Zeek’s top Ponzi pimps “delaying” victim payouts
Someone I don’t ever see myself envying on a professional level is the Zeek Rewards Receiver.
Charged with wading through the haphazard mess of records and accounting that Paul Burks and his crew kept, Kenneth Bell is now working on recovering Ponzi funds from some of the MLM underbelly’s worst serial offenders.
And true to their nature, Zeek Rewards’ top Ponzi pimps refuse to go down without a fight.
Shameless and hell-bent on keeping the money they stole, they’re still doing everything they can to delay the returning of money to their victims.
Working collectively in some cases, various top Zeek Rewards winners are using the same attorney to delay the inevitable returning of their money.
Trudy Gilmond, Jerry Napier, Darren Miller, Rhonda Gates, Aaron and Shara Andrews are all paying North Carolina attorney William R. Terpening of Nexsen Pruet to represent them. Durant Brockett and David and Mary Kettner are using Rodney E. Alexander of Alexander Ricks.
Defendants Todd Disner, David Sorrells, T. Le Mont Silver (and wife Karen), Michael Van Leeuwen and Lori Jean Weber are listed without representation.
After clawback litigation was filed last month, the case against the Zeek Ponzi pimps is at the stage of discovery. A “lengthy” conference was held between the Zeek Receivership and defendants on April 4th. After which the Receiver sent the defendants a proposed discovery plan for them to agree to, and that’s currently where we’re at.
The intent of this proposal was to provide the Court with a single document describing the parties’ positions and leaving arguments to be made by both sides at the hearing.
Also, Receiver’s counsel suggested that if Defendants felt that written arguments were necessary then the Defendants could file a separate document with their arguments to which the Receiver could respond in kind.
Typically if a party disagrees with a discovery plan proposal, they respond with what they disagree with and why. Zeek’s pimps however also included “Zeek is not a Ponzi scheme arguments” in their response (“we sold penny auction bids”, “it’s not an investment because we didn’t call it that” etc., etc.), which was not the correct platform to do so.
While the Receiver waited on a response to the amended proposal (sans “lengthy” Zeek Rewards is not a Ponzi scheme arguments), the Defendants went ahead and filed their response with the court. They did this without notifying the Receiver or having come to an agreement as to the terms of which discover would be carried out.
The court had ordered a discovery plan proposal be filed by the 9th of April, but with the Receivership still waiting on a reply to their amended proposal, instead they had to file a report explaining the situation to date.
One of the other major disagreements between the Receivership and the defendant Ponzi pimps is the scheduling of their respective cases (currently grouped together as a class-action).
In nutshell, the defendants are trying to argue that any decision on their case(s) should be suspended until a motion to dismiss and question of class certification against them as a collective, are decided upon by the court.
Why do they want that?
Each defendant intends to file a motion to dismiss in accordance with Rule 12. While defendants are not in a position to fully advise the Court of the all of arguments they will make in their motions to dismiss, the motions will argue for dismissal, among other reasons, because:
(i) subject matter jurisdiction is lacking for the reasons explained in the Motion to Intervene and for an Order Dissolving the Appointment of a Temporary Receiver and Memorandum in Support Thereof (Dkt. No. 84 in the SEC Matter); and
(ii) the Complaint fails to meet the pleading requirements set forth by the Supreme Court in the cases of Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, (2007) and Ashcroft v. Iqbal, 566 U.S. 652, 129 S. Ct. 1937 (2009).
With at least one motion to dismiss already being shot down, the intent of the defendants to bog down the Receivership with having to respond to their similarly worded but separately filed motions should be obvious. Not to mention the wider delay inflicted upon the schedule of Zeek Rewards’ victim payouts.
As for the discovery itself, when you look at what the defendants are proposing, again it’s clear the objective is to waste more time. The Receiver has proposed a maximum of
- up to 20 interrogatories be issued by the Receiver to each named defendant
- up to 50 interrogatories collectively and up to 5 additional individual interrogatories by issued by defendants to the Receiver
- up to 15 depositions by the Receiver, with an additional deposition by each name defendant
- up to 20 depositions by the defendants collectively
The Ponzi pimps however disagree, and want
- up to 200 interrogatories be issuable by each name defendant
- up to 15 depositions by the Receiver
- between 20 and 50 depositions by the defendants
First off the notion that the defendants need hundreds of depositions and discovery interrogatories is laughable. And it’s even more hilarious when you consider most of them are using the same lawyers.
Quite clearly the idea is to bog the Receivership down with paperwork and delay proceedings against them for as long as possible. Oh and naturally having to respond to the pimp’s extravagant requests will cost money – so said pimps will be able to point at the expense the Receivership will rack up dealing with their crap too.
One of the more common Ponzi fictions is that appointed Receiverships (or the government) just wind up keeping victim’s money. How ironic that the same people who’s happily preach this to their victims are also responsible for drawing out the process and incursion of unnecessary legal fees.
I mean really, nearly two years after the SEC shut Zeek Rewards down – this is the kind of crap the courts have to entertain from its pimps:
Defendants further state that without further information from the Receiver about the basis for its belief that RVG/ZeekRewards operated as a Ponzi scheme, it is difficult for defendants to commit to a schedule for expert discovery.
Yeah, no worries guys. Despite the mechanics of Zeek Rewards laid out in great detail for all to see (Paul Burks fudging the daily ROI and using new investor money to fund it), you all are going to prove Zeek wasn’t a Ponzi scheme by wasting as much time as you can.
Summarizing the situation in his report, the Receiver pretty much hits the nail on the head:
The key difference in the parties’ proposed case management is that the Defendants in this action are seeking to delay and complicate the case at every stage.
Delays hurt Rex Venture Group’s victims not only by making them wait longer to receive a final distribution of assets but, even more importantly, it allows time for the named defendants and other net winners to dissipate the assets received from Rex Venture Group.
And that last bit in bold is really what these latest ploys by the defendants come down to.
Looking forward, at this proposal stage there’s nothing stopping either party from filing complete garbage with the courts. My prediction however is that when the times come for these proposals to be decided upon, the ass-reaming of Zeek’s Ponzi pimps is inevitable.
The named defendants are the largest net-winners of the Zeek Rewards scheme, receiving up to $2 million are more from RVG.
Whether it is in this action or forum, whether it is in single lawsuits or otherwise, the Receiver intents to seek repayment of their net winnings.
Therefore, regardless of the merit of their procedural or pleading arguments, the claims against the named defendants will ultimately proceed in some forum, and there is no good reason to delay discovery, which will then be available in whatever case moves forward.
The first settlement conference between the Receiver and Zeek Ponzi pimps is scheduled to take place tomorrow on April 14th.
The Receiver will respond to the remainder of the defendant’s arguments, including the unreasonableness of their requests collectively for what amounts to thousands of interrogatories and requests for admission and over 500 depositions, at the April 14th hearing.
Call my cynical, but I don’t think the meeting tomorrow is going to be very productive. These thieves know full well they participated in a Ponzi scheme, with any arguments about the legitimacy of Zeek Rewards serving only as a means to an end.
That end being the notion that they’re going to keep the funds they stole.
I imagine when it’s left to a Judge to start handing out penalties and bring some of these serial scamsters back into reality, we’ll perhaps only then see things moving forward quickly enough.
Footnote: My thanks to Don over at ASDUpdates for providing additional information for this article.