Source: http://zeekrewardsreceivership.com/receiver
Timestamp: 2019-04-18 11:10:42+00:00

Document:
On March 16, 2016 the U.S. District Court approved a settlement between the receivership and NewBridge Bank in the amount of $10,000,000. The settlement arose out of claims the receivership had against NewBridge Bank for its continuing to provide banking services to Rex Venture Group after mid-April 2012, by which time the receivership alleged that the bank and its executives knew or should have known that Paul Burks and RVG were using their accounts to conduct an illegal Ponzi and pyramid scheme.
On behalf of the victims of RVG and Zeek Rewards the receivership team continues to pursue and collect assets that will be paid to those with recognized claims. We hope to bring to a conclusion in 2016 our class action against more than 9,000 net winners, which will be a significant milestone.
I have written many times encouraging tens of thousands of claimants with recognized claims who have not yet received a distribution check to log into the claims portal and electronically sign the Court required Release and OFAC Certification. At some point, I will be required to distribute the funds that have been reserved for these claimants to other Affiliates who have completed the process and, therefore, hold Allowed Claims. I don’t want any claimant with a recognized claim to lose out on receiving a distribution simply because they did not complete all of the steps required by the Court’s Orders.
On February 11, the Receiver filed a Motion seeking to recover $13,174,015.48 in outstanding Receivership Assets from Payza, Payment World, VictoriaBank (a Moldovan financial institution), and their affiliates or, alternatively, to hold these entities in contempt for violating the Court’s August 17, 2012 Agreed Order Appointing Temporary Receiver and Freezing Assets of Defendant Rex Venture Group, LLC, as amended on August 30, 2012 (“Freeze Order”). On February 12, the Court ordered an immediate interim freeze of $13,174,015.48 at a United States correspondent bank account for VictoriaBank pending resolution of the Receiver’s Motion on the merits.
These funds are outstanding Receivership Assets from the payment processing relationship between Rex Ventures Group LLC, Payza, and PaymentWorld, for which a percentage of the processed funds were held on reserve at VictoriaBank in Moldova. For the past 3.5 years, the Receiver Team has worked diligently and devoted significant time and resources in its investigation, analysis, and various other efforts to reconcile and recover these outstanding funds, including negotiations with Payza, PaymentWorld, and VictoriaBank (collectively, “Respondents”) and coordination with United States and Moldovan government authorities. In direct violation of the Court’s Freeze Order, and despite the Receiver’s repeated requests, the Respondents refused to pay the Receivership Estate the outstanding assets. Each of the Respondents has had some role in failing to freeze and or return the outstanding Receivership Assets from this payment processing relationship.
With the Respondents’ failure to comply with the Court’s Freeze Order and increased risk of dissipation of funds, the Receiver, after exhausting a myriad of other options, filed the above-referenced Motion. Pending resolution of the Motion on the merits, the Court issued an immediate interim freeze of the full $13,174,015.48 at VictoriaBank’s correspondent bank account at a United States bank. The Receiver anticipates the Court will set a briefing schedule and hearing date to facilitate the resolution of this Motion on the merits. The Receiver will work diligently in pursuing a successful resolution of the Motion in hopes of securing the recovery of these funds for the benefit of ZeekRewards’ victims.
On September 11, 2015, Judge Graham Mullin entered a Consent Order Appointing Class Counsel appointing Kevin Edmundson, counsel for several of the large named net winner defendants, to represent the Net Winner Class defendants previously certified by the Court in Bell v. Disner, et al., Civil Action No. 3:14-dv-91 (W.D.N.C.) (See Notice of Certification of Defendant Class Action). As instructed by the Court, Mr. Edmundson will be communicating with the Net Winner Class primarily through a website and collective emails. He has now set up a website for that purpose, which can be found at http://www.zeeknetwinnerclass.com.
Since September 30, 2014 we have distributed nearly $245 million to affiliate claimants. At the end of October we will issue approximately 1,500 distribution checks to claimants who have not already received a distribution because they had not previously submitted the release and OFAC certification required by the Court. Please note that all distributions are made to affiliates who filed a claim by the Court ordered deadline of September 5, 2013, and have had their claim allowed. I have no authority to allow claims filed after that date. Contrary to misinformation circulating among some affiliates, there are no new claims being accepted.
Unfortunately, approximately 44,400 Affiliate claimants have accepted claim determinations, but have not submitted the required release and/or OFAC certification that is necessary to allow me to pay those Affiliates. If you are in this group, please log in to the claim portal and provide those documents through the webform available in the claim portal. Doing so will permit me to pay you on account of the money you are owed.
Nearly 6,000 claims eligible to be paid have not yet been sent a distribution because the amount to be paid is less than $100. It would be an inefficient expense to send distribution checks for an interim distribution for less than $100 followed by a final distribution check. We will send distribution checks to all eligible claimants at the end of the receivership.
Many non-US claimants have reported difficulty in cashing or depositing distribution checks. We are considering asking the Court for authority to make distributions to overseas claimants by wire transfer. However, wire transfer fees range from $25 to $50, an expense that would have to be borne by the claimant. Also, there would be added expenses to the receivership to solicit, receive, process and maintain required additional information from claimants, as well as additional bank fees and further governmental requirements and disclosures. It is not clear that such additional expenses are a good and fair use of receivership funds.
Many of you have asked when the receivership will end, and when a final distribution will be made. We are in litigation, or pre-litigation negotiations, with individuals and institutions seeking to recover millions of dollars on your behalf. Most notably, we continue our litigation against a class of more than 9,400 net winners (those who took more money out of the Ponzi scheme than they put in) in the United States and in several foreign countries. Litigation takes time, and collecting on the judgments we expect to win against the net winners will also take time. I can’t tell you how long. If the receivership at any time holds sufficient funds to make another interim distribution cost effective we will do so.
Finally, we have been contacted by numerous Affiliate claimants regarding the lack of 1099s being issued on account of tax withholdings that were made from such Affiliate claimant's distributions. On December 19, 2014, I announced that there would no longer be tax withholdings made on account of distributions to be made by the Receivership and any amounts that were previously withheld on account of prior distributions would be paid out to the Affiliate claimant from which money was withheld. Distribution of these withholding amounts was made in late 2014. As such, no taxes have been withheld from any Affiliate claimant's distribution and no 1099s need to be issued. Additionally, we have consulted with tax professionals and determined that the Receivership estate will not issue 1099s, even if requested by the claimant.
I greatly appreciate your continued support and patience as we work on your behalf.
On July 31, 2015 we mailed 112,374 distribution checks to eligible claimants in the total amount of $89,200,834.29. Including that distribution, we have made distributions totaling $246,048,079.29.
Distribution checks have not been mailed to 9,394 claimants because the amount of each distribution check would have been less than $100. Due to cost efficiencies, the Court orders provide that distribution checks below $100 will not be mailed until the end of the receivership and payment of final distributions. We have created a reserve to insure those claimants will be paid at the same rising tide distribution percentage as all other claimants. If a claimant’s distribution amount reaches an amount in excess of $100.00 before the final distribution, the claimant will be paid.
Unfortunately, approximately 35,400 claimants were not mailed a distribution check on July 31 because they still have not electronically signed the release and OFAC certification required by Court orders. Had these claimants done so we would have mailed an additional $46,237,165.62 in distributions. We have posted an instructional video on this site showing how these forms can be electronically signed. You may review that video by following this link: http://www.zeekrewardsreceivership.com/OFACandRelease. Those who do so before October 20, 2015 will be mailed their interim partial distribution representing 60% of their allowed claim (calculated using the rising tide method) on October 31, 2015.
Efforts to recover additional funds for the benefit of claimants continue. I fully expect that we will recover tens of millions of additional dollars that we can then distribute to claimants. It is not possible to project with any certainty, but I believe that total recovery by eligible claimants will exceed 70% by the closing of the receivership case.
I am pleased to announce that we will be making a second partial interim distribution to all Affiliates who hold Allowed Claims on the next Court authorized distribution date (July 31, 2015), which, when combined with the first partial interim distribution and the amounts paid by Zeek Rewards before it was shut down, will return to victims 60% of allowed claimed losses due to the Zeek Rewards Ponzi scheme.
There has been some confusion about how the amounts of distributions are calculated using the Court ordered “rising tide” method. The rising tide method of loss calculation is designed to make every recognized claimant equally whole (as a percentage of their investment). Take for example two recognized claimants, each of whom invested $10,000 into the Zeek Rewards Ponzi scheme. The first claimant received nothing back from Zeek Rewards while the scheme was operating. The second claimant received $4,000 out of Zeek Rewards before it was shut down. Under the rising tide method, the second claimant is deemed to have already received 40% of her investment back, while the first claimant has received nothing back. When we made the first partial interim distribution of 40% the first claimant received $4,000, but the second claimant did not receive a distribution check.
When the second interim partial distribution is made, the first claimant will receive an additional $2,000, and the second claimant (who did not get a first distribution) will receive $2,000. This will ensure that both claimants have received 60% of the amounts they invested. While some Affiliates have complained about the rising tide method, I believe it is the most fair way to make the Zeek Rewards victims equally whole; two investors put $10,000 into the scheme and each will receive $6,000 total, whether it was received from the scheme itself, or from distributions from the receivership, or a combination of both.
There also has been some confusion about our quarterly distributions. Some mistakenly believe that they will receive a distribution every quarter. There was a first partial interim distribution and will soon be a second. Each quarter we send distribution checks only to claimants who completed the claims process since the last quarter.
Unfortunately, nearly 50,000 claimants with recognized claims have not received a first, nor will they receive a second, partial interim distribution. The only reason for this is that those 50,000 claimants have not electronically signed the Release and OFAC certification available through the claims portal. Many have called or emailed asking for personal assistance signing and submitting these forms. We will soon create and post on the receivership website an instructional video showing how to electronically sign and submit the Release and OFAC certification through the claims portal. The cost to create and post this video will be a minimal expense to the receivership.
We have received calls and emails asking that we cut off the recovery rights of the 50,000 recognized claimants who have not completed the process and distribute their share of distributions to those who have. That day may come, but it has not yet. I will give each claimant with a recognized claim every opportunity to receive their share of the recovery. Nonetheless, I implore everyone to promptly complete the Court required process. Sometime before the end of the receivership I will have no option but to ask the Court for permission to distribute all remaining receivership assets to only those recognized claimants who have completed the process.
If your contact information has changed, or the claims portal shows that you were issued a check that you have not received, or a check you were mailed was issued in the wrong name, please click on the following link to learn how to let us know: https://cert.gardencitygroup.com/zrwdet/fs/home.
After this second partial interim distribution, the receivership will maintain sufficient funds to pay those claimants who have not yet, but hopefully will, electronically sign the Release and the OFAC certification, and sufficient funds to allow the receivership team to continue to pursue additional recoveries for the ultimate benefit of eligible Affiliates. We are not going to hold onto money that we could otherwise distribute to victims.
We are in negotiations or litigation with financial services firms to recover tens of millions of dollars for Affiliates. The litigation against U.S and foreign net winners (those who took more money out of the scheme than they put in, essentially holding the victims money) is progressing. I remain confident that we will succeed in all of these efforts. Unfortunately, litigation is never quick, and once we have judgments against the net winners, in amounts exceeding $200 million, we will have to collect on those judgments. I don’t anticipate making a third partial interim distribution for quite some time because the funds for such a distribution will largely have to come from litigation recoveries that will take quite some time.
I know and understand that recovering only 60% of your investment is not what you want. I have read letters from and spoken to many of you. I know the hardships that Zeek Rewards inflicted on thousands of people. It may be no comfort, but a 60% recovery by victims of a Ponzi scheme is unusually high, and I am proud that the receivership team spends less as a percentage of total recoveries than any receivership of which I am aware.
I am entirely confident that when we are finished with our work on your behalf your total recovery will be more than the 60% we will distribute. I ask you for your patience, and thank you for your continuing support.
Complaint in Bell v. Disner, et al.
Specifically, the Court certified a defendant class (the "Net Winner Class") comprised of all persons and entities (approximately 9,400 in total) who were “net winners” of more than $1000 in ZeekRewards. By this ruling, each of the members of the Net Winner Class becomes a defendant in the case. An updated list of those persons and entities that RVG records show to be Net Winners of more than $1000 is available here.
The Receiver believes that the certification of the Net Winner Class will provide the most fair and efficient process to resolve these legal claims and recover more funds for victims. The Court determined that “a class action is the only means to reasonably and efficiently resolve the Receiver’s claims against 9,400 net winners.” In addition, the Court found that the proposed class representatives (the named defendants) and their counsel are able to fairly and adequately represent the interests of the defendant class. However, any member of the Net Winner Class may of course consult personal counsel to advise them on their legal rights.
The Receiver looks forward to moving ahead in this lawsuit and the others he has filed to maximize the recovery of funds for the benefit of ZeekReward’s victims.
At the end of January we mailed another 8,143 first interim partial distribution checks totaling $12,708,427.80 to claimants holding qualified allowed claims. While I am pleased that we have now mailed distributions to nearly 100,000 claimants and distributed approximately $147 million to victims of the ZeekRewards scheme, I very much regret that nearly 75,000 claimants have not yet completed all the steps necessary to be eligible to receive their distribution. Some 60,000 claimants have not even responded to the Letter of Determination emailed to them. Thousands more have failed to provide the release and OFAC certification required by the Court to be eligible to receive a distribution.
We receive many calls and emails from claimants who have not received a distribution check claiming that they have done all that is required to become eligible. That simply is not correct. I again strongly encourage every claimant that has not yet received a distribution check to log into the Claims Portal (https://cert.gardencitygroup.com/zrwdet/fs/home), respond to your Letter of Determination if you have not already done so, and, if you accept the Letter of Determination, provide the Release and OFAC certification. We will send a reminder email to all holders of a recognized claim who have not completed these required steps to be eligible for a distribution. We will make the next distribution to those who complete these steps and who have not already received a distribution at the end of April.
Many distribution check recipients have asked whether we will issue IRS Forms 1099 showing the disbursement. We have consulted with tax professionals and determined that the Receivership estate will not issue 1099s, even if requested by the claimant.
Finally, many affiliates call and email asking for a claim status report or help with the claims process. Because there are 175,000 claimants we decided not to offer personal, individualized assistance by phone or email. The costs of such assistance would be great and would significantly reduce the amount of money we have and will have available to send to all victim claimants. Please see my message of November 25, 2014 for further explanation of our reasoning.
We continue to pursue additional recoveries for the benefit of the victim claimants, with great success. You can read about our efforts in our quarterly status reports filed with the Court, available on the Case Documents page of this website. Thank you, as always, for your continuing patience and support.
The Receivership will no longer withhold taxes from distributions paid to affiliates. If the Receivership previously withheld taxes from a distribution, we will issue a new check on December 23, 2014 to distribute the previously withheld funds to that affiliate. As I have said before, so that we do not expose the receivership to potential fines and penalties that would dramatically decrease the amount of money available to those claimants eligible for a distribution, we have sought assurance from the United States Internal Revenue Service that no withholding is required. We have not been able to get such assurance. However, I have received a tax opinion from a professional that persuades me that tax withholding is not necessary.
On December 23, 2014 we will mail approximately 58,000 checks to claimants that were mailed a distribution on September 30, 2014 from which a withholding was made. Those checks will be in the amount of the taxes previously withheld for tax purposes from that affiliate’s distribution. On that day we also will mail checks to those individuals who requested (through a formal request on the claim status portal) that their September 30 check be reissued because the original check out was not properly delivered, was lost or was made payable to the wrong name through inadvertent error of the claimant.
In late January 2015, we also will send distributions to those qualified affiliate claimants who completed the online claim allowance requirements after August 15, 2014 and have not yet received a check. Somewhat frustratingly, there are nearly 62,000 affiliate claimants that have received a letter of determination but have not yet accepted (or objected to) the recognized claim. We have the funds on reserve to make a distribution to all these claimants in the same manner we did for approximately 90,000 affiliate claimants in September. But, unless a claim is accepted (or has had an objection resolved) and the affiliate claimant completes the release and OFAC certification, a distribution check cannot be mailed. I encourage all of these affiliate claimants to go online and complete the process to be eligible for a distribution check in late January 2015. For cost efficiency reasons, we will issue checks only quarterly, so if an affiliate claimant has not completed these steps by December 31, 2014 the next opportunity to receive a distribution check will not be until late April 2015. I would much rather send all qualified affiliate claimants a check than hold those funds in a bank account.
Finally, we are making great progress in recovering and marshalling additional funds which, together with the funds we currently hold, will be later distributed to all qualified claimants.
Today, new features were added to the claim status portal in response to issues that have arisen in the distribution process. The claim status portal can be accessed by following: https://cert.gardencitygroup.com/zrwdet/fs/home. These updates allow for a claimant who is eligible to receive a distribution to be able to check the status of that distribution by logging on to the claim status portal. In addition to claim status, that portal will now provide those affiliates who are eligible to receive a distribution with: the date on which his/her distribution check was issued; the amount of the distribution check; whether the distribution check has been cashed; and whether the distribution check was returned to us as undeliverable. Second, if your check was returned to us, lost, destroyed, or your check was issued in the wrong name (for example, if you inadvertently provided your Zeek username instead of your real name when you provided your payment information), you will now be able to request a new check be issued to you in the proper name. We hope that these updates will address many of the issues you have been asking us about.
With these improvements to the claims status portal we will no longer respond to emails and calls that request the status of a claim that can otherwise be answered by logging into the claim portal and checking on the status of your claim. We have been spending a considerable amount of receivership assets responding to affiliate claimants’ inquiries about the status of their claim, all of which can now be answered through self-help. The savings generated by this automated system will allow us to make larger distributions to all affiliate claimants holding allowed claims.
Among the inquiries to which we will no longer be responding are requests from affiliates who registered on the claims portal but did not complete and finally submit a claim. The claims system was continuously operational and was tested and verified as accurate during the claims period and afterward. If review of your claim status shows that you did not finally submit a claim through the claim portal by the Court ordered deadline of September 5, 2013, I have no authority to accept or permit you to file a claim thereafter, including now. I regret that anyone who could have validly submitted a claim failed to do so.
If you hold a claim eligible for a distribution, but were not mailed a check on September 30, 2014, I encourage you to login to the claims status portal and accept the letter of determination you were issued (or have any objection you raised to the claim determination resolved) and submit the required Release and OFAC certification so that we may distribute money to you. If you take these steps, you will be mailed a first interim partial distribution at the end of January 2015.
By the close of business on December 1, 2014, we will have issued Letters of Determination to all affiliate claimants who timely filed claims.
Finally, we continue to receive many inquiries about tax withholdings from distribution checks. We are trying very hard to get reliable guidance from the Internal Revenue Service. I do not want to withhold taxes from distribution checks, but unless and until I receive assurance that the IRS agrees with me, withholdings will be made. We cannot expose the receivership, and the assets which we have and from which we will make distributions to victims, to potential penalties and fines by the IRS.
Various foreign claimants have reported that their banks have refused to deposit the distribution checks I have sent to you. It is likely that these banks are mistakenly seeking to deposit the checks in the local currency instead of in United States dollars. ALL checks issued by the Receivership are issued in United States dollars. Please inform your bank when you are depositing your check that it is in United States dollars. I am unable to issue checks in any currency other than United States dollars.
Today, a federal grand jury returned a criminal indictment against Paul Burks. The indictment alleges four felony counts, including conspiracy to commit wire and mail fraud, wire fraud, mail fraud, and conspiracy to commit tax fraud.
The bill of indictment is available here.
I want to address the question many of you are asking about why a percentage was withheld from some distribution checks.
On September 30, 2014 we mailed more than 90,000 checks to claimants as part of the first partial interim distribution. These payments were calculated to equal 40% of an accepted claim using the rising tide method of distribution previously ordered by the Court. For those claimants to whom checks were mailed that did not provide an IRS Form W-9 (for US residents) as requested on the claims portal we withheld a certain percentage for tax purposes. For non-US claimants a percentage was withheld whether or not an IRS Form W-8 was provided. I have heard from many of you that this withholding should not have been made because these distributions are not taxable. The tax laws on this issue are not entirely clear. We have attempted to get a definitive opinion from the IRS but have not yet been able to do so. Given this uncertainty we acted on the side of caution and made the withholding.
If and when we receive assurance that withholding from distributions to Affiliates is not necessary we will send additional checks to those claimants from whom a withholding was made in the first interim partial distribution in the amounts that were withheld. For US residents, online completion of an IRS Form W-9 will allow us to send an additional check in the amount that was initially withheld. Click here to provide tax form.
While I am gratified that we were able to send 90,000 Affiliates a distribution, there were approximately 48,000 claimants to whom I wanted to send a check but was not permitted to pursuant to the Court’s orders. If you have received a letter of determination, in order to be sent your first partial interim distribution, you must accept the determination (or have had an objection resolved) and complete the release and OFAC certification provided on the claims portal. At the end of January 2015 we will make a first partial interim distribution to those claimants with allowed claims who were not mailed a distribution check on September 30, if these steps are taken by December 31, 2014.
Approximately 12,000 Affiliates with approved claims were not mailed a check because the amount would have been less than $100. It was not cost efficient for the receivership to mail these checks at this time. At the end of the receivership Affiliates holding approved claims due a payment of less than $100 will be mailed a distribution check.
I want to re-emphasize that these distributions are the first, and partial, distributions I believe you will receive. We continue to pursue and recover additional funds that will be distributed on later dates.
This first interim, partial distribution represents, with certain limited exceptions, an amount equal to 40% of the Allowed Claims of all Affiliates holding Allowed Claims as of August 15, 2014, using the "rising tide" method of calculation previously approved by the Court.
On May 28, 2014, we filed a motion seeking to make an interim, partial distribution in amounts equal to 40% of each Affiliate’s allowed claim using the "rising tide" method of calculation previously approved by the Court. Yesterday the Court approved this motion. You can read the Order here. In this distribution, Affiliates with allowed claims will receive an interim distribution of 40% of the amount of their cash investment in ZeekRewards, less any money received from ZeekRewards prior to my appointment as receiver. If an Affiliate holds an allowed claim, but received more than 40% of their cash investment in ZeekRewards from ZeekRewards prior to my appointment as receiver, that Affiliate will not receive an interim distribution.
We will make the first interim, partial distributions on allowed claims on September 30, 2014. The Court's order provides that August 15, 2014 is the date for determining whether a claim is allowed and payable on September 30, 2014. This means that if you are an Affiliate that holds an allowed claim on August 15, 2014, you received less than 40% of your cash investment in ZeekRewards prior to my appointment as receiver, and would be entitled to a payment of in excess of $100.00 , the first interim, partial distribution will be mailed to you on September 30, 2014.
On March 3, 2014, I announced the filing of a lawsuit to obtain the return of the money paid out to net winners in the ZeekRewards scheme in excess of the amount they paid into RVG. In that lawsuit, Kenneth D. Bell v. Todd Disner, et al., Civil Action No. 3:14-cv-91, I made claims against more than 10 of ZeekRewards' largest "net winners" in the United States asking that the Court order them to repay the net winnings they received from the scheme. I also made class action claims against approximately 9,400 ZeekRewards net winners in the United States who each won more than $1,000.
Today, I have filed with the Court a motion asking the Court to certify this Net Winner Class and asked that the Court appoint one or more of the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the Net Winner Class. Proposed Net Winner Class members are not required to file any response to the motion, but may, of course, discuss this matter with legal counsel if they choose to do so. The deadline for the named defendants to respond to the motion has been set for August 18, 2014.
A copy of the Motion to Certify the Net Winner Class and the Memorandum of Law in Support of the Receiver's Motion to Certify the Class can be found here: Motion and Memorandum. Also, a list of those individuals whom the Receiver believes won more than $1,000 and therefore would be included in the Net Winner Class can be found here.
The Department of Justice has begun posting information related to victims’ rights in the criminal matter of United States v. Dawn Wright Olivares and Dan Olivares - Case No: 3:13-cr-335. Click here for information on that case.
On May 1, 2014 I told you that I would file a motion with the Court asking permission to make an interim, partial distribution on allowed claims. Yesterday, May 28, 2014, we filed a motion seeking to make distributions at an amount equal to 40% of each affiliate’s allowed claim using the "rising tide" method of calculation previously approved by the Court. If the Court approves this motion affiliates with allowed claims will initially receive 40% of their investment in Zeek Rewards, minus any money received from Zeek Rewards prior to my appointment as receiver. We anticipate that this motion will be addressed by the Court in June. You can read the motion here.
Let me emphasize that this is only a first distribution. I am entirely confident that we will make another distribution once we have recovered all assets possible. As you know, we have sued the former insiders (Paul Burks, Dawn Wright-Olivares and others) and more than 9,000 individuals in the United States who took more money out of Zeek Rewards than they put in. This money rightfully belongs to affiliates with allowed claims. We will also sue foreign net winners in the near future. Also, I believe we will recover several millions of dollars more from financial institutions still holding receivership assets.
Despite our best efforts to make a distribution in mid-summer, logistical issues regarding the payment to what may be more than 150,000 affiliates required us to ask permission of the Court to make the first interim, partial distributions on allowed claims on September 30, 2014. We also asked that August 15, 2014 be the date for determining whether a claim is allowed and payable on September 30, 2014. This means that if you have an allowed claim on August 15, 2014, and your distribution would be in excess of $100.00, the first interim, partial distribution will be mailed to you on September 30, 2014.
In order for your claim to be allowed, you must have received your claim determination, agreed to that claim determination (or resolved any objection you made to such claim determination and agreed to a claim determination), and provided the required release and OFAC certification requested on the claim portal. If you have received your claim determination, but have not agreed to the determination or have not provided the required release and OFAC certification, your claim is not yet allowed. Please submit this information as soon as possible. Without it, we are not permitted by the Court’s orders to include you in the September 30, 2014 interim, partial distribution.
If you have not received your claim determination, please be patient; it is coming. If you have already received a claim determination, or when you do, I encourage you to respond as soon as you are able so that we can provide you with your first interim, partial distribution.
It has been several weeks since I have given you an update because I wanted to be able to give you accurate numbers and dates you can rely on. I can now do that.
As you know, we have been reviewing approximately 175,000 timely filed claims. By Friday May 9 we will have issued about 160,000 letters of determination regarding those claims. Another 10,000 or so letters of determination will be sent before the end of May. There are a few thousand claims that will require additional time to review, because of conflicting information regarding the amounts claimed. We will send letters to this last group of claimants as quickly as we are able. Bottom line, we will have letters out to more than 95% of the claimants in the next few weeks.
If you have not yet received your letter of determination, please be patient; it is coming. If you have already received a letter, or when you do, I encourage you to respond as soon as you are able.
You also are anxious to know when we will begin making distributions on claims. This month we will file a motion with the Court asking permission to make an interim, partial distribution on claims. Our goal is to distribute now an amount equal to 40% of each reconciled claim using the "rising tide" method of calculation already approved by the Court. My best guess is that we will begin making distributions in mid-summer.
I will also be reserving cash to distribute to holders of claims that have not yet been determined and allowed. When your claim is allowed, you will receive distributions in the same total amount you would have received if your claim was allowed in the first batch of claim determinations.
This first distribution will not be of all the funds I'm confident we will ultimately be able to return to claimant victims. We continue to collect receivership assets from financial institutions and those who took more money out of Zeek Rewards than they put in. We have sued more than 9,000 of these "net winners" in the United States. We will soon sue net winners who live outside the United States. I remain hopeful that we will add tens of millions of dollars to the pool from which we will make final distributions to claimant victims. Unfortunately, these efforts will take quite a long time, maybe years. I will not be permitted to make final payments until all recoverable assets have been collected, but there will be an additional, final distribution at some point.
Also, next week we will send out thousands of amended IRS Forms 1099 for 2011 and 2012. We have determined that Rex Venture Group often miscalculated the amount of money that should have been on the 2011 forms. There also were some errors for 2012 because of inadequate and erroneous records of the company. Thousands of affiliates may have paid taxes for 2011 and/or 2012 that they did not owe because of incorrect 1099s. If you receive an amended 1099 I encourage you to consult with a tax professional.
I know this process has taken longer than you, or I, would have liked. I can only assure you that the receivership team has worked diligently to return as much money as possible, as quickly as possible, to victim claimants. Our efforts on your behalf continue. Thank you for your continued support and patience.
Since my appointment as Receiver, I have said that I intended to investigate and file legal actions against those who created and operated the ZeekRewards scheme and to pursue claims to recover the money paid to the scheme’s net winners. After careful analysis of Rex Venture Group’s (“RVG”) written and electronic records, the review of hundreds of thousands of documents and numerous interviews with relevant witnesses, on Friday, February 28th, I filed lawsuits in the United States District Court for the Western District of North Carolina to achieve both those goals. The Complaints are public records, and copies of both Complaints have been posted to the website.
Both actions describe in detail the ZeekRewards Ponzi and pyramid scheme and how it was operated from January 2011 to August 2012. In the scheme, over 700,000 participants lost over $700 million dollars. The first action, Kenneth D. Bell v. Paul Burks, Dawn Wright-Olivares, Daniel Olivares, the estate of Roger Plyler, Alexandre de Brantes and Darryle Douglas, Civil Action No. 3:14-cv-89 asserts claims for breach of fiduciary duty, unjust enrichment, the return of fraudulent transfers and other claims against six of the scheme’s insiders. It asks the Court to order the defendants to repay the losses caused by their unlawful conduct and return the money RVG paid them.
The second action, Kenneth D. Bell v. Todd Disner, et al., Civil Action No. 3:14-cv-91, makes claims against more than 10 of ZeekRewards’ largest “net winners” in the United States asking that the Court order them to repay the net winnings they received from the scheme. Each of the named defendants won in excess of $900,000 (either individually or together with another family member or through their shell corporation). As described in detail in the lawsuit, because ZeekRewards’ net winners “won” (the victims’) money in an unlawful Ponzi and pyramid scheme, they are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims.
This second action also includes class action claims against approximately 9,000 ZeekRewards net winners in the United States who each won more than $1,000 in ZeekRewards (claims against net winners outside the U.S. will be pursued in future actions). The total amount won by these net winners exceeds $200 million. As explained in the Complaint, the law permits the Receiver to bring claims against a class of defendants where the underlying facts and legal issues are similar against the members of the class – like in this case where they all won money in ZeekRewards. The Receiver has asked that the Court appoint the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the net winner class. A list of those individuals whom the Receiver believes won more than $1,000 and therefore would be included in the class can be found here. If you are on the list, you are not required to do anything at this time, although you may, of course, discuss this matter with legal counsel if you choose to do so. However, I do ask all those on the list to complete a short contact information form so that those persons can be promptly notified of important information as the case moves forward.
As discussed above, the goal of the lawsuit against net winners is simply to obtain the return of the money paid out to net winners in excess of the amount of money they paid to RVG. Previously, I have offered to discuss settlement of the Receiver’s claims against net winners in an effort to recover this money without the need for litigation. The Court has approved over 175 settlement agreements, with many allowing the repayment of the settlement amount over time on a negotiated payment schedule. Although litigation against net winners has now begun, and I intend to pursue it vigorously to obtain Judgments, including interest, against all defendants and class members, I remain willing to settle the Receiver’s claims with those willing to repay a significant portion of their net winnings. Net winners who want to discuss settlement should indicate their interest by email to zeeksettlement@mcguirewoods.com.
I am and have been grateful for the continuing support and patience of affiliate victims.
We have recently added a link on Zeekrewardsreceivership.com that will allow you to check the status of any timely, fully submitted claim(s) that you filed through the Claims Portal (the “Status Check Link”). The Status Check Link can be accessed at the following address: https://cert.gardencitygroup.com/zrwdet/fs/home. The Status Check Link will allow you to log in to a webpage using the userid and password you selected when you registered on the Claim Portal. After logging into the Status Check Link, you will be brought to a webpage that will inform you whether your claim determination has been issued and will also permit you to confirm or update your contact information, as necessary. Please make sure that any contact information that you submitted is up to date so that when a claim determination for your claim is completed, you will receive notice that your claim determination has been completed. If your claim has been determined, upon logging in, you will be prompted to review your claim determination.
If, after logging in, the Status Check Link shows that your claim has not yet been determined, please be patient. We are working hard to determine all fully submitted claims of Affiliates as quickly as possible. Please do not call or email me to request the status of your claim as this will slow the claim determination process for all parties. Moreover, all entities making such requests will, to the extent they receive a response from the Receivership Team, be directed to the Status Check Link to obtain such status.
If you cannot log in after following the Status Check Link because you cannot remember your userid or password, you will be able to recover these items from the website.
We have located the account associated with the Registration ID and password which you have tried to use to log in to check the status of a claim. However, our records indicate that no claim was finally submitted for this Registration ID.
Before contacting the Receivership Team however, please confirm that you do not have a separate Registration ID under which you have filed a completed claim by clicking on the link below and selecting “Forgot Registration ID” and entering the email address that you have used to register. An email will be sent to the email address which you provide and that email will contain a list of Registration IDs associated with that email address.
If you believe this is an error, please contact us through the address listed in that message and we will evaluate your assertion.
If you filed a claim by an alternative method approved by me in writing, you will receive your claim determination through a paper submission.
Finally, we wanted to update you on the claims reconciliation process. We are nearing the completion of the determination of more than 40,000 additional Affiliate claims. These claim determinations will be finalized in the next few weeks and will be sent out in large groups. We will continue to send email notices of determination to all individuals holding such claims. Please check to see if your claim has been determined using the Status Check Link listed above.
Thank you again for your patience and support in this process.
Many who have received a Letter of Determination are confused about the amounts recognized. For every claim we "recognize" two amounts: the amount of money the claimant paid to Rex Venture Group/ZeekRewards (referred to as "Receivership Defendant") before August 17, 2012, and the amount of money Rex Venture Group/ZeekRewards (again referred to as "Receivership Defendant") paid to the claimant before August 17, 2012. Both numbers are important in determining how much money will be paid to each claimant once the Court approves a Distribution Plan. Some claimants look at the line showing "Payments from Receivership Defendant" and mistakenly think this is the amount of their claim recognized by the Receiver. "Payments from the Receivership Defendant" is simply the amount (if any) paid to the claimant by Rex Venture Group/ZeekRewards before August 17, 2012, that is, before the Court appointed the Receiver. It is NOT the amount of the recognized claim. Claimants can Accept both of the amounts ("paid to" and "received from"), or object to one or both of the amounts.
Many claimants ask if completing the W-9 or W-8 (and perhaps later receiving an IRS Form 1099) means they will have to pay tax on a future distribution from the Receivership. Receiving a Form 1099 does not necessarily mean that a claimant will owe taxes on the future distribution. Each claimant's tax situation is different, so I encourage each claimant to consult with his/her tax preparer or professional advisor. We are simply required, by applicable law, to report to the IRS if the Receivership distributes more than $600 to any claimant.
On December 20, 2013, the United States Attorney for the Western District of North Carolina filed federal charges of Conspiracy to Defraud the United States against Dawn Wright Olivares and Daniel C. Olivares, along with the plea agreements that each defendant entered. The Government also filed a motion asking the Court to appoint Kenneth D. Bell as Special Master in this criminal proceeding to make proposed findings of fact and recommendations to the Court regarding the identity of victims and the proper amount of restitution owed to such victims, among other items. The Court granted this motion.
A copy of the Bill of Information, Plea Agreements, Motion to Appoint Special Master, Order Appointing Special Master, and the press release from the U.S. Department of Justice are available at the links below.
On December 20, 2013, the Securities and Exchange Commission (SEC) filed a complaint against Dawn Wright-Olivares and Daniel Olivares alleging the unregistered offer and sale of securities, fraud in the offer and sale of securities, and fraud in connection with the purchase and sale of securities. To settle the SEC's charges, both defendants consented to judgment. Wright-Olivares agreed to pay at least $8,184,064.94 and Olivares agreed to pay at least $3,272,934.58. A copy of the SEC's complaint, both consents, and the SEC press release are available at the links below.
The Receiver held a press conference on Friday, December 13, 2013, in Lexington, North Carolina at the site of the Receivership auction. At this press conference, the Receiver discussed the status of the Receivership claims process, among other items. Click the link below for a video of the relevant portion of the press conference.
Many of you seem to be confused about an email notice that was sent to you late last week or over the weekend. We sent you notice that we filed with the Court a Motion For Order Approving Distribution Procedures and Certain Other Related Relief because we are required to do so. We want you to know what we are planning to do in this case. There is nothing you need to do regarding that motion unless you want to file an objection with the Court to our plan for eventually making distributions to recognized claimants or the other relief requested in the motion.
The filing of this motion does not mean that we are about to begin making distributions on claims. Please read my letter posted on December 13, 2013 for more detail on where we are in that process.
Please do not call my office or send emails to me asking for a “status” on your claim. I simply cannot respond individually to as many as 170,000 claimants. Also, do not call or email me with change of email address or other contact information. FAQ 32 on this website tells you how to update your contact information.
I will post an update on this page when Claim Determinations begin going out later this month.
The Receiver has given notice of his intention to sell at auction certain real and personal property of the Receivership Defendant. The real properties will be sold at public auction to be held on the 16th day of December, 2013, at 12:00 p.m. at 4095 Old Salisbury Rd., Lexington, Davidson County, North Carolina. The auction of these properties will be in conjunction with the personal property auction that will be held the 16th and 17th of December, 2013 commencing at 9:00 a.m. both days.
ZeekReceiverDay2), or contact Iron Horse Auction Company at (800) 997-2248 or (910) 997-2248.
For Notice of Public Auction of Real and Personal Property here.
On December 12, 2013, the Receiver filed a Motion Requesting an Order Approving Distribution Procedures.
On October 22, 2013, Judge Graham C. Mullen issued an Order approving an extended claims deadline of December 1, 2013 at 11:59 P.M. (prevailing Eastern Time) for certain parties (the “Extended Period”). The only entities that are permitted to assert claims during the Extended Period are (i) affiliates whose financial institutions paid the Receiver on or after August 1, 2013 for stopped payment instruments and are thereafter charged or debited by their financial institutions for these items and (ii) financial institutions seeking to file a subrogation claim on behalf of their affiliate customers after paying stopped payment instruments to the Receiver on or after August 1, 2013.
Please see FAQ 29 for additional information.
THE CLAIMS FILING PERIOD FOR ZEEKREWARDS CLOSED AT 11:59 P.M. (PREVAILING EASTERN TIME) ON SEPTEMBER 5, 2013.
On May 8, 2013, Judge Graham C. Mullen issued an Order approving (I) Claims Process, (II) Setting of Bar Date, and (III) Approving Notice Procedures. Pursuant to that order, the claims filing period opened May 15, 2013 and closed September 5, 2013.
On August 17, 2012, the Securities and Exchange Commission ("SEC") filed a Complaint in United States District Court, Western District of North Carolina, Charlotte Division, against Rex Venture Group, LLC ("Rex Venture") d/b/a ZeekRewards.com ("ZeekRewards"), and Paul R. Burks. The SEC alleges that Rex Venture and Burks fraudulently offered and sold securities in an unregistered offering as part of a combined Ponzi and pyramid scheme.
On August 17, 2012, Judge Graham C. Mullen issued an Order appointing Kenneth D. Bell of McGuireWoods LLP as temporary receiver (“Receiver”) for Rex Venture Group, LLC d/b/a ZeekRewards.com. The August 17th order directs the Receiver to, among other things, take control and possession of and to operate the Receivership Estate, and to perform all acts necessary to conserve, hold, manage and preserve the value of the Receivership Estate.
This website will be the Receiver's primary means of communicating with customers and the public. Please check back periodically for additional information.
FAQ 32 - How do I update my contact information (address, phone number, email address) if it has changed from when I originally submitted my claim(s)?
If you would like to update the contact information (address, phone number, email address) you provided in a previously submitted claim, you may do so by and clicking on "Update/Change Contact Information for a Previously Filed Claim." You may then log into the address portal by using your logon information for the Receiver's Claim Portal (not your user name and password for your original Zeek Rewards account). Upon logging in, you will see the contact information you previously provided in your prior claim submission. Please make any necessary updates/changes to your contact information on this page and submit this information. The Receiver may ignore any change in this information submitted through alternative means.
FAQ 31 - I received an E-mail requesting further information regarding my ZeekRewards User Name, is this a legitimate request?
Yes, the Receivership Team is seeking to reconcile claims with the books and records of ZeekRewards and is requesting further information from those individuals who either did not provide a ZeekRewards User Name or provided a ZeekRewards User Name that was not valid. Please follow the link provided in that E-mail so that you can provide a valid User Name, or inform the Receivership Team that you cannot locate or do not have a ZeekRewards User name. If you did not receive an E-mail requesting this information, you are not required to take further action at this time.

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