Zeek Receiver calls VictoriaBank out for facilitating fraud
The Zeek Rewards, Payza and VictoriaBank dispute has been running for some time now.
At the center of the dispute is $13 million dollars in stolen Ponzi funds, currently frozen in a Bank of New York Mellon account.
The Zeek Receiver wants these funds returned to Rex Venture Group, in order for them to be distributed to victims of the Zeek Rewards Ponzi scheme.
VictoriaBank insist the money is rightfully theirs. VictoriaBank are largely relying on the premise that they aren’t a US bank and should thus be permitted to keep the funds.
Back in February the Zeek Receiver filed a motion seeking to hold VictoriaBank, Payza and PaymentWorld to turn over the $13 million or be held in contempt.
VictoriaBank has since filed an opposition to the motion, which the Receiver has now replied to.
It ain’t pretty…
The specific amount VictoriaBank wants to keep is $13,174,015.48.
According to the Zeek Receiver;
Victoriabank’s attempts to distance itself from the ZeekRewards Ponzi scheme are disingenuous.
From at least May through August 2012, during the height of the ZeekRewards Ponzi scheme, Victoriabank played a significant role in facilitating the flow of victims’ funds.
Zeek affiliates paid money into the scheme via e-wallet company Payza; Payza used a payment processor—PaymentWorld—to process these transactions; and PaymentWorld used its account at Victoriabank in Moldova to process the RVG funds for Payza.
Each of the parties played a material role in the processing of victims’ funds.
Ultimately when Zeek was shut down by the SEC, the funds were in the possession of VictoriaBank, in an account belonging to PaymentWorld (who Payza used to accept funds from Zeek Rewards investors).
Now Victoriabank attempts to avoid liability for its illegal conduct in connection with its participation in the ZeekRewards Ponzi scheme by claiming that it is not subject to the Court’s jurisdiction.
In other words, it can facilitate an illegal scheme, victimizing countless affiliates in the United States and elsewhere, and avoid any consequences of its illegal conduct.
The Court must not allow such blatant disregard of the laws of the United States, its Court orders, and international comity.
VictoriaBank have also claimed that the asset freeze is enforcement of the 2012 Freeze Order injunction, prohibiting funds tied to Zeek Rewards from being transferred.
The Receiver clarifies that this is not the case.
The subject funds are merely restrained until the Court resolves the Receiver’s pending Motion on the merits.
Thus, no jurisdictional determination is necessary for the funds to remain restrained pending resolution of the Receiver’s Motion.
I think it’s pretty clear that if VictoriaBank didn’t have funds in the US (at Bank of Mellon New York or elsewhere), they’d have continued to ignore litigation against them.
Only now that the Receiver has secured a freeze on the disputed amount has VictoriaBank come to the negotiation table.
None of the cases upon which Victoriabank relies supports its contention that a Court has no jurisdiction over a foreign entity that facilitated a massive, U.S.- based Ponzi scheme, violated a Court Order, and aided and abetted U.S.-based entities’ violation of the Court Order in the context of a Court-appointed Receivership.
In the absence of case authority, Victoriabank attempts to avoid this Court’s jurisdictional reach by downplaying its activity directed at North Carolina and the United States.
The way I see it there’s not really much of an argument. Payza accepted Ponzi funds through PaymentWorld, who deposited the funds with VictoriaBank.
VictoriaBank has no claim to the funds and should be ordered to return the funds, in addition to a possible fine for potentially violating the asset-freeze order.
The only factual support Victoriabank provides consists of self-serving affidavits with zero corroboration, which are insufficient to support its request for dismissal on jurisdictional grounds.
Interestingly enough, the Receiver has asked, if VictoriaBank’s affidavits are to be taken seriously, for jurisdictional discovery.
This would open up VictoriaBank to potentially more liability, as they’d have to comply with court-approved discovery requests from the Receiver.
The Receiver, at a minimum, requires jurisdictional discovery from Victoriabank and PaymentWorld to determine the extent of their participation in the scheme, their contacts with North Carolina and the United States, and their conduct in connection with the Receivership Assets and compliance with this Court’s Orders, including the flow of funds to/from the United States, the control and management of the account, and all conduct in connection with the restriction or release of the Receivership Assets from the account.
Something tells me a shady bank in Europe that thinks it’s entitled to Ponzi proceeds won’t be willing to go down that path.
The Receiver filed his response to VictoriaBank’s opposition, however a ruling is still a ways off.
PaymentWorld has filed a second motion requesting an extension of time to file their reply.
According to PaymentWorld, they first secured legal representation on March 3rd.
On April 28th PaymentWorld’s lawyers ditched them as clients, claiming ‘they could no longer proceed with their course of representation’.
PaymentWorld didn’t secure legal representation again until May 23rd, which left their new lawyers with only nine days to prepare a response.
On May 25th PaymentWorld filed a motion for a second extension of time to reply to the Receiver’s motion.
Judge Mullen granted the motion on May 26th, giving Payment World until June 14th to file their response.
After that the Receiver has some time to file a reply, with a decision finally expected in late June or early July.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Zeek Receiver’s May 27th response to VictoriaBank, PaymentWorld’s May 25th request for a second extension of time and Judge Mullen’s May 26th approval order.