Zeek Updates: Coach Van, zCustomers, Grimes & Kaplan
Three brief updates from the Zeek Receiver today, coming in from the Receiver’s Application for Fees and Expenses (1st quarter, 2015), a docket report for a new lawsuit and a settlement agreement in the Kevin Grimes litigation.
Michael Van Leeuwen (Coach Van)
Michael Van Leeuwen had default judgement entered against him for the amount of $1,617,444.99 in August 2014.
Van Leeuwen hasn’t been interested in paying back his victims, with the Receivership now escalating attempts to recover the funds Van Leeuwen stole.
The Receiver continued work to collect a judgment obtained against Michael Van Leeuwen.
During the quarter ending March 31, a Notice of Filing of Foreign Judgment in Cumberland County was served, via Sheriff, on Mr. Van Leeuwen.
On March 11, 2015, following Mr. Van Leeuwen’s return from a trip to the Philippines, the Cumberland County Clerk of Court issued a Notice of Rights to Have Exemptions Designated.
The Notice of Rights to Have Exemptions Designated was delivered to Cumberland County Sherriff’s Department for service.
The Receiver anticipates a Writ of Execution and commencement of post judgment discovery in the second quarter following completion of the Notice of Rights procedure.
Sounds to me like Van Leeuwen’s going to have assets seized by the end of the year if he doesn’t start playing ball.
Out of curiosity I checked in on Coach Van to see what he was up to.
Apparently his latest ruse is something called “DoNothingAndGetPaid”:
Anyone can get paid for doing absolutely nothing and I will show you how.
Oh dear.
Gary Bessoni & Peak USA (zCustomers)
Originally conscripted by Zeek Rewards to flood their affiliates with bogus email addresses, Peak USA went on to launch zCustomers when Zeek decided to no longer offer the service.
Basically for a few bucks a pop, Zeek investors could buy bogus email addresses from zCustomers to dump bids onto. Zeek Rewards had them do this in order to grow their Ponzi point pools.
We’re not entirely sure what this is yet, but a lawsuit was filed by the Zeek Receiver against Peak USA LLC, Peak Impact LLC and Gary Bessoni (owner) on May 26th, 2015.
I’d assume it’s an insider lawsuit, looking to clawback funds Bessoni charged Zeek investors for bogus email addresses. As of yet no complaint is listed on docket report though, so we’ll have to wait and see.
Kevin Grimes & Howard Kaplan
It looks like the Kevin Grimes “legal malpractice” lawsuit has been resolved, following a mediation conference held on April 20th.
In addition to Grimes, Spencer Reese (his former partner) was present, with a whole bunch of other lawyers.
According to a Report of Mediation filed on May 26th,
The case has completely settled.
Counsel will promptly notify the court of a settlement by the filing of a stipulation of dismissal signed by the parties within ten (10) days of filing this report.
The Receiver had alleged Grimes played an “integral role” in promoting Zeek Rewards, in addition to receiving $843,000 for selling Zeek affiliates a “bogus compliance course”.
The details of the settlement will certainly be interesting to read once made available.
Of related interest is the Zeek Receiver’s lawsuit against Howard Kaplan for “legal negligence“.
Kaplan had filed a motion to dismiss, which the court recently stayed ‘pending the Receiver’s mediation efforts in the case against the Grimes defendants.‘
If the Grimes settlement sees him pay back funds to the Receiver, then I imagine Kaplan will have his motion to dismiss denied, and instead be required to agree to similar terms Grimes did via mediation.
We’ll have more on that once the finer details of Grimes’ settlement are filed.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of the Receiver’s Application for Fees and Expenses (1st Quarter 2015), the Report of Mediation in the Grimes litigation and docket report for the new zCustomers case.
Update 30th April 2016 – As per the Receiver’s first quarter report for 2016, Howard Kaplan’s Motion to Dismiss was denied on all but one claim, aiding and abetting.
The Zeek Receiver has filed an appeal against the decision, with the appeal currently before the court.
turns out ‘donothingandgetpaid’ belongs to coach van himself as it is registered to him!
whois:
so, coach van has an default judgement of over 1 million dollars being executed against him, and in april 2015, he is brave enough to launch an all out ponzi scheme!
he must be under exceptionally poor legal advice at this time!
unlike kaplan, grimes was More than a legal advisor to zeek. besides drawing fees for legal advice he was selling his ‘compliance course’ to zeek affiliates, and profiting from it. he was more like a ‘partner’ or ‘business associate’ to zeek.
just a monetary fine for such collusion is not enough. grimes should be disbarred from practicing law for a few years at least.
cases of the size of zeek, which cost so much time and money [money of zeek investors], and are of considerable public interest, should show more concrete results, in my view.
you spend time and money, then let there be some ‘solid message’ put out. this was good opportunity to stick it to MLM compliance attorneys, and a fair warning not to use pseudo compliance jugglery and jargon.
let’s see what the ‘settlement’ is about, if it is a large amount then that is sufficient deterrent too, but not ‘enough’.
BTW according to coach van’s bio, he is the son of a policeman and has himself served in the US army for 15 years.
his bio makes no mention of his zeek misadventure, or clawback case against him.
bio.coachvan.com
Nice Coach Van… the is zero mining on the crypto 888 club.
it’s not open source and NO 3th party platform does exchange this currency – Nigel Allen the former CEO of “ONE-COIN” is helping the Dutch guy Frank van Zon (owner) with this “hit and run scam”.
some old zeek members learned their lesson – but Coach Van is a hard core Ponzi believer.
“crypto 888” is just another offspring of BigCoin and OneCoin and will Die just like MyCoin (our of hongkong) and Ufun (out of BangKok).
(pando.com/2015/03/06/hong-kong-authorities-arrest-five-in-suspected-mycoin-bitcoin-exchange-ponzi-scheme)
but you know – if they take down these last 2x ponzi’s these ponzi birds like Coach Van will find a new home!
call it the ponzi endorfine virus….
correction:
“DoNothingAndGetPaid” is coach van’s website for promoting the crypto 888 ponzi.
it’s by ‘invitation only’.
he’s busy touring east asia to sign up members to his ‘private club’
facebook.com/photo.php?fbid=10153294154831212
Coach Van probably leads a fairly modest life except for his world traveling.
He is spending the money he got from Zeek on things that cannot be recovered. He probably does not have too many assets. And I am sure whatever money he does have left has been squirreled away and will not show up anywhere.
He is not going to prison over this. There may be some recovery from the judgment but it will not be very much.
It really is too bad because some of these folks need to be nailed hard.
Settlement agreements are usually filed under seal / in camera / not publicly available. Some general info will probably be disclosed in one of the Quarterly Reports, e.g. Q2 2015 on July 30.
The case against Howard Kaplan was much more vague. It was based on the theory that Kaplan knew or should have known that legitimate companies don’t offer high returns (like Zeek did), and that he should have informed the affiliates about that it actually was an investment (he should have advised them to use “Schedule D” rather than “Schedule C”).
It has many vague elements, e.g. the “Schedule D / Schedule D” element is based on “Kaplan knew or should have known” (not on which Schedule was the correct one in February 2012), i.e. it isn’t supported by tax logic.
“Kaplan knew or should have known” should normally be based on the specific information Kaplan had access to in February 2012. The fact that ZeekRewards was shut down seven months later may be rather irrelevant.
Hypothetical theories like “Kaplan should have known based on his field of expertise” or “Kaplan should have known because legitimate companies don’t act like that” will have too little substance to be useful in court.
The case against Kevin Grimes had much more substance. “Bell v. Howard Kaplan” will probably be resolved outside the court room.
My prediction is that “Bell v. Howard Kaplan” will be dismissed / voluntarily be withdrawn by the Receiver.
The Motion To Stay most likely means they needed time to rethink which strategy to use (“continue or quit?”), that they seriously have looked at the “quit” option as an alternative.
The case had 2 relevant claims for relief:
1. Legal malpractice / Negligence / Fiduciary Breach of Duty
2. Aiding and abetting fiduciary breach of duty
Both claims will probably need to be supported by relevant facts, showing some actions or omissions that directly caused the damage they claim he caused. That part is missing or too vague. It’s mostly based on hypothetical theories not supported by the stated facts.
1. Legal malpractice / Negligence / Fiduciary Breach of Duty is about that he didn’t inform the affiliates that the income from ZeekRewards would be taxed as “capital gains”. He avoided using investment language in the FAQ and those 2 leadership calls.
* The tax theory there is flawed. The income from ZeekRewards was correctly taxed as income from business related work.
* The direct cause of damage is missing.
2. Aiding and abetting fiduciary breach of duty is about that RVG enlisted Kaplan and other professionals to add credibility to the scheme, to reduce the skepticism among affiliates (new and existing ones).
* Paul Burks managed to run ZeekRewards for more than 12 months without Howard Kaplan’s assistance, so the “indispensable role” isn’t supported by the facts.
* Giving general tax advices to a group of affiliates isn’t directly related to the core parts of the Ponzi scheme. People would most likely have invested even without those tax advices, like they did before and after.
right. currently he’s modestly enjoying modest luxuries in phuket and hanging out with the creator of crpto 888 himself:
facebook.com/photo.php?fbid=10153309796956212&set=a.10150524128271212.427324.603711211&type=1&theater
meanwhile his alert followers are alerting him about behindmlm:
it is possible, but i think it will most likely end in a settlement, with neither party wanting to risk taking the challenge to court.
1] kaplans defense is basically hinged on ‘in pari delicto’ and he has provided some strong precedents for his argument. eg:
in the case of grimes he was directly deriving benefit from the zeek scheme, by selling his ‘compliance course’ for profit. this could be considered to be a ‘fraudulent conveyance’.
in kaplans case he may have received his ‘fee’ for his tax advise, but there was no ‘fraudulent conveyance’ to him.
2] receiver bell’s allegation that kaplan failed his fiduciary duty because he ‘ought to have known the fraudulence of zeek’ is a weak argument because he needs to conclusively show :
so, i agree with you, that the case against kaplan is weak, but i cannot exactly predict whether this case will be dismissed, withdrawn or settled.
in case the sheriff is on the lookout for michael van leeuwen aka coach van, the fellow is still having a blast in thailand:
by ‘club’ he means his team for crypto888, which he has christened ‘do nothing and get paid’ in true ponzi lingo.
“In pari delicto” is less risky than going into details about his tax advices. She tried to get the lawsuit dismissed without focusing on his work as a tax attorney.
She pointed out that tax assistance to the affiliates can’t be seen as a fiduciary breach of duty, i.e. there’s no direct loss for RVG connected to that.
The complaint was extremely thin, but we assumed that Kenneth Bell had got some information from Dawn or others, that his case was more solid than it looked like.
It will be weak even if it’s being repeated multiple times, unless it’s backed up by something.
From the Complaint, “Factual background” quick summary:
Factual background should normally be about those actions or omissions leading up to a conclusion, but here Irving Brenner seems to have focused on his own ideas rather than the realities of the case.
Kaplan didn’t tell the affiliates that ZeekRewards was an investment program, something he knew or should have known “By virtue of his knowledge of RVG and ZeekRewards and his legal expertise”.
Something I wasn’t aware of in the Kaplan case is that the case was stayed by the court itself.
Amicus brief (amicus curiae, “friend of the court”) is a type of limited intervention from a learned non-party, “to suggest a rationale consistent with its own views”.
Maybe it is you who are focused on “your own ideas rather than the realities of the case.”
Kaplan is accused of breach of fiduciary duty to the company (RVG) not because he furnished tax advice to affiliates (as you erroneously conclude.) Secondarily RVG was conveying money belonging to defrauded investors to Kaplan. Thirdly, Kaplan knew or should have known this was occurring.
Kaplan did not provide fair value to RVG for the funds he received because the advice he furnished was concocted bullshit.
Lastly this is a fraudulent conveyance case therefore “the receiver of a corporation used to perpetuate a fraud MAY “seek recovery against an alleged third-party co-conspirator in the fraud.”
I did that for the stay, but I corrected it when I checked the court document. So it has already been corrected in post #13.
“Fiduciary breach of duty” is a claim, not a factual content. The plaintiff will need to state some “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
None of that was mentioned in the complaint?
Fraudulent conveyance wasn’t mentioned in the Complaint?
It’s about:
1. Malpractice, Negligence, Fiduciary Breach of Duty.
2. Aiding and Abetting Fiduciary Breach of Duty.
3. Constructive Trust
We’re obviously talking about two different cases here. I’m talking about “Bell v. Howard Kaplan”, so my statement about tax advices to affiliates was correct enough.
My prediction in post #8 was based on that the Receiver was the one who had initiated the stay, not the court itself, e.g. that he wished to delay a decision in the Kaplan case until he had finished mediations in the Grimes & Reese case.
The reason for the stay is probably that the court will need more information, currently not available, before it can make a decision for a part of the MTD. That missing info is probably related to Public Policy, to the in pari delicto argument.
That defense can be unavailable because it will “significantly interfere with the effective enforcement of the securities laws and protection of the investing public.”
there is a difference between paying a ‘fee’ for a service and ‘fraudulent conveyance’ of money.
by your argument, any fee paid to a payment processor for transferring zeek funds, any fee paid to a convention center for holding a zeek event, every bill paid for tea and snacks by zeek executives, should all be clawbacked because all this money actually belongs to defrauded investors of zeek.
kaplan was providing zeek ‘tax advice’, he wasn’t hired to approve or give advice about the ‘business model’ of zeek.
just because zeek was fraudulent does not mean anyone who came near it has to be shot dead. you have to see the role of that person, and whether he had anything to do with the fraudulence.
it will be highly impractical to expect every payment processor, convention center owner, tea service provider, to be the eyes and ears of regulators.
it will be highly impractical to expect every payment processor, convention center owner, tea service provider, to shut down a ponzi scheme if they were in a position to ‘know, or should have known’ about it. such behavior would be nice, but we cannot expect it as a right.
i don’t think law can punish kaplan for mere ‘proximity’ or ‘service’, bell will have to show that kaplan ‘assisted and benefited’ [more than the industry norms for service provided], from the zeek scheme.
Yes there is, but not in the case of Kaplan, who it is alleged knew or should have known that he was aiding and abetting the expansion of the scheme. The fees paid to him constitute a fraudulent conveyance under such conditions.
The tea and snack purveyors of course had no fiduciary duty to RVG, nor did they have a duty to enquire, as did Kaplan, thus they are protected by law insofar as they furnished services in good faith and gave fair value.
The money processors. It remains to be seen how that works out.
They may have a duty of fair dealing but, I very much doubt it gives rise to a fiduciary duty and while they may have given fair value its unknown whether it was in good faith and consistent with banking and financial laws.
I said “accused.” The request for a constructive trust is so the fees paid to Kaplan are recoverable by the estate.
Based on previous postings in this thread I assumed, perhaps wrongly that the recovery was under the theory of fraudulent conveyance. If not….what is it?
The bottom line is that the estate wants the money back and they expect Kaplan to disgorge it and Kaplan’s duty was to RVG not the affiliate’s.
I don’t know anything about which theory. I tried to get a quick overview in post #12.
The Receiver want Kaplan to compensate RVG for damages in the range of $100 million caused by his Malpractice / Negligence / Fiduciary Breach of Duty / Aiding and Abetting Fiduciary Breach of Duty.
Right. OK, thanks. Damages. It appears to be a straight forward tort claim not an action for disgorgment based on fraudulent transfer.
Normally it should have been straight forward. But the facts supporting the claim seem to be incomplete and vague. You can try to analyse them yourself?
* “Kaplan knew or should have known” is a legal conclusion without any direct supporting arguments. The facts are missing or extremely vague.
“Normal practice”
* Writing a FAQ can’t be seen as a type of malpractice in itself.
* Answering email questions seems to be quite a normal practice.
* Participating in 2 leadership calls seems to be normal practice.
* Use of name is normal practice. The opposite would be to participate in those two leadership calls as “anonymous tax attorney” or. “Mr. X”.
“The substance”
* Kaplan advised that Affiliates should use IRS Schedule C (“Profit or Loss from Business”) to record their income, making no mention of the fact that they should use IRS Schedule D (“Capital Gains and Losses”).
That point is backed up by a legal conclusion with few supporting arguments. It’s impossible to identify whether it is a potential malpractice or a normal practice based on the information in the complaint.
There are some other arguments related to that same point, e.g. an argument that Kaplan candidly could have disclosed to the affiliates that the income from ZeekRewards would be taxed as “Capital Gains”.
Paragraphs 31 through 39 in the Complaint repeat 7 times that “Kaplan knew or should have known”.
Simply stating that people knew or should have known isn’t enough. It must be supported by something, e.g. the type of information Kaplan had access to as a part of his work for RVG.
* There’s no factual arguments pointing to what Kaplan actually could have known in February 2012, the relevant time period for the stated actions or omissions.
* Most arguments about malpractice appears to be about quite normal practice for a tax attorney.
* “Schedule C” appears to be the correct solution based on IRS rules. The logical reasoning for why “Schedule D” should be more correct doesn’t refer to any valid tax logic.
It will be impossible for a court to determine anything here. The arguments may look valid enough, but that’s all.
Err,
umm,
it’s a “complaint” not the sum total of the receivers’ argument/s
Further, “knew or should have known” is a completely acceptable term and doesn’t require expanding in the complaint
here’s stalking coach van some more in his adventure across the world. he has several FB pages and the moment i copy paste from one, he stops posting there and runs off to a different page. ha, caught him again!
this guy is really high on his ponzi tripping!
yes, and then coach van went to korea too.
however, what will interest the sheriff of cumberland county, north carolina is that fayetteville’s little boy has finally Come Home!
go get him sheriff!
see that, he’s ‘ready to leave again’! he should be ‘served’ with whatever documents need to be served on him, before he takes off again. this guy has travelling chakras under his feet.