Zeek Reciever sues USHBB & operators for over $750,000
Narc That Car, AdSurfDaily, Zeek Rewards and OfferHub.
Other than being scams, what do these MLM opportunities all share in common?
They all solicited the promotional services of marketing firm USHBB.
Owned and operated out of Indiana by James Moore, Oscar Brown and Robert Mecham, USHBB provided marketing services to the MLM underbelly.
Now for their efforts in assisting the promotion of some of the most prolific MLM scams to date, the Zeek Receiver has taken USHBB and its operators to court.
At the center of the litigation is the funds USHBB made from Zeek Rewards, including profits made by Moore, Brown and Mecham through direct participation in the $850 million dollar Ponzi scheme.
From January 2011 until August 2012, RVG operated a massive Ponzi and pyramid scheme through ZeekRewards.
USHBB, Inc. (“USHBB”), James A. Moore, Oscar H. Brown, and Robert Mecham profited from their role in promoting and sustaining the scheme, collectively receiving more than $1.5 million from RVG.
For creating promotional videos that were used to lure new investors into the scheme, USHBB was paid $675,000.
Oscar Brown (commonly known as “OH Brown”) used USHBB to sign up to Zeek Rewards itself, and managed to steal $168,642 from investors before the scheme was shut down.
Both James Moore and Robert Mecham also signed up as Zeek Rewards investors, stealing $109,130 and $868,542 respectively.
Brown and Mecham also each received a separate (and unexplained) $25,000 payment from a Zeek insider, transferred the same month the SEC shut the scheme down (Aug 2012).
All up the trio made off with no less than $1.8 million dollars in stolen investor funds.
The Defendants have previously provided assistance to suspect schemes, including the Ad Surf Daily Ponzi scheme and one or more other failed MLM operations.
Simply put, the Defendants knew or should have known that affiliates were rewarded merely for recruiting new investors without regard to any efforts by the Affiliates to sell bids or products or otherwise materially support the Zeekler retail business.
Bearing in mind USHBB’s past involvement with scams, the picture painted by the Zeek Receiver is that of conniving scamsters exhibiting calculated intent.
Consistent with this dubious track record, the Defendants assisted the ZeekRewards scheme by creating multiple videos that served as promotional tools for ZeekRewards.
These videos included the titles “One Penny Billionaire,” “You Get Paid to Advertise,” “Got 20 Seconds,” “The Dog Gone Truth,” and “Spin the Wheel.”
The videos were carefully produced to mislead and deceive victims into participating in the scheme, convincing victims that with minimal effort they could earn significant financial returns from the Zeek scheme.
These videos assisted the Insiders in promoting the alleged ease with which affiliates could earn passive profits by investing in the scheme and selling membership in the scheme to others.
Affiliates were told to mention the ZeekRewards program to a prospective affiliate or advertise it on a web page, and then email or otherwise provide them a link to the USHBB videos, which upon information and belief convinced other unwary victims to sign on.
The videos were a key component in proliferating the RVG Ponzi scheme, causing significantly more victims and financial loss than otherwise would have occurred absent Defendants’ actions.
So entrenched were USHBB’s promotional services within Zeek’s marketing agenda, that the company was permitted to market directly at official Zeek events.
USHBB directly promoted their videos to Affiliates.
For example, in June 2012, Defendant Mecham personally promoted the USHBB “video system” to Affiliates at a ZeekRewards “Red Carpet” event in Lexington, NC.
Through USHBB, Moore Brown and Meecham also worked directly with Zeek corporate to mask the fraudulent Ponzi activity taking place.
in August 2011, ZeekRewards adjusted some of the terminology it used publicly in an attempt to disguise the “Compounder” as a legitimate retail profit sharing mechanism.
The Compounder’s name was changed to the “Retail Profit Pool,” but the substance of this investment vehicle did not change. USHBB was or should have been fully aware of this deceitfulness in which it participated.
In a June 24, 2011 email, Dawn WrightOlivares wrote to O.H. Brown regarding a webinar that USHBB had created for Zeek:
“I started to do minor edits . . . ([Y]ou’ll see them where I started to say Retail Profit Pool) lol instead of Compounder . . . . ”
She further wrote to Brown: “the silent cap [for bid expiration] reality will be 125% but we can’t SAY it as you know.”
Long time BehindMLM readers will of course instantly recognize Wright-Olivares channeling Gerry Nehra’s unique brand of “see no Ponzi, hear no Ponzi, speak no Ponzi” MLM compliance.
Furthermore, it appears USHBB were one of the first Zeek related entities to become aware of an SEC investigation into the scheme:
O.H. Brown wrote to Dawn Wright-Olivares in June 2012:
“Heads up!!!! Our IT partners, RMR development received a telephone call from the SEC today regarding yougetpaidtoadvertise and what organizations were associated.
This was a very short call I am told. Not sure what will come of this but this is an alarm at least that the government is looking.
We need to get squeaky clean and quick!”
That same month Troy Dooly revealed that answering whether or not Zeek Rewards’ incoming revenue was mostly from affiliates would be “out of compliance“.
Zeek Rewards also announced that they would be “migrating” their affiliate-base to a closed private forum. Previously these forums had been open and were used as a promotional tool to further market the scheme.
For their efforts in assisting Zeek Rewards perpetuate an $850 million dollar Ponzi scheme, as well as directly profiting from said scheme, USHBB, James Moore, Oscar Brown and Robert Mecham now face six claims of relief:
- fraudulent transfer of RVG funds in violation of the North Carolina Uniform Fraudulent Transfer Act
- common law fraudulent transfer
- aiding and abetting breach of fiduciary duty
- unfair and deceptive trade practices
- unjust enrichment and
- constructive trust
The court-appointed Receiver’s lawsuit, filed on the 26th of March, requests the defendants pay back the money they received through USHBB. It also requests an amount equal to ‘all damages and losses suffered by RVG and the Defendants’ unjust enrichment in an amount to be determined at trial.‘
Prejudgement interest and attorney’s fees have also been sought.
This lawsuit is one of several steps the Receiver is taking pursuant to his court-ordered duties to the Receivership Estate to recover fraudulent transfers and damages for the harms incurred by RVG.
Who will be next?
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Zeek Receiver’s March 26th lawsuit.
Update 15th July 2015 – Following a failure to respond to the Receiver’s lawsuit, default judgement was entered against USHBB ($675,000 plus interest) and James Moore ($109,130 plus interest) on the 8th of July.
I’m not into bald men, or men in general but I’m getting a serious man crush on Ken Bell.
Finally, people who should know better are being held accountable for pretending that they didn’t.
O.H. Brown and USHBB have been selling picks and shovels to the ponzi gold miners for years, it’s long past time for them to be pay the price for never counting the costs of their actions.
meet james moore and his fancy car/bike:
twitter.com/ushbb
about.me/mlmpro
moore and brown, also run an MLM company called ‘the tools network’, which obviously sells lead generation and other tools.
they market these tools to ‘leaders’ in MLM, and encourage them to get their downlines to join, so that they can achieve success in the network company they are all working in.
moore’s linkedin profile says he is now with a company called prosales connect, but i cannot find more info about that?
It also requests an amount equal to ‘all damages and losses suffered by RVG and the Defendants’ unjust enrichment in an amount to be determined at trial.‘
The sky’s the limit.
USHBB had been making videos and such all the way back to Andy Bowdoin’s Ad Surf Daily, IIRC. I think PPBlog can tell us more about that.
And also: TVI Express, Global Verge/Buzzirk Mobile, Ad-Ventures4U, AdGateWorld, BizAdSplash.
Ad-Ventures4U, AdGateWorld and BizAdSplash basically were reload schemes that surfaced after the 2008 collapse of ASD. May of the usual suspects were involved.
Ad-Ventures4U, a purported “advertising” company and “revenue-sharing” business purportedly married to a gold-trading venture, disappeared in August 2009. The asserted operator claimed he and his family were threatened by members unhappy about slashed payouts.
AdGateWorld, another “advertising” company, vanished in September 2009, purportedly after selling itself to an unidentified entity or person in the “Middle East.”
When AGW first launched in 2008, ASD’s name appeared in its Terms of Service. Members of the U.S. military were among AGW’s targets.
Jack Schrold, an ASD member and attorney once suspended from the Florida bar for misconduct, was an early figure in AGW. Prior to that, he was prosecuted by the Federal Trade Commission for the actions of his credit-repair firm, and was convicted separately of knowledge of the commission of conspiracy and wire-fraud.
BizAdSplash, yet another “advertising” firm, was tied to Walter Clarence Busby Jr. He was an ASD figure and the operator of Golden Panda Ad Builder, positioned as the “Chinese” arm of ASD. Busby and ASD’s Andy Bowdoin both got sued for racketeering.
One of the filings in the RICO case identified Busby as “Rev.” at least 120 times. His calling did not prevent him from launching BAS in the aftermath of the collapses of ASD, Golden Panda and La Fuente Dinero, ASD’s purported “Spanish” arm.
In the late 1990s, the SEC sued Busby. This was long before his “advertising” ventures. Prior to those, he pitched prime-bank swindles, including one that offered 10,000 percent.
During the same time period, ASD’s Bowdoin was running securities scams in Alabama via Georgia.
BAS actually did a couple of disappearing acts before the final curtain in early 2010. During the summer of 2009, it pulled the ASD trick of declaring a payout suspension while it purportedly conducted an audit of itself.
It also disappeared during the “Black December” period of late 2009.
BAS declared itself dead in January 2010. The death cycle was complete in March 2010, when the entire site vanished.
The hauls of BAS, AGW and Ad-Ventures4U are known only to the scammers.
PPBlog
there appear to be three classes of defendants in zeek:
1] third party vendors like NXpay and plastic cash international etc, who are expected to return any RVG money laying in their accounts, after zeek was shut down. receiver has not asked for a trial, but just money judgment from the court.
2] net winners in the zeek scheme, who are expected to disgorge all winnings with interest. receiver has not asked for trial but just money judgment from the court. [defendants have fought back asking for a trial on merits]
3] parties that have ‘colluded’and ‘profited’ alongwith RVG in the running of the fraud scheme zeek, who are expected to not only disgorge payments for services, but also pay ‘damages’.
USHBB and kevin grimes [along with his firm], falls in this category. the receiver has ‘asked for a trial’ in these cases.
kevin grimes has not yet replied to the receivers consolidated response to the his motion to dismiss, and USHBB’s first response in this matter is awaited. like kevin grimes he too, may rely on the ‘in pari delicto’ defense.
you guys were excited about the gilmond gang trial? here’s two more!
Who’s excited ??
Zeek is dead – no one can lose any more money, THAT is exciting
People are going to have some of their losses made good – THAT is exciting
Many / most of the net winners are going to lose some or all of their winnings – THAT is exciting
Whatever else happens will be interesting, but hardly “exciting”
well, ‘interesting’ is a synonym of ‘exciting’.
you are welcome to stay coldfish ‘interested’ in somethings, and wildass ‘excited’ about somethings, and everyone can choose their position on the spectrum.
so, buzz off.
when the likes of sloan get jammed hard, that will be exciting. we don’t care who gilmond is (compared to the likes of real ponzi pimps). Just another name to now keep an eye on.
1] sloan is a ‘lead character’ in the telexfree drama.
2] gilmond is a ‘lead character’ in the zeek drama.
3] do not mix up drama categories and actors.
4] study hard.
The Gilmond et al situation isn’t something that hasn’t happened before.
Ponzi net winners being asked to return their winnings then fighting tooth and nail to retain their ill gotten gains is par for the course.
A ponzi promoter like Sloan being prosecuted, on the other hand, marks a definite watershed moment in the way ponzis and pyramids are being treated by the authorities in the USA
uh, gilmond and sloan, have both been prosecuted civilly, for disgorging net winnings in fraudulent schemes [zeek,telexfree].
sloan’s prosecution is currently on ice, due to ‘stay’ of discovery in the telexfree civil case.
gilmond gang’s case is on a fast track for resolution ‘at trial’, on merits, which includes the ‘jurisdiction of the court and SEC’.
i haven’t seen any major case such as gilmond’s in recent history. if you have, good for you.
Then you need to expand your horizons and look outside the HYIP ponzi arena.
Being “prosecuted civilly, for disgorging net winnings in fraudulent schemes” is merely another way of saying “Ponzi net winners being asked to return their winnings”.
of course i will, worry not. meanwhile with your expanded horizons, which recent ponzi/pyramid case can you name, which has questioned jurisdiction of the court and SEC, and gone to trial, and got judgement at trial?
all the case filings in zeek, cite ‘old cases’ as precedent. if there were ‘newer precedents’ they would be cited, no?
well done, you understood this at least.
TSA pat downs must really get you off.
Allegations are meaningless if they don’t hold up in court. If the only thing you find exciting is the headline moment you should stick to reading Bruce Jenner stories in People magazine.
It will be easier if you limit that theory to “jurisdiction of the court”.
SEC doesn’t have any subject matter jurisdiction, so any theory about “SEC’s jurisdiction” will most likely be flawed.
Trudy Gilmond’s defense argument #1 (33.pdf):
It doesn’t mention anything about SEC.
You’re probably mixing up different parts of the legal system, e.g. it seems like you’re trying to give the executive branch of the system the power of a court.
The powers are divided between 3 branches:
* Legislative branch, the law makers.
* Executive branch, the agencies. They have “administrative powers”.
* Judiciary branch, the courts. They have jurisdiction.
Any arguments about “SEC didn’t have subject matter jurisdiction” will be true, but they will also be completely irrelevant. So any theories based on that idea will be completely flawed.
You can imagine a scenario where SEC will need to prove its subject matter jurisdiction in court, but it will most likely not happen in reality.
okay sir lets try get this technically perrrfect:
gilmondgang, the defendants, are asking the court, to check whether it has jurisdiction in this matter, ie check if zeek was selling securities, because if it was not, then the SEC did not have administrative powers, to investigate or make a deal with RVG/burks [which includes setting up of receivership to collect for the RGV estate], because the legislative branch never gave the SEC, the power to meddle in ‘non security’ matters.
please feel free to make any improvements. as nonlawyers we can help each other!
I’m sorry,
which part of the statement prompted your response ??
Sloan wasn’t charged or it isn’t a watershed moment in the way ponzi frauds are treated in the US ??
I’m sorry,
which part of the statement is inaccurate enough for you to have to resort to making such a smarmy response ??
Sloan wasn’t charged or it isn’t a watershed moment in the way ponzi frauds are treated in the US ??
arrgh, puke, barf.
LRM may be silly sometimes, but let’s protect him from mental torture 🙂
he may be redeemable.
watershed moment [meaning] – A critical turning point in time where everything changes, that will never be the same as before.
is the ‘charging’ of sloan for clawback a ‘critical turning point?
madoff and zeek, predate her ‘charging’.
You are more ‘excited’ about sloan, and merely ‘interested’ in other clawbacks, that’s the critical point.
What’s with you and inaccurate information ??
Faith Sloan was, along with seven other Telexfree officers and promoters, charged with multiple violations of securities laws
This was not a “clawback” action.
The interesting bit being the fact four promoters were included in the SEC action.
THAT marked a watershed moment in the way ponzi fraud is treated in the US
It isn’t about “technically perrrfect”, it’s about common sense. Any theories involving “SEC’s jurisdiction” or “SEC’s authority to shut RVG down” will be meaningless.
The first part is correct, the second part has several flaws.
SEC’s power to investigate comes (quite correctly) from laws, e.g. Securities Act 1933, Exchange Act 1934, multiple other laws.
The right to investigate will arise from one of the lowest legal standards, e.g. “reason to suspect”. The right to prepare a case and to bring it before a court will arise from a slightly higher legal standard. So SEC will usually have the power to investigate and to bring a case to court.
NOLINK://en.wikipedia.org/wiki/Legal_burden_of_proof
Without those different legal standards, the system wouldn’t have worked.
Once the case has been brought before a court, the court will be responsible. The case will be outside SEC’s “area of authority”. It will have the role as a plaintiff rather than the role as a decision maker.
Neither. My comments were addressed to your excitement over the Complaint against Telexfree (as a company) and Merrill, Wanzeler, Labriola, Sloan, Rodriques et al (as individuals.)
The SEC allegations (violation of the Securities Act of 1933 and 1934 etc,) in the Telexfree case are precisely the same violations alleged against Rex Ventures (as a company) and Paul Burks (individually)
There is no “watershed event” occuring here. Its business as usual….SEC v bad guys, same law, same arguments, with a different set of characters and some variation in the fact pattern.
What remains consistent is the law, and that is why some people (myself included) find the application of the law far more exciting than whether Faith Sloan is going to get “jammed up” or Trudy Gilmond wins or loses. Those issues will take care of themselves… by applying the law.
The clawback issues effecting Gilmond and the gang are almost certain to resurface in the Telexfree case.
So, if you’re not excited by the legal battle in Zeek (which I believe you are… or should be) then what are you excited about in Telexfree?
The issues are the same. I see no reason why you can not be excited by both.
I bow to your superior knowledge.
I didn’t realize Paul Burks was merely a promoter and not an officer of the company and that the SEC including promoters in the initial complaint wasn’t unusual or worth noting.
Burks was not merely a promoter. He was also owner and chief executive. The three roles are not incompatible or mutually exclusive.
Telexfree ownership and control was not unified under a single individual as was Zeek.
To the contrary Telexfree had three or more owners split over two continents, had transferred managerial control to outsiders, filed bankruptcy and fully intended to continue operations.
That the SEC included top management/promoters in the Complaint seems justified under the circumstances and also noteworthy.
the SEC is free to investigate the effects of shakespearean drama on alien life, and bring the case to court.
the court may throw out their case, seeing that it does not involve the selling of ‘securities’.
this is because, the legislature did not give the SEC, the authority to meddle in issues, which are non security related.
avoid hairsplitting.
you are correct that the charge against sloan, is not purely a clawback action, but includes her assistance in promoting telexfree.
but, this is not the first time ‘promoters’ have been charged alongwith the ‘management’ for promotion of a ponzi.
in SEC vs mantria corp[2011], two ‘top promoters’ were charged, alongwith the owners of mantria, for promoting the scheme
so sloan’s charging is not the ‘watershed moment’ you excitedly claim it to be. you may have missed earlier watershed moments.
well said. well said.
Mate, the first rule of trolling is “when you find yourself in a hole, stop digging”
The Mantria Corp case is not as you present it.
Promoting is NOT the same as “raising funds”
Well said, well said.
Now that it’s been established that yet again Anjali is derailing, any further talk of Mantria Corp will be marked offtopic.
huh? sloan was ‘promoting’ telexfree and hence ‘raising funds’ to keep the ponzi going?
what is the difference between saying ‘promoting’ and ‘raising funds’?
the SEC complaints, in zeek, telexfree, and ‘other offtopic’ ponzis, all use the term ‘promoters’, for non management ‘fund raisers’.
is team WUKAR, in dubli, a promoter or fundraiser, or may be addressed as both? in a complaint [including offtopic ones], can they be addressed as ‘promoters’ in the beginning, and somewhere down the complaint if they are called ‘fundraisers’, does it matter dang?
do not cherry pick paragraphs from SEC complaints. it’s trolly.
It didn’t, so that scenario isn’t relevant in this case.
You said it yourself = “the legislature didn’t give SEC the authority”.
So which branch has the power to decide? And which branch doesn’t have that power?
It’s not hairsplitting to point out that the powers are divided and separated into 3 different branches?
Your theories were based on some type of “shared powers” between those 3 branches, e.g. the idea that the Receiver partly had been appointed by SEC.
Give it up, Anjali, hairsplitting doesn’t become you, especially when you criticize others for doing it
is that the extent of your response then?
You were hairsplitting about ‘promoters’ and ‘fund raisers’.
you said the charging of sloan as a ‘promoter’ for telexfree, was a watershed moment, and i gave an example to the contrary. at this point you should have given it up, just as i gave it up, in agreeing that sloan’s case, was not just a ‘clawback case’.
in a discussion we all have to concede certain points. no need to stand in a hole mate, come on out and get on with it.
Around and around we go.
“Raising funds” in the context of the case you presented is not the same as the promoting of a HYIP ponzi fraud Sloan and the others did, no matter how many tortured analogies you invent.
In fact the term “raised funds” i.e. seeking capital, as used in the example you presented is not the same as what is generally understood by the term “fundraising”.
seeking capital, as in seeking investments, as in raising funds, to ‘promote’ a ponzi, all mean the same in my general understanding.
since the SEC, in the example i provided, has used both the words ‘promoters’ and ‘raised funds’, for the same two persons who were charged, their general understanding of these terms, appears to be the same.
first you said, ‘raising funds’ is not the same as ‘promoting’. now you’re saying the ‘general understanding’ of the term is not the same.
where will this end? next, will you say ‘raising funds’ in swahili means ‘puffickly preposserous’.
what ‘context’?
both are ponzi schemes, and both had promoters.
the law does not differentiate between ‘promoters’ of a pure ponzi/hybrid ponzi/HYIP ponzi, or any other ponzi under the sun.
Ah, there’s the crux of the problem then
Not at all.
I’m saying Anjalis’ “general understanding” of the term is not the same.
Your reputation precedes you
awwww, a disingenuous disintegration into ad hominem attacks again.
sigh, there’s no redeeming LRM after all.
charity “fundraisers” are not the same as people who “raise funds” for illegal schemes and neither category is the same as people who promote illegal schemes, without participating in the management of said schemes.
If we are to believe differently, Sloan and the others might as well give up any idea of pleading not guilty.
Anjali has seen to that by pointing out her case is no different to that of the defendants in the Mantria case who, by the way, were found guilty.
^^^huh?
who said anything about ‘charity fundraising’?
my posts are limited to ‘promoting a ponzi’ by virtue of ‘raised funds for it’ [from investors] or, ‘fund raising for it’ [from investors]. let’s not argue english language usage!
telexfree and ‘my example’ are both ponzi schemes, and both had promoters, and the SEC in both cases, has charged the management and top promoters for running a fraudulent scheme.
the rest of your post is undecipherable. get some sleep.
ps; you cant say mantria, its off topic. things may get established against you.
I didn’t explain that clearly enough.
The court can only rule in the “areas of law” where it has the power to decide. It can dismiss a case based on actual rules in the law, but it can’t invent its own rules.
You will be unable to find any matching rules for your scenario:
You gave the judiciary branch too much power.
The court’s subject matter jurisdiction isn’t based on whether SEC had the power to investigate and prepare the case against Paul Burks and RVG. It isn’t based on which powers the legislative branch have given to SEC.
75% of your arguments were irrelevant.
The existence of securities in the form of investment contracts may be relevant enough, but that’s all.
If the defendants wish to question “SEC’s right to investigate RVG and prepare the case against it”, the court will immediately find that it doesn’t have the correct authority to rule in that matter.
definitely not. this was very valid info, which in fact, i used to rewrite my view of the defendants demands of the court in post#18.
you started hairsplitting in post#24, which is when i rang the alarm bell.
it appears that you agree with this part of my post:
good, this is enough to to carry the case forward.
once the court makes a decision about whether securities were sold or not, the rest of the matters, which includes the SEC’s role, and the clawback demand of the receiver, will untangle themselves.
Why do you keep trotting this out. You miss the point. No one disputes the SEC has “the right” to investigate, prepare cases and go to trial.
THE POINT is that having done so they must maintain standing THROUGHOUT the action. They do this by proving that securities are involved. They must prove that securities are involved….
If they can’t… the SEC will lose standing…which means they are not properly before the court….thus the court has no subject matter jurisdiction and the case must be dismissed.
Standing must be maintained all the way through the action including through appeal or the case must be dismissed. It is a requisite for any Court to retain subject matter jurisdiction.
“If a party is found to lack standing, the court is without subject matter jurisdiction to determine the action. See Pele Defense Fund v. Puna Geothermal Venture, 77 Hawai’i 64, 67, 881 P.2d 1210, 1213 (1994).”
The SEC may bring suit against anyone (even you Norway) if it suspects you are dealing in securities, BUT if the court finds there are no securities then the suit fails for lack of standing by the SEC, thus, the court is without subject matter jurisdiction to determine the action and the suit must be dismissed.
What is so difficult to understand here?
standing means:
1] there should be a real case or controversy [which is brought for litigation at the ‘right time’ ie it should be ripe, and not early or moot]
2] the case has to be brought by the right person …to show standing, a plaintiff has to demonstrate that he has an actual stake in the litigation
so, if the SEC brings a case, which does not involve ‘securities’ it is not the right person or ‘agency’ to bring the case, and does not have a stake in the matter, even though there may be an underlying fraud.
That in a nutshell is precisely the case.
Once again, raising funds in the manner in which it was carried out by the co defendants in the Mantria case is not the same as recruiting members into a ponzi scheme, no matter how many ways you try to spin it.
That’s why I have pointed out that “SEC’s role” is irrelevant in the clawback litigation.
Further answer will be meaningless, because you have probably read something out of context.
That’s why I have pointed out that “SEC’s role” is irrelevant in “Bell v. Disner et al”. SEC doesn’t really have any roles in that case.
The existence of securities in the form of investment contracts may be relevant enough. “No investments” will mean that people actually bought the sample bids for a different purpose than their own desire to earn a profit.
Only the relevance.
You posted 18 lines of reasoning in 2 posts, but you failed to explain the relevance of those arguments. 16 out of 18 lines seemed to focus on hypotheticals.
Is that really relevant in “Bell v. Disner et al”?
The first argument should be relevant enough, but does the rest of it have any relevance?
Is “SEC’s standing” really relevant in “Bell v. Disner et al”?
But does that have any relevance in “Bell v. Disner et al”?
SEC has never had any standing in that case anyway. The case isn’t about securities law violations, and SEC isn’t the plaintiff.
But does it have any relevance in “Bell v. Disner et al”?
Only the relevance.
The arguments revolved primarily around “SEC’s standing”, with SEC in the role as a plaintiff. It’s difficult to find any relevance in the arguments, because you failed to explain that.
This has pretty much become your standard answer.
It’s the standard answer when it’s difficult to identify any meaningful content of a post, e.g. if a post seems to derail completely from a topic.
You have got 2 other answers. One answer pointing out the main problem about relevance, and one answer identifying the details. So you have got a relatively complete answer in 3 posts.
Now it will be up to you to identify the relevance of your own posts.
Yes. First, it should be understood that Burks consent to subject matter jurisdiction is of no consequence.
Secondly, that Bell will act in concert with the SEC in order to prove that securities were being offered by RVG.
Thirdly, Bell’s authority is derived from Orders that were based on unproven allegations that Plaintiff SEC made in the SEC v. Burks AND RVG case.
Fourthly, based on the SEC allegations the court found that it had 1.) subject matter jurisdiction and 2.) Appointed a Receiver.
Once appointed the Reciver announced his intention to clawback funds from the net winners.
However….
If Bell can not prove that RVG was offering securities as the SEC alleged in the SEC v RVG case, then the SEC will have failed to maintain its standing. Under such a circumstance the court can no longer retain subject matter jurisdiction in either the SEC v RVG case or its derivitive, Bell v Disner.
The clawback brought by the Receiver would be dismissed for lack of subject matter jurisdiction.
So is the SEC standing relevant? Without a doubt.
That’s correct. I stated the same thing in another thread, based on a footnote in Order Denying Motion To Dismiss.
That argument doesn’t directly support anything.
“Bell v. Disner et al” is primarily based on Fraudulent Transfer rules. The existence of securities in the form of investment contracts may have some relevance, e.g. without the investment motive the bid purchases can be seen as commercial transactions.
The theory where “Bell will act in concert with SEC to prove that securities were being offered in RVG” seems to be hypothetical. It hasn’t been explained properly.
Correct. Paul Burks and RVG consented to the judgments, and agreed not to dispute anything. There’s nothing wrong in that.
It doesn’t explain any “SEC’s standing” theories.
It only points out that the existence of securities haven’t been proven in court.
Correct, but slightly incomplete. Several documents were filed under seal early in that case.
The argument doesn’t directly support anything.
“Bell v. Disner et al” is primarily about Fraudulent Transfer. The existence of securities may be brought up as part of defense arguments.
SEC haven’t had any standing in that case initially either, so how can it “fail to maintain its standing”?
That part about “SEC’s standing” hasn’t been properly explained.
You’re missing one key part = “SEC’s standing in Bell v. Disner et al”.
You have tried to circle around that question by releasing other theories, e.g. “Bell will act in concert with the SEC in order to prove that securities were being offered by RVG” and “If Bell can not prove that RVG was offering securities …”. Both those theories are incomplete.
But yet you have failed to explain it properly.
All your arguments “circled around” the question.
No shit? That is the whole point. It HAS been brought up as a defense.
The SEC has no standing in that case, but Bell’s authority to bring the suit is still derived from the previous SEC action. Can you not process that and see they are connected?
You complain that I have “circled around the issue, but I am only explaining what the defendants are trying to do.
Eerybody can see what Bell is arguing (fraudulent transfer) what you can’t seem to grasp is what the defendant’s are doing to defend themselves. I tried. You don’t get it.
@Hoss
A: SEC has standing as a plaintiff in “SEC v. Paul Burks and RVG”. Kenneth Bell has standing as a court appointed receiver. Paul Burks and RVG have standing as defendants.
Other than that, multiple parties have had standing as “intervenors” or “interested parties”, e.g. Gilmond/King, Kettner/Sorrells, Robert Craddock, NXpay, Preferred Merchant Solutions, Plastic Cash, Internet Dynamo, etc.
B: SEC doesn’t have any standing in “Bell v. Disner et al”. That case isn’t about securities law violations but about fraudulent transfer. Kenneth Bell has standing as plaintiff. Multiple parties have standing as defendants.
C: Any arguments involving “SEC’s standing” should normally be about “SEC v. Paul Burks and RVG”. That’s why you receive questions about relevance when you try to bring in theories about “SEC’s standing” in the other case.
“SEC’s standing” in “Bell v. Disner et al” is highly hypothetical. It was primarily supported by other hypothetical theories, e.g. “Bell will act in concert with SEC to prove securities”.
“Hypotheticals supported by other hypotheticals” can neither be proved nor disproved. I can’t prove that the conclusion of the theory is wrong, I can only prove that it has very little substance.
Should?
What else would it be about?
SEC v. Paul Burks and RVGI is the ONLY case where the SEC is a plaintiff, and thus the only case where SEC standing can is subject to question.
This does not mean that SEC standing can not be disproven or challenged during the the Bell v Disner case. It can. which is why the judge made certain long ago that there would would be a trial on the merits.
The Disner defendants asserted lack of subject matter jurisdiction as a defense. If you can tell me how they would argue that without calling the SEC’s standing into question I will blow your horn.
a ponzi scheme is a ponzi scheme.
recruiting new members for raising funds for the ponzi, is the same for all ponzi’s, only methods are different. [no legal difference]
there’s only one way to spin this which is the ‘factual’ way.
i think what you’re trying to say, is that, for the first time to your information, a high profile incessant ponzi player like sloan has been netted for ‘promotion’ charges, and this makes you happy, and is a watershed moment of your life.
BUT, this is not a watershed moment in the life of the SEC or the courts, as top non management promoters have been charged before.
Oh please,
don’t even begin to go there,
just like all of your other hypotheticals, other than satisfying your own agenda you have no idea what people are trying to say or what is actually taking place.
Do you even read what you write ???
You’ve just condemned Sloan and the others to certain conviction.
what?? i thought you wanted that too!
It doesn’t matter what you “THINK” I want
That’s the whole problem, you don’t think past satisfying your own agenda.
First you say Sloan and the others are going to skate because there’s no securities involved, therefore no SEC jurisdiction.
Then you start arguing the Mantria case is like the Zeek case, with regard to the treatment of “fund raisers” and that “raising capital” in support of an illegal ponzi scheme is the same as recruiting members for a ponzi scheme (the same ponzi scheme, that according to you hasn’t been proven to exist, so securities violations don’t exist).
Then, in your own words, condemn Sloan et al to certain conviction.
Keep trying to discredit me, Anjali, you’re doing a great job – for the SEC
NO. sloan is associated with telexfree, not zeek. even in zeek, i am not saying anyone will skate, there is an interesting question of law here, which is ‘exciting’.
NO. like TELEXFREE and Sloan, the mantria case had management alongwith top promoters charged for promoting a ponzi scheme. there is no connection to zeek here.
i certainly hope sloan et all, are convicted, and the law ‘proves’ itself in both zeek and telexfree.
why should i? you’re doing a pretty good job yourself.
LRM seriously, are we done here? you were Right that sloan’s case was not purely a clawback case, ok? congrats!
If you don’t specify any case, it will normally be about the case that was discussed when you brought up that theory = “Bell v. Disner et al”.
That’s the only case where “the Gilmond gang” are defendants, where they can question the existence of securities or question the jurisdiction of the court.
“The Gilmond gang” doesn’t have standing in “SEC v. Paul Burks and RVG”, so your initial comment (post #49) can’t have been about that case.
Are you being willfully obtuse? Can you really not figure out which case I was referring to when I quoted your own words?
Here they are again.
“….the SEC v. Paul Burks and RVG is the ONLY case where the SEC is a plaintiff, and thus the only case where SEC standing is subject to question.”
What is not clear. What is confusing you? How after reading the above could you conclude I was talking about Bell v. Disner?
++++++++++++++++++++++++++
Among other things, you incorrectly assume Gilmond et al must intervene in the SEC v Burks case in order to affect that case. You reason that since they were not allowed to intervene, the issues they raised are dead. You are wrong.
You also incorrectly assume that the SEC must be the plaintiff in the Bell v Disner case for the issue of SEC standing to have “relevance.” You are wrong about this too.
Anyone can see that the SEC has no standing in the Bell v. Disner action. The SEC is not even a party for God’s sake.
Now…there is only one case where SEC is a party and where its standing has relevance. Do I need to tell you which one? Hint: its not Bell v. Disner as you have inexplicably concluded)
++++++++++++++++++++++++++++++++++++++++++++
As you know….
The Court will consider the merits in Bell v Disner. IF IF! Mullen were to find, as the defendants have argued in their briefs, that their profits were predominately due to their own efforts, and not that of a promoter (in other words there were no securities per Howey) then Mullen would/should/must upon his own motion find that he has/had no subject matter jurisdiction in the SEC v Burks/RVG case because the SEC lacked or failed to maintain standing in the case)
None of the net winner defendants need appear or have standing in the SEC v Burks case for that to occur, and the SEC need not have standing or appear as the plaintiff in the Bell v Disner case for that to occur.
The judge may/must act on his own findings.
It should be abundantly clear that if Mullen concludes that he had no subject matter jurisdiction in the SEC v Burks case that he has no subject matter jurisdiction in the derivative Bell v Disner case either.
Now, if that is circular logic, so be it, its also good lawyering and realistically the only defense the net winners have.
Your comments, starting from post #49 and ending around post #60, e.g. the fact that you didn’t respond to direct questions about the relevance, e.g. in post #61:
You got several questions about “SEC’s standing” in “Bell v. Disner et al”.
From my perspective, it looks like you suddenly decided to adjust your theories when you had read post #63 about standing.
Nope, I’m unable to recognize that (almost the whole section). I have probably focused on something different.
Long series of statements about what you assume I have assumed will make very little sense. You can’t expect it to make any sense either.
I tried to follow the reasoning, but I had to give up rather immediately.
I am sorry you could not follow it. I am sure its correct.
I simply didn’t have time or interest to post corrections. You have derailed into almost 100% hypothetical ideas. The last post where I posted something directly related to the Zeek case as a whole was in post #63.
I’m simply not very interested in lengthy discussions about what you believe I believe, what you assume I assume, or discussions about “constructed scenarios”.
Yes, I saw that. Very factual stuff. No analysis, Uninspiring.
Please don’t include me in the “As you know” list. The logical reasoning used in that example is completely meaningless.
You first have a statement “IF IF! Mullen were to find …”, and then you have a condition where the ONLY thing he can find is that SEC didn’t involve any securities.
It’s much easier simply to google “void judgment” or some similar search string. There’s no need to analyse a complete scenario when one of the conditions always will produce the same final result.
“If the judgment in SEC v. Paul Burks and RVG is found to be void, what will happen then?” could have replaced the whole scenario.
Are you saying you don’t know….”The Court will consider the merits in Bell v Disner?” I assumed you knew that.
Everything starting with “IF If!” is speculation concerning the defense strategy. As far as I can tell it is logically correct and does not conflict with any of the assertions you made in Post #63 (all of which I acknowledge are true)
The judgments rendered against Burks in the SEC v Burks case are indeed voidable. The various Orders (including the appointment of the Reciever)are also voidable, but WHY would Mullen ever void judgments and orders except if he found that he had no subject matter jurisdiction?
I must paraphrase here but Mullen said regarding Burks agreement with the SEC. Its black letter law that a party can not consent to jurisdiction. (i.e., jurisdiction is a matter of law not consent) and also that jurisdiction is subject to challenge at any time.
YOu have repeated over and over that Bell v Disner is “about” fraudulent transfers. That’s true BUT its also just as much “about” subject matter jurisdiction (and a whole lot more.)
That is why the judge confirmed that the issue of jurisdiction would be decided on the merits in Bell v Disner.
Perhaps I should have said, as you know, or SHOULD KNOW, that is why the judge confirmed that the issue of jurisdiction would be decided on the merits during the Bell v Disner case.
You did know that didn’t you? If not…. you know it now.
Then you should probably have limited the “As you know” to that first statement only?
I didn’t make any comments about the first argument, only about the rest of the reasoning.
It was completely meaningless, because the argument about what the judge would find would over-rule all the previous arguments. The first few arguments (starting from “If Mullen finds”) were not really needed.
The logical reasoning used there was completely meaningless because the result always would be the same.
If the result always will be the same then we can jump directly to that result, it will only be a waste of time to analyse any details.
Currently they’re NOT. You’re not referring to those actual judgments but rather to some hypothetical ideas.
The judgment against Paul Burks in “SEC v. Paul Burks and RVG” is final. The defendants in “Bell v. Disner et al” can currently not do anything to change that judgment. The court can’t do anything either (“currently”).
Mullen deferred ruling on challenges to his subject matter jurisdiction during the course of SEC v Burks hearings. Right? Nod your head yes.
++
He confirmed that jurisdictional challenges would be decided “on the merits” during the course of the Bell v Disner action. Right? Nod again Yes
++
Therefore, a finding in Bell v Disner may have an effect in the SEC v Burks case. (This is where you perpetually get lost… Focus and concentrate.
++
I assume the defense will again challenge the Court’s subject matter jurisdiction in Bell v. Disner.
If they prevail the lack of jurisdiction will relate back to SEC v Burks case which is where the Receiver obtained his appointment.
Voiding the Receiver’s appointment results in Bell having no authority or standing to pursue clawbacks.
That is how the defendants can WIN because it does not matter if there were fraudulent transfers or not if the SEC had no standing to bring an action in the first place.
Its a technicality but one that Mullen obviously respects. It is he who put off ruling on the challenge to the SEC standing and his subject matter jurisdiction until all of the evidence was heard in Bell v Disner case.
The SEC will almost certainly request to intervene or file amicus briefs in the Bell v Disner case.
Why? Because they will look like F^&%ing idiots if the judge were to find that no securities were involved.
Easy Peasy. Nice and Breezy
Personally I do not believe the court would enforce the judgments if it found that it lacked subject matter jurisdiction even where Burks consented to them and the court concurred. .
It makes me laugh to tears when I consider that you believe a judge can bring a dead boy back to life by reversing an order twenty years after the fact but don’t think Mullen could vacate a judgment after hearing all the evidence.
Stick to your guns Norway, even if your ship is sinking.
Glub Glub
.
Your good for a laugh anyway.
You have probably misinterpreted something there. The judge can’t “forward” the issue to a potential case in the future. The only thing he can do is to point out, “to the Receiver’s edification”, that they will need to address that issue in the clawback litigation (if the other party brings it up there).
It has already been done in Motion To Dismiss / Order Denying Motion To Dismiss. The court applied the Howey test and found that it had jurisdiction. So the jurisdiction issue has currently been resolved “on a preliminary basis” (“interlocutory”).
Now it will be up to you to prove the opposite, to prove that you have interpreted it correctly.
It’s too unspecific to be meaningful. “A finding” can be about almost anything, even if I limit the scope to be about the jurisdiction issue. So the reasoning is wrong, but the conclusion may still be correct.
“Lack of subject matter jurisdiction” is defense #1 for at least one of the defendants, IIRC. But we know too little about how they intend to prove it. Neither you nor I have that information.
Your post could have started there. All the other arguments are unnecessary since they all lead up to a specific result.
You’re METHODS are completely wrong, but I’m no expert on logical fallacies so I can’t point out exactly which fallacy.
My post was about the actual case, not about a hypothetical scenario. The court has clearly enforced the judgments against Paul Burks and RVG.
Whether you believe it or not, Paul Burks consented to a judgment where RVG was put under the control of a court appointed receiver, and where Paul Burks had to pay a $4 million fine. It happened in August 2012.
Those are your words…not mine. You have used them before and they are a layman’s mischaracterization of what actually happened.
From a legal standpoint, it is as if the issue was never raised….. and an issue that has never been raised can not rightly be said to be forwardable.
++++++++
Having considering the entirety of the situation and how best to handle it Mullen denied the challenger’s request to intervene.
Having no standing the prospective intervenors could not (and legally did not) challenge the court’s jurisdiction.
This is not Mullen’s first rodeo. He understood the relevance, and made sure before denying the intervention that there was going to be a time and place for the jurisdictional challenge to be taken up.
He had to do that or he risked an immediate (and probably successful appeal, but he did it right. He moved the case forward and ensured the net winners would be afforded all due process.
To say it has been resolved overstates the situation but a ruling is in place and it is interlocutory. Eventually, Mullen will make a final ruling based on the merits.
Hilarious. Keep working on it.
Neither Burks nor RVG have challenged SEC standing or the court’s subject matter jurisdiction. Have they?
Then describe “what actually happened” based on the transcript (75-1.pdf)?
Here’s the relevant part:
I highlighted “that should clawback litigation be filed in this court”, and “I’m making no ruling on that one way or the other”.
It’s clearly a conditional statement, e.g. “the issue hasn’t been completely resolved here, so we will need to deal with it IF clawback litigation should be filed in this court“.
He even specified that he didn’t make any ruling on those
My layman description looked like this:
It was from memory, but you’re free to point out and to correct the “layman’s mischaracterization of what actually happened” you mentioned.
I just did. I don’t need to reread the transcript.
“Mullen deferred ruling on challenges to his subject matter jurisdiction during the course of SEC v Burks hearings. Right? Nod your head yes.”
If you have any further questions ask Anjali.
That’s OK for me. I can check your version.
The last 2/3 of it was extremely vague and “fluffy”. It had some completely irrelevant elements, and it avoided relevant ones.
As far as I can see, my version is much more similar to the transcript. Your version seems to be a modified version, like something that first have been filtered through a confused brain.
I don’t really give a piss.
I think we’re done here…
@norway, hoss
we have discussed these issues to death, and reincarnated them from time to time.
this cat has only nine lives and it’s rolled them!
whether zeek sold securities, is the primary focal issue on which bell vs disner, it’s underlying principal case of SEC vs burks/RGV, and all related cases are hinged on.
the only doubt in my mind, relates to the agreement between SEC/burks/RGV, ie, in case no securities are found, what is the status of this agreement?
burks/RGV have promised not to challenge the agreement. i guess it will be up to the court to vacate the agreement, in case no securities are found.
That’s what I expect would happen.
Contracts based on mistake are voidable and, though I doubt it would be necessary, Burks could always breach the agreement and contest the Court’s jurisdiction.
Under the circumstances discussed here he would win of course and maybe even sue the bejesus out of the SEC.
The thing is Mullen told Sorkin he did not buy his “Gilmond did work argument” even as he complimented him on arguing it well.
It seems to me Gilmond et al should have taken the hint and settled but maybe they have something else up their sleeve.
Lots of companies pay salaries, commissions and divvies with raised capital and borrowed money, enduring a high burn rate expecting revenue to catch up, so there is a case to be made here….. but what a long shot.
1] the gilmond gang may feel putting enough ‘pressure’ for ‘proving the case’ may lead to a settlement, conducive to them.
2] they are relying on an appeal in the fourth circuit, since case law about howey/ponzi+pyramid, is not strongly established.
the coin can fall any which way. i think people who participate in such schemes may be ‘natural risk takers’
That’s a valid perspective. if Bell can not maintain or loses standing he can not maintain the suit for fraudulent transfer.
Here’s something. If I posted this before please excuse.
crystal clear paragraph from the SC. well said, mr SC.
no wonder bowers {SEC}, claimed, proving ‘standing’ [and thus the courts jurisdiction], ‘put them in a Pickle’!! 🙂
Mullen could have acted sua sponte (see above,) That would have put the SEC in a HUGE pickle, but it didn’t happen that way.
en.wikipedia.org/wiki/Sua_sponte
well hoss, after reading the order, denying the ‘motion to dismiss’ of gilmond et all, it is clear how judge mullen thinks.
there was never a chance of any sua sponte action from judge mullens side, except if it was to spank gilmond ! or terperning. or both.
nevertheless the SEC does stand ‘pickled’ sua sponte.
But how do the defendants prove it?
The court has already denied Motion To Dismiss (e.g. based on the Howey test). The next step will be the trial, where claims can be backed up by solid evidence.
The case is based on that Paul Burks / RVG operated a fraudulent investment scheme, collecting monies from investors via the purchase of VIP sample bids, with the promise of a 90 day ROI on each purchase.
The 90 day ROI was said to come from the profits of a penny auction website. The ROI wasn’t paid directly out as money. People could reinvest it directly from the back office.
One way to prove the defendants’ case can be to prove that Zeekler actually generated a legitimate profit. There’s probably multiple other ways, but the “core defense” will need to be about the alleged fraudulent investment scheme.
One way to prove something is to prove that VIP sample bids were not part of an investment contract, i.e. that the primary function of the VIP bids was of commercial nature.
The law will separate between commercial transactions (e.g. consumer purchases) and financial transactions (e.g. investments).
Bids can be seen as “commercial products or services”. They were commercially tradeable from RVG to the affiliates, e.g. new affiliates could order up to 10,000 VIP sample bids at the same time, and receive the bids to a type of account where they later could be used in the penny auction.
That commercial nature of the bids was supported by the contracts. The contracts clearly specified that people were purchasing commercial products. It’s supported by the fact that the bids actually could be used in auctions.
The commercial nature of the VIP bids is partly contradicted by the promised 90 day ROI, and that very few VIP bids actually were used in auctions.
INDIRECTLY PROFITABLE?
The VIP bids can also be seen as “marketing material”, as something that indirectly generated a legitimate profit from the penny auction by attracting real retail bid customers.
That idea is supported by Zeek’s contracts and online presentations. It’s contradicted by the fact that very few retail bids actually were sold or used.
Yet another way to prove something is to analyse the whole process from bid purchase → profit payout, e.g. to show that it was the work that generated the profit.
The daily profit required some work.
* post 1 online ad each day (could be done automatically)
* give away sample bids to potential customers (99% automated)
* sell retail bids to end users (optional)
* recruit other affiliates (optional)
So if the defendants can prove that the work actually generated a profit for the penny auction, they may have a case.
The profit will need to be about the penny auction’s profit, not the individual personal profit. How a personal profit was generated does neither prove nor disprove anything for Zeek as a whole.
My impression so far is that the defendants will have a very difficult case to prove. Evidence will need to be about the realities of the case, e.g. about the profitability of the penny auction.
trial:
plaintiff = receiver bell [RGV estate]; stated case = fraudulent transfer in fraudulent scheme.
defendant = netwinner class; stated case [opening question] = court must check it’s jurisdiction as no securities were sold
court = judge mullen [promised to take up securities question on merit]= will question bell on securities question. he may have to invite an ‘SEC expert’ to debate the securities question.
as hoss has suggested in a post, the SEC may also file an amicus brief to strengthen the state’s case.
how exactly judge mullen works it out, we don’t know, but the jurisdiction of the court will be debated at trial. and as the SC has pointed out, the burden of proving ‘standing’ rests on the plaintiff.
ie bell, he has to show that his role as receiver, has rightly arisen from the SEC/RGV/burks agreement, as the SEC has ‘standing’ in this ‘whole’ case, by inviting an SEC expert to state the case.
ps; go by the spirit of my post , and not ‘technical’ language, as we are not practicing lawyers.
I have covered this one earlier, but yet another way to prove something is to focus on subscription bids.
Affiliates purchased monthly subscriptions of bids as part of their monthly membership fee. Those purchases generated 20% commission to the sponsor. It can be seen as legitimate sale of products or services to “internal consumers”.
It may prove that Zeek partly was based on legitimate activity that actually generated a profit. It may disprove the pyramid scheme allegations, but it won’t disprove the Ponzi scheme.
The court can’t claw back profit from legitimate activity, but that type of activity can’t simply be incidental to the scheme as a whole. “Substantial legitimate activity” can be used as a partial defense.
For all that, it boils down to… lets have a trial.
Don’t overthink it.
NET WINNINGS = Money OUT – Money IN
Bell has informed the court that this is the method he used to calculate net winnings. There has been no objection to the method by the defendants.
Case law that I have looked at indicates courts view a ponzi/pyramid scheme as an integrated whole. All net earnings are deemed “ponzi” earnings.
Trial is about evidence. There’s no “opening question” to the court. There’s some “closing arguments”.
I believe it was already indicated in the April 2014 “kickoff meeting” that the Receiver would use some type of financial expert as an expert witness, while the defendants would use a rebuttal expert.
it is quite clear that the bids were ‘real’ ie could be used in the a ‘real’ penny auction, where products were won.
the problem is, that the bids were almost never ‘Used/Consumed’.
unused bids could not be returned or refunded.
in MLM an important construct is that the products should be Retailed, or Consumed or Returned. this life cycle should be complete and products should not be piled up in a garage or an internet account. this life cycle proves that the product has value, and proves there is no inventory loading.
zeek bids fail this ^^ test. so, i believe the gilmondgang are going to stick to disputing the howey test, on the ‘work’ issue and ‘horizontal commonality’ issue.
Article updated with news of default judgement entered into against USHBB and James Moore.