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Entries in zeek rewards (1)

Friday
Oct042013

Zeek Receiver Seeks To Auction Former Headquarters, Inventory

The court-appointed receiver overseeing the fallout from the $600 million Zeek Rewards Ponzi scheme has filed papers (the "Filing") seeking court approval for the public auction of real and personal property to raise funds for nearly two hundred thousand victims.  The Receiver, Kenneth Bell, has recovered over $300 million thus far, and last month announced that 174,000 victims had submitted claims for aggregate losses of approximately $550 million.  Along with the former warehouse and office of Rex Venture Group, the parent company of Zeek Rewards, the Receiver is also seeking to dispose of over 1,000 pieces of personal property that include office furniture, music, and even entertainment memorabilia.

The shutdown of Zeek Rewards by the Securities and Exchange Commission ("SEC") in August 2012 exposed one of the largest Ponzi schemes in history, if not the largest based on the sheer number of victims.  The SEC announced that, while Zeek had daily investor obligations of approximately $45 million, it had only $225 million on hand - meaning that the scheme could have collapsed within a week.  Zeek had become well known through its representations that investors could earn daily "awards" of 1.5% based on a daily commitment of no more than 5 minutes.  The scheme featured a referral-based network that rewarded users based on investors they attracted to the company, and over 1 million would join - including over 100,000 that would ultimately profit from their investment.  

After his appointment, Bell began marshaling assets for the benefit of investors.  This included securing Zeek's former headquarters, located in Lexington, North Carolina, as well as other real estate the company had purchased, such as a warehouse holding various personal property.  The Filing seeks court approval for the sale, by public auction, of Zeek's former headquarters and the warehouse, as well as the personal property collected thus far.  According to Nash Dunn at the Lexington Dispatch, this personal property includes home and office furniture, Zeek promotional material such as water bottles and coffee mugs, and approximtely 600 items relating to country music memorabilia.  

Under the procedures proposed by the Receiver, the real estate and personal property will be sold through public auction by a professional auctioneer company.  The sale, which is proposed to take place within 60 days of a court order approving the sale, will be heavily advertised and also be broadcast over the internet to ensure maximum exposure.  The Receiver cites maintenance and upkeep costs as an incentive to sell the property, as well as additional funds for the benefit of victims.

In a quarterly report filed for the period ending July 31, 2013, Bell stated he had recovered approximately $325 million for investors.

Memo in Support of Motion to Approve Sale of Real Property by jmaglich1