zeekrewardsThe two remaining high-profile disputes between merchants and the Zeek Receiver are NxPay and Preferred Merchants.

NxPay served as Zeek’s merchant payment processor and, after returning some of the stolen Ponzi funds in their possession, hold out that they are entitled to keep some $9 million.

After the staffer NxPay put in charge of negotiating with the Receiver agreed NxPay would likely have to return the money, they got rid of her and started to play hardball.

Similarly Preferred Merchants are holding onto $4.8 million in stolen funds, sourced from a Rex Venture Group trust fund.

After they were notified that the SEC had shut Zeek Rewards down, Preferred Merchants quietly transferred $4.8 million out of a Rex Venture Group trust account and hoped nobody would notice.

Forensic accounting of Rex Venture Group’s account undid them, and now Preferred Merchants are doing everything they can to delay the inevitable return of funds.

In the meantime, the Receiver had filed a Motion seeking to find Preferred Merchants and its owner, Jaymes Meyer, in contempt of court for not handing over requested documents related to the funds.

In two separate orders filed yesterday, Judge Mullen moved to squash both NxPay and Preferred Merchant’s dillydallying.

NxPay had filed for an extension of 21 days to reply to the Receiver’s motion demanding they turn over the funds. This would have pushed the reply deadline to January 12th.

Seemingly not interested in any more delays, Mullen denied NxPay’s request:

A brief hearing was held on this matter on December 16, 2014. For the reasons stated in open court, IT IS HEREBY ORDERED that NxSystems, Inc.’s Motion for Extension of Time to Respond is hereby DENIED; and NxSystems, Inc. is directed to provide to the Receiver an accounting of the funds at issue within thirty days.

What was discussed in open court is unfortunately not available.

Meanwhile in a separate hearing held on the same day, Preferred Merchants were also ordered to disclose what they’ve done with the stolen funds in their possession:

Pursuant to the Court’s broad discretionary power in supervising this equity receivership, the Court hereby orders Preferred Merchants and Mr. Meyer to produce to the Receiver by 10:00 a.m. Wednesday morning, December 17, the following:

A full accounting of the use and location of the RVG funds transferred to Preferred Merchants/Meyer in August 2012 from the date of the transfer to the present and all documents related to the creation, governing documents, transfer of assets into and current holdings of the “Cook Islands Trust” described by Preferred Merchants’ and Mr. Meyer’s counsel to the Court on November 24, 2014.

Preferred Merchants are currently holding the funds offshore, and it is believed NxPay are doing the same.

What I imagine happens next is the Receivership will receive the accounting details of both balances, which he’ll then be able to use to facilitate the transfer of funds back to the US – either via court motions or the co-operations of the institutions the funds have been deposited with.

Either way, continuing to fight the Receiver has consistently proven to be a futile effort on both NxPay and Preferred Merchant’s behalf.

Point for trying fellas, but no – you don’t get keep millions of dollars in Ponzi proceeds.

 

Footnote: Our thanks to Don@ASDUpdates for providing a copy of Judge Mullen’s Preferred Merchants and NxPay orders.