Court-appointed Receiver in ZeekRewards Case Sues Insiders, Net Winners of the Scheme

CHARLOTTE, N.C., March 3, 2014 /PRNewswire-USNewswire/ -- The court-appointed receiver in the ZeekRewards case filed the first lawsuits against alleged insiders and net winners of the scheme in an effort to recover more than $200 million for victims who lost money in the vast Ponzi and pyramid scheme.

Kenneth D. Bell of McGuireWoods LLP's Charlotte office filed two separate actions in the U.S. District Court for the Western District of North Carolina on Friday.

Together, the two federal complaints detail how the scam defrauded more than 700,000 victims of over $700 million from January 2011 until officials shut it down in August 2012.

The first action (Bell v. Paul Burks, Dawn Wright-Olivares, Daniel Olivares, the Estate of Roger Plyler, Alexandre de Brantes and Darryle Douglas) asserts claims for breach of fiduciary duty, unjust enrichment, the return of fraudulent transfers and other claims against six of the scheme's insiders. In the complaint, Bell asks the court to order the defendants to repay losses resulting from their unlawful conduct and to return the money they received from Rex Venture Group, which did business as ZeekRewards.com.

The second lawsuit (Bell v. Todd Disner et al.) makes claims against more than 10 of ZeekRewards' largest net winners from the United States, each of whose winnings topped $900,000 either individually or collectively with a family member. In addition, the complaint asserts claims against a class of all ZeekRewards net winners who won more than $1,000 in the scheme. Nearly 9,000 individuals are being sued as members of this defendant class.

(Bell's full statement is below, and copies of the complaint can be found at http://www.zeekrewardsreceivership.com/index.)

"[T]he goal of the lawsuit against net winners is simply to obtain the return of the money paid out to net winners in excess of the amount of money they paid to RVG," Bell said.

During the past year, Bell settled claims with some of the scheme's net winners, and he says settlements are still possible.

"Previously, I have offered to discuss settlement of the Receiver's claims against net winners in an effort to recover this money without the need for litigation.  The Court has approved over 175 settlement agreements, with many allowing the repayment of the settlement amount over time on a negotiated payment schedule," Bell said.

"Although litigation against net winners has now begun, and I intend to pursue it vigorously to obtain Judgments, including interest, against all defendants and class members, I remain willing to settle the receiver's claims with those willing to repay a significant portion of their net winnings," he said.

Net winners who want to discuss a settlement should express their interest in an email to [email protected]. 

McGuireWoods LLP is a full-service law firm with more than 900 lawyers in 19 offices worldwide. The firm's Charlotte offices are at 201 North Tryon Street. For more information, visit www.mcguirewoods.com.

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Statement of Kenneth D. Bell

Receiver for Rex Venture Group, LLC d/b/a ZeekRewards.com

Since my appointment as Receiver, I have said that I intended to investigate and file legal claims against those who created and operated the ZeekRewards scheme and to pursue claims to recover the money paid to the scheme's net winners. After careful analysis of Rex Venture Group's ("RVG") written and electronic records, the review of hundreds of thousands of documents and numerous interviews with relevant witnesses, on Friday, February 28, I filed lawsuits in the United States District Court for the Western District of North Carolina to achieve both those goals. The Complaints are public records, and copies of both Complaints have been posted to the website.

Both actions describe in detail the ZeekRewards Ponzi and pyramid scheme and how it was operated from January 2011 to August 2012.  In the scheme, over 700,000 participants lost over $700 million. The first action, Kenneth D. Bell v. Paul Burks, Dawn Wright-Olivares, Daniel Olivares, the estate of Roger Plyler, Alexandre de Brantes and Darryle Douglas (Civil Action No. 3:14-cv-89), asserts claims for breach of fiduciary duty, unjust enrichment, the return of fraudulent transfers and other claims against six of the scheme's insiders. It asks the Court to order the defendants to repay the losses caused by their unlawful conduct and return the money RVG paid them. 

The second action, Kenneth D. Bell v. Todd Disner, et al. (Civil Action No. 3:14-cv-91), makes claims against more than 10 of ZeekRewards' largest "net winners" in the United States asking that the Court order them to repay the net winnings they received from the scheme. Each of the named defendants won in excess of $900,000 (either individually or together with another family member or through their shell corporation).  As described in detail in the lawsuit, because ZeekRewards' net winners "won" (the victims') money in an unlawful Ponzi and pyramid scheme, they are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek's victims. 

This second action also includes class action claims against approximately 9,000 ZeekRewards' net winners in the United States who each won more than $1,000 in ZeekRewards (claims against net winners outside the U.S. will be pursued in future actions).  The total amount won by these net winners exceeds $200 million. As explained in the Complaint, the law permits the Receiver to bring claims against a class of defendants where the underlying facts and legal issues are similar against the members of the class – like in this case where they all won money in ZeekRewards. The Receiver has asked that the Court appoint the largest net winners sued by name as class representatives because they will, by virtue of their own defense to the same claims, be adequate and appropriate representatives for the rest of the net winner class.  A list of those individuals whom the Receiver believes won more than $1,000 and therefore would be included in the class can be found at www.zeekrewardsreceivership.com.  If you are on the list, you are not required to do anything at this time, although you may, of course, discuss this matter with legal counsel if you choose to do so.  However, I do ask all those on the list to complete a short contact information form that is provided on the receivership website so that those persons can be promptly notified of important information as the case moves forward.      

As discussed above, the goal of the lawsuit against net winners is simply to obtain the return of the money paid out to net winners in excess of the amount of money they paid to RVG. Previously, I have offered to discuss settlement of the Receiver's claims against net winners in an effort to recover this money without the need for litigation.  The Court has approved over 175 settlement agreements, with many allowing the repayment of the settlement amount over time on a negotiated payment schedule.  Although litigation against net winners has now begun, and I intend to pursue it vigorously to obtain Judgments, including interest, against all defendants and class members, I remain willing to settle the Receiver's claims with those willing to repay a significant portion of their net winnings.  Net winners who want to discuss settlement should indicate their interest by email to [email protected]. 

I am and have been grateful for the continuing support and patience of affiliate victims.

SOURCE McGuireWoods LLP