zeekrewardsIn Zeek Rewards’ heyday, NxPay (NxSystems) was the ewallet of choice by the company.

Content to turn a blind eye to the hundreds of millions of dollars in fraud taking place through its processor systems, NxPay was instrumental in Zeek’s ongoing business operations.

In acknowledgement of this, the court-appointed Receiver filed a clawback lawsuit against NxPay for $9 million dollars.

NxPay wanted to keep the money, which prompted the Receiver to file contempt proceedings against the processor on December 3rd, 2014.

In June 2015, NxPay were subsequently ordered to surrender the requested $9 million to the Receiver.

The only problem?

NxPay turned around and claimed they didn’t have the money. One million was all NxPay could scrounge up at the time, with a question mark hovering over the remaining $8 million dollar judgement.

Today in a filing by the Receiver, it is revealed that a settlement agreement between the parties has been reached.

Under the terms of the settlement agreement, NxPay will return $3.5 million of the requested $9 million in stolen Ponzi funds. The agreement also sees NxPay consent to ‘a Confession of Judgment for $9,069,446’.

As with the recent Gerry Nehra settlement, the Receiver justifies the reduced amount by claiming it ‘balance(s) the probable benefit and potential cost of pursuing a claim or defense against the costs of the proposed settlement‘.

The Receiver believes that RVG’s legal claims to recover damages or payments from NxSystems, Inc. are strong and straightforward; yet, Zeek itself was an extraordinarily large and complex scheme which will unavoidably create complexity in the litigation to assert these claims.

So, while the Receiver believes there is a significant likelihood of success, the path to obtaining Judgments against these Defendants may not be quick or easy, and settlement of the claims without the expense of further litigation is worthwhile.

Basically you take NxPay to court and lose money winning the case, only to risk obtaining either slightly more than $3.5 million.

Or worse still, given NxPay’s purported current financial situation, even less.

NxSystems has represented to the Receiver that it has limited financial resources and is not able to return the full amount owed to RVG and claimed by the Receiver.

NxSystem has given to the Receiver a sworn financial statement describing its financial condition and further agrees to give sworn testimony under oath regarding that financial statement.

These limited resources might erode even further during litigation to enforce the Receiver’s claims.

The settlement proposal sees NxPay acknowledge they received and refused to hand over $9 million in stolen Ponzi funds, with a return of $3.5 million as that’s purportedly all they have left.

This Settlement Payment is based on NxSystems’ financial assets and current ability to pay and reflects, to the extent that it can be accomplished, the full payment of all the NxSystems’ funds and assets available to satisfy the agreed judgement.

Assuming Judge Mullen signs off on the Receiver’s proposed settlement agreement, the funds NxPay have paid back will be distributed out to Zeek victims at a later date.

 

Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Receiver’s December 14th “Motion to Approve Settlement Agreement With NxSystems, Inc“.

 

Update 17th December 2015 – In an order published on the 16th of December, Judge Mullen has signed off on the $3.5 million proposed settlement.

 

Update 30th April 2016 – As of March 31st, 2016, NxSystems have transferred $998,669.07 to the Receiver.