Will Zeek Rewards’ top thieves be named & shamed?
As the anniversary of Zeek Reward’s closure comes and goes, the noose around the necks of affiliates who took home the lion’s share of Ponzi profits grows steadily tighter.
The bar for court action has been set extremely low, with court-appointed Receiver Kenneth Bell advising that anyone who made $1000 or more in Zeek is a potential target. As an observer and someone who spends a great deal of time analysing the industry, for me there’s a particular interest in those at the top.
Those who made a few thousand will be dealt with in due course but of far greater interest are affiliates like this:
Randy Jarvis, a former Lexington resident and Zeek Rewards user met hundreds of affiliates while working at the Holiday Inn Express.
Upper-level affiliates would nearly book the entire hotel, some staying for weeks to attend “Red Carpet Events” run by the program’s former chief officer, Davidson County resident Paul Burks.
He said affiliates from Australia showed him how they were making $200,000 a day through the program while another couple from Vermont, who eventually talked him into signing up, showed him actual checks to validate the thousands they were making.
Why the particular interest in Zeek’s top affiliates over the not-so-profitable variety?
The receivership estimates that more than $295.5 million was “fraudulently transferred” to thousands of Zeek’s “net winners.”
It’s estimated that about 77,000 “net winners” pulled out more money than they put in. Several of the highest-profiting affiliates, who made more than $1 million through the program.
Through their wild income claims and check flashing, these are the top Zeek Rewards affiliates who collectively roped in who knows how many thousands of affiliate investors, the overwhelming majority of which lost money in the scheme.
Well, “lost” is probably not the most accurate of adjectives to use, as where the money wound up is wholly known. That being in the bank accounts of Zeek Reward’s top affiliates and in some instances, company management itself.
A testament to the greed of these top Ponzi thieves, many of whom are well-known in the MLM industry and continue to market similar schemes after Zeek was shut down, out of the 77,000 winners only ‘150 Zeek profiteers‘ to date have settled with the Receiver for a total of around $2 million dollars.
Instead of settling with the Receiver and handing over what they effectively stole, what have the rest of Zeek’s top affiliates been up to (in particular the aforementioned “highest-profiting” ones)?
Several of the highest-profiting affiliates, who made more than $1 million through the program, filed motions early on obstructing the receivership’s progress, including one that intended to dissolve the receivership altogether.
A federal judge denied all the measures.
Fighting tooth and nail in court to keep their ill-gotten gains.
Not only did they have the sheer audacity to fleece thousands of affiliate investors into what was always an obvious Ponzi scheme, now they’re pointedly giving them the finger.
Despite their silly legal ranting and raving about how “legal” Zeek Rewards was, Zeek’s top affiliates continue to plough on and defiantly refuse to settle with the Receiver – wholly to the detriment of Zeek Reward’s 840,000 net losers.
Should these top affiliates not settle, Bell intends to go after them in court.
Bell intends to get that money back through “clawback” lawsuits, which seek to recover profits from investors, employees or other parties who were transferred money.
Bell said the plan is to sue a handful of the largest profiteers by name, then follow up in a defensive class action, which will target a much larger group of “net winners.”
“I think we’ll sue 15,000 or 16,000 people in the next few months,” Bell said, adding that number does not reflect all the affiliates capable of being sued.
The class action is probably too broad in scope to pore over but I for one certainly hope that the top earning affiliates holding out are publicly named in Bell’s lawsuits.
“Clawback litigation is costly, can last for several years and does nothing more than both delay the claims process and deplete the potential funds available for distribution to victims,” Jordan Maglich, a Florida attorney and expert on Ponzi schemes said.
“And 99 percent of the time, there is no allegation that those clawback targets were complicit in the fraud or somehow anything different than those victims who lost money.
However, it is their decision to fight to keep their fraudulent gains to the detriment of their fellow victims that sets them aside from that group.”
There’s an entrenched attitude in Ponzi circles that deem participants largely untouchable and entitled to the money they steal.
Invest some money, convince thousands of people to do the same, withdraw their money through the compensation plan and then run off into the darkness with what you believe is now rightfully yours.
Pop up a few months later and wash, rinse and repeat.
How effective Bell will be putting a stop to that (god help the idiots who invested their Zeek money in similar ventures after the shutdown) remains to be seen, however as an analyst I’m expecting some MLM industry heavy-weight names to be dropped.
We know most of Zeek Rewards management were involved as affiliates, but how far the company’s tentacles extended into what is traditionally considered “legitimate MLM” is bound to raise eyebrows.
With this many people involved everything that went on inside Zeek is pretty much guaranteed to spill out once Bell files his lawsuits. Most of it is already public knowledge but to see actual dollar amounts attached to names will intensively clarify the true nature of those involved in unprecedented graphic detail.
That is of course if the list is made public, which I’m hoping it will.
It’s bad enough that these people are collectively directly responsible for recruiting a ton of people into the largest Ponzi scheme participants wide in US history. Now they want to keep the money too?
These people entirely deserve to be named and shamed, if not for public interest than at least for the well-bring of the MLM industry itself. Takes a lot of balls to rip that many people off and then try to keep the money you stole, despite being given ample time and opportunity to clear your name.
And seriously, anybody who thinks they have a hope in hell of convincing a judge they’re entitled to keeping their Ponzi profits during clawback litigation has got to be delusional.
There have been some setbacks, though, including sorting out terabytes of information in Zeek’s databases without nearly any help from company insiders.
“It’s not on standard business software. It’s stuff they created on their own, and they wrote code on their own,” Bell said.
“We didn’t have access to the insiders who created that software and data because they had government problems and aren’t at liberty to talk to me, I suppose.”
“Government problems” is diplomatic code for what’s coming down the track, which, after Bell is done, is pretty much guaranteed to be criminal proceedings against those responsible for Zeek Rewards.
So far, more than 110,000 claims, totaling more than $350 million, have been filed.
As a final note to anyone reading this who lost money in Zeek and hasn’t yet filed a claim with Bell, the deadline of September 5th 2013 is fast approaching.
What on earth are you waiting for?
Update 1st October 2013 – The first details of SEC action against Zeek Rewards’ paid consultants has been revealed.
On the 30th of September the SEC accepted a settlement offer from Troy Dooly (MLM Helpdesk), for his part in promoting Zeek Rewards and failing to and at times covering up his financial agreement with the company.
Update 4th March 2014 – On the 28th February 2014 the Receivership filed clawback litigation against Zeek Rewards insiders and top net-winners. An additional 9000 US-based net-winners who had also not yet settled with the Receivership were also named and shamed.