VictoriaBank dismissal granted, Zeek Rewards Receiver appeals
With $13.1 million dollars of stolen investor funds in the balance, the court’s decision to grant VictoriaBank a Motion to Dismiss on May 3rd was pretty unbelievable.
Along with dismissing the Receiver’s claims against the bank, the decision would also dissolve the freeze order currently in place.
That freeze order is the only thing stopping the $13.1 million dollars disappearing for good.
To recap, the Zeek Reciever identified some $23 million dollars of Zeek Rewards investor funds passed through Payza.
The Secret Service recovered $8.9 million, with the remaining $13.1 million outstanding.
Following the filing of a lawsuit in 2013 seeking to recover the balance, the Receiver filed a contempt motion back in February 2016.
Payza claimed the funds were held in a VictoriaBank account in Moldova. PaymentWorld was the alleged owner of the account, with Payza claiming they had no access to it.
PaymentWorld US in turn claimed it had no access to the account, because the account was held by PaymentWorld Moldova.
This despite the fact that PaymentWorld US and PaymentWorld Moldova are the same company owned and operated by the same people.
Unable to access the $13.1 million held abroad, a freeze order was granted on $13.1 million VictoriaBank held in a US account at the Bank of New York Mellon.
The freeze order was to be in place pending resolution of the Receiver’s Contempt Motion, which VictoriaBank objected to with a Motion to Dismiss.
To date there is nothing on the case docket indicating a decision on the motion was made on May 3rd itself.
An appeal filing by the Receiver on May 23rd however reveals Judge Mullen announced an intent to grant the dismissal motion in open court, but gave the Receiver thirty days to file an appeal.
In effect the order granting the dismissal was stayed for thirty days pending an appeal, which the Receiver filled on May 23rd.
Notice is hereby given that Kenneth D. Bell, the Court appointed Receiver of Rex Venture Group, LLC hereby appeals to the United States Court of Appeals for the Fourth Circuit from the Court’s ruling in open court on May 3, 2017 granting Victoriabank’s Motion to Dismiss and indicating its intent to dissolve the Freeze Order entered by the Court on February 12, 2016 in the absence of an appeal.
On May 25th Judge Mullen acknowledged the Receiver’s appeal, and ordered the dismissal order stayed until its conclusion.
VictoriaBank meanwhile has filed a motion to vacate the freeze order on May 30th.
In its motion, VictoriaBank claim the May 3rd ruling was correct in that the court had no jurisdiction over it.
VictoriaBank acknowledge the Receiver’s appeal filing, but cite alleged shortcomings in the Receiver’s original filing for the stay.
This Court has already ruled that it does not have jurisdiction over Victoriabank, and that, therefore, the Receiver’s Motion must be dismissed and the 2016 Freeze Order dissolved.
This ruling was made less than a month ago.
Nothing new has emerged since the May 3, 2017 Ruling that would suggest that the Receiver will prevail.
Because the Receiver has not shown any likelihood that he will succeed on the merits of his appeal, the Stay Order should be dissolved.
VictoriaBank also argue that if the freeze order is granted,
there is simply no indication that funds would be unavailable to satisfy a judgment against Victoriabank at some point in the future.
If there wasn’t a risk in the first place, why was the freeze order granted to begin with?
Personally I’d argue the fact that the funds in question were improperly obtained via an $850 million dollar Ponzi scheme is a strong indication they’ll disappear the second the freeze order is lifted, but hey… what do I know.
Whether VictoriaBank get their freeze dissolution and/or how the Receiver’s appeal plays out remains to be seen.
Roman Balanko and his partners own and operate PaymentWorld across the US, Hong Kong and Moldova. Through Payment World LTD SRL (Moldova), Balanko is a majority shareholder in VictoriaBank.
Ultimately a decision will have to be made on whether Roman Balanko and his partners keep $13.1 million dollars of stolen investor funds, or whether those funds are returned to the Zeek Rewards victims it was stolen from.
Stay tuned…
Personally, this is a bit of a long-shot on the receiver.
Basically, you have Zeek’s $$$ in Payza, Payza’s Money in PaymentWorld (PW), PW’s money in PW-Moldova, and PW-Moldova’s money in Victoria Bank (Moldova). So Receiver filed a freeze on… Victoria Bank (US).
While it’s passing the buck, and I’m not acquainted with how liability works in this case, I personally would just go after Payza’s money instead. After all, Zeek’s account is with Payza, no one else. If Payza needs to sue PaymentWorld or anyone else, why is that receiver’s business?
I mean, if A owes you money, then A claims he gave the money to B, who gave the money to C, who gave the money to D, do you go after D for your money? Nope. A owe you money, period. Why do you have to run after B, C, and D?
PW is a major shareholder of VictoriaBank. At the end of the day, be it through PW or VictoriaBank, Balanko just wants to keep the $13.1 million (or his cut of it).
IMHO, Payza’s the one holding the bag after all is said and done.