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

Entries in ken bell (2)

Thursday
Sep132012

Zeek Receiver: Nearly $300 Million Recovered, Clawbacks Likely

The receiver appointed to recover assets in the $600 million ZeekRewards Ponzi scheme announced today that he had recovered nearly $300 million in assets for eventual distribution to the estimated one million victims.  The receiver, Ken Bell, also estimated that "tens of millions of dollars more" are still unaccounted for, and hinted at their eventual recovery as well.  While victims certainly should be optimistic about the developments to date, Mr. Bell urged patience going forward, stating that "this process will take months, if not longer."

Also of note in the letter was Mr. Bell's most pointed statements to date that he intends to pursue clawback litigation against those "affiliates who took more out of Rex Ventures than they put in."  While many victims received few, if any, distributions and instead chose to re-invest their gains, some affiliates were rumored to have withdrawn tens or even hundreds of thousands of dollars in excess of their initial contribution.  Citing principles of equity, Mr. Bell declares that "in order to make everyone as whole as possible, those who profited from participating should surrender their gains" (emphasis added). Courts routinely approve the use and legal theory surrounding clawbacks, and they are very difficult to defend.

It also appears that the beginning of a claims process is near.  Mr. Bell indicated that an "information template" will be posted to the Receivership website soon that, while it will not function as an official claims form, will allow the Receivership to begin collecting victim information and also enable an accurate method of communication as the case proceeds.

Finally, and likely in response to increased and rampant speculation over recent comments made by some affiliates in which they purported to have spoken to the Receiver or the SEC about the negative merits of the case, the Receiver issued a strong statement denying the rumors.  According to Mr. Bell, false information is being circulated by these claimants" (emphasis added). Going forward, Mr. Bell urged victims to consider only what the SEC posts on its website for its position on the matter.

Ponzitracker published an article several days ago consistent with Mr. Bell's comments after having been forwarded an email that purported to contain comments attributed to the SEC concerning the "weakness" in Zeek's case.  In a conversation with a top SEC official involved in the litigation, Ponzitracker was able to confirm that the statements being circulated were false.

Wednesday
Sep052012

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

It has now been over one week since Ken Bell, the court-appointed receiver overseeing ZeekRewards ("Zeek"), held a press conference to brief various members of the media about this progress thus far and plans for the near future. In his remarks, Bell indicated that one of his main priorities going forward was to continue gathering assets for eventual distribution to victims. This included cashiers checks deposited, but not cashed, by Zeek investors just before the scheme's collapse. Following the press conference, Mr. Bell posted an update to his website that included a letter updating investors and additional answers to investor questions.

Since that meeting, a review of the court docket reveals that the recovery of assets continues to be the focus of Mr. Bell and his team. In the past ten days, various financial institutions have submitted sworn statements in response to the court's earlier asset freeze indicating how much, if any, Rex Venture Group ("RVG") maintained in bank accounts. RVG is the parent company of ZeekRewards. Those reports, from institutions such as Charles Schwab and NewBridge Bank, showed that tens of millions of dollars were currently being held in the name of RVG or Paul Burks, Zeek's founder. Additionally, Mr. Bell's lawyers have sparred with Burks in an attempt to gain control of his personal assets.

Shortly after the Securities and Exchange Commission ("SEC") filed suit against Zeek, United States District Judge Graham Mullen issued an order appointing Mr. Bell as receiver. That order listed the various assets over which Mr. Bell would have authority over, including assets held or fraudulently transferred by RVG. These orders are standard in receivership proceedings, and their wording rarely varies. However, Zeek was somewhat unique, in that it highly encouraged the use of cashier's checks to fund a new investor's account. Different from personal checks, a cashier's check operates like cash upon endorsement by the maker. According to the receiver, "numerous" cashier's checks and other forms of payment potentially totaling several million dollars were received either on or after the date the SEC shut down Zeek, Because of this, Mr. Bell sought the Court's approval (the "Motion") to clarify the language of the order appointing receiver to explicitly include those forms of payment as receivership assets.

The Motion also sought to freeze assets in possession of Burks and other third parties, including his family members. In support, Bell noted that while Burks was estimated to have secretly misappropriated roughly $11 million from Zeek, nearly $7 million of that sum was no longer in Burks' possession or control, including $1 million transferred to certain family members.

Not surprisingly, while Burks did not object to the inclusion of uncashed cashier's checks into the receivership estate, he strongly opposed any attempts to now "include Mr. Burks' personal accounts." Noting that the receiver's basis for this request centered on the SEC's allegations in its complaint - which Burks had neither admitted nor denied in his settlement with the SEC as is typical of SEC judgments - Burks' attorney argued that no other evidence existed in support. Additionally, Burks noted that, in addition to the $4 million penalty paid to settle the SEC's allegations, the IRS received more than $5 million in income tax assessments for 2011 and 2012. Arguing that Mr. Bell was overreaching, Burks' lawyers touted his roots in Lexington, marital status, recent successful bouts with cancer, and lack of prior legal troubles. In other words, Burks was not a flight risk.

Apparently swayed, Judge Mullen declined to grant the receiver's request to include Burks' personal accounts in the asset freeze, but did allow the amendment of language in the order appointing receiver to include cashier's checks and other forms of payment as receivership property. However, the receiver certainly has the ability to bring future lawsuits against Burks and/or his family members once he has completed his analysis of Zeek's financial records and been able to trace the flow of assets in and out of Zeek. This investigation is expected to take weeks, if not months, to complete.

The Receiver's Motion to Amend is here.

Burk's Response is here.

Judge Mullen's Ruling is here.