Search
Most Recent
AdSurfDaily Agape agent American Integrity Aronson asset sales Attorney av bar reg baker bank bank of america Bankruptcy baumann bermudez black diamond blackwell bridge loan bull cattle CD celebrity cftc charity china China Voice church cityfund claims claims process clawback commission commodities commodity pool computer program congress Crown Forex currency death sentence denver diamond bar disgorgement Distribution Dodd-Frank donnan Dreier dunhill e-bullion elderly E-M Management SEC england Fairfield family FBI FDIC Fees female ponzi scheme financial advisor fine FINRA football forex fraud fufta fugitive Full Tilt gift card guilty plea GunnAllen hawaii Heckscher HSBC india invers forex janvey John Morgan JP Morgan kansas ken bell kenzie las vegas lawsuit lawyer libya Lifland machado Madoff Marian Morgan metro dream homes mets milberg millers a game Morgan European Holdings mortgage multiple schemes NCAA Net Winner new jersey notes objection Oxford Patrick Kiley paul burks PermaPave Pettengill Petters Picard poker Ponzi ponzi scheme ponzi scheme database ponzi scheme list Prime Rate profitable sunrise prosun pta puerto rico Rakoff real estate receiver receivership regulation relief defendants religion remission repeat offender restitution Rothstein RRA sec sentencing simmons sipa sipc snelling standing stanford stettin subpoena td bank telexfree treasury bonds treasury strip Tremont Trevor Cook UBS UFTA uga utah venture advisors Wachovia wilpon wire fraud woman zeek zeek rewards zeekler zeekrewards
Social
Recent SEC Releases
« New Mexico Ponzi Schemer Sentenced to Twelve Years in Prison | Main | Man Who Operated Charity As Ponzi Scheme Sentenced to Eight Years in Prison »
Monday
Sep102012

SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned

On August 17, 2012, the Securities and Exchange Commission (“SEC”) filed an emergency enforcement action to shut down ZeekRewards (“Zeek”), calling it a massive $600 million Ponzi scheme.  According to the SEC, while Zeek promised participants a daily payout of “net profits,” these profits were nearly exclusively derived from the funds of new investors – the classic hallmark of a Ponzi scheme.  At the SEC’s request, the court then approved the appointment of Ken Bell as the receiver, who would be tasked with gathering and safekeeping assets for eventual distribution to victims. 

Emotions have run high since Zeek’s shutdown, as many lament their losses amid what was such a promising operation that seemingly defied the age-old “if it’s too good to be true..” mantra.  However, a select (and growing) group has taken their dissatisfaction to another level, soliciting the assistance of other victims to fight the “illegal” and “unlawful” actions taken by the SEC.  While their rousing rhetoric is critical of the SEC, recent representations made regarding the SEC's handling of the case may have crossed the line from opinion to misrepresentation.  Indeed, an SEC official briefed on the claims by Ponzitracker explicitly refuted such allegations.

Shortly after the SEC stepped in, several groups, including “Zeek Rewards Affiliates United Against The SEC” and “Zteambiz” were formed, and appear to operate in tandem.  Zteambiz describes itself on its website, www.zteambiz.com, as “a professional organization designed to secure competent legal counsel to prevent further damage caused by the actions of the SEC actions against Rex Venture Group aka, Zeek Rewards.”  Dave Kettner and Robert Craddock are several of the individuals behind these sites, as evidenced by multiple postings attributed to them.  Using the site, both have solicited Zeek victims to “donate” towards a fund being set up to retain a top law firm to fight the SEC’s allegations and reopen Zeek.   A September 5, 2012 update from Kettner implored victims to donate if possible to be added to the “protected group.”  The response seems to have been positive, and on August 30, 2012, a notice was posted indicating that SNR Denton, a well-known international law firm, had been retained:

“Important notice:

SNR Denton US LLP represents Fun Club USA and all inquiries about this representation should be directed to Fun Club USA at xxxxxxxxx. SNR Denton’s legal representation is limited to Fun Club USA; SNR Denton does not represent and does not have an attorney-client relationship with affiliates of Zeek, Zeek Rewards, Rex Venture Group LLC or with any individual or party that chooses to provide funds to Fun Club USA.”

The notice is seemingly at odds with representations contained in the "People Helping in the Legal costs” tab on Zteambiz, which indicated that those who had donated – numbering over 6,000 as of September 1, 2012 when it was last updated – were “now being represented by counsel, to protect their moneys (sic) earned by Zeek Rewards and monies currently held by Zeek Rewards.”  The notice, which has since been removed, was clear that “SNR Denton’s legal representation is limited to Fun Club USA."  A quick search on Florida’s Division of Corporations website yielded a “Fun Club USA Inc.” registered on August 28, 2012.  The President of Fun Club, as shown on its Articles of Incorporation?  Robert Craddock. 

Zteambiz has been vocal in its criticism of the SEC, alleging that “all the pages that were submitted…by the SEC that froze the assets of Rex Venture Group, LLC has all been one sided and what we believe to be a misrepresentation of the truth and facts of what Zeek Rewards was as a viable and legal business.”  Additionally, Zteambiz claimed that “the SEC mislead (sic) the judge” in securing an emergency asset freeze.

This past Saturday, an email from “Dave” updated recipients based on information recently learned from Craddock.  One of the first revelations was that SNR Denton had decided to no longer represent Zeek, reportedly due to the “tons of calls” received by the firm from victims that interfered with Denton’s “entire law firm operations.”  A new law firm was said to be in the works, whose identity would remain a secret until court filings were unveiled “early next week.”  What piqued the interest of many, however, were the representations made immediately after.  The paragraph is reproduced below:

Here is the great news...The law firm has already talked to the SEC and the NC DOJ. On Thursday, Robert got a call from one of our attorneys regarding the conversation that he had with the SEC. Here
is what he said:

The SEC acknowledged that there are a couple of problems with the case against Zeek Rewards and Rex Venture group. Here are the problems:
1.    We (the SEC) are not able to find a victim in this case. We are not able to find anybody at this time that has been harmed by Zeek Rewards.
2.    We (the SEC) are having a hard time finding a security. In the complaint, it said that Zeek was selling securities and was an investment scheme.
Based on their (the SEC) new knowledge of the Zeek Rewards business model, they are having a hard time moving forward in making their case. And they are now looking for a path or way to back out of this.

These apparent admissions by the SEC quickly spread over the internet, with dozens of websites frequented by the multi-level marketing community accepting the statements as fact and quickly proclaiming that the SEC was close to capitulating.  

The claims seem skeptical for several reasons.  First, it is highly unlikely that these kind of admissions would be made to a potentially adversarial party and/or attorney.  Second,  both Rex Venture Group and Paul Burks have each already entered into a consent judgment agreeing to waive any right of appeal, and, in Burk's case, paying a $4 million civil penalty.  Further, a link to an information page established by the SEC now features prominently on the SEC's homepage, www.sec.gov.  

These suspicions were confirmed today after Ponzitracker spoke with a top SEC official familiar with the case.  After reviewing the allegations, the official, who declined to be named, labeled the statements as "inaccurate" and "false".  Additionally, it would be highly impractical for the SEC to make such moves and statements without allowing the receiver to complete his initial investigation and make appropriate recommendations.

Craddock is no stranger to controversy in his affiliation with Zeek and Rex Venture Group.  Several months before Zeek was shut down by the SEC, a blogger who goes by the name of KSChang posted an article presenting a detailed look into the legitimacy of Zeek.  The article contained a wealth of information about Zeek, its past, and, perhaps most prescient, asked whether "ZeekRewards [is] a Ponzi Scheme?". However, shortly after the article was published, the site's administrator received a letter from a person purporting to act on behalf of Rex Venture Group alleging that:

It has come to our attention that your website Hubpages.com is broadcasting and delivering content that is both copyrighted and, Trademark Protected. In addition, the content constitutes a tortuous interference with us and our 1.2 million independent advertising reps around the world.

The following page was brought to our attention yesterday (July 21, 2012) and we would request this page to be removed before greater damage is done to our business model and reputation. 

The author of the letter?  Robert Craddock, on behalf of Rex Venture Group LLC.  The letter succeeded temporarily, as the article was removed by the site administrator while the claim was investigated.  Apparently not satisfied with the allegations, the article was allowed back online after six days.  KSChang provided a summary of his efforts while the site was down:

When I requested details from this person, he said he couldn't POSSIBLY create a list of what's untruthful or libelous and why about the hub by Monday. (I contacted him on THURSDAY). When I pressed for more details, he replied with veiled legal threats about "pursue all legal venues".

Less than three weeks later, the SEC confirmed the article's skepticism and shut down Zeek.  

The 9/8/2012 email is here.

The Fun Club USA Articles of Incorporation are here.

The "takedown" letter sent by Craddock is here.

Recent Zeek Coverage:

ZeekRewards Update: Banks Report Account Balances, Receiver Takes Fight For Cashier's Checks To Court

ZeekRewards Victims: What Happens Next

SEC Shuts Down Zeek Rewards, Alleges It Was $600 Million "Massive Ponzi Scheme" On Verge Of Collapse

PrintView Printer Friendly Version

EmailEmail Article to Friend

References (21)

References allow you to track sources for this article, as well as articles that were written in response to this article.
  • Response
    Ponzitracker - Ponzitracker - SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned
  • Response
    Response: Play roulette
    Thanks for enabling me to attain new ideas about pcs. I also possess the belief that certain of the best ways to keep your laptop in best condition is a hard plastic material case, or maybe shell, that suits over the top of one's computer. These kinds of protective gear are ...
  • Response
    Response: Play roulette
    Regards for helping out, wonderful info .
  • Response
    Response: Fake Oakleys
    What I think is great concerning the Wii fit is which is gets normally inactive men and women up and active. Exercise is boring for most of us. Getting up and enjoying yourself and burning calories wonderful bonus.
  • Response
    Response: zBvBZCqV
    Ponzitracker - Ponzitracker - SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned
  • Response
    UGG Boots made really effectively identified for becoming the makers of high high-quality footwear
  • Response
    Response: indexing backlinks
    Great Website, Keep up the useful job. Regards!
  • Response
    Response: deviantart.com
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    Response: Venus Factor
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    Response: Vigrx Plus Reviews
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    Response: Yatish
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker
  • Response
    SEC Admissions Of Weakness In Zeek Case "Inaccurate"; Tactics and Motivations of Zeek Victim Group Questioned - Ponzitracker - Ponzitracker

Reader Comments (2)

The "face behind the faces" here is a man named Todd Disner. He was one of the top "earners" in Zeek Rewards and his "down line organization" was the first to push this lawsuit effort. This isn't the first time Mr. Disner has tried to sue the government for closing his favorite ponzi scheme, below is a link the final dismissal of his effort to get Ad Surf Daily reopened:

http://www.patrickpretty.com/wp-content/uploads/2012/08/Doc-59.pdf

September 10, 2012 | Unregistered CommenterGlimDropper

What I have found most interesting is how closely these events dovetail what happened in the ASD Cash Generator claim. In the ASD Cash Generator case there were over 90 legal filings trying to claim standing in the case and all were denied for lack of standing.

I guess the people in Zeek believe since there are more members in Zeek than there were in ASD Cash Generator this will somehow tip the scale into their favor. What I find appalling is they are asking victims of Zeek to defray the cost of their legal action. These are the major earners in Zeek, and they don't need the rank and file members of Zeek helping them with their legal expenses.

Since Todd Disner's name has been mentioned, people should know that he solicited donations from the ASD members to help defray the legal filing he and Dwight Schweitzer made in their ASD Case claiming that it was for "all " the ASD members just like he is claimiing in the Zeek case should a filing be made. If you didn't pay the attorney he is not representing you. Todd and Dwight's case was dismissed just like all the others. This is a man who was bragging on YouTube about his $500,000 condo he bought from Zeek funds. Not exactly a pauper to need others to pay his legal challenges now is he.

September 11, 2012 | Unregistered CommenterLynndel "Lynn" Edgington

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>