Attorney updates help for Zeek pyramid scheme victims
The attorney overseeing the effort to retrieve money for Zeek Rewards pyramid scheme victims will file a request this month with a federal court to begin distributing payments next year.
Kenneth Bell, an attorney out of Charlotte who is the court-appointed receiver, provided an update on the massive pyramid scheme that was based out of Lexington in a report posted online Thursday. Bell said he will ask the U.S. District Court for the Western District of North Carolina in November for permission to begin a partial payment of claims to former Zeek Rewards affiliates who were bilked in the global Ponzi scheme. Bell indicates in his report — posted on the website www.zeekrewardsreceivership.com — that partial payments would begin next year, though there’s no specific date.
More than 174,000 claims in excess of $596 million were filed earlier this year by victims of the pyramid scheme, which was broken up by federal authorities in August 2012. The U.S. Securities and Exchange Commission termed Zeek Rewards and its parent company, Rex Venture Group, as a $600 million Ponzi scheme on the verge of collapse.
In his third-quarter report, Bell also updates the investigation into affiliates who made money through the pyramid scheme and his effort to retrieve winnings from them. Bell estimates that more than $283 million “in fraudulent transfers” were provided to affiliates and investors in Zeek Rewards and Rex Venture Group.
The receiver “intends to recoup as much of this money as possible ... but it is unable to estimate the portion of this amount that may be reduced to judgment and eventually collected.”
Bell said he’s reached settlement agreements with more than 155 “net winners” that should lead to promised settlement payments of approximately $2.235 million.
Bell said he also “continues to evaluate and prepare for the prospect of filing claims” against Zeek Rewards and Rex Venture Group insiders, including employees, contractors and other agents “who played an active role in furthering the scheme. The approximate value of these potential claims remains unknown at this time.”
The receiver’s report gives insight into the scope of the scam and the complexity of sorting through its fallout — Bell and his staff are combing 1.6 billion records in electronic databases.
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