Insiders, money winners sued in pyramid scheme
The court-appointed receiver in the Zeek Rewards pyramid scheme has filed the first lawsuits against alleged insiders and net winners in an effort to recover more than $200 million for victims who lost money in the global swindle.
Attorney Kenneth D. Bell out of Charlotte office filed two separate actions in the U.S. District Court for the Western District of North Carolina. Together, the two federal complaints detail how the scam defrauded more than 700,000 victims of more than $700 million from January 2011 until officials shut down Zeek Rewards in August 2012.
One lawsuit accuses six Zeek Rewards insiders of breach of fiduciary duty, unjust enrichment, the return of fraudulent transfers and other claims. 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 Zeek Rewards. The pyramid scheme was based from a small office in Lexington on W. Center Street near the interchange of Interstate 85 Business Loop.
The other lawsuit makes claims against more than 10 of Zeek Rewards’ 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 Zeek Rewards net winners who won more than $1,000 in the scheme. Nearly 9,000 individuals are being sued as members of this defendant class.
“[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 Rex Venture Group,” Bell said Monday.
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.