zeekrewardsThe original argument of those who profited in the Zeek Rewards Ponzi scheme was that it wasn’t a Ponzi scheme.

After wasting $30,000 of Zeek Reward victim’s fund on an expert witness they hoped would prove just that, turns out the witness was unable to disprove Zeek Rewards was a Ponzi scheme.

Armed with this conclusion, late last month the Zeek Receiver filed for summary judgement against Zeek’s top net-winners.

In a July 29th response filing, the net-winner class attorney is now arguing Zeek’s top profiteers “provided value” to the $900 million Ponzi scheme and believed it was a legitimate business.

The Receiver’s motion for summary judgment presents the Court with the following question: does the fact that a business operated as a Ponzi scheme relieve a plaintiff from establishing all elements of his fraudulent transfer claims and entitle him to judgment as a matter of law against any person who received payment from the business?

Even if those recipients provided reasonably equivalent value and believed they were dealing with a legitimate company?

The answer, of course, is no.

Even if…? If the business in question is a Ponzi scheme, you don’t get to crap on about “even if…”. It’s case closed.

Hand over the money you stole and have a nice day.

The Receiver’s argument in support of this request can be succinctly summarized: “ZeekRewards was a Ponzi scheme; therefore, I win.”

But that is not the law, and never has been.

As far a clawback litigation goes, isn’t that precisely what the law is?

You earn money fraudulently in a Ponzi scheme, you pay it back through clawback litigation. For what other purpose than to retrieve ill-gotten funds through investment fraud does clawback litigation otherwise exist?

Seriously guys, talk about clutching at straws.

Whether the Class Defendants gave reasonably equivalent value is also relevant.

Lack of reasonably equivalent value is an element of a constructive fraudulent transfer claim, meaning that the Receiver bears the burden of proving that the Class Defendants failed to provide it.

And  haven’t we already gone over this? Spamming Ponzi advertisements en-masse to classified websites nobody but the Zeek affiliates spamming them accesses is hardly “value”.

Amusingly, the net-winner response filing seeks to equate spamming unused classified sites with Ponzi spam to the job of “internet marketing specialists”.

The net-winners argue that had Zeek Rewards of hired professionals to spam abandoned classified websites, they’d have had to pay them $50,000 to $80,000 a year.

Just one thing guys: What legitimate business would pay an “internet marketing specialist” team to spam unused classified websites with Ponzi spam?

The comparison of Zeek’s top scammers to legitimate internet marketers, given what Zeek had its affiliates do to qualify for a daily ROI is nothing short of ridiculous.

The evidence of reasonably equivalent value here is significant.

The Class Defendants spent countless hours marketing ZeekRewards and recruiting new customers to the Zeekler penny auction—some logging as many as 18 hours per day.

A reasonable estimate as to the value of these services, based on salaries offered to persons performing similar tasks at other companies, is $472 million.

This is far more than the $295 million in net winnings alleged by the Receiver.

At a minimum, ZeekRewards received reasonably equivalent value in exchange for
the payments it made to the Class Defendants.

And in and event, how is promotion and marketing of a Ponzi scheme providing “value”? Value to whom? The fraud itself?

Certainly not to the general public or Zeek Rewards’ victims, who let’s not forget the net-winners have ultimately stolen from.

NCUFTA provides a transferee who gave reasonably equivalent value in good faith with an absolute defense to an actual fraudulent transfer claim, regardless of whether the transferor (ZeekRewards) made the transfer with actual intent to defraud.

In short, whether ZeekRewards was a Ponzi scheme is hardly the end of the inquiry.

All evidence indicates that the Class Defendants acted in good faith, believing they were working for a legitimate business.

The Receiver, to this credit, does not contend otherwise.

As such, summary judgment must also be denied on this claim too.

So uh what Mr. Net-winner Attorney, every Ponzi scammer claims they provided value and makes clawback litigation redundant?

You don’t think there’s a reason ill-gotten gains obtained through a Ponzi scheme is an absolute in the eyes of the law?

And how exactly does one differentiate between “I thought a $900 million dollar Ponzi scheme I made hundreds of thousands or millions of dollars in was legitimate”, from a scammer?

You can’t, because they are one and the same.

Even if the Court were inclined to apply a Ponzi scheme presumption under
North Carolina law with respect to the issue of reasonably equivalent value something that has never been done in that state—summary judgment should be denied in any event because the Receiver’s claims are barred by a contractual limitations period.

The Class Defendants and Rex Venture Group (the operator of ZeekRewards) agreed to be bound by the terms of service on ZeekRewards’ website.

Those terms required any claim related to ZeekRewards to be brought within one year of the date the claim arose.

Yeah here’s the thing though, Zeek Rewards was a $900 million dollar Ponzi scheme.

In light of the widespread financial fraud committed and millions of dollars stolen from victims of the scheme, Zeek Rewards’ terms and conditions don’t mean jack.

I obviously can’t say for sure, but hopefully these ridiculous arguments will be shut down by Judge Mullen.

Paul Burks lost and is going to jail. His second in command has already plead guilty and will likely also spend time in jail.

Your $30,000 expert witness failed to conclude Zeek Rewards wasn’t a Ponzi scheme.

Give it up guys, you’re not keeping that money.


Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Class of Net Winners’ Response filing (filed July 29th).