Zeek Receiver to Host Conference Call December 17th to Update Investors; Clawback Lawsuits Imminent?

The court-appointed receiver tasked with recovering assets for victims of the $600 million ZeekRewards Ponzi scheme has scheduled a conference call intended to update investors on the progress thus far, as well as provide a forum for investors to ask questions.  In a letter posted to the Receivership website today, receiver Kenneth Bell announced that he would host an hour-long web-based conference call on December 17th at 5:00 PM EST.  Additionally, the call comes days after Mr. Bell took actions necessary before he may proceed with filing 'clawback' lawsuits against those investors that profited from the scheme.

Perhaps intentionally, the call comes almost exactly four months to the day since the Securities and Exchange Commission ("SEC") took over Zeek's operations and asked United States District Judge Graham Mullen to appoint Kenneth Bell as receiver.  Since his appointment on August 16, 2012, Bell has undertaken the self-described 'herculean' task of attempting to recreate and digest the financial records and inner-workings of a scheme that is now estimated to have had as many as 2 million victims and collective investor losses totaling approximately $600 million.  

Through several previous updates provided to investors, Bell has begun the transition from the initial phase of securing existing assets in his possession for the benefit of the Receivership Estate to the second phase of recovering assets not in his possession that rightfully belong to the Receivership Estate. One of Bell's highest priorities has been the identification of individuals (or, as Bell refers to them, Affiliate ID's) that were fortunate enough to receive distributions of principal and/or interest in excess of their original investment.  Bell has indicated that he intends to seek these "false profits", as they are commonly referred to in legal parlance, "from those who took out of Rex Venture more than they put in."  

Following up on his promise, Bell has already issued approximately 1,200 subpoenas to those individuals who withdrew the largest amounts of money from the scheme.  These subpoenas, containing wide-ranging demands for information concerning the use and location of profits obtained from the scheme, are expected to represent only the first wave of subpoenas to what Bell estimates are over 100,000 'affiliate ID's' that received false profits.

Additionally, the Receiver has also initiated the process required to acquire jurisdiction over individuals from whom he intends to recover funds or property representing proceeds traceable to the fraud.  As reported on ASDUpdates, after obtaining an Order Reappointing Receiver, Mr. Bell then initiated over 60 actions in various federal districts across the United States serving as notice of Bell's appointment as Receiver.  This process is required under 28 U.S.C. 754, which requires that a receiver seeking jurisdiction and control over property in a specific federal district must, within ten days after being appointed receiver, file copies of the complaint and order of appointment.  Importantly, these actions indicate that clawback lawsuits may be imminent.  

The conference call is scheduled for 5:00 PM EST on Monday, December 17, 2012.  Further information, including login information, is located here.  Additionally, callers are encouraged to email their questions to Mr. Bell ahead of the call at zeekrewardcall@mcguirewoods.com.