Update on Zeek Rewards net-winner clawbacks
Last we checked in with the ongoing battle between Zeek Rewards’ top Ponzi pimps and the court-appointed Receiver, they were arguing about the particulars of discovery.
Looking to bog down the Receivership in both time and costs (so they can no doubt bitch about it later), Zeek Ponzi royalty were collectively asking for ‘what amounts to thousands of interrogatories and requests for admission and over 500 depositions‘.
With there obviously being no need for that much discovery on the net-winners’ side, the conclusion the Receivership arrived at in his court-filed response accurately summed things up:
The key difference in the parties’ proposed case management is that the Defendants in this action are seeking to delay and complicate the case at every stage.
That was the situation as of April the 13th, with a hearing scheduled to take place the next day on the 14th ‘to discuss the competing proposal plans and… establish how discovery should take place‘.
An order issued on the 15th of April reveals that, after listening to both sides, the Receivership’s proposal won out. As ordered by Judge Mullen, the net-winners
- are permitted to take 20 depositions collectively (they wanted between 20 and 50 each) and
- may propound up to 50 interrogatories collectively, plus an additional five per defendant (they wanted up to 200 for each defendant)
Of note is that the above is exactly what the Receivership proposed, with the court failing to grant any of the net-winners’ time-wasting requests.
Looking forward, the net-winners have been ordered to file their answers to the hearing by June 30th, with discovery to be completed by February 28th 2015 (miles off!).
Mindful of the fact that, in light of Zeek’s biggest thieves looking to drag out court-action for as long as possible, waiting for settlements between the Receivership and top net-winners is likely to severely delay payouts, in an update published on May 1st the Receivership advised
As you know, we have been reviewing approximately 175,000 timely filed claims. By Friday May 9 we will have issued about 160,000 letters of determination regarding those claims. Another 10,000 or so letters of determination will be sent before the end of May.
There are a few thousand claims that will require additional time to review, because of conflicting information regarding the amounts claimed. We will send letters to this last group of claimants as quickly as we are able.
Bottom line, we will have letters out to more than 95% of the claimants in the next few weeks.
You also are anxious to know when we will begin making distributions on claims. This month we will file a motion with the Court asking permission to make an interim, partial distribution on claims.
Our goal is to distribute now an amount equal to 40% of each reconciled claim using the “rising tide” method of calculation already approved by the Court. My best guess is that we will begin making distributions in mid-summer.
I will also be reserving cash to distribute to holders of claims that have not yet been determined and allowed. When your claim is allowed, you will receive distributions in the same total amount you would have received if your claim was allowed in the first batch of claim determinations.
Note that the 40% estimated figure is only preliminary, with the Receivership noting
This first distribution will not be of all the funds I’m confident we will ultimately be able to return to claimant victims. We continue to collect receivership assets from financial institutions and those who took more money out of Zeek Rewards than they put in. We have sued more than 9,000 of these “net winners” in the United States.
We will soon sue net winners who live outside the United States. I remain hopeful that we will add tens of millions of dollars to the pool from which we will make final distributions to claimant victims. Unfortunately, these efforts will take quite a long time, maybe years.
I will not be permitted to make final payments until all recoverable assets have been collected, but there will be an additional, final distribution at some point.
A common misconception among Ponzi players is that, if they reside outside of the US, they are safe from clawback litigation in the US. So how the Receivership goes about recovering funds from overseas net-winners will be interesting watch play out, even if it does take years.
As an aside, I was recently contacted by a BehindMLM reader who claimed to have received correspondence from the Receivership concerning a one T. LeMont Silver.
After contacting the Receivership to advise them of Silver’s whereabouts (Silver fled the US shortly after clawback litigation against Zeek’s top net-winners was announced), the Receivership purportedly contacted them last Wednesday to advise ‘Mr. and Mrs. Silver were served this morning.’
You can run, but you can’t hide.
Footnote: My thanks to Don @ ASDUpdates for providing additional documentation for this article.
HA HA… Made my day!! I want to see him (T Le Mont) in handcuffs!
You think he runs in the same circle as that TF Dominicana fugitive? 😉
Derrick A. Payton is listed as a net winner, who will have to return his illegal winnings, in the Zeek Rewards ponzi scheme.
He also stole tens of thousands of dollars from innocent people in the 20daily ponzi scheme and is now a part of the SpinDing ponzi scheme and many more. This is how he illegally gets money without getting a real job, so that he can evade paying child support.
He is a deadbeat dad. He has already been arrested on two counts of felony child abandonment and still refuses to pay child support even though he has stolen thousands of dollars in these Ponzi Schemes.
In addition to knowingly scamming people out of their hard earned money by convincing them to invest in his Ponzi Schemes, he is using the illegal funds to pay an attorney $300/hr to assist him in evading child support.
His motto “you get in, make quit money and get out”.
I was on a training call recently and T Lemont Silver was on it too. He is learning Facebook marketing from social media ad genius… Those folks might know his whereabouts.
What does “rising tide” mean?
Pay one group of creditors until they have recovered 100%, then pay the next group of creditors until they have recovered 100%, and so on.
EXAMPLE (not 100% correct order):
* First pay salaries owned to employees.
* Then pay taxes
* Then pay secured creditors
* Then pay unsecured creditors (e.g. the net losers)
* Then pay trade partners
The last group(s) will typically not get anything. The first groups will often get 100%, if the groups are small enough and the amounts owed to them isn’t too high.
In the context of the Receivership paying out on approved claims, it means that as more funds are recovered (the rising tide) subsequent distributions will be made.
Here’s a correction from a Ponzi lawyer (Ponzibook-blog):
Net Loss Method:
People will get distribution of money based on their net loss, e.g. if you initially invested $10,000 and have withdrawn $4,000, your net loss is $6,000.
If the percentage distributed is 40%, you will receive 40% of the $6,000 = $2,400. All other net losers will also receive 40% of their net losses.
Rising Tide Method:
If you have withdrawn money, e.g. you have withdrawn $4,000 of a $10,000 investment, you have already received 40% and will not get any money in the first 40% distribution.
Thank you Norway and Hoss.
If you really want to get into it.
Which is to say that if a person withdrew 40% of an initial $10,000 investment before Zeek went bust he would still have a $6000 net loss but will not receive a prorated distribution on the $6000 until all other members of the class have received 40% of their investment back as he has.
The $4000 withdrawal is deemed to have been property of the estate even if it was withdrawn months before collapse.
Under this system people who took withdrawals will discover that they have already received a share of the upcoming distribution.
A whole bunch of motion to dismisses went out to day. They’re all “failure to state a claim” related, and argue that Zeek didn’t sell securities and/or that no specific claim has been made against the top net-winners.
One has even filed a counter-claim against the Receiver, again based on the defense that Zeek Rewards wasn’t selling unregistered securities (lol).
Won’t report on them individually but the outcomes should be interesting.
I’d have thought making money in an illegal Ponzi scheme was claim enough, but we’ll see what the Judge says.
It must be getting close to the Response deadline.
Next move? …. Bell motions for Class certification… which both forces and permits these respondents to argue that a Defendant Class should not be certified.
So….if the receiver has said he has sued the net winners, should there have been some paperwork sent out to them? We have nothing.
I know the top pimps have been sent paperwork, but I’m not sure how it works for the 1000s of others on that list.
He has so far sued SOME of the net winners
As of March 3, 2014 the court had approved 175 settlement agreements and the receiver had filed a class action claim against 9000 net “winners” with the following comment on his website:
Might I suggest you visit the receivers’ website where you can keep yourself updated as to the current state of play, here: zeekrewardsreceivership.com/
Interesting! I was involved with this. Glad to be updated on the progress.
“Quick overview” (list of Zeek articles):
* He will first get a judgment about the existence of a Ponzi scheme (fraudulent transactions, etc.).
* Then he will send out 9,000 individual claims (full amount plus interests) to individuals, supported by the judgment about Ponzi scheme. Any discussion about the claim will be about the correctness of the individual amount, not about the correctness of the Ponzi scheme judgment.
* People who do respond to the claim may be able to correct the amount in their own favor. People who don’t respond to the claim will most likely get a default judgment (full amount plus interests).
* Then he will get a judgment against the individuals.
* Then he will try to collect the individual amounts.
People can still setttle the amount. Or they COULD do it (I’m not updated on that part).
As mentioned above the “top pimps” have been served and thereby joined to the suit. The deadline for them to file a response has just past.
Other net winners, though listed in the Complaint, have not been noticed, thus are not joined, and legally speaking have not even been sued. They won’t be joined until the Receiver is ready.
Its not really possible to guess when that might be but I expect Bell will work through many of the issues using the “top pimps” as proxies before serving notice on everyone else.
Thank you. Yes I am following the receiver website. Just wondered about the paperwork process.
Update from PPblog (patrickpretty.com):
User “Gary” had 2 comments showing some statistics about settlements and costs of the Receivership (including some hired third party companies, lawfirms, etc.).