ZeekRewards Zeek Rewards Receivership Recovery Q&A, all sourced from news reports and experts, who is Robert Craddock?

BREAKING NEWS: ZEEKREWARDSRECEIVERSHIP.COM is now open for the claims process.

Please go to the website and register to file your claim for the money you lost. You will need to scan some documents and such as proof of your loss.

You can read the details at the receivership website.

Introduction

This is a real Q&A of frequently asked questions regarding the effort surrounding efforts to recover money from the Zeek scam, the largest Ponzi scam to hit the US regarding number of victims.

If you need information about the scam itself, please see [ Analyzing Zeekler and Zeek Rewards ]

All sources of information will be documented clearly. Accept only real information from real experts, not some random "upline" relaying info that cannot be verified!

This is a companion piece to [ Zeek Rewards scam shut down by SEC. What should you do now? ]

NOTE: For simplicity's sake, the "company" known as Zeekler, ZeekRewards, and Rex Venture Group will simply be referred to as "Zeek".

Latest updates:

09-NOV-2012 added info on the lawyer asking for $300 to respond to the subpoena

15-MAY-2013 claims process is now open at zeekrewardsreceivership.com!

Zeek Prosecution

Q: What was Paul Ray Burks and Zeek charged with?

A: Paul Burks, head of Zeek, and Zeek was charged with multiple violations of "Securities Act" and "Exchange Act" by the Security and Exchange Commission. The charges are as follows:

  • Unregistered offer and sale of securities
  • Fraud in offer and sale of securities
  • Fraud in connection of purchase or sale of securities

(source: SEC complaint, Zeek related Court documents, see end section for link, )

Q: What did Paul Burks do in response?

A: Paul Burks, after consulting with his lawyer (Noell P. Tin of Tin Fulton Walker & Owen, PLLC) and legal team, chose not to fight the allegations. Instead, he had entered a no contest plea, gave up control of the company to a court-appointed receiver, give up 4 million of his money, and cooperate with further investigations. A "final judgement" has been entered, and the case is now waiting for the receiver to do his job.

(source: Judgement as to Defendant Paul R. Burks , Zeek related Court documents, see end section for link, )

Q: So Burks did not plea guilty?

A: The plea entered was "no contest", which is normal for "white collar" crimes. See Wikipedia: "nolo contendere". It has the same immediate effect as a guilty plea.

Q: Can Paul Burks / RVG appeal the case?

A: No. The judgment specifically says the defendant had "waived any right to appeal from this final judgment", both for Paul Burks personally, and RVG (represented by Paul Burks as "managing partner").

(source: Judgement as to Defendant Paul R. Burks , Zeek related Court documents, see end section for link, )

Q: What agencies were investigating Zeek?

A: As of now, the only agencies that are CONFIRMED to be investigating Zeek are US Secret Service, Securities and Exchange Commission, and now, the Receiver Ken Bell. There are unconfirmed reports that several other agencies at both state and Federal levels are involved. (source: The Dispatch news)

Q: What happens now with Paul Ray Burks, head of Rex Venture Group / Zeek?

A: Burks is at his home in Lexington, with a security guard out front, and is not talking to the media. (source: The Dispatch, WFMY news)

Q: Will additional charges be brought against Burks?

A: Unknown at this time. Based on past history, very likely.

Q: Will charges be brought against other officers in Zeek?

A: Unknown at this time.

Q: Will charges be brought against top affiliates in Zeek?

A: Unknown at this time.

Q: How long has Burks known about the SEC actions? No affiliate knew anything until 17-AUG-2012, when the whole thing got shut down!

A: According to a motion filed by Burks' lawyer, Noell P. Tin, responding to receiver's motion to freeze more of Burks' personal assets for investigation, Burks likely have cooperated "for a period" (of unknown duration) before SEC took action on 17-AUG-2012.

Motion by Burks' attorney suggesting Burks have cooperated with SEC without telling any one.
Motion by Burks' attorney suggesting Burks have cooperated with SEC without telling any one. | Source

How long "a period" actually lasted is currently unknown. However, producing "hundreds of thousands of documents" doesn't happen overnight.

Add to that the company had cancelled the Red Carpet Event for the week after the shutdown, and cancellation of multiple training calls and leadership calls, in the previous week, would suggest they had at least a week's warning, possibly three.

Furthermore, it was pointed out that Daryl Douglas has not been seen since June 2012, and Dawn Wright-Olivares had not been seen since she was moved to CMO and Caldwell took over. However, there are unconfirmed reports that Dawn and Alex got married and went on a European honeymoon before all this went down.

One more data point... Caldwell is head of "White Head Solutions", which specialize in member compliance, according to their website. If RVG / Zeek had to get an outside consultant, with specialty in member compliance, to take over as acting COO, there is clearly a severe lack of leadership at Zeek in the months leading to the shut down.

Add to this is the fact that NC AG's office actually sent the civil information demand (CID) to Zeek back in JULY, and neither Zeek or AG's office chose to make this public.


Receiver Information

Q: What is a receiver?

A: A receiver is like a court-appointed bankruptcy, in case of financial fraud resolution, to liquidate all the assets and pay back as much money as possible to all the victims.

See wikipedia for exact definition: http://en.wikipedia.org/wiki/Receivership

Q: Why has a receiver been appointed for Zeek?

A: Paul Burks, owner, has accepted final judgement in the case brought by the SEC, and agreed to give up the company to the receiver for disposal and refund of all affected.

Q: Who is the receiver?

A: Ken Bell, an attorney for Macguire Woods LLP, was appointed by Federal Judge Graham C. Mullen as the receiver on 17-AUG-2012.

( source: Court order, ZeekRewardsReceivership official website )

Q: How do I get in touch with the receiver?

A: Info is available at www.zeekrewardsreceivership.com and info@zeekrewardsreceivership.com

Receiver is requesting patience from all victims, as he needs to devote his and his staff's attention to locate all the assets available for the eventual refund. All e-mail to the above email address will be read and cataloged.

( Source: ZeekRewardsReceivership.com statement 27-AUG-2012 )

Q: What do I have to do to get my money back?

A: Please wait until the receiver created a registration form for all the victims to fill out.

Q: When can I get my money back?

A: Unknown at this time.

Q: How much of my money can I get back?

A: Unknown at this time.

Q: But I just paid Zeek! They haven't "cashed" the check yet! I want it back!

A: Please see next section: "Funds in Transit"

Q: What if I actually got more out of Zeek than I put in? (i.e. I profited from Zeek?)

A: Unknown at this time. However, Receiver has stated he will pursue all assets "from any one who ought not to have it" (source; Forbes.com)
UPDATE: If you are among the 1200 top earners, you should be receiving a subpoena from the receiver very soon. See his website for "Subpoena FAQ" (source: receivership website)

Q: What exactly does that mean?

A: My personal interpretation is "expect clawback offers, then clawback lawsuits".

Q: What do you mean by "clawback offers"?

A: Once receiver had compiled a list of all affilates who have gotten MORE out of Zeek than put in, will send out letters to such affiliates asking them to pay back a large percentage of what they had taken out, and in return, they will not be subject to a clawback lawsuit. Usually, this "large percentage" is 90 to 95%, depending on the amount taken out.
UPDATE: 1200 subpoenas and offers have been sent out, as of 30-OCT-2012 (source:receivership website)


Q: What about clawback lawsuits?

A: My personal interpretation, based on study of other restitution programs, indicates that If the affiliates who had been determined to have taken more out of Zeek then put in, and don't accept the clawback offer, the receiver will then sue the affiliates to compel them to cough up all of the money gained. (see below)

Q: But I earned that money!

A: All money earned through a Ponzi scheme are earned fraudulently, and subject to clawback by the receiver for restitution. Whether you knew it's fraud or not is irrelevant. This argument was raised with the Madoff Ponzi victims who had profited. It didn't stop Irving Picard, Madoff's receiver (technically, bankruptcy trustee), from getting BILLIONS of dollars back for restitution. (source: The National article)

Q: Is there anything I can do to speed up the process?

A: Not at this time, except maybe not join any efforts to slow down the process (see lawsuits against Zeek and lawsuits against SEC)

Q: What can I do to prepare for registration with the receiver?

A: Document every penny you paid to Zeek, such as checks, money orders, credit card debits, and so on and so forth. You need to document everything, AND how much you got back from Zeek. If they gave you a 1099, get that too. If you have printouts of your backoffice, keep it. Put it all into a folder and wait.

UPDATE: See Receivership Subpoena FAQ on receivership website

Q: Will I really get back money from the receiver?

A: People from the Ad Surf Daily Ponzi did. Of those who filed claims, they got back 100% of their money (not all filed claims)

BEWARE of fearmongers spreading rumors that receiver will never give you any money.


Funds in Transit

Q: I purchased a cashier's check / teller's check / certified check and mailed to Zeek. Can I stop payment on it?

A: No. Cashier's check / teller's check / certified check cannot be "stop payment" as per uniform commercial code. All such checks are property of the receiver estate. (Source; Receiver's FAQ)

UPDATE 29-AUG-2012 Receiver has received instructions from the presiding judge that all such funds in transit are indeed part of receivership estate.

Q: What if the bank already stopped payment on the cashier's check / teller's check / certified check?

A: The bank may have to pay receiver the amount owed, fees, and such for violating UCC and court order. (Source; Receiver's FAQ)

UPDATE 29-AUG-2012 At least one bank (Synovous Bank) apparently allowed stop payment on 19 different cashier's checks for total of about 100,000 dollars before it received the court order and stopped allowing stop payments. It has petitioned the court for clarification.

NOTE: What the bank does when it had to pay the receiver while it already gave you back the money is up to the bank.

Q: What if I sent Zeek a personal check?

A: Personal check can be "stop payment" if you give your bank sufficient notice, and the check had not been cashed/deposited. (Source; Receiver's FAQ)

Q: What if I sent Zeek a money order?

A: This depends on who "signed" the order, you, or the "bank". The former is like a personal check, while the latter is like a cashier's check. (Source; Receiver's FAQ)

NOTE: In my personal experience, most money orders are of the "like cashier's check" type.

Q: But I bought the cashier's check! It's mine! It's not cashed yet so it's not theirs!

A: Uniform Commercial Code 3-309 and 3-312 states that once the cashier's check leaves your possession, i.e. in transit, it belongs to the intended recipient, and thus, part of the receiver estate. You cannot cancel cashier's check until at least 90 days after issue. This is standard operating procedure for receivership. (source: Receiver's FAQ)

Q: What if I have automatic fund transfer setup with my bank to Zeek?

A: That is between you and the bank. Usually if you request stop payment 3 days before the scheduled payment they should have no problem doing it. (Source; Receiver's FAQ)

Q: What if I have payments through eWallet?

A: All eWallet providers (STP, NxPay, and Payza) have complied with Receiver order to freeze all funds related to Zeek, including affiliate accounts. (Source: news reports)

Q: Can I dispute / chargeback eWallet transactions related to Zeek?

A: You may be in violation of court order if you do so. (source: NxPay Zeek announcement)


Assets identified thus far

Q: Just how big is the Zeek Ponzi?

A: About $600 million. However, receiver's news conference on 27-AUG-2012 indicate that the amount will likely be revised upward. (source: SEC complaint, News conference)

Q: How many people were affected?

A: Initial SEC complaint puts the number at near 1 million affected. However, the receiver has since stated that up to TWO MILLION people may be involved. (source: SEC complaint, News conference)

NOTE: EITHER number would make Zeek the widest spread Ponzi in US history.

Q: Is there a list of assets thus far discovered?

A: Receiver has been in contact with all the various banks involved with Zeek and so far the following assets have been identified, as per public sources:

  • Charles Schwab: 15 million in name of Rex Venture Group, and 3.6 million in name of Paul Burks
  • New Bridge Bank: 11.46 million (see NOTE 1)
  • Four Oaks Bank: unknown amount, TBA (see NOTE 2)
  • First Premier Bank: over 31 million
  • Preferred Merchant Solutions (Check Processor), up to 15 million in unprocessed checks, plus up to another 3 million in unprocessed checks due to processing errors.

It was previously reported that each of the 3 eWallet providers for Zeek probably has 20-30 million each held in reserve for chargebacks. However, exact amount is not available.

NOTE 1: Back in May Zeek had announced they have abandoned New Bridge Bank. It is unclear why would New Bridge Bank still have 11.46 million that belongs to Zeek.

NOTE 2 (UPDATED): Four Oaks Bank indicated it has an account held in the name of "Nx System", which is frozen. Why would NxSystem, with HQ in Oregon, have an account at Four Oaks Bank, which is a small community bank in North Carolina, is unclear. However, NxPay, operated by NxSystem, is one of the 3 eWallet vendors for Zeek.

Above information sourced from PatrickPretty.com news bulletin (see end for links), as per new court filings as of 31-AUG-2012


Lawsuits against Zeek

Q: How many lawsuits have been launched against Zeek?

A: So far, two, both seeking class action status, one in Louisiana, and one in North Carolina. Please see

http://kschang.hubpages.com/hub/ZeekRewards-shut-down-by-SEC-as-600-Million-Ponzi-Scheme-What-happens-now-and-what-should-you-do

Q: Should I join such a lawsuit?

A: If you mean can you get more money by going through a lawyer, the answer is likely "no". The receiver's order from the final judgment was very specific: all lawsuits against Zeek will be stayed (i.e. on hold) until the receiver has done his job, i.e. pass out all the money.


Lawsuits against SEC

Q: I heard that someone is going to sue the SEC and get Zeek restarted. Is that true?

A: There is rumor of such, but no lawsuit has yet been filed as of 05-MAY-2013

Q: When did this start?

A: First announcement appeared 5 days after Zeek was closed, approx 22-AUG-2012.

Q: I heard they hired "SNR Denton", a very famous lawfirm!

A: As of 17-SEP-2012, SND Denton was no longer involved.

Q: Who is behind the effort to sue SEC and restart Zeek?

A: The primary organizer appears to be Robert Craddock, who supposedly works for the Zeek Acting COO Greg Caldwell before Zeek was closed. A prime supporter is Todd Disner, a top Zeek affiliate. Their primary spokesman is Dave Kettner, who had been documented as advertising Zeek since July 2011. (source: various announcements from "Zeek Defense", PennyAuctionWatch)

Q: What can you tell me about Robert Craddock?

A: Robert Craddock is an investigator and reputation manager for Greg Caldwell, and had previously taken down several websites operated by critics of FHTM. It is unclear why there's a listing of Robert Craddock on LinkedIn (later removed) that stated Craddock as a Zeek affiliate and FHTM affiliate. Craddock had previously attempted to take down an article critical of ZeekRewards, 3 weeks before the SEC took action and closed Zeek. (source: Troy Dooly, LinkedIn, A MLM Skeptic)

Q: What can you tell me about Todd Disner?

A: Todd Disner is a top Zeek affiliate, and video have surfaced in April 2012 where he was showing off his new mansion (and expensive furnishings) to some Portuguese speaking people touting benefits of ZeekRewards. Todd Disner was one half of the Quiznos sandwich chain founders. Later he turned to MLM and Ponzi schemes. He was for a while pitching Wow! Mobile, and later, Ad Surf Daily Ponzi. Together with a disbarred attorney Dwight Owen Schweitzer, they sued the Federal government for malicious prosecution of Ad Surf Daily Ponzi headed by Andy Bowdoin. Ad Surf Daily Ponzi was closed in 2008 by the SEC. Disner and Schweitzer's lawsuit was dismissed on 29-AUG-2012, and Andy Bowdoin of Ad Surf Daily was sentenced to 78 months in prison on same day. (Source: ASDupdates,com )

Q: What can you tell me about Dave Kettner?

A: Dave Kettner is a serial MLMer, who was documented or to have claimed to be involved in TVI Express pyramid scheme, Diamond Holidays (TVI Express clone), Club Seabreeze (TVI Express clone), and Zeek Rewards. His own ad indicates that he had been advertising Zeek as early as July 2011. His LinkedIn profile also shows he's involved in a Holistic something and sells vitamin chews. (source: LinkedIn, PennyAuctionUpdates)

Q: Is this effort seeking donations?

A: Their website zteambiz.com has a Paypal donation button, ranging from $20 to $100, with a recommended level of $50 per person. Then the Paypal button was removed and replaced with a unencrypted "e-Check" form. This was later removed when multiple MLM news websites such as Troy Dooly's MLMHelpdesk and and Ted Nuyten's BusinessforHome. Nuyten came right out and said this is fraud taking advantage of former Zeek affiliates (source: their website, MLMHelpdesk, BusinessForHome)

Q: Where is the money going to?

A: According to the website, the money is going into "Fun Club USA", a Florida company owned by Robert Craddock. At first, it was PayPal, then when PayPal turned them off (possibly for soliciting donation without being a charity), they changed to UNENCRYPTED e-Check writing, then finally stopped altogether. (source: their website)

Q: And what exactly do I get for the donation?

A: Nothing. It's a DONATION. You give them money of your own free will, expecting NOTHING in return, because you believe in them.

Q: So I don't have a say in what it's spent on?

A: According to their website, any money not spent on the lawfirm will be spent on PR. (Whether you can trust them to do that is a different matter)

Q: Don't I get represented by them if I donate money?

A: No.

Q: What is Fun Club USA? What is its relation to Zeek?

A: Fun Club USA appears to be a FHTM rep organization according to website of the same name, owned by Robert Craddock. According to Florida Secretary of State's website, the company is "inactive" as of 24-AUG-2012, though a receipt later appeared that shows $70 registration fee paid 25-AUG-2012 SATURDAY afternoon. (Source: FunClub USA website, Florida Secretary of State Corporation Search, Troy Dooly)

Q: What is ZTeambiz?

ZTeamBiz.com was setup, presumably by Craddock, as a website where Zeek affiliates can "buy" customer "leads" to give their bids to, thus qualify for Zeek retail profit pool, as of 15-AUG-2012, until Zeek was shut down. When Zeek was shut down, Craddock turned the website into a fundraiser site for "Zeek Defense" (source: Google cache, ZteamBiz)

Please note that some of the email sent by Dave Kettner contradicts the statement on their own website, which appears below. Kettner claimed that if you contribute you are a part of the lawsuit. Read the section below, then confirm it on their website, and decide who is lying.

NOTE: Following was just posted the ZteamBiz website:

SNR Denton US LLP represents Fun Club USA and all inquiries about this representation should be directed to Fun Club USA at <redacted>@gmail.com. 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.

Conference call recorded on August 25, 2012 has been removed due to an unauthorized access, and publishing a different recorded call. Our apologies, we will for now on only publish conference calls we record to prevent this from happening in the future.

Editor's Commentary: they appear to be rather secretive about "unauthorized access" of their conference call, which was advertised all over the place.

Q: Didn't you say SNR Denton was no longer involved?

A: Correct. It was revealed in 19-SEP-2012 that Rodney Alexander of Charlotte NC has been retained by "Fun Club USA", and he's inviting an attorney from Dallas TX called Michael J. Quilling to appear as co-counsel.

Q: Can they actually sue the SEC?

A: Anybody can sue anybody in the US. You just need to hire a lawyer. However, the lawyers above merely filed paperwork to appear to represent interest of their clients, not to sue the SEC.

Q: *Are* they actuallying suing the SEC?

A: As of 15-MAY-2013, the answer is no. No motion had been filed. One has filed "intent to appear", but no actual motion nor any sort of lawsuit had been filed. The only motion so far filed was they want to be appointed "examiner" to work alongside the receiver and get paid by the receiver. That motion had been REJECTED by the court.

Q: What I mean is, do they have a chance of winning?

A: To restart Zeek? My personal opinion? No chance at all. ZERO. Why?

1) Because they have "no standing". Paul Burks, as the managing partner of RVG/Zeek, has already agreed to final judgement and waived any further rights to appeal. Unless they can prove that Burks had no right to give up the company, the lawsuit will be thrown out.

2) Even if they can get the case into a court, then they have to prove that SEC's numbers are completely wrong, that there is another couple hundred million lying around that Burks choose not to tell the SEC, or have a couple hundred million a month in revenue that Burks somehow lost track that would prove there's a LOT of income that did NOT come from affiliates. This would be absurd, because if this evidence actually exists, Burks would have known about it and would have used it at the civil hearing, and logically would choose to fight it out in court. instead, Burks simply plea "no contest" and gave up. Logically, there is no such exculpatory evidence.

3) Even if they somehow, managed to do that, that still doesn't clear RVG / Burks of the remaining charges such as violations of the Securities Act and Exchange Act, as well as the fraud charges stemming from that.

Thus, there is no chance Zeek can be restarted, IMHO, of course.

Q: Why then would any one do something that's hopeless?

A: You'll have to ask them. They don't think it's hopeless.

My personal opinion: such a lawsuit has one primary effect: it will stop the receiver from doing his job, such as clawback lawsuits. Basically, people who may be affected by clawbacks would definitely support the lawsuit as even if they lose, at least they delayed the receiver and perhaps, give them more time to spend their money and tell the receiver: ain't got the whole amount, here's half, take it. Even better if they can get the other affiliates to pay.

Q: Wait, so what exactly are they appearing for, if it's not to sue the SEC?

A: This is from their "notice to appear"

Please take notice that the undersigned, Rodney E Alexander, is appearing in this matter as local counsel for Fun Club USA, Inc and other entities whose assets were seized in connection with the above-referenced matter.

This already contains one FUNDAMENTAL error... Thus far, there are NO assets seized. All assets handled by the receiver Ken Bell were turned over VOLUNTARILY by Paul Burks, and belonged to Rex Venture Group, of which Burks is the sole managing partner / owner.

Thus, in my amateur opinion, this "assets were seized in connection with the [Zeek Ponzi]" can only refer to something that has YET TO HAPPEN, i.e. clawback lawsuits.


Tax Potential Problems

Q: Can I report my Ponzi scheme losses on my tax return as a deduction for 2012 tax year?

Q: What do I do with my 2011 deductions and income tax that was already filed, that involves Zeek income (or loss)?

A: Please consult a competent tax professional who knows how to file such returns. You may want to read this following article about how to declare loss and distribution (when it's made).

http://www.irs.gov/uac/Theft-Losses-from-Investments-in-%E2%80%9CPonzi%E2%80%9D-Schemes:-Tax-Treatment-of-Distributions-Received-From-a-Trustee-Receiver

EDIT: IRS redesigned the website so I had to find a new URL.

Receiver Subpoena and Responses

Q: I heard Receiver had sent out subpoenas to all the top earners. Is it true?

A: Yes, Zeek Rewards receiver Ken Bell had sent subpoenas for information to 1200 top earners. You can consult his FAQ on the receivership website.


Q: If I got the subpoena, should I respond to it?

A: If you don't, you can be charged with contempt of court (Federal).


Q: I previously donated to Fun Club USA. Wasn't "Fun Club USA" supposed to be representing us?

A: Fun Club USA is advertising services of a lawyer Rodney Alexander of Alexander-Ricks PLLC (North Carolina). For $300, he will file an objection for you.

Q: Wait, so they want me to pay $300 for my own lawyer?

A: Correct. And it's ONLY for filing this objection. If the receiver decides your objection is not reasonable and asks you specifically for more info, the lawyer will charge you more money, at $200-375 per hour. See below for an excerpt from the retainer agreement:

Q: Has someone hired this lawyer and filed this "objection"?

A: Robert Craddock (see "Zeek Defense" section above) has filed an objection through Rodney Alexander where it was claimed that virtually everything the receiver asked for is unreasonable in one way or another (and the receiver will get NO cooperation).

Commentary: First Craddock suggests that receiver will eat up the Zeek money pushing paperwork, now he wants to cause receiver to do more paperwork, such as sending physical subpoenas...

More by this Author


Comments 48 comments

kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

NEWSFLASH: Top Zeek Affiliates Todd Disner and Dwight Owen Schweitzer's lawsuit against the Feds for closing Ad Surf Daily ponzi had been dismissed.

COMMENTARY: Disner is bankrolling an effort to sue the Feds for closing Zeek. You tell me how likely is that to succeed? AND they want YOUR DONATIONS.

SUGGESTION: If you do send money, send it DIRECTLY TO SNR DENTON, attention the 2 lawyers named, with a printout of the solicitation, via REGISTERED MAIL. That way, it can't be diverted into other purposes.


KJinSF 4 years ago

I really appreciate your analysis and insights regarding zeek. It is so refreshing to find someone with critical thinking skills online. My friends involved in zeek did not want to believe that it was a scam, but they are now ready to sign up for the next big thing. Which makes me think that many people are essentially impossible to help. Thank you for your excellent work in trying to educate people. (also, your link to IRS article doesn't seem to be working).


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@KJinSF -- hmmm... it was working... darn it. Seems IRS just revised their ENTIRE website. Here's updated link:

http://www.irs.gov/uac/Theft-Losses-from-Investmen...


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

NEWSFLASH: Secret Service issued seizure warrant at "Preferred Merchant Solutions" check processor for Zeek, may have up to 18 million of checks there. Also, Four Oaks Bank of NC revealed they have an account, NOT in RVG or Zeek name, but as "NxSystem". NxSystem operates NxPay, one of Zeeks eWallet providers. Why NxSystem, a company based in Oregon, have an account in North Carolina, is unclear. As a precaution, that account was frozen. See ASDUpdates and PatrickPretty for details.


AusAlex 4 years ago

@kschang i have a few q's.

1: Not from the states so don't understand all the jurisdiction issues, but why is the Secret Service investing ZR?

2: Claw-back; how can the receiver claw-back money from foreign investors?

3: A number of people did not use their own CC (as ZR does not accept CC or DC to buy bids) to pay their initial investment into Zeek them self as eWallets seem to take up to 4 week to "verify" your evidently, so cash was given to the up-line and the up-line went into your account and bought the bids through their already set up eWallet accounts.

Therefore we have no official record of putting money into our ZeekRewards, however the up-line would have a record of putting in multiple amounts for multiple down lines. As i no longer believe anything that comes out of my up-lines mouth (or his fingers on the keyboard), can my up-line put in his claim, and get my money refunded to him?

Any idea how I can prove that he paid for me but I gave him cash? (yes I know, I was an idiot)

4: Regarding the lawsuit by Kettner: If they go with the argument that you outlined above, essentially saying that Burks had no right to had over ZR to the SEC, wouldn't they be saying that THEY are the owners of the company, which would mean that they bought "shares" in ZR. If i follow that thought, then in essence they are saying that they INVESTED in the company, thus the ZR WAS selling securities? That would prove that the SEC was right.


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@AusAlex -- I'll try, but then, I don't have all the answers.

1) Secret Service in the US has powers over financial crimes and any problems with the US currency (such as counterfeiting). US Secret Service was originally a part of Department of Treasury.

2) I have no idea, though lawsuits, I guess. "Foreign" investors participated in a US venture, and thus would be subject to US laws.

3) Hmmm... good question. Do you have backoffice records and records of paying your upline? If it's YOUR backoffice, it's your loss (and your restitution).

4) Nobody said potential scammers need to be self-consistent. They just need to sound good. Makes you wonder WHY they're really doing it, doesn't it?


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

NEWSFLASH: NXSystem, i.e. NXPay, confirmed with Federal court they have $14 million of Zeek funds. However, this doesn't explain the "Four Oaks Bank" as they did not disclose an amount in that filing.


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@Ausaffiliate -- do you really believe in "hearsay"? You put too much faith in hearsay. That link you sent was a transcript someone who heard from someone who heard from from attorney who heard from SEC. It's like FOURTH HAND hearsay (fifth hand if you count the repost).

And why would SEC attorney comment on a case they already got a "no contest plea"? ha-ha-ha.

I deal with INFORMATION, not rumors.


Jim 4 years ago

Until I have access to my 10k that I sent to ZEEK, I don't believe a fuggin word any of zeek lawyers say or any one affiliated with ZEEK.


KJinSF 4 years ago

BehindMLM site not available? DoS attack, or ??


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

BehindMLM is having database problems.


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@AusAffiliate -- why don't you go read a real Ponzi expert's take on what SEC thinks about all these nasty rumors people are spreading about them:

http://www.ponzitracker.com/main/2012/9/10/sec-adm...

I've had that email spammed on me, from MULTIPLE sources, linking either straight to Craddock's website, or reposted on multiple sources, such as your "getresponse" URL. Frankly, all of its contents have been discussed, it's bull****, it makes no sense

Why would SEC admit to any one it had a weak case when the person they are aiming for, Burks, already gave up with "no contest" plea?

The letter claims to have heard from Craddock who allegedly heard from lawyer who allegedly heard from SEC guy admit their case is weak.

If you enjoy listening to fourth-hand hearsay and spread that around as "fact" and "people need to know", I'd say you need a reality recalibration.

Rejecting your rumors is not conspiracy. I am not a tabloid and I don't approve comments just because someone said so, much less someone heard someone heard someone heard someone said so.

When you find a more DIRECT material I may reconsider. Have a nice day.


Jim 4 years ago

kschang so should I just sit tight and wait til I am contacted by the receiver? I can't get any straight information from anyone affiliated with zeek. Only an idiot would believe that the SEC said they made some mistakes in this case, as that nutball Craddock or whatever his name is says. I'm not to sure what to think of Troy Dooley, unfortunately I found his website before yours when sending in 10k to those idiots in NC. I'm just hoping to recoup one day, if that is even possible, I put 10k back in June and never took out a dime. Thank God my "friends" had more brains than I had and didn't put a dime in this scam. I would hope the SEC would take care of U.S. Citizens before foreigners outside of our borders considering the SEC will never beable to collect clawbacks from those people? (sigh)


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@Jim -- You will get something back. The question is how much and how far in the future. The payment processors already froze the eWallets, so it's the question of clawbacks, but first, receiver's job is to search every bank and business that held Zeek's money in any way, and identify this to the court. When all were identified, the judge then will sign an order to authorize transfer those to Receiver's account. The registration by all the victims may start in a few months, once the receiver has confirmed the "member roll" and who got more out than they put in, and how calculate a threshold of sorts on what criteria should he go for clawbacks. As there is over one million members, this may take a while. AND he needs judge's approval before proceeding.

This may take several years. As I wrote before, ASD was shut down in 2008, and there were disbursements in 2010, 2011, and now 2012.


Jim 4 years ago

kschang do you think the SEC will take care of U.S. residents first? As far as paying back our funds if there is any? Or do foreign affiliates who the SEC has no jurisdiction over have the same chance we get? The SEC can't sue them for clawbacks, but they can sue U.S. affiliates. I would hope people like Dawn and other cronies of Burkes at the top have to pay back every dime!! They knew what was going on!!


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@Jim -- Receiver's duties, as specified in the court order does not specify nationality / citizenship of the victims. However, practical matters would "suggest" that US residents will probably get reimbursed first.


Jim 4 years ago

I got this email from the NCDOJ this morning.....................

Final Information about Zeekler/Zeek Rewards

This message is in reference to the email you submitted to our office concerning Zeek Rewards. As you know, Zeek Rewards was the subject of a lawsuit filed by the Securities and Exchange Commission (SEC), and Zeek Rewards closed down around August 17, 2012. Since that time, a United States District Court Judge has appointed a Receiver to collect and catalogue all information pertaining to Zeek Rewards.

This message serves as notification that any further correspondence or inquiries regarding Zeek Rewards should be addressed and directed to the official Receiver, Ken Bell. Mr. Bell has set up a website and an e-mail address for any information regarding Zeek Rewards. We encourage you to visit that website at www.zeekrewardsreceivership.com, and feel free to e-mail the Receiver at info@zeekrewardsreceivership.com. The North Carolina Department of Justice email account regarding Zeek Rewards is no longer active.

The receivership website indicates that the Receiver will eventually create a claims process for harmed investors. You are responsible for filing a claim with the Receiver when that process becomes available and making sure the Receiver has all of the information necessary to consider your claim. Any information you submit or have submitted to our office is not a claim. You must re-submit your information to the Receiver. Regrettably, we cannot help you with the claims process.

Finally, scammers often target groups of people who have recently lost money in the hopes of making a profit. We are aware of some groups asking former Zeek members to re-invest money, donate money, and/or provide personal information. Please be extremely cautious about such solicitations and be wary of any promises that sound unrealistic or too good to be true.

Thank you.

PLEASE DO NOT RESPOND TO THIS EMAIL.


Carpe 4 years ago

Gregg Evan commented on Troy's site that all victims regardless of nationalities will get the same percentage of the refund back on the dollar. Administration process may mean that refund to US affiliates may arrive first or proccess first since it is easier in term of administration. Get first doesn't mean get more in this case as it has shown in many other previous Ponzi scheme which also involved international investors.


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

NCDOJ... reminds me of Florida in ASD case. They filed charges, then dismissed the charges as they are glad to let the Feds charge Andy Bowdoin with various crimes. Basically, NCDOJ now has a file on Burks and gang, and they'll let the Feds to their job.


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

Zeek Receiver Ken Bell puts out a new letter: I'm working on it, I got another 100 million secured beyond what SEC has identified. Any one who claimed to have talked to me or SEC are liars. Only official comm should be trusted.

http://zeekrewardsreceivership.com/pdf/9-13-12%20-...


Jim 4 years ago

kschang I hope you are right, considering the SEC can't collect clawbacks from foreigners outside of our borders you would think U.S. citizens would be prioritized, but Gov't is never "practical" lol


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@Jim -- SEC is no longer involved in the civil part. Receiver Ken Bell is solely in charge under one or two judges. He *can* sue people in foreign lands. It's not impossible, but it's, as you say, not very practical. We know the Canadians and the Brits and most European countries will likely cooperate. The rest are iffy. He needs to weigh what's the cost and likely benefits and decide on a threshold to go after, and that he won't know until he go through every last member records AND their pay-in and pay-out record. Add to that some people using other people's accounts or credit cards (to bypass some restrictions of Zeek) and you have a quadmire for Bell and staff to wade through.


DMartelonline 4 years ago

I didn't read all of the comments but the Clawback is nicely defined by Investopedia. The most relevant section "1. Money or benefits that are distributed and then taken back as a result of special circumstances."

Read more: http://www.investopedia.com/terms/c/clawback.asp#i...

My guess is fraud falls under special circumstances ;)


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

NEWSFLASH: Paul Burks is well-versed in deception and distraction, according Clifton Jolley, the PR expert hired by Zeek in its final days. Paul Burks had performed as a magician, and is skilled in distracting / deceiving people, as well as a decent country-and-western singer. In fact, he performed as Paul Burks "the singing magician" .


AusAffiliate 4 years ago

Man, KS you'll write just about anything to supposedly substantiate your position.

To all those ex-Zeek affiliates contributing to KS. Chang's hub-page here. For a second, let's just assume that by some miracle, ZeekRewards is authenticated, albeit under a minorly revised business model, and running again. Would you want back in if it was still generating similar profits for you? I reckon, in private, most of you would say resounding YES. Hypocrites!!


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@AusAffiliate -- if the stuff's true (confirmed by newspapers AND Clifton Jolley, who worked with Paul Burks), why should I not show it to the world? What did you think magic is? Play with your expectations, by showing you something, leading you to believe something else, when that clearly did NOT happen. Scam is the same thing, albeit you actually suffer financial losses, where magic is harmless (to you).

And what's the point in talking about the "theoretical"? Illegal is illegal. Clearly, it cannot generate profit in the real world, which is why it's a Ponzi. And how do you f___ up something as simple as penny auctions? Yet Zeek did it. What's there to "reckon"?


Carpe 4 years ago

@AusAffiliate: NO, both in private and public, my answer is still NO. I will not want to be back in after I get back our initial investment -- I'm Out!

Reason: Ponzi is always a ponzi. Zeek cannot sustain with the same current business model, with a minor change and still keep the RPP. Soon, they will run out of money and collaspe on its own even without SEC interference. Plus, Zeek was so bad in communication, customer services, and bad leaders. The leaders treated affiliates like children.

If there is a major change in the business model they would not be able to pay affiliates as before. I still will not join because penny aution is also an unstable business industry, similar but worst than gambling.


AusAlex 4 years ago

@AusAffiliate: sorry, but you are a fool! If you think for one moment that this can be turned into a legal business model you are delusional!

@Jim: while Kchang is write that clawing back money from the US is easier, these days with international treaties, if the US courts issue a seizure order, it will (most likely) be recognized by other countries (Canada, Europe, Aus, NZ... the 3rd world countries are anyone's guess). I think if the funds withdrawn by international affiliates is large, then it will be worthwhile to go after them (I double if someone in the UK withdrew $100 more then they put in anyone with bother, but if they withdrew double what they put in, they will probably be subject to court order to return the funds).

@Kchang: I have been told you are a "talking head" following is a quote from a Dave Kettner email I got:

"Here is what need from all of you...Please stop listening to the negative naysayers and doomsday "talking heads" that obviously have no idea what the facts are and are only trying to drive up traffic to their sites by preying on this hot new topic"

I request: KEEP TALKING!

Thank you for all the information you provide!


kschang profile image

kschang 4 years ago from San Francisco, CA, USA Author

@AusAlex -- the problem with Kettner's email is... everything he said applies to himself. It's a lot like Hitler calling Churchill and Roosevelt "warmongers" (actually, he did!)


kschang profile image

kschang 3 years ago from San Francisco, CA, USA Author

Receiver opened claim process! Go to receiver's website zeekrewardsreceivership.com and start your claims if you lost money.


liligibson 3 years ago

Hi, I have a question:

I opened 4 zeekrewards accounts with my money. One is under my name, the other 3 accounts are under my family members name. I am an America citizen and the other 3 family members are Chinese citizens who live in China. Since I used their name, I had to use their Chinese address.

Bottom line: after I registered for my own account and filed a claim, I received emails for confirmations. However, after I registered and submitted the claims for my other 3 accounts, I DID NOT receive any email. So I really do not know if the other 3 claims went through or I did something wrong.

Please let me know as soon as possible so that I can fix the problem within limited time

Thanks


kschang profile image

kschang 3 years ago from San Francisco, CA, USA Author

You need to email the Receivership's office.


kschang profile image

kschang 3 years ago from San Francisco, CA, USA Author

BREAKING NEWS: "Net winner" attempt to dissolve receivership to keep your money in their wallet was denied by judge. Trudy Gilmond and Kellie King hired a big shot attorney to file a motion to dissolve the receivership. The motion was denied. Records show the two are net over 1.2 million bucks out of Zeek.


liligibson 3 years ago

The question is the Receivership's office does NOT answer any emails. I did it a long time ago. I did it recently too. The receiver's website states they will NOT answer any emails although there is a CONTACT US EMAIL ADDRESS.


kschang profile image

kschang 3 years ago from San Francisco, CA, USA Author

According to FAQ at Receivership website, you should be able to use the claim ID you made and go back in to "amend a claim". If there's nothing to amend, then the info you have entered are lost.

http://zeekrewardsreceivership.com/claim#25


liligibson 3 years ago

Thanks a lot for the information. My husband and I are just wondering I didn't get the emails after we registered for the other 3 accounts and after we submitted the other 3 accounts is because the addresses of the other 3 account is in China. I realized if I can't get an email after I registered, I definitely will not get an email after I submitted the claim.

Anyway if we can't figure things out, I will have to print out all the forms I filled for the other 3 accounts and mailed them to the receiver by a registered mail. I am not sure if they take regular mails.


liligibson 3 years ago

Hi, Chang:

I tried to make a copy of the claimant Summary page to show you what my situation is , but I can't do it since this page here is very narrow. I will type it and give you a rough idea.

The bottom of the page is like this:

submission zeekrewards user name

----------------------------------------------------

1 xxxxxxx

------------------------------------------------------------

2 xxxxxxx

Create date

-------------------------------------------------

09/22/2013 (That is the date I registered)

---------------------------------------------------

07/23/2913 (That is the date I submitted the form)

1-2 out 2 records

-------------------------------------------------------------------------

status

--------------------------------------------------------------------------Amended

--------------------------------------------------------------------------

Submitted

--------------------------------------------------------------------------

If I click Amend a previously filed claim, then a new page comes out.

I will see the page says Amend a Claim and on that page, it writes : ask a reason for Amendment.

What do you think? I am sorry to ask you so many questions. I just feel helpless.


liligibson 3 years ago

Chang: Just FYI, I did go back into amend a claim and everything I filled up in the past are still there. After I clicked amend the file, I was asked why I wanted to amend the file. I just wrote :" double check". I contacted a person on facebook who is also a ZR victim. He is from another country and he told me he had the same problem I had which is he didn't get an email to confirm that he has submitted his claim.


liligibson 3 years ago

I finally figured out how to make everything works. I hope I can help those people who has the same problem. Since I had no problem to receive an email after I submitted my own account, I went back to my own account to see if I need to amend anything. After I finished everything, I saw a sentence saying something like DO YOU WANT TO FILE ANOTHER CLAIM? I clicked Yes and did the rest of the 3 accounts I opened by using my family members names. Then I got all the confirmation emails for the other 3 accounts.


kschang profile image

kschang 3 years ago from San Francisco, CA, USA Author

Glad to hear you got it figured out.


Carm 3 years ago

How will I file in this scenario? I registered a friend and paid for his membership fee an d VIP bids, in the hope he will add into it. He did not and told me it is up to me. I changed the info like name, address, email address, and was able to see the changed info, just like that, without asking Zeek that I did such. I am thinking of making the claim under the changed info (my sis), what do you think?


kschang profile image

kschang 3 years ago from San Francisco, CA, USA Author

IMHO, you should file under whatever the most recent info you had submitted. It goes by username any way.


Bob 2 years ago

The claims process closed before I even knew about it. Does this mean I can't get my $1,875.00 dollars back. Can I still claim it on my 2013 taxes?


kschang profile image

kschang 2 years ago from San Francisco, CA, USA Author

There's a how-to on IRS website on how to claim losses from scams.

Claim was on for many many months. You only heard about it now?


straitstack 2 years ago

I filed my claim a few weeks ago by never received a confirmation email but user status it says final determination accepted.. do I need to do anything else.?


kschang profile image

kschang 2 years ago from San Francisco, CA, USA Author

If it says final accepted, then you should be fine.


lili gibson 2 years ago

Hi, Chang:

when I filed my claims for my 4 accounts , I did file one account first, after that since I did not received an email from the receiver to confirm that they got my claims, I decided to file my 4 claims together all under my name. Now the problem is there are 3 claims have been accepted, but the one account I filed separately at first and filed with the other 3 claims again later on is still under investigation. It has been under investigation for months. I sent the receiver emails to explain why, but have not received any answers. Do you think I can ever get an answer? Although I claim one account twice, but the information I filed are all the same , why it is such a big deal?


kschang profile image

kschang 2 years ago from San Francisco, CA, USA Author

Maybe you can let them know you accidentally filed twice.

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