‘legal’ question has been raised. questions are asked and answered in court which is how caselaw develops, and we should appreciate this instead of wailing and flailing.
i mean, this is not harry potter, and speaking about the zeek case is not a voldemort [“He Who Cannot Be Named”] that will bite us in the ass. grow up or something.
I don’t think I can adequately explain to you or Hoss in words how little any of your strawman arguments cause me to “ventilate” or, in fact, do anything more than smile.
Your strawman argument was put in place way back when you proposed the idea that the “securities” question was of vital importance and would need caselaw to be developed and the courts “woulda, shoulda, coulda” have to settle YOUR argument once and for all.
Of course the question will arise.
And, just like the myriad of HYIP ponzi cases before it, will be settled under current legislation in double quick time.
There’s very little doubt also, that some or all of those charged will use every legal right available to them to extend proceedings as long as is possible, as is their right and exactly as they should.
None of which has any bearing on the fact Zeek Rewards / RVG was a fraudulent operation with no “material” difference to the “next-big-thing” ponzi / pyramids which came before it.
Existing caselaw is more than adequate to secure convictions
What HAS changed, though, is the way such fraud is being handled within the USA and by whom it’s being handled, a fact Ms Gilmond is about to discover to her detriment.
Ask Matt Gagnon what can happen to ponzi / pyramid pimps under the current system.
Here’s a relevant link to that story.
Hoss:
In response to your comment about my using the term “good grief,” this time I will revert to using the term “Good Heavens.”
I probably have forgotten more information about Zeek than you know about Zeek.
We were reporting Zeek to federal law enforcement a full year before the Secret Service and the SEC shut them down. We were providing them information up to the middle of July 2012.
Toss in the over 300,000 documents that Zeek provided the Secret Service, not counting all the other information Zeek provided, they knew everything there was to know about Zeek.
The SEC is going to have a slam dunk in proving Zeek was indeed selling unregistered securities and that the lead people were acting as broker-dealers as charged.
May I suggest you read the criminal indictment against Paul Burks and you will see just how much information the SEC and Secret Service really do have in regard to Zeek.
Remember, they will have Dawn Wright-Olivares, as well as her step-son, as their leading expert witnesses against Paul. I am sure it is part of her plea deal with the FEDS when she pled guilty to the criminal charges filed against her.
I can’t wait to see how many more of the insiders are charged criminally for their role in Zeek. As each new case is filed, you will see a rush for a plea deal.
As for the light payment agreed to by Gerald Nehra and Richard Waak of $100,000 from the $10 Million Dollar judgment, it is ALL the assets of the firm. Kind of hard to get more money out than they have available don’t you think anjali?
If you think admitting to a $100 Million Dollar judgment is no big deal, try talking to a real attorney and see what they say.
And as for their having to admit that Zeek was a Ponzi and illegal pyramid scheme, it also is a big, big, big deal. Gerald Nehra’s reputation as being this great MLM guru legal counsel is ruined forever.
When you toss in ASD, Zeek and TelexFree, that were all Ponzi’s, there will never be another MLM company that will come near him for legal advice.
I tried to google “confess judgment”. One of the uses seemed rather normal when people settle a lawsuit in the very initial stages — before answer to complaint, etc.
The receivership will also be dissolved in a couple of years.
first of all it is not a ‘strawman’ argument and secondly it is not MY argument. it is an argument before a court, and not of my making.
i see that you agree that the securities question can arise and that the defendants are free to ask the question as a matter of right.
the only disagreement in our POV’s appears to be that you have prejudged the case as a slam dunk and i’m willing to let the case play through and wait for the final judgement as i do not find ‘enough’ precedent to prejudge this matter.
unfortunately the only arguments you present, to bolster your ‘slam dunk’ opinion are along the lines of:
-the SS is involved in investigations!! [what does that have to do with ‘securities’??]
– the olivaries will rat out on burks [what does that have to do with ‘securities’??]
– there is enough case law to secure convictions [which federal caselaw? this is a civil case, what convictions are you talking about?]
– zeek was a fraud [what does that have to do with ‘securities’??]
you are avoiding the the Primary Question of securities and beating all around the bush with your ‘strawman’ arguments.
hence you do not convince me. hence i shall wait for the court to clarify its stand about ‘securities’ is zeek.
NOLINK: legal-dictionary.thefreedictionary.com/Confess+judgment
-matt gagnon pleaded guilty
-matt gagnon was getting 50% of the profits of the legisi scheme.
was there a ‘finding’ by the court of ‘securities’ in the legisi scheme? if not, how is it relevant to the current zeek case?
if gagnon was a 50 % partner in profit how is it relevant to the particular case of trudy gilmomd?
i mean, it’s good that the legisi guys got their ass whipped, but i dont see the relevance here.
So when you talked to a real attorney, what did the attorney have to say?
I googled it, and found two types of information. One about “creditors’ tool”, “Maryland and Virginia”, “excessive attorney fees”, “prohibited in several states”.
The other one was this one:
we have seen the complaint of SEC vs RGV/burks, bell vs disner etc, SEC vs gilmond, IIRC none of these documents alleges that ‘they were partially paid from the investment itself / partially paid from recruitment of other investors’.
so, i don’t know what you’re talking about.
“If you are smiling, it must mean that you think a $85 Million combination ponzi and pyramid is a laughing matter.”
Well you are right about one thing. Whatever you said was not adequate and your vein popping hyperbole is beyond ventilation, but I must ask, will you forever misconcieve the the strawman fallacy? Its torture to be forced to hear you misuse the term day after day. Here’s a primer.
“The Straw Man fallacy is committed when a person simply ignores a person’s actual position and substitutes a distorted, exaggerated or misrepresented version of that position.” (such as “if you are smiling, you must believe…)
Here’s another example, in the form that should be all-to-familiar to you since you use it all the time.
“If you are discussing security law , it MUST mean that you think the government can not make its case in the Zeek $85 Million combination ponzi and pyramid scheme. That’s a pretty stupid conclusion to draw don’t you think?
Are you still smiling?
Equivalent terms…so what.
Oh fuck me, I did not realize you were a Junior G-man and an HYIP industry follower besides (your buddy LRM’s term)
Let me make something clear to you Lydell since you seem to have the wrong impression or simply have no tolerance for the contingencies; I have never said that the SECs case wasn’t rock solid, or that the allegations were not true, but it still remains the case that absent confessions, agreements or settlement the government and the receiver will have to PROVE their cases.
How they are going to do that in a court of law, is the basis of my interest , so unless you can offer me more stuff than, “if you think that (which I probably don’t) then you must believe this,” (which I definitely don’t) then you don’t bring much other than bombastic “I am the authority here” bullshit to the table.
I can entertain two separate and opposing viewpoints in my head without losing it…I wonder if you can do the same.
In other words, Nehra’s deal with the Receiver will be buried in the voluminous record of this case, so long as he pays the $100,000.
No judgment on file, not action against his license. Boy things have really changed.
Must it ???
Well, it’s bloody obvious there’s lots of things you don’t “realize”
Or we can use another definition, which describes Anjalis’ constant references to the need for judicial clarification of the “securities” issue as underpinning the case/s.
Oh, sorry, is that the conclusion I drew ??
Bloody ‘ell, ain’t psychic abilities amazing ??
Be careful there, cowboy, displaying your myopia in public is terribly unbecoming.
They only specify amounts when it has a function.
They specified something for Trudy Gilmond.
They will probably use her own recruitment activity against her, e.g. as evidence for “Receiving success-based fees (i.e., fees contingent on the success of the financing transaction)”.
The main components of the scheme have been described specifically.
Example:
uh, but it IS true – the need for judicial clarification of the “securities” issue IS underpinning the case/s.
what to do?
calling stuff strawman or strawdog or scarecrow, and going ballistic, will hardly change this fact.
So apparently you and Lydell believe that YOU were instrumental in the SEC decision to file suit against Burks and therefore you know everything anyone needs to know about Zeekler, security law, clawbacks and the current litigation. Well guys, I hate to tell you that’s probably not true.
Look, it must be very satisfying to be members of a secret HYIP industry follower society where you can act as investigators, but keep in mind that neither of you is the judge or the jury here so there is plenty of room for diverse opinions. However!
I salute you Junior G-men. Do good work, go forth and bring the baddies to justice. A grateful nation turns its eyes to you.
I know you cut and pasted that Broker-Dealer summary which was good, but this aspect does not apply in the way you are suggesting.
Gilmond was not receiving fees contingent on a financing transaction. Please don’t try to torture the words to make things fit.
I take this back. It could apply. Who knows? You could be right. My guess is Gilmond will default or settle so we will never hear the arguments anyway.
You are a trip. Never claimed to be a Junior G-man, that is your interpretation. What we do at Eagle, besides educating the public about how to protect themselves from becoming a victim of these online Ponzi’s/Scams, Illegal Pyramid Schemes, etc., etc.; is to provide our research to law enforcement agencies globally assisting them in their investigations of these programs.
They don’t even know these programs exist 99% of the time until we alert them, and allow them to decide which programs they want to pursue. Eagle has been doing this for more than 8 years; but I personally have been exposing them for more than 11 years.
You’re the one who said I didn’t know what I was talking about, and I was just illustrating how wrong you were.
Since you can entertain two separate and opposing viewpoints in your head without losing it, does this mean you are bi-polar? (It’s a joke!)
By why the profanity?
Only to you, Anjali.
I have a couple of potential explanations for the lawsuit against Trudy Gilmond.
It can have been initiated indirectly by the Receiver, based on the information he had about her involvment in ZeekRewards.
SEC has quietly waited in the background, not doing anything to disturb the case — before they suddenly decided to file a lawsuit against Trudy Gilmond. She has probably been on the radar for a very long time, but they have waited for the right moment.
So I have looked at the events leading up to the lawsuit, e.g. the MTI and “Bell v. Disner et al”.
1. The lawsuit against Trudy Gilmond will make it less attractive for any of the other defendants to bring up “SEC’s jurisdiction” and “the existence of securities” during the trial.
It will make the argument “we worked hard, recruiting people” become rather meaningless to use as a defense argument.
2. Trudy Gilmond has put up a lot of resistance against discovery. A lawsuit from SEC may simply be a solution to that problem.
October 2014 She gave rather vague answers to 15 questions from the Receiver.
April 2015 She refused to meet to deposition meetings. The Receiver filed a Motion for default judgment, alternatively for an order to show cause.
May 2015 She accepted default judgment by refusing to meet in court.
December 2015 I’m pretty sure she has continued with the same type of resistance. Lawsuit from SEC popped up.
Court documents:
It’s her favorite theory, and it did have some substance as an issue that could be disputed. Jordan Maglich saw it as plausible that it would be disputed during trial — in March 2015. But he didn’t see it as very relevant.
IMO it was not only gilmond and other ‘RVG personnel’ who attracted new investors, but all zeek matrix participants were free to recruit anyone into the matrix or RPP [qualified affiliates].
the daily profit-share awards distributed through the Retail Profit Pool, was dependent on the total amount of investments collected by zeek.
i am simply saying this: new investors were recruited into zeek by existing investors.
with the help of the zeek website and videos, zeek investors could recruit new investors independently without the company playing a direct role in the actual ‘consummation of the sale’ whether it was membership in the matrix or investing in the RPP.
zeek ‘relied’ on its investors to generate fresh funds in the RPP, even if recruitment was optional.
zeek did not directly invite investors to join the RPP, without being recruited by anyone through the matrix first. the ‘failure or success’ of the zeek RPP ponzi depended on considerable efforts of the investors and not just the efforts of the management.
further in SEC vs RGV, in relation to the RPP, the complaint notes;
so, in the zeek RPP, the ROI depended on the amount invested by the qualified affiliate ie it was on a prorata basis.
similarly in SEC vs howey, an investors returns depended upon how much acreage of citrus grove he invested in.
however in sec vs howey, the ‘profit’ was generated by the efforts of the management itself, unlike zeek where there was ‘substantial reliance’ on investors themselves to bring in funds [profits] to the RPP.
this is essentially the difference i see in ‘investment contact aka securities’ and the zeek RPP.
what an anticlimax that will be!
in that case we should sue gilmond et all, for getting us all into this ‘war of words’ here, and then calmly walking off into the sunset.
i mean, LRM is is ready to bust his arteries and all 🙂
A “ponzi” business is a fiction.
Contributing to the success of a fiction is not “work”
Not “knowing” it was a fiction does not mean victims are entitled to the same considerations as those who work for a legitimate company.
The daily profit share was dependent on whatever Paul Burks arbitrarily decided.
oh blah.
we’ve gone through this whole ‘work’ thing under the howey test in previous posts.
it’s like reading the whole ramayan and then asking who ram is.
i’ll just put in down to your poor reading skills.
ZeekRewards could clearly have worked without recruitment, but it couldn’t have worked without investment from investors. So the question will need to be about how essential that recruitment component was.
It has been discussed earlier in a different thread. And I have pointed out that investors managed to join Zeek without the assistance of recruiters, e.g. investors lined up in queue outside Zeek’s office on a daily basis to make investments.
I analysed the different components of Zeek in a few posts there, e.g. #59, #63, #74 — the cash flow of the whole program and some top earners’ earnings from it.
Example (post #63):
The fact YOU have “gone through the whole work thing” in previous posts and come to the conclusions you did has nothing to do with the fact a ponzi is, by its’ very nature, fraudulent, whether it’s victims or participants knew it or not.
The fact, also, that people did not wish to become embroiled in one of your endless strawman arguments, is not an indicator your “point” was accurate, made or proven.
so?
i have not suggested that zeek management were doing ‘nothing’.
i have suggested that zeek affiliates may have contributed substantial efforts which affected the success or failure of zeek.
the court will decide this, if this issue survives to the end.
Ummn, no you didn’t.
What you said was:
(my highlighting)
And it plainly wasn’t dependent on anything but arbitrary decisions made by Paul Burks
Further proof from the same document that “profit share” was not dependent on revenues:
(my highlighting)
yet, here you are blabbering endlessly and rather ‘pointlessly’, if i may add.
now that you can read, start working on your comprehension too.
daily profit-share awards – ‘dependent’ on the total amount of investments collected by zeek – ‘dependent’ on investors themselves – ‘because’ they were collected by investors themselves.
that burks sat in his little brick office and made up some imaginary profit percentage in his head everyday, does not take away from the fact that zeek ‘relied’ on investors to bring in fresh investment funds to the RPP, an ‘arbitrary percentage’ of which could be distributed as ‘profit’ [in cash and ‘points’].
the question is NOT whether the daily collections/revenues could or could not support the daily awards. zeek was a fraud with barely any real profit at all.
the question is whether this daily collection/revenue, which in July 2012 averaged approximately $5 million per day, involved considerable effort of the investors themselves or not.
you are really not getting this LRM. move along, you’re tiring.
“The question is NOT whether the daily collections/revenues could or could not support the daily awards”.
At the time, to those observing/involved in Zeek, it appeared the number of products being advertised daily was only a handful. I noticed this but no one involved seemed to question it ie, how a few dozen products could be generating the daily funds needed to pay.
That’s not THE question, that’s YOUR question.
No matter what you call it, a ponzi, a pyramid or simply a fraudulent scheme, the fact someone expended effort in promoting or recruiting for it does not entitle them to any form of consideration for what they did.
In Gilmonds’ case, the complaint states quite clearly she “either knew or should have known” it was a fraudulent scheme.
Pardon me. I did not say you didn’t know what you were talking about.
I objected to your dismissive attitude and bloated sense of self importance…and my use of the pejorative, Junior G-man, was to prick that gas bag, so of course (!) you never said you were one unless you are a self-reporter.
I apologize for the profanity and think what you are doing with Eagle is really great. Its just peculiar how you always seem to come to LRM’s defense when his eyes bug out and he says something incomprehensibly duh. Are you two a couple or what?
The daily profit share was unrelated to the amount collected by the affiliates. Paul Burks has already admitted that he made up a percentage himself each day, as you correctly stated.
Only a few had the right to “collect money”. Trudy Gilmond was one of them, and she has correctly been sued by SEC for unlicensed broker-dealer activity and investment fraud.
Only a few had the right to collect money. So we can forget that theory. The affiliates had the right to promote the scheme and to recruit investors in a downline, but they didn’t have the right to collect money.
Revenue is about income from commercial activity, e.g. from sale of VIP bids or retail bids. We can look at the numbers …
METHOD
* Identify the different components of the business
* Identify money IN / money OUT (real Cash Flow)
* Identify false cash flow
Based on those figures, Paul Burks played a much more significant role in the creation of profit than the whole group of affiliates.
The money the affiliates brought in only generated $120 million in RPP commissions, while Paul Burks’ activity generated at least 7.5 times more — between 900 million and 1,350 million in withdrawable “Cash Available”.
Of the $400 million paid to the affiliates, only $120 million can have been generated from real monetary transactions — from initial purchases of sample bids. Most of the commissions were generated from reinvestment activities.
The affiliates didn’t “collect money” from other investors, i.e. they didn’t bring in money — they brought in people. That’s a big difference.
ZeekRewards was dependant on investments from affiliates to be able to pay anything out as withdrawals, but it didn’t depend on recruitment of those investors. Any other process could have worked, e.g. an online signup form could have worked just as well as signing up through a back office.
Affiliates managed their own investments, e.g. how much they should withdraw and how much they should reinvest. The recruiting sponsors didn’t play any active role in that process — the “system” itself managed all those functions.
Trudy Gilmond had an active function, but the other affiliates didn’t have anything to do with monetary transactions from other investors.
Gilmond is like every other Zeeker in this respect; she and they are subject to disgorgement of ALL compensation received regardless of why they received it. That Gilmond had “rights” to collect that others did not is a side story.
The core issue is that she coordinated/liasoned and pulled more people into the scheme.
The details provided in the Complaint (once you get past the basic elements of of receiving payment for promoting securities without a license) are there to substantiate the SEC’s demand for damages, and to convince the judge to issue an Order that will prohibit Gilmond from promoting securities in the future.
To obtain damages and an Order the SEC must demonstrate how egregious Gilmond’s actions were, and her right to collect on a consulting contract is not what is important.
What is important is what she did in the performance of that contract. According to the SEC she did a lot… including fraud.
IMO
The main point there was about other affiliates. They didn’t collect money, they brought in people. RVG itself collected the money.
The recruitment part of the program simply brought in some “low hanging fruits” of unsophisticated investors. Some but not all invested some money.
I have simply tried to correct Anjali’s ideas about how profits were generated. She tried to give the affiliates a much more significant role than they really had.
Zeek was dependant on their investments, but the recruitment part could easily have been replaced by other methods.
I think you’re very very confused.
The question in SEC v Gilmond is whether she was compensated for inducing or attempting to induce persons to invest in Zeekler. Presumably she did induce persons to invest and was compensated and so the path the money took from an investor/affiliate to Zeek’s bank account is immaterial. She need not have personally “collected” the funds.
Saying that she as an affiliate brought in people rather than money is plain silly when the point of bringing in the people was so that they would (and did)transfer money to Zeek’s bank account.
We’re talking about two different things here.
* I’m talking about the affiliates as a group, about whether they collected money or simply brought in people.
* You’re talking about Trudy Gilmond, the charges against her.
Fake, non-monetary transactions generated exactly the same commission as real, monetary transactions. It didn’t really matter whether people were bringing in fresh money from the outside or reinvested “Cash Available” — the commissions were exactly the same.
yes, a ponzi, pyramid or fraudulent scheme definitely does not entitle anyone to keep the returns they got from such a scheme.
but, if you call something a ponzi as in a ‘securities offering’ you have to prove that first, and that’s the question in zeek.
and, gilmond is being sued by the SEC not only for promoting a fraud, but for promoting Securities without a license.
as i said before, this concept seems beyond your ken, LRM. giveitup.
you have No Idea whether zeek could or couldn’t have worked without recruitment.
we only know how zeek worked in ‘reality’, and that was that it was ‘powered’ by recruitment. people were recruited into the matrix and then recruited into the RPP.
the ‘real’ money that existed in the RPP pool was the investments of recruited members. your own data shows that there was barely any retail, and this further shows that recruitment was an ‘essential component’.
no, that’s just gobbledygook.
the affiliates ‘independently’ recruited people and ‘convinced’ them to join the matrix and then invest in the RPP. zeek, it seems, did not exert any ‘controlling’ role in these ‘sales efforts’.
that the money was put or ‘collected’ in zeek accounts, is not the decisive issue here, in deciding the role of the affiliates in the zeek scheme.
Do you really believe that, Anjali, or is this the same sort of obtuse defiance that you employed for all those months defending Speak Asia ??
This thread is about the SEC ADMINISTRATIVE action against Gilmond in a civil court.
Not against RVG or Zeek, it’s not the receivers’ class action against net winners.
And on those civil / administrative charges,they have her nailed to the wall AND they (the SEC) have done it all before
Unlike the other “net winners” in the class action, she had inside knowledge and access and could make changes to such things as points allocation etc
– read the SEC complaint against gilmond and you will find that she is accused of selling securities without a broker license.
– it’s not about what ‘i believe’, this discussion was just about what ‘securities’ are and how they could fit in with zeek.
– it seems offense is the only form of response you can think up.
– shoo
But, but, but,
aren’t these virtually the same arguments you used to deliberately mislead readers when you were defending Speak Asia for all that time ???
IOW, the Secret Service, IRS, DoJ, Financial Fraud Enforcement Task Force (oops, as Hoss calls it “LRMs precious task force”) are all wrong and a serial contrarian with a history of defending fraudsters has got it sussed.
R–I–G–H–T
What is this douchebaggery? . This is a civil enforcement action in Federal District Court not an Administrative action.
Good Grief and Good Heavens, a Junior G-man should know the difference.
According to the referenced material below, case law and precedent play a far more significant and determinative part in the outcome of actions heard in Federal Court than in actions before an Administrative Judge.
Just a guess, but the Andy Bowdoin Experience probably doesn’t tell us everything there is to know about securities litigation at the Federal level.
See Links
No Link ://www.sec.gov/divisions/enforce/enforcement-approach-forum-selection-contested-actions.pdf
No Link //www.law360.com/articles/610688/dealing-with-the-sec-s-administrative-proceeding-trend
No buts. There is a place for discussions of caselaw and precendent.
preSceNdent ???
12Daily Pro
Colon End Parenthesis
Legisi
AdSurf Daily
Achieve Community
People in Profit System
Material difference = none
Approach of lawmakers = increasingly harsh
Failure to succeed in prosecution = none
No, precendent. Pay attention!
Herp Derp. I’m a spell checker. Meep meep.
An impressive list of things you apparently know very little about.
Would you two stop the nitpicking already? Sheesh.
“You have no idea” should probably apply to both of us?
“Neither of us have any idea whether Zeek could or couldn’t have worked without recruitment”.
One theory isn’t more valid than the other if we’re discussing a hypothetical scenario. But you seem to believe in some other ideas?
The recruitment component isn’t described like that in the complaint. It’s described as a secondary component. The scheme as a whole is described as a combined Ponzi and pyramid scheme, with the Ponzi scheme as the primary component.
Most people were actually recruited as free members, a “try before you buy” option — or a “lock your position” option if we’re talking about the Matrix. The free membership offered 100 free VIP bids / 60 day profit share as an incentive.
You’re talking about a different program here.
Step back, Norv, quit trying to win an argument and ask yourself if what you are saying makes any sense. A Ponzi/pyramid that vacuums up $850 million in investment needs investors. Prospects were recruited, they tried and they buyed. Its not rocket science.
There hasn’t been any disputes about that?
A Ponzi scheme will of course need to attract investors. But that doesn’t mean that Ponzi schemes will need MLM based recruitment systems to recruit those investors into “opportunities”.
Ponzi schemes will need “acceptable stories” people can believe in, stories that can be used to mislead investors to feel it’s relatively safe to invest money and reinvest ROI. Zeek’s MLM component was simply that — “a needed part of the story”.
yes, the ponzi part of the RPP Can Be Separated from the recruitment part of the RPP.
but, courts often examine how the scheme operated as a Whole in Reality.
participants in the RPP ponzi knew that that daily profit share was dependent on the daily collection of funds in the RPP pool.
they were ‘encouraged’ to recruit more people into the RPP, with up to 10% commissions of the invested amount. the ‘expectation of profit’ by affiliates was tied to the recruitment, even if the ponzi element is differentiated from the pyramid element.
one statistic that i do not know, is how many people were recruiting in the RPP. since RPP participants profited from recruitment only two levels deep, and yet the RPP raised over 800 million, it indicates that many people were recruiting.
as i’ve said several times before, this is a very interesting case and now lets wait for gilmond to reply to the SEC complaint.
You don’t have to concern yourself with whether Zeek “needed” an MLM recruitment system or “needed” MLM to be part of the story.
Whatever you decide about that will be conjecture. Sticking with just the facts at hand you know that Zeek had an MLM recruitment system and MLM was part of the story. You don’t have to guess.
The “acceptable story” that got mom and pop to invest was the prospect of sharing in the penny auction profits.
That mom and pop could potentially make additional money within the matrix and pool and by recruiting friends and family into this purported money making opportunity was just icing on the cake.
No doubt there were certain individuals who realized that the auction was a sham but knew they could make money anyway by entering at the top of the pyramid and recruiting clueless mom and pops into the scheme.
Some of the names of these serial scammers are well known.
Nope. Not needed but using the MLM system exponentially increased the growth of the scheme.
The primary magnet that drew investment was the prospect of large profit sharing from the auction. You don’t “need” MLM to sell that idea, but it was an effective way of doing it none the less.
Here’s how it was described on Zeek’s website …
The main idea was “Get paid to advertise” / “Post one ad and get paid each day.
Same page:
Page 8-9 have more detailed description of the daily profit share.
The different Zeek clones used different ideas, and they generally failed to work (even if they had the same recruiters).
Ostensibly they were using MLM to advertise auctions, which could be legitimate in its own right, but once Burks-Olivares advertised that affiliates could get paid to advertise it created an expanding network of advertisers advertising that they could get paid to advertise.
Running that kind of show required that the auctions be wildly profitable, which they weren’t and Burks used new investor/advertiser money to pay earlier investors/advertisers.
So what was the “main idea?” The SEC will say recruitment driven pyramid ponzi. Gilmond would probably say legitimate plan to promote an auction business that just happened to fail.
If you multiply the number affiliates by the number of days and hours/per day they spent promoting Zeekler the aggregate effort is considerable, and likely far exceeded the hours Burks put in. Howey point 4.
No question there was fraud so Bell will win the clawback suit but was there a security? I don’t think the question will ever be answered because Gilmond alone can not face down the SEC on this issue.
I looked into the question whether Zeek was dependant on the efforts of the affiliates, or the affiliates were dependant on the efforts of Zeek’s management.
Zeek was dependant on the investments more than on the recruitment efforts.
All the basic ideas came from the management. T. Le Mont Silver failed relatively miserably in his two next Ponzi pyramid schemes based on profit sharing and recruitment (GoFunRewards and JubiRev). And so did most others when they tried to create different clones based on similar ideas.
pretty silly statement.
so, how much investment did zeek collect Without the Recruitment?
of course. no one has said that zeek was the ‘idea’ of affiliates. the only question is whether the profit the affiliates expected, was dependent on their own efforts too.
uh, if the SEC had not stepped in to shut down zeek, it was headed for a major crash too.
really norway, neither burks or lemont silver could have ever been successful running a recruitment scheme. so, whats your point?
Yes and yes… both, but put the question on the scales of justice and the SEC's point of view will prevail.
I view them as one and the same, like cold on ice, white on rice. Separating them is a falsehood.
Correct. The scheme can be (and has been) identified as a whole and divided up into components. Both perspectives will usually have a function.
So far so good.
That’s probably correct.
“ZeekRewards Income Calculators” were distributed online and offline. They focused primarily on the Daily Profit Share, and some also included commissions from downline’s investments and reinvestments.
There’s probably something missing here. “Potential profit” is one motivational factor among many. Most people seem to be motivated by more than one factor.
The primary source of income for most people was the Daily Profit Share — based on the affiliates’ own investments and reinvestments. It can be calculated in a spreadsheet, e.g. you can calculate a whole group of investors organized in a downline.
The commission you’re looking at there came 100% from investments and reinvestments, so it has been classified as “RPP” or “Cash Available” in the affidavits attached to the default judgments.
It hasn’t been identified as “recruitment commission” by SEC or the court. It didn’t involve payment of money when people reinvested “Cash Available”.
Your theory doesn’t match the reality here. It only shows that the Ponzi scheme component was a much more significant part of ZeekRewards than the pyramid scheme component.
The logical reasoning was also very vague. You used your own theory about how people had been motivated by recruitment based rewards to back up a conclusion that “it indicates that many people were recruiting”. There’s a type of logical fallacy there, but I’m not sure about which one.
Most of my posts here have been related to Anjali’s posts, to the theory where ZeekRewards was heavily dependant on the recruitment efforts by the affiliates.
SEC used that method — separating it into “The Profit Pool”, “The Matrix”, “The Penny Auction”. The Receiver used the same method. So there’s nothing wrong if I do it when I’m talking about the same thing.
Less than 50% of the affiliates recruited anyone into the program — based on plain logical reasoning and math. The number of non-recruiters will always be higher than the number of recruiters in a binary system (1-2-4-8-etc.).
ZeekRewards required 2 personally sponsored “Preferred Customers” (affiliates) to qualify for certain commissions.
…is like saying ice is more dependent on cold than on water.
yes, the three can be clearly separated.
but, can the recruitment side of “The Profit Pool” [RPP] be completely disassociated from the ROI paid by it?
its like a body laying with a knife in it, and you conveniently pull out the knife and say – hey see, no connection!
whether people received their daily profit share depended [in part] on how many VIP bids were sold that day. just because affiliates were paid separate commissions for recruiting more people to buy VIP bids in the RPP, does not ‘realistically’ separate this activity from the ROI paid from the RPP?
also, the SEC complaint in SEC vs RGV/burks mentioned two parts of the zeek program which involved securities – the RPP and the Matrix.
if we technically separate the ROI and recruitment aspects of the RPP, we can see a ponzi there.
the matrix will have some trouble with howeys test, as there is no ROI aspect involved there, but only recruitment commissions.
Where have you got that idea from?
The description in post #209 was from Zeek’s own website = how it falsely had been described. If you got that idea from there then it’s the wrong idea.
A copy of the website was filed as “Exhibit 1” in SEC’s reply to Trudy Gilmond’s / Nellie King’s Motion To Intervene.
Most of my arguments here have been based on that material, plus the other knowledge I have about how Zeek operated in reality. I have simply looked at the same material the court looked at before it made some decisions.
If that question is based on that wrong idea, then it’s the wrong question.
“The Profit Pool”, “The Matrix”, “The Penny Auction” can all be identified as separate components of the scheme. They can be identified as primary, secondary and tertiary components based on the functions they had in the business.
Some monetary transactions can be separated, e.g. the initial transactions when people paid for a number of VIP bids and/or a Premium Subscription (Silver, Gold, Diamond). They have identifiable sources (Cashier Checks, etc)
Some internal transactions — e.g. renewal of Premium Subscription, reinvestments — cannot be clearly separated. Some monetary payouts derived from those internal transactions cannot be clearly separated.
What is the point of this dismemberment. The patient is already dead. Killed by overanalysis.
It isn’t a patient, it’s a “walking dead” (revenant, ghost, zombie or something similar).
Apparently you have difficulty with abstraction. The “patient” was a subject of some mutual interest now killed and dead due over-analysis.
OMG
i got the idea from the zeek website, and affiliates could easily figure it out too:
even a zombie can figure that that ‘sales’ includes the sale of VIP bids on that day. and affiliates were encouraged to sell VIP bids to their downlines and make them RPP participants.
yeah, how many knives can we stick in one dead patient.
stop norway, Stop! 🙂
“Walking dead / revenant”.
I didn’t try to offer medical treatment. I have tried exorcism, silver bullets, cross, garlic and similar remedies, but the revenant always reappear in a new shape and form.
I’m talking about the discussion about “SEC’s jurisdiction / the existence of securities”. I see the discussion about “RPP / recruitment commission” as a new appearance of the same discussion.
Which “patient” did you have in mind?
definitely not me.
i’m just disgustingly healthy 🙂
Zeek’s website described what they wanted the affiliates to believe in. It didn’t describe how it operated in reality.
The profit was 100% false, based solely on Paul Burks’ “proprietary formula”.
The current facts of the case are the factual allegations in the complaint — “what the plaintiff intends to prove and what the defendants may intend to disprove during the trial”.
According to the factual allegations in “SEC v. Paul Burks and RVG”, ZeekRewards offered unregistered securities in the form of investment contracts — investments in a combined Ponzi and pyramid scheme.
The investors are presumed to be innocent victims of the fraud. Some investors received fraudulent transfer of some false “profits” from the scheme. They have been sued in a clawback litigation. A few investors (e.g. Trudy Gilmond) may have been to deeply involved in the scheme to be seen as innocent victims.
Theories should be based on those realities.
* Payment of sales commissions for sale of unregistered securities in the form of VIP bids to people in downline doesn’t disprove the existence of securities. You will need a different type of evidence there.
It could have been. 🙂
* I described it as “walking dead” (revenant, ghost, zombie, etc.).
* Hoss described it as “a subject of some mutual interest”
Both descriptions were vague enough to be interpreted in many different ways.
That zombie-logic fails. The VIP bids have been identified as one of the elements of unregistered securities in a fraudulent investment scheme. “Sale” will need to be about commercial products or services.
The affiliates haven’t been accused of any wrong-doing. The “system” did most of the job for them, it required very little work from the affiliates to participate.
That’s patently ridiculous. Inducing another to purchase bids or positions is selling and when a person buys, a sale has occurred.
Please, no more this nonsense about there needing to be “commercial” products or services for a sale to occur. Investment contracts ARE “commercial products”
Zeek and the Zeekers were selling. What they were selling is the question. If you believe that “very little work” was required then per Howey they were selling securities.
There is no more to it than that.
Investment contracts are financial products, not commercial ones. They can be sold through registered broker-dealers or financial institutions.
* ZeekRewards was shut down because of sale of unregistered securities in the form of investment contracts — based on a fraudulent investment concept.
* Trudy Gilmond has been charged with securities law violations, including failure to register herself as a broker-dealer.
I’m simply pointing out the facts here.
yes, sales commissions can be paid on the sale of securities, and this in itself does not prove or disprove the presence of securities.
the pertinent question is, was the ROI expected by the investors unrelated to the sales efforts of investors?
say, a ponzi scheme collects investments and tells investors that they will get an ROI based on stock trading. the investors are further told that if they bring in more investors, they will get a sales commission.
in this ^^ case the expectation of the investors is to receive an ROI from the [purported] third party business profits of the scheme organisers. the sales efforts and consequent sales commissions of some investors, can be completely separated from the expectation of profit [ROI] of all the investors.
in zeek, the ROI expected by investors was dependent [in part] on the daily sales revenue of the scheme from VIP bids, and not ‘only’ on some third party business profits of the scheme organisers [eg, it was not wholly dependant on the profits of the penny auction].
the zeek website itself declared that the profits from the ‘daily sales’ revenue would be distributed as a profit share to RPP participants.
further, the task of generating this very same ‘daily sales’ revenue was delegated to the investors themselves and separate sales commissions were paid on it.
thus, i see the question of payment of ‘sales commissions’ for selling securities in zeek, as different from a regular sales commission for selling securities.
right.
but norway just goes on and on, and i’m just ‘forced’ to step in and tell him he’s Wrong! 🙂
No you are not. You have manufactured a definition of “commercial” that suits your preconceived notion that Zeekers were not selling, and according to you, since they were not “selling” they could not themselves have contributed to their “expectation of profit,” (Howey test) and therefore (according to you).
Zeek and Zeekers were dealing in securities. I happen to agree with your conclusion, but your logic is mush because Securities are financial products and financial products are commercial products.
You seem to think that a commercial product must be a can of juice, a viamin pill, or a box of soap ( something tangible)…. well, think again.
Have you ever heard of an annuity? Insurance? They are financial products and most definitely commercial.
Zeekers were selling. The question is whether their expectation of profits was predomininately due to their own efforts or due to the promoter’s (Burks et al) efforts.
There is no need to concoct new and radically innacurate definitions of “commercial” to make the case that Burks’ efforts predominated.
I believe we’re talking about two different things here.
ZeekRewards allegedly sold unregistered securities in the form of investment contracts. That’s a product that cannot freely be traded — the market is regulated by authorities and will require registration of the products and the broker-dealer. It will require a license or something similar.
I’m talking about laws and regulations. I’m not sure what you are talking about here.
I frankly don’t think you know what you are talking about. Commercial products, which include financial products, include investment contracts, which depending on their terms, may be assignable and thus freely tradeable.
Such contracts come under the purview of the Department of Corporations in the West or an equivalent such as the Massachusetts Securities Division in various other States and locales … or under the purview of the SEC at the federal level.
Some security markets are highly regulated and others are not. Here we are discussing a very loosely regulated corner of the the overall market which has fallen under the SECs attention because of what it sees as blatant illegality and the potential for harm to the general public.
There are thousands of different types of securities, some are freely tradeable with liquid markets and central exchanges, but many are traded (or sold) without any oversight or central exchange at all such as seen in network sales type businesses.
I know perfectly well what Zeek is alleged to have done. The discussion… if you can keep on track… was whether or not Zeek was dealing in securities.
My point to you is that lack of “commercial products” and services is not an element which bears on the discussion becasue the sale of investment contracts is the sale of a commercial product.
If you are looking for a box of soap to prove there were sales then you are looking in the wrong place for the wrong thing. Zeekers were almost certainly selling investment contracts which you won’t find in a box no matter how long you look.
I gave you two relevant examples, but you only looked at one of them. The second one was Trudy Gilmond.
Trudy Gilmond was sued by SEC for securities law violations, including failure to register herself as a broker-dealer.
That second example should have triggered an alarm bell. You argued that you didn’t see any substantive difference between Trudy Gilmond and the other affiliates in posts #66 / #69 — they could all be sued for the same violations.
You have only reiterated the allegations in the Complaint and offered some confused three tiered explanation of God only knows what followed by an entirely untrue pronouncement that securities are not “commercial” and therefore can not be sold.
The separation between “commercial” and “financial” products or services is about “regulated / non-regulated markets”. We seem to agree on that idea.
“Regulated market” doesn’t mean that all products or services are regulated. We seem to agree on that idea too.
But here comes the problem …
ZeekRewards’ unregistered securities have suddenly become part of a “loosely regulated corner of the overall market” — in the meaning that they could be traded freely if it had been a real (not fraudulent) investment.
It means that Trudy Gilmond didn’t really violate the law. If the securities could be freely traded by other affiliates, then they could be freely traded by Trudy Gilmond too.
SEC saw it differently …
And I have simply accepted SEC’s description. I don’t share the ideas about a “loosely regulated corner of the overall market”.
No . Commercial is anything done for profit.
A commercial transaction is a for profit transaction and that is all it means. The vareity of commercial products and services is virtually unlimited.
Somne commercial activtiy is tightly regulated, but much of it is not. Zeek was not regulated at all in the sense that banks or Wall street brokerages, or and public companies are but that does not mean that Zeek and Gilmond could operate lawlessly. They attracted attention of the authorities and here we are today.
No again. Not all securities must be registered. There are many exceptions provided at both the State and Federal level providing certain criteria are met.
Zeek met none of those criteria as far as I can tell and apparently the SEC agrees.
Loosely regulated does not mean Zeek and Gilmond could freely trade or sell anything they wanted to. That certainly is not the case, but the SEC doesn’t have the manpower to scrutinize every methodology and transaction that takes place in the entire nation.
However, when it becomes aware of violations as here, they usually act.
I quoted from the article in that post (#231). It was a short summary of SEC’s claims for relief.
I have accepted your ideas about a “loosely regulated corner of the overall market”. The problem is that SEC hasn’t quite accepted it yet, it still seems to insist on some form of regulation. So I will stick to SEC’s version of the reality.
No. Even bona fide investments carry risk and in particular private company offerings are the most risky. As such they can be sold only to qualified investors in limited quantity with license or exemption.
Then you you have a private company like Zeek selling what are arguably securities heedless of all safegaurds and peddling them over the internet. You may notice that the SEC is very plain about the fact that Zeek and Gilmond made no attempt to ascertain the qualifications of the people it recruited and sold interests to (sophistication level, income, net worth etc. must be ascertained).
Unsophisticated investors are most likely to be gulled by false promises and fraud so you can see why the SEC requires qualification prior to selling private placement investments to them. Zeek did nothing in this regard.
Bottom line Zeek like so many of the companies reveiwed here was a fraud, and operating outside the law in just about every respect imaginable.
I tried to identify the “loosely regulated corner of the overall market” there and how it could be applied to the affiliates.
They either could sell securities freely (legally), or they couldn’t sell. Now it seems like you have changed position from “could sell” to “couldn’t sell”.
Its slightly more involved than that. Zeek should have been following the rules for a private company security offerings and if they had done so they could have offered securities and made a go of the penny auction business.
Instead they chose to disregard every statutory requirement that I know of and the SEC intervened.
Normally,one might be tempted to say “how stupid are these people anyway?” but its also tempting to believe that Burks and Olivares were puppets controlled by persons more remote and unknown to the public.
Even with Nehra advising there is no way a thoughtful person could believe this would pass scrutiny with the SEC or State agencies. The whole scheme was blatantly illegal.
I don’t understand why anyone would do such a thing knowing they must eventually be caught. An article on the psychology of the these ponzi idiots would be an interesting read.
It means that the affiliates couldn’t legally sell securities for RVG / ZeekRewards.
SEC has already identified “little or no efforts” as the most typical behavior.
Example:
If you ask PEOPLE (affiliates) rather than looking at laws, they will probably tell you that “Zeek didn’t FEEL like a fraud, it felt like a real opportunity”.
One example:
That’s one of the reasons for why I have disputed the idea that ZeekRewards was dependant on recruitment, that affiliates were needed to “convince” new investors. People convinced themselves.
Psychologically you may be correct but you know the law is not going to blame the victims, so even if people were drawn to Zeek, the law looks at it as if it was the owner/organizers that set up a system that drew them in.
The law is going to lay blame completey on the owner, promoter, organizer; person(s) selling the security and perpetuating the fraud… not the “people who convinced themselves.” Legally thats a non starter.
Psychologically you may be correct but you know the law is not going to blame the victims, so even if people were drawn to Zeek, the law will not look at it that way. The victims “convinced themselves” is a non-starter, legally.
I only tried to illustrate “Zeek didn’t FEEL like a fraud”.
Here’s another one … 10 months after the shutdown … it still didn’t feel like a fraud. It’s a lengthy post, and I’m only showing the first two paragraphs to give an idea.
“Most” can be a misleading word.
In any large aggregation of individuals the work will likely be performed unequally. (For example let us say for the sake of discussion that 80% of the work is done by 20% of the people.)
Saying that “most” did not expend much effort, is in this case true, but it tells us nothing about the impact the efforts of the 20% had on the success of the enterprise and whether participant’s “expectations of profit” was due predominately to the efforts of a Burks or from the aggregate effort of all the participants communicating and working more or less in concert…. even if “most” of those participants expended “little or no efforts”
One might argue that the power of millions of person’s in a network (the network effect) is the source of expectations rather than the efforts of an organizer like Burks
Neo
SEC has probably analysed how it operated in reality.
The quote in post #245 was from “Factual Allegations” → “THE ZEEKREWARDS OFFERING” section of the complaint against Trudy Gilmond.
I picked up the term “most” from there — “Most Qualified Affiliates opted to simply purchase VIP Bids …”. So it wasn’t a theory, it was about the facts of the case.
Don’t be paranoid. Nobody said it was theory.
On the other hand just because something is factual does not mean it gives a complete picture of what’s going on. I hope you understand that.
Don’t be paranoid. Nobody said it was theory.
On the other hand just because something is factual does not mean it gives a complete picture of what’s going on. I hope you understand that.
Yes and no doubt others have as well. It does not mean everyone agrees and has come to the same conclusion on what the reality is. Keep that in mind. Facts are slippery things.
I don’t think “a complete picture” will be very relevant.
* This case is about Trudy Gilmond’s role as a promoter for ZeekRewards, whether she violated securities laws.
* It’s not an official study from Department of Labour → “How much work do people actually do in a Ponzi pyramid hybrid?”.
“How the scheme operated in reality” will have some relevance as a necessary background information, but that doesn’t mean that each and every detail will be relevant. They won’t bring in expert witnesses for whether it took 3 or 5 minutes to place the daily ad.
Is that right. So you would find against Gilmond on partial evidence presented exclusively by the SEC and an incomplete picture. No addtional facts needed for you. Wow. I hope you are never called for jury duty.
You really don’t have a clue how this would be argued do you.
Well ok, Lets move along.
It will need to be about something relevant, something of relevance to the legal issue.
I didn’t say anything about “exclusively by SEC”.
Factual allegations in the complaint are meant to be seen as “factual and true”, but not as “undisputed” or “proven” — or as a “complete description”. It’s not meant to be interpreted as “accurate in each and every detail”.
It’s about what the plaintiff intends to prove, plus relevant background information. Some facts will be undisputed, some facts may be disputed during the trial. Details in the whole picture will probably change.
You have probably focused on the amount of work — “SEC’s jurisdiction and the existence of securities”. That’s currently not an issue in the case.
That’s rather obvious. I haven’t seen any answer to the complaint yet, or any motion to dismiss.
Plaintiffs usually don’t include “counter arguments against how we presume the defendant will argue this case” in a complaint.
Uh? Yeah? OK. Not relevant. Have I misquoted you?
Maybe. The quote is from post #254, from a specific context where it was about “all details in the complete picture”, and where I applied a “this case” perspective. If you remove it from that context then it may be a misquote.
The case “SEC v. Trudy Gilmond” is about securities law violations. The complaint cover the relevant facts for those issues. It doesn’t try to cover “Trudy Gilmond’s procedural history from related cases”
Yeah maybe.
This deserves a repost.
It has already been answered in post #254.
Certain details will not be very relevant. “Little or no work” isn’t a question about whether it took 3 minutes or 5 minutes to post the daily ad. They won’t bring in expert witnesses for that purpose.
You got another answer in post #257 — “Factual and true” doesn’t mean “undisputed” or “proven”, or “complete description”.
And you got a third answer in post #260 — “If you remove a statement from its original context then it may be misquoting”.
THE COMPLAINT
You must look at the TYPE of document. A complaint is an initial document, and nothing has been disputed yet. So it will only need to give a “presentation” of the case and what it is about, with the most relevant factors.
It should be about THE issue rather than YOUR issue — about securities law violations rather than the amount of work.
You’re focusing on a hypothetical dispute based on Trudy Gilmond’s “procedural history”. That’s not very relevant to include in the complaint. SEC has already addressed it in an oral hearing and in the reply to the MTI — in 2013.
Here’s some information about the Howey test …
* It’s not meant to be interpreted as a static test, e.g. to be applied separated from the facts of the case.
* It’s not a “legal algorithm” that always will provide the correct answers by itself.
* It’s not a “How to determine the existence of securities … for dummies”.
* It’s not a “step-by-step guide”.
In fact, it is purposely drafted to be as broad as possible:
So far so good. I think we all agree.
OK, there will be anopportunity for each side to present evidence so that the judge can determine the facts.
Whoa horsey.
Yes of course, but you do agree that Gilmond should have an opportunity to present evidence on her own behalf don’t you?
Are you seriously trying to tell me that only the SEC’s allegations are relevant?
Like I said before , I hope you never get called for jury duty, but on second thought, it wouldn’t matter anyway since you would be disqualified for unmitigated bias anyway.
No. I’m telling you that certain details will not be very relevant, e.g. whether it took 3 minutes or 5 minutes to post daily ads. The relevant factor there is that the work was relatively meaningless in itself.
You have quoted from post #254 five times, in posts #255 #256 #258 #262 and #266. You have got answers to all of them.
I believe you may have derailed there.
To make this simpler …
1. If we follow normal legal logic, e.g. presumption rules, then the complaint is to be seen as “factual and true” (but not as undisputed, etc.).
2. Factual allegations will first be disputed in an answer to the complaint or in a motion to dismiss.
That’s how it works — simplified.
I have simply followed normal legal logic when I have identified something as “facts of the case”. We haven’t seen Trudy Gilmond’s response yet.
Well, that’s not at all the same as saying:
Since you believe something is not “very relevant,” you must correspondingly believe you know what IS relevant and you can not make such a distinction without entertaining a belief that you understand the whole.
Do you understand the whole? Maybe, and you apparently think you do, but on the other hand you haven’t heard all the evidence or the defenses’ counter arguments.
Both arguments were about exactly the same example, about details in “little or no efforts”.
I have tried to point out that I used quite normal legal logic. I also specified a “this case” perspective, and gave an example for “rather unimportant details”.
I haven’t followed that idea. I have simply identified some details to be not very important because they don’t really make any difference — they don’t prove anything meaningful.
They are details in the background story, but they are not essential parts of evidence.
“Current level of understanding” can be just as useful as “understanding the whole”.
Gilmond hasn’t responded to the complaint, so how do you know what evidence is essential for her defense?
You don’t. You lack this relevant information.
Guess again.
That argument can be applied to both of us?
Neither of us have seen any response from Trudy Gilmond to the current lawsuit. I have already mentioned it directly or indirectly in several posts.
So what’s your point there?
You have based your theories on exactly the same “lack of information”.
To clarify something …
My arguments have primarily been based on the complaint itself — “looking at the facts and what they are about” — but that doesn’t mean that I have ignored other sources.
“Bell v. Disner et al”
Trudy Gilmond and other defendants have already “used up” several legal theories and remedies in “Bell v. Disner et al”, and Trudy Gilmond has already received a final judgment in that case.
The court has already looked into arguments about “substantial efforts”, “existence of securities”, “SEC’s jurisdiction” — and it has made a decision about it. The details in “how RVG operated in reality” will have less relevance in this case.
Those particular details, e.g. whether it took 3 or 5 minutes to post the daily ads, didn’t have much relevance in “Bell v. Disner et al” either.
Don’t talk Rot and Garbage. I never maintained that Gilmond’s defense could be based on a “lack of information.”
The court found that it had subject matter jurisdiction and cited Howey but it was not a final ruling. Bell has yet to prove fraudulent transfer, no expert testimony has been heard and the defense has not presented its case. Don’t get ahead of yourself.
You may have misinterpreted the statement?
* You pointed out that I didn’t have access to all information.
* I pointed out that neither did you have.
We have based our arguments on exactly the same “lack of information” = none of us have had access to Trudy Gilmond’s response to the complaint.
I’m not sure we’re talking about the same thing here, but Trudy Gilmond has already received a final judgment in “Bell v. Disner et al”.
The dispute about “SEC’s jurisdiction” was resolved in the Order Denying Motion To Dismiss. It was based on certain factual circumstances, e.g. that Paul Burks had consented to his judgment and also to the court’s jurisdiction.
She defaulted,! which may be overturned on motion with cause. There was no finding of fact or law. The trial on the merits has not even begun. NO evidence has been presented!
Defaults are (practically speaking) meaningless when the facts alleged in the complaint which resulted in the default are still in dispute. (which is what has happened here.)
Nothing will be “final” as to any of the defaulting defendants until the trial on the merits is over and the findings of fact and law have been made in favor the Reciever/Plaintiff, in which case the defendants like Gilmond will have no basis upon which to ask to court for relief (to vacate the default)and the judgments against them will become collectible.
If on the other hand , the outcome of the trial favors the defendant class, the defaults will be subject to overturn.
She refused to meet at deposition meetings, and received a warning that the Receiver would seek a default judgment against her. The Receiver then filed a Motion for default judgment, alternatively meet and show cause (113-main.pdf).
She was then ordered to meet in a court hearing to show cause why a default judgment should not be entered against her (116.pdf).
She refused to meet (120-main.pdf). A default judgment by the court was entered against her (119.pdf).
There’s nothing more to be tried in her case. She has actively refused to defend herself in court. The judgment is enforceable, it will not need to wait for the outcome of a trial.
Jerry Napier had a similar history. He first refused to meet at deposition meetings, received a warning and a “show cause” order. He then decided to co-operate with the Receiver, and the motion was withdrawn (118.pdf).
Gilmond wanted to play the sovereign angle, make money from the economy, but refuse to play by the rules.
Doubt she has any money to be coughed up though. It’s probably just delaying tactic, to what end I have no idea.
Perhaps we are seeing Occams Razor principle at work here.
There’s little or no valid defense being offered because there IS no valid defense when you’ve been caught red handed and very publicly running or helping to run a multi million dollar combined ponzi / pyramid scheme in the USA in 2015.
WE all know she was defaulted and why. What you can’t seem to grasp is that nobody is going to try (and probably could not anyway) to enforce judgment against her so long as there is a possibilty that the default can be vacated.
You can read all about it here: ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=2489&context=flr
Rule 55 and 60 of FRCP (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 final default judgment under Rule 60(b).
One example of good cause (there are many):
In a nutshell, these individual Zeek defendants are avoiding the cost of defending themselves by taking defaults.
If the outcome of the trial on the merits in Bell v Disner favors the net winner defendant class these people will file inexpensive motions to vacate their individual defaults.
From their perspective, that is a much more economical and effective method of addressing the allegations. They are in effect letting the defendant class pick up the bill for their own defense.
Noooooooooo. it has to be more than that. There are still syllables and even letters that have not been overly parsed for no reason.
++++++++++++++
I have suggested before that the attorney for the defendant class may attack the court’s in personem jurisdiction over the affiliate class (which relates directly to the defaults entered against Gilmond, Napier et al.) Burks consented to jurisdiction….the affiliates have not.
The court’s jurisdiction over them is a matter of fact and law, so we have to wait and see how the trial turns out.
The SEC/Bell can not afford to lose this and I think they are going to be very careful. Shutting down Zeek was easy because Burks folded, but obtaining clawbacks is a different matter. The proof has got to be there.
From the Receiver’s third quarterly report …
I don’t grasp ideas when they deviate from reality, when they primarily are based on theories.
That’s exactly what I have tried to say. Trudy Gilmond received a final default judgment. She doesn’t have any unresolved issues waiting for trial. She has actively refused to defend herself in court.
Rule 60(b) and 60(c) refer to all final judgments.
Bell is justified in obtaining defaults and initiating collection efforts as default judgments are obtained since he anticipates winning Bell v Disner on the merits, but if he loses Bell v Disner he will not be able to collect aginst those judgment debtors.
They will petition the court for releif uncer FRCP 60 and there is little doubt such a petition would be granted.
Do you really think the court would enforce clawbacks against those four or five people once it rules that Bell can not claw back from the other 8,000? Get a grip on your thinking man.
“Get a grip on your thinking” should be about realities. Your thinking was based on a hypothetical scenario, and it wasn’t a very realistic one (it was supported by theories more than realities).
I have only tried to answer the question about Trudy Gilmond’s default judgment, whether it’s final and enforceable or if she still has some unresolved issues waiting for trial (in “Bell v. Disner et al”).
Well you answered wrong.
cooperandstorm.com/Articles/When-Can-I-Appeal.shtml
“Illinois Courts”?
You referred to a specific rule from illinoiscourts.gov/supremecourt/
It seems to be about something different (wrong state, wrong court, wrong type of rule).
I specified “Bell v. Disner et al”. 🙂
You specified idiotic and hit the nail on the head. The allegations and facts are substantially if not exactly the same in all clawback suits so they all rise or fall together.
The introductory paragraphs illustrated the general concepts and how the Supreme Court of Illinois (in this example) understands finality.
There can hardly be any doubt that the US Supreme Court view is consistent. You apparently did not read the introduction, can’t understand it or believe you know better.
Did you even consider what it said before feigning confusion and focusing on the irrelevant particulars of Rule 304? I very much doubt it.
Sorry, but I won’t crawl down the stupid hole with you.
FRCP Rule 55 Setting Aside a Default or a Default Judgment.
This is all you need to know. Litigation on the merits is coming up and default judgments that are inconsistent with the outcome of such litigation are subject to set aside.
Findings cited when denying a motion to dismiss are not final and consequently not appealable.
Why? Because they are subject to findings made during litigation on the merits.
If you have anything that directly refutes this, post it, otherwise quit cutting and pasting irelevant passages from Illinois Rule 304 and being willfully obtuse.
That paragraph didn’t exist in the original source. It seems like you have made it up yourself.
I tried to google “Default judgements are not considered final because they are not determined on the merits”, but I only found the opposite conclusion.
So deal with it. Its an accurate restatement of the the relevant parts of the original article. I also quoted the original sections of the article and provided a link to the entire article. What the F do you want for free.
The selections you quoted from Duhaine are not on point. They would be if Gilmond was the sole individual facing litigation but that not the case.
The court would never hold her responsible via default if it found in favor of the other 8000 net winners, all of whom face substantially the same allegations, based on the same facts and operative law. It would not be fundamentally fair to do so.
Duhaine’s final entry states the case properly:
If Bell can not prove his clawback case against the 8,000 Gilmond would file a motion to set aside the default and it would be granted.
You may want to enjoy a vicarious punishment visited on Gilmond but the court will not. FRCP Rule 55 Setting Aside a Default or a Default Judgment would abide.
That’s plain BS.
* The first paragraph was probably something you added yourself to support your own theories.
* The two other paragraphs were from the article, but quoted slightly out of context.
The source wasn’t very relevant either. It was about Illinois state courts, not federal courts. But I could have accepted it if you hadn’t falsified the first paragraph.
Here’s the original, the one you linked to (case references omitted):
Here’s your version from post #287:
You should have recognized that it was a restatement. It was posted directly under my user name and it was not in quotes as were the passages lifted directly from the article itself, so all I can tell you is to pay attention.
Shall I now be required to inform you that every word I write is my own? The convention is that one “quotes” others (which I did) while writing in the first voice (which I was)
The question here is whether my restatement accurately reflected what the article said concerning final judgments, and it did, which is I assume why you are acting like you’ve been hit on the head with a hammer.
OK, so you are confused, things are not what you thought. Now you have a chance to understand how things really are. Quit fighting it.
Going all the way back to the transcripts of Sorkin’s Motion to Intervene, we saw the judge informing Bell (with the SEC in attendance) that they should be prepared to deal with jurisdictional issues (securities) duing the clawback litigation, where the question would be taken up on “the merits.
Look it up. Its in black and white.
There has been no trial on the merits. Accordingly the opinion expressed while denying the MTD is not final and Gilmond’s defaults remain subject to set aside with cause.
She “could” eventually have cause if the defendant class prevailed on the merits of their case.
Good. Then accept it. The first paragraph was not a falsification, but my words, posted under my user name with no intention to deceive.
Ok, I see your problem now. I don’t know what happened to the quote marks and formatting since during the course of editing the post I was going back and forth between two open behindmlm tabs and the source tab Blame me or blame wordpress.
The fact remains that defaults can be set aside for cause and and the judge’s opinions expressed while denying the Motion to Dismiss are not final. If you want final resolution you’ll need to wait for the litigaton on the merits and perhaps beyond if there is an appeal.
or appealable. litigation on the merits.
Oh and P.S. This uncertainty works in Gilmond’s favor within her local jurisdiction.
Bell can hire local counsel and initiaate collection efforts but a local court may be indifferent to those efforts once its informed that the default judgment is related to ongoing litigation and potential set aside.
That was what I tried to tell you in post #291.
But you insisted it had been correctly quoted from an article.
I have simply ignored the rest of your posts. Post #287 didn’t really tell us anything meaningful about default judgments.
The article was titled “When Can I Appeal?” — subtitled “Final judgments in Illinois Civil Cases”. So it doesn’t really apply to default judgments.
STATUS OF THE CASE
The only thing we know is that Trudy Gilmond received a default judgment after she actively refused to defend herself in court.
The third quarterly report from the Receiver stated … Regarding collection efforts in the U.S. net winner lawsuit, the Receiver pursued collection efforts with the aid of local counsel against judgment debtors Michael Van Leeuwen, Todd Disner, Trudy Gilmond, and David Sorrells.
That’s the status of Trudy Gilmond’s case (in “Bell v. Disner et al”).
I never insisted any such thing.
When you brought it up, I told you that I had written a restatement of the pertinent information contained in the article. I subsequently explained how I had edited the post in multiple open tabs and that is what resulted in the post appearing without guotation marks, as and where I intended.
You apparently identified this clerical mistake right away and I responded, so what may I ask are you so butthurt about?
Well… I think we both know that its because you’ve been schooled, don’t like it, and will sieze on any excuse to divert attention away from this inconvenient truth.
My advice. Buy some Vaseline apply it to the sensitive area and the pain and embarrasment will subside.
That may be the only thing you know, but some people know more.
“Insisted” referred to post #292.
It’s a short version of “you told it was an accurate restatement of the relevant parts of the original article”. I tried to make the statement simple.
You have already clarified that the first paragraph wasn’t a quote but your own words. And I have already decided to ignore arguments based on that post.
Simple? No, what you did is accuse me of lying when you knew very well that I had not. That’s called pathological.
Look, ignore whatever you want, stick your head in the sand if you need to, but at least pull it out of your ass.
Post #287 was misleading as it was presented.
Post #292 only told a half truth, and didn’t clarify anything.
An explanation first came in post #295 / #296. I have accepted that explanation. It did clarify what I asked about. I haven’t questioned anything there.
I have looked into it …
If we’re discussing the actual case, “Bell v. Disner et al” or “SEC v. Trudy Gilmond”, then there’s very little of relevance in posts #287 → #303. All the posts there can simply be ignored.
* The duhaime.org link may have some relevance
duhaime.org/LegalDictionary/D/DefaultJudgment.aspx
If we’re discussing some law theories and/or hypothetical scenarios, then relevance isn’t really important.
Other topics discussed in posts #287 → #303 seem to be rather off-topic.
Dishonest and dumb. Your well suited to MLM.
I have simply looked at the case itself.
Trudy Gilmond CAN file a Motion For Relief From Judgment, but currently she doesn’t have a “good cause”. So she will be dependant on the outcome of the trial to get that “good cause”. We can’t reasonably predict any outcome in her favor.
Article updated with news of a reply from Gilmond.