Paul Burks indicted for operating Zeek Rewards
After two and a half years of silence leaving many of us wondering what Paul Burks’ ultimate fate would be, news broke this morning that he has now been indicted.
Burks was indicted by a grand jury for the operation of Zeek Rewards, an $850M Ponzi scheme he operated between 2011 and 2012.
For those unaware of the grand-daddy of penny auction MLM scams, Zeek Rewards offered unregistered securities using the penny auction platform Zeekler as a front.
Burks (right) is collectively named in the indictment, along with those who helped run the scam, as co-conspirators.
The co-conspirators falsely represented that Zeekler was generating massive profits from its penny auctions that the public could share in such profits through investment in Zeek Rewards.
In truth and fact, Zeekler’s purported profits were bogus and Zeek Rewards operated as a fraudulent Ponzi scheme whereby the co-conspirators used monies from later victim-investors to pay fraudulent returns to earlier victim-investors and to personally enrich themselves.
The indictment goes on to detail the fraud behind the pretending that Zeek Rewards’ ridiculous ROIs were pegged to the retail activities at Zeekler.
BehindMLM first reported on this back in September of 2011. The SEC moved to shut Zeek Rewards down in August of 2012.
Nailed in the indictment are Gerry Nehra’s attempts to legitimize Zeek Rewards with pseudo-compliance:
As the Ponzi scheme grew in size and scope, the co-conspirators took several steps to conceal its true nature and to prevent scruitiny be regulators by making a series of cosmetic changes.
For example:
a. Initially, the co-conspirators called the Retail Profit Pool the “compounder” (ref our report on this dated June 2012) and touted it as a way to obtain a 125% “rebate” or “return on investment” on the purchase of “compounding bids.”
Over time, the co-conspirators attempted to eliminate references to the terms “compounder,” “compounding bids,” and 125% “return on investment,” to conceal the true nature of the Ponzi scheme and to prevent scrutiny by regulators.
At some point, instead of specifically promising a 125% return of investment on each dollar invested through the purchase of a VIP Bid, the co-conspirators published bogus daily figures of Zeek’s profits, averaging approximately 1.8% a day, to reach the 125% goal.
The supposed daily Zeek’s profits figure was not based on actual computation of daily profit. Indeed Zeek lacked the books and records that would be necessary to compute such a number.
Instead the RPPP was made up by Paul Burks to artificially reach the originally advertised 125% return of investment.
And this is the real icing on the cake.
What was Gerry Nehra’s legal analysis and opinion that the scheme was perfectly legal based on?
Nothing. It was all bullshit conjecture.
The co-conspirators attempted to lull victim-investors and to bolster the credibility of Zeek by hiring attorneys, and touting their advice and approval of the legality and legitimacy of Zeek to victim-investors and others, including banks, in emails, letters, and conference calls.
In reality, these attorneys could not have reviewed the actual books and records of Zeek, which were non-existent, nor otherwise made any determination of whether or not the profits were legitimate, which they were not.
Burks is also called out for lying about Zeek Rewards’ banking problems.
As the Ponzi scheme grew in size and scope, banks and other financial institutions began to question the co-conspirators about the fraudulent appearance of the scheme and many shut down or refused to open Zeek bank accounts.
However, Paul Burks and other co-conspirators falsely told victim-affiliates that Zeek had merely outgrown its banks.
To this day, Robert Craddock, sidekick of Zeek’s acting COO Gregory Caldwell, maintains that Zeek Rewards was not a Ponzi scheme.
I’ve previously published the facts destroying any and all arguments supporting the notion that Zeek wasn’t a big fat fraud, but here they are again – as detailed in Burks’ indictment:
As the scheme continued and the number of victim-investors grew, the outstanding liability to victims resulting from the bogus 125% return on investment continued to rise beyond control.
Indeed, by August 16 2012, there were approximately 3 billion outstanding VIP Bid points in the RPP, which the co-conspirators fraudulently represented to victims was worth approximately $2.8 billion.
Yet, the co-conspirators had no accurate books and records to even determine how much cash on hand was available to redeem the victims’ VIP Bid Points.
In truth and fact, by August 17, 2012, the co-conspirators had only $320 million (approximately 11% of the $2.8 billion) available to pay out to victim-investors.
Irrespective of whether the SEC moved to shut Zeek Rewards down when they did, the scam was on the fast track to collapse town regardless.
Robert Craddock and anyone else who tells you otherwise is simply full of shit.
For their part in operating Zeek Rewards, Paul Burks (owner) walked away with $10.1 million, Dawn Wright-Olivares (COO and later CMO) $7.2 million, Daniel Olivares (programming) $3.1 million and Darryle Douglas (Sales Director) $2 million.
And then there was the tax fraud…
Rex Venture Group, Zeek Rewards and Zeekler failed to file any corporate tax returns or to make any corporate tax payments to the IRS.
For the tax year 2011, Paul Burks and others issued many IRS Form 1099s to victim-investors that purportedly reported the “income” received by the victim-investors for their participation in the scheme.
Paul Burks also engaged attorneys and tax professionals to legitimize the issuance of the 1099s.
However, in truth and fact, the vast majority of income reported to the IRS was fictional and had neither been earned nor received by the victim-investors.
In total, Paul Burks and others reported to the IRS supposed income by the victim-investors of over $108 million for the year 2011 on the 1099s issued, while Zeek Rewards actually paid out less than approximately $13 million in cash to victim investors.
As a result, individual victim-investors filed false tax returns with the IRS reporting phantom income that they never actually received, and Burks, and others were able to use the false tax notices to perpetuate the Ponzi scheme by making it seem legitimate.
For his part in orchestrating an $850 million MLM Ponzi, Paul Burks was indicted on four counts:
- conspiracy to commit wire and mail fraud
- mail fraud
- wire fraud and
- tax fraud conspiracy
The court has issued a summons against Burks and he is expected to appear in federal court for his initial appearance in the coming days.
The wire and mail fraud conspiracy charge, the mail fraud charge and wire fraud charge each carry a maximum prison term of 20 years and a $250,000 fine.
The tax fraud conspiracy charge carries a maximum prison term of five years and a $250,000 fine.
Accoridng to the current case docket, the summons referenced above was issued on the 24th of October and Burks appearance has been scheduled for the 13th of November.
Stay tuned…
both the olivares , will negotiate a plea bargain with the prosecution and may get off with lighter sentences of a couple of years and fines and probation .
to get an idea about how north carolina awards sentences in wire/securities frauds this is a relevant and recent case study :
fbi.gov/charlotte/press-releases/2012/ponzi-scheme-mastermind-sentenced-to-50-years-in-prison
Keith Franklin Simmons did not plead guilty , and suffered the unbelievable consequence of a 50 year sentence [!!]
burks should fall face down before the federal court and BEG on the 13th, november, he’s already 67 years old or something.
As Oz has already reported, both have already entered into plea agreements and are awaiting sentencing:
NOLINK: behindmlm.com/companies/iwowwe/dawn-wright-olivares-pleads-guilty-to-fraud/
Compare that to “Fraudy” Jorgensen (Bidify, etc.). He got 2 years 6 months prison sentence (in December 2009) for operating the $10-15 million pyramid / Ponzi scheme PlexPay. PlexPay had 16,718 investors, mostly from the U.S.
PlexPay co-organizer Jarle Johansen got 1 year 9 months prison. 21 months and 23 months are relatively similar sentences.
Norwegian source:
NOLINK://no.wikipedia.org/wiki/PlexPay
yes, it seems the disparity in sentencing is an issue, and we are not the first to notice it :
blogs.wsj.com/law/2011/11/15/a-white-collar-sentencing-disparity/
i think giving a human being 50 years for financial fraud is a ‘judge gone crazy’. NOBODY can take away a human beings whole life over money crimes. it’s not rational , its not justice, it’s not humane, it should NOT be legal .
another interesting statistic is: for every two persons convicted of financial fraud in the US , one actually goes to jail .
if law is about justice , then punishment for financial fraud should be based on Restoration [disgorgement of illegal gains] and Reformation [short sentence long probation] rather than Retribution [ 50 year sentences!]
Financial crimes can be just as serious as murder, i.e. the effect can be relatively similar. The effect on the society as a whole can be worse. But prison doesn’t solve anything in itself, i.e. it won’t significantly reduce new crimes.
Incentives usually work better than punishments, or there should be a balance between them. Currently there’s an incentive to organize financial crimes from outside the U.S., “in competition with local ones”.
Try comparing like with like before making such rash statements
There were 11 defendants in the Black Diamond fraud case and each was charged with different offenses, depending on his / her level of involvement.
Simmons was deemed to be the mastermind behind the $ 40 million fraud and was charged and convicted of three serious offenses i.e. securities fraud, wire fraud, and money laundering.
Muyres was convicted of the lesser offenses of conspiracy to commit securities fraud and conspiracy to commit money laundering
I disagree. “Money crime” has nothing to do with it. Often these schemes result in devastating losses for thousands of people. What the perp deserves is years +/- for each victim and if that equals life or near to it, too bad.
I know people so adverserly affected by fraud that lifetimes of effort are erased. They, will never be made whole. These are bad and selfish crimes, premeditated in every sense of the word. Perps should suffer consequences commensurate with the harm they have caused.
Loss of your entire life savings can be as devastating as murder and sometimes results in suicide. I agree with Hoss
@oz
behindmlm is accessible now.
try reading what i wrote before accusing me of rash statements.
the ‘disparity’ is in judgement handed out by DIFFERENT judges, in different districts and courts, for the same type of crime.
justice cannot be so ad hoc, and punishment cannot vary by huge margins for the same type of crime.
@hoss
i believe justice at its core should be reformative . if we want retribution , then we are no better than lynching talibanese. human life should be valued and be treated with the dignity and divinity that resides in it .
as human beings we have the power to reform , no one gave us the power to take away a fellow human beings whole life and liberty . these days jails are called correctional facilities for a reason .
@oz
cannot access behindmlm from india . i had to use hidemyass. do something !
‘can be’ is very subjective . if we want to use our legal polity to take away a co citizens liberty , we have to be very very clear .
law is to keep society safe , not to punish .
justice cannot be about punishment , it can be about reformation , or safety , or as a deterrent . we have no moral right to ‘Punish’
I switched the server back today. DNS propagation is probably taking a bit longer due to it being the weekend.
I was getting some stupid ad page till I switched to Google DNS so I could continue writing.
Took 20-30 minutes last time I did it so I figured it’d be the same this time around. Give it 24 hrs max and it should propagate properly.
Moral, schmoral.
Whose morals ??
Whose definition of “justice”
In a perfect world, where everybody is playing by the same rules, maybe.
In the real world where exists a whole sub class which has its’ own version of “justice,” a completely different set of “morals” and little or no respect for any of societies’ acceptable standards of behaviour, there has to be the ability to impose punitive measures, otherwise anarchy reigns.
lol, and what happens when you are caught breaking the law? You get punished.
Burks and company swindled millions of dollars out of thousands of people.
I’ll be thrilled if the authorities start handing out heavier sentences to white collar criminals. They do every bit as much damage as other types of criminals.
Society will be safer from Paul Burks if he spends the rest of his life in prison. He can reform himself and try to do some good in there.
All people have different sets of ethical rules, usually in favor in something they believe in themselves, all claiming to have the right set of ideas (e.g. “the others are the problem, they don’t follow my ideas”).
From Free Legal Dictionary (a few irrelevant ones removed):
The definitions mostly revolve around the ethical ideas of fairness, equity, equality, etc., and around the law ideas “to bring justice”, “to do justice”.
The problem is that they can be interpreted to support all sorts of ideas.
morals of society which are reflected through the legal system employed by it . a society [ like taliban] are considered immoral and less evolved because their concept of justice is an eye for an eye . this is base animal instinct emotional retaliation.
evolved societies should base their morality and values and their legal systems on the fundamental principle of ‘pricelessness of human life and liberty ‘. start from there and see how far you can go in taking away a persons life and liberty because you have ganged up, under the banner of justice, to do so.
a society which is callous about the value of human life will fall into anarchy , a society which treats human life as a ‘priceless gift’ will evolve into a higher moral and ethical society .
that’s correct , the topic is very vast and everyone stands at different wavelenghts of the spectrum .
i , for one, hope that people do not get carried away in ‘dispensing justice’ to burks. a crime of greed ,dealing with external possessions [ and not ‘life’], should receive commensurate punishment.
There’s lots of things societies SHOULD do. In this case, Western society HAS decided fraud IS punishable which is its’ right.
It’s called “democracy” in case you’re unfamiliar with the concept.
Well, I’ll be hornswoggled.
Anjali has (once again) created a strawman argument
What a nonsurprise
It’s normal Freedom of expression. Experienced ones will accept a wide range of different “ethical standards”, as long as people use them as guidelines for themselves rather than as rules to apply to others.
“If you want to get people to accept some of YOUR rules, you will first need to accept some of THEIR rules”. Old Jungle sayin’ from the deep tropical forests of Bengalla (where the 16th Phantom lives in a cave).
Justice is also about damage to the society as a whole. Financial crimes may cause much more damage to a society than murder.
For Paul Burks, the $225 million initially recovered from banks may work as a defense, e.g. “My client tried to reduce the damages caused to the individual investors”. He can point to “currently more than 90,000 investors have been able to recover 40% of their losses, and that’s only the first distribution”.
well , if the ‘decision’ was well thought out , or engraved in rock , there would not be so much disparity in sentencing people for the same crime.
western society has also decided to call prison and jail ‘correctional facilities’ which means evolution is continuing .the more ethically we treat members of society , the more evolved we become , this is a continuous process .
these ideas are not limited to western society but democratic societies across the world.
yes, and the best way to undo the damage to society is by restoration [“currently more than 90,000 investors have been able to recover 40% of their losses”] , ensuring future safety [condemnation of the act and education], deterrence [ reasonable jail time , penalties, probation] — together these actions create a reformative process .
the only idea i have removed from the mix, is the idea of retributive justice. retribution [ except in rarest of rare cases like cold blooded murder], does not repair society , it turns us into the animal we are trying to protect ourselves from.
Another perfect example of an Anjali created strawman argument.
Burks was charged – end of.
Anything else is, at best, pure conjecture on your behalf and, at the very least, a strawman argument designed for goodness-knows-what purpose only a troll would know.
no , it was a recent relevant example of how north carolina ‘sentences’ in ponzi schemes
the wonder of it all, is that you keep inviting your ass into these ‘trolly’ arguments for goodness-knows-what purpose .
nothing , NO THING, can compare to the damage of a human life snubbed out.
you DO realize , we are the only conscious beings [in our knowledge], on earth, and the observable neighborhood.
what ‘value’ do you ascribe to this, and how do you compare it with ANY THING.
Purely to stop readers becoming confused about the relevance of your agenda driven strawman arguments.
Burks has been charged – that is all.
As is its’ right, society frowns on $600 million plus fraudulent operation and has decided over time it can and will ,impose punitive actions should individual/s decide to systematically and deliberately defraud its’ members.
Theory driven “what if” arguments belong on alt.26.conspiracytheories-R-us
there is no argument about this.
the discussion is about what those ‘punitive actions’ should be , and how we decide that, defines us as a society.
the 50 year sentence awarded in carolina , raised my hackles, and that’s how the topic started.
if you don’t like it , don’t encourage it by participating.
In actual fact, the discussion is about Paul Burks indicted for operating Zeek Rewards
Your personal feelings about punishment are for another time and place.
It is possible that the 50 years will be pared because a divided U.S. Court of Appeals for the Fourth Circuit reversed his money-laundering convictions while affirming his fraud convictions.
The facts of the case as they pertain to fraud remain the same.
Simmons almost caused a bank with 45 offices in 38 communities to go under. He was running an obvious Ponzi scheme to which the bank turned a blind eye and ended up losing a whopping 16 percent of its value. Had the bank collapsed, it would have cost the FDIC insurance fund $500 million.
The Simmons caper was so bizarre and had so many moving parts that it actually was hard to publish stories that didn’t read like fiction.
A supposed “German liquidity provider by the name of Klaus” became part of the Simmons narrative, for example. In addition, Simmons had a Zeek-like gaggle of stooges running interference for him, at least one of whom was operating from the money-laundering haven of Belize via Ohio.
Another of the stooges tried to dupe the victims into not cooperating with the CFTC. Earlier, some of the stooges were gathering money directly from marks, a Zeek-, ASD- and TelexFree-like practice.
On a side note, the Simmons caper involved far less money than Zeek. In dollar volume, Zeek was about 22-25 times larger. By victims’ count, Zeek was off-the-charts larger: 800,000 to 1 million, compared to about 400.
One could argue rationally that Zeek was doomed from the start based on venue alone and that the mere fact it chose to operate in North Carolina displayed a stunning level of disconnect. It was operating in North Carolina AFTER the exposure of the 12DailyPro scheme, AFTER the Feds exposed ASD ties to North Carolina, AFTER the exposure of the Simmons scheme, and AFTER the attendant publicity surrounding the prosecution of CommunityONE Bank in connection with the Simmons scheme.
Put another way, there was a reason Zeek lost some of its banking vendors. It was screaming Ponzi, and some of the bankers remembered what happened to CommunityONE.
Did you know that money from the AdSurfDaily Ponzi scheme made its way into a Georgia bank that later failed?
From Oz, quoting the Burks indictment in the Zeek case:
Here is part of what the Court of Appeals said about Simmons in the Black Diamond case:
“In 2009, when investors’ earning statements reflected a total of more than $292 million, the Black Diamond bank account had in fact dwindled to $523.60.”
If one applies the Simmons conundrum to Zeek, some of the Zeekers would have been cheering for the $523.60 and ignoring the fact that victims were out tens of millions.
PPBlog
That’s no defense. Its a mitigating circumstance to be taken into account at sentencing.
I obviously can’t know for sure, but, I’d be prepared to bet London to a brick Anjali wasn’t there for the Simmons trial or sentencing and is basing her argument on what little information she was able to glean from media reports.
US Federal courts operate under sentencing guidelines and Anjali has given no indication she has the slightest knowledge of which factors within those guidelines applied to Simmons’ case and resulted in the length of sentence.
Well, Anjali will be really upset when she learns that in China if you are found guilty of running a Ponzi the sentence is death. So 50 years is a walk in the park.
She will also have a heart attack when she reads how much time Bernie Madoff got for his Ponzi.
Her disdain for Simmons sentence rings a little hollow to me, and sounds more like a disgruntled relative at the length of the sentence. Or she was a victim and feels if he was given a chance he would make all well and good.
Heck there are still people who think Andy Bowdoin should have been given a chance to make things right. Some never learn.
Given the fact Burks is 68, does Anjali think he should receive a discounted sentence because of his age ??
Burks’ fraud took in around $850 million
Simmons’ around $40 million
Any sentencing guidelines you can suggest, Anjali ??
you win , i wasn’t at the simmons trial ! i did not even bother to glean much information about it . i saw – man sentenced to 50 years for running a ponzi scheme, and i said ‘heck , that is not fair.’
this is justice on ‘crack’ .if there were people on mars, they would be amazed at how mind led we are , refusing to use our intellect , in deciding how to run ourselves.
i will repeat my stand for the slow minded, introspect , understand fully the value of human life and liberty , we are unique sentient beings , respect that , and use that as the foundation for setting up your discourse about crime and punishment.
duh , there’s a reason the world doesn’t follow the china model!
i don’t think china makes it to the list of ‘countries for ethical treatment of human beings’.
Personally I think once you start getting into the millions of dollar of Ponzi/pyramid fraud, mandatory jail sentences of 5-10 years should be on the cards. Perhaps 1-2 years for amounts in the hundreds of thousands or less.
That and the absolute stripping of any money stolen through the running of the fraud and any associated activities.
Those who promoted the scheme at the top should also be facing jail time (1-2 years) and the absolute stripping of any money stolen.
If money cannot be recovered (hidden overseas) then jail sentences need to be increased dramatically in those particular instances.
None of this civil charges only stuff. You do the crime you do the time.
Paul Burks sat in a room and made up ROI numbers daily. He went around telling everyone these numbers were based on non-existent retail profits.
$850M later? A simple fine doesn’t cut it.
Carlos Wanzeler? Dude ran. By all means hold a trial and when he’s found guilty he should be receiving three or four times whatever he might have gotten had he not fled and refused to face the music.
Pretty much you want to make it if he returns to the US he’s spending a considerable amount of the rest of his life behind bars. He’s pretty much ruined the rest of his life outside of the US anyway.
He’s had everything in the US seized and once whatever he’s stashed away runs out, he’s going to find it difficult to get by.
the very fact that countries allow stolen money to to sit in their banks , and ‘shield’ the money and the perpetrators , tells us that stealing , is not an ‘inconceivable, unforgivable ‘ crime. we allow whole countries to act as tax havens and what not , so that everybody has a nice little place to keep their steal.
‘murder’ is not intrinsic to human nature , hence deserves harsh treatment.
‘greed’ is intrinsic to human nature ,it is a human failing , and should be treated with less severity.
There are sentencing guidelines,promulgated by the US Commission on Sentencing… even a grid table that judges use. There are enhancements (additional time) and reductions (subtractions of time) depending on various factors and its all supposed to be taken into account.
Defense attorneys have access to these guidelines and can appeal if the judge deviates very far from guideline.
All in all if a person gets 50 years it is almost certainly because he/she is a multiple repeat offender, and a persistent and ongoing threat to society.
I’m not talking about destinations known, as usually this money is recovered (financial institutions need to keep banking channels with the US open).
I’m talking about participants hiding money in locations unknown and refusing to provide details or just keeping quiet hoping to get away with it.
And please, what kind of dumbass logic are you pushing anyway?
I can commit a crime in X, run off to Y and what? Because of jurisdictional challenges the crime committed is conceivable and forgivable?
That’s pretty high on my “stupidest comments ever made” list.
Sort of related: Dawn Wright-Olivares’ cafe venture The Healthy Hog shutdown last month. The e-cig venture she was pushing appears to have also closed, as the domain is now parked.
Which is why I am saying you can’t simply dismiss a 50 year sentence as being “unfair” without knowing the circumstances.
Did he do it 2, 10, 20 times before ??
Did he tell the judge to stick it up his nose, he wasn’t sorry, refuse to enter any rehabilitation programs, refuse to disclose the whereabouts of the proceeds and would do it again in a heartbeat given the chance ??
Did he somehow satisfy all the criteria required to be sentenced to the maximum possible under the sentencing guidelines ??
Did he…………………..insert the most ridiculous reason you can imagine here………….??
I could totally agree with you that 50 years is excessive for a financial crime, it doesn’t alter the fact neither of us know the reasons it was imposed.
On top of which, none of it applies to Burks’ situation anyway.
All that has happened is that he has been charged
We have no details, no inside information, no extenuating circumstances, no sentencing, no victim impact statements – he has been charged
yes, i found it here:
mynorthcarolinadefenselawyer.com/criminal-charges/
i thought justice was about following the tenets of ‘natural justice’ as far as possible.
if we start building mathematical grids to define a crime, we may lose our way .
someone needs to tell north carolina to introspect and clean some rot .
a man steals your ‘money’ and you steal his whole life – just doesn’t fit with MY idea of natural justice. the state comes across as a bigger criminal.
There, fixed it for you.
No need to thank me, it’s my pleasure
In the Simmons case, the Probation office recommended a base level of 43, the maximum under the points system, and a criminal history category of I. These translated to a recommended sentence of 80 years.
The trial judge departed downward to 50 years, acknowledging 50 years was an “enormous” sentence despite the downward departure, but saying he could “not ‘remember another case that involved such devastating, life wrecking’ greed.”
A summary of the key facts from the case:
* Black Diamond was not doing what it said it was doing: trading Forex. What it actually was doing was pretending it was trading Forex, while duping investors by sending them bogus account statements.
Simmons used investor funds as his “personal piggy bank” and made Ponzi payments to amateur investors, who predictably saw the payments as evidence no fraud was occurring and equally predictably began to get loved ones and friends involved.
Paid pitchmen who “siphoned” money, conducted no due diligence, simply repeated lies and put on blinders made matters worse. (Basically, scammers scamming the scammer-in-chief.)
* “Ultimately, Simmons’s Ponzi scheme cost his victims more than $35 million. Many lost their life savings. Some lost their families. Many became depressed, even suicidal, after learning that their money was gone.” (Direct quote from the Court of Appeals, laying out the facts of the case.)
Source: NOLINK
ca4.uscourts.gov/Opinions/Published/124469.P.pdf
PPBlog
yes, that reduces simmons sentence by about 10 years.
Simmons took in about 35 million , paid out about 19 million , around 4 million worth of his properties were forfeited at the end , so the net loss of his ponzi run approximates 12 million . he gets 50 [now 40] years .
Meanwhile just about a month back the FTC catches AT&T insidiously , fraudulently and systematically cheating millions of consumers at the rate of around 10$ a month, totaling a whopping 250 million dollars [approx] in 2 years .
the FTC complaint says : AT&T’s practices have caused consumers millions of dollars of injury. AT$T walk away with a fine.
unless simmons has a nuclear bomb up his ass , there is nothing that can JUSTIFY a 50 year sentence.
apples say hi to oranges
well , the trial judge should probably get out a bit more .does he use AT&T ?
nine of simmons victims testified at the trial. words like ‘enormous, devastating , life wrecking’ should be used with ‘care’.
@littleroundman , apples and oranges are different , but BOTH are ‘fruit’. they fit the description of fruit and hence are treated alike as fruit.
The grid does not define the crime.
The grid is a tabular presentation of the sentencing guidelines.
“Natural justice”
One possibility is that you meant the right to be judged free of bias ( or what is called a right to due process of law in the US.) There’s no indication that process of law is the issue here, so I assume you really mean that the sentence does not fit your idea fairness. “That which is just is fair” etc.
I doubt this is simply a situation where “a man steals your ‘money’ and you steal his whole life” In all likelihood this a man who steals a LOT of people’s money, every chance he gets….and more.
Looking at it from both sides, what is just and fair…not only to the man, but to society as well?
i could not find any criminal record for simmons. even the appeal order of the 4th circuit court does not mention any prior convictions , except for a singular mention that ONE probation officer gave him a criminal record history of 1.
if he had been convicted of fraud before, i think the order would have mentioned such an important fact , as the appeal was against all four counts.
draconian justice , is a piss poor message to society . it means nobody is safe .
‘natural justice’ means that justice should be fair , reasonable, non arbitrary and ‘appear ‘ to be done.
a 50 year sentence for a crime of greed , cannot be fair
a reasonable person cannot find this sentence just
what sentences have been handed out in larger ponzi schemes like FHTM , burnlounge ? what sentence will the olivares get for being on top of a 850 million ponzi scheme? definitely NOT 50 years. thus there is arbitrariness .
and there is no ‘appearance’ of justice being done to simmons, rather a disconcerting disturbing sense of ‘shocking overreach’ by the justice system.
PS: i have no axe to grind with the justice system of the US . if you check our criminal justice system back here in india , it will be a challenge not to puke.
and around and around we go, pandering to Anjalis’ insane need to use BehindMLM as a platform for her world views.
Poor ol’ Paul Burks isn’t going to get a look in, instead we are condemned to weeks, if not months of watching Anjali criticize the USA, it’s justice system and anything else which annoys her.
In fact, anything “BUT” Paul Burks and the impact of his actions on what – tens of thousands or hundreds of thousands of victims ???
Draco’s justice was death for virtually everything. This hardly fits that mold.
Whats a criminal history level 1? A probation officer report? What does it mean?
draconian: rigorous; unusually severe or cruel [the free dictionary].
in north carolina , a probation officer is assigned, by the court, to prepare a report on the defendant, assessing several factors about his personal and professional life.
one of the factors checked is the criminal record history of the defendant :
CLEARLY simmons has no criminal record, as he was classified as Level 1. poor poor simmons .
mynorthcarolinadefenselawyer.com/criminal-charges/
Simmons / Burks
Burks / Simmons
Black Diamond / Zeek Rewards
Zeek Rewards / Black Diamond
Convicted / only charged
Only charged / convicted
2012 / 2014
2014 / 2012
You’ll have to help us out here, Anjali.
As much as I change things around, it still looks like you’re comparing two different cases with more differences than similarities,complaining about something that may never happen and hijacking a thread for your own trollish purposes.
OK!
burks is walking into the same court with a similar crime as simmons, ie the US district court of the western district of north carolina.
it is perfectly relevant to bring up a recent precedent set by this court , in the matter of ponzi schemes.
this way, you wont be surprised! if the trial judge hands out 80 years to burks, to be continued in his next life , as he wont be able to complete the sentence in this life.
simmons got gobsmacked BECAUSE he did not plead guilty . that’s the ONLY sense i can make of it .
hope the bloody old idiot burks has the sense to plead guilty . look at the olivares ! out on bond, and probably may avoid jail time completely .
Not at all, a guilty plea is only one of the factors covered in the sentencing guidelines, AND YOU DON’T KNOW what sort of “point score” the court arrived at when considering the sentence.
Once again, this is all conjecture on your part, both of what happened in the Simmons case and what MAY happen in the Burks case.
In fact, if I were to employ “Anjaliconjecture” I could easily conclude a five or ten year sentence would be a life sentence for a 68 year old man, so perhaps we could include an “Anjaliclause” in the sentencing guidelines requiring the court to include some sort of reverse age discrimination calculations in sentencing.
on May 13, 2014 , the FTC ‘settled’ with fortune high tech marketing FHTM , an obviuos pyramid scheme, for 7.75 million dollars.
why wasn’t FHTM taken to court in kentucky , and indicted , and sentences handed out ?
why do some ponzi/pyramid schemes attract the facility of monetary settlement and no jail time ? what are the conditions and prerequisites for this?
if your daddy plays golf with the governor/someotherbigshot , will it create ‘enabling conditions’ for quick and easy settlements?
why has poor simmons got 50 years with 400 victims and a total loss of 12 million dollars ?
one can accept ‘some’ disparity , but how does one accept total ‘absurdity’?
Because Founder Paul Oberson died in late 2013.
Had he of lived I suspect criminal charges would have been filed at some point. FHTM was fined after Oberson died.
webpronews.com/paul-orberson-head-of-fortune-hi-tech-marketing-dies-at-age-57-2013-12
It’s not “ponzi” schemes which are fined, it’s largely pyramid schemes or ponzi / pyramid schemes
The FTC, FDA, SEC and states’ court actions are “civil” i.e. administrative and not “criminal”
In the Zeek case, we have already seen the civil penalties imposed, what we are talking about in this thread is a separate and distinct criminal case against Burks alone.
Because of the difficulties and delays involved in bringing a criminal case of this size, which under current conditions within the USA would give offenders 3 or 4 years head start on disposing of evidence and the proceeds, as well as giving them the opportunity to continue the fraud for a similar period of time, it has been common practice for civil charges to be brought first, effectively stopping the fraud in its’ tracks and freezing all assets, giving the DoJ and prosecutors time to gather evidence to dot the “is” and cross the “tees” before criminal charges are filed.
ok, got it , thanks.
the national US sentencing data , for the 3rd quarter of 2014 , shows that out of a total of 5618 cases of fraud sentences:
-72% got prison only
-6% got split sentence [prison/community service]
-22% got probation
-8.5% got probation and house arrest
a 5 million dollar ponzi can get you five years [approx] and a 10 million dollar ponzi scheme can get you 10 years [approx], even after a guilty plea is entered.
also when you calculate the cost of harm of a ponzi scheme, you have to subtract the total payout that was made . thus zeek collected 850 million , but how much did it pay out during it’s run, and what is the net loss.
things are looking very very bad for burks.
in india, sentencing for ponzi/pyramid fraud is limited to 3 years , even adding some more charges like money laundering ,forgery etc , will rarely take sentences over the 10 year mark.
it’s WAAAY too much in the US.
No, you don’t.
Paying out ROIs does not negate the fraud.
Zeek Rewards was an $850M Ponzi scheme and Paul Burks is likely going away for a very long time, end of story.
it does not negate the fraud , but (Ozedit: no buts.)
not fair oz. this is an important ruling . it affects simmons case too . what is wrong with sharing the ruling ?
This article is about Paul Burks being indicted for his role in orchestrating Zeek Rewards.
I don’t know who Simmons is, nor do I care.
What Anjali is attempting to do provides a perfect example of the dangers not reading or understanding the indictment.
Paul Burks was not charged with “running a fraud” or running a ponzi” or even “operating a pyramid scheme”
In fact, Paul Burks has been indicted on charges of:
“conspiracy to commit wire and mail fraud
mail fraud
wire fraud
tax fraud conspiracy
As fraudsters and their “Anjaliapologists” evolved into becoming more devious and their particular crime/s more complex, legislators and law enforcement agencies have been forced to evolve also
i read the indictment , i know what he is charged with , the 4 charges against him, arise from the fraudulent scheme he ran.
@oz
the recent ruling by the sixth circuit court , affects all ponzi cases , moving forward :
For the reasons below, we vacate the sentence of the district court and remand the case for resentencing…..
sentencing.typepad.com/sentencing_law_and_policy/2014/09/sixth-circuit-reverses-ponzi-scheme-sentence-because-loss-calculation-failed-to-credit-monies-paid-o.html
Zeek Rewards is still an $850M Ponzi scheme, irrespective of how much it paid out.
I don’t give two shits about sentencing, that’s up to the courts to handle and will occur in due time.
And in any event, re-sentencing does not equal an automatic lighter sentence. It’s entirely possible (but unlikely) he could get more time behind bars after a re-sentencing.
All the court noted is that the amount paid out wasn’t included in the complaint (for whatever reason). Also we don’t know the scope of the Ponzi or how much each investor was paid out, nor the total number of those who lost money.
In Zeek all these are known, with the amount paid out to Burks and his top investors and staff unlikely to have any bearing on his sentencing. $850M wire fraud, mail fraud, tax conspiracy and conspiracy to commit wire and mail fraud is just that.
Paying out your Ponzi investors doesn’t negate the magnitude of your crime. That’s Ponzi supporter cheerleading talk (“how can we be a Ponzi? We’re paying out (some) investors!”).
Anything further on trying to assert that how much a Ponzi pays out negates the fraud that takes place will be marked as spam.
Draco – (flourished 7th century bc), Athenian lawgiver whose harsh legal code punished both trivial and serious crimes in Athens with death.”
The 50 year sentence is to convince the next guilty bastard that is charged with a similar crime to take a plea bargain. There’s no more to it than that.
since draco is no longer with us, as in dead , we just use his name in the word ‘draconian’ to keep his spirit alive and well 🙂
the next guilty bastard will just get a reduction of 2 / 3 levels on the ‘sentencing grid’ if he makes a plea bargain . if you’re looking at 50 years what difference will a few years here or there mean . you wont be alive to check how many years you saved via a plea bargain anyways !
en.wikipedia.org/wiki/United_States_Federal_Sentencing_Guidelines
I make no claim to expertise but I suspect there is more to it than what you mention. For example if a person is charged with four counts, dropping three for a plea of guilty on one would change the picture entirely.
In this view the length of Simmon’s sentence reflects his intransigence and unwillingness to cooperate with authority as much or even more than it does his criminal activity.
Everybody deserves a fair trial but the guilty are going to be sentenced on all charges per the the full sentencing guidelines if they lose.
I am reminded of old movies where the sheriff says, “throw out your weapon and come out with your hands up.”
The ones that give up live. The one’s that don’t generally get shot in the head.
in the specific case of ponzi frauds, all the counts are serious : mail /wire fraud, money laundering, tax evasion etc. reading a few case studies and the sentencing grid itself, shows that dropping of any of these serious counts in exchange for a plea bargain, does not happen in real life.
justice does not stop at ‘fair trial’ . justice also means ensuring commensurate punishment.
the sentencing guideline are not mandatory but advisory . the sentencing guidelines are a monstrosity , human fate cannot be decided in this way . we have to apply principles of reason and fairness , not an abacus to decide anyone’s whole life.
the olivares are going to get full advantage of this section of the sentencing guidelines , along with a 2/3 level reduction for their plea bargain:
This is an unknown at this point concerning Wright-Olivares.
I really question that conclusion.
“Prosecutorial discretion refers to the fact that under American law, government prosecuting attorneys have nearly absolute powers.
A prosecuting attorney has power on various matters including those relating to choosing whether or not to bring criminal charges, deciding the nature of charges, plea bargaining and sentence recommendation. ”
Should Paul Burks go to trial on his four counts and be found guilty he would receive a sentence commensurate with the one Simmons received.
If on the other hand he plea bargains to a single count of wire fraud I would expect him to receive a sentence commensurate with any other person who pleads guilty to a single count of wire fraud.
It is the denial of guilt and being found guilty that has resulted in Simmons extreme sentence….not his crime.
Our justice SYSTEM can not function without plea bargains. so:
incentives are offered to defendants if they will take responsibility for their actions and accept a plea. The incentive to do this must be EXTREMELY significant compared to the full statutory penalty, for otherwise no one would plea bargain knowing they could do no worse and perhaps much better by denying guilt and going to trial.
Simmons is an example of what happens when a guilty person does not admit guilt, fights, loses, and is subject to the full statutory penalty.
Prosecutorial discretion, statutory penalties and sentencing guidelines are the tools the system uses to meet the tripartite goals of fair, efficient and cost effective administration of justice.
….but the statutory penalties are expressed as maximums. I would opine that’s what Simmons earned and received under the law which is another way of saying:
If you are guilty of defrauding thousands of people admit it, take the plea, get 12-20 be out in 10-14. That’s what the system wants, needs and expects…. and perhaps that even meets with your sense of fairness.
…oh and one last thing. I am not in India but if 3 years seems fair and is enough to deter these types of crimes where you live then good, but it has no bearing on what works or even what seems fair to the citizens of the US.
I’m in the US, and to me 3 years seems ludicrously inadequate to deter such activities.
1] the american bar association task force, has in a 2013 report, recommended that there should more balanced sentencing and not hideously high sentences,for financial crimes, that result from crunching numbers on the sentencing guidelines table.
2] it is expected that the sentencing commission will reform the guidelines for financial crimes , in its next session [ when is that? ]
3] sentencing guidelines award the highest category of 20 points for financial fraud over 7 million [not much] . if the fraud involves more than 250 victims [ technology makes high numbers possible] another 6 points get added taking the total to 26 points. this preloads the sentencing level , and results in hideously high sentences .
4] judges, prosecution and defense often make deals to circumvent the guidelines , as many judges do not believe the guidelines throw up rational sentences. this is increasing disparity in sentences, and doing the opposite of what the sentencing guidelines were supposed to achieve [level the sentencing field]
5] 2014–2015 GUIDELINES AMENDMENT CYCLE : The United States Sentencing Commission today unanimously approved its list of priorities for the coming year, including consideration of federal sentences for economic crimes and continued work on addressing concerns with mandatory minimum penalties.
@hoss
i have no detailed knowledge of the US law system . the kind of sentences being thrown out for first time non violent economic offenders seemed ‘instinctively’ wrong .
my instincts seem right to some extent , because there seems to be an ongoing conversation in the judicial system regarding sentencing in white collar crimes. the suggestions recommend reformative justice , with less jail time, and more probation.
read the article below. it’s really really good .
millerchevalier.com/portalresource/RestoringSentencingSanityInWhiteCollarCriminalCases
Perhaps it would be appropriate to introduce a psychic avatar for Anjali to use.
Not only is she predicting the outcome of Wright-Olivares sentencing, she apparently knows exactly what will happen to Burks, even thought he just been indicted.
Well, either that or she is once again treating a thread as a personal soapbox to further expand on her “let’s support fraudsters and criticize the USA at every opportunity” agenda
I think I might just go with the “either that” option.
i agree, depending on the size of the fraud, sentences should be increased to upto 10 years . a 10 year ceiling would be acceptable to my sense of fair play .
no, i support humane treatment of ALL human beings. the foundational aspect of being a ‘human being’ is ‘being human’.
duh, whatever can i have against the USA ? dumbest allegation EVER !
It is good. I think it ends up emphasizing how difficult it is to find the perfect solution.
You’re entitled to your opinion, but mine is that a fixed ceiling would induce people to risk trial and the courts would be overwhelmed.
being imperfect ourselves, it would be a waste of time to expect ‘perfectness’ from the systems we create.
if our system is imperfect and unsure, it is always wiser to err on the side of caution .
if we wrongly or ‘over’ punish a person , we all carry the burden of guilt .
it’s great that the sentencing commission is giving this issue a serious thought .
due to the complicated point system of the sentencing guidelines and the uncommonly high sentences they recommend , federal appeal courts are jammed with appeals of convicts.
texascriminallawyerblog.com/2010/08/common-criticisms-of-the-feder.html
let us consider dawn’s plea bargain , to check if your idea is working here.
dawn was charged on two counts :
dawn entered a plea bargain on BOTH counts [ NO count was dropped]:
further the plea bargain agreement CLEARLY notes the following :
there are judges who inspite of plea bargains follow the sentencing guidelines religiously , then there are judges who will relent a bit . it’s all a bit of a pot luck .
the 3rd quarter sentencing report, 2014, of the sentencing commission , says that [figures approximate] :
47 % sentences were in accordance to the guidelines
29 % sentences were govt sponsored downward deviations [cooperation/plea bargains ]
21% were court induced downward deviations [kind judges!]
so , your stance that simmons got it where it hurt , due to failure to plead guilty ,is not supported by fact, almost 50% defendants are screwed over by the guidelines regularly.
One follows the other.
Then that was the specific deal that was negotiated. . It in no way proves that prosecutors do not have full discretion to amend or drop charges
I do not understand how you reached such a conclusion. Knowing that 50% of ALL sentences had downward deviation and 47% were in accordance with guideline tells us nothing about Simmons specifically.
What we do know is that he was convicted after a full blown trial on all four counts…. and its most likely his sentence had no downward deviation and perhaps even enhancements.
You can see where that approach lead.
Olivares PLEAD guilty on two. We’ll see where that goes.
NOLO Press provides examples of different outcomes depending on concurrent or consecutive sentencing.
NO link://www.nolo.com/legal-encyclopedia/concurrent-consecutive-sentences-double-punishment.html
I don’t know the specifics of the Simmon’s case but if he was charged on four, convicted on four and the max sentence was 22 each served consecutively the term would have been 88 years total and that is about what he got out of the box.
Olivares might be facing two counts of 22 years max (I don’t know) but if she plea bargains she may get the low end (say 16) but serve the counts concurrently = 16 total…. not 32… less probation, half way house, eligibility for early release, good behavior time off, served in min security facility etc.
There’s so much to it but fighting and losing (or repeat offenses) is what results in super long sentences.
Go to prisontalk.com You’ll get the picture…. I told my boyfriend to take a plea bargain for 7 but he went to trial, got convicted and received 20 and I’m so sad etc.
The “system” says we caught you, be reasonable, admit it and the sentence will be “fair” otherwise make us jump through hoops to convict and it may be much worse.
both counts dawn faces have a maximum sentence of 5 years each.
before entering her guilty plea, she would have negotiated sentencing with the prosecution . the prosecution will recommend this negotiated sentence to the judge , and it is up to the judge to concur with it [ they usually do].
my point was, no counts have been dropped for dawn , and neither will any of the four counts be dropped for burks.
dawn had a negotiating tool with the prosecution , ie, rat out on burks .
what does burks have to offer the prosecution ?
for instance bernie madoff pleaded guilty on all charges , but refused a plea bargain , where he had to admit ‘conspiracy’ and rat out his family members.
his guilty plea had NO effect whatsoever on sentencing. even without a trial he got maximum sentence possible under the guidelines.
No counts dropped for Dawn – Yes. .
Burks – you have no way of knowing. A few weeks ago you said Burks would never be found guilty because a “good” lawyer could get him off. I assume Simmons thought the same thing, and you see where he ended up.
American justice is a discount system. Take a deal get a discount. Don’t take the deal. Lose …pay full price.
Well, you did say Madoff wouldn’t bargain didn’t you.
I can’t believe you even wrote that.
A guilty plea, so that they don’t have to prove their case for one. Secondly, Burks can readily cooperate, implicate dozens and provide testimony against banks, money transerors, etc etc etc. etc.
Grimes and Kaplan among others probably wish he’d contract Alzheimers.
i would have thought , pleading guilty on all 11 counts , and saving the prosecution time and money required by a trial , should have yielded some ‘discount’ to him.
but the requirement seems to be that to save your skin , you have to sell your soul. only that will yield a ‘discount’.
punish a person for ‘his’ crime , not for keeping his conscience. ‘getting’ the others involved is the job of the investigating agency and prosecution .
actually i said that he could use ‘bad compliance advice’ as a defense , the fact that he has disgorged illegal gains is also a mitigating factor.
the main recommendation to the sentencing commission , is to downplay the importance of ‘loss’ which is the primary factor used in sentencing currently . the number of points awarded to ‘loss’ takes the total sentence into the stratosphere.
the second recommendation is to consider ‘actual’ harm to the victims. for instance a 1] ponzi involving investments of 25,000$ per investor , causes greater ‘harm’ than a 2] ponzi collecting 100$ per month from victims. the total loss of ponzi 2 can be very high, but its effective harm is low.
the third recommendation is to give more weight age to the past criminal record of a defendant . a clear record should convert to greatly reduced sentence.
there are other points recommended , but the above seemed the strongest.
You said that too, but the point is that “good defenses” and/or “good lawyers” do not guarantee success which is why most cases settle with plea bargains. The risks of doing otherwise are…. by design….extreme.
I don’t know about selling souls but admitting to guilt and cooperating is looked upon favorably by prosecutors and judges. Madoff was going to prison “long term” no matter what he did or who he ratted out. He’s really a poor example as he personally had nothing more to lose and thus no incentive to negotiate.
I agree. The internet has changed the dynamics such that the effective harm per person can be relatively low though in aggregate very high. I don’t think any of it moves the ball very far. It amounts to little more than adjusting sentences for inflation
I think your way overgeneralizing. There are many cases where the defendant has no information of further interest to divulge and yet accepts that a plea bargain as in his best interest.
i think it will far more than a cosmetic change . the recommendations by none other than the american bar association ,may change how financial crime is viewed and punished . at least i hope so , in the interests of fair and humane treatment for all accused.
well, it really kind of the prosecution to offer such a plea bargain in some cases. in the case of madoff his lawyer was negotiating 12 years with the prosecution , but the plea went off the table when they asked him to handover his family .
from 12 years his sentence exponentially went up to 150 years[ duh , how can a punishment be longer than a human life? irrational !]
how can the Same Crime be punishable by either 12 years OR 150 years ? wheres the connect ? how random is that ?
You already understand how and you are not the first to criticize it.
en.wikipedia.org/wiki/Plea_bargain
If you read it you may get a better understanding of how charging is used to offer concessions (discounts as I have termed them)
Punishment can not be longer than a human life….. but a sentence can. Nothing irrational about that.
These very long sentences are sometimes referred to as “symbolic sentences,” and they serve additional purposes as deterrents and object lessons. It also bears mentioning that society needs to be protected from sociopaths and not everyone is “correctible.”
Lastly, a convict may be eligible for parole so may not actually serve the whole term.
some US states have rejected plea bargaining like New Orleans, Ventura County, California, and Oakland County, Michigan.
en.wikipedia.org/wiki/Plea_bargaining_in_the_United_States
i feel the plea bargain system gives unnatural powers to public prosecutors . they can dangle the severe sentencing guidelines over an accused head and get him to agree to anything! also , the possibility for ‘corruption’ becomes very high , in private deals being made between defense and prosecution .
who knows what all gets exchanged ? who supervises these deals ?
actually the federal sentencing guidelines do not allow parole:
usprobation.com/p_guidelines_p.html
there is ‘probation’ or ‘supervised release’ after a sentence, but no ‘parole’ during the sentence.
Once again, Ms Contrarian, what on earth does any of this have to do with the fact Paul Burks has thus far only been indicted ???
He may never make it to trial, he may not be offered the opportunity to enter a plea bargain, he might receive a sentence you find satisfactory, the sky might fall down and land on his head
You are speculating about something that may never happen, AND filling up the blog with your nonsense while doing so
Whatever you are quoting sounds proposed rather than actual, but regardless parole is never part of the sentencing. If granted at all it comes by way of a parole board decision within the Penal System.
Wiki quote “Parole is the provisional release of a prisoner who agrees to certain conditions prior to the completion of the maximum sentence period. ”
Forget that. Its completely mixed up.
The Judge. You should by this point be well aware that a plea bargain is subject to judicial review approval and modification.
You have named a city and two counties. I do not expect you to know the difference but these are not States. Your examples represent a few local variations to the general overall scheme.
Correct, and for good reason. Parole if it is granted at all is not a judicial or sentencing matter. The Penal system convenes parole boards and they decide which inmates qualify for supervised release (aka parole.) You must already be incarcerated to appear before the board.
Parolees report to a Corrections officer called a Parole officer and they are subject to search anytime. Any screw-ups and the parolee goes right back to prison.
Probation is not the same as parole though both are supervised. Probation is a sentencing alternative to incarceration.
A person could get probation only, or jail (not prison) plus probation. Probationers report to a probation officer.
Probation is generally for first time and not so serious offenses, but a probationer can find themselves off to jail and/or prison in a heart beat if they screw up.
This is way off the MLM beat .
a person sentenced under federal sentencing guidelines is not eligible for parole. i could not find anything that refutes this . parole may be a part of individual states sentences.
The Judge. You should by this point be well aware that a plea bargain is subject to judicial review approval and modification—-hoss
the judge is not privy to the negotiations between the defense and prosecution in a plea bargain .these are closed door negotiations and there is no third party witness from the court. anything can happen !
the judge is informed of the deal , by the prosecutor , and is expected to sign on the dotted line [passive judges ]. if money or favors are exchanged in negotiation , nobody knows .
no , probation and sentencing are not mutually exclusive .a sentence of over an year ,usually has probation at the end of it . however some low grade offences may have no jail time and only probation.
ok, i’ll stop. [unless something tooo interesting comes up ! 🙂 ]
– burks pleads guilty and enters a plea bargain
– burks demands trial and faces the full force of the sentencing guidelines
– the sentencing guidelines are due for a makeover as we speak .
I found something and you are 100% right as far as Simmons is concerned. I was living in the past.
Not quite. Nobody is going to receive 80 years as a result of a plea bargain.
obviously not . that kind of cruelty is reserved for the guidelines to unleash.
i meant sentences being adjusted over money or favors. even public prosecutors have home loans to pay and promotions to win .
Oh great,
now we have Hans Christian Anjali inventing fairytales about judicial corruption.
Just a little bit off the topic of Burks indictment, methinks.
The guidelines are used in both plea bargaining sentences and verdict driven sentences.
That wouldn’t be cricket.
Man is corruptible. Government’s are imperfect. Simmon’s earned his sentence. In the end justice was served.
and:
“anjali: a smart lawyer can create enough doubt to avoid a ‘guilty verdict’.”
This mindset can cost an offender dearly. Simmons shows us exemplary justice in action ….. not cruelty.
The idea that “smart lawyers can get you off” must be utterly controverted.
yah! because the ‘fact’ of judicial corruption is an idea invented by me ! it happens, it happens all the time .
no , simmons got corrupt convoluted justice. he was corrupt, and we showed him , we are worse than him ! that’s not justice , that is retribution.
remember OJ simpson and the ‘gloves that did not fit’ argument?
smart lawyering saved him from clear as day murder . now, there’s a man who deserves 50 years in jail .
the Q 3 report 2014, of the sentencing commission shows downward departure from the sentencing guidelines ,in the approx 29% cases of fraud, that were settled through plea bargaining.
No, because you are planting the seeds of possible judicial corruption in a case in which the defendant has only just been charged and which is probably at least two years away from being started.
You are claiming a defendant in an unrelated case received an unfair sentence when you have no idea either of the inner workings of the case or the reasons for the sentence.
In short, you are speculating, foretelling, implying, suggesting, guessing, hypothesizing and surmising a great deal about something that hasn’t and may never happen.
What makes your commentary more ludicrous is, you are “Anjali, the internet troll and SpeakAsia defender” and not “Anjali, the legal expert to whom we refer in such cases”
A meaningless statistic in itself without accompanying date showing:
* why plea bargains were not used in the 71% of fraud cases NOT settled with plea bargains
* The similarities / differences between the amounts involved, timespan and victim impact of the “fraud” in each case. Put simply “fraud” ain’t “fraud”
* The number of said cases involving fraud alone and those involving “other” charges.
no , sufficient statistic to support the point i was making . it gives a general idea about how plea bargain can break the bottom line of the sentencing guidelines.
what ‘inner workings’ ? he ran a ponzi scheme , did not plead guilty , and got sentenced according to the sentencing guidelines. and i’m calling the sentence ‘Unfair!’
read his appeal , there are no hidden reasons or secrets :
whitecollarsecuritiesdefense.com/wp-content/uploads/2013/12/US-v.-Simmons-12-4469-4th-Cir-2013.pdf
i shall not respond to ad hominem attacks , but neither are you any kind of expert, and neither are you the moderator .
I think I see where you formed your impression.
As I said in our first exchange on this subject. “I believe you are attributing more certainty to the efficacy of “smart” lawyers than they deserve.”
Case in point: Simmons 50 years. That OJ got off and Simmons did not shows you just how strong the prosecutions case may have been in the Simmons case and yet like you he apparently believed his “smart lawyers” would get him off regardless of the facts…. and if they didn’t he should still get the same sentence as if he just confessed to begin with.
What’s fair about that?
Excellent
now we know how to keep you on topic.
was the prosecutions ‘case’ strong in simmons OR was the ‘defense’ strong in OJ simpson ?
a common criticism of the sentencing guidelines is that the point system is so complex and arbitrary, than only a ‘very good defense lawyer’ can convince a judge to go lower than the suggestions of the guidelines .
the Q 3 , 2014 report of the sentencing commission shows that in approx 20% of fraud sentencing there is ‘judge induced’ downward deviation . this statistic points to strong defense and more reasonable judges.
it is possible simmons ‘defense’ was not as strong as the ‘prosecution’ and he got railroaded. it happens all the time.
Burks was indicted – relevant
In the Simmons case xxxxxxx – irrelevant
The justice system is xxxxxx – irrelevant
Plea bargains could xxxxxx – irrelevant
A smart lawyer might xxxxxx – irrelevant
In the OJ case xxxxxx – irrelevant
The sentencing points system is xxxxxx – irrelevant
The defense could / may / might xxxxxx – irrelevant
Judges are xxxxxx – irrelevant
Judges are not xxxxxx – irrelevant
Burks was indicted – relevant
there should be only one length of sentence for one kind of crime [ with some variance in accordance to the facts and circumstances of each case].
if a guy confesses , pleads guilty , cooperates, then a portion of the sentence can be converted to probation . eg; if financial fraud gives you a 6 year sentence and you plead guilty, then the last 2 years , you can be out on probation.if you further cooperate maybe last 3 years can be probation .
this is fairer than telling a guy that if you plead guilty and cooperate you will get 10 years , otherwise you’re going in for 50 . what’s fair about that ?
I must apologize, , I had no idea you were privy to the sentencing judges’ reasoning and Simmons behaviour
OOPS
you weren’t.
You’re speculating again
First off, the strength of the case is a very different thing from the “smartness” of the lawyer. My point was that having a “smart attorney ” is no guarantee of acquittal.
Secondly, OJ was facing a double homicide. There’s no acceptable plea bargain for that. Simmons on the other hand had alternatives and chose the one that potentially rewarded him the most even though it had the highest risk. You look at the consequences of that and conclude there is cruelty and retribution at play There is not. Simmons gambled and lost. OJ gambled and won. That’s all that happened.
Save your outrage for the innocent.
yes , you must apologize for being a dimwit. the sentencing judge relied on the sentencing guidelines to sentence simmons . canya get that ? the ‘reasoning’ involved crunching numbers on the grid . canya get that ?
here’s what judge rockstar rakoff has to say to thick skulls like you :
if you cannot understand what i am saying , listen to rakoff . he says it better .
mainjustice.com/justanticorruption/2013/03/11/rakoff-scrap-dangerous-sentencing-guidelines/
no. injustice deserves full blown outrage.
the justice system should work on the highest principles of fairness and humaneness.
it’s not a casino in las vegas.
That’s not the deal. What the “guy” is being told is that if you’re guilty as sin, take the offer and live with it. Its the best we can do. If you are innocent then you should plead not guilty.
What’s unfair about that?
Here’s the USSG United States Sentencing Guidelines …
Main page:
NOLINK://www.ussc.gov/guidelines-manual/2013-ussc-guidelines-manual
HTML version:
NOLINK://www.ussc.gov/guidelines-manual/2013/2013-index
Here’s the indictment of Paul Burks:
18:1349 – CONSPIRACY TO COMMIT WIRE AND MAIL FRAUD (1),
18:1341 – MAIL FRAUD (2),
18:1343 – WIRE FRAUD (3) and
18:371 CONSPIRACY TO COMMIT TAX FRAUD (4)
Here’s some of the relevant guidelines:
CHAPTER TWO – Offense Conduct
Part T – Offenses Involving Taxation
Part T4 Tax table
(N) More than $100,000,000 32 points
Part B – Basic Economic Offenses
(P) More than $400,000,000 add 30
( C) involved 250 or more victims, increase by 6 levels.
CHAPTER THREE – Adjustments
CHAPTER FOUR – Criminal History and Criminal Livelihood
CHAPTER FIVE – Determining the Sentence
Part A – Sentencing Table
Whether or not anyone understands what you are saying is beside the point.
That point being, you have (once again) derailed a thread and turned it into an off topic personal rant.
Having read the bulk of the the Appeal Court opinion there is not a chance in the world Simmons was “railroaded.”
He confessed to an FBI agent, and all evidence, as well as the testimony of nine of his investors pointed directly at him. The Appeal reversed two counts of money laundering, but the other counts were upheld.
So his sentence will be adjusted based on only two counts.
He was as I suggested sentenced to serve them concurrently and both the trial judge and the Appeal Court opined that the sentence was justified. His pre sentencing probation report grade was 43 (?) Not sure what that is, but likely not good.
Other source quote …. “The presentence report may well be the single most important document at both the sentencing and correctional levels of the criminal process.”
Wiki ** en.wikipedia.org/wiki/Presentence_investigation_report
I believe it attempts to do that, but in ways that you do not understand or at least acknowledge.
No, but nobody, not even you with your high sense of moral outrage, if faced with the choice would forgo trial if there was nothing more to lose.
The justice system can not afford you that luxury. It can not give you a free, no risk trial, and whether you realize it or not, that is what you are demanding….a free shot at exoneration with no downside risk.
Ten years, no matter what, does not work because nobody would ever admit guilt and that would mean everyone would need a trial and that would overwhelm the courts.
So while we all want a justice system that promises “the highest level of fairness and humane principals there is no perfect way of achieving that when criminals only respect power.
Let us not forget an important reason why people like Burks and their ilk are sent to prison…
Yes, it is to punish them. And yes, it is to send a clear message that these kind of things are not allowed and to deter criminals.
But also, frankly, to protect the rest of society from these predators. People Like Burks, Olivares and the rest of the Ponzi Pimps are predators. These are not people who made “mistakes”, “got in over their head” or “overlooked some laws”.
These are people who set out, with malevolent intention and clearly planned forethought to defraud other people. They did this repeatedly and over a long period of time. Their criminal operation grew to the point where it could devastate more than just people and families, but possibly entire organizations and communities.
We need to protect ourselves and our neighbours from such predators. This is not the “first trip to the prom” for most of these people. They have shown by their actions that they are serial criminals.
Frankly, it is time a message is sent.
If you intend to defraud masses of people with these schemes, you will be exposed to the harsh light of day, and if need be, removed from society for the protection of all of us.
Google “Albania 1997” to see what happens when these things go unchecked.
And, frankly, I think Sammy Davis Jr. said it best.
“Don’t do the crime if you can’t do the time.”
XORLY
Excerpt from Appeal opinion Simmons case.
The court acknowledged that this was an “enormous” sentence, but explained that it could not “remember another case that involved such devastating, life wrecking” greed.
The court concluded that a fifty-year sentence was sufficient, but not greater than necessary, to accomplish justice.
1] the trial court and appeals court found the sentence ‘justified’ according to the Sentencing Guidelines. i am saying the sentencing guidelines, in themselves, are irrational, arbitrary, and give rise to unjust punishment.
2]simmons first two charges are being served ‘consecutively’ and NOT concurrently , which is also contributing to the unfair length of his incarceration :
3] a report grade of 43 is the highest grade for financial fraud. if the loss is over 7 million , and involves more than 250 people , it is ‘likely’ you will end up this grade . unfair !
i cannot believe you said that . free, no risk trial, is the absolute RIGHT of any accused ! that courts will get bogged down is NOT an excuse, for snatching this right from any individual.
if jury trials are too expensive and time consuming , change the system, and let a judge decide , BUT every accused has the right to a fair free trial.
here’s what rockstar rakoff says :
Rakoff said the way the process is currently structured gives prosecutors all the cards. They can hold lengthy mandatory minimum sentences over defendants’ heads and entice them to take deals. Only about 3 percent of cases end up at trial.
Rakoff said mandatory minimums should be eliminated and prosecutors’ roles in plea bargaining should be reduced.”
who all love rakoff , raise your hands !!
huffingtonpost.com/2014/05/29/thousands-innocent-pled-guilty_n_5412494.html
“SIGH”
Yet another Anjali post completely unrelated to the topic at hand.
Anything further not directly related to Paul Burks’ indictment will be marked as spam. Ditto the other article about BWI’s cease and desist.
….and the indicted Paul Burks will not be denied that right. He only has to enter a plea of not guilty and the cost of trial and the burden of proof will be borne entirely by the government who will even provide him an attorney if he can’t afford one. That seems pretty fair.
On the other hand the indicted Paul Burks may decide to enter a plea of guilty in return for various concessions, and that seems fair too.
the indicted burks will be denied ‘just’ justice , till the sentencing guidelines are not scrapped or modified to within an inch of their life.
but the indicted burks should relax because judge rakoff , has lit a rocket up the sentencing commissions ass, and they’re on fire now , so to speak .
You are off topic.
The indicted Paul Burks is subject to applicable law.
Wait until we have more information before you start to complain about “injustice and unfairness”? 🙂
Andy Bowdoin (AdSurfDaily) was sentenced to 78 months in prison for operating a $100+ million Ponzi scheme. Paul Burks will most likely receive a higher sentence than that.
A sentence will be the result of his own actions (according to James Conway, retired superintendent of Attica correctional facility).
That’s as I understand it. Was the Bowdoin sentence from a plea bargain or verdict?
I have no idea, I just googled “Andy Bowdoin sentence” to get the correct number of months, but I didn’t check any details.
James Conway’s viewpoints about prison sentences were based on a TV documentary “The Norden” (program 1:6) / interviews in U.S. newspapers, e.g. Huffington Post.
NOLINK://www.huffingtonpost.com/2014/10/28/ny-prison-warden-norwegian-prison_n_6063360.html
The main point in my comment was that it’s too early to claim “injustice and unfairness”, i.e. to criticize the legal system based on some vague ideas.
Bowdoin, age 77, who ran a 110 Million dollar Ponzi, plead guilty to one count of wire fraud and is serving a 78 month sentence. With time off for good behavior he should be home in 65 months or less.
I don’t know how many counts he was originally charged with.
It was a plea. But Bowdoin put at risk every ounce of benevolence the government was prepared to provide him by joining the sovereign citizen/tax denier/political extremist camp from which he was manipulated into firing his paid attorneys and proceeding pro se.
This encampment began early in the civil asset-forfeiture proceedings. Bowdoin, under the advice of a defense attorney who is now a federal judge, agreed to drop his claims to the seized money. In short, the strategy was to work cooperatively with the Feds in the civil case because Bowdoin’s criminal exposure was off the charts. Lots of money in ASD. Obvious money-laundering conduits. Lots of senior citizens. One of the victims was a person with one arm. Bowdoin already was a convicted felon from a securities scam in Alabama.
Bowdoin’s sudden shift from intransigence to cooperation horrified some of his co-conspirators. They influenced him to act against his own interests. Incredibly, he listened to them, fired his paid attorneys without notice and started to file pro se. At one point, he claimed he was inspired by a former Miss America. Some of his pro se pleadings in the civil case were virtual confessions to crimes and were so at odds with the groundwork laid by his paid counsel that the situation became irreconcilable.
It was painful to observe because Bowdoin, a man then in his mid-70s, was doing things that could have put his senior-citizen wife in the slammer — but still the steroidal puppeteers cheered.
A very keen judge saw what was going on and ordered Bowdoin to acquire new paid counsel. Bowdoin then adopted a freelance strategy of trying to smear his former paid counsel, the prosecutors and the judge. The judge exercised almost superhuman patience as the bizarre game played out.
The prosecutors simply bided their time.
What the prosecutors knew — but did not reveal until the appropriate time — was that Bowdoin had sat for debriefings with the government and defense counsel over a period of four or five days. He laid out the entire scam just prior to abandoning his claims in the civil case.
The most disturbing things was that some of his so-called “supporters” actually were playing with the life of a then-76-year-old man to save their own asses. He stopped doing anything in his best interests and basically ceded his entire personhood to the Steroidal Puppeteers.
Evil is not too strong a word to describe what was going on.
The Feds probably had enough to indict his wife and two of his family members. This created leverage, to be sure. The tragedy was that Bowdoin and the puppeteers had created this leverage. Bowdoin’s wife, his fourth or fifth, wasn’t exactly Ma Barker. The two other family members basically were greedsters drunk on religion.
I don’t mean to understate the severity of the situation, but it was really amateur hour in the annals of crime. The scheme they hatched never had a chance of succeeding because Bowdoin himself did not have control over all of the money, people from the inside were robbing him blind and he even was being blackmailed.
It will be interesting to see whether Paul Burks experienced something similar. There is no doubt that Bowdoin was coerced by his “supporters” into acting against his own best interests.
There’s also no doubt he always was going to go to prison. He pitched at least three scams after ASD, claiming in at least two of them that the “opportunities” had been vetted by attorneys.
He was almost emaciated by the time he reported to jail. Some of the ASDers issued email appeals to send him money to buy slippers and toothpaste. The appeals included ads for Zeek Rewards, whose purported daily payout was even higher than ASD’s.
PPBlog
as per PPblog’s post, andy bowdoin gave a lot of trouble to the prosecution and the court. incredibly he walked away with 78 months, inspite of being a repeat offender. incredible !!
my criticism is reflected strongly in judge rakoff’s views. i don’t think he has ‘vague’ ideas.
I wasn’t talking about that specific post, but about those 50 others. 🙂
madoff pleads guilty in 20 billion ponzi — 150 year sentence
andy bowdoin plea bargains in 100 million ponzi —- approx 6 year sentence
jasen snelling plea bargains in 9 million ponzi——11 year sentence
simmons does not plead guilty in 32 million ponzi —–50 year sentence
since the above data , points in several directions at the same time , i can safely conclude that paul burks , can get anything between 5 to 150 years. done and dusted.
That’s right. It depends on a lot of personal factors, but especially whether the defendant takes responsibility for his actions.
How do you rehabilitate a person who will not admit his mistakes? You really can’t so you keep them away from society for as long as the law allows.
Burks is smart enough to realize that. He proved that when he settled with the SEC. He’s cooperated. There’s no way I see this guy getting an “enormous” sentence.
you must be right hoss .
andy bowdoin with his criminal repeat offender history DOES appear to be the most ‘re habitable’ person .
no wonder he got the least sentence . fine chap !
in fact , soooo fine, he’ll be out in five !
I don’t want to judge, but it reads as if the guy was a bit unbalanced, perhaps senile and manipulated. I can see what may have mitigated for certain leniency… old, frail and crazy.
Why saddle the Correction system with hospice care and burial expenses? He’ll be toothless in five years anyway.
The only thing you reasonably can presume, with some degree of certainty, is that it will be a complete injustice because of the “system” itself. 🙂
Here’s a different type of fraud, with 11 years prison for a $1 million fraud. He got 2 years extra because of the pleasure he felt when defrauding people.
NOLINK://edition.cnn.com/2013/06/10/us/bieber-con-man/
thankyou for caring about the correction system , but madoff and simmons will be requiring hospice care anyway , so why deny bowdoin ?
the more the merrier !
how many ‘points’ did the ‘pleasure’ get on the grid 🙂
but MORE shocking was that people actually PAY to watch justin beiber .
Is it really necessary to explain this to you?
andy bowdoin has a criminal repeat offender history. yet, in the examples i have listed , he got the least sentence.
can we hence assume , that repeat offenders can be rehabilitated more easily than first time offenders like simmons?
what if simmons repents after 5 years? can he be rehabilitated with no parole system in federal sentencing ?
He is a nobody and a minimal threat to society. He will be 83 when released if he is not already dead . The idea is to protect society at minimal cost not incarcerate people until they die. He admitted guilt.
That is a frivolous assumption Bowdoin is never going to be rehabilitated. He is going to die…or whatever is next to it.
Simmons had his chance and he blew it. Anybody that stupid is not likely to be rehabilitatable. Its an IQ thing.
c’mon hoss this is a more serious issue, than a game of dice, and who threw well and who did not.
you should take this up with the DOJ and ABA [ american bar association] who have both written to the sentencing commission [ussc], in the current year of 2014, recording their discomfiture with the arbitrary disparate sentencing , and asking for a return to reformative justice of the pre-guidelines era.
the USSC generally forwards it’s reforms suggestions to congress in may , and by november the reforms are formally adopted . so next year , expect changes , and this could be well before burks sentencing.
C’mon, Anjali,
Oz has asked nicely that you keep the thread on the topic of Paul Burks being indicted, so please do so.
You are now exhibiting the same sort of behaviour and tactics employed by HYIP ponzi / pyramid pimps by burying the information readers of the blog need to know about how HYIP ponzi and pyramids work under a barrage of off topic rants.
Please stop acting like a wilful child and / or find a more suitable venue for expounding your personal views
One can not throw dice well…or poorly. One can only decide whether to throw the dice at all.
Your one size fits all approach to sentencing does not work. Its entirely impractical. Rejiggering the sentencing guidelines is not going to change that. Plea bargains are here to stay.
What you call “Reformative justice” is likely known as “restorative justice” and Paul Burks is never going to be able to “restore” anything to his victims so they can feel empowered and he can gain a greater sense of self worth. Get real. Get off the topic.
Correction.
I read a long treatise on Reformative Justice by a woman named Bayo Aina and a few other references. I get the idea.
you just made my day mr hoss.
institutions like DOJ and ABA also get it . organisations like human rights watch [america] and FAMM get it . judge rakoff [my current hero] and lots of other federal judges get it. it’s all good .
i HAVE to say this about judge rakoff , he wrote his masters thesis on mahatma gandhi and it is said, that he has been influenced by gandhi’s ideas on spirituality and humanity . this makes me love judge rakoff Even More !
to cut a long story short ; why whine, tomorrow will bring sunshine ! [ rhyme intended 🙂 ]
both the olivares had their bond hearing and arraignment along with their initial appearance . we can expect the same for paul burks .
At the arraignment, you will:
-Be read the charges against you, unless you waive a reading of the complaint
-Be advised of your rights under the Constitution, including the right to an attorney
-Have the opportunity to request a public defender if you cannot afford an attorney
-Enter a plea to the charges you face
the olivares pled guilty to both their charges. what what what is burks going to do !!
Apparently he is out on $25K Bail and has entered a plea. At his age he obviously wants the trial to drag on for as long as possible, and a plea bargain of any length is more or less a life sentence anyway. So…. Burks pleads not guilty.
idahostatesman.com/2014/11/13/3484394/zeekrewards-founder-arraigned.html?sp=/99/109/
Ugh… he’s really going to take this to trial?
Good luck with that.
Has his wife kicked the bucket yet? If not then I think you may be right, he wants this to drag on while he’s out on bail.
If it follows the same path as of some of the more recent ponzi prosecutions and he uses up every one of his legal options, we will be looking at around four years from close down to closure
i was fully expecting him to plead ‘not guilty’ . not surprised !
at this stage , the prosecution must have offered him close to nothing .
burks is 67 , he’s going to play the system to the hilt. he’s got nothing to lose.
well, we all just got invited to a full blown trial, if we’re lucky ! 🙂
you will notice that the SEC has regularly entered agreements and imposed fines on companies/individuals , without the party having to admit or deny allegations.
from 2014 onwards , in cases of direct public harm, the SEC will now require the alleged parties to ‘admit’ guilt of the fraud/non compliance etc.
washingtonpost.com/business/economy/sec-to-require-admissions-of-guilt-in-some-settlements/2013/06/18/9eff620c-d87c-11e2-a9f2-42ee3912ae0e_story.html
and well , take a wild guess HOW the SEC has been tamed !
two words: judge rakoff. he refused to enter settlements without admission of guilt , other judges began following the same route, and net result : SEC will now require admission of guilt in ‘egregious cases affecting large numbers of investors’.
burks is lucky , he missed the SEC bullet !!
Sounds good to me. I’m rather sick of the “we’ll pay a massive fine but neither admit or deny we’re fraudsters” statements.
I predict scammers either admitting their guilty or some lengthy lawsuits where they are ultimately found guilty (and awarded hopefully much harsher sentences for wasting everybody’s time).
@Oz While I have no sympathy for Burks (or for the idiot ‘victims’); I find it distasteful for you to refer to his domestic problems as ‘his wife kicking the bucket’.
It’s perfectly fine to expose the emperor in all his nakedness when it comes to these scams, but that was just well, crude. But then, what does one expect from someone born in a former penal colony?
@Viribusuntis
I meant no disrespect to his wife, but only brought it up as a possible motivating factor for him wanting to drag this out (and be out on bail in the interim).
It’s a commonly enough used phrase. Harden up princess.
Well you ARE a journalist in my eyes, and those of others I would think. So a little polish can be expected. ‘Nough said.
I tend to be a little less formal in the comments :). Again, no offense intended.
Burks is waiting to see the government’s case then he’ll get the advice from Noell Tin. He won’t enter a plea before then, and obviously Tin’s going to say his client’s innocent… until he isn’t.
Tin’s experienced. He’s not going to offer a plea until he sees what government has on Burks. There’s probably some other factors which may or may not involve citing guilty pleas from Dawn and son and the rest.
@Kasey
*gazes into crystal ball*
Crystal ball’s been a bit tounge-in-cheek lately.
crystal ball needs to update himself a bit .
1] the september 15th ruling of the sixth circuit court, now requires that ‘loss calculation’ should be a ‘net calculation’.
ie amounts paid during the run of the fraud , clawback ,properties seized will all have to be subtracted from the total fraud amount.
SEC had pegged zeek to be a 850 million fraud . bank accounts seized and clawbacks will probably net 400 to 500 million . then, payments made to participants in the one year of functioning will have to be considered [ the amount they invested but nothing above that] .
2] the american bar association has suggested approximate halving of the points given to ‘loss’ on the sentencing grid.
for a total loss of say, $200,000,000, 28 points are awarded. if this is approximately halved to say 15 points . the sentencing scenario will change dramatically . it will be much more realistic of course!
crystal ball should purchase a new age updated ball to keep in line with changes that have already occurred and changes which are on the immediate horizon .
^^ Ladies and gentlemen, that’s how you kill a joke.
wot! thatwasajoke !
ok, i’ll be polite and ROFL now .
rule number 1 to 10 : always laugh at the bosses jokes ! 🙂
Hey, 13th of November was yesterday!! Any news now?
Hahaha… To bad for you!!! Let’s eat some rabbits, kill some aborigines (or just send them to jail) and watch Crocodilo Dundee!
detailed article in the dispatch dated 13,nov,2014 :
the-dispatch.com
in a ‘secured bond’ the accused has to actually pay cash or provide property as surety.
in an ‘unsecured bond’ , the accused has to only sign documents saying he is liable to pay the bond amount , in case there is violation of bail orders.
judge cayer seems quite convinced burks is harmless, and not a flight risk .
The SEC has his balls in a vice-grip.
He’s not going anywhere.
ALL the SEC has in its vice-grip is a settlement , which makes burks liable to pay 4 million dollars and NO Admission or Denial of guilt. what is stopping burks from walking across to mexico ?
he’s old, and he has family to think of, probably . the SEC don’t have nothing on him !
Burks, Wright-Olivares and son have also agreed ‘to a consent judgment of $600 million to be satisfied with substantially all of their assets.‘
The $4 million was just the tip of the iceberg.
doesn’t 600 million seem UNrealistic ? they don’t have that kind of money and neither are they expected to pay that amount . its like the 150 year sentences , sounds impressive , but nobody can really serve them !
the olivares, will of course lose all assets which can be traced to them , but that’s about it .
burks has already handed over the keys of RGV to the SEC and then the reciever. so, WHATS stopping him from hopping across to canada ? the SEC can hardly stop him !
I wasn’t aware you were intimately knowledgeable of Burks’ finances.
Yet in the US he remains. It’s not so much about stopping him as the repercussions for fleeing.
nobody needs to know burks finances to understand that the olivares CANNOT have 600 million on them . an 850 million fraud and 600 million is in the safekeeping of the olivares ?
how that math work boss ? you know its impossible, no matter what consent agreements blah about .
I know that he’s going to be left with nothing asset-wise when alls said and done.
What kind of life is a penniless Burks going to have on the run with no passport in countries the US doesn’t have extradition treaties with?
You can argue with yourself about why he hasn’t fled. The fact remains, he’s still in the US and a $25,000 unsecured bond suggests he’s not going anywhere anytime soon.
i found a memorandum in reply , by ira sorvin [ madoff’s lawyer] filed in support of a motion by two zeek net winners gilmond and king .
this is the opinion of the reply, on the SEC’s consent agreement with burks and Rex.
very interesting to see how ira sorvin explains the zeek business as being not a ‘security’, because bids had to be retailed and a ‘lot of work’ was involved. i guess burks defense will also be lined up in a similar way ?
zeekbates.com/1-26-13/Memorandum%20of%20Law%20in%20Reply%20to%20Motion%20to%20Intervene.pdf
It’s not really interesting at all, because it’s bullshit. Bids were bought by affiliates. There was no significant retail or retailing.
And when I say significant, we’re talking <5% and a fraction of a percentage point of bids being actually used.
Ira Sorkin hasn’t analysed how ZeekRewards’ actually worked. He has rather analysed his own ideas for how he BELIEVE it worked. That’s a major difference, you can’t base a defense strategy on flawed ideas.
People were indirectly promised a positive ROI on their sample bid purchases through a “system”. It worked like this:
1a. People paid money IN …
1b. … and received sample bids in exchange.
2. Sample bids were converted to VIP points.
3. VIP points were used to calculate a daily ROI.
4. The daily ROI could be used to purchase more sample bids.
5. Points 1b – 4 could be repeated over and over again as a “compunder” for VIP points and daily ROI, without bringing in any fresh money from the outside.
6. Real money could be withdrawn, based on the false “profit” generated in the previous points. That profit didn’t exist in reality, so ZeekRewards used the money coming in from new investors to pay the old ones’ withdrawals.
I have ignored a few unimportant factors to simplify the description, e.g. the requirements for posting 1 daily ad, giving away sample bids to fake customers, recruitment rewards, etc.
Ira Sorkin’s idea seems to be to convince himself about something, and then actively try to convince others about the same ideas he believe in himself. But that idea will fail if someone points out some flaws in his ideas he can’t rationally explain.
People can simply ignore HIS ideas and focus on the realities. His ideas will be easily defeated (I’m talking about his ideas about the realities of the case, not his other legal ideas).
This thread is about the fact Burks was indicted on four criminal counts:
conspiracy to commit wire and mail FRAUD
mail FRAUD
wire FRAUD
tax FRAUD conspiracy
This (the criminal indictment) doesn’t involve securities or the SEC and it (the SEC CIVIL action and subsequent agreement) has no bearing on the indictment counts.
it is completely acceptable for sorkin to give an explanation that will suit the interests of his clients [zeek participants]. that would be his job as a defense attorney .
how well has the SEC analysed how zeek rewards worked? the SEC’s conclusions are not ratified by a court of law. based on prima facie evidence they entered a consent agreement with burks and Rex, without any admission of guilt .
to expect this ‘private deal’ to cover all other participants ,cannot be right .
either other net winners can make deals with the SEC like burks did , or they can contest the clawback on the basis that : the SEC has not proven it case against zeek , the deal with burks is not incumbent on other participants, and they have a right to fight the clawback :
The same issue — whether the ZeekRewards program involved a”security” — will be litigated in federal district courts throughout the country if Proposed Intervenors are not allowed to intervene. ‘
i think some net winners will fightback and bide time and wait for the final outcome of the criminal case against burks .
have gilmond or king settled since then ? sorkin said that whichever way the intervention motion went , either party would appeal . but seems sorkin has not appealed yet ?
i’m not saying , zeek is not a ponzi , but purely as a matter of law ,there is ‘some’ ground for the net winners to fight .
utter nonsense. all the four counts arise from the allegation that zeek and burks were selling ‘unregistered securities’ in the shape of ‘investment contracts’.
the fact that SEC settled without admission of guilt , means that the DOJ , has to give burks a ‘clean page’ to start his arguments of ‘not guilty’.
to say the settlement with SEC has ‘no bearing’ is stupid . it has a positive bearing . burks was informed by SEC that his business was suspect , he handed over the keys and stopped, without any question .
goes to ‘intent’.
The Court did not find the argument persuasive and ruled against Gilmond and King.
Mr. Sorkin was being paid well to make the best possible arguments for his client. That being attacking the “through efforts of a third party” prong of the Howie test. It was his best argument to make but it (for the motion to dissolve the receivership) failed.
If I recall correctly the motion conflated the matrix and ponzi point portions of Zeek Rewards. No one doubts it took Ms. Gilmond significant personal effort to recruit enough people to max out her matrix but that was the pyramid or endless chain part of the program so the Howie test does not apply.
The arguments for ponzi points not being an investment contract were more nebulous and equally unsuccessful.
At the end of the day Trudy and Kellie were sitting on a large chunk of change they stood to lose to the receivership and applying some of it to high power legal representation was a no risk, possible reward situation.
Mr. Sorkin’s considerable skills couldn’t change the facts of the case but he got paid either way.
Am I remembering correctly that after the motion to dissolve was settled Ms. Gilmond moved to more affordable representation?
Sorkin’s main hope was that the Judge in North Carolina would hear his arguments and want to create precedent in the District since the particular issue had not been adjudicated there. (thin hope) but barring that, he knew full well his arguments had already been tested and found wanting in other Districts.
The North Carolina judge didn’t bite and as you say, Sorkin collected his paycheck and went home.
King and Gilmond, indeed all represented net winners, seem to have drifted towards a defense that asserts equal fault (en pari delicto) as a means to defend their retention of net winnings. While doing so they have utterly abandoned any claim that RVG was legal.
They now favor arguing that RVG was equally to blame and thus has no right to recover funds from them.
Wright-Olivares and son have plead guilty to fraud and evidence collected against Burks is damning (him sitting in a room and fudging the daily ROI numbers).
A trial is a formality at this stage.
It may be “acceptable”, but the idea may easily fail. Ira Sorkin had some “constructed theories” about bid purchases and daily profit. He didn’t connect the dots correctly.
Ira Sorkin would have felt rather uncomfortable if he had been forced to defend his ideas (similar to the feeling you had when you were asked about how common it was among Indians to purchase “survey panels” as products).
His arguments were tested in an oral hearing in July 2013, and they failed miserably. ZeekDoc-151.
The money promised and distributed to investors was not coming from profitable auctions though Burks knowingly conveyed that impression and people relied on it. That is fraud and easy to prove.
Its also easy to prove that he used the wires, falsified tax information, and conspired with others to perpetuate the fraud. Its a slam dunk. Burks is just playing for time before he says goodbye to life. He’s cooked and the net winners are cooked with him.
huh ? by the en pari delicto argument net winners should also disgorge their profits , as burks and RVG has done in their SEC settlements .
i would think king and gilmond , would drift towards a defense that says, in our view zeek was not a security , we did a lot of work , we did not know burks sat alone in a room and made up ROI percentages. why should we be penalized ?
the court denied gilmond and kings intervention , but did not say : this SEC action is applicable to you, as it is to burks and RGV, so shut up and pay up. the recievership was set up for RGV , it does not control all net winners funds.
so , these net winners can drag this through the courts for years .
The only “nonsense” is in your what you just said.
IOW, in simple language even you can understand, they didn’t do what they said they were doing and used the internet and mail services to do it.
WHICH IS SEPARATE AND DISTINCT from the securities violations.
Now, do I REALLY have to explain conspiracy and why it has nothing to do with the SEC as well ???
The Judge has indicated this will not happen. It was in a Receivership response to a filing IIRC.
And ???
So what ???
If they do, it will be costing them even more, and, unless you think they have a hope in hell of winning, will make no difference anyway.
This ain’t TV, where justice can be served in 60 minutes, less commercial breaks.
That is how the justice system works, it’s not like the longer they can draw things out, the more likelihood of them getting away with it.
They have rights – they get to exercise those rights fully, and THEN justice is served and they get nailed to the wall.
Bowdoin, for example, kept his case going for four years after ASD was shutdown and, even then, appealed the sentence after he had pleaded guilty.
Made no material difference – he’s still in gaol, only he’s a few years older than he would have been if he had entered and early guilty plea
yup , mail and wire were used to collect the ‘securities’ which were being sold , creating the ponzi scheme.
the DOJ press headline says: ZeekRewards President Indicted On Federal Charges For Operating $850 Million Internet ‘Ponzi Scheme’
ponzi or pyramid is the underlying cause to counts of wire fraud, mail fraud etc.
aaaand lets see what the net result of these delays and appeals was .
bowdoin walked away with an approx six year sentence , inspite of having a previous criminal record . he got the least sentence, out of sentences discussed in this thread .
so playing out the case in sloooow motion , seems to help in wearing down the prosecution and getting better deals.
@littleroundman
the allegation of securities violation is not limited to the SEC action, but is the basis of the criminal case against burks too .
do not misguide me , this is complicated enough !
Either I do not understand en pari delicto or you don’t and I am 99-100% sure its you. Please read up.
Sorkin already argued that viewpoint and lost, and I don’t recall there is an appeal.(not that it would make any difference) Disagreement with the decision is no basis for an appeal.
This is not to say that Sorkin couldn’t have found some obscure procedural issue to raise… and King and Gilmond made a half hearted attempt to promote such an effort, but they found no financial support among the net winners.
Its over and even the most diehard realize they have reached the end of that rope and there’s no benefit to throwing good money after bad….which is why Gilmond and King have switched to a pari delicto defense.
That is in essence the pari delicto defense…
but it does not change the fact that they were all pushing securities.
The reason that defense is not going to work is that a Federal Receivership is not going to held responsible for the acts of Paul Burks.
Gilmond and King have been unjustly enriched and are in receipt of fraudulent transfers which by law belong to the creditors of the RVG estate.
Sure it does, if Bell can get a ruling that net winners are in receipt of fraudulent transfers (which he will) then he will also obtain judgments against every one of them and he is doing that by suing them as a Class.
The Prosecution does not have to prove there was a security violation to prove there was fraud. You get that, right?
Could or would Burks have been charged if there were no securities violations and no SEC action ??
One is not dependent on the other
@Anjali
….Sorkin argued the SEC did not have jurisdiction because Zeekler affiliates were NOT selling and promoting securities.
Therefore, according to Sorkin, all that followed, the deal with Burks, and the appointment of a Receiver was illegitimate and should be undone.
The core idea for Gilmond and King was that Zeek must be allowed to continue as before since the SEC had no jurisdiction to begin with and thus no right to bring suit against RVG/Zeekler.
As you can see the Receiver is still here. It thus follows that the Court found that the SEC had jurisdiction…. because securities were involved.
…and you really think going back in front of the same judge to reargue that Zeekler was not pushing securities is a viable defense strategy?
ok , so i read up and this is what in pari delicto means:
this is the defense ira sorkin put up . he said the SEC had 1] not proved that RVG was selling unregistered securities and 2] SEC consent order with RVG had no binding on net winners.
ira sorkin said make your case , that RVG was selling illegal contracts , otherwise the estate of RVG has no business to recover funds from net winners.
the judge refused the intervention , refused to dissolve the receivership , but did not give a ruling in favor of the receivership also . judge mullen refused to extend the powers of the receivership , to demand payments from netwinners as a right .
judge mullens order denying intervention , does not state that he rejected the idea that RVG was not selling securities. the ruling had more to do with the fact of the SEC’s action in the matter of setting up receivership for the RVG estate, had been ‘settled ‘ as per the consent agreement of RVG and SEC .
i read somewhere , that mullen told the gilmond and king that they could raise their questions, at a later stage on a different forum [ cant find that link now ]
as the reciever does not control funds of the net winners ,he has initiated the class action , and trudy gilmond et all , are fighting this class action .
once the issue of ‘class action ‘ is decided by judge mullen , only after that will we know what kind of defense, gilmond will take up in court as an individual or as a class. for all you know she may continue with ira sorkins ‘in pari delicto arguments’.
no . the court found the SEC had jurisdiction BECAUSE the consent orders with RVG and burks , agreed to the jurisdiction of the SEC, WITHOUT admitting guilt.
thus the matter of the jurisdiction of SEC was ‘settled’ for the matter of setting up of the receivership, as RVG handed over the keys to the state.
Howard Kaplan’s attorney argued the in pari delicto defense, but I don’t remember Gilmond / King using it? The clawback action isn’t about wrongdoing.
In pari delicto = “at equal fault”, e.g. a wrongdoer suing another wrongdoer.
Gilmond / King had, among several other defenses, the defense of “unclean hands”. It’s based on the theory that the Receiver stands in the shoes of the wrongdoer, based on some technical interpretation of the Receiver’s role (he holds all the rights, privileges, etc. of the wrongdoer).
Right, so you’re saying Burks didn’t believe the SEC had jurisdiction and that RVG wasn’t selling securities, but he was going to hand over the “keys to the state” and with it all or most of the company assets for the heck of it.
R–I–G–H–T, sure he did.
Unclean hands is one variant of en pari delicto.
You may want to read Zeek doc 5 again. Burks submitted to the jurisdiction of the Court not the SEC. He expressly admitted no guilt insofar as any of the allegations made in the SEC Complaint and that included dealing in securities.
That’s crazy. If as you contend, Burks agreed that the SEC had jurisdiction then he would at the same time have been admitting the he was dealing in securities since the SEC only has jurisdiction when securities are involved.
Burks and/or RVG can accede to whatever they want but SEC jurisdiction is statutory. It has jurisdiction where securities are involved period…or it doesn’t. Burks can refrain from contesting the issue but he can not grant the SEC jurisdiction…..they assert it and take it when its justified.
Come Sorkin who alone contests that the SEC has no jurisdiction because, he argues, there are no securities involved….. and loses… and yet you think someone else will prevail using this line of argument? Fat chance.
The SEC has jurisdiction when it asserts securities are involved and no one successfully disputes it. Exit Sorkin, the last great hope of a generation.
Not exactly. The SEC made plausible allegations which Burks did not contest and then he voluntarily and without coercion relinquished control of RVG. Consequently, there was good and sufficient cause for the Court to approve a Receivership.
Sorkin’s later attempt to disprove the SEC’s jurisdiction and the appointment of the Reciever is proof that nothing was quite settled, and won’t be until the fat lady sings……a day which is coming.
The SEC and Reciever will soon ask for a ruling that RVG violated security laws and that RVG/Zeekler was a Ponzi. Only that will conclusively “settle” the matter.
Paul Burks by the terms of the Consent Agreement can not contest. Shortly thereafter those deemed to be in receipt of fraudulent transfers (net winners) will have judgments entered against them.
Your definition is not how I think pari delicto is being applied here.
Wikipedia’s entry catches the essence of why Gilmond and King hope it applies.
Logically it would apply if Paul Burks in his capacity as owner of RVG were attempting to recover funds from Gilmond and King, but Bell is not RVG but a Federal Receiver over the RVG estate and its nearly impossible to believe he has no capacity to recover fraudulently conveyed funds.
” The phrase is most commonly used by courts when relief is being denied to both parties in a civil action because of wrongdoing by both parties.
The phrase means, in essence, that since both parties are equally at fault, the court will not involve itself in resolving one side’s claim over the other, and whoever possesses whatever is in dispute may continue to do so in the absence of a superior claim.
I don’t know which source you have used, but it seems to be about contract law?
In pari delicto is a Latin legal term, and it usually means “at equal fault”. You will probably find many different versions of it in various areas of law, but they will all be about “at equal fault” types of logic.
In the Bell v. Howard Kaplan lawsuit, the defense lawyer referred to “North Carolina’s long-standing policy against permitting redistribution of losses among wrongdoers”. She also referred to the doctrine of in pari delicto, but to another version than the one you cited.
That’s why I identified 2 specific cases so you could see the difference.
* the clawback actions are not about wrongdoing.
* the Howard Kaplan lawsuit is about malpractice (bad tax advice, aiding and abetting fiduciary breach of duty, etc.)
In pari delicto can potentially be used as a defense in the Howard Kaplan lawsuit, but it wouldn’t make much sense in the clawback action against Trudy Gilmond.
“Variant” doesn’t mean the two terms are interchangeable (“it doesn’t matter which one we use”). It can simply mean they’re both based on the same types of ethical or legal ideas.
Anjali = confirmation bias personified
Imagine that Gilmond has worked her fanny off to sell a product, is paid commissions and profit share by RVG only to find out that RVG lied to her about the true nature of the business and for whatever reason demands she return all of the the money she was paid.
In such a situation She would have a valid defense because RVG induced her to act and sell the product based on misrepresentations. RVG would not have clean hands and the doctrine of pari delicto might well apply.
Now remove Burks and put Bell in charge of the RVG estate such that it is now a Federal Receiver attempting to recover fraudulent conveyances from an unjustly enriched Gilmond. You may understand how a Court could view a defense based on en pari dilecto in an entirely different light. Bell will argue that pari dilecto does not apply.
Sorry that more closely reflects equal fault.
That’s why I defined in pari delicto to be about “at equal fault”. As far as I can see, Trudy Gilmond isn’t accused of any wrongdoing where in pari delicto can be applied. Howard Kaplan is.
Your hypothetical scenario sounded more like a “good faith” defense (good faith / provided value). You also added “unjust enrichment” to make your hypothetical scenario work logically. But it doesn’t reflect the reality of the case.
Focus on the reality rather than on hypothetical ideas? A variant of something doesn’t mean it will be interchangeable.
1] burks and Rex signed a consent agreement with the SEC ,agreeing to the jurisdiction of the SEC , but not admitting guilt .[ without agreeing to jurisdiction of the SEC how can an agreement come about ?]
2]the consent agreement was formally accepted by judge mullens court with burks and Rex again agreeing to the jurisdiction of the court .[ without agreeing to jurisdiction of the court , how can the matter move forward in that court at all ?]
so, burks/rex agreed to the jurisdiction of Both the SEC and the north carolina district court.
there is only one ‘relevant point’ in the consent agreement . that is : burks and Rex DID NOT admit guilt .
the SEC came knocking at their door , they gave full cooperation , came to a financial settlement . agreeing to the jurisdiction of the SEC means nothing , as he has not admitted any fault at all .
dawn olivares has signed a consent agreement with the prosecution saying she will pay 600 million . does that mean she will actually pay that money ? maybe the agreement says olivares is santa claus in disguise , and she agreed ?
Burks had the option of fighting the SEC in court. He didn’t.
Game over.
Nobody pays fines for things they didn’t do. Pay fine? Guilty. That’s the way the world works.
there is no ‘reargue’ because the question was never argued before judge mullen .
the issue of whether zeek was dealing with ‘securities’ is still alive and well . bell has been complaining about it regularly in his replies. and gilmond et all, wont let go of it .
in august 2014 , gilmond etc filed a motion in court which says :
No security; no jurisdiction. (I wonder if anyone else ever used this self-same argument??)
Since subject matter jurisdiction can be raised at any time and cannot simply be agreed to by the parties, the Court should consider now whether these cases are based on securities. At a July 23, 2013 hearing in the SEC Action, the Court said it would do so.
At the same hearing, both the SEC and the Receiver (contrary to what he now claims) agreed that the issue could be considered now on the merits.
the SEC had the option of taking burks to court and not settling for a ‘no admission of guilt’ consent agreement . they didn’t !
They got $600M judgement and $4 mil fine. Much quicker then wasting time and money in court for the same outcome. The SEC can only bring about civil charges.
Burks is guilty and going away for a long time. He’ll come out of this with no money, no assets and his reputation in ruins.
@norway
this is where i found the definition of in par delicto:
legal-dictionary.thefreedictionary.com/Pari+Delicto
SEC says zeek was offering fraudulent investment contracts , so i thought this definition suited the purpose.
i disagree. the receiver was instituted on the basis of a consent agreement . the facts of the case remain unproved.
bell saying ‘fraudulent conveyances’ does not have the weight of a legal argument ‘proving it’.
i think , the question of whether RVG was peddling ‘securities’ will get its day soon in court .
gilmond etc, will probably lose, but it will be interesting ! 🙂
What we have here is a perfect example of the difference between a high school student being asked to provide a definition of the term and a law clerk being told to find a definition of “in par delicto” which could be used in a criminal case.
What Anjali found was “A” definition of the term and not “THE” definition which is applicable in this case.
There is no “case” involving the SEC or securities violations.
There are civil and administrative proceedings WRT securities laws violations which by law cannot have a bearing on the criminal “case” which must be separate and distinct.
The allegations (which must be proven) are Fraud and conspiracy existed whether or not securities violations are or were involved.
so , there is a settled civil CASE . this case was settled without going into the MERITS of the case. the recievership is based on this ‘settled unproven case’ .
based on the SEC’s unproved allegation of securities violations, zeek is pronounced a ponzi scheme.
based on the SEC allegation of ponzi scheme DOJ launches a criminal case against burks .the allegation of mail/wire fraud all arise from zeek being a ponzi scheme.
if during the clawback litigation , gilmond etc are able to prove zeek was not selling ‘securities’ , humpty dumpty will fall on his head, and the wall will come tumbling down all over his ass.
here is what judge mullens said while denying the intervention motion :
judge mullen left the door wide open . he argued with the SEC counsel and kenneth bell and got them to admit , that the matter would be allowed during clawback litigation .
read the full transcript of the hearing in july 2013 . its just delightful !! 🙂
drive.google.com/viewerng/viewer?a=v&pid=sites&srcid=YXNkdXBkYXRlcy5jb218ZmlsZXMtd2Vic2l0ZXxneDozNDM2NjU3Y2YxYjIyMzhj
You must never have been married.
It can come about because it is not the subject matter of the agreement.
Gilmond is in effect saying “we were in this together” so under the doctrine of en pari delicto the court should not enforce RVG’s claim against me . We were both at fault therefore RVG can not recover money from me, i.e., no clawback.
Kaplan uses the same “we were in it together,” we are equally at fault” reasoning.
You must also consider what is not in the document. Nowhere did he acknowledge SEC jurisdiction. Its not there. You only assume it must be.
I doubt you have read the transcripts to know, but Sorkin definitely argued in his Motion that there were no securities and therefore the SEC had no jurisdiction. His Motion was denied.
UH?? I agree except you recently said the SEC had jurisdiction because Burks consented to it? Would you like to reconsider?
You keep reciting Sorkin’s old stale debunked arguments.
Whether or not the court has formally ruled on whether or not securities were involved is not the point… The denial of Sorkin’s Motion on behalf of Gilmond has made it 99.99% probable that the Court will find that securities were involved when the SEC and Receiver ask for a formal ruling….which they will do as an adjunct to the clawback litigation.
You are missing the forest for the trees. The primary object of the SEC was to shut the damn thing down and protect the public from securities fraud…not to piddle around proving an old man was guilty. Jeez….get practical.
You don’t “prove” facts. Burks was gotten rid of, the Reciver was appointed to stabilize the situation and recover assets for the creditors. The evidence will be presented and the SEC and Reciever will make their cases when THEY are ready to do so.
The Receiver must obtain a ruling that the net winners are in receipt of fraudulent transfers if he is going to clawback funds for the benefit of creditors.
The net winners, including Gilmond will have an opportunity to argue there was no securities fraud and thus no fraudulent transfers. If they do, they better find a better argument than the one Sorkin made.
correct , that’s exactly what i’m saying .
1] the receiver must prove securities fraud , before demanding clawback from parties, who are not part of the consent agreement between burks/rex/SEC.
2] the argument about RVG peddling ‘securities’ is not resolved to date , and the entire process till now, rests on unproven SEC allegations.
if you read the transcript , the SEC and bell , went into a major hemming and hawing and shuffling routine when judge mullen asked them pointedly about the ‘securities argument’.
if the SEC had such a strong hand , why would they hem and haw and ‘settle’
if bell has such a strong hand ,why would he hem and haw and start talking about ‘ fraudulent transfers’ instead of ‘ fraudulent securities’
bell became receiver under the “SEC’s” consent agreement , NOT under the consent agreement of some ‘common law fraud resolution authority etc’
That is so not right, it doesn’t even qualify as being wrong.
Geez, it must be a right PITA having such an irrational need to be right, you’re prepared to make a fool of yourself in public so often, AND having to hijack this thread AGAIN to find a venue for your rantings.
Civil and criminal proceedings are different, they have different procedures, different standards of proof, different laws, different aims and different punishments
The fact you cannot distinguish between the two is irrelevant.
And where did you find that “I’m at fault too!” argument in Trudy Gilmond’s answer to the complaint? 🙂
“At equal fault” will require 2 wrongdoers. Your scenario only had 1. Receiving money isn’t a wrongdoing in itself.
It’s better to look at the realities of the case. Trudy Gilmond didn’t use the in pari delicto defense, that defense argument first popped up in one of your theories.
Are you telling me you have have access to the transcripts? That would be exceptional. I doubt you.
I have only read the consent agreement and there is no hemming or hawing in it. The Consent Agreement immediately neutralized Burks, secured his cooperation and the payment of a fine… all with the minimum amount of fuss.
This provided an immediate benefit to the investing public since it stopped the scheme dead in its tracks, which means it was totally consistent with the mandate of the SEC. So what if Burks did not admit guilt? Only you seem to find that significant.
There is little doubt in my mind that the SEC can prove Burks’ guilt anytime they direct the resources into doing it and frankly, I am glad they seem to have more important priorities than that.
Burks isn’t going anywhere, and neither is the SEC. His day will come.
The Receiver was not appointed “under” the Consent Agreement. Bell was appointed upon Motion by the SEC to take control of a company that was spinning out of control with no chief executive.
The Consent Agreement merely said I Burks, admit no guilt, but will cooperate, GIVE UP CONTROL of the company and pay a fine.
It logically followed that a Receiver would be required to take manage an untenable situation
What is the docket number of her response. I will take another look.
Docket 33
After denying she knew anything at all and droning on about how the Receiver stands in the shoes of RVG, and blah blah, Gilmond asserts…
ELEVENTH DEFENSE
(Unclean Hands)
The equitable doctrine of unclean hands precludes any equitable remedy by Plaintiff as to Defendants.
Wikipedia states under the entry for en pari delicto
“The doctrine is similar to the defense of unclean hands, both of which are equitable defenses.”
Close enough, “variant,” “similar too.” Whatever.
I didn’t ask you about that. I asked you about where did you find “I, Trudy Gilmond, am at equal fault” (directly or indirectly mentioned in her statements).
Unclean hands will require only ONE party. In pari delicto will require TWO parties. Your scenario didn’t identify Trudy Gilmond as a wrongdoer = your logic was flawed.
The transcript is available sa 75-1.pdf, TRANSCRIPT OF MOTION HEARING BEFORE THE HONORABLE GRAHAM C. MULLEN UNITED STATES DISTRICT COURT, “Bell v. Disner et al”.
NOLINK://drive.google.com/viewerng/viewer?a=v&pid=sites&srcid=YXNkdXBkYXRlcy5jb218ZmlsZXMtd2Vic2l0ZXxneDozNDM2NjU3Y2YxYjIyMzhj
@ litteroundman
there are TWO ways to follow the Zeek story :
1] we can all wear some war paint and chant : kill burks , kill RGV
this would be fun! , but ‘base level’ fun.
2] we can bring forth both sides of the argument , and in doing so , bring more information to the public domain , and a better education to both commentators and readers.
this would be ‘funner’.
i believe we are well past our hunter & gatherer mindset, and have evolved into a more intellectual society, capable of debate.
PS : i have NO qualms about being Wrong . i just want full debate and commensurate punishment.
tis fair , ain’t it ?
I don’t think it matters. The foundations and doctrine of en pari delicto run throughout her response….. AND she is not arguing equal fault but equal right, which is to say that she is arguing that the Receiver has no more right to the funds than she does. She merely arrives at that conclusion by asserting he has unclean hands.
Again from Wiki: “The same principle (en pari delicto)can be applied when neither party is at fault if they have equal right to the disputed property, in which case the maxim of law becomes in aequali jure (melior est conditio possidentis)”
I really don’t care what Trudy Gilmond’s lawyer put on a piece of paper after too little sleep. The reality is that neither she or Bell is at fault.
Do you believe Bell has unclean hands as Gilmond’s attorney asserts or do you think it more probable that Bell has no greater right to the funds than she does? I believe that en pari delicto is the essence of her argument regardless of what the attorney wrote down.
It’s probably time to stop that discussion. The Receiver can’t both be right and have unclean hands at the same time.
No shit? That’s why there’s a judge.
By now you should be able to understand that en pari dilecto IS the argument Gilmond is making.
The inverse of equal fault is of course equal right.
….but equal right does not.
In aequali jure melior est conditio possidentis.
“When the parties have equal rights, the condition of the possessor is the better.”
Gilmond is of course the possessor in this case
I accepted that immediately, but “equal fault” or “equal rights” will require TWO parties with similar faults or rights. Both your theories were flawed (in the scenario you described) = one of the parties had unclean hands, the other didn’t.
Since Trudy Gilmond hasn’t been accused of any wrongdoing, the in pari delicto argument will be moot. A defense argument should preferrably make some sense, but your arguments didn’t.
Oops. I no longer doubt you. Interesting stuff. You are right that Sorkin-like arguments concerning securities and subject matter jurisdiction can and may be raised during the clawback litigation. Both Bell and the judge seemed ready to deal with the issue on the “merits.” Maybe we will see Sorkin again after all.
You have failed to check the RELEVANCE. The clawback action isn’t about wrongdoing, i.e. Trudy Gilmond won’t improve her rights to the money by proving that neither she nor the Receiver can be blamed.
It’s time to stop that discussion. It has become rather meaningless and hypothetical.
* Howard Kaplan’s attorney did use the in pari delicto defense, but Howard Kaplan was accused of wrongdoing.
* Trudy Gilmond’s attorney didn’t use that defense (other than in some hypothetical scenarios you presented).
What “debate” ???
You are using a thread designed to provide factual information as your personal soapbox and are attempting to rewrite history while doing so.
The laws, both civil and criminal were in place when Burks et al undertook to defraud the public and only appear to be different due to Zeeks’ / RVGs’ size and reach in comparison to previous “similar” cases involving both securities violations and fraud.
He / they knew EXACTLY what could and would happen when they were inevitably busted, yet they chose to present themselves as sitting ducks.
None of what is happening is cruel, unusual or unexpected and there’s not the slightest amount of “hunter gatherer” mentality involved in society protecting itself, while ensuring those who would blatantly set out to defraud it and its’ members should not profit from their endeavours.
That is an uproven allegation which you are trying to take to the bank.
The Receivership can hardly be viewed as having dirty hands even if RVG under Burks did…. and RVG under Burks is not the party in interest here, a Federal Receivership representing the creditors is. That changes things considerably.
Bell asserts a right to clawback funds. Gilmond asserts a right to retain the funds. The question is who has the greater right. Maybe Bell? Maybe Gilmond?
If the rights are equal then Gilmond retains the money under the doctrine of pari delicto and that is what she is trying to do, and the way she does that is by allegeing Bell has unclean hands which in effect says he has no right, or at least no greater right to the funds than her.
In this case Wrongdoing has nothing to do with it. Equal right to the funds is the issue.
Gilmond alleges that the Receivership has unclean hands and thus has no right, or at least no greater right to the funds in her possession than she does.
I never said it was.
So your assumption is that the doctrine of pari delicto can only be applied when there is an allegation of wrongdoing?
Who says? You? I disagree. Your logic is flawed.
Yes, he did. Your understanding is flawed.
True but the odds are long.
Oh goody,
let’s all play hypotheticals with Anjali, shall we ??
Or perhaps we should look into “unjust enrichment” and start a whole new round of “ANJALIdebate”
Not exactly. I claimed that the defense argument had to be RELEVANT for the type of case, that it must address the legal issue of the case.
“None of us can be blamed” will only be relevant if the party is accused of wrongdoing.
“None of us have a more superior right than the other” will only be relevant if the parties have relatively equal rights, and that isn’t relevant in this case because of fraudulent transfers.
“Both of us can be blamed” isn’t relevant because the case isn’t about wrongdoing by the defendant.
“Fair Use” won’t be relevant even if Trudy Gilmond only used a fair portion of the money for educational purposes, and the money had been out there in the public domain anyway.
Fair Use may be relevant for copyright infringement cases, but it’s not very relevant for profit from Ponzi schemes.
Would you rather play “its a black and white world?” Its not.
Dude. You are really losing your shit here. Take a break.
If I did, it certainly wouldn’t be in a thread entitled “Paul Burks indicted” or be about things that haven’t happened,
Or, for that matter, be about my laymans’ interpretation of things that have happened, (with court approval, by the way)
hoss/norway/in pari delicto
read this :
now, read this:
zeekbates.com/1-26-13/Memorandum%20of%20Law%20in%20Reply%20to%20Motion%20to%20Intervene.pdf
i have given you cinderella and her shoe , on a platter .
why must you argue so ?
Simply because you keep producing a (totally inexperienced) laymans’ interpretation of events that either haven’t happened, submissions that failed in their intent or are totally irrelevant to the subject at hand.
What significance does your production of an over 18 month old “memorandum of law” have to your argument ???
Was it accepted ??
When did it change from being an argument in support of a defendants’ position to becoming case law ??
I may be numb but I do not see the relevance. Can you ‘splain it to me.
No it was not, but neither were the arguments rejected. The judge sought and received confirmation that the arguments could be raised, adressed, and more fully considered during the course of the clawback litigation. The judge made that very clear.
Whether or not Zeekler was peddling securities is unresolved. The SEC allegations are unconfirmed.
That’s not really true because you yourself have forecast outcomes and “things that haven’t happened.”
Of course, you are 100% correct.
Zeek MIGHT not have turned out to be a $600 million ponzi
The criminal charges “MIGHT” not have followed the civil charges
The Federal task force “MIGHT” not have been involved
Just as the sun “MIGHT” not appear in the sky tomorrow and the next day
Anjali is doing what Anjali does AND doing it in a totally inappropriate place.
Not the same, Hoss.
But, of course, you knew that.
1] enforce an invalid contract :
“Indeed, that Defendants Burks and Rex settled the SEC’s allegations without admitting or denying them does not preclude Proposed Intervenors — who were not parties to the settlement –from challenging legal conclusions in the settlement.”
2] that no party can recover in an action where it is :
3] necessary to prove the existence of an illegal contract in order 4] to make his or her case:
hence the defendants are saying , prove the presence of an illegal contract [ securities] , because we believe the SEC has no jurisdiction and has not proved that the illegal contracts are actually ‘securities’. and till this is not done the court cannot push this ‘invalid contract’ [SEC settlement/ receivership] to recover money from the defendants .
be numb , not dumb , i say ! 🙂
Hoss, you can join with Anjali and play the contrarian till the cows come home and the moon turns blue.
Any reasonable person, on the other hand will ignore the semantics and move on.
The SEC won and Burks / RVG / Zeek didn’t.
The whole process played out and continues to play out exactly as predicted by those with no agenda or barrow to push and, most importantly, as it should be.
when did i say it was case law ?
the defendants argument is still pending for resolution .
this is important in the context of the zeek mess.
the defendants may lose, but this does not mean it is not worth mentioning .
I’m sorry,
are we talking about the world now ??
I thought we were discussing an illegal $600 million dollar scheme blatantly carried out over several years in full view of the public and which involved securities violations as well as fraud, wire fraud and conspiracy.
THAT is what is black and white
Sorta different than the “world” wouldn’t you say ??
actually lesser than one and a half years.
while deciding guilt and sentencing , the court also looks at how much personal enrichment the perpetrator enjoyed.
burks is credited with utilizing approx 11 million for self enrichment .
over half of this was paid in federal taxes , and 4 million paid in fines to SEC. he scored a net 1 million as it stands out of an 850 million scam .
i hope you find this on topic 🙂
i though gilmond/king vs SEC , bell vs disner et all ,are all part of actions, involving the same 600 million dollar scheme ?
can burks criminal indictment be completely separated from ‘questions’ about SEC’s unproven allegations ?
judge mullen is insistent he wants to check the ‘securities’ question , going forward.
is judge mullen a contrarian ? he may be a contrarian but don’t call him a PITA . Respect for Judges !
18th day of JANUARY, 2013
What are you saying here, Anjali ???
It’s still pending ???
Gilmond and King were successful ??
The receivership was dissolved ??
The receiver is operating illegally ??
The defense was right and the SEC and receiver were wrong ??
Absolutely they can.
Here’s your mission, should you decide to accept it:
Read the indictment found here: NO LINK:zeekrewardsreceivership.com/pdf/File.stamped.Burks.indictment.pdf
Find the words “securities violations” or Securities and Exchange Commission or the acronym SEC
Once again, and I’ll type it real slow to allow for your obvious reading and comprehension difficulties:
“Securities violations are a CIVIL or administrative matter, they are NOT a criminal matter
conspiracy to commit wire and mail fraud
mail fraud
wire fraud and
tax fraud conspiracy
are all CRIMINAL charges
CIVIL and administrative wrongdoing can exist which do not involve criminal activity and, conversely, criminal charges can be preferred which do not involve civil wrongdoing.
In Burks case, however, both civil and criminal wrongdoing is alleged
In fact, it is only in the past very few years, the US government has moved to include both civil and criminal prosecution of ponzi schemes and their operators.
Previously, as in the case of Charis Johnson / 12Daily Pro, SEC securities violations and their consequences were the only action taken, whereas Bowdoin / ASD faced both criminal AND civil charges, as is the case with Burks.
If you can simplify it a little to make it become clearer, the criminal indictment of Paul Burks can clearly exist without the “SEC’s unproven allegations”.
The tax fraud conspiracy is clearly “stand alone” from securities law violations. It’s a violation of tax laws rather than securities laws.
That didn’t make much sense? I have no idea of what you have looked at there. “Read this” should normally have been followed by “page xx, paragraph yy, the line starting with zz” or some other more specific explanations.
My reply should be “Check the internet!”, to show that I can be much more confusing than you. 🙂
burks is indicted for running a ‘ponzi scheme’ .
(Ozedit: I’m going to cut you off there. See: https://behindmlm.com/companies/zeek-rewards/paul-burks-indicted-for-operating-zeek-rewards )
read post 273.
Note to Anjali, fiction will be marked as spam.
No, to be precise, Burks was indicted on four counts:
Count one: conspiracy to commit wire and mail fraud
Count two: Mail fraud
Count three: Wire fraud
Count four: Tax fraud conspiracy
You are now switching between being a pedantic nit picker and a broad brush descriptor to suit your own ends.
i will rephrase the above statement.
burks was indicted on four counts [ mail , wire, tax, conspiracy] .
the bill of indictment first clearly established the PONZI scheme devised by burks.
then the bill of indictment names the four counts and explains them in detail .
each explanation rests on the premise that burks devised a ponzi scheme and under the aegis of the scheme , ended up doing mail wire tax and conspiracy frauds.
so, when his criminal matter is argued in court , the basis will be , was the scheme a ponzi scheme ? hence is he culpable of wire mail tax fraud.
finally, ponzi scheme IS a securities violation/fraud . ask wiki .
Yes, Its natural to wonder about “things that haven’t happened.”
The criminal indictment can, and it would also be possible to convict without ever mentioning securities BUT at trial the defense will have opportunity to refute everything the state alleges.
If it were the case that the SEC civilallegations were disproven it would completely change the complexion of the criminal case because the defense would set the table for the jury who would hear a very very different set of facts. Facts which when presented would I think yield a far more sympathetic view of Burks than what you read in the indictment.
I don’t for a minute think that will happen but if it did LRM might even decide he’s a fan of penny auctions.
Give it up, Anjali, no one is interested any more in your fictional interpretation of what happened.
if ‘securities’ are disproven , (Ozedit: Please, just stop. This is ridiculous.)
Post #273 is partly about jurisdiction issues, partly about invalid contracts (or partly about the definitions you found in Free Dictionary)?
That didn’t make much sense either?
The dialogue goes like this:
1. “hoss/norway/in pari delicto” (quoted something)
2. “Now, read this” (link to a document)
– reply from me “That didn’t make much sense?”
3. “Read post 273”
– reply from me “That didn’t make much sense either?”
From post #273:
“Invalid contract” may have been mentioned somewhere in the court documents, but please point to where anyone (Gilmond/King) have made that type of claims about the Consent Order (the agreement between Paul Burks and SEC)?
it IS about the definition i found of in pari delicto on the free dictionary . and i believe this is the defense used by ira sorkin in the gilmond/king motion to dismiss. it fits .
gilmond/king are not challenging the consent agreement . burks/rex can make any agreement they like and that cannot be challenged. but this agreement was the basis of the setting up of the receivership , which is seeking to recover money from gilmond/king .
as gilmond/king were not party to the consent agreement , they are not bound by it , and can ask questions NOT about the settlement itself , but about some of the legal conclusions arising from that settlement [ ie zeek was selling ‘securities’ ].
the ‘contract’ is ‘invalid’ , in the sense that it does not apply to them .
And around and around we go.
Once again, I have to ask – why is Anjali once again insinuating herself into the thread about Paul Burks’ indictment, when the King / Gilmond/ Napier appeal has its’ own thread on BehindMLM here: https://behindmlm.com/companies/zeek-rewards/zeek-pimps-want-discovery-delay-till-dismiss-motions-resolved/
If I was only slightly more cynical than I am, I could easily imagine Anjali is or was a player in the Zeek ponzi and is now working overtime to confuse victims as much as possible.
@littleroundman
since YOU have asked me questions on THIS THREAD , i’ll just answer them here:
What are you saying here, Anjali ???— i’m saying gilmond/king (Ozedit: Gilmond/King have nothing to do with Burks indictment.)
If so, the Receiver has no greater right to the funds than Gilmond and per the doctrine of en pari delicto the Court should not enforce Bell’s demands upon her. She would retain possession.
Paul Burks has been indicted for 4 counts of fraud / conspiracy. None of them will need the existence of unregistered securities.
A Ponzi scheme can work without “securities”, e.g. an oral promise may work just as well as investment contracts. In the Pigeon King Ponzi scheme, farmers bought “breeding pairs” of pigeons from Pigeon King, and earned a positiv ROI when they sold back the offsprings.
In the ZeekRewards case (the indictment of Paul Burks), the unregistered securities are only needed to make the factual description become more understandable.
It will still be a fraud if they change that description to “Paul Burks and RVG falsely promised 1.5% daily discount to consumers for 90 days, to trick the consumers to purchase worthless sample bids”, plus the other related facts.
“Pseudo compliance” will focus on details, e.g. in the use of construed descriptions like “purchase sample bids, earn daily discounts”. But pseudo compliance only has the function of misleading people to BELIEVE something is legitimate, it doesn’t have any real function in court.
Sure but a legitimate business can overspend on contractor compensation and marketing expense. A legitimate business can run in the red, look for additional capital and find itself in regulatory hell, so one of the questions the jury has to answer for itself is this a normal business?
If a Big Government Agency makes a Big Mistake like shutting down a business for securities violations when there were none it casts doubt on the government’s integrity and competency and “beyond a reasonable doubt” becomes somewhat more difficult to achieve.
A jury may really never understand how the Zeekler compensation plan worked but it will be susceptible (with the assistance of a charismatic defense attorney,) to arguments that “a Big Government Agency made a Big Dumb Mistake and hard working people like themselves had their dreams shattered” and “Its the SEC that is the villain here, not Paul Burks. That even sounds familiar as I write it.
In other words a failure to prove securities violations introduced doubt. Its not conclusive but they say juries can be fickle.
@M_Norway
That’s still the offering of unregistered securities. Verbal or otherwise, an offer is an offer.
My comment there was about the same thing LRM said. Securities violations are not needed in the indictment of Paul Burks. The different counts of FRAUD / CONSPIRACY he is indicted for are NOT based on securities violations, but on general or specific fraud.
Securities violations are not part of the indictment. It may be a part of the factual description in how the fraud was operated and how it eventually was shut down by multiple agencies. So securities violations are not NECESSARY for the indictment.
That’s why I also used the Pigeon King as an additional example. I could have added more examples, e.g. the “Kubus / Cleopatra’s Secret” ponzi scheme.
“LUCRATIVE MARKET”
In Pigeon King, farmer’s were told about the lucrative market for pigeons, e.g. “sport pigeons” could be sold to wealthy people in Saudi Arabia, pigeons would gradually replace chickens as food, etc., etc.
The farmers were offered buy-back contracts for the offsprings of “breeding pairs”, 10 year contracts where Pigeon King would pay a certain amount for each 12 week old bird (offspring from those breeding pairs).
The farmers could have different contracts, e.g. some could breed “sports pigeons” and some could breed “food pigeons”, and some could even breed “pet pigeons”. Or they could mix the different types, as long as they managed to keep them separated.
The PRICE started high when the scheme was launched, but the scheme gradually adjusted the prices downwards to become more affordable to more farmers. Early investors could pay as much as $500 per breeding pair, but the profit was also high. Late investors could pay $100 for the same type of breeding pair, but the profit was reduced simultaneously.
THE OFFSPRINGS
The offsprings were sold to new investors as “breeding pairs”, e.g. Pigeon King paid $10 per bird to the old investor, then matched 2 and 2 birds together as “breeding pairs” and sold the breeding pairs to new investors for $100 or more.
EXTERNAL MARKET
No external market existed, the offsprings were simply “recycled” out to new investors.
Some farmers managed to sell some birds at a heavily reduced price after the scheme had collapsed. The other birds had to be destroyed by authorities / other competent organizations.
HOWEY TEST
Pigeon King won’t meet the criteria of the Howey test, e.g. it will fail to meet the criterion of a profit that derives solely from the efforts of others.
So my argument was correct enough. Ponzi schemes can be about general fraud, they don’t NEED to involve the sale of unregistered securities.
LOGICAL FLAW “ALL SHEEPS ARE WHITE”
People might BELIEVE Ponzi schemes will need to involve securities, e.g. based on experience and what they have seen themselves. But with that logic all sheeps will be white, since white sheeps are much more common than black ones (since people haven’t SEEN black sheeps themselves, black sheeps can’t exist).
the counts of fraud/conspiracy may not change .
but the bill of indictment will have to change to replace ‘ponzi scheme’ with some other fraud type [ fake penny auction business ?]. which means a fresh indictment .
then there’s the question of the olivares plea bargain based on a similar bill of indictment . what happens with that ?
so a lot changes, if the SEC does not have jurisdiction or there is no ‘securities’ fraud
In Pigeon King, the buyback contract constitutes the offering of an unregistered security.
Yes, I’ve said that …several times.
By law the Court may not deprive the net winners of property without due process. I am guessing the judge has very little concern or doubt that the SEC has jurisdiction but he would have a huge headache if he did not ensure Gilmond and King (all net winners) were afforded due process.
So he asks Bowers and Bell, when, how, are you going to address this securities issue. Hem Haw? When? How? Bell….during the clawback litigation on the merits. Judge, OK I heard the word merits. Motion to Intervene denied. Gavel sound.
It constitutes an INVESTMENT (investment contract), but that doesn’t mean it constitutes a security?
It will most likely fail to meet the criteria of the Howey test, e.g. because of all the work needed. The profit depended heavily on live birds, and live birds depended heavily on the farmer’s own work. Pigeon King wouldn’t have managed to sell dead “breeding pairs” to new investors, farmers are simply not that stupid. 🙂
Pigeon King needed the live offsprings from the early investors as new breeding pairs it could sell to other investors. Theories about dead birds filling the function of the live ones will be rather meaningless.
Your theories on pigeon king are pretty meaningless. “Arlan Galbraith was sentenced to seven years in prison Tuesday” .
Read more: /kitchener.ctvnews.ca/pigeon-king-saga-wraps-up-as-founder-sentenced-to-imprisonment-1.1735164#ixzz3JWqDDe4kHe
Have you READ the indictment? I haven’t, I only had a quick look at it and I didn’t look at any details.
You will most likely find that the indictment already has changed.
There was and is no reason for the indictment to change.
It is extremely clear on both the ponzi component and the fraud components as in: there was fraud involved on multiple levels and the indictment clearly points out each fraud
Why would it most likely have changed?
The clue is “You will most likely find …”.
It was a prediction that she most likely will find that the Bill of Indictment has changed from what she believed it was about to what it really is about.
That makes no sense at all. The indictment does not change unless the prosecutor gets it amended and there is no reason I can see why he would have it amended at this date. He just obtained it. Are you having a lunar moment?
I haven’t said that the indictment will change? You have probably read a statement out of context.
Anjali will most likely find out, by reading the indictment and trying to identify the problems she pointed out, that those problems are not there in reality.
It’s a prediction about what Anjali will find out rather than a prediction that something will happen / has happened to the Bill of Indictment.
Oh, so Bozo the Clown wrote the following
You have definitely gone loonar.
Securities are normally about FINANCIAL contracts. The investments in Pigeon King were more of the type BUSINESS contracts (commercial contracts).
You also have other types of contracts, e.g. employment contracts. Some employment contracts MAY potentially involve some types of payment from the employee. That doesn’t make those contracts become securities.
The fact that people paid money to a third party company with the expectation of earning a profit is, in itself, not enough to constitute a security. The contract must be of the right TYPE, a financial type of contract. That’s why you have the Howey test, to be able to exclude wrong types of contracts.
That’s also why pseudo compliance lawyers will try to add products or work to some contracts. Gerald Nehra heavily believes in his own theories about “movement of products”, so he added 10 VOIP software to each AdCentral contract. It will also explain the statement “It’s not an investment, people are paid for advertising the business”.
You can write this and at the same time swallow the pigeon story? I know you did not just fall off the back of the turnip truck but damn!
Its the same scam, whether its birds, avocados orchards, pine forests, llamas, work posting ads, or work shoveling bird crap. Same. Its a product front. Just because they are cute little birds doesn’t change a thing.
Why do you think the guys doing seven years?
You have probably misinterpreted something? I haven’t swallowed the Pigeon King story. Post #304 contains some additional information.
Most likely because he was indicted and prosecuted for some type of fraud. That’s the most common reason for why people end up in prison.
It will change the type of contract from financial contract to commercial contract. It will still be a fraud, but it will not be a securities fraud. It will still be a Ponzi scheme.
LISTEN to the man.
Try to analyse it yourself? But try to analyse the realities, rather than some hypothetical scenarios.
Pigeon King required a substantial amount of work from the farmers. It also required additional business investments (e.g. buildings, water supply devices, etc.). It also involved business costs (electricity, food, transport costs, etc.).
The “breeding pairs” of pigeons were primarily bred by the farmers themselves (the old investors), and were sold by Pigeon King at a profit to new investors. That profit was used to pay the old investors.
The work done by the farmers had a significant function. It wasn’t simply just a “product front” or some “insignificant work”.
A passive investment scheme could have accepted dead birds, e.g. of type “Norwegian Blue” (from the Dead Parrot sketch by Monthy Python). Dead birds wouldn’t have required the same amount of work, expenses or business investments, but they wouldn’t have produced many offsprings either.
@M_Norway
Business contracts that promised an eventual greater than 100% ROI. Whatever those contracts were attached to and whatever busybody work they had them doing is irrelevant.
None of that matters. They were promised a massive profit for going through the motions. Invest, jack off twice a day and receive a 100% ROI.
Wake up.
None of that matters?
Without water supply, the birds would die within 1-3 days, and the profit would turn into a loss. The farmers were not offered any profit for dead offsprings. That idea is rather weird in itself.
I believe it may be wise to terminate the Pigeon King discussion now. It will most likely be rather fruitless anyway. I have already posted most of my arguments, and you have probably posted the ones you had.
Without the giving away of bids and spamming of the internet, Zeek Rewards affiliates wouldn’t have been paid.
Without the viewing of ads, investors in every advertising-based Ponzi scheme wouldn’t have been paid.
The busywork is irrelevant because it has no effect on the revenue generation used to pay out investors. As with Zeek, ROI revenue was raised solely by investment and re-investment made by new and existing investors.
You don’t recognize any difference between financial contracts and commercial ones?
The courts will, they will TEST the type of contracts, e.g. by applying the Howey test. I will also need to focus on that part of an audience, so I will clearly recognize some differences between financial contracts and commercial ones.
I recognize a contract that solicits an investment and promises a >100% ROI, paid out of newly invested funds.
I don’t consider anything else relevant within the context of this discussion.
I know that, so I didn’t even bother to look for or bring up any legal definitions. I only mentioned that courts and regulators most likely will see it differently.
Further discussion will probably be rather fruitless, so we might as well terminate that discussion. It was rather off-topic anyway.
no. all the counts are clearly rising from the scheme being a ‘ponzi scheme’ and clear mention of bids being shares of the company, promising excessive ROI, paid to older participants by new participant funds.
if it turns out this is not a securities [ponzi] fraud , i say the bill of indictment will have to be changed.
also i could not find two definitions of ponzi schemes [ financial/commercial].
ponzi schemes are securities/investment contracts with high ROI , paid by new investors money .
so definitions of ‘what are securities’ and ‘what are investment contracts'[howey test] , will be the basis of argument in judge mullens court soon.
Oh goody, let’s choke up the blog by playing endless games of “if it turns out”
I’ll go first:
“If it turns out the prosecutor is sleeping with the judge then a mistrial will have to be declared”
Your turn, Oz.
That’s actually the requirements.
Did you manage to find ONE legal definition of Ponzi scheme? I’m talking about legal definitions, not about “descriptions” of how they generally work.
Legal definitions can usually be found in one of the first sections of the different laws. The way you described it, it should normally be found in Securities Act 1933 or Exchange Act 1934.
I have never managed to find any legal definition of Ponzi scheme, but I have found many “general descriptions”.
IF there is no legal definition of ponzi scheme, it follows that no one can be ‘directly’ indicted for running a ponzi scheme.
hence ‘other’ defined legal frauds are used to indict in a ponzi scheme.
read the indictment again . all the counts are based on the devised ‘ponzi scheme’.
Ponzi is a general descriptor. It tells us the context in which the defined violations took place, e.g., …during the course of running a “Ponzi” scheme the accused engaged in, 1. Mail fraud, 2. Wire Fraud, or….
During the course of a “high speed police chase” the accused 1. ran a red light 2. exceeded the speed limit 3. Failed to Yield 4. drove recklessly.
Context helps us understand why.
Welcome aboard, Captain Obvious.
Maybe that’s why the prosecution team decided not to indict on the grounds Burks was running a ponzi.
Maybe that’s why, when it came to the relevant part of the indictment, counts 1 through 4, the word “ponzi” does not appear.
The prosecution instead using the term; “above described SCHEMES AND ARTIFICES”
In fact, if one were to remove the word “ponzi” from the indictment entirely, it would make no material difference, the word “ponzi” always being used in conjunction with the word “scheme”
So, unless Anjali can show how the defendant has been mislead, and therefore disadvantaged by the use of the word “ponzi” she is once again just whistling in the wind and using up valuable blog space
yes, and in burks bill of indictment , ponzi IS the general descriptor , and the context, in which the 4 counts are rising from .
if the fraud counts could stand without using the word ‘ponzi’ at all , the prosecution would have avoided it , wouldn’t they . why tie themselves up ?
as it stands, the current bill of indictment relies on ‘ponzi scheme’ very heavily.
so if , by some Rare Chance, it comes to be, that zeek is not exactly a ‘ponzi’ but some other kind of fraud , the bill of indictment would change and burks will have to be re indicted.
yeah , “ABOVE DESCRIBED schemes and artifices”
then one scrolls up, and reads WHAT was described above.
According to an anonymous internet poster with absolutely no experience of preparing an injunction
why are we even talking about it, then ???
Why not have a separate thread all about the endless possibilities that Anjalis’ mind can create ??
Once again, the fact you think it, doesn’t make it so.
No material difference that disadvantaged or mislead the defendant is all that matters.
In fact, I wouldn’t mind betting (note: as in, I’m not making a definitive statement) the prosecution and / or the defense will at some stage have to explain the word “ponzi” to the jury
in this context receiver bell made a flummoxing statement to judge mullen :
“MR. BELL: Your Honor, our intention, and not until this issue is resolved, is to file a clawback litigation against these movants and others under a fraudulent transfer claim theory, and alleged that by virtue of the Ponzi and pyramid scheme aspect of it that is a part of the transfer, we do not intend to bring any claims that it was an unregistered security.”
so , while SEC has been repeatedly saying ‘unregistered securities’ , bell is going to call it a ‘ponzi’, without claiming it is a security.
that means ponzi can be defined as something OTHER THAN an unregistered security .
huh ?
because it is a REAL issue before a REAL court , as we speak .
If there is no security violation….. which is to say the judge finds that expectation of profits were NOT solely due to the efforts of Burks but also derived from the efforts of affiliates like Gilmond, much and maybe all of what is being alleged against him disappears.
You simply can not convict Burks of Fraud if he was telling the truth, and what the “truth” is, very much depends on Howey item #4
1. an investment of money due to
2. an expectation of profits arising from
3. a common enterprise
4. which depends solely on the efforts of a promoter or third party
The SEC is on record as saying that removal of Gilmond would have had no impact, whereas the Removal of Burks would have ensured the collapse of Zeekler. Countering that we have the argument that Zeekler could not have operated without the affiliates.
Notably the Pigeon King is in prison after using Gilmond-like reasoning.
the defense is also arguing point 1 of howey ie :. ‘an investment of money due to’
an investment of money makes it an ‘investment contract’ or a ‘security’.
an investment contract should be expectation of profit with NO or LITTLE work
a ‘security’ is a whole different ball game , because securities have some fundamental qualities , which the ‘zeek securities’ [ SEC interpretation] do not have [ defense interpretation].
That’s why I asked YOU to read it. I had a quick look at it, browsed quickly down to the 4 counts, and didn’t find any major problems. You seem to have focused on other parts of the indictment, and mostly on the details.
The requirements for paragraphs 1..37 is simply that it should be understandable …
The court will not carefully analyse each and every word, but rather look for the meaning. It’s simply “background information” to the 4 counts, the most essential facts. It doesn’t have any specific formal requirements.
The counts have some formal requirements, e.g. about specifying the statute, rule or regulation:
I believe you have applied “MLM logic” when you have read it. “MLM logic” will typically focus on details, carefully analysing each and every word, and typically come up with descriptions that are highly deceptive.
I think you are right. The foundation for the charges is the “schemes and artifices” which are characteristic of a Ponzi (or else Ponzi would not have been mentioned in the indictment.)
Among those artifices are the means by which the scheme was implemented and perpetuated, i.e., use of mail, wire, in conspiracy with others and tax fraud. (the four counts)
All Ponzis violate securities law AND all engender fraud. If no security violation is found then it is manifestly NOT a Ponzi.
It must be something else…something which may or may not involve fraud. So what is it?
The bill of indictment was predicated on the belief that Zeekler was a Ponzi. If its not, it seems reasonable to believe the Prosecutor has to offer an alternative and explain why there is still reasonable suspicion that fraud was committed.
This may not be unusual.
“The DA has the discretion to indict a case however they want. If they feel like they cannot prove a case the way it is indicted, they are free to re-indict it any time within the statute of limitations.”
Only in your head.
You said, and I quote:
Again I say: why concentrate on that hypothetical ??
We could spend every minute of the next 10 years coming up with “if, by some rare chance it comes to be” scenarios and each of them would be as irrelevant to the fact Paul Burks was indicted as yours
It simply doesn’t matter what you “THINK” is contained in the indictment.
He’s indicted.
The indictment contains only enough information the prosecution thinks is necessary to have the accused indicted.
Unless and until the defendant challenges the indictment, your hypothetical situation exists only inside your head.
The court accepted the indictment “as is”
Unlike you, the prosecution aren’t guessing.
They have been “inside” Zeek / RVG for months, they don’t need to invent hypothetical scenarios, they have the facts, probably in triplicate.
All ponzis are securities law violations, but the mechanics of a ponzi can be demonstrated by cash flow analysis alone.
There was insufficient “external sales” to support the profit share distributons and that supports the theory of fraudulent transfer.
The section III “Scheme and artifice to defraud” referred to in counts one, two and three contains no mention of the word “ponzi”
The very first sentence of the Introductory Allegations maintains that Paul Burks engaged in a “Ponzi”
The “Schemes and artifices” do NOT contain the word ponzi.
The “schemes and artifices” are pointed to in the wording of counts one, two and three.
The word “ponzi” does NOT appear in the wording of counts one, two or three.
Was he indicted on count one: “conspiracy to commit wire and mail fraud”, does that count contain the word “ponzi”?
Repeat for counts two and three.
NOW comes the bit where the details matter – in the courtroom.
The substance of an indictment is normally about where, when and how the defendant committed an offense, the formal description separated into different counts.
That’s the part where a jury or a judge will need to make a decision. It’s the only part of an indictment where there’s some formal requirements.
Whether or not Paul Burks engaged in a Ponzi scheme isn’t really important. The important factor should be whether he committed a criminal offense, e.g. wire fraud. “Ponzi scheme” is simply a part of the background information for the different counts.
The first sentence of the Introductory Allegations maintains that Paul Burks engaged in a “Ponzi”. The indictment runs from the general to the specific.
Yes it is. Read the indictment. The recitation includes the allegation that he “engaged” in a “Ponzi”.
If he did not engage in a Ponzi you can be damned sure Burks defense attorney is going to be looking to overturn the indictment since it was obtained under mistake or assumptions that are false.
No DA would ever go forward and no judge would ever let it go forward. Its a slam dunk appealable issue and Burks would win.
So what ???
He’s indicted.
You and Anjali are complicating the uncomplicated.
Either Burks has had the worlds’ worst legal team advising him and Anjali is right, or the indictment worked as it was designed.
HYIP ponzi promoters who are desperate to convince victims there is the possibility Burks is not guilty and Zeek might return attempting to confuse things, I can understand.
Why Hoss and Anjali feel the need to second guess the prosecution and courts by playing “what if” is anybodys’ guess
Every single count begins the same way….. “The Grand Jury realleges and incorporates by reference herein all of the allegations contained in paragraphs 1 through 37 of the Bill of Indictment.
Paragraph 1 alleges Burks engaged in a Ponzi and its incorporated by reference.
Again with the hypotheticals.
First Anjali creates a strawman argument, based on something that COULD happen, then hands over to Hoss who then treats the strawman as if it were a valid argument.
There’s lots of things that could, may, or might happen and as many possible outcomes IF a particular circumstance existed.
Let’s talk about them IF that circumstance eventuates.
I have interpreted the 4 counts to be most important, while you have interpreted the background informatipn to be most important.
The 4 counts are the formal descriptions of the alleged offenses. Where, when and how the defendant allegedly committed the offenses, plus which law rule he violated. A jury will only need to find it proven beyond reasonable doubt that he committed the offenses.
You probably have some theories that “the 4 counts may have been compromised, since paragraphs 1..37 are being realleged in each of the counts”. I don’t use theories like that.
The description for mail and wire fraud in Wikipedia describes them as the typical charges for fraudulent schemes (not limited to Ponzi schemes).
Criteria:
scheme or artifice to defraud
Description from USlegal.com:
“A plan or a trick to obtain, by false or fraudulent pretenses, representations, or promises, money or property from someone”. Most of the background information is about exactly that.
I did not say one was more important than the other, but only that if the Grand Jury was told it was a ponzi and it was found not to be that neither the Court nor the DA would proceed.
Ponzi is all over the indictment. Its incredibly prejudicial and if it were not true it would be a gross miscarriage of justice to proceed.
If its true, fine. If its not dismiss and re indict. That’s the only way.
You’re doing it again.
You’re posing hypothetical scenarios then setting out to prove what “might” happen if your hypothetical were to happen.
Strawman with a capital “S”
O K The judge finds that Zeekler violated securities law and the indictment remains unchanged.
That is of course hypothetical as well given the present unsettled state of the litigation but maybe if I write it down you will stop your incessant whining.
Not sure if you’re aware, but the MLM HYIP trade has been seeking this specific finding since at least 2008.
In the initial ASD litigation, the ASD “defenders” went crazy because the government described ASD as an “autosurf.”
This caused near-apoplexy, with the defenders insisting ASD was not an autosurf because participants had to click on a symbol to get an “ad” to load. The 12DailyPro prosecution told them in 2006 that autoloading ads required no “work,” therefore keeping Howey in play.
So, with ASD, the “work” of clicking on symbols was seen as defeating Howey. Other schemes from a script kit quickly emerged. Some of those added more purported “work” — clicking on a symbol and perhaps providing a “rating” for an ad by making a check mark on a form, perhaps.
The government still cleaned ASD’s clock.
In my view, Zeek was just an extension of ASD, with new artifices conceived to defeat Howey.
I do not believe any federal judge, regardless of judicial or political philosophy, ever will give Scamland the ruling it seeks. That’s because the pretense and disingenuousness of the schemes shine clean through.
Allowing a case to go to a jury is an altogether different matter. For me, at least, it’s scary to think that a jury in a Zeek-like case could come back with an acquittal.
What could cause it? Well, math confusion, for starters. And some jurors also could believe the Ponzi issues were avoided via disclaimer. (The HYIPers want a judicial ruling on this matter, too.)
I have contemplated that, if the jury did return an acquittal in a Zeek-like case, that the judge might arrest the verdict instantly. In the absence of that, the prosecution might sprint into the appeals court and move for an emergency appeal.
That’s because an acquittal would be seen as a validation of the business model and a blueprint on how to make Ponzi schemes legal. MLM HYIPers would interpret it as a license to both print and steal money.
PPBlog
so,
1] ponzis are securities law violations
2] the mechanics of a ponzi can be demonstrated by cash flow analysis alone [ new money paying old participants]
in a court of law , can the prosecution deal with just ONE part of the definition , and say , hey judge, lets not look at point 1] , because it’s not convenient . and please judge don’t let the defendants ask questions about that too .
if bell , wants clawback on the basis of the mechanics of the the ponzi scheme and fraudulent transfers, he needs to address the part about securities violations too .
You should probably CHECK that theory first before you start to build new theories from it. “Is it really true that all Ponzi scemes are security law violations?”.
Was SpeakAsia that? Was Pigeon King?
SEC : burks/rex agreed to jurisdiction of SEC and this court . they gave us their keys . hence proved — zeek was a securities fraud. WE have agreed to OUR jurisdiction . what more does anyone need ?
bell : the SEC says its a security violation . hence proved .hence jurisdiction proved. now i’m just looking at the fraudulent transfers of money and i don’t need to address the question of securities no more .
judge : jurisdiction CANNOT be decided merely by consent of two parties. jurisdiction has to be proved, if anyone raises the question.
SEC : well judge , that puts us in a pickle [ bowers, SEC, actually said that !]
there may be some merit in your argument, i’m not going into that now.
as things stand , ponzi schemes are described as ‘securities violations/fraud’.
I’ll bet they have!
I was thinking about the political aspect just yesterday. I came to the conclusion that if a rogue judge ever seriously undermined current law that Congress would be forced to enact some bright line legislation.
That is a nightmare scenario and one that I expect will play out some day when just the right circumstances converge but I don’t think it will be on Bell’s watch.
if a finding is sought , then it should be found and rested. no point having courts run over with repeated litigation over the same issues, from case to case.
in zeek , if a question [whatever the merits , in our personal viewpoints] of jurisdiction is asked , it should be answered.
hope ira sorkin will put up the argument of the decade and judge mullen shoots it down with a brilliant ruling .
i read a quote by an american judge recently , to the effect : the justice system works best , when the defendant can ask, every step of the way –‘prove it !’
You CAN use some logic?
* You have primarily been looking at Ponzi schemes operating in the US. Will Ponzi schemes NOT operating in the US be securities laws violations?
That will require an extended geographical jurisdiction for the securities laws (or similar securities laws in every state and country). That could hypothetically exist, but is it really true?
“As it stands now”, the validity of that theory may have SOME limitations. It will probably be TRUE if you test it on some Ponzi schemes, but it will test FALSE if you test it on others.
First of all the prosecution would never say “lets not look,” it would simply make its case using the financials. Nor would the judge on his own volition bring up the issue…that is for the defense to do and Sorkin has done so. Bell/the SEC prosecutor will have to address that.
However, left to his own devices Bell would not desire this. Bell derives no benefit from proving Zeek was a security violation because while ALL ponzis violate securities law, not every violation of securities law is a ponzi.
A prosecutor could spend a lot of time proving that security laws were violated and still not prove Zeek was a ponzi. Absent Sorkin, why do it. There’s nothing to gain.
Fraudulent transfer does not require securities it just require fraud and the movement of money.
How unsurprising.
If its a ponzi it violates security laws of the United States.
Why? At a minimum, because ponzis meet the Howey Four point criteria of an investment which fails to adequately disclose the risk of investing to the public.
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information
1 Types of securities fraud
1.1 Corporate fraud
1.1.1 Corporate misconduct
1.1.2 Dummy corporations
1.2 Internet fraud
1.3 Insider trading
1.4 Microcap fraud
1.5 Accountant fraud
1.6 Boiler rooms
1.7 Mutual Fund fraud
1.8 Short selling abuses
1.9 Ponzi schemes
So, was Zeek a “deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information
Ws it, as the HYIP industry likes to claim not a “pure ponzi” and therefore not subject to SEC jurisdiction.
Did it, as the HYIP ponzi industry like to claim, contain elements of both ponzi and pyramid schemes, likewise making it not subject to SEC jurisdiction.
Was it exactly like Charles Ponzis’ original scheme ?? If not, does that make the usage of the term “ponzi scheme” inaccurate and therefore the SEC action invalid ??
Did Burks appear before the SEC and / or the court sans legal representation and if he did have representation, why didn’t it include anonymous internet bloggers who could have had the charges dismissed in a flash, based on the use of the word “ponzi”
Was Burks’ case weakened by the usage of the word “ponzi” and / or was he disadvantaged by its’ usage ??
Does anyone involved in this pseudo debate have access to PACER or transcripts, or are they relying on second hand reporting of events, media reports of the events or whether or not other internet bloggers could be bothered uploading any and all relevant documents and they (internet bloggers) asking Mr Google the right questions to enable them to be found ??
Yeah the guy went to jail Did you forget again.
(post #328)
That’s probably correct, but it hasn’t been verified. That theory is mostly based on observation (my observations, not your’s).
You will find several descriptive definitions (how Ponzi schemes work, how they’re organized, what they primarily are about).
It’s almost impossible to find legal definitions (how the law defines it).
The lack of legal definitions is being reflected in the indictions, e.g. Paul Burks was charged with more general types of fraud.
correct. the SEC and bell were trying to say that sorkins questions about ‘jurisdiction’ are a ‘red herring’ and the court should not consider them, as SEC jurisdiction was settled due to the consent agreements.the judge disagreed with that and rightly so .
well , this is a good opportunity to answer that question . there is some merit in it . answering it, will make the future easier.
ps :instead of ‘securities’ and ‘investment schemes’ , would it have been better if FTC had addressed zeek as a pyramid scheme?
here is a hearing transcript for people who just love to participate in ‘psuedo debates’
drive.google.com/viewerng/viewer?a=v&pid=sites&srcid=YXNkdXBkYXRlcy5jb218ZmlsZXMtd2Vic2l0ZXxneDozNDM2NjU3Y2YxYjIyMzhj
No. it was not.
in india , ponzi schemes fall under the jurisdiction of our version of the SEC ie SEBI [securities exchange board of india]
there is no civil authority overlooking pyramid or ponzi/pyramid schemes.
i agree that not all ponzi schemes can be described as ‘securities violations’. we can see, the SEC also uses the phrase ‘investment contracts’ which need not behave entirely like ‘securities’. so they have relaxed the definition a bit ?
You seem to forget, the SEC and prosecutors aren’t guessing any of this.
Proving Zeek was a fraud or a ponzi won’t be done by searching the word on Wikipedia.
They have documents, accounts, forensic analysis, screen shots, videos, insider declarations, bank records and details of every single transaction
Why on earth would anyone be concerned by whether or not Anjali thinks the usage of the word “ponzi” could possibly invalidate the injunction or be detrimental to the prosecution case in the criminal proceedings
I can’t say with certainty what was happening here but the attorneys and judge do problem solve during the course of oral argument. If the SEC says “were in a pickle” the judge may suggest a method to overcome the difficulty. There is some give and take.
correct . LRM was badgering , about how burks was NOT indicted for ‘ponzi scheme’ .
well, mr misguider , that’s just not possible . that’s why !
“Went to jail” doesn’t mean he violated securities laws, does it?
Arlan Galbraith was investigated by the Royal Canadian Mounted Police for fraud. He was indicted for one count of fraud, and 4 counts of bankruptcy law violations.
He received Cease and Desist in Iowa, Washington and Maryland. I haven’t checked all those, but the C&Ds were primarily about Business Opportunity laws.
Oh how remarkably Hoss like.
GOOD ! let them bring it all out in court then ! that’s what courts are for !
BTW i am not raising the questions here , but merely ‘repeating’ questions which stand raised before the court .
Your theory doesn’t reflect the reality. SpeakAsia didn’t violate securities laws in the United States, other than hypothetically. It didn’t even operate in the United States, it primarily operated in India and Bangladesh.
Your theory doesn’t reflect the reality. The Howey test isn’t used by EVERY court in the United States, some states will use a different test (“Risk capital” or something).
It matters not what you “say” your purpose is.
It’s all froth and bubble empty rhetoric.
* Zeek is closed
* Further harm is prevented
+ The SEC got what it wanted
* The receiver has what he wanted
* distribution has begun
* Dawn Wright Olivares pleaded guilty to investment fraud and tax fraud conspiracy
* Daniel C Olivares pleaded guilty to tax fraud conspiracy
* The grand jury has returned its’ verdict
* Burks remains indicted
Anything further than the fact Burks is indicted is conjecture / guessing / fortune telling / speculation
Now comes the bit where the contrarians propose Wright Olivares acted on his / her / their own and Paul Burks might / could have been totally unaware of what was happening and thus might / could be found not guilty.
Gotta be a good three or four weeks worth of contrarian to-ing and fro-ing on that possibility alone.
@ LRM
Zeek is closed—-true
* Further harm is prevented—true
+ The SEC got what it wanted—–true, but their ass is still in soup.
* The receiver has what he wanted—–partially, his ass is also currently floating in a soup.
* distribution has begun—true
* Dawn Wright Olivares pleaded guilty to investment fraud and tax fraud conspiracy—-she can unplead at any step till sentencing
* Daniel C Olivares pleaded guilty to tax fraud conspiracy—–he can unplead at any step till sentencing
* The grand jury has returned its’ verdict—–no ‘verdict’, just an ‘indictment’. for every two people indicted only one lands in jail .
* Burks remains indicted—–true
but the SMASHER is that ,JUSTICE has not yet been served . the PROCESS of justice has only Just Begun . long ways to go mr misguided!
I didn’t understand that post?
Paul Burks hasn’t been indicted for “Ponzi scheme”. The jury doesn’t need to answer “YES” or “NO” to that. It will need to answer “We find the defendant guilty / not guilty” on the 4 counts, based on the evidence as a whole rather than on the details.
If you have another version of how a trial works, then please describe that version. You seem to believe that the jury will need to answer ALL points in the indictment?
You and hoss have used relatively similar logic. “EVERY count begins the same way. They INCLUDE points 1..37”:
You have probably interpreted that in a very specific way, but does that interpretation really reflect the reality?
Mr / Ms Foreperson,
how do you find on count one, guilty or not guilty ??
how do you find on count two, guilty or not guilty ??
how do you find on count three, guilty or not guilty ??
how do you find on count four, guilty or not guilty ??
“Well, Your Honour, in the introductory paragraph of the indictment the prosecution uses the word “ponzi” which we consider inaccurate so we think the prosecution should go back and re submit the indictment to eliminate that word.”
R–I–G–H–T
yeah , before the jury can make any ‘finding’ the prosecution will have to establish the ‘ponzi scheme’, because the bill of indictment goes blue in the face saying ‘ponzi,ponzi,ponzi’.
the jury cannot pull any ‘finding’ out of the clear blue sky.
(post #348)
I don’t know exactly how you have interpreted that. Can you clarify it?
There’s 2 potential interpretations:
1. It’s simply how an indictment should be written. Points 1 through 37 are simply about what the trial is about, the allegations that can be disputed by the defendant, where both the prosecutor and the defendant have a chance to prove their case for the 4 counts / charges.
The 4 counts are the formal charges, what the prosecutor has to prove beyond reasonable doubt that the defendant committed. They are BASED ON points 1 through 37 (rather than “points 1 through 37 have been INCLUDED”).
2. It can also be interpreted to “since points 1 through 37 have been INCLUDED in the 4 counts, the defendant has also been charged with all (relevant) points 1 through 37”.
you were dead right on the pigeon king ‘business contract’ argument !
the SEC went after it thinking ‘ponzi’ but had to correct their stand to ‘business opportunity fraud’
i think that’s what zeek defendants are trying to say too , that it wasn’t a ‘security’ and it wasn’t an ‘investment contract’ , but a business contract .
Where and in what context ??
if you start reading from the middle of page 18, the SEC makes the argument that the fact of jurisdiction has been settled between burks/rex/SEC/court.
the court says jurisdiction cannot be settled by consent of parties
SEC tries to convince the court that , burks/rex consented and handed over his keys, after heavy lawyering, and this goes to show the SEC has jurisdiction .
the SEC tries to tell the court that defendants themselves concede to the sanctity of the consent agreements , hence should not be questioning jurisdiction . [this is not correct , because , defendants never questioned the consent agreements at all . they are only questioning the legal conclusions arising out of the consent agreements which affect their interests ].
the SEC makes a case about the defendants coming 4 months late to the table .
so , this coming of the defendants , to question the validity of jurisdiction , puts the SEC in a pickle, because they assumed jurisdiction was SETTLED.
in his ruling , judge mullen disallowed the intervention ,and ONE reason for that was that the defendants came late.
however the court did not agree with the SEC that subject matter jurisdiction was settled.
I haven’t drawn any conclusions there, but I haven’t blindly accepted the “all Ponzi schemes are …” idea. Ideas like that are typically based on beliefs rather than on realities. They will eventually fail when new sets of information becomes available.
Government agencies can’t use ideas like that. They will need to analyse their own jurisdiction in each and every case. Since they can’t use that type of ideas, neither should I.
And ???
The end result is different how ???
Once again you’re going over old and irrelevant ground.
As the subject line on this thread says: “Paul Burks indicted”
Unlike you, the SEC has no need to “win” every point.
It got what it wanted
and the question of subject matter jurisdiction is PENDING and will be heard by the court. wait for it .
the SEC did not get what it wanted , ie settle the case and go home free , leaving bell to sweep up the mess. now they will have to convince the court of their jurisdiction .
seriously ! how much explaining do you need !
Can we at least stick with US Law. He went to jail for something that looked and smelled just like what is regarded as a ponzi in the US. If he had been in Birdistan he would have been convicted of bird-farting (that is actually what they call it) for it is against their laws to do stinky things with birds.
By definition, investment contracts are securities.
That is a mischaracterization of the process. It is not an “introductory paragraph” it is an allegation and has been used to establish “probable cause.” Without “probable cause Burks would not be charged at all, so this is not so frivolous a matter as you believe.
Items 1 through 37 as the Indictment says, are incorporated by reference (constitute part of the overall story) and were considered along with the specific allegations of fraud contained in Counts 1-4.
It means that the Grand Jury (not the trial jury which does not have the same function) has considered ALL of the allegations (the whole story) presented to it and UPON THAT BASIS finds there is probable cause to bring charges against the defendant on the Counts.
Once the Grand Jury returns a true bill the defendant is arraigned and eventually the trial jury (or judge) decides whether specific laws were broken. The Grand Jury indictment is a determination of probable cause based on allegations 1-37 and each individual count allegation (it might for example find no probable cause of one count but still find the overall story credible)
The Trial Jury determines whether any of it is true after hearing the evidence and the Judge makes sure everybody plays by the rules.
It must be acknowledged that Grand Juries often rubber stamp
what is presented to them.
Regardless There is still some test or criteria used. Call it the “Is this a security test” if you need to feel better.
Ah, so you’re saying it can’t be the same Kenneth D Bell who has received court approval to begin the claims reconciliation process because the SEC case is still pending.
Hang on for just a second – there’s a flock of pigs flying past making a terrible racket.
Right – quiet again.
I believe you were about to explain how the receivership is going to be unwound…………….
Hoss,
what the h*** are you on about ???
He’s indicted
But isn’t that just another way of asking whether Zeek was dealing in securities? If the Court finds they were, then the SEC has jurisdiction and thus the action it initiated in North Carolina District is proper (the Court has jurisdiction over federal matters.)
It may be a bit of a pickle (horse before the cart type of thing) now but it gets resolved if, as I expect, the court determines Zeekler dealt in securities.
The Receivership is not going to be unwound. The SEC has jurisdiction over RVG because it owner, Burks consented to it. The motion to remove the receiver has already been
denied.
Yes, we are all aware that Burks has been indicted. You don’t need to keep shouting it over and over again.
OK, B&G , just got a few minutes to spare .
yes , investment contracts are securities , BUT are differently defined from ‘stock, shares, market,’ securities.
securities as in stock market defined ‘securities’ have a whole different set of ‘qualitative’ behavior.
so , SEC deals with securities , and investment contracts that are similar but not EXACT to securities.
correct . i was jus’ bein’ pretentious boss 🙂
If “we” know, then why is the Anjali / Hoss tag team continually proposing ridiculous hypotheticals, arguing continually over the usage of the word “ponzi” in the (granted) indictment and suggesting the SEC somehow “failed” in its’ objective ??
There are only two groups now keeping the thousands of past and potential victims who read this blog confused and / or believing some sort of technical error will be found which will save Zeek and Burks:
The HYIP ponzi “industry” and the Hoss / Anjali tagteam
zeek is shut down . there is no confusion .
there is only ONE group of humanity , which seeks the ‘truth’ in any and every matter.
as the american judge advised — ‘prove it!’
why cant you shoulder that responsibility , instead of whining ?
That’s why I added Iowa, Washington and Maryland (the Cease and Desist orders). My main message was that we should look at the realities rather than hypothetical theories.
Maryland and Washington involved Securities Divisions (on state level), but the laws used were Business Opportunity Fraud laws. Your theory “All ponzis are securities law violations” has been weakened but it hasn’t been disproved completely.
Your theory has actually been seriously weakened, because agencies will need to analyse the facts and then apply the correct law to the facts.
seems anjali is trying to figure out how to avoid/not be responsible for clawbacks on her ‘earnings’. There really is no other reason for discussion until the proceedings.
I think:
Yes and the Court agrees…. as to RVG itself… its settled
Yes. but a settlement is contractual and this one was between the SEC and RVG. The argument is that the RVG and the SECs contract is not binding on the affiliates….thus they are not subject to the jurisdiction of the court in the matter SEC v RVG.
Yes, the SEC said RVG adequately represented their interests when it settled, the court did not accept that.
Yes, regarding the dissolution of the Receivership. More importantly the SEC also made the point that Burks settled and was gone, so RVG needed administrating, and it was better to retain Bell, who had been doing it for four months than forcing the SEC to act as receiver. (which it could have done) Motion denied.
Yes…which is another way of saying that the Court is questioning whether it has jurisdiction to find against Gilmond and King in an action initiated by the SEC if there is no securities involved.
As you pointed out, Bell said he was not going to raise the securities issue. The Court on the other hand wanted to make darn sure he did, otherwise the Court would not have jurisdiction to grant clawback judgments
Anyway, that the way I see it…right or wrong.
OK look at in anyway you want. The bird man was in violation of bird laws in Omaha, and animal laws in Oregon, he was in violation of commercial law in Canada, Consumer law in Elkhorn.
Can we just speak the same language?
Brilliant. Does she even have earnings?
first of all , leave hoss out of this . he does not agree with ‘all’ of my ideas.
the ONLY hypothetical i see, so far , is that SEC ‘understands’ this as a ‘ponzi’ scheme, without showing ‘proof’ .
stuff your consent agreements, where the sun don’t shine, as an equal member of the ‘world’ , i demand ‘proof’
goodnight
Nobody ever said a technical error would be found or suggested Zeek and Burks would be “saved” except you…just now.
Don’t fear. It will all turn out all right.
like Whaaaat ? i never even seen the the zeek website in my life !
like what ???
That question is primarily about SEC’s jurisdiction (to shut down Zeek), but also the court’s. The court was confident enough to deny the “Motion to dissolve”, and to delay the jurisdiction dispute when it initially was filed.
If it had been serious doubts about the jurisdiction, the court would most likely have acted differently.
Federal courts will normally use the Howey test to determine whether there is an investment (unregistered securities).
* investment of money? YES
* in a common enterprise? YES
* expectations of profit? YES
* which arose substantially from the efforts of others? To be tested.
I believe the amount of retail bids sold was appr. $7 million, but i may remember it incorrectly. That’s the legitimate part of the business. Trudy Gilmond can claim to have sold some of those bids directly or indirectly.
She has carefully avoided claiming anything specific about sale of retail bids, she has focused on the amount of work rather than on the results.
She has been vague about almost everything, so my bet is that she has a really weak case. If she had a solid case, she would have been much more specific about it much earlier.
Recruitment of people into a Ponzi or pyramid isn’t work, as the law sees it. A court will never reward that type of “work”. That’s probably one of the other reasons for why she has been so vague about the work.
The sample bids didn’t bring any profit to the company, so she can’t claim that. The posting of ads didn’t generate any profit either. All in all, her case looks rather weak.
so . what am i saying ?
TEST IT !
so be it ! let the court determine, and in the process create some strong ‘case law’
i cannot agree with unproven justice . can you ?
investment of money , is not a fraud in itself.
you , yourself, made a finding, that all investment contracts are not security violations , but can be a business contracts [pigeon king ].
A Bit of the Pickle. –
Authored by Ari Sorkin
If the Court finds Gilmond and Kings profits were derived from investment contracts then it follows that Gilmond/Kings actions were always subject to regulation and thus properly under the jurisdiction of the SEC.
Accordingly, the SEC v Burks, RVG dba Zeekler lawsuit brought all who were dealing and promoting Zeekler’s securities under the subject matter jurisdiction of the District Court.
Since the Court has jurisdiction it has the authority to rule and demand disgorgement.
duh.
‘How do I EXPLAIN thee? Let me count the ways’ [many apologies to elizabeth browning]
1] bell has court approval to deal with the RGV estate
2] the consent agreement ‘allowed’ bell to pursue all creditors of the RGV estate
3] but, point 2] does not have the ‘concurrence’ of the creditors , since the consent agreement , by law, cannot apply to them .
SO , believe – it- or- not , bell’s powers DO NOT extend beyond the RGV estate.
‘ ‘IF” the court finds’, is the delineating subtext here.
‘If’ the Court finds Gilmond and Kings profits were derived from investment contracts then,—– it follows zeek was a ponzi scheme—-argument over.
because the SEC refused to substantiate its case , we poor lay persons are left grappling with the ‘if’s’.
i mean , the SEC does not have the ‘budgets’ to clear the ‘if’s’.
i mean, do We have to string along our budgets, fighting on viewer less blogs, proving/unproving the ‘if’s’. unfair !!
🙂
@anjali
Um, 99+% of the money flowing into Zeek was affiliate funds. Burks made up a daily ROI percentage and paid out existing investors with new affiliate funds.
The scheme was on the verge of collapse when the SEC shut it down.
There is no question that Zeek Rewards was a Ponzi scheme. Submitting evidence in court is a mere formality.
I cited the Howey test. I didn’t say anything about fraud, the Howey test is used by federal courts to determine whether something is an investment / unregistered securities.
I first analysed retail bids, the legitimate part of the business. Then I analysed other parts of work Trudy Gilmond could have done.
The dispute about jurisdiction will eventually need to be backed up by facts by BOTH parties. The facts in this case are heavily in Trudy Gilmond’s disfavor, as far as I can see.
Update in the Paul Burks case:
* Motion to continue – approved (delaying the next hearing or trial until January 2015, to give the defendant better time to prepare his defense)
* Bell has been appointed Special Master in the case. It’s about locating witnesses and victims. He has already access to the database and are familiar with the case, so he was probably the best choice.
Update in the SEC v. RVG and Paul Burks case:
* Motion for an order ordering Plastic Cash to transfer $8 million to the Receivership, to be held in a separate account until the dispute has been resolved.
* Motion for an order of Contempt of Court against Plastic Cash, for failing to freeze assets (according to the August 17 2012 order).
Update in the Johnny Belsome case:
* To no surprise, Marc Michaud has appealed the Order denying Notice of Attorney’s Charging Liens. He has filed a Notice of Appeal.
Now you’re being just plain stupid.
The point is moot.
The SEC doesn’t have punitive powers to impose any future penalty and DEFINITELY doesn’t have the time nor the money to satisfy anonymous internet bloggers’ demands
They asked
They got
End of story
Next hearing in the Burks case is scheduled for 20th Jan 2015.
Ken Bell’s also been appointed Special Master in the indictment case,
It’s not about “failed to substantiate its case”. If you look at the initial complaint and the press release, you will see that it has been described as an emergency shutdown of a Ponzi scheme on the verge of collapse, to preserve the assets while the case is under investigation.
The court has simply done what’s needed as an initial step in a long lasting process. There has been enough evidence to shut the scheme down and place it into receivership, but that doesn’t mean the case was fully investigated when RVG was shut down.
You can compare it to SpeakAsia. It was halted in May 2011, but a chargesheet was first filed in December 2013. If I remember correctly, you were whining about the same thing there, something about authorities failing to prove their cases (they didn’t even meet in court in the Solomon James case before near the end of that case).
The Burks case is a perfect example of why the SEC has been so strenuously working to convince legislators and the courts to allow it to strengthen its’ “no-admit, no-deny” policy
From the SEC Chair, Mary Jo White:
bunkum. the SEC has been ARM TWISTED into changing its ‘no admit no deny ‘, policy.
the SEC was whining that admissions of guilt , would mean corporates would refuse to settle with them , leading to long expensive court cases which they cannot handle because they are poor and understaffed.
judge rakoff raised the bugle cry against SEC when he refused to sign off on the SEC /citibank deal [2012] , and asked for a trial .some other judges also started giving SEC a hard time , by refusing to sign in their ‘deals’without admission of guilt.
this is why the new chair mary jo white has announced this change in ‘no admit-no deny’ policy .
this is what judge rakoff said in his ruling:
‘the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances’
Yeah, yeah
once again, Anjali has found a media statement proving her “right” but, also as is usual, has failed to research the subject fully.
The SEC says the Rakoff Citigroup decision didn’t influence them, but, of course, Anjali knows better.
Most commentators (note I said “most”) have opined that requiring any admission by the defendant would expose it to astronomic liability in follow-on securities class actions.
Anjali knows better
Federal Rule of Evidence 408 bars, with one notable exception, the admission of evidence relating to conduct or statements made during settlement negotiations that would otherwise be admissible “to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or an admission
To say nothing of the practical conundrums presented by Rule 908, which, by its terms: does not apply to: conduct or a statement made during compromise negotiations about the claim—except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority
The SEC asked
It got what it wanted
and on and on we go
the only possible response to this asinine suggestion is – ha.ha.ha.
Most commentators (note I said “most”) have opined that requiring any admission by the defendant would expose it to astronomic liability in follow-on securities class actions—-LRM
if the defendant is afraid of exposing itself to class actions, due to admission of guilt, in a civil settlement with SEC ,their lawyers can help them draft a admission of guilt , which provides future protection. [philips falcone , harbringer LLC admitted guilt in carefully worded statements]
if the defendant is afraid of ensuing criminal actions , due to admission of guilt in a civil settlement , they should take the trial route , and even if they lose, it wont affect the criminal case:
“A verdict after a losing trial with the SEC would have no preclusive effective in a subsequent criminal action.”
right now , the word on the street is that , you can get away with bloody murder , as long as you ‘pay’ the local policemen [SEC]
with the change in the ‘no admit-no deny’ policy the BAR has been raised. people always complain when the bar is raised , because everyone just cant get off being lazy.
Of that I have never been in doubt.
Unfortunately, history tells us it won’t come about without the Anjali / Hoss tag team critically opining on every single possibility they can dream up.
In Anjalis’ learned and considered opinion of course.
OH !!!!
Putting aside the repercussions in any ensuing criminal case, can you imagine the consequences in the civil actions which would follow any such admission, carefully worded lawyers’ statement or not.
The $25 million punitive damages awarded in the O.J. Simpson civil case would seem like small change.
OH !!!! you and your bleeding heart.
if a company has faulted egregiously , and harmed public interest ,let there be consequences.let there be class actions ,let everybody know that they cant continue stealing from the public.
AT&T stole 200 million dollars from the public and got away with a fine. but burks must go to jail for 80 years ?
why are you so worried about the consequences to big bad thieving corporates , but have no sympathy for burks ?
Up to 80 years with your imaginary penalty, are we, Anjali ???
And the poor bloke hasn’t even made it to trial yet
Remind me, Anjali, are we talking about Paul Burks or AT&T here, Anjali ???
Didn’t you start this offtopic rant because you wanted the SEC to force Burks to declare his guilt ??
Against whom ???
Paul Burks ???
The receiver ??
Or, are we now talking generally and not about the subject of this thread ???
Perhaps that was your twin sister who only a few days ago was ranting against a system which you claimed was attempting to extract extreme and unjust revenge against Paul Burks.
One wonders
a) what leverage the SEC may have left to force Burks to admit his guilt in public, given how much he turned over
b) what will be left after the criminal trial
c) what the cost / benefit ratio would be for someone instituting a class or civil action against Burks after the SEC and criminal court have had their way with him.
You were, referring specifically to Paul Burks, weren’t you, Anjali
I’d hate to think you were turning this thread into yet another one of your off topic rants.
why was the court confident enough to delay the jurisdiction dispute?
you will find the answer in the consent agreements between burks/rex/SEC.
burks/rex have signed it all away and cannot contest that agreement.
the SEC has also included a clause that’s says defendants understand that the SEC is 1] not taking any stance on the legality of the business. 2] another clause says defendant will not contest the allegation of securities violations, 3] another clause says that for the purposes of this motion[setting up of receivership] the court shall accept the allegations of SEC as true.
so ponzi or not , jurisdiction or not , burks /rex has acquiesced completely
so the court did not see any merit in stopping the receivers work . which was well under way , and the jurisdiction issue did not affect burks/rex/SEC/receiver .
drive.google.com/viewerng/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxhc2R1cGRhdGVzZmlsZXN8Z3g6NjA1OWY2YThiZDdjZDM0Yg
Loosely speaking perhaps it is …. because the outcome appears to be a foregone conclusion.
History tells us you have a chronic case of diaper rash.
Welcome aboard Captain Obvious.
You FINALLY get it
The SEC didn’t and doesn’t need to spend another minute or another taxpayers’ dollar.
It got what it wanted
NOW will you get back to discussing the topic at hand which is Paul Burks has been indicted?
@anjali
Your references to Judge Rakoff are rather confusing. His viewpoints about settlements are not very relevant to this case, because he’s talking about FINAL settlements where big financial institutions can pay their way out of responsibility for the individuals who have been involved, in something the SEC itself described as a blatant fraud.
That’s not the case here. It could have been if the RVG shutdown action had been the final settlement, but it clearly wasn’t.
Long video, but the 5 minute introduction will give a quick overview (disabled link, “not of general interest”):
NOLINK://www.youtube.com/watch?v=GNATrnQV4oM
No it did not. It got what it needed….probably.
Comforted?
you are just not going to get this captain duh-nut.
the SEC wrapped burks/rex into a neat bundle and handed it over to bell, and were calmly riding off into the sunset [on a horse called consent]
ira sokin jerked consents tail . consent hemmed and hawed and threw the SEC into a pickle.
now the SEC has to trudge back to the north carolina district court and prove their case.
LRM should not complain about this, because he believes the SEC has neatly pinned and filed all their evidence in triplicate.
how much money can a few court hearings cost ? chair white was wearing a really nice jacket [ penny auction anyone ? 🙂 }
so, the SEC thought they got what they wanted , but turns out not entirely so .
LRM said the SEC begged the courts and congress, to be allowed to change their ‘no admit-no deny’ policy.
my reference to judge rakoff, was to tell the REAL story behind SEC’s changed policy.
but judge rakoffs ruling that SEC should bring out the ‘truth’ , is valid for all cases under the SEC. if a consent agreement between a party and the SEC is questioned by a court or affected defendants , the truth should be brought to the fore , to serve justice well .
The SEC filed a complaint with the United States District Court giving the court a summary of its’ factual allegations and against the defendants, Burks and Rex Venture Group LLC.
The SEC then went on to provide the court with a “Prayer for Relief” listing seven suggested remedies.
Which remedies did the court not grant, Anjali ???
Oh look, Anjali has introduced another hypothetical and another uninformed opinion into the situation
In ANJALIS simplistic opinion of an extremely complex matter
Well done,
Gotta be worth another two or three weeks of taking the thread off topic, Anjali.
why are you mixing up the burks/rex/SEC/court/receiver settlement with the defendants motion to dismiss ?
give it up ,this is beyond your intellectual capacity.
M_Norway explained it very well:
My comment was about Judge Rakoff’s relevance to THIS CASE. His viewpoints was about FINAL settlements, specifically for the financial institutions that had been involved in the 2008 finanancial crisis.
His objections were specifically about the vagueness in some settlements, where SEC had investigated financial institutions and had settled the cases out of court, using the court to “rubber stamp” the settlements.
The difference in this case is that it was initially described as an emergency shutdown, not as a final settlement between Paul Burks and SEC. Emergency actions won’t need to be fully documented, they will only need to show enough evidence for the action to be fully justified.
This article is about the indictment of Paul Burks. You’re the one who eagerly have discussed Trudy Gilmond’s Motion to Dissolve, e.g. how SEC “failed to prove the Ponzi scheme and the unregistered securities when they negotiated a solution with Paul Burks”.
You used Judge Rakoff’s viewpoints to support your own viewpoints, e.g. that the justice system had failed, and that the indictment had serious flaws.
I don’t see any problem in that? It looks like you have looked more at the arguments than the conclusion.
It’s a dispute about SEC’s jurisdiction / the Court’s jurisdiction. It will need to be resolved.
How did you come to the conclusion that “SEC will need to trudge back to the North Carolina District Court”? It isn’t incorrect in itself, since both cases are tried before the same court, but the meaning sounded rather incorrect.
If SEC has to prove its case, it will be in the class action lawsuit “Bell v. Disner et al”, where Trudy Gilmond is one of the named defendants. The dispute will need to be resolved in a case where she is a party herself. The Court has already decided that.
It granted what the SEC asked for but its not settled.
The SEC filed a Complaint against Burks RVG asking the Court to take jurisdiction via Prayer VI. The Prayer if granted is expressed in an Order.
In the Order Appointing a Temporary Receiver th Court took subject matter jurisdiction over the SEC v Burks case, as well as jurisdiction over the assets and exclusive possession of them.
Sorkin came. “Too late” to challenge the Appointment of the Receiver but NOT too late to challenge the Court’s jurisdiction which may be challenged “at any time”
So even thought the Court granted all the Prayers for Relief, Prayer VI, jurisdiction remains an open issue.
Whatever way its done the Court’s subject matter jurisdiction is what’s being challenged and that relates back to the Complaint in the SEC v Burks case and the SEC’s Motion for an Order Appointing a Temporary Receiver.
“Relates back” doesn’t mean it will need to be resolved there?
It’s the Receiver (not SEC) that will need to prove that he has a valid case against Trudy Gilmond and others. A core point in that is to prove the existence of a fraudulent investment scheme = correct jurisdiction for SEC and for the Court.
The court has clearly ordered that dispute to be delayed, to be tested in the relevant case rather than in the initial case. If it had to be tested in the initial case, it would have been tested in July 2013.
Oh dear, Hoss,
you’re not very good at this troll business, are you ??
The SEC got what it wanted.
Zeek / RVG / Burks are out of business.
Burks has been indicted
The Receiver is doing his job.
Hoss and Anjali are desperate to have the last word.
IOW, situation normal.
Do not “assume” I meant that it did. I wrote:
I just don’t think it MUST be handled in the Bell v Disner case, nor that Gilmond has to be a party, though it could be done that way.
The subject matter jurisdiction is what has been challenged not the Court’s personal jurisdiction over Gilmond
Are you still kicking your dog?
Maybe not, Subject matter jurisdiction is in dispute.
Yes. Can you just imagine the Counter Claim that Burks and the net winners would bring if the SEC had no jurisdiction?
Yes he has and you have already convicted him which is why if you were honest you could never be on the jury. Which is why your opinion counts for dick.
He’ll have a real tough time clawing back even a penny if the court finds it does not have subject matter jurisdiction though.
Ouch. That’s gotta hurt.
The Court will be the author of the final word.
Jurisdiction is analysed in the initial parts. Prayer VI is probably about something different. We don’t “pray” a court to take jurisdiction, we “analyse” that it actually has the correct subject matter jurisdiction.
Prayer VI is being reflected in the judgment against Paul Burks, ZeekDoc8.pdf point VIII.
Jurisdiction (in the Complaint):
Prayer VI (in the Complaint):
“In accordance with the principles of equity …” is probably the main point there. A court can “take” jurisdiction for the purpose of avoiding a multiplicity of suits when it already has subject matter jurisdiction.
NOLINK://en.wikipedia.org/wiki/Maxims_of_equity#Equity_will_take_jurisdiction_to_avoid_a_multiplicity_of_suits
The subject matter jurisdiction is an open dispute in “Bell v. Disner et al”, but it has already been decided in the other case.
Read the damn Complaint and quit guessing.
I rather doubt that since Sorkin appeared and he SEC v Burks case, but your entitled to your opinion.
I have done it. Subject matter jurisdiction is analysed under “Jurisdiction and Venue” paragraph 8 (where you could EXPECT to find it).
Where did you find that Prayer VI was an open issue? It hasn’t been disputed by anyone as far as I could see. Paul Burks and Rex Venture Group both consented to the complaint. Trudy Gilmond’s intervention wasn’t about that, it was about the subject matter jurisdiction and it was denied.
That motion was DENIED ( ZeekDoc-151.pdf ORDER Denying Motion to Intervene and Dissolve the Receivership ), July 23 2013.
The theory “since Sorkin appeared, it must be an open issue“ doesn’t reflect the realities. The dispute has actually been resolved in that case, and the court has made a decision.
You apparently missed an important part of the discussion. Maybe Anjali can direct you to her post that went over the transscript…or you can read the transcript for yourself again. The motion was denied but the jurisdictional issues were contested and discussed,.
For god’s sake its not a theory. Its in the transcript.
I have only focused on the case documents. I haven’t blindly accepted any theories from any discussion.
Ira Lee Sorkin appeared in “SEC v. Paul Burks and RVG” with a Motion to Intervene, Motion to Dissolve. That motion was denied in July 2013. It’s not an open, unresolved issue in that case (the fact that Ira Sorkin appeared doesn’t make it unresolved, we must look at the realities = the order denying the motion).
Trudy Gilmond and others still have an ongoing dispute about the jurisdiction in a different case, “Bell v. Disner et al”.
DIFFERENT LOGICAL IDEAS
You have probably mixed those 2 cases, e.g. “since there is a dispute about the jurisdiction in case B it will affect case A, and it must be resolved in case A. SEC will need to prove its jurisdiction in case A”.
I have used the opposite idea, clearly separating those 2 cases. “The dispute has been resolved in case A. Any remaining dispute about the jurisdiction will need to be resolved in case B. Bell will need to prove that he has a valid case against the defendants in case B”.
* I have located the jurisdiction dispute to case B, “Bell v. Disner et al”. It has been resolved in case A, “SEC v. RVG”. That theory has been based on the case documents, e.g. Order Denying Motion to Dissolve.
* You have located the jurisdiction dispute to BOTH case A and case B, to both “SEC v. RVG” and “Bell v. Disner et al”. You don’t believe in the idea that the dispute actually was resolved in case A when Motion to Dissolve was denied in July 2013.
The transcipt is a “case document.” You must read and understand it or you will not understand the rest. Instead you will write a half page of irrelevant trash.
Even the transcript of the court hearing says that the Motion to Dissolve has been DENIED. It’s not an open issue in “SEC v. Paul Burks and RVG”. If it had been, it wouldn’t have been denied.
There’s a hypothetical part of your theories. It goes appr. like this:
“If Trudy Gilmond has any success with her jurisdiction issue, then there must have been a flaw with SEC’s jurisdiction initially, and the whole foundation of the case has been flawed”.
The hypothetical part is the scenario “if Trudy Gilmond has any success”. I didn’t blindly accept hypothetical ideas like that. I didn’t accept the conclusions derived from hypothetical ideas either.
I have read it, and I have understood it. But I have probably placed some different “weight” on some of the arguments than you have.
I will focus primarily on the conclusion and on the arguments leading up to the conclusion. I will place less weight on the discussion.
Motion to Dissolve was DENIED. The arguments leading up to that decision were about prejudice, no substantial interest, untimely filing, Trudy Gilmond could wait until she became a party in the clawback litigation.
You and Anjali have mostly focused on other details, on the discussion rather than on the conclusion. You have placed more weight on the details in the discussion than on the conclusion.
I have placed less weight on the statement “parties can’t consent to GIVE a court jurisdiction”. It’s simply about establishing the correct practice. A court must HAVE jurisdiction, parties can’t GIVE it. Arguments like “Paul Burks agreed to accept the jurisdiction” will be flawed in a dispute with another party.
while ruling on a case of a corporate settlement with the SEC , judge rakoff fretted and fumed and gave this advise to the SEC:
“the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances”
i do not think judge rakoff meant that the SEC should maintain the integrity of its statutory mission of bringing out the truth , in this particular case, but can hoodwink in other cases. this was a holistic kind of advise from judge rakoff , but you are entitled to your views.
i disagree. the SEC settled with burks/rex ,the consent agreement is the final settlement of SEC with burks/rex. the SEC has no pending business with burks/rex.
the SEC had to come back to the north carolina district court ,to reply to the motion to dismiss. and they have to come back again to argue the question about jurisdiction .
yes, i agree case A has been resolved , and pending issues of jurisdiction will have to be settled, probably in ‘bell Vs disner et’ all .
but , for proving jurisdiction the SEC will have to come in and prove their case. it is not bell’s job to prove jurisdiction of SEC.
And the difference that will make to the fact Paul Burks was indicted is zero
if you think the question of SEC’s jurisdiction , hence proving zeek was/wasn’t a security , has no bearing on paul burks indictment and subsequently on his criminal case, you probably have visions of snowflakes in hell , too.
this is where i think the prosecution has dug itself a nice little ditch , and defense can bury them easily, with some deft spading action.
the SEC has said zeek was dealing with ‘securities’ in the FORM of ‘investment contracts’. thus all they need to prove their case, is the howey test.
but, the DOJ , in the bill of indictment , does not say ‘investment contracts’ it says ‘shares of the zeek stock’.
well, once you describe ‘securities’ as ‘company shares’ , you have to bloody well show, that they had the ‘characteristics’ of stocks and shares. not happening !
What I “think” is irrelevant.
The subject of the thread is Paul Burks’ CRIMINAL indictment on fraud, wire fraud, conspiracy and taxation charges, not about whether or not the SEC has jurisdiction.
Types of securities include notes, stocks, treasury stocks, bonds, debentures, certificates of interest or participation in profit-sharing agreements, collateral-trust certificates, preorganization certificates or subscriptions, transferable shares, investment contracts, voting-trust certificates, certificates of deposit for a security, and a fractional undivided interest in gas, oil, or other mineral rights.
Under certain circumstances, interests in oil- and gas-drilling programs, interests in partnerships, real estate Condominiums and Cooperatives, and farm animals and land also have been found to be securities.
I applied the Howey test in post #408. I only needed to analyse the details for the fourth criterion.
The court will need to look at the realities of the case, e.g. the amount of retail bids sold. You and Hoss prefer to look at theories, but the court will need to look at realities. It can’t place too much weight on vague information.
The court may of course decide to replace the Howey test with the Sorkin test, but that scenario is rather hypothetical. The “Sorkin test” is about 3.5 pages of theory, based on some “similar to” ideas (it will identify some characteristics of securities, and look at how similar the object to be tested is).
i do not know on what grounds you agreed with point number 1 of howey’s test about there being an ‘investment’. bids were being bought which were not stock of the company.
the fourth criterion is of course, the flash point , and as i understand, it is a pending question before the court since 2008, as PP Blog pointed out . the question is whether schemes that depend of the efforts of participants, can be called investment contracts, and hence securities, and hence fall under SEC jurisdiction.
on the subject of investment contracts, it seems case law is all over the place, with different courts reaching different conclusions :
the amount of retail bids sold , is the second part of defining a ponzi or pyramid scheme. the amount of retail bids sold could make it a pyramid scheme too ,not necessarily ponzi.
ira sorkin first wants to consider the first part, of the definition of ‘ponzi’ ie ‘securities’ fraud. this is the first Reality of the case, which should be answered FIRST.
first settle jurisdiction , then do whatever you want , including counting retail bids.
i wouldn’t treat sorkin so UNseriously !
Nonsense.
The dispute is not resolved” if it “will need to be resolved…..”
Yeah right, except the “amount of retail bids sold” has absolutely NOTHING to do with whether the bids are deemed securities.
@littleroundman
Yes yes but what if the judge changes the definition of security.
What if Paul Burks really isn’t Paul Burks?
Let’s say, hypothetically, he’s a praying mantis. Hypothetically what then would the judge do?
Stock vs. investment contract. Is there a difference? Sure. Does it make a difference here? No. They are both securities. I can not see it affecting the validity of the indictment or that Burks’ guilt hinges on this?
I am missing your point.. Bids need not meet the definition a stock for the SEC to have jurisdiction.
why not ? the world is a-changing ! but , not the judge , instead congress, or whoever does the definition changing 🙂
for your kind information , even the supreme court gets tied up in knots , defining ‘investment contracts ‘- clearly and finally. there are some questions they refuse to answer about ‘commonality’ and ‘vertical relationship’ of the investor and the issuer of the contract, and which of the two, is most important to establish .
so , there is CONFUSION , and hence there is some merit in ira sorkins questions about securities and investment contracts.
yes, both are under the broader definition of ‘securities’.
the SEC is arguing zeek securities are ‘investment contracts’ hence they fall under the howey test.
the DOJ is claiming VIP bids ‘acted’ like shares of ‘zeek stocks’. the test for this is to check for ‘characteristics’ of stocks .
since ira sorkin is smarter than me , i will just list his checklist,
zeek shares :
1] could not be assigned, hypothecated, sold, or used as collateral
2]did not and could not appreciate or depreciate in value.
3]the profit points did not represent an investment in an entity, the profit points could not be liquidated as in the case of a security.
4] The profit points, were nonnegotiable.
5] the profit points in and of themselves, unlike a share of stock, paid no dividends.
6] they didn’t grant to the qualified affiliate voting rights.
so, one wonders why DOJ chooses to go the ‘share’ argument way , which is going to be darn difficult for them to prove .
generally whenever an investment does not show CLEAR stock indica, it is put under the head of ‘investment contract’.
nope and nope.
instead he’s just a 67 year old ,two time cancer survivor , with a sick wife , who did not even know how to keep his books.
i wont be surprised, if he was surprised, at how zeek went viral !
They would darn sure have to change the indictment.
With that logic, you could probably use ANY checklist. 🙂
I gotta tell ya, pushing Anjalis’ buttons and then watching her flounder around becoming more and more desperate with each post sure beats watching TV.
Especially since Burks is still indicted.
Your biases are showing.
All the SEC needs to prove is that Zeek was dealing in securities, whether it was stocks, investment contracts or promissory notes does not matter.
If the indictment mentioned stocks rather than security contracts its not determinative and the indictment could be dismissed,reobtained and refiled, or superceded. It probably nothing more than a drafting error anyway.
Sorkin is attempting to capitilize on the same worm hole every other ponzi attorney tries to use. To wit:
He proves that the bids were not stocks. If they are not, what are they? Investment contracts? Yes. What are investment contracts? No precise definition, varied rulings with little binding precedent. He then argues that Gilmond’s work proves that her expectation of profit was not due solely to the efforts of a third party promoter. (Howey #4)
How smart does he have to be?
If someone is willing to pay him to make that argument then nobody can stop them. The likelihood it will work? In my opinion….nil.
Sorkin’s hope is that this judge will be interested in making new law. I think that will be a vain hope.
If he’s smart, then he should also handle the realities = how ZeekRewards operated in reality. The investment plan had several components working together as a “system”.
A: VIP sample bids
B: VIP Profit Points
C: Daily profit share
D: Virtual payouts to a back office
ZeekRewards worked like this (simplified):
1. Affiliates paid money in (initial payment)
[Loop]
2. and got an equal amount of VIP sample bids
3. which generated an equal amount of VIP Profit points
4. which generated a 1.5% daily profit for 90 days
5. which were paid to the back office as “Cash available”
6. which could be reinvested automatically
[loop back to point #2]
7. “Cash available” could eventually be withdrawn as cash by the early investors. Zeek recommended 80% reinvestment / 20% withdrawal after the VIP Point balance had compounded for 90-180 days or had grown to a balance of around 50,000 VIP Points.
VIP Points “retired” after 90 days, and were removed from the VIP Point balance. An initial investment of $10,000 would grow to appr.:
38,000 – 10,000 = 28,000 VIP Points in 91 days.
After the first 90 days, if people reinvested 100% of the daily profit share, the VIP Point balance would be doubled in appr. 100 days (people would have more than 1 million VIP Points after 600 days, from an initial investment of $10,000).
That is not what the DOJ is claiming.
From the Indictment:
….”thus the VIP Bids were represented as functioning like shares of Zeekler stock.”
The DOJ is not claiming that Vip bids ‘acted’ like stocks or had any characteristic of a stock, only that victim-investors were told they functioned like a stock.
Contrarily, Sorkin argued that Vip Bids ‘acted’ nothing like a stock because they had none of the attributes of a stock.
So what was Sorkin really getting at?
I think he was asserting that Gilmond and King could not have believed they were making a passive investment and in fact their income actually derived from their own efforts. In other words, not solely from the efforts of a promoter or third party (Howey #4)
This I believe demonstrates how and why Sorkin’s Motion to Intervene and Dismiss the Receiver inevitably led to the securities and jurisdiction issues which still need to be resolved.
Moreover, even if victim-investors like Gilmond and King) thought their labor produced the income they enjoyed it did not. Their promotional efforts only permitted them to enjoy more of the funds which Burks’s scheme generated.
He can’t argue reality or more precisely, the reality as you see it. He argues his version of reality. The one that supports his clients interests.
The Howey test:
Interesting. Thanx
actually what sorkin is saying is that zeek bids were neither stocks of zeek, nor investment contracts , but ‘business contracts'[or something else], where affiliates were NOT bringing in new investors, but rather more bidders to the penny auction .
you yourself admit howey case law is all over the place . howey is over 60 years old , and courts find it tough to stretch howey over more complex businesses that have emerged. if change is inevitable , then testing howey through the courts , in a case like zeek , is a good thing .
if ira sorkin is unsmart , then how smart is the SEC in declaring –zeek is ponzi , no questions please! SEC is a regulator , not a dictator.
norway, you keep trundling off the path .
the question before the court is whether zeek bids were securities.
zeeks lack of retail and dependence on recruitment could well define it as a pyramid ?
you interpreted the sentence wrong . read the whole of point 18 of the bill of indictment .
BECAUSE people ‘Invested’ and expected a fixed ROI , zeek bids ended up being ‘representative’ of ‘zeek shares’
DOJ is not saying ‘zeek represented’ bids to its affiliates as ‘shares’.
hence, DOJ is still comfortably ensconced in the self dug ditch .
Err,
maybe they can say that with confidence because, unlike Anjali, who is depending on Google to be able to find relevant information, they have seen the books / accounts / computer records / statements from insiders and even the receiver.
They don’t have to rely on what Burks / Zeek or Sorkin “says” happened or what was supposed to have happened.
They KNOW with absolute certainty what happened.
Maybe they only included as much information in the complaint as was necessary to convince the court their complaint was valid, which means Anjali wouldn’t have a bloody clue what they know or knew before filing the complaint, much less what they now know.
Try again, Anjali.
it’s no secret i’m adopting a ‘pretend’ bias towards zeek , for the purposes of discussion , because i don’t like ‘hunt&kill’ expeditions. it’s gladdening , that neither does judge mullens court.
besides, i worry about LRM’s floundering IQ level, don’t want him watching too much ‘dumbing down’ TV 🙂
Says the troll who keeps turning a thread about Burks being indicted into endless rants about the SEC / definition of securities / what a defense lawyer in an unrelated case / cases has said in defense of his clients / the unfairness of sentencing laws in unrelated matters
In fact, everything BUT the fact Paul Burks was indicted.
yes, that’s why they are getting a chance to’prove it’. they should thank questioners for the opportunity !
scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1016&context=wmblr
this is interesting too [@ hoss] .
always two sides to a coin.
always two sides to the thinnest pancake
yada yada.
Once again, Anjali,
finding reference to similar subject matter, but in different circumstances makes not one bit of difference to the fact Burks remains indicted and the Receiver is going happily along with his job.
“CAN” and “COULD” and “MIGHT” and “POSSIBILITY” may keep you on the thread, albeit off topic.
Back in the real world, however………………………..no one but you gives a damn.
go say that to judge mullen, in the real world of a real court …………..and see where his gavel lands!!