Disner appeal denied, $2M dollar default judgement stands
In analyzing court filings by Ponzi investors, a common thread of assuming the judiciary and regulators involved in the case are complete morons can be observed.
Whether this stems from the bubble-world such investors live in, a carry-over from treating the everyone they encounter as gullible morons (critics of the schemes they invest in are also often treated with similar contempt), a simple lack of education – who knows. But it’s definitely there.
A recent example was Faith Sloan in the SEC’s TelexFree case. Named as a defendant in the SEC’s civil case, which alleges TelexFree to be a billion dollar Ponzi, Sloan was quick to cry poor in court filings.
Simultaneously, Sloan was also openly advertising her qualification for thousands of dollars in recruitment commissions on Facebook.
Today we take a look at another example, Zeek Rewards investor Todd Disner.
Disner was one of the top investors in Zeek Rewards, an $850 million dollar Ponzi scheme. Under multiple affiliate accounts under his control, Disner stole over $1.8 million dollars from Zeek’s victims.
March 2014 saw clawback litigation filed against Disner, which he chose to ignore.
This prompted the court-appointed Receiver to file for default judgement, which was granted against Disner in July.
After realizing that plugging his ears with his fingers wasn’t going to make the clawback litigation go away, Disner finally responded to the litigation later that month.
In his filing, Disner asked that the court set aside the default judgement against him because
he does not have access to electronic filings. He was unaware that the time within which he had to reply had arrived, as he had not received any responsive pleadings from his co-defendants.
Other excuses such as Disner’s inability to find counsel in the months, partly owing to him being unable to afford their services were also trotted out. Yes, the guy who stole $1.8 million from Zeek’s victims, like Faith Sloan, was also crying poor.
What is particularly amusing in Disner’s case, is that he’s no stranger to Ponzi litigation. Disner was a top investor in the AdSurfDaily Ponzi scheme, and this isn’t his first rodeo.
With that in mind, Judge Mullen’s ruling on Disner’s motion came with little surprise.
Passing an order yesterday, Judge Mullen denied Disner’s motion.
As Judge Mullen observed,
The Court finds that Disner has failed to act with reasonable promptness.
He was personally served with the Summons and Complaint three months before he finally filed a substantive document in this lawsuit, which was a request to set aside the default.
Moreover, it is clear that he had notice of the action and claims against him and the knowledge to act on his own behalf because he filed a Notice of Appearance to appear pro se nearly a month before the answer was due. Disner states that he “had not received any responsive pleadings from any of his co-Defendants” as an excuse for his failure to file an answer.
He further suggests in a general fashion that he was seeking to obtain counsel. However, Disner never contacted the Court or the Receiver to request additional time.
His assertions fall short of excusing his failure to act with reasonable promptness.
A polite way of calling Disner out as a lying so and so if ever I saw one.
Furthermore, Disner fails to assert a meritorious defense. He does nothing more that state in a conclusory fashion that he “believes that he has a valid defense to the Plaintiff’s complaint . . . .”
This vague statement falls well short of asserting a meritorious defense.
And Disner’s defense was bogus to. Well, his lack of defense if you want to be technical about it.
As I mentioned earlier, a great deal of Disner’s undoing is by way of fact that he’s not a stranger to Ponzi litigation. Disner knew exactly what he was doing (stalling), and in Mullen’s order he was appropriately called out on it:
Disner is personally responsible for his failure to plead. He has had previous experience with Ponzi scheme litigation and filed a twenty-nine page pro se Complaint for Declaratory Relief against the federal government in late 2011 claiming wrongful seizure of his Ponzi scheme winnings in another Ponzi scheme.
Also, Disner sought pro se to intervene in a federal lawsuit where he claimed the funds were “wrongfully confiscated” by the federal government.
Any excuse Disner may assert of ignorance of the need to file an answer or seek extra time to do so is simply not credible in light of his extensive history of active litigation in Ponzi schemes.
Everything Disner filed in the AdSurfDaily Ponzi case was rejected.
To give you an idea of what Disner was likely hoping for with the Zeek litigation, AdSurfDaily was shut down in 2008. Disner stalled and stalled and it wasn’t until 2013 that his appeal was denied.
Disner stalled his AdSurfDaily litigation for years – but there’ll be none of that in the Zeek Rewards clawback litigation against him:
The Court further finds that the Receiver will be prejudiced if delay is allowed.
Taking into account the highly complex nature of this case and the multiple parties involved, the Court allowed the Defendants a lengthy several month period to answer the Complaint, but made it clear that the case then needed to move forward on a specific track in the interests of efficiency and clarity.
To allow a single, unresponsive Defendant to proceed on a different track than the rest of the Defendants, or to delay the entire proceeding as to all parties due to Mr. Disner’s dilatory filings, would cause additional costs and burdens upon the Receivership Estate, including increased legal fees.
The government has brought to the Court’s attention Disner’s previous dilatory action in other litigation.
In the case he filed against the United States, the government filed a motion to dismiss on May 18, 2012. Disner failed to provide any response to the motion to dismiss, and the court was forced to order Disner to respond.
In light of his litigation history, Mr. Disner was aware of the severe consequences of a failure to plead or defend.
Despite this knowledge, he nonetheless failed to raise a hand until after default had been entered in this matter.
Moreover, the Court finds there is no sanction less drastic that would adequately address Mr. Disner’s lack of good cause for failing to defend. No lesser sanction would overcome the prejudice to the Receiver if a delay were granted, and it would not overcome Disner’s failure to assert a meritorious defense and his personal responsibility for the dilatory behavior that led to his default.
The Court finds that Disner’s Motion to Strike the Receiver’s affidavit in support of the Motion for Default Judgment is likewise without merit.
(Disner’s) vague and conclusory statements fall far short of refuting the Receiver’s Motion for Default Judgment and provide no basis for striking the Receiver’s affidavit.
IT IS THEREFORE ORDERED that Disner’s Motion to Set Aside Default and Disner’s Motion to Strike are hereby DENIED.
So, what happens now?
The second part of Judge Mullen’s order reads;
IT IS FURTHER ORDERED that the Clerk is directed to enter default judgment against Defendant Todd Disner.
As per the clawback litigation filed against him, Disner is up for $1.8 million and $279,720.82 in interest.
With default judgement entered against Disner by the court clerk on December 17th, Disner now has to return $2,079,757.88 to the Zeek Rewards victims he stole from.
Game over son.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of Judge Mullen’s December 17th order.