Kevin Grimes returns $1.13 million to Zeek Rewards victims
Last last month we reported that a settlement had been reached in the Zeek Rewards Receiver’s lawsuit against Kevin Grimes.
At the time details of the settlement were yet to emerge, so we weren’t sure what had been agreed upon.
Now in a settlement agreement filed on June 2nd, we can reveal that Kevin Grimes and Grimes & Reese (now R&R Law Group), will return $1.17 million dollars to Zeek Rewards victims.
For his part in assisting with the perpetuation of the $850 million Ponzi scheme, the Receiver identified Kevin Grimes as a Zeek Rewards insider.
For services rendered to the fraudulent business opportunity, Grimes was paid $843,000.
Despite the settlement amount being in excess of what Grimes (right) was paid, the Receiver notes
the Defendants have told the Receiver that they have already spent all or a substantial portion of the payments they received from RVG and have represented to the Receiver that they have limited financial resources and are not able to fully pay the damages claimed by the Receiver.
These limited resources might erode even further during litigation to enforce the Receiver’s claims.
Had the case of gone to trial, the Receiver had alleged Grimes’ conduct caused damages “in excess of $100 million”.
Also named as a defendant in the lawsuit was Grimes & Reese (now R&R Law Group), with Grimes’ former business partner Spencer Reese no doubt none too happy about having been dragged into all of this.
Reese’s signature appears on the settlement agreement as a witness. I don’t believe he himself had any personal dealings with Zeek Rewards.
I was curious at to what the split between Grimes and R&R Law Group was, however that is not disclosed in the settlement agreement.
The proposed Grimes settlement agreement was filed on the 2nd of June, with Judge Mullen signing off on it as is the same day.
Looking forward, it would appear Howard Kaplan will now also find himself paying back money he was paid by Zeek Rewards.
Kaplan, a tax attorney, was also sued by the Receiver for being a Zeek Rewards insider.
After Kaplan (right) responded to the lawsuit, claiming to have known nothing about Zeek Rewards’s fraudulent business practices, the Receiver further accused him of giving Zeek Rewards “bad legal advice“.
Kaplan later filed a Motion to Dismiss, which was ‘stayed pending the Receiver’s mediation efforts in the case against the Grimes defendants.‘
Should Kaplan refuse to settle with the Receiver, Kaplan’s conduct has also been alleged to have caused “in excess of $100 million” in damages.
How much Kaplan was paid by Zeek Rewards has yet to be disclosed.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Grimes settlement agreement and Judge Mullen’s approval order.
well, zeek didn’t hire kevin grimes the individual, they hired ‘grimes and reese’ as their compliance attorney.
the money paid ie $843.000, by zeek must have gone to the ‘firms’ account and not grimes personal account. so, i think grimes & reese [now R&R] will be carrying some of the burden of this settlement.
but, at approx 1% of the claim amount of 100 million, kevin grimes has gotten off very easily! he can continue business as usual.
It looks like Kevin Grimes took the whole responsibility here.
Spencer Reese was hardly mentioned. His name was listed in the “Mediation Certification” as a representative for R&R Lawfirm. He seems to have represented himself, but his lawfirm used an external attorney.
Kevin Grimes was listed as a party. Represented by 3 attorneys (one for him and MLM Compliance, two for him personally).
Grimes & Reese lawfirm was represented by one attorney.
R&R Lawfirm was represented by one attorney.
Based on that summary, Kevin Grimes personally (as a lawyer) and his company MLM Compliance seems to have been the main defendants.
MLM Compliance was probably an “additional income stream”, related to him personally rather than to the lawfirm.
I came to quite different conclusion. Spencer Reese signed as a witness on behalf of R&R Law Group PLLC ( f.k.a. Grimes & Reese (R & R)), attached to the Settlement Agreement.
I also counted the number of attorneys representing the parties.
I don’t believe we will see the same type of mediation in the case against Howard Kaplan.
The first thing that will happen there is probably that SEC will be asked to file an Amicus Brief (“guidance to the court”) about public policy (for the “in pari delicto” argument in Motion To Dismiss).
The next thing will be Motion To Dismiss. An alternative is of course voluntarily withdrawal of the case.
“More substance”
The case against Kevin Grimes and MLM Compliance had much more substance, and the settlement in that case seems to have been about exactly that.
Bell didn’t spend the same amount of resources on Grimes & Reese lawfirm.
M_N is right here, KG was heavily involved, in Zeek when MLM Compliance course was mass-marketed (i.e. made to be “required”) for all affiliates. Kaplan, at best, had one big appearance, and no continuing profit plan.
My personal feeling is Kaplan will cave and offer to pay back any fees Zeek paid him, plus a little extra punitive damage. But it won’t be anything CLOSE to what Bell asked for.
yes kevin grimes and MLM compliance are the main defendants. but grimes&reese are also defendants. some of the money paid by zeek for the services of kevin grimes as a representative of grimes&reese, must have gone to the companies coffers and spent by the company in its normal business affairs.
so, i think that part of the money will be paid by grimes&reese, towards the settlement. i don’t think they’re getting off scott free here.