Zeek Receiver’s first quarter report for 2016

On the 29th of April Kenneth Bell, the Zeek Rewards Receiver, filed his first quarter report for 2016.

In the report the Receiver covers:

• collections from settlements
• payments to Zeek Rewards victims
• ongoing recovery efforts against Zeek new-winners and insiders (Michael Van Leeuwen, Todd Disner, Trudy Gilmond and Darryle Douglas)
• a new settlement with Preferred Merchants and Jaymes Meyer
• Payza and Howard Kaplan litigation update
• a potential tax dispute between the Receivership and the IRS and
• a property formerly owned by Dawn Wright-Olivares going up for auction

Collections from settlements

• $5 million dollars from NewBridge Bank, ‘pursuant to a settlement agreement approved by the court on March 16, 2016′
• $998,669.07 recovered from NxSystems on January 7th, 2016, following a settlement agreement reached last December
• $37,770.48 from ‘settlements with third parties who were holding Receivership Assets or against whom the Receiver had asserted claims’
• $24,596 from ‘payments from various financial institutions relating to previously dishonored cashier’s checks, teller’s checks, official checks and bank money orders’

As of March 31, 2016, the Receivership Estate held approximately $89.1 million in the Affiliate Payments Account, approximately $1.4 million in the Holdback Account, approximately $6000 in the Settlement Account, approximately $6000 in the Pre-Filing Account and $0 in the Seized Asset Account.

The Receiver anticipates closing the Settlement Account, the Pre-Filing Account, and the Seized Asset Account during the second quarter of 2016.

The Affiliate Payments Account will be the main account used by the Receivership going forward for incoming and outgoing payments.

To date the Receiver has collected ‘over $12.3 million in total litigation-related settlements‘.

Payments to Zeek Rewards victims

In the first quarter of 2016, the Zeek Rewards Receivership disbursed $2.07 million to victims of the scheme.

Ongoing recovery efforts

No specifics, but the Receiver advises ‘collection efforts … against Michael Van Leeuwen, Todd Disner, and Trudy Gilmond‘ continue.

As per his Facebook profile, Van Leeuwen is currently hiding out in the Philippines and has attached himself to the Crypto 888 Club Ponzi scheme.

Trudy Gilmond was sued by the SEC in December, 2015. A trial has been scheduled later this year in September.

The current status of Todd Disner is unknown.

The Receiver is also pursuing a claim on default judgement against Darryle Douglas.

During the first quarter, the Receiver team corresponded with the Court and U.S. Marshal Service regarding the arrest and planned release of Defendant Darryle Douglas pursuant to the Court’s Contempt Order.

A deposition of Mr. Douglas was scheduled to take place during the second quarter of 2016.

The SEC case docket reveals that on the 25th of April, Receiver served a subpoena on Yadkin Bank (formerly NewBridge Bank).

The subpoena requests Yadkin Bank provide

monthly account statements for any and all checking, savings, or credit accounts, or any other account, held by Darryle DeLafayette Douglas at NewBridge Bank from January 1, 2010 through the present.

The subpoena requires the above information be provided to the Receivership’s lawyers on the 25th of May.

Regarding efforts to recover funds from non-US net-winner investors;

The Receiver continued litigation against defendants in the lawsuits against Canadian, Israeli, British Virgin Islands, Norwegian and Swedish defendants.

These matters are ongoing, and the Receiver team has been involved in case management conferences, briefing of responses to motions to dismiss, and drafting written discovery for these lawsuits.

The Receiver also participated in a mediation with the British Virgin Islands defendants and their counsel.

In addition, the Receiver team continued its efforts in pursuing fraudulently transferred assets from net winners residing in foreign countries.

These efforts involved extensive research into various countries’ judgment enforcement standards and providing foreign counsel with evidence for use in actions to enforce the Receiver’s U.S. judgments; drafting and filing of motions for entry of default and default judgment against defendants who failed to answer within the timeframe allowed by the Federal Rules; ongoing work to serve foreign defendants with legal process; and collection efforts regarding foreign defendants against whom the Receiver has obtained default judgments.

The Receiver also worked to settle claims against foreign defendants in Canada, Norway, and Sweden.

Preferred Merchants settlement

Following criminal charges filed by the DOJ back in March, Preferred Merchants and Jaymes Meyer’s refusal to hand over Zeek funds has crumbled.

Jaymes Meyer plead guilty to one count of Obstruction of Justice on March 10th. A plea agreement will see him return at least $4.8 million and surrender real estate assets.

Meyer is currently out on bail and has since negotiated a settlement with the Zeek Receivership.

The Receiver Team has entered into a settlement agreement with Preferred Merchants and its affiliates, which will soon be presented to the Court for approval.

Pending approval by the Court and satisfaction of the settlement agreement, this will bring the Receiver’s claims against Preferred Merchants and its affiliates to a close.

Payza Litigation

As it stands $13.1 million in stolen Ponzi funds has been frozen in a Bank of New York Mellon account held by VictoriaBank in Moldova.

The Receiver’s lawsuit against Payza, Payment World, VictoriaBank is still playing out.

Howard Kaplan lawsuit update

In a lawsuit against attorney Howard Kaplan, the Court granted in part and denied in part Kaplan’s motion to dismiss.

The Court denied the motion as to each of the Receiver’s claims other than the claim for aiding and abetting breach of fiduciary duty.

In addition, the Court rejected the Defendant’s argument that the Receiver’s claims are barred by the in pari delicto doctrine, observing that “Considering the important public policy interests at stake, the Court finds that the in pari delicto doctrine should not be applied to bar the Receiver herein from attempting to obtain recovery for the victims of the Zeek scheme from a person accused of directly participating in the illegal scheme.”

The Receiver has filed a motion for reconsideration regarding the dismissal of the aiding and abetting claim, which is currently pending.

To clarify, the court denied Kaplan’s Motion to Dismiss on all but one claim (aiding and abetting), which the Receiver has filed an appeal against.

Potential tax issues

In the first quarter of 2016 the IRS sent the Zeek Receivership a “notice of intent to levy”. In layman’s terms, a warning that the IRS are going to escalate efforts to collect tax.

The details of the tax dispute between the Receivership and the IRS have not been made public, with the Receiver’s report stating only that

the Receiver Team sent correspondence for a second time to the IRS regarding the reason for the penalty and who is liable for it.

The Receiver Team had previously sent similar correspondence in the fourth quarter of 2015 (and) is awaiting a response from the IRS.

Dawn Wright-Olivares’ home is going up for auction

In the first quarter, the Receiver team finished working to prepare for sale a residential home in Clarksville, Arkansas, that was surrendered to the Receiver as part of a settlement with Dawn Wright-Olivares.

Before this property can be sold, a lien filed by a general contractor who had worked on the home must be removed from the property’s title.

The Receiver has retained local counsel who is working to address the lien issue.

Wright-Olivares now goes by the surname De Brantes. Her Facebook profile advises she is a ‘Blogger/Owner at TheHippieDiva.com and works for Founder at White Lightning Liquids and Business Strategist at Arkansas Eliquid Co’.

Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Zeek Receiver’s “Status Report for the First Quarter of 2016”.