Clawbacks filed against Zeek insiders & winners
One of the frequent questions we get regarding Ponzi schemes here at BehindMLM is the question of liability for a scheme’s top promoters. Typically these promoters are the “face” of the affiliate-field and the ones who “got in early” and collect the largest returns.
As part of the Zeek Rewards Receivership’s effort to recover funds to pay out those who lost money in the scheme (Zeek was on the verge of going belly-up had the SEC not shut them down), the Receiver has gone after Zeek’s top net-winner affiliates.
In addition to “baiting the hook” by creating a number of net winners, the Insiders operated the scheme with the knowing, reckless or at least negligent assistance and encouragement of a number of managers and advisors that greatly enhanced the perceived legitimacy and resulting success of the scheme.
Thus far some have settled with the Receiver repeatedly issuing statements in his quarterly reports about pending clawback litigation to be filed against those who refuse to return the money they stole. After a long wait and speculation over whether or not the general public would learn who these stubborn thieves are, today we can reveal that on the 28th of February 2014 the Receiver finally began his clawback litigation efforts against them.
Because Zeek’s Insiders “won” or received (the victims’) money in an unlawful Ponzi and pyramid scheme, they are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims.
In no particular order, here are the top profiters in Zeek Rewards who, despite Zeek Rewards being a $600M Ponzi scheme, believe they are entitled to keep the money they stole from their victims.
Ladies and gentlemen, the worst of the worst the MLM industry has to offer:
Paul Burks (CEO and owner of Zeek Rewards)
Paul R. Burks is, upon information and belief, a resident of Lexington, North Carolina and the owner and former top executive of RVG. He was the acknowledged leader of Zeek. Paul Burks received in excess of $10 million from RVG.
On information and belief, Burks used investor money to provide cash gifts of more than $250,000 to his son, and more than $30,000 to his daughter.
Burks and the other Insiders were aware that the payouts to Affiliates would be funded by new participants rather than retail profits from the penny auctions.
Burks and the other insiders understood that the compensation plan would be unsustainable in both the short run and the long run because there would not be enough new participants to support full daily cash payments to a growing number of existing Affiliates.
Burks deliberately evaded affiliate questions asking how the RPP was calculated. In a Skype chat with an affiliate, he said: “[a] proprietary system is used to determine the amount of profit sharing that is done each day. We do not divulge the details of how those numbers are determined.”
The alleged “profit percentage” was nothing more than a number made up by Burks or one of the other Insiders. Most days, Burks made up the number.
As Danny Olivares explained to RVG’s internet provider, “Paul [Burks] goes in nightly and opens up adm_displayCompunder3.asp and enters a decimal percentage.”
Sometimes, the number was made up by Dawn Wright-Olivares or Danny Olivares. Often, the company simply used the previous week’s daily RPP percentages.
In a statement issued to reporters in March 2013, Burks defended his role in Zeek Rewards:
“I never told anyone to invest more money than they could afford,” Burks snapped. “I didn’t tell them to do that. Never.”
He said if they lost money, “it’s their fault. Not mine. Don’t blame me.”
Dawn Wright-Olivares (COO and CMO, Paul Burks’ 2nd in command)
Wright-Olivares misappropriated over $7.8 million through the scheme. With these investor funds, she repaid personal loans, renovated her home, purchased an RV, bought multiple vehicles, and engaged in several other suspicious transactions.
In addition, Wright-Olivares looted RVG of significant funds after it had become apparent that the scheme would soon end. In August 2012, she received over $1.7 million from RVG, with most of this sum being paid directly to an account held by her shell corporation, Wandering Phoenix LLC.
Wright-Olivares then redistributed more than $1.2 million of these funds to her personal account and de Brantes’ personal account, as well as to others involved with RVG, including OH Brown, Robert Mecham, Peter Mingils, Aaron Baker, and Barbara Ghent.
Further, Wright-Olivares paid out $150,000 to Jonathan Wright, Suzanne Wright, and Ben Powell Construction on August 17, 2012, the day ZeekRewards was shut down and the freeze order took effect.
Moreover, even a week after the freeze order was in place, Wright-Olivares was still redistributing the illicit funds, paying over $90,000 to Aaron Baker, John Wright, and her own accounts on August 24, 2012.
Peter Mingles at the time was a board member of the Assocation of Network Marketing Professionals.
Wright-Olivares has plead guilty to her involvement in Zeek Rewards. A final judgement was handed down in the SEC’s civil case against Wright-Olivares her on the 28th of February 2014, holding her ‘liable for disgorgement of $7,846,99.95‘.
Taking into account a “pre-judgement interest”, the total amount Wright-Olivares is being held liable for is $8,184,064.94.
Wright-Olivares’ son, Daniel Olivares, had a separate case filed against him, with a $3.2 million liability also handed down on the 28th after he too pleaded guilty.
Wright-Olivares’ husband, Alex de Brantes, was in on the scam too:
Brantes told an affiliate in July 2011:
Our average has been between 1.6–1.8% which would actually be a great deal more than 125%.
The attorneys our [sic] advising us on what we can and can’t say and now it’s our job to figure out how much we need to pay daily to get everyone exactly what we intend to give (it makes it a little tricky but it is our intention to maintain a system that pays 125% without saying it anywhere on the site).
It’s my understanding that to reach 125% we’ll need to pay 1.38% per day.
Our programmers and strategists are working around the clock to land on the right method, percentages, and presentation for all of this. Right now we’re still working on the 125% cap system. We just aren’t saying 125%.
A mountain of evidence against Wright-Olivares has been collected and presented by the SEC, with the Receivership providing some explicit examples in his filing:
(Wright-Olivares was) very clear about the plan, telling Danny Olivares on January 21, 2011: “We’re just going to use bids as currency.” On another occasion, Dawn Wright-Olivares referred to the compounding bids as “Monopoly money.”
In one email, when referring to compounding bids being renamed VIP bids, Wright-Olivares wrote, “wherever you see a (compounding) next to VIP – you will know that these terms are interchangeable,” and she later wrote that “no change has been made in how they operate, qualify or earn.”
Indeed, Wright-Olivares admitted that she thought the name changes were a joke. In a June 15, 2011 email to O.H. Brown, an RVG advisor whose company created marketing videos for ZeekRewards, about a company webinar script, she said: “you’ll see where I started to say Retail Profit Pool (lol) instead of Compounder…. We’re going to call compounding bids – VIP bids.”
As with the Compounder, the Insiders changed the terminology for the Matrix, but they never changed the real essence of the scheme. Dawn Wright-Olivares explained the cosmetic changes to the Matrix this way: “you [will] in effect be paid on levels 5-10”…. “but we can’t SAY that. Deep matrices get shut down.
So instead…we say that you are getting a matching bonus on all of the 2×5’s on your 5th level. It’s semantics, but semantics mean a great deal with regulators.” … “[I] don’t really understand how they can say they have levels 10, 15, etc. when it’s a 2×5, but if we can get away with it this way – then it’s my vote to leave it alone.”
Similarly, Keith Laggos, a Zeek Rewards advisor, emailed Dawn Wright- Olivares (copying Burks) in July 2011: “when talking about matching bonuses, you are showing being paid on 1 to 10, 1 to 15 and 1 to 20 levels. This defeats what we did by going to a 2×5 matrix. You should say a 100% matching on all your 5th, 15th and 20th level affiliates’ 2 x 5 matrixes. I know you want to show they get paid on 20 levels in a 2 by 20 matrix, but that is when you can get a pyramid investigation or charge.””
Whether or not Wright-Olivares found the eight million dollar figure she’s liable for as funny as the psuedo-compliance name-changes she implemented was not immediately clear.
On a Lyoness affiliate recruitment call pitched to his Zeek Rewards downline, Keith Laggos made the following prediction on the 1st of August 2012:
I don’t think it’s (Zeek Rewards) going to last. I think the FTC will take action within 6 months, maybe 3 or less. I don’t think they’ll go a year before they take action.
Sixteen days later the SEC shut Zeek Rewards down and filed charges against the company.
At the time Laggos claimed to be making $40,000 a month as a Zeek Rewards affiliate. His absence from the Receivership’s net-winner clawback filing would indicate he has already settled with the Receivership.
Update 3rd March 2014 – Keith Laggos appears on a recently published list of 9000 Zeek Rewards net-winners who made more than $1000 from the scheme, confirming he hasn’t yet settled and paid back his victims.
Roger Plyler (Affiliate Relations)
Roger Plyler was, upon information and belief, a resident of Charlotte, North Carolina and handled “affiliate relations” for Zeek. Mr. Plyler received more than $2,300,000 from Zeek under one or more usernames, including “roger.”
Not only was Plyler lending a hand to run the scheme, but he was also collecting his ROIs under multiple usernames. Plyler’s accomplices in the scam include Beth C. Plyler and James L. Quick (both co-trustees of Plyler’s estate and trust fund).
Plyler lent money to Burks to keep the Zeekler penny auction site running after it launched to mediocre success (this was before the Zeek Rewards Ponzi scheme was attached to it).
Darryle Douglas (Affiliate Communications & Relations)
Darryle Douglas is, upon information and belief, a resident of Orange, California and was part of Zeek’s senior level management involved with affiliate communications and relations. Prior to Zeek, he worked with Burks in other multi-level marketing businesses. Mr. Douglas received more than $1,975,000 from Zeek under one or more usernames, including “dd.”
As with Roger Plyler, not only was Douglas committing fraud through Zeek Rewards, but he did so using multiple usernames within the system.
Todd Disner (net-winner investor)
Todd Disner is, upon information and belief, a resident of Miami, Florida. He is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,875,000 under one or more usernames, including “tdisner,” using Kestrel Spendthrift Trust as the nominal payee for his payments.
Upon information and belief, Todd Disner is the trustee for the Kestrel Spendthrift Trust.
Trudy Gilmond (net-winner investor)
Trudy Gilmond is, upon information and belief, a resident of St. Albans, Vermont. She is a former “field liaison” in the ZeekRewards’ scheme, a ZeekRewards “affiliate” and a “net winner” of more than $1,750,000 under one or more usernames, including “trudygilmond,” and using Trudy Gilmond, LLC, a shell company, as the nominal payee.
Jerry Napier (net-winner investor)
Jerry Napier is, upon information and belief, a resident of Owosso, Michigan. He is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,745,000 under one or more usernames, including “napier.”
Durant Brockett (net-winner investor)
Durant Brockett is, upon information and belief, a resident of Las Vegas, Nevada. He is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,720,000 under one or more usernames, including “DBA.”
Darren Miller (net-winner investor)
Darren Miller is, upon information and belief, a resident of Coeur d’Alene, Idaho. He is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,635,000 under one or more usernames, including “djmiller742.”
Rhonda Gates (net-winner investor)
Rhonda Gates is, upon information and belief, a resident of Nashville, Tennessee. She is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,425,000 under one or more usernames, including “cybernetcentral.”
Michael Van Leeuwen (net-winner investor)
Michael Van Leeuwen, also known as “CoachVan,” is upon information and belief a resident of Fayetteville, North Carolina. He is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,400,000 under one or more usernames, including “coachvan78” and “coachvan.”
David Sorrells (net-winner investor)
David Sorrells is, upon information and belief, a resident of Scottsdale, Arizona. He is a former ZeekRewards “affiliate” and was a “net winner” of more than $1,000,000 under one or more usernames, including “davidsorrells.”
T. LeMont Silver (Zeek Rewards “field liason” and net-winner investor)
T. Le Mont Silver Sr. is, upon information and belief, a resident of Orlando, Florida. He was a “field liaison” in the ZeekRewards scheme, a former ZeekRewards “affiliate” and “net winner” of more than $773,000 under one or more usernames, including “LKW” and “shnookput.”
Turns out Silver was also double-dipping in his scamming efforts:
Mr. Silver also used Global Internet Formula, Inc., which is, upon information and belief, incorporated in Florida, as a shell company through which he was a ZeekRewards “net winner” of more than $943,000 under one or more usernames, including “mentor.”
Triple-dipping if you include his wife:
Karen Silver is, upon information and belief, T. Le Mont Silver’s wife and resides with him or is a resident of Orlando, Florida. She is a former ZeekRewards “affiliate” and was a “net winner” of more than $600,000 under one or more usernames, including “tlksilver”.
Whether or not the Receivership is aware T. LeMont Silver and his family fled the US to the Dominican Republic late last year is unclear.
Aaron and Shara Andrews (net-winner investors)
Aaron and Shara Andrews are, upon information and belief, residents of Lake Worth, Florida. Innovation Marketing is, upon information and belief, incorporated in Florida, and a shell company through which Aaron and Shara Andrews were ZeekRewards “net winners” of more than $1,000,000 under one or more usernames, including “aaronandshara.”
David and Mary Kettner (net-winner investors)
David and Mary Kettner are, upon information and belief, residents of Peoria, Arizona. They are former ZeekRewards “affiliates” and “net winners” of more than $930,000 under one or more usernames, including “mypennyauctions” and “pennyauctionbids,” using the shell companies named Desert Oasis International Marketing, LLC and Kettner & Associates, LLC as nominal payees.
Lori Jean Webber (net-winner investor)
Lori Jean Weber is, upon information and belief, a resident of Land O’Lakes, Florida. P.A.W.S. Capital Management, LLC is, upon information and belief, incorporated in Florida, and a shell company through which Lori Jean Weber was a ZeekRewards “net winner” of more than $1,940,000 under one or more usernames, including “snook” and “billyboy.”
Charges filed against the insiders and net-winners by the Receivership include
- the fraudulent transfer of RVG Funds in violation of the North Carolina Uniform Fraudulent Transfer Act (both insiders and net-winners)
- Common Law Fraudulent Transfer (both insiders and net-winners)
- Breach of fiduciary duty (insiders only)
- Constructive Trust (both insiders and net-winners)
- Conversion (insiders only)
- Unjust Enrichment (insiders only)
- Constructive Trust (insiders only)
On account of the net-winners, the Receivership has asked a judge
- Enter a declaratory Judgment against the Net Winner Class determining that the net winnings they received were fraudulent transfers from RVG
- Enter Judgment against each of the named Defendants in the amount of their net winnings from the ZeekRewards scheme
- Enter an injunction against the named Defendants and the Net Winner Class prohibiting each of them from dissipating their assets pending satisfaction of the Judgment against them
- Award prejudgment and post-judgment interest, costs and such other and further relief against all Defendants and the Net Winner Class as the Receiver is entitled to recover
Both Zeek Rewards’ insiders and net-winners now have the opportunity to respond and contest the Receivership’s clawback litigation, but let’s face it: the evidence against all involved is nothing short of damning.
Based on the actual average daily “profit” percentage of 1.43% used during the scheme, the daily “profit” award to Affiliates would be over $40,000,000 on 3 billion points. The amount of money paid in to ZeekRewards daily was far less than $40 million.
Therefore, if RVG had been required to pay the daily awards supposedly available to Affiliates in cash, ZeekRewards would have quickly collapsed.
Specifically, during the last month ZeekRewards operated (July 16, 2012 to August 15, 2012) the daily average RPP award was $38,237,036, but the daily receipts (from all sources, not just retail auctions) were much smaller, averaging approximately
Thus, not only were the ZeekRewards payouts made from the money put in by other participants, but the so-called “profit” awards greatly exceeded total receipts, which, of course, was unsustainable.
Burks and Wright-Olivares, along with the other orchestrators of the scheme, engaged in self-dealing with no regard for the fact that in a matter of months or weeks, ZeekRewards would be unable to pay back those individuals who unwittingly bought into the lie.
In the Receivership’s filing a secret “Sweet 16” scheme is mentioned, something I hadn’t heard of previously. As per the description filed in the Receivership’s clawback litigation, it appears to have been a revenue-sharing pay-to-play scam within a scam:
In addition to the Compounder/RPP and the Matrix, a select group of individuals were allowed an additional revenue source, referred to as the “Sweet 16.”
The Sweet 16 was another means by which RVG made payments on a passive investment. It did not involve the sale of a product, nor did it require a member to recruit other participants into the program.
As RVG advertised in late 2010 or early 2011, the Sweet 16 was a program where participants received “a 1/16 share at the diamond level” on paid subscriptions in the then-2×21 matrix “across the entire width of the matrix.
Participation in the Sweet 16 cost a one-time fee of $999.
Each month, RVG totaled commissions from all subscription renewals for the entire Matrix and divided a portion of those commissions among the Sweet 16 members.
On information and belief, Sweet 16 payments to investors totaled more than $4.7 million over the life of the scheme.
In addition to the Sweet 16, two insiders were allowed payments through a revenue source referred to as the “Row of 16.” Dawn Wright-Olivares and Danny Olivares were the only two members of the Row of 16.
These Row of 16 payments were generally calculated as sixteen times the highest Sweet 16 payment amount. The Row of 16 was nothing more than a gift or bonus to these two individuals.
As with the other “compensation” payments made to Affiliates, these payments were made with money received from Affiliates purchasing VIP bids or subscription renewals, not from a legitimate retail activity.
Dawn Wright-Olivares and Daniel Olivares received more than $5.8 million in Row of 16 payments over the life of the scheme.
Like I said earlier in this article, these people are nothing short of the absolute worst the MLM industry has to offer. Time to pay up kids.
Footnote: My thanks for ASDUpdates for the heads up.