zeekrewardsIn yet another blow to merchants who facilitate the operation of MLM Ponzi schemes, a criminal charge has been filed against the owner of one of Zeek Rewards’ payment processors.

Our characters in this story are:

On the civil side of things, Meyer came under fire by the Zeek Receiver back in 2014. The Receiver alleged Preferred Merchants attempted to circumvent an SEC asset freeze on their accounts.

In total, Preferred Merchants processed $5.8 million dollars of Zeek Rewards’ stolen Ponzi funds.

After Zeek Rewards was shut down, the Receiver managed to secure around $1 million, with the remaining $4.8 million unaccounted for.

Further investigation revealed Meyer had been contacted by an SEC agent regarding a freeze on Zeek Rewards’ funds. Meyer told the agent Preferred Merchant had no control over Zeek Rewards’ assets.

19 minutes after the SEC agent call, Meyer then transferred the $4.8 million from a Zeek Rewards bank account into an offshore Preferred Merchants account.

The evidence establishes that Preferred Merchants and Meyer directed the $4.8 million transfer from the RVG trust account to Preferred Merchants’ accounts just 19 minutes after the SEC told them about the asset freeze and imminent shutdown of RVG.

This is unlikely to be a coincidence.

The Receiver went on to file for a temporary restraining order against Preferred Merchants and Meyer in October 2014, which was granted.

Preferred Merchants were also ordered to hand over documents related to the transfer. After failing to hand over the documents, the Receiver filed contempt proceedings against the processor, which they unsuccessfully tried to delay.

So that’s the story so far.

Now we rewind back to 2012, with the Department of Justice’s filing against Meyer laying out exactly what happened to the missing $4.8 million dollars.

According to the DOJ, Meyer assisted Rex Venture Group (Zeek Rewards’ parent company) to create a “RVG Corporate Trust”.

RVG was the sole beneficiary and Preferred Merchants the designated trustee. In other words, Meyer and Preferred Merchants had complete control over the account.

Through their investigation, the SEC learned that Preferred Merchants had control of about $60 million in RVG assets.

Pertaining to the SEC agent call on August 16th,

Meyer falsely (implied) that Preferred Merchants did not exercise dominion or control over any RVG assets.

In truth and fact, Meyer, through Preferred Merchants, was the trustee over the RVG Trust Account, which then held approximately $17.4 million in RVG assets.

Approximately 20 minutes following his phone call with the SEC, Meyer emailed a representative of Bay Area Escrow and directed her to transfer approximately $4.8 million from the RVG Trust Account to (a) Preferred Merchants E*Trade brokerage account.

The next day Meyer emailed a representative of the Bay Area Escrow and directed her to wire transfer approximately $1 million from the RVG Trust Account to an attorney trust account at a national law firm.

In the same email, Meyer directed the Bay Area Escrow representative to stop all incoming and outgoing transfers from the RVG Trust Account.

Remember, this is the guy who told the SEC he had no control over RVG assets.

Until the Receiver started snooping around, Meyer for the most part got away with it.

He used $350,000 of his Ponzi haul to purchase a home in California and laundered the rest through a series of shell companies.

On or about September 13, 2012, Meyer transferred approximately $5.8 million from the Preferred Merchants E*Trade brokerage account to the Preferred Merchants Bank of America account.

On or about September 13, 2012, Meyer formed Fidus LLC in the state of Delaware.

On or about October 5, 2012, Meyer opened a brokerage account in the name of Fidus.

Fidus was a shell company that Meyer used to conceal the trail of RVG assets.

On or about September 27, 2012, Meyer established the Spiritum Holdings Irrevocable Trust, a Cook-Islands-based trust account.

Meyer used the Spiritum Holdings account, which was maintained at HSBC Bank in Hong Kong, to further conceal the trail of RVG assets.

In 2013, Meyer initiated what appeared to be his exit-plan.

On or about February, 2013, Meyer transferred approximately $6 million from the Fidus Scottrade brokerage account with further credit to Meyer’s personal account at the Scotiabank in the Turks & Caicos and to the Spiritum Holdings HSBC bank account.

On or about April 9, 2013, Meyer transferred approximately $4 million from the Spiritum Holdings HSBC bank account to Meyer’s personal bank account at Bank of America.

In or about June 2013, Meyer purchased a home for approximately $490,000 in the Turks & Caicos, using RVG funds.

The home was purchased in the name of Bella Vita LTD (and) Meyer made approximately $1.5 million in improvements to the home.

In an attempt to fool authorities while he was busy setting up a new life in the Turks & Caicos islands, Meyer

submitted a fraudulent and misleading Declaration purporting to establish his compliance with the Freeze Order and Seizure Warrant.

On or about December 18, 2014 and January 5, 2015, while under oath and under penalty of perjury, Meyer made fraudulent and misleading statements to the attorneys for the Receiver in depositions.

Meyer told the Receiver’s attorneys he had no control over the Fidus Scottrade account (despite being listed as the sole member with a 100% interest).

Meyer represented that he “did not believe he received any money from the account” and that it was set up by Spiritum.

When questioned about funds in Preferred Merchants’ E*Trade account, Meyer claimed

the funds …. were commingled with other Preferred Merchants monies that were earned from other clients.

The DOJ’s investigation revealed that the balance of the E*Trade account, prior to Meyer’s transfer of RVG funds into it, was $0.

According to the DOJ,

the $7.5 million deposit of RVG funds was the only deposit made in the account.

For his part in stealing and attempting to enrich himself with millions of dollars in invested Ponzi funds, the DOJ filed a criminal charge against Meyer on March 10th, 2016.

In it, Meyer faced one count of Obstruction of Justice, which accused him of

corruptly influencing, obstructing and impeding the due administration of justice in the SEC v Rex Venture Group and Paul Burks case.

The forfeiture notice attached to the criminal charge sees Meyer required to return ‘all property which constitutes or is derived from the proceeds of the violation.‘

  • at least $4,800,000
  • the property in Providenciales Island, Turks & Caicos
  • the property in California
  • any and all interest, as well as any funds or other assets, held in the name of Preferred Merchants Solutions LLC, RVG Corporate Trust, Fidus LLC, Spiritum Holdings Irrevocable Trust and Bella Vita LTD

Court records show that a plea agreement was entered on the same day the DOJ filed its case (March 10th).

Meyer made his initial appearance in court on March 22nd, at which he plead guilty the criminal charge leveled against him. The plea agreement stipulates that Meyer will return $4.8 million and surrender assets as per the forfeiture notice.

The court accepted Meyer’s plea and set bond at $25,000. Meyer is currently out on bail with (sealed) restrictions in place.

As at the time of publication, a sentencing hearing has yet to be scheduled.

As per the Ohio State Bar Association, ‘federal obstruction of justice is punishable by up to five years in prison.‘

Stay tuned…

 

Footnote: Our thanks to Don@ASDUpdates for providing a copy of the DOJ’s March 10th criminal charge filing and March 15th Consent Order and Judgement of Forfeiture.

 

Update August 24th 2016 – On August 23rd Jaymes Meyer was sentenced to 15 months prison and ordered to pay a $4.8 million dollar judgement.