Zeek Receivership to see out clawback litigation, then done

The Zeek Rewards Receiver was appointed back in August of 2012.

Saddled with recovering funds for distribution to victims of the $900 million Ponzi scheme, other than a few disappointing settlements the Receivership has overall been a success.

The Receiver has marshaled total assets of approximately $361.4 million during the period between August 17, 2012 and June 30, 2016, while disbursing approximately $269.1 million during the same period.

In the latest Status Report for the second quarter of 2016, the Receiver advises that he’s almost ready to wind up the Receivership and call it a day.

The Receiver describes the class-action lawsuit filed against US net-winners as ‘the driver in bringing the Receivership to a close.‘

Once this action is completed, the Receiver’s work in any remaining litigation and the claims process should end soon thereafter.

In the second quarter of 2016, the Receiver was paid

• the remaining $5 million NewBridge Bank owed as part of their settlement agreement and
• $218,504.76 and $5,785.30 into the Affiliate Payments Account and the Settlement Account

In total, $987,288.64 was paid back to Zeek Rewards victims during the second quarter.

Pending the outcome of the net-winner lawsuit, for the most part the Receivership has otherwise begun to wind down.

In no particular order, here’s a run down of the rest of the Receiver’s report.

Funds held by the Receiver

As of June 30, 2016, the Receivership Estate held approximately $92.6 million in the Affiliate Payments Account as a reserve against distributions to claimants who have yet to provide the required Release and OFAC Statement, and approximately $1.4 million in the Holdback Account.

Sale of Jaymes Meyer’s assets

Through his company Preferred Merchants, Jaymes Meyer (right) received millions of dollars in stolen Ponzi funds.

When Zeek Rewards was shut down, Meyer attempted to hide funds in his possession. He later used the funds to purchase property in California and the Turks and Caicos Islands.

The DOJ caught up with Meyer and filed obstruction of justice charges against him back in March. Likely realizing he was screwed, Meyer entered into a settlement agreement with the Receiver.

During the second quarter of 2016 the Receiver Team continued to work with counsel in the Turks and Caicos Islands (“TCI”) to complete the sale and transfer of a house and car purchased by Jaymes Meyer with Receivership assets.

The transaction was complicated by a “caution,” or a lien, of $700,000 having been placed on the house by a contractor who had performed services for Meyer without being paid, and by the fact that renovations to the house by Meyer resulted in it encroaching onto Crown, or government, land.

Extensive discussions and documentation were required to gain TCI Court approval and complete the sale for a total purchase price of $485,000.

During the third quarter of 2016 the Receivership will receive payment of $110,000 and receive the balance of $375,000 in 2017.

The Receiver Team also interviewed, engaged, and worked with real estate professionals regarding the sale of a house in Napa, California purchased by Meyer with Receivership Assets.

The Receiver Team expects to accept an offer to purchase of more than $500,000 in the third quarter of 2016.

Following the entering of a guilty plea, Meyer is currently scheduled to be sentenced on August 23rd.

Payza, PaymentWorld & VictoriaBank

In addition to the net-winner lawsuit, one of the remaining sizeable tasks remaining is the recovery of $13.1 million dollars processed by Payza.

Payza sent the funds to VictoriaBank through PaymentWorld, after which they disappeared.

While efforts to locate the funds continues, the Receiver has since managed to secure a freeze of $13.1 million sitting in one of VictoriaBank’s US accounts.

A contempt motion filed by the Receiver has yet to be ruled on.

To further support the Contempt Motion and the recovery of the outstanding assets, the Receiver is pursuing additional discovery, including discovery of additional documents and information that certain Respondents failed to produce previously or that is relevant to new information that has been produced, and the deposition testimony of PaymentWorld’s CEO, Roman Balanko.

The Receiver’s 2016 second quarter Status Report, filed August 16th, can be viewed on the Zeek Rewards Receivership website.