One of the last insider holdouts of the Zeek Rewards Ponzi scheme is Howard Kaplan.

Whereas pretty much everyone else who profited from the operation of Zeek Rewards has settled and been stripped of the fraudulently obtained funds they were paid, Kaplan is challenging the Receiver and heading to trial.

Kenneth Bell, the Zeek Receiver, sued Kaplan back in 2014 and alleges the tax attorney “gave bad legal advice” to the $850 million dollar Ponzi scheme.

Kaplan (right) disagrees and as part of his defense, wished to depose the Receiver in his capacity as the court-appointed representative of Zeek’s parent company, Rex Venture Group.

The Receiver objected to a deposition on the grounds

  1. he has no personal knowledge of the facts related to the claims against Kaplan
  2. he is serving as active counsel in the action against Kaplan
  3. he should not, as Receiver, be compelled to appear on behalf of RVG or required to designate another party to appear when all RVG affiliates are incarcerated or deceased
  4. there are other, less burdensome methods to procure the information Defendant seeks

Defense 3 is a bit strange, but I believe is a legal procedural standard as opposed to the current situation with respect to Zeek Rewards affiliates (management?).

In his September 8th decision, Judge Mullen sided with the Receiver and acknowledged he

has no independent personal knowledge of the factual basis for the claims against Kaplan.

He had no knowledge or involvement with RVG prior to his appointment as the Receiver.

Indeed, he has no knowledge of the facts underlying claims against Kaplan beyond what he has learned in the documents already provided to Kaplan in discovery and communicated to Kaplan via interrogatories.

Judge Mullen goes on to infer Kaplan has ignored identified documents point to his liability in pursuit of deposing the Receiver.

Because Mr. Bell not only serves as the Receiver in this case, but also is serving as active counsel, Kaplan must meet the heightened standard required to justify deposing opposing counsel.

Mr. Kaplan seeks to depose Mr. Bell to obtain his core mental impressions of the case and his justifications for his actions.

These are clearly privileged from discovery.

Accordingly, the Defendant has failed to make the required showing necessary to depose Mr. Bell in this case.

In what appears to be an attempt to circumvent the Receiver’s objections, Kaplan also served Rex Venture Group notice directly.

The Receiver, as sole representative of Rex Venture Group would be the only available representative for deposition on RVG’s behalf.

Judge Mullen however was having none of it;

As there are no former officers or agents of the company that would be suitable for designation as RVG’s 30(b)(6) witness and Mr. Bell cannot be forced to serve in this capacity as an end run around the impropriety of deposing him as an individual, the 30(b)(6) deposition of RVG will be quashed.

Judge Mullen granted the Receiver a requested protective order, resulting in the quashing of both deposition notices (one for Bell and one for RVG).

With that out of the way, a tentative trial date has been scheduled for June 11th, 2018.

I’d be very surprised if Kaplan didn’t settle before then. In my opinion defense wise he doesn’t have a leg to stand on.

But hey, it’s entirely Kaplan’s prerogative to insist he’s entitled to keeping stolen Ponzi funds he was paid and go to trial.

Stay tuned…