Howard Kaplan folds, settles with Zeek Rewards Receiver for $392,500
Last we checked in, Howard Kaplan’s Zeek Rewards clawback lawsuit had been scheduled for trial this June.
Following that order, Kaplan and the Receiver entered into mediation on February 28th.
Ongoing negotiations have lead to a proposed settlement, which will see Kaplan return almost four hundred thousand dollars to Zeek Rewards Ponzi victims.
The Receiver initiated clawback proceedings against Kaplan (right) in 2014, via a lawsuit that alleged legal negligence.
Kaplan, a tax-attorney, initially responded to the lawsuit by claiming immunity.
The Receiver argued Kaplan was liable for “bad legal advice” and the case has slowly played out over the past four years.
During mediation proceedings, the Receiver maintained his case stood “a significant likelihood of success”.
Kaplan, having already ‘asserted numerous defenses to the (Receiver’s) claims‘, claimed he intended to ‘vigorously pursue those defenses‘ if a settlement was not reached.
The issue however was Howard Kaplan’s financial resources.
Kaplan has limited financial resources and would not be able to fully pay the damages claimed by the Receiver.
These limited resources, in particular insurance coverage, are likely to erode even further during litigation to enforce the Receiver’s claims.
And, there may be a cost incurred by the Receiver to collect any Judgment awarded.
A settlement agreement was favored by both parties and filed on March 15th.
As per the settlement agreement, Kaplan will return $392,500 to the Receivership.
Although the Receiver alleged Kaplan’s legal negligence resulted in damages “in excess of $100 million”, I don’t believe exactly how much Zeek paid Kaplan was ever made public.
Nonetheless, the Receiver states Kaplan’s settlement is “fair and efficient”.
Judge Mullen approved Kaplan’s settlement on March 16th, with the settlement agreement stipulating the Receiver’s claims are dismissed upon payment.