Burks, Wright-Olivares and son to pay Receivership $600M
As the Zeek Rewards Receivership continues to pursue financial settlements with insiders who should have known better, news broke today that those at the top have already settled.
In his status report for the second quarter of 2014, Receiver Kenneth Bell has revealed that
By the filing date of this report, the Receiver had reached settlement agreements with Paul Burks, Dawn Wright-Olivares, and Daniel Olivares, pending Court approval.
Each of these defendants agreed to a consent judgment of $600 million to be satisfied with substantially all of their assets.
How the $600M figure will be paid back, in particular who is paying what amount, is unclear. Ditto how much of the judgement will be distributed to the scheme’s victims by the Receivership.
What is clear though is that it appears to be a lump sum, and after it’s paid – those primarily responsible for the creation and operation of the Zeek Rewards Ponzi scheme will have absolutely nothing left to show for it.
As someone who was actively covering Zeek Rewards during the height of the Ponzi insanity that gripped so many within the MLM industry, this latest judgement is a far cry from the hype and cheerleading that went on during Zeek’s heyday.
Not withstanding Burks, Wright-Olivares and her son being left penniless as a result of settling with the Receivership, the trio of Zeek’s top scamsters still have the civil and criminal cases against them to contend with.
That said, the $600M judgement clearly dwarfs the $4 million Burks agreed to settle the civil case against him by the SEC.
On the criminal front, last December Dawn Wright-Olivares and her son Daniel pled guilty to fraud. What additional penalties they face are as of yet undetermined.
Meanwhile criminal charges have yet to be filed against Zeek’s owner, Paul Burks. Speaking with the Secret Service a few days ago, the Dispatch confirmed ‘no criminal charges have been filed on Burks‘.
That criminal charges will eventually be filed against Burks is a certainly, it’s just a matter of when.
Other issues covered in the Receivership’s quarterly report include
- ongoing negotiations with NxPay to recover $13 million in stolen affiliate funds ($3.98 million has already been recovered)
- a letter sent to Preferred Merchants and its CEO Jaymes Meyer demanding $4.8 million in stolen affiliate funds be returned ($1 million has already been recovered)
- ongoing attempts to recover $9.8 million from Plastic Cash International
- continued investigation into how to best recover $13.9 million in stolen affiliate funds held by Pazya, $1.7 million from Solid Trust Pay and $5.1 million from CyberProfit (“as part of these efforts, the Receiver Team is working closely with various government agencies at various levels to investigate, pursue outstanding information, and recover funds from these foreign accounts“)
- the interviewing of Kevin Grimes, Gerald Nehra, Richard Waak, Howard Kaplan, other attorneys and “a former employee of RVG” (note that Kevin Grimes and Howard Kaplan have since been sued by the Receivership)
- dealing with “distractions” filed by idiots seeking to receive their cut of what is paid out to net-losers (Belsome)
- the conducting of ‘extensive research into various legal issues relating to the pursuit of claims against foreign net winners‘
One of the recurring themes surrounding Zeek Rewards is the issuing of fraudulent 1099 forms. To that end the Receivership writes,
The Receiver Team determined during the first quarter that it would be necessary to file amended 1099s for payments made during the calendar year 2011 and 2012 to certain Affiliate-Investors.
The efforts in the second quarter were focused on addressing the issues that arose during the preparation of the amended 1099s. The Receiver Team resolved the issues, and in working with FTI and National Law Forms, the amended 1099s were filed with the IRS and were mailed out to those certain Affiliate-Investors.
In connection with the issuance of the amended 1099s, the Receiver Team continues to work with FTI and National Law Forms to respond to Affiliate-Investor inquiries regarding the 2011 and 2012 amended 1099s.
The Receiver Team anticipates that responding to Affiliate-Investor inquiries will be an ongoing process.
How the Receivership intends to go after Zeek investors who reside or are in hiding outside of the US was also revealed:
Counsel for the Receiver prepared a request for proposal, which it distributed to a select number of law firms in countries where the largest ZeekRewards net winners reside.
The Receiver Team has been in discussions with multiple overseas law firms regarding the logistics, strategy, and costs involved with pursuit of net winners residing in these firms’ various countries.
Claims against foreign net winners will likely be grouped by the country in which these individuals reside, with some actions being initiated here in the Western District of North Carolina and other actions being filed in the foreign net winners’ home countries.
The Receiver is evaluating the most efficient means of pursuing these individuals that will generate the greatest possible return for the Receivership Estate.
What countries the Receivership intends to target haven’t been disclosed, but if you’re hiding out in South America I’d say your days are numbered. Ditto any English-speaking western country other than the US.
Lawsuits against Plastic Cash and and Preferred Merchants appear to be in motion too, with the Receivership noting
The Receiver Team continues to investigate the roles of Plastic Cash and Preferred Merchants Solutions LLC (“Preferred Merchants”) in the ZeekRewards scheme, including their aiding and abetting of the scheme.
Additionally, the Receiver Team has been investigating the actions of Plastic Cash and Preferred Merchants that appear to have been in direct violation of
the Freeze Order.
On an aggregate basis, the actions of Plastic Cash and Preferred Merchants appear to have deprived the Receivership Estate and the Affiliate victims of more than $14 million.
Both Plastic Cash and Preferred Merchants maintain that they have not acted improperly in withholding the subject funds from the Receiver. Specifically, Plastic Cash disputes that it is improperly withholding Receivership Assets.
Plastic Cash has also submitted a claim through the Court-approved claims process, arguing that it holds certain secured claims against the Receivership Estate.
The Receiver disputes and plans to vigorously defend against Plastic Cash’s claims and will continue to pursue the outstanding Receivership Assets held by Plastic Cash and its agents and affiliates that were not submitted upon the Court’s appointment of the Receiver and those which were improperly transferred or withdrawn in violation of the Freeze Order.
Similarly, instead of complying with the Receiver’s demand for the funds that Preferred Merchants had fraudulently transferred from an account held for the benefit of the Receivership Defendant when it knew that the shutdown and asset freeze of the Receivership Defendant were imminent, Preferred Merchants submitted an invoice, claiming that it is owed funds from the Receivership Estate from which any outstanding funds, if owed, would be set off.
The Receiver disputes Preferred Merchants’ claim on the merits. Moreover, any such claim was not submitted through the Court-approved claims process.
The Receiver takes very seriously any violation of the Freeze Order, and invoking any rights to the outstanding funds years after the entry of the Freeze Order does not change the fact that these institutions are holding the funds in direct violation of the Order.
The Receiver will continue to pursue the recovery of these outstanding Receivership Assets and expects that he will be required to commence litigation against Plastic Cash and Preferred Merchants to resolve these matters.
Plastic Cash and Preferred Merchants can continue to fight the Receivership, but in the end like everybody else involved in Zeek they’ll be required to pay up. Better stock up on lube boys.
Oh and anyone waiting for the distribution of funds by the Receivership can thank Plastic Cash for holding up the return of money:
Unfortunately, Plastic Cash, which has filed a claim with the Receivership for $14.9 million, has objected to the Interim Distribution Motion.
This objection significantly decreases the likelihood that the dates set forth in the Interim Distribution Motion will be met.
The Receiver intends to reserve the $14.9 million for this contested claim, which has been denied, in order to expedite the process of making an interim distribution.
Nevertheless, the objection threatens to significantly delay the payment of an interim distribution to Affiliates.
Despite the claim apparently being denied, I believe the Receivership has made the decision to withhold the funds in the event an appeal is filed.
That $600M judgement though, ouch. The saga continues…
Footnote: Our thanks to Don @ ASDUpdates for providing a copy of the Receivership’s second quarterly report for 2014.
Oh and if anyone from the Receivership is reading this, who’s stupid idea was it to recently block direct access to the PDF directory?
Scanning the website for updates is so much slower… share the love you donks!