zeekrewardsLast 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.