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.
For information regarding the Net Winner Class, please visit http://www.zeeknetwinnerclass.com.
I want to give you a status update concerning the Receivership, including our plans for future distributions to affiliate claimants holding allowed claims and pursuing additional assets. First, as you know, we have made refunds to the affiliate victims of ZeekRewards of 75% on allowed claims (using the "rising tide" method). We hold funds sufficient to make another small interim, partial distribution. However, the expense associated with making such a distribution counsels against making it. Instead, I expect to make only one final distribution at the end of the Receivership. This final distribution will be greater if we do not make small interim distributions.
Also, we continue to pursue significant receivership assets through litigation against several parties, most notably the net winner defendant class members, Victoriabank of Moldova and others who supported the scheme. Absent further settlements with the net winners with whom we have not yet settled, we will soon seek to sell the judgments against them to debt collection firms or engage such firms on a contingency basis. I very much hope that we are able to resolve this remaining litigation during 2018.
Finally, while I cannot guarantee anything, it is my goal to bring the Receivership to an end in 2018 and make a final distribution that brings total returns to victims with allowed claims to more than 80% (using the "rising tide" method).
As always, the Receivership team appreciates your support and patience.
As previously announced, on March 15, 2017, the Receivership Estate made the third partial interim distribution to Affiliates who are holders of Allowed Claims against the Receivership Defendant. This third partial interim distribution is comprised of 122,335 checks in a total payment amount of $67,755,715. This distribution, combined with the first and second partial interim distributions and the amounts paid by ZeekRewards (prior to its shutdown), has provided victims with Allowed Claims a total of at least 75% of their losses (calculated using the rising tide method).
If you previously have received a distribution payment from the Receivership, you will receive another payment in this distribution. If you had recovered more than 60% from ZeekRewards prior to its shutdown, but less than 75% (using the rising tide method), you will receive a distribution in this distribution.
Distribution checks are being sent by United States mail and may take a week or more to be delivered to Affiliates in the United States. Delivery of distribution checks to Affiliates that are located outside the United States will take additional time. I ask your patience in the delivery process. You may request a reissuance of your distribution check if you do not receive it timely. I ask that you wait until at least April 17, 2017 to make such a request because addressing reissuance requests will reduce the amount of funds we have to make future distributions.
I thank you for your patience and your continuing support. I am confident that we will make a further distribution in the future.
On February 13, 2017 Paul Burks was sentenced to 14 years and 8 months of imprisonment by United States District Court Judge Max O. Cogburn, Jr. in Charlotte, North Carolina. Judge Cogburn cited the need to balance the harm caused by Mr. Burks' conduct against Mr. Burks' extremely poor health and 70 years of age. There is no parole available under the federal court system.
The Court also ordered Mr. Burks to pay $244 million in restitution to the receivership for distribution to victims holding allowed claims. As a practical matter the Court's restitution order will not result in any payments to victims because the receivership has already taken from Mr. Burks essentially all of his assets. For similar reasons the Court found that Mr. Burks has no ability to pay a fine and declined to enter a fine.
The Court allowed Mr. Burks to remain free on bond until instructed to report to a federal prison by the Bureau of Prisons. The process of designation to a federal prison usually takes 30 -90 days.
As I previously announced, I continue to pursue Final Judgments requiring each member of the Net Winner Class of those who won at least $1000 in ZeekRewards to repay their net winnings to the Receivership for distribution to victims of the scheme. On January 27, 2017, United States District Judge Graham Mullen entered an Order on Process for Determining the Amount of Final Judgments Against Net Winner Class Members, which sets forth the process for determining the amount of the net winnings received by each member of the Net Winner Class. That amount plus prejudgment interest will then become the amount of the Final Judgment to be entered against the net winner. I intend to pursue collection of these judgments vigorously, and expect the ultimate amount collected, while uncertain, will be a substantial sum.
The Court's Order, which describes the process in detail, may be viewed by following this link. The first step in the process – notifying each Net Winner of the amount of their net winnings – is expected to begin next week. After notification, each Net Winner is required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification using a website Net Winnings Determination Response Portal. More information and links to the Response Portal will be sent to the Net Winner Class members in the notification email. If a Net Winner does not receive their notification by February 13, 2017 then he or she should email netwinningsresponse@zeeknetwinnerclass.com to receive instructions on how to obtain the notification.
Throughout the Receivership, the Receiver has expressed a willingness to consider voluntary final settlements with ZeekRewards' Net Winners to efficiently resolve the claims against them. Hundreds of settlements have been negotiated with Net Winners and approved by the Court. If a Net Winner wants to discuss a settlement of the Receiver's claims prior to Final Judgment being entered, please communicate with the Receiver at zeeksettlement@mcguirewoods.com.
On February 13, 2017, Paul Burks will be sentenced in United States District Court for the Western District of North Carolina for his role in the ZeekRewards Ponzi and pyramid scheme. The sentencing hearing is open to the public and will be held at the Federal Courthouse at 401 W. Trade Street, Charlotte, NC.
Suffering substantial harm to his or her ability to obtain credit.
I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.
I am pleased to announce that we will be making a third partial interim distribution to all Affiliates who hold Allowed Claims on March 15, 2017. When made, combined with the first and second partial interim distributions and the amounts paid by ZeekRewards to such Affiliates before it was shut down, the third partial interim distribution will have returned to victims with Allowed Claims a total of at least 75% of their losses using the rising tide method.
If you previously have received payment from the Receivership, or receive a payment for the first time during the January 31 distribution, you will be issued another payment on March 15, 2017. If you had recovered more than 60% from ZeekRewards prior to its shutdown, but less than 75%, you will receive a distribution as part of the third partial interim distribution.
The funds used to make the third partial interim distribution will be taken from the reserves that I previously held for those Affiliates whose claims were disallowed and forfeited pursuant to the Court's November 16, 2016 Order that required these claimants to provide their Release and OFAC certification by December 31, 2016. Their failure to do so has permitted me to release these reserves and to pay the third partial interim distribution to Affiliates that hold Allowed Claims.
Finally, we do not have authority to accept new claims and are not considering further requests to amend previously allowed claims. The time to file claims or to amend claims has passed.
I am confident that we will make a further distribution in the future. I ask you for your patience, and thank you for your continuing support.
Once logged in, click the button "Proceed with claim completion process" on the Claimant Summary page under the Claim Status section of that page (it is in the center of the page you reach upon logging in).
Review the Declaration and Release. To complete and submit the Declaration and Release, check the box that states "I certify under penalty of perjury that the foregoing is true and correct" type your first and last name in the electronic signature of claimant box, and then click the "I Agree and Electronically Sign the Declaration and Release" button.
Review the OFAC Certification. To complete and submit the OFAC Certification, check the box that states "I certify under penalty of perjury that the foregoing is true and correct," type your first and last name in the electronic signature of claimant box, and then click the "Confirm Certification" button.
Confirm or update your contact information for payment.
Click the "Complete Claim Determination Process" button.
You have now completed the submission of your Release and OFAC Certification. You may logout of the online claim portal or return to the Claimant Summary page.
For further assistance completing the OFAC Certification screen, please view the instructional video found here: http://www.zeekrewardsreceivership.com/OFACandRelease.
Failure to complete this process by December 31, 2016 will result in forfeiture of claim, meaning a distribution check will never be issued.
AFFILIATES WHO HAVE ALREADY RECEIVED A DISTRIBUTION DO NOT NEED TO DO ANYTHING FURTHER IN ORDER TO BE ELIGIBLE TO RECEIVE ANY SUBSEQUENT DISTRIBUTION THAT THE RECEIVER MAY MAKE. Those affiliates have already completed the required process.
This is not a new opportunity to file a claim. The time to make a claim ended on September 5, 2013 by order of the Court. Please do not attempt to file a claim now.
On November 29, 2016, United States District Judge Graham Mullen entered an Order granting the Receiver's Motion for Summary Judgment Against Remaining Named Defendants and Partial Summary Judgment Against the Net Winner Class. The Court's 27 page opinion details the factual and legal basis for its decision that ZeekRewards operated as a Ponzi and pyramid scheme and that the net winnings received by the net winners are as a matter of law fraudulent transfers that must be returned to the Receivership. The opinion may be viewed by following this link.
As I have previously stated, the next step will be for the Receiver and counsel for the Net Winner Class to confer and then ask the Court to approve a process to determine the amount of judgment, or money owed, by each of the class members (other than the named defendants who have already been found liable for the full amount of their net winnings) to the receivership. This process is expected to take several months, but the entry of summary judgment 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 allowed 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.
The Receiver previously announced his plan to file a motion to obtain confirmation from the Court that, subject to certain limited exceptions, any claimant that has not electronically submitted its OFAC certification and release by December 31, 2016 will be deemed to forfeit his/her claim in the ZeekRewards Receivership. Today, the Receiver filed this Motion to Affirm Disallowance of Claims and Forfeit of Distributions for Failure to Submit OFAC and Release. A copy of the motion is available at this link.
By this Motion, the Receiver requests that the Court enter an order affirming that the Receiver has the authority to deem any claim of a Subject Affiliate who has failed to submit the Required Information by 11:59 p.m., Eastern time, on December 31, 2016 as disallowed, that the distribution on any such disallowed claim be deemed forfeited, that he have the authority to make limited exceptions to the disallowance of such claims and the forfeiture of distributions on account of such claims.
AFFILIATES WHO HAVE ALREADY RECEIVED A DISTRIBUTION DO NOT NEED TO DO ANYTHING FURTHER IN ORDER TO BE ELIGIBLE TO RECEIVE ANY SUBSEQUENT DISTRIBUTION THAT THE RECEIVER MAY MAKE.
More than 41,000 claimants have a claim recognized by the ZeekRewards Receivership, but have failed to electronically submit an OFAC certification and release. The ZeekRewards Receivership cannot pay a claimant with a recognized claim unless the claimant submits an OFAC certification and release. Failure to submit an OFAC certification and release may result in these claims being forfeited.
The Receiver anticipates filing a motion to obtain confirmation from the Court that, subject to certain limited exceptions, any claimant that has not electronically submitted its OFAC certification and release by December 31, 2016 will be deemed to forfeit his/her claim in the ZeekRewards Receivership. Once approved by the Court, the funds held in reserve for the forfeited claims will be released from the reserve for payments to claimants with allowed claims in this case.
The Receiver has and will continue to contact all claimants that hold one of these more than 41,000 claims regarding the forfeiture of their claim.
On September 13, 2016 United States District Judge Max O. Cogburn, Jr. sentenced Dawn Wright-Olivares to 90 months in prison and Dan Olivares to 24 months in prison for their roles in the Zeek Rewards Ponzi and pyramid scheme. The Court considered their cooperation with the government in the successful prosecution of Paul Burks in handing down the sentences. I appeared before the Court and argued on behalf of the victims of these crimes, and presented to the Court letters from victims describing the impact that Zeek Rewards had on their lives.
You can read the press release of the United States Attorney's office at https://www.justice.gov/usao-wdnc/pr/zeekrewards-former-chief-operating-officer-and-former-senior-technology-officer.
The sentencing of Paul Burks has not yet been scheduled. If you would like to submit a letter for the Court's consideration at Mr. Burks' sentencing please email it to HearingLetter@zeekrewardsreceivership.com.
On September 13, 2016 at 9:30 AM Dawn Wright-Olivares and Daniel Olivares will be sentenced in United States District Court for the Western District of North Carolina for their roles in the ZeekRewards Ponzi and pyramid scheme. The sentencing hearings are open to the public and will be held at the Federal Courthouse at 401 W. Trade Street, Charlotte, NC.
On August 23, 2016 Jaymes Meyer was sentence in federal court in Charlotte, NC to 15 months imprisonment followed by 2 years of supervised release on charges of obstruction of justice. Mr. Meyer was the CEO of Preferred Merchants LLC, a financial services company based in Napa, CA that assisted Paul Burks and Rex Venture Group (RVG) in the last few months of its existence. After learning from the SEC of the impending shutdown of RVG Mr. Meyer caused millions of dollars of RVG assets to be transferred to accounts under his personal control. During the last four years the Receiver Team has traced these funds all over the world and through several overseas shell companies and offshore trusts. On behalf of the victims of RVG we have secured ownership of houses in the Turks and Caicos Islands and Napa, CA, and recovered nearly $1 million in cash. The Receiver Team assisted the United States Attorney's office, United States Secret Service and Internal Revenue Service-Criminal Investigation during the investigation of Mr. Meyer. A link to the Justice Department's press release is below.
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.
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.
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.
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