Zeek Ponzi pimp troll counter-claims dismissed
In response to clawback litigation being filed against them, several of Zeek’s top net-winner investors filed counter-claims against the Receiver.
In total around a million dollars was requested, mostly by way of unpaid Ponzi ROI earnings. This was done via claiming that Zeek Rewards had contracts with the net-winners, and that unpaid ROI earnings should be paid out. Funds seized from Zeek’s payment processors were also requested.
And as ridiculously trollish as it all sounds, I kid you not that’s what was filed.
Not surprisingly, an order issued on the 14th of January has seen every one of these counter-claims rejected.
First up we have Trudy Gilmond, Jerry Napier and Darren Miller’s “breach of contract” counter-claim.
(Gilmond, Napier and Miller’s) breach of contract claims allege that they had enforceable contracts with RVG pursuant to which they performed services for RVG.
They claim that RVG owed them money when the Receiver was appointed, and that the Receiver is liable for RVG’s failure to pay them under the purported contracts.
By “performed services”, Gilmond, Napier and Miller of course mean nothing more than “we invested money in Zeek”.
(Gilmond, Napier and Miller’s) breach of contract claims fall squarely within the definition of a Claim pursuant to the Claims Order.
The Claims Order set a Bar Date of September 5, 2013, after which the holders of any
None of the Defendants filed a Claim with the Receiver requesting any money owed under any alleged contract with RVG.
Any breach of contract claim is therefore barred.
The reason no claims were filed of course was that at that stage, clawback litigation hadn’t been filed and the top investors still thought they had a shot at keeping the millions the collectively stole.
Moreover, some or all of these claims concern funds that the Court has already determined are Receivership Property, not the property of any Defendant.
Denied!
The second batch of counter-claims were filed by Aaron and Shara Andrews, Durant Brockett and Rhonda Gates.
All allege: “The Receiver, acting as RVG, and by confiscating the funds in [Defendants’] RVG NxPay account, has failed and refused to pay [Defendants] for the services that [Defendants] performed.”
Whereas the first counter-claims pertain to funds not paid, in this second batch the net-winners are demanding they be paid funds seized from their NxPay accounts.
The problem?
In the SEC Action this Court ruled that “NxPay® properly froze the accounts and the funds determined to be RVG funds must be returned to the Receiver pursuant to the Agreed Order.
Gotta love troll lawsuits based on emotion instead of facts…
Instead of intimidating the Receiver, which was obviously the intention behind the counter-claims, this happened:
Aaron Andrews, Shara Andrews, Innovation Marketing, Brockett, and Gates all assert identical counterclaims for tortious interference (with contract).
Defendants allege that they each had a contract with NxPay, and that the Receiver somehow “interfered” with that contract by accepting the funds that NXPay turned over to the Receivership pursuant to this Court’s Order.
The Receiver, however, cannot be liable for tortious interference simply by doing his job as Receiver as ordered and authorized by this Court.
Aaron Andrews, Shara Andrews, Brockett, and Gates next seek to hold the Receiver liable under the common law claim “Money
Had and Received,” contending that the Receiver is in possession of funds of which Defendants are the rightful owners.The crucial issue in this type of action is whether the defendant has the right to retain the money.
This question has already been answered by the Court. The Court has already determined that the funds at issue do not belong to the Defendants.
Innovation Marketing, LLC, Aaron Andrews, Shara Andrews, Brockett, and Gates next seek damages for an alleged violation of their constitutional rights pursuant to 42 U.S.C. § 1983 or, alternatively, under a common law claim for violation of their rights under the Fourth Amendment to the United States Constitution.
Defendants contend that the Receiver violated their constitutional rights by confiscating the funds in their RVG NxPay accounts “without any adequate process to determine the true ownership of the funds,” thereby depriving Defendants of the “value, use and benefit” thereof.
First, the Receiver is a court-appointed officer and accordingly, cannot be held liable.
Despite Defendants’ allegation that the Receiver wrongfully “confiscated” the funds at issue, the Receiver took possession of these funds only pursuant to the Court’s Order that such funds be turned over to the Receiver.
Because Defendants do not allege the Receiver was acting outside his court-appointed authority in taking possession of the NxPay funds, their claim under § 1983 fails as a matter of law.
In their final counterclaim, Defendants Innovation Marketing, Aaron Andrews, Shara Andrews, Brockett, and Gates seek to hold the Receiver liable under North Carolina’s Unfair and Deceptive Trade Practices Act.
In addition to the fact that the Receiver is immune from this claim as described above, Defendants fail to allege sufficient facts of
deceptive conduct by the Receiver.While Defendants describe the Receiver’s conduct with a variety of disparaging adjectives, including “illegal, offends public policy and is immoral, unethical, oppressive, unscrupulous, and deceptive,” such allegations are conclusory and speculative and are therefore insufficient to withstand a motion to dismiss.
Defendants have identified no representations, omissions or deceptive or misleading acts by the Receiver that affected commerce and caused them harm.
Defendant Miller asserts a counterclaim for conversion in his Amended Complaint.
This counterclaim must be dismissed for the same reason the “money had and received” claim is dismissed: Miller never owned the funds at issue.
Denied x5!
Judge Mullen’s January 14th order was made on the filing of a collective Motion to Dismiss by the Receiver. The Reciver’s motion was granted in full.
The only outstanding issue between clawback from Zeek’s more notorious net-winners is the upcoming appointment of a pro-Ponzi rebuttal expert.
It’s expected that after an expert is appointed and pro-Ponzi arguments that have already been shot down are trotted out and dismissed, that the net-winners still holding out will finally have to pay the millions they stole.
Stay tuned…
Footnote: Our thanks to Don@ASDUpdates for providing a copy of Judge Mullen’s January 14th order.
Love seeing scammers put bull’s eyes on themselves for when they get jammed in their next scam.
And the complaint reads kinda like sovcit leanings.
the counter claims have been rejected mostly on technical grounds. i cannot access this order, but from bells consolidated response to the counterclaims motion, it is clear that the arguments were centered on technical issues rather than ‘ponzi scheme’ issues.
1] defendants made their claims late, and hence technically the claims were barred.
2] NX pay had a contract with RGV which agreed that:
thus the court was technically correct in determining that NX pay funds belonged to RGV and hence the receiver.
3] all the other arguments put up by defendants, about constitutional rights being infringed, or bell being ‘mean’, got dumped in the garbage, because bell is an officer of the court, working under the authority of the court, following court orders, and hence immune from attack.
question: if zeek was a ponzi, and its contracts worthless, why is it’s contract with NXpay valid?
Only because the counter-claims themselves were legally baseless. Just smoke and mirrors from upset net-winners who want to waste as much time as possible.
You can’t make claims on funds you’re not legally entitled to.
Because Ponzi ROI contracts != merchant contracts.
whichever side wins, zeek is not coming back.
if SEC/bell win, then disner etc have to pay up.
if disner etc win, the RGV estate has to distributed amongst claimants.
disner etc, have some strong hopes about winning this, thus they have laid their claims before the receiver, at the outset, under any and every heading applicable [payment for contractual work, constitutional rights, lack of claim, public policy etc].
so, disner etc are being properly smart.
bell, in his motion for clawback against disner etc, has relied almost wholly on the ‘ponzi scheme’ argument.
however in replying to the claims of disner etc, he has rejected the ‘ponzi argument’ to go for a technical argument based on the RGV/burks/SEC ‘agreement’.
so, In The Rare Event that disner etc win, their claims will still stand rejected on these technical grounds. The RGV estate will still belong to the receiver, as RGV/burks gave it away without any avenue for redress.
so, bell is being properly smart too.
It’s already finished, the regulators won. They always win because under no circumstances are Ponzi schemes every going to be legal.
Now we’re just seeing who gets punished how.
It’s already finished, the regulators won. They always win because under no circumstances are Ponzi schemes every going to be legal—oz
ponzi schemes are mostly shut down due to settlements, plea bargains.
zeek is interesting because someone had the gumption to ask for ‘proving the case’.
zeek is based on the howey test, which is disputed, and unresolved by the supreme court.
i doubt the defendants will see it through, but if they do , it would be interesting to see if howey fails or passes. personally, i think defendants are mounting pressure, to probably get very easy sweet deals with bell.
the civil case of the defendants MAY also pressure the criminal case, leading to a sweet deal for burks, and once again taking the pressure off the establishment, for ‘proving the case’.
ponzi’s can never be legal, but cases can fail ‘technically’ for misapplication of law. in this case howey is an old wheel, being run mercilessly, and could break down, anytime.
all these elements make this case, a proper theater of drama and suspense, and since its free, we can all watch it unfold, with some pepsi and some bated breath.
their being illegal frauds.
A Ponzi is a Ponzi is a Ponzi. The fundamentals never change.
Gumption? That’s a misplaced notion. The net winners are sitting on millions of dollars which they are loathe to return. How much gumption does it take to pool resources and hire a lawyer to sauce baloney? Nil. Zero.
Gumption is fighting for what you believe is right even when the other guy has your money. THAT takes steel.
No way Bell deals at this point. It would call the default judgments into question and he has the whole class to consider not just the six morons who are convinced they can prevail gambling with house money. I don’t even know if its possible to make a class action “deal”.
Why these people did not file a Proof of Claim is indicative of the inexperience of this lot. Where’s Jodi Foster? This is the Slaughter of the Lambs.
What do you mean the Howey test has not been proven Anjali? It is case law. It has never been disproven.
I don’t think she meant it that way. I believe she was talking about that SEC’s jurisdiction haven’t been proven in court.
Paul Burks consented to his judgment, waiving his right to “Findings of fact / conclusion of law”, waiving his right to appeal etc., consenting to the jurisdiction of both the SEC and the court.
The court has tested its own jurisdiction in Doc-90.pdf Order Denying Motion To Dismiss, by applying the Howey test. It didn’t directly test SEC’s jurisdiction, because that wasn’t an issue in the MTD.
No, what it did is apply Twiqbal.
No linkypoo ://en.wikipedia.org/wiki/Twiqbal
He didn’t ask about that. I tried to give him a relevant answer from memory, including which source.
The court tested its own subject matter jurisdiction by applying the Howey test. It didn’t directly test SEC’s jurisdiction.
It has probably applied Twiqbal too, some place in that document.
@Hoss
It was made abundantly clear that Ponzi winnings would not be paid out via victim claims.
That’s why they tried to get the funds via alternative means (the counter-claims). That and emotional retaliation against the Receiver for filing clawbacks against them.
Um yeah, we already knew that……. Let us not forget that several “Net Winners”, including Todd Disner, have default judgments against them, as do Canadian ‘Net Winners”.
What gets me is these idiots in Bell v Disner et al, never bothered to respond to the lawsuit, hence the defaults. They knew they already lost.
Let’s see how Paul Burks does in the criminal case.
i don’t care WHO asked or had the gumption. as long as someone has the gumption to step up and ask the state to prove it’s case.
in my opinion, that’s how justice should work, never mind the excuses.
sweeping things under the carpet, is not a good way to keep things clean and healthy and organised. rot will set in.
i think there was a fallout between the trudy gilmond gang and disner [and a couple of others].
disner and a couple of others struck out on their own, and decided not to reply to the summons.
a little reading, prima facie shows that, ‘declaring bankruptcy’ seems to be the method of choice, for confronting default judgments.
remember, these guys disner, sorrels etc will not be paying up easily. bell will probably have to set some debt collectors loose behind them.
Bell looks like he’s doing a proficient job of cleaning up the mess. You can do a white glove inspection when he’s finished.
One would expect Bell to take such a position. An experienced adversary would have filed a claim anyway…in order to preserve it.
Good grief. Burks was offering a 125% ROI on the money you put into Zeek. All the other bells and whistles were just for show trying to disguise the investment and Zeek not being registered to offer investments.
It was all smoke and mirrors and they got caught without the smoke screen.
He also told the members do not call it “investing.” If it’s not investing you don’t have to tell people it isn’t for God’s sake.
yes, i have tried to say something like this in post#4.
i found it extremely interesting that bell did not revert to the ‘ponzi fraudulent transfer’ argument to oppose the ‘counterclaims’ of netwinners.
he took a technical argument, which will preserve his argument, even in the event that netwinners win their ‘no securities/no SEC jurisdiction’ case.
well thought out, longtime plan, indeed!
the application of howey to ponzi/MLM schemes, is a practice which has still not been clarified by the SC since 40 years.
different circuits interpret howey differently. there is a lot of over turning of howey judgements between district courts and circuit appeals court.
there is no final clarity, on howeys fourth prong about ‘efforts of others’, which has mutated from solely, to modicum of effort, to essential managerial skills, to – affiliates work is nonsense if the scheme is ponzi.
it started from dare to be great, where affiliates invited people to a company program, managed by company officials, where they were given the spiel and psychologically pressured into joining the scheme. the recruitment work was directly and mostly accomplished by the company itself, so it fitted the definition of a security.
in koscot, the court, copy pasted the DTBG order, without taking into consideration that in koscot, the recruitment work was mostly independently performed by affiliates. the district trial court did not find koscot to be a security, but the fifth circuit reversed the order, by going with DTBG order.
there are ponzi cases, where the affiliates do all the recruiting work, But because they were using company provided literature and brochures, the scheme was deemed a security.
there is a case where a pastor introduced his church to a ponzi scheme, which was deemed not to be a security, only because no company representative attended the church meetings and the pastor did not use any ‘company materials’ to sell the ponzi. this apparently, made the ‘effort’ wholly his.
um, even the concept’ of ‘duplication’ is used to deem a scheme a ponzi, because um, if your’e only ‘duplicating’ how can you um, say the effort is all yours?
^^^^ this needs to be cleaned up.
meanwhile this is what the SC said in 1975:
since then, silence from the SC , about the stretchability of howey.
Wrong logic. You see recruitment as “work”, but only legitimate work can be counted as work (in court). The work won’t generate any profit in itself, i.e. the scheme can’t legally pay you any profit.
A court will not reward participants for recruiting more participants into a scheme. It will not allow them to deduct expenses either.
From the BurnLounge April 2013 cross-appeal decision.
Courts are always very clear. 🙂
wrong track! could you just for one moment only, look at the definition of security [investment contract] and howeys test, without rolling down the ‘legitimacy of work and profit’ slippery slope?
BL was taken down by FTC [not a securities case].
please provide the link of this cross appeal, you have quoted.
once a scheme is declared a ‘securities pyramid’, naturally a court will not allow ‘expenses’ borne by defendants, to propagate said scheme.
my reply to LLE’s question about howeys, was about whether howey is correctly applied to ponzi/pyramid schemes, to declare them a securities violation.
the question of the legality of profits, or expenses borne, come later, they are not relevant to the application of howey.
start and then stop, at ‘howeys test for investment contract’. do not take even One Step More. can you do it?
Waste of time.
Ponzi “work” (investing in fraud, promoting fraud and recruiting new investors into fraud), is not legally recognized as work.
Pretending otherwise and building hypotheticals to question established laws on securities fraud is pointless.
I didn’t think it was of any interest, but here it is:
NOLINK://www.ftc.gov/system/files/documents/cases/2013-04_burnloungebrief.pdf
Howey test (modernized version):
“investment of money, in a common enterprise, with the expectation of profit, that arises substantially from the efforts of a third party or agent”.
Ponzi scheme = investment contract. It’s the “system” itself that will reward some investors with false “profits”. There’s no real profit other than that.
Pyramid scheme = investment contract. It’s the “system” itself that will reward some investors with false “profits”.
once again. you defined ‘investment contract’, and then jumped to the mechanics of the ponzi scheme, without saying hello to howey’s fourth prong.
the broadest definition of howey’s fourth prong i could find is (modernized version) is:
“whether the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.”
courts do not say, a scheme is selling securities, because there are false profits. they cannot say this because howeys test, does not test the legality of the enterprise.
so courts just mangle the fourth prong, by ‘declaring’ that work of affiliates is ‘nonsense’ because of the managerial efforts of the company. the same work of ‘selling something’ ,would be valuable work in a legal enterprise, because they are ‘efforts which affect the failure or success of the enterprise’. so, i believe this is not a sound legal argument.
in post#22 i have given some examples to show how howeys fourth prong, is being almost comically misused, so maybe its time for the SC to speak up.
I divided them into 2 separate components, and showed that both could pass the Howey test (including the fourth prong). It doesn’t mean both will need to be Ponzi schemes, but both can be securities in the form of investment contracts.
Check ZeekRewards’ “Profit Pool” and “The Matrix” in one of the complaints? “The Matrix” was recruitment based. The “Profit Pool” was primarily based on investments and reinvestments, partly based on commissions from downline’s investments and reinvestments.
SEC didn’t need to analyse in detail how much the “Profit Pool” was based on either factor, but it CAN be analysed.
A court or a regulator must have some realities to apply the test on, i.e. they must identify relevant facts first.
Your logic works in the opposite direction = “identify the test first, and then try to bend the realities to either pass the test or fail the test”.
“Dare To Be Great” was a pyramid scheme, IIRC. Pyramid schemes can be seen in many different ways, e.g. as “consumer deception”, “investment based opportunity”, “gambling / lottery”. If it had been shut down by a different regulator, the Howey test wouldn’t have been relevant.
Koscot is usually seen as a pyramid scheme test. I didn’t know the Howey test was used there?
Your two other examples are impossible to identify. They are relatively vaguely described.
The Howey Test determined what is considered a security/investment. It makes no difference what you call it: loan, advertising, shares, etc. if it met the Howey Test it was a security/investment.
Zeek met every condition of the Howey Test and thus Zeek was offering “Securities” and you were “Investing” in Zeek despite what Zeek, Paul Burks and anyone else tried to claim that Zeek was not a security and you were not investing.
Anjali’s idea goes like this:
1. Choose the test, law, rule, theory or idea
2. Identify the facts relevant to that choice
3. Apply those facts to that choice
4. Draw the conclusion
Since the test, law or rule already have been decided, you can look at some limited amount of facts.
Gerald Nehra used that method when he analysed TelexFree. He decided to use his own idea favorite idea, “compensation will be legitimate when it’s based on the movement of products rather than on the movement of money”.
Then he could simply adjust the reality to match that idea, e.g. by adding 10 TelexFree software to each AdCentral contract. It “fixed” the investment issue. 🙂
The ROI issue was “fixed” in a similar way. “Pay people in products rather than money, and then buy back that product for $20 each week”.
Normal logic goes like this:
1. Correctly identify the facts
2. Identify relevant laws, rules, tests, etc.
3. Apply the relevant rules to the realities.
4. Draw the conclusion
So working to sell ‘something’ like securities proves there are no securities. That just adorable. You’ve solved the dilemma of Howey.
sorry sir, beg to disagree.
this is how everyone’s logic SHOULD work :
1] identify the facts
2] identify the test you want to use
3] a) match the fact with the test, b) without bias
the howey test is without bias, to the nature of the business.
but, to ‘fit it’ onto ponzi/pyramid schemes ‘bias’ has entered into the fray. this is dishonest. reality is being adjusted, to fit the test.
facts are cherry picked, and and force fitted onto howeys fourth prong of ‘efforts of others’.
exactly. if you’re ‘working to sell’ something, it may not be a security.
that’s what howey’s test says. not me.
Only in your pro-Ponzi head.
Anjali is sitting on a three-legged stool talking about the 4th leg.
howey is sometimes defined with three prongs and sometimes using four prongs:
1] an investment of money
2] in a common enterprise
3] with an expectation of profits
4] from the efforts of those other than the investor, that are the undeniably significant efforts, those essential managerial efforts which affect the failure or success of the enterprise
so, i’m sitting on a four-legged stool, and talking about the fourth leg, ie the ‘efforts of others’ prong.
Why did you put in “want to use” in the second point?
You haven’t really listed any facts either.
To fit the question asked, not to fit the test. Trying to make realities fit a test will be rather meaningless. I gave you Gerald Nehra as an example for that.
But then you should probably stop doing it? The only one who have tried to make realities fit a test is you. I have pointed to a much wider range of facts.
They clearly are if people use YOUR method.
If you cherry pick facts right from the beginning, then you clearly have some type of strong bias, e.g. a bias towards a specific idea.
Gerald Nehra had a bias towards his own “MLM expertise”, identified by me as a specific idea (to simplify it). Then he cherry picked the realities to look at, and how to adjust them to match his idea.
The result = he ignored more important facts, and failed to find a proper solution.
Does not apply to Ponzi schemes. Enough.
If you wish to focus on a specific test, rule or idea, then you must first check what that test/rule/idea is meant to be used for.
The Howey test was created to more clearly identify the term “investment contract”. If you use it for that purpose, you’re probably on the right track.
SPEAKASIA
For SpeakAsia, people paid money for “survey panel contracts”, $220 for the first contract and $200 for every subsequent panel or sub-panel. The contracts promised a weekly payout of $20 per week if people qualified by filling out an online survey form, a total of $1,040 for a one year contract.
SpeakAsia didn’t have any external clients paying for the surveys, so the work people did filling out the surveys didn’t have any real function in the business.
HOWEY TEST SPEAKASIA
1. Investment of money? YES.
2. With the expectation of profit? YES.
3. In a common enterprise? YES.
4. Profit depending solely on the efforts of others? YES.
All those 4 “YES” can be tested, e.g. prong 2 can be tested for “commercial / investment” factors, prong 3 can apply some separate tests for commonality, prong 4 can be tested against the economic realities of the business.
The Howey test will not identify the facts for you, you will need to identify the facts yourself.
The success of the hive is not dependent on the efforts of any single bee. Gilmond represents that single bee. Individually her efforts were insignificant.
Prong 4 of Howey is thus established by considering the behavior of eusocial animals, like bees, ants, termites and human beings.
reply to norway’s question with a less ‘combative’ stance. may it please the lord.
DTBG was the first ponzi/pyramid scheme to be addressed by the SEC, as a ‘securities’ case.
koscot was found not to be security by the trial court, but found a ‘security’ by the appeals court.
omnitrition was again, not found to be a ‘security’ by the trial court, and remained unresolved at appeal.
the difference between DTBG and koscot/omnitrition, was that in the former, recruitment activities were performed directly by company officials. in the latter distributors performed recruitment activities themselves.
this is probably why the district courts in both koscot and omnitrition, held the view, that i hold, that work of the distributors was of considerable importance, and ran afoul of howeys fourth prong, and hence the schemes did not satisfy the ‘securities’ definition.
so, courts have held the view i have, i’m not charting some new journey here.
BTW burks has asked for more time to prepare for his criminal trial.
from asdupdates:
Scams were shutdown for being Ponzi/pyramid schemes, tried in court and done and dusted. End of story.
Anyone claiming otherwise is most certainly charting a hypothetical alternate reality journey.
According to Babener, the SEC “stepped in”, proving that it also had jurisdiction in pyramid scheme cases, not only the FTC.
Because both were pyramid scheme cases, shut down by the FTC. Whether it involved any securities wasn’t an issue.
… was the agency (SEC and FTC). FTC can’t argue “investment contracts”, it doesn’t have that authority.
Recruitment activities can be important for the fraudulent scheme itself. It will bring in more participants or investors, but it will eventually lead to failure.
That’s why people, if they want to use “Good Faith / provided value” as a defense, will need to focus on the legitimate part of the activity (e.g. the sale of Retail Bids in ZeekRewards).
Claiming “I played an indispensable role in ZeekRewards, personally recruiting more than 50 new investors, creating an organization of over 2,000 people” will be a serious mistake. The court won’t reward that type of activity.
But you’re looking at the wrong factor.
* Ponzi schemes are investment based and will normally involve SEC. SEC will argue “fraudulent investment” and similar arguments. It can argue “investment contracts in the form of a matrix based pyramid scheme”. It will usually not be involved in any commercially based pyramid scheme cases.
* FTC will argue “pyramid scheme”, “misleading marketing” and similar arguments. It will handle commercially based pyramid schemes, but it doesn’t have the authority to handle investment based ones.
Just adding to your observation: There is nothing preventing the SEC and FTC doing a tag-team, with the agencies simultaneously bringing their own individual prosecutions against a “program.”
The FTC and the U.S. Commodity Futures Trading Commission have worked together in this fashion when targeting “precious metals” investment schemes such as American Precious Metals LLC.
In the APM case, the CFTC handled the metals angle, and the FTC brought a telemarketing-fraud case.
One of these days, one of these network-marketing “programs” is going to get hit with everything that U.S. government can throw at it. The maximum expression of this so far has been TelexFree, though the FTC does not appear to be involved.
Point is, it could have been involved based on the advertising elements alone, plus the issues with payment processors.
PPBlog
Your retelling of events sounds like a self serving load of crap.
The ponzi was run by Ephren Taylor via City Capital Corp. The guy skipped town and never even answered the Complaint which cited the typical laundry list of security violations. City Capital defaulted and was ordered to pay $11 Million.
no://www.vice.com/read/the-black-bernie-madoff-000442-v21n9
Is that Ephren Taylor II, i.e. youngest black CEO, social entrepreneur, 20% went to charity, blah blah blah? It’s all bull****.
kansascity.com/news/local/crime/article573396/Young-CEOs-success-story-unravels-in-court-cases.html
and here’s him sentenced back in October 2014.
kansascity.com/news/local/crime/article2650077.html
What’s really sick is he specifically went after Black churches, since he’s black.
A grand jury indicted Taylor back in June. Wednesday, he plead guilty to conspiracy to defraud investors.
you are wrong, because i was not talking about ephren taylor at all.
i was talking about a pyramid called ‘sell america’, which was alleged to be a ponzi in court, but the district court and fourth circuit court both found it Not to be a security, because, it did not satisfy howeys fourth prong.
i used this case because, the court used a broad interpretation of howeys ‘efforts of others’ prong, but still found the scheme not to be a security.
“Even if the Sell America scheme involved investment of money in a common enterprise, the scheme sold to the Matewan Church would not qualify as an investment contract because the fourth Howey prong is not met.
The Fourth Circuit interprets this requirement to mean that the “most essential functions or duties must be performed by others’, and not the investor.
The “3-B” gold contracts scheme sold in this case required significant and substantial efforts from the investor. In fact, the promoter’s only effort was to provide forms and pamphlets and to skim the profits.
The most essential “functions and duties” were the sales efforts to be performed by the investor. The Court FINDS that the transaction at issue in this case did not involve a security”
law.justia.com/cases/federal/district-courts/FSupp/950/1306/1971557/
Good grief! Who cares about all these other programs? This is about Zeek Rewards. It was always a Ponzi and was a security/investment. It met all the conditions of the Howey Test and that’s why the SEC acted.
This nonsense that the defendants are going to be able to prove it wasn’t a Ponzi but a legitimate business is all smoke and mirrors trying to hang onto their ill-gotten gains for as long as they can.
Argue about that if you want, but enough of all the other what-if’s and back and forth about other programs that have no bearing on Zeek. Start a blog if you want to talk about all these other cases but they have nothing to do with the topic of this thread.
Any other red-herrings you want to toss out Anjali start a blog.
not my cousin zeek I hope
Because it didn’t satisfy the second prong (common enterprise). The fourth prong was just “additional information” (not a FINDING). It means the court didn’t analyse any details there, it only stated the “general understanding” it had.
The presentation was too vague to be identified as a security. It was seen as a recruitment scheme more than an investment scheme.
A pyramid scheme is based on the recruitment of new “warm bodies” (consumers or investors, or sometimes “players”). Pyramid schemes will collapse when they run out of “warm bodies”.
“Sell America” seems to have been a pyramid scheme with a false investment component. It also sold the expectation that gold coins would rise in value (or at least Shinn had got that idea).
That quote looked different in the original?
You edited it to change the meaning of it? That’s rather biased?
The final FINDING will be based on the other FINDINGS, but you presented it as based on something different.
no. let me walk you through what the court said without ‘complicating’ the matter.
(Ozedit: Everything said that unnecessarily complicates the matter removed.)
then why have you allowed norways comment?
Because as usual I’m far too busy to attentively babysit the Zeek articles. That and it puts me to sleep.
What I do know though is that if multiple readers are complaining about offtopic rambling then you’re always at the center of it.
Look, if a Zeek pimp gets off on this fourth irrelevant prong then I’ll create a separate article for you to spam. Otherwise just leave it.
Nobody is interested in your unrealistic hypotheticals but you.
Because of factual content / “needed corrections” / “counter weight against madness” / etc.? 🙂
The main topic should be Zeek. “Sell America” was rather vague about factual details, so it wasn’t very relevant in itself to be used as an example.
Zeek components:
1. Zeekler penny auction
2. ZeekRewards marketing division
3. Other components (not very relevant ones)
– – – – – – – – – –
Zeekler components:
a. Retail bid auctions, $10 million bids sold
b. Sample bid auctions, 19 million bids used
– – – – – – – – – –
ZeekRewards components:
a. Retail bid sale, 20% commission
b. Sample bid sale, up to 15% commission (2 levels deep)
c. Retail Profit Pool, average 1.43% ROI per day
d. Memberships / subscriptions ($10, $50, $99)
– – – – – – – – – –
CASH FLOW
Money coming IN:
2-a Retail bid purchases $10 million ($6.3 million to non-affilites)
2-b Sample bid purchases $820 million
2-d Memberships / subscriptions
Money going OUT:
$400 million total payouts to affiliates
$283 million in net winnings
– – – – – – – – – –
With a method like that, it will be possible to analyse the most relevant parts of the business, e.g. for primary vs. secondary business function. I didn’t manage to find all the details, I only had a quick look at it.
It will be possible to find out whether the “system” or the recruiters did most of the job (the job related to the payouts).
actually you should say: Sample bid SALES $820 million.
judge mullen in his order denying the ‘motion to dismiss’ has , in part relied on DTBG and koscot, to conclude – “finding that pyramid recruiting could be regulated as security…”
the sell america (Ozedit: No.)
Ponzi investments are not sales. The only people buying Zeekler sample bids were affiliates, because of the Ponzi points attached to them.
i can agree with this.
in a case the size of zeek, and defendants with deep pockets, who have access to topline lawyers, and the prevalent ambiguity in the law, it would have been Better to have the FTC involved in this case too.
if burnlounge could be halted efficiently by the FTC, by proving its case in court quite effortlessly, using anti fraud/anti pyramiding provisions of the FTC act, this route could have been taken with zeek too.
if there is some see sawing in court orders regarding pyramids and securities, the FTC could have lent a shoulder to bolster the pyramid side of the fraud.
no spillage, strong message.
A court must look at the economic realities of the case, e.g. that those sales actually had any function.
The $820 million was the amount paid in by affiliates for VIP bids, not the total number of VIP bids. Only 19 million VIP bids were ever used in auctions. The total number of VIP bids created was 7 or 10 billion.
Money coming IN:
2-a Retail bid purchases $10 million ($6.3 million to non-affilites)
2-b Sample bid purchases $800-$820 million (Retail Profit Pool)
2-d Memberships / subscriptions $97 million (the Matrix)
– – – – – – – – – –
The Retail Profit Pool was the primary part of the business, more than 8 times larger than the Matrix (in terms of the amounts they brought in from affiliates). It was 80 times larger than the sale of retail bids.
Retail sale to affiliates or non-affiliates:
Todd Disner: 50 Retail bids sold ($6.50 commission)
David Sorrells: 300 Retail bids sold ($40 commission)
“Coach Van”: 200 Retail bids sold ($26 commission)
Catherine Parker’s payments:
RPP Retail Profit Pool $169,835 (94.2%)
Non-subscription Matrix payments $10,516 (5.8%)
yes, there are the economic realities, as displayed by your astute number crunching.
and yes, there are the functional realities, of something’s being ‘sold’ as in ‘sales’.
lets agree to disagree.
Trade (sale, purchase) is defined to be “exchange of values”, e.g. the seller delivers goods to the buyer in exchange for money.
That didn’t happen in ZeekRewards, most of the sales were actually fake (no payment of money or other things of value, the products delivered didn’t really have any function other than as investment vehicles in a fraudulent scheme).
Realities will need to be about more than Gerald Nehra’s favorite theory about “movement of products” (the changes he made to TelexFree contracts).
When looking at realities, you can’t just focus on your own “favorite theories” and expect a court to do the same. You must look at the same factors a court will need to look at, “have the same understanding of the realities as a reasonable juror will have”.
@Anjali
From one of your own sources.
In that case, it was about “no reasonable juror will swallow SEC’s theory” (about “one vague presentation IS the contract”). The other material presented pointed to a quite different conclusion.
No reasonable juror can be expected to believe that the Zeek affiliates bought the sample bids for any other purpose than investment. Rational people will normally not pay up to $10,000 for “products” that don’t have any real function and only exist as “numbers on a screen”.
The jury did “swallow” the Government’s theory, because Holtzclaw was convicted of securities fraud.
This is not about whether the jury’s verdict was reasonable” in the conventional sense but only that THIS JURY could not reasonably have convicted Holtzclaw of securities fraud if it understood there was no security.
let the sale and the product be fake, i’m only interested in the effort put by ‘anyone’ in making a sale.
let all jurors believe that zeek affiliates bought sample bids for investment, i’m only interested in how those investments were sold and who made the effort.
the fourth circuit court reversed the finding of securities. they found a pyramid and various other things [moneylaundering?] and holtzclaw was convicted, but not for securities violation.
Nobody is going to recognise “effort” with any sense of legitimacy when said effort amounts to nothing more than the perpetuation of fraud.
“You stand guilty of robbing a bank, what say you?”
“Well we put a lot of effort into it. We had to drive the truck, acquire explosives to break in, put a team together… man it was a lot of work.”
“I see, well in that case case dismissed! And somebody get this man a beer!”
Yeah, only in anjali’s fantasy world.
and the fourth circuits fantasy world 🙂
It is clearly elucidated in all the relevant documents that not only does the court have jurisdiction under the relevant Securities acts, but it also has common law jurisdiction.
Common law which says “effort” in the perpetuation of an illegal enterprise is not “work” nor legitimate.
Just as it says that while “clicking on advertisements” for a percentage of a cent can be considered as “legitimate work” clicking on advertisements for 1% a day or some equally ridiculous reward is not “work” and, equally, recruiting for illegal schemes is not “work” no matter how much time and effort is expended doing it.
The precedents are there, the court in question is a Federal Court and common law applies.
A court can probably analyse that, too. But we have too little data to look at, “not enough clear information to understand it properly”.
I looked at the affidavits for the default judgments against Catherine Parker, Todd Disner, David Sorrells and Michael Van Leeuwen as one type of source. They only identified different types of transactions, not the exact details for the types.
Different types of payouts grouped together in larger groups will not be clear enough to analyse.
“It’s not about the efforts …”
Usually it isn’t about the efforts of individuals but about how that effort is related to the profit, e.g. “the difference they made with their efforts”. In ZeekRewards, most affiliates didn’t make much difference. The results were much more related to the scheme itself than to the efforts of promoters.
ZeekRewards didn’t REQUIRE much efforts, and it’s almost impossible to detect any “difference making efforts”. It’s reflected in the numbers, e.g. in the sale of Retail Bids. Only 1% of Zeek’s revenue came from the sale of Retail Bids.
People focused on the wrong efforts, on something that didn’t create any profit. They focused on purchase of sample bids rather than on sale of retail bids. They acted as ill-informed consumers rather than as sales people.
It required no significant efforts. 88%-92% of the VIP bids didn’t require any sales efforts at all, and it didn’t bring in any money either (neither as investment nor as purchase). Zeek itself provided all the instructions and the tools needed for repurchase of more sample bids.
The 88%-92% was calculated like this:
a. $800-$820 million paid for sample bids, “from the outside”
b. 7 billion or 10 billion sample bids created.
Calculation #1:
800 million / 10,000 million = 8% of the total number of bids
Calculation #2:
820 million / 7,000 million = 11.7% of the total number of bids
Net winners “compounded” their VIP Points, but they didn’t bring in more money. If they recruited someone, the same thing happened to the people they recruited. Most of the reinvestments didn’t bring in money and it didn’t require any sales efforts.
Here’s some numbers from affidavits attached to default judgments.
Payment type___|____Disner_|__Sorrells_|_Coach Van_|
Available Cash_|$1,505,338_|$__791,009_|$1,281,546_|
Diamond Pool___|$_______56_|$_______38_|$_______13_|
Subscription___|$__385,236_|$__624,796_|$__138,382_|
ZAP commission_|$________6_|$_______40_|$_______26_|
Total__________|$1,890,787_|$1,415,884_|$1,419,969_|
Since different types of payments have been grouped together e.g. as “subscription”, I can’t analyse any details for matrix commissions.
Zeek paid the following “sales” commissions:
a-1. Retail Bid sales: 20% commission
b-1. VIP Bid, level 1: 5%-10% commission (directly recruited)
b-2. VIP Bid, level 2: 2.5%-5% commission (indirectly recruited)
Recruitment commissions:
Membership / subscription: 20% commission
Matrix commission: $0.25 – $3.50 per affiliate
Generation bonus: (leadership pool)
Diamond Pool: (leadership pool)
Matrix commission specified:
* $10 Silver_____$0.25__$0.25__$0.25
* $50 Gold__ ___$0.35__$1.00__$1.00
* $99 Diamond__$0.40__$1.50__$3.50
ok, we wont use howey on you.
we’ll charge you with theft, and throw you in jail.
I hope you don’t think that the Holtzclaw-Sales America case supports your queer notion that Zeek was not offering securities because of the way they were sold.
If Holtzclaw-Sales America tells us anything it is that the contracts are at the center of the enquiry. What Trudy Gilmond or Pastor Shinn thought they were doing may well be evidence of fraud but such impressions do not prove or disprove the existence of a investment contract.
USA v Holtzclaw: 4th District
“In every United States Supreme Court case addressing the definition of a security there has been a document at the center of the transaction.”
in zeek, neither side is talking about distributor contracts.
the only talk is about the ‘investment contract’ and as we see in the holtzclaw case, the fourth circuit, reversed a finding of securities, because the scheme, being a pyramid, did not satisfy the definition of ‘investment contract’.i had nothing to do with this decision, but i can support its logic.
the SC has never addressed the use of howeys, in ponzi/pyramid cases.
Be patient, they’ll get there. Oz doesn’t analyze the Comp Plans for nothing.
“(1978); Aldrich v. McCulloch Properties, Inc., 627 F.2d 1036, 1039-40 (10th Cir.1980)
(stating that “promotional materials, merchandising approaches, oral assurances and contractual agreements” have all been considered in “virtually every relevant investment contract case” when determining whether a security existed).”
NO. The Question before the court in Holtzclaw was not does a pyramid scheme satisfy the definition of ‘investment contract’ but was Holtzclaw pushing securities via a pyramid scheme.
The court acquitted on the charge of securities fraud because there was no security.(“The Court FINDS, that the pyramid scheme in this case does not include an investment in a “common enterprise” as required by Howey.)
The Court never said a pyramid scheme can not be used to promote and sell a security, but only that there was not one being sold (included) “in this case.”
Its entirely possible to sell and promote securities via a pyramid scheme. Sales America was not doing so. Zeek pretty clearly was.
well, what about the comp plan hoss? is there some secret bullet hidden in it?
it was an MLM comp plan – – recruit and earn. everybody worked so hard at recruiting, that a million people joined up, to buy some bids which were never used. so, investments were being sold by the investors, to earn a false profit.
so, how does the comp plan ‘prove’ a security? you know that only howey knows the answer to this question.
Its no secret.
Howey offers no proof. Its a test.
The evidence proves whether there is a security and the evidence lies in the “promotional materials, merchandising approaches, oral assurances and contractual agreements” (which)have all been considered in “virtually every relevant investment contract case” when determining whether a security existed.)
uh, howeys is a test, which ‘proves’ whether an ‘investment’ is an ‘investment contract’ or not.
wordsmithing much, hoss? the court found there was no security, because of the pyramid recruiting, which failed howeys fourth prong. you may say this any which way you like,
short ways, long ways, depending on how much you want to muddle it.
i’m sure the court will look at all materials in zeek too, promotional, brochures, contracts, et all. that will give some idea about how much direct ‘help’ the management was providing in the recruitment process. even in holtzclaw the court looked at all these materials and found that:
lets see how the court interprets this matter in zeek. it’s the same court.
how did this humongous amount of money , ‘come in’ from the ‘outside’? was it the queen bee or the worker ants?
Online Ponzi schemes usually have external transactions (real money, between bank accounts) and internal transactions (non-monetary units like “bids”, “commissions”, “bonuses”, “Cash Available”, “Daily Profit”, “RPP”, “VIP Points”, “Hong Kong dollars”, etc.).
The last type can usually be used for internal transactions, e.g. people could use the “daily profit” to pay for “VIP bids” and “subscriptions”, but it can’t be used to pay for anything else (anything outside that system).
Only a few of the bid purchase transactions in ZeekRewards involved any real money, “money coming in from the outside”. The other bid purchase transactions were internal transactions of “monopoly money”.
So even if it required some “work” to purchase VIP bids each day, it didn’t involve any real money.
Nope. The Court found there was no horizontal commonality…no common enterprise…adding that…. “EVEN IF the Sell America scheme involved investment of money in a common enterprise, the scheme sold to the Matewan Church would not qualify as an investment contract because the fourth Howey prong is not met.” EVEN IF….
Lack of common enterprise is the threshhold finding, because if there is no commonality then there is no reason to enquire as to the relative level of effort between promoter and investor. EVEN IF… is not a finding, its a secondary observation. Don’t hang your hat on it.
The Court’s analysis relied exclusively on evidence contained in the brochure which said, “the earnings under the “Unitary Marketing Plan” “are based solely upon your own efforts and abilities.” (again…no commonality)
Save America – Zero pooling of funds or interests. Earnings (if any) entirely from self effort. = No security
Zeek – pooling of funds – earnings substantially from the efforts of the promoter and others (not entirely, or even minimally from self effort) = Security
That post was part of something. I tried to check the realities of the case, e.g. I tried to identify the amounts brought in and the amounts paid out.
Most of the amounts paid out to Disner, Sorrells and “Coach Van” came from the “Retail Profit Pool”, the internal system where monopoly money could be compounded. That system didn’t generate any profit for Zeek.
It will be relevant for the “expectation of profit” prong in the Howey test, and also for the fourth prong about where the expected profit derived from.
Only an extremely naive or greedy person can be willing to believe that a “system” like the one in Zeek will generate any profit. It shouldn’t come as a surprise for anyone that the system didn’t generate any profit at all.
keep the internal monopoly money aside. people can play with monopoly money all day long, and the SEC wouldn’t give a fig.
there were external transactions of money ‘coming in’ to the tune of 800 million. real money.
how did this real money come in from ‘outside’? who brought it in? whose efforts were they?
if you tell me that burks sat in his little brick office, and attracted all the money through some mind control experiment, i will try to believe you.
Hundreds of thousands of affiliates around the world invested it.
Some knew it was a Ponzi scheme, others were led to believe the Zeekler penny auction was a cash cow.
hoss!!
the court found that commonality was not met.
the court said, even if it had found commonality, the scheme would still not be an investment contract, because it failed the fourth prong.
ie, the fourth prong, was the hair that broke the camels back.
blatant misinterpretation hoss!
howey only says that there should be an investment….with an expectation of profit.
this expectation of profit should be mostly, mainly, substantially, from the effort or others.
howeys does not ask whether the profit came from a fake RPP or burks ass.
Was Sell America identical in all regards to Zeek Rewards ???
If not, why is it being discussed in a thread about Zeek Rewards ??
That’s right. There was no common enterprise. It was every man/woman for himself just as the documents said. The court observed that the Matewans were prepared to “sell unto others as had been sold to them. So what was sold to them? 3-B contracts.
There is no doubt the Matewans got scammed and they inadvertantly entered into a pyramid scheme, but they did not buy a security when they purchased the 3-b contracts and therefore could not have sold securities when they tried to sell more of them.
It makes no difference if the earnings were “ based solely upon their own efforts and abilities if they were selling 3b contracts which in themselves were not securities.
They could have been selling turnips and hoping to profit based solely upon their own efforts and abilities” and Howey would still ask first if the turnips were sold in a common enterprise.
duh.
no two cases can be identical.
if you attack a scheme as a fraud/pyramid, you will test it against the letter of the law, and precedent.
if you attack a scheme as a security, and more specifically as an investment contract, you will have to test it against the settled test for it, ie howey, and precedent.
sellamerica was a ponzi/ pyramid scheme accused of being a security. it was tested against howey, and the test failed. it was tested against the precedent of DTBG and koscot, it was found to be a pyramid, not ponzi.
law is not Created for each case.
Oh, and by the way, it’s “The Howey Test”
Not HoweyS
It was named after a case involving the W. J. Howey Company and Howey-in-the-Hills Service
It is not plural, neither does it belong to the WJ Howey Company
Just a minor point, but it does reflect somewhat on your lack of subject knowledge
Back to discussing irrelevant cases.
gosh hoss.
what were the matewans doing?
they were investing, and selling investments, to others to realize their fake profits.
of course, nobody knows whether they’re buying ‘3-b’ contracts or ‘bids’ or horseshit.
everybody was ‘investing’ with the ‘expectation of profit’
this is not enough. howeys has a very important fourth prong (Ozedit: Not this shit again. No.)
Most of it was based on the “system” itself, not on the efforts of the affiliates. Claiming (and trying to prove) otherwise would be a serious mistake.
The clawback litigation is based on “no wrongdoing from the affiliates” (based on the case as a whole). No sane person can be expected to try to prove the opposite, e.g. that their own recruitment of new investors played an indispensable role, i.e. that they actively participated in the fraud.
Zeek had 3 streams of money coming in “from the outside”:
1. Retail bid purchases $10 million ($6.3 million to non-affilites)
2. Sample bid purchases $800-$820 million (Retail Profit Pool)
3. Memberships / subscriptions $97 million (the Matrix)
The clawback litigation hasn’t tried to separate any “active promoters” from the rest of the group (other than the management). Individual promoters CAN claim that their own personal efforts actually played an important role and that it did make a difference.
Point to ONE CASE where a court have followed your logic, and have focused solely on the Howey test and have ignored other realities of a case?
Your ideas will typically refer to scenarios like that, but you have failed to prove that courts do it like that in reality.
Absolutely false. It was not a ponzi. If it was it would have met the common enterprise prong and the jury verdict would have been affirmed. Read up.
Oops, I should have said “point to one RELEVANT case” rather than “ONE CASE”. Some appeals can be solely about a Question of Law, e.g. about the interpretation of the terms “solely” or “common enterprise”.
The Howey test will usually be applied to the facts of the case, making it a “mixed question” where the court first will need to establish the facts before it can apply the test. But an appeal can be solely about how the trial court interpreted the Howey test before it applied it to the facts, e.g. that the court applied some “wrong legal ideas”.
NOLINK://legal-dictionary.thefreedictionary.com/Question+of+Fact
NOLINK://legal-dictionary.thefreedictionary.com/Question+of+Law
OZ. Can you re-name your blog “Behind Ponzi deals” Very little of what I see reviewed or debated has anything to do with MLM.
Can you guys please stop stroking each other on this stupid Zeek thing? Its over! No one cares but you guys. Exchange phone numbers or emails or something. ha ha.
OZ. It doesnt matter for SEO or SEM because no one is searching for Zeek anymore. Its Diluting your traffic. Kill this thing already will ya?
but that’s Exactly what trudy gilmond et all are saying, they are saying they worked hard for their profits. they are saying their role was indispensable, and hence there was no ‘investment contract’.
uh, do you Read what oz reviews? they are mostly a combination of ponzi/pyramid schemes.
read first, suggest later, unless you’re here for voyeuristic purposes, in which case you’re way off the mark. try search again.
Trudy Gilmond said she worked 12-14 hours per day, but the description was very vague and general.
She didn’t claim anything like that?
She has carefully avoided being specific about her work, and has carefully avoided being specific about results of her work.
ZEEKREWARDS AS A WHOLE
ZeekRewards didn’t require much work from the affiliates, and most affiliates didn’t do much work either. The only requirement was the “1 ad per day” plus “2 Preferred Customers” (could be filled by 2 family members buying 10 bids each).
Any claims about work will need to be individual. That’s why I had a hard time finding any sane claims other than the sale of retail bids to external consumers (or even to people in downline). The other types of work were too closely related to sale of unregistered securities.
you keep saying this, without explaining HOW 1 million people became a part of zeek. did 1 million people individually, randomly, reach zeek’s website and join up? everybody knows posting ad’s is not work, so lets stop pushing that line.
of course claims of work are individual. nobody said that the entire affiliate base was working as a team. if an individual did not recruit , they could not earn, at least in the matrix.
Exactly my point. What do those deals have to do with MLM?
The only people that care about Zeek are the few people that were involved and the people like yourself who have some kind of wierd emotional attachment to it. You have all flaunted your “expertise and wisdom” ad naueseum. Time to move on. Seriously.
The comp plans are similar/identical, it’s the rest of the business that’s the problem.
Because recruiters earned commissions for recruitment.
Zeek proliferated the same as any other Ponzi investment scam.
Individual or not, they are irrelevant.
Promoting a Ponzi scheme is not legally recognized as work (see ASD).
they have MLM compensation plans, which puts them under the MLM umbrella.
‘wierd emotional attachment’ is a bit too much, suffice to say, the matter before the court is ‘interesting’.
have you had enough of zeek? move on. seriously.
there ain’t no chains holding you down here. seriously.
there’s no caselaw in ASD. no trial , no appeal.
it was shut down and after wasting some time, bowdoin pleaded guilty.
The majority of people joined in the last 6 months, e.g. the amount coming in from investors in the last month was $162 million = 20% of the $800 million (not counting the Cashier’s Checks and other “instruments”).
It didn’t really have much momentum in 2011.
Zeek bought its own publicity through various channels, e.g. Troy Dooly, NMBJ Network Marketing Business Journal (Keith Laggos), ANMP Association of Network Marketing Professionals, BusinessForHome (Ted Nuyten), etc., etc.
Zeek in the News (“News at 11”)
NOLINK://www.youtube.com/watch?x-yt-ts=1421828030&v=dGLDMuC-cdE&x-yt-cl=84411374
you keep missing the question, don’t you.
you want to do some irrelevant math in some posts, you want to give statistics of how many people joined in the last 6 months, BUT you will not tell me HOW those people joined.
round and round the mulberry bush.
just answer the question ‘directly’ . ‘how’ did everybody join?
By visiting the Zeek Rewards website and signing up as an affiliate.
Obvious is bloody obvious?
Ponzi schemes were illegal before ASD. Ponzi schemes are still illegal after ASD.
Thankyou come again.
Well? You’ve gotten very quiet. Maybe you finally get it.
Most people didn’t focus on the Matrix, they focused on the RPP “Daily Profit”. That was the primary part of the business, 8 times larger than the Matrix (in terms of amounts coming in from the outside).
The Retail Profit Pool didn’t require much work, it only required posting 1 ad per day. It didn’t require any recruitment or sale.
The fourth prong of the Howey test is related to the “expectation of profit” prong. Most people expected the profit to arise from the Retail Profit Pool, from posting 1 ad per day and compounding the VIP Points for 90 days or more.
Even the top recruiters expected the profit to come from that component, e.g. Disner received nearly 80% of his payouts from that part.
But you’re asking the wrong types of questions.
WHERE? Usually on a company website (e.g. replicated signup page).
HOW? By filling out username, email, etc.
HOW? Signing up for a free account first, “try before you buy”.
That free account was the typical signup. It offered 50 or 100 “trial bids” that could be compounded for 60 days. To become a real affiliate, people would need to buy a membership / subscription (e.g. Silver $10) plus minimum 10 VIP bids – within 30 or 60 days (I don’t remember the details there).
@Anjali
You can look at the first webpage of the “Copy of ZeekRewards website”. Free business, Silver business, Gold business, Diamond business are mentioned right under “Be Your Own Boss”.
“Join” is listed in the menu to the left. It probably goes to a signup form. A pdf-copy will not show elements like that (it’s more like a screenshot than a real website). A “Learn More” form is shown.
But you can find multiple other “Join Now” / “click here” on the same website, and multiple “Learn More”.
(ZeekDoc113-1.pdf)
NOLINK://docs.google.com/viewer?a=v&pid=sites&srcid=YXNkdXBkYXRlcy5jb218ZmlsZXMtd2Vic2l0ZXxneDoyMDYzOTgxMDMzNjY3Yjk
The court has actually looked at the “efforts of others” in 90.pdf Order Denying Motion To Dismiss, section “A. Subject Matter Jurisdiction” (page #5 – #7), from a pre-trial perspective (no FINDINGS).
For the Profit Pool, the court looked mostly at what the affiliates as a group were required to do rather than at what individual affiliates could do.
The tenor of a court opinion often turns on whether it desires to find a security or not.
I included it because of the logical methods more than for the conclusions of those methods.
The court looked at the affiliates as a whole group rather than as individuals. It looked at requirements rather than at what people could do. It looked at typicals rather than atypicals.
RETAIL PROFIT POOL, $800 MILLION (88% of revenue)
Investment based Ponzi scheme component.
It didn’t require much work from the typical affiliate, and they didn’t do much work either. The most essential parts of the work were done by Paul Burks and RVG.
Although people could earn additional daily payouts if they recruited additional affiliates, most people didn’t recruit. It wasn’t required either.
THE MATRIX, $97 MILLION (11% of revenue)
Investment based pyramid scheme component (it was partly based on rewards from the Daily Profit Sharing component).
For the typical recruiter, the additional RPP commission (2 levels deep) would be the most significant part of any recruitment rewards. The Matrix didn’t offer much rewards in itself to the average recruiter (it offered 20% commission on monthly membership fees).
Investment based?
Most of the commissions probably came from the RPP part of the scheme, from the 10% commission and the 5% commission.
10% commission on a $2,000 initial investment = $200.
10% commission on 90 days reinvestments = $470.
20% commission on 3 months subscription = $60 (less than 10% of the commissions from a $2,000 investment).
(Ozedit: One component of Zeek’s compensation plan does not negate the rest. You can’t cherry pick and ignore everything else.
Zeek investors were paid a ROI out of the total company investment, directly proportional to how much they invested and continued to re-invest.)
That estimate can be defended. The average amount invested by “Belsome et al” was $3,350 (from memory). The average investment among all investors was probably around $1,000.
From “Bell v. insiders”:
Zeek had 4 types of membership:
* Free
* Silver $10 per month
* Gold $50 per month
* Diamond $99 per month
I tried to calculate Diamonds only, so $2,000 investment was seen as “low, but realistic” for that group.
Any direct recruited (“Level 1”) or indirect recruited (“Level 2”) would generate many times higher commissions from the Profit Pool than from the Matrix itself.
The pyramid scheme wouldn’t have worked without the RPP Pool, it simply didn’t offer enough rewards on its own. It can be seen in Disner’s, Sorrells’ and Coach Van’s incomes from Zeek Rewards.
On the other hand, the investment scheme could easily have worked without the recruitment part.
yes, in the RPP they were paid in accordance to their investments, AND according to their recruitment.
(Ozedit: one does negate the other, waffle removed.)
of course they dont negate each other, but (Ozedit: No buts. Zeek was a Ponzi scheme using newly invested affiliate funds from around the world to pay off existing investors.)
Investment based = disgorgement of net winnings (own investment and membership fee will be deducted).
Recruitment based = disgorgement of all payouts (no setoff for own investment or membership fee).
The court came to the conclusion that there was very little work involved. I came to the same conclusion using a different method.
Only an insane net winner would try to prove the opposite, because if you can’t prove it for the affiliates as a group then you don’t really prove anything. You will only prove that you deserve a permanent injunction and no setoffs.
Being paid from the Ponzi scheme part won’t exactly count in favor of the recruiters?
Your looking at 2 illegal components. It isn’t really important whether one of them required some work to get paid, it won’t make it become more “legitimate”.
The only legitimate component was the sale of Retail Bids, but very few affiliates actually sold anything.
no, no and no.
(Ozedit: Yes and yes. Pyramid and Ponzi schemes are both illegal.)
The court has come to no conclusions on this issue. It merely denied the Net-winners Motion to Dismiss using Twombly-type reasoning.
It came to the conclusion that it had subject matter jurisdiction? Section A in the Order Denying Motion To Dismiss.
Twombly is about failure to state a claim, Section B.
@Anjali
“Bell v. Disner et al” is an ancillary case to “SEC v. Paul Burks and RVG”.
Ancillary case means that some legal issues already have been decided for the scheme as a whole, e.g. it has already been decided that the money paid out as net winnings was fraudulently transferred to the net winners as a group.
A valid individual defense argument can be “good faith / provided value” for some types of legitimate work. Recruitment of investors isn’t that type of work.
It doesn’t matter how hard people have worked recruiting others or how many hours they spent per day doing it, it won’t make it become more legitimate.
A hypothetical defense argument can be that ZeekRewards used legitimate profit to pay the individual affiliate.
That’s the two main options. Legitimate work or legitimate profit. Recruiting people into a Ponzi scheme isn’t legitimate work, and other investors’ money isn’t legitimate profit.
Sale of Retail bids will be legitimate work. Commissions for that type of work will, in theory, be profit derived from a legitimate source.
It did….based on bald face allegations made by the SEC. There has been no evidence presented and the net winners will dispute the SECs assertions.
The court found that it had subject matter jurisdiction using “Twombly-LIKE.” reasoning. The Court took the SEC allegations as true and assumed jurisdiction based on that.
No. The net winners have an opportunity to make their “work” argument in the Bell v Disner case. If there is sufficient work then the payments would not be fraudulent transfers but bona fide payments.
None of this has been decided. There has been no presentation of evidence, nor even the formation of the class.
Who decided? Based on what evidence?
(Ozedit: Ponzi recruitment not being legally recognized as work is not an opinion.)
They have individual cases. It has already been decided that Paul Burks and RVG fraudulently transferred money to “some people”, but the individual cases haven’t been decided yet.
Some factors, e.g. the frozen NxPay e-wallets, have already been decided in “SEC v Paul Burks and RVG”. Contract claims have already been decided in the claims process, the deadline for filing claims arising from contracts was September 2013.
Not “sufficient work”, but “sufficient legitimate work”. Recruiting people into a Ponzi / pyramid scheme will normally not count as “legitimate work”.
The legal issue isn’t solely about paying people for work. It’s also about the source of the money used to pay them. A court can’t use money that legally belongs to creditors to pay for illegitimate work.
Settlement is a different issue, it’s not about payment but about cost reduction.
Evidence will only be relevant if there’s any disputes about facts. There was a dispute about the ownership to the money in the frozen ewallets, and I believe the ownership was proved in court.
I wasn’t talking specifically about the class action lawsuit, but about the clawback litigations in general. “Class certification” is only relevant for the class action lawsuit.
A correction to that one = the “fraudulent” hasn’t been decided yet.
A correction to that one too = “SOME contract claims …” (not ALL contract claims).
That decision hinged on the “folder on the counter analysis.” There was no finding of fraudulent transfer to the affiliates, nor could there have been, since the money was never transferred into their possession.
Finding there was a failure to file is not a finding that the claims would have been denied if filed on time, nor is it a finding that money already received is wrongfully possessed.
Bell must PROVE that the net winners received fraudulent transfers. The burden of proof is on him. He will need to provide evidence.
That’s right.
correct. denying a claim, due to failure to file the claims, within the stipulated deadline, is a simple matter of technicality, it does not ascribe any ‘meaning’ to the nature of the claim, or any ‘reason’ for the denial except ‘lateness’.
the reason given by gilmond etc for the delay in filing the claim is that :
It shows that counter claims made in “Bell v. Disner et al” were affected by decisions made in “SEC v. Paul Burks and RVG”, e.g. affected by the deadline. That was exactly my point.
Defense arguments will be affected by the type of primary case, e.g. the defense argument “good faith / provided value” will be affected by the fact that the primary case is a Ponzi / pyramid scheme case. e.g. that it didn’t really have any money it could use to pay for recruitment.
The defendants in “Bell v. Disner et al” listed the following types of work:
Points 1, 2, 4 and 5 resulted in a monthly average of $1.50 retail sale commission for Disner, Sorrells and “Coach Van”. That’s more similar to “a few random purchases” than to work.
Points 3, 6 and 7 don’t seem to be directly related to any “income generating activity”. One of them seems to be about “social activity”, the two others seem to be about “training”.
When analysing ZeekRewards itself and the work claims made by the defendants, it’s very hard to find any relevant work that actually generated any legitimate profit.
Most payouts seem to be directly related to the fraudulent parts of the business. Those parts didn’t generate any profits, they didn’t have any money to distribute as rewards.
It doesn’t seem necessary or relevant to ascribe any ‘meaning’ to the nature of the claim? It would only have made some sense if the parties actively had argued some ‘meanings’ themselves.
“Failure to file a claim within deadline” seems to be the most correct legal reason to dismiss that counter claim.
The bar date in the claims process seems to have affected many of the counter claims, and it will affect similar claims in the future.
It affected “Breach of contract” and the counter claims about “value of work and time” (setoff).
BTW, the Fourth Quarterly Report 2014 reveals how the Australian net winners were served / will be served with the lawsuit.
Canadian net winners:
Mr Bell has previously quite clearly laid out his plans for dealing with foreign net winners.
The plans included first establishing contact with investigative and recovery companies and legal firms in each of the relevant countries to satisfy any local legal requirements and, once they have been satisfied, only then proceeding to the next stage of filing lawsuits and finally instituting recovery
There have been vast amounts of conjecture and speculation, but, I have seen no evidence indicating that is not exactly what has happened.
This is the first report where he has been specific about countries and methods. In earlier reports, claims against foreign net winners were not listed by countries.
Second Quarterly Report 2014 is the most detailed one, but it isn’t very specific.
The threshold for lawsuit against foreign net winners has been set to $50,000.
In the First Quarterly Report 2014, the claims against foreign net winners were identified like this:
the above statement does not clarify whether all the 25 odd canadian defendants have been located and served.
the process of filing a case against the canadian net winners, to reaching a default judgment against 8 of then has taken approx one and a half years.
the australian action has been initiated in dec 2014, so even preliminary results are a way off.
i dont think there has ever been any conjecture or speculation about whether bell is capable of following due process, or working with agencies abroad.
any speculation has more to do with the ‘enforcement’ of bell’s default judgments given the current conditions of ‘international jurisdiction’ legal space.
It has taken 5.5 months so far. The Complaint was dated August 15 2014.
thanks for the correction. for some weird reason, i read that as 2013!
nope. “EVEN IF” It’s an obiter dictum
google.com/webhp?sourceid=chrome-instant&rlz=1C1CHWA_enUS613US613&ion=1&espv=2&ie=UTF-8#q=obiter%20dictum%20definition
obiter dictum : “by the way”, that is, a remark in a judgment that is “said in passing”.
what you are saying , is that, the fourth circuit court, did not need to address howey’s fourth prong at all, because the test failed at prong 2 ie commonality itself.
well , even zeek, both in the matrix and RPP , has problems with horizontal commonality.
Well everyone’s favorite online scammers, Aaron and Shara Andrews, have joined a binary options trading trading group called Options Domination and have been put in charge of running their closed Facebook group.
Look out OD members, you are about to be scammed!
About to be? lmao
behindmlm.com/companies/ds-domination/options-domination-accused-of-stealing-binary-signals/