Claimants are able to check the status of their claim by accessing the following Status Check Link https://cert.gardencitygroup.com/zrwdet/fs/home. The Status Check Link allows you to log in to a webpage using the Registration ID and Password you selected when you registered on the Claims Portal.
ANNOUNCEMENT FROM THE RECEIVER – July 25, 2016
On Thursday July 21, 2016, following a three week trial, a federal jury in the Western District of North Carolina found Paul Burks guilty of mail and wire fraud, and conspiracy. Each of these three counts carries a maximum prison term of 20 years and a $250,000 fine. Burks was also convicted of tax fraud conspiracy, which carries a maximum term of imprisonment of 5 years and a $250,000 fine.
Burks was allowed by the Court to remain on bond pending sentencing, which has not yet been scheduled. Victims of Mr. Burks’ crimes have the right to attend his sentencing hearing. We will post the date, time and location of his sentencing hearing when it is scheduled by the Court.
ANNOUNCEMENT FROM THE RECEIVER – July 1, 2016
The trial of Paul Burks in United States District Court, Western District of North Carolina (Charlotte) is scheduled to begin on July 5, 2016. The trial is open to the public. We will be monitoring the trial and will keep you updated. The indictment against Mr. Burks can be viewed at this link.
Also, yesterday we filed a motion for summary judgment, a memorandum in support of the motion and exhibits in the litigation against named defendants and the defendant class of net winners in the United States. By this motion we are asking the Court to rule as a matter of law that ZeekRewards operated as a Ponzi and pyramid scheme, and to find that the net winnings received by the net winners must be returned to the receivership for distribution to claimants with recognized claims. The motion, memorandum and exhibits may be viewed at this link.
The defendants will have an opportunity to respond to this motion. Thereafter, the Court may schedule a hearing. If the Court rules in our favor and grants our motion, the liability of the named defendants and class members will be established. We will then ask the Court to approve a process to determine the amount of judgment, or money owed, by each of the defendants to the receivership. This process will take several months, but the filing of this motion is a significant event for the receivership and claimants. The face value of these claims is in excess of $200 million. How much of that we will be able to collect for distribution to claimants with recognized claims is uncertain at this time. However, we will pursue collection of these judgments vigorously, and expect the ultimate amount collected will be a substantial sum.
ANNOUNCEMENT FROM THE RECEIVER – May 6, 2016
Many foreign Affiliates have reported that they are unable to deposit or cash their distribution checks due to local banking fees and regulations. We filed a motion with the Court seeking a remedy for this problem so that all Affiliates, could receive their distributions. On April 27, 2016, the Court entered an Order that permits the Receiver to pay certain foreign Affiliates by wire transfer in US Dollars. I sought this relief because various foreign Affiliates that were eligible to receive distributions contacted me to alert me to the fact that they were unable to cash the physical checks denominated in US Dollars that they had received. This relief will allow me to pay those foreign Affiliates who complied with the Court mandated process, but were otherwise unable to recover on account of their Allowed Claim because of their location.
If you are eligible to receive your distribution by wire transfer, my team will be sending you an email explaining how you may exercise the option to receive your distribution by wire transfer. However, if you are eligible to receive your distribution by wire transfer and you choose to do so, all of the fees and costs associated with the payment of the wire will be deducted from your Distribution (including without limitation the fees and costs associated with the sending of the wire by the estate, the receiving of the wire transfer by your bank, any currency conversion fee associated with converting the wire transfer from US Dollars to your local currency, any bank charges, and any canceled check fees incurred on account of any uncashed check which was previously issued to you. In addition, you agree to pay any costs associated with canceling uncashed checks previously issued to you). If you request a wire transfer and it is determined that the cost of the transfer will be greater than your Distribution, your Distribution will be sent by check.
In order to receive the wire transfer, you must submit all of the requested banking information via the Claim Portal. You must also give the estate a release in regard to any misdirected wire transfer caused by the entry of any incorrect banking information.
Wire payments will follow the same schedule as check Distributions and will not be made until the Release and OFAC have been submitted.
This message is directed primarily to foreign, or non-US resident, Affiliates. It is not to announce another round of distributions, but there will be at least one more distribution to all eligible claimants. I understand that all you really want to know is “when and how much.” I’ll do my best to answer those questions. There are three major sources of funds for future distributions. First, as you know, we are in litigation with more than 9,000 US “net winners,” those who took more money out of the ZeekRewards scheme than they put in. We remain confident of success in that litigation, and that it will result in the collection of tens of millions of dollars for distribution to qualified claimants. We expect to be able to ask the Court for an Order in our favor this summer. If the Court grants our request we will begin collecting those funds shortly thereafter. Second, we are in litigation with three financial services entities to recover more than $13 million. Hopefully that matter will decided this summer as well. Third, we are holding in reserve tens of millions of dollars earmarked for those 41,000 claimants who would have already received distribution checks if they would simply log into the Claim Portal and electronically sign the Release and OFAC certification. If those claimants do not complete the process to become eligible for a distribution before the end of the Receivership we will ask the court to allow us to distribute those funds to claimants who have.
The bottom line is that we expect additional recovery of tens of millions of dollars for distribution in this year or next. I’m sorry I can’t be more precise; litigation is slow and uncertain. You now know as much as I do.
Thank you for your support as we continue to work on your behalf.
ANNOUNCEMENT FROM THE RECEIVER – March 28, 2016
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.
Details of the receivership’s potential claims and the settlement may be accessed and reviewed by clicking on the highlighted links below:
Motion to Approve Settlement and Settlement Agreement
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.
Thank you for your support as we continue to work on your behalf.
RECEIVER FILES MOTION TO RECOVER AND SECURES INTERIM FREEZE OF $13 MILLION IN OUTSTANDING RECEIVERSHIP ASSETS
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.
The Receiver’s legal filings and the Court’s order freezing the funds pending resolution of the Receiver’s motion are available at the links below:
The Receiver’s Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets
Memorandum in Support of the Receiver’s Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets
ANNOUNCEMENT FROM THE RECEIVER – November 5, 2015
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.
ANNOUNCEMENT FROM THE RECEIVER – October 22, 2015
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.
ANNOUNCEMENT FROM THE RECEIVER – August 5, 2015
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 greatly appreciate your continued support and patience as we work on your behalf.
ANNOUNCEMENT FROM THE RECEIVER – June 18, 2015
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.
ANNOUNCEMENT FROM THE RECEIVER – February 12, 2015
On February 10, 2015, the Court granted the Receiver’s Motion for Class Certification in the lawsuit Bell v. Disner et al., Case No. 3:14-cv-91 (W.D.N.C.). In that case, the Receiver alleges that because ZeekRewards’ Net Winners “won” (the victims) money in an unlawful combined Ponzi and pyramid scheme, the Net Winners are not permitted to keep their winnings and must return the fraudulently transferred winnings to the Receiver for distribution to the ZeekRewards victims. A copy of the Order certifying the class and the initial Complaint in the lawsuit are available at the following links:
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.
The Receiver’s Sealed Ex Parte Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets
Memorandum in Support of the Receiver’s Sealed Ex Parte Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets
ANNOUNCEMENT FROM THE RECEIVER – February 5, 2015
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.
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