Zeek Rewards and Internet Censorship

[GlimDropper]

I share Gregg's frustration with the veteran ponzi players. You take a gun and rob a liquor store for a hundred bucks and do hard time, help an online ponzi bilk millions out of the teaming masses and if your unlucky you might lose most of your take. I understand how the two are not really equivalent but the Todd Disner's of the world are just as culpable as the Andy Bowdoin's but Andy's living in a prison cell and Todd is showing off the $500k condo he bought with some of his Zeek winnings.

Another update:

LATEST NEWS





November 7, 2012



Greetings good people

First let me say that for everyone that has been served a subpoena by Kenneth Bell you would be wise to consider the following: first you may be giving up valuable rights by not responding to the request. That in not saying you need to provide the requested documents but rather you need to retain competent legal counsel.

The attorneys for Fun Club USA are ready and willing to assist you for a simple and reasonable flat fee of $300.00 but you can also respond in what is known as a Pro Say motion where you represent yourself. I can also tell you that it is likely the method you received your requests were not proper and would not be recognized by the court as so, for example what proof does the receiver have that you received the request?

I have received a request and it was served on our attorneys which is proper, but it is our position that the receiver request is objectionable because, it seeks documents related to matters traditionally discoverable only post-judgment. Specifically, the Subpoena seeks the discovery of documents relating to Respondent’s personal financial information, including bank accounts, investment accounts, trust accounts, savings or credit union accounts, certificates of deposit, future interests, life estates, etc. when, not only is there no judgment against Respondent, there is no basis for any claim against Respondent and there is no basis for any claim that Respondent is liable to any person or entity for any conduct in connection with the Subpoena or the receivership.

I can advise you on what you should do but if you would like to see the filed response to Kenneth Bell I have provided a PDF file for you to view.

http://www.zteambiz.net/Objection.pdf

OK, I don't have a copy of the subpoena Ken Bell sent out but a summary was posted over at BehindMLM:

All documents constituting or relating to:

1) Any communications involving or related to RVG or any affiliate, vendor, customer or client of RVG

2) Show all user names, passwords, email addy and accounts in connection with RVG

3) any communication between you and Paul Burks

4) performing any work or giving assistance, advice or counsel to RVG as an employee, ind contractor, vendor or agent of RVG

5) any employment or other contract or agreement between you and RVG or any salary or compensation received

6) contract or agreement or governing rules or terms between you and rVG as customer, affiliate, agent or vendor

7) any financial transactions of any kind between you and RVG, show all payments made to and from RVG and the account and use renames to which each payment relates

related to the placement of ads

9) related to the recruitment of any person to join or participate

10) related to sale, gift, transfer or assignment of bids to be used

11) any financial statements describing your financial assets or liabilities, including seeking a loan, mortgage, or other form of financing or credit at any time jan 1, 2010 to the present

12) your bank accounts, investment accounts, trust, savings or credit union, CD or other from jan 1 to now

13) relating toa ny and all future interests, life estates, or right or power exercisable by your or for your benefit jan 1 to now

14)relating to your purchase, sale or ownership of any auto, trucks, trailers, or other motor vehicles jan 1 to now

15) purchase, sale or ownership of boats or boat motors jan 1 to now

16) purchase, sale or ownership of office equip, furnishing, inventory or supplies jan 1 to now

17) purchase, sale or ownership of households items or furnishings, audio, video, or computer jan 1 to now

18) jewelry, watches, furs, firearms, sports equip, or photo equip jan 1 to now

19) anything not listed above, purchase or sale of anything more than $1500

20) any and all of your interest in insurance policies and annuities Jan 1 to now

21) any and all interest in IRA, ERISa, Keogh or other pension or profit sharing

22) purchase, sale or ownership in any stock, bond security, negotiable or non negotiable interest, financial instrument interests in incorporated or unincorporated businesses, associations or trusts

23) any and all interests in partnership, joint ventures, or LLC belonging to, owned or possessed by you

24) any and all purchase, sale or owner of any real properly

25) 2009, 2010, 2011 federal and state tax returns

26) all documents no produces in response to one of the previous requests that relate in any way to RVG, Zeek rewards, Paul Burks, Dawn WO, or any other employee, agent, affiliate, customer, consultant or agent of RVG

All above from Jan 1 2010 to present

OK, so Robert's attorneys objects to the subpoena. I can't gauge the legal merit of the objection but let's assume for the moment it has some, all that would mean is that Ken Bell goes back and writes a more carefully worded subpoena. The Fun Club fans are crowing that this will reopen Zeek or some similar balderdash.

But it occurs to me that even if this objection is sustained it would pretty much be an across the board deal, wouldn't it? If the judge were to rule that there is some defect with the subpoena it would apply to all of the 1,200 subpoenas sent last week and not just to Robert. If so, what exactly is the law firm of Alexander Ricks charging the Fun Club faithful $300 a head for?

[wserra]

Another update:

LATEST NEWS
...
you can also respond in what is known as a Pro Say motion

Nobody said these guys were smart.

what proof does the receiver have that you received the request?

Oh, I don't know. An affidavit of service?

OK, so Robert's attorneys objects to the subpoena. I can't gauge the legal merit of the objection but let's assume for the moment it has some, all that would mean is that Ken Bell goes back and writes a more carefully worded subpoena. The Fun Club fans are crowing that this will reopen Zeek or some similar balderdash.

Right. Nonsense.

If that is in fact the subpoena, it may well be overbroad. In fact, that's common practice - a very broad subpoena, narrowed down through agreement between the one issuing and the one receiving the subpoena. But reissuing the subpoena, or narrowing it by agreement, has no effect on Zeek, which is still dead as Marley's Ghost.

But it occurs to me that even if this objection is sustained it would pretty much be an across the board deal, wouldn't it?

Not necessarily. It depends on the identity of the person whose records Bell subpoenas. He will clearly have greater scope when it comes to an officer or employee, for example, rather than just a distributor. Also, these things are typically worked out without court involvement.

[Lambkin]

http://www.hpe.com/view/full_story/2078 ... uote]Since the U.S. Securities and Exchange Commission seized Zeek Rewards’ assets Aug. 17, the receiver – attorney Kenneth D. Bell out of Charlotte – has been trying to secure money that could be returned to the upward of 1 million people worldwide bilked in the pyramid scheme.[/quote]

“We have already recovered more than $300 million and continue to pursue millions more held in financial institutions,” Bell writes in a letter on the receiver’s website, www.ZeekRewardsReceivership.com.

[wserra]

what exactly is the law firm of Alexander Ricks charging the Fun Club faithful $300 a head for?

I think we may know that now.

This appears to be the Alexander Ricks engagement letter for the $300 Zeeksters. Here's the heart of it:

The Firm’s engagement on Client’s behalf is presently limited to representing Client for the sole purposes of: (i) reviewing that certain Subpoena to Produce Documents (“Subpoena”) Client received rom Kenneth Bell, Esq., Receiver of Rex Venture Group, LLC (“Receiver”); and (ii) subject to the following paragraphs, drafting objections to the Subpoena and serving them on the Receiver ( the “Matter”).

The Firm is not presently agreeing to perform work other than working with Client to prepare and serve an initial objection to the Subpoena, assuming such Subpoena is of a standard form as received by others from the Receiver. Client further understands that it is possible that the Receiver may move to compel you to produce documents or may request a hearing on your objections. Firm is not agreeing to represent you in any such proceedings and will only do so at its standard hourly rates, set forth in the following paragraph.

In other words, the $300 covers them filling in your name on the form initial objection and serving the receiver. If the recipient of a subpoena completely refuses to produce anything (as the form objection does), then typically the subpoena issuer will move to compel. Responding to that motion is not covered. Even more typically, though, as I wrote above the recipient and the issuer will confer and compromise on what will be produced. That negotiation is not covered. Court appearances are not covered. They will use their word processors to fill in your name in a form document, and send it to the receiver. That's it.

That's not the only troublesome aspect of the engagement, however. Catch this:

Client understands and agrees that the Firm is representing other persons or entities in connection with the Rex Venture Group, LLC, consents and agrees to such representation; and to the extent any conflict of interest exists in such representation, waives such conflict to the fullest extent allowed by law and applicable ethical rules.

Recall how we discussed the inherent conflict a single firm will have in representing Zeeksters from opposite ends of the swag spectrum? How the interest of the big winners is to keep as much as possible, while the interest of the losers is that the big guys disgorge as much as possible? There it is. As a matter of legal ethics, I have my doubts that a conflict that stark is even waivable. They address that possibility too:

Client further understands that, to the extent a conflict exists between Client and any of Firm’s other clients which is not waiveable, Client consents to Firm’s withdrawal of representation of Client and the continuation of representation of Firm’s other client or clients.

In other words, if some court says we can't represent both Craddock and some $300 guy - well, bye-bye $300 guy.

Frankly, this sucks.

[notorial dissent]

WES, your understatement button is stuck in the on position.

I've said from the beginning, that this stinks to high heaven of SEVERE conflict of interest, and nothing I have seen here alters that in the slightest.

I just do not see how this can be anything but an ethics violation, and the plain fact of the matter is that, again as I have previously said, all they are preparing to do is further screw the lesser Zeeklets yet again.

[GlimDropper]

As far as the conflict is concerned it's less of an issue with the $300 copy and paste subpoena service than with the general Fun Club fund raising effort. As of now 1,200 subpoenas have been sent out and with the possible exception of Robert Craddock himself they all seemed to have gone to top Zeek earners. Ken Bell reported that they'd identified close to 100,000 net winners in Zeek so only a small percentage of them have been contacted thus far.

There was an interesting little back track on the most recent call. Previously Robert was telling people that because almost all of those who received the subpoenas did so through the mail and not by a process server, they were improperly served. He noted that himself and one other affiliate in Florida (please God, let it have been Todd Disner) were the only ones he knows of who were properly served. He did stop short of telling people they could ignore the subpoenas, but not by much. This week he repeated the claim but also suggested people respond in the 14 day window the notice calls for. Of course he recommended people respond with an objection (queue sales pitch).

One interesting note, one of Robert's updates:

LATEST NEWS

November 8, 2012

Greetings good people

For first time callers about subpoenas, we’ve worked with Michael Quilling’s firm to set up a subpoena “hotline” and e-mail address, as follows:



Phone: 214.560.5499

Email: RVG@qslwm.com

Michael J. Quilling
Attorney at Law

So the engagement letter is with Alexander Ricks in North Carolina but the "subpoena hotline" is being handled by Quilling, Selander, Lownds, Winslett & Moser in Texas. I'm not sure if that's unusual but at a minimum I want to give QSLWM acknowledgment for their participation here.

And one further point of interest, perhaps a new player on the stage. After Robert and the call moderator Gregg Baker left the call the line stayed open for a number of minutes, in that time a man named James Baggs indicated that the asset protection service he provides might be of value to some of the people facing clawbacks. He seems to place great store in what he feels to be the near magic powers of Nevada C corps but unfortunately the call clicked off before he could explain how they might be useful against clawbacks.

So instead of investigating claims he didn't have a chance to make, I did a little digging on him. In a lot of ways he is pretty much off the radar but I can tell you he does know a thing or two about setting up corporations in the state of Nevada. Only a partial list:

NATIONAL ASSET MANAGEMENT SERVICES, LLC Status Permanently Revoked
EMPIRE REAL ESTATE CORP Status Permanently Revoked
FFF ENTERPRISES Status Revoked
FINANCIALOGICS, INC. Status Revoked
FUTURE GLOBAL VISION, INC. Status Revoked
JPA ENTERPRISES Status Revoked
K & B ASSOCIATES Status Revoked
TRUE NORTH RESOURCES, INC. Status Revoked

There are others. He doesn't appear to act as a registered agent (who are usually attorneys, aren't they?) but I wonder if his name is listed in some records of corps he sets up for other people so I limited the list to only asset management service companies, who's registrations are no longer active.

I don't think he'll make too much headway selling C corps to the loyal affiliates. I doubt Robert will appreciate someone else poaching his pigeons and what he's selling seems to be an alternative to what Robert is.

And over the weekend Jordan Maglich of PonziTracker dot com had a post about this situation:

First Batch of Zeek Subpoenas Arrive; Victims Solicited For New 'Pay-To-Object' Venture

In which he makes an interesting point:

However, a closer look at the engagement agreement to obtain legal representation for the "simple and reasonable flat fee of $300" raises several issues which should be considered by victims and could result in the incurrence of thousands of dollars in subsequent legal fees. Specifically, the agreement makes clear (in bold print) that the $300 fee only covers the preparation of an initial objection to the subpoena. However, the filing of an objection to the subpoena is likely the beginning, rather than end, of involvement with the Receiver. Under federal rules of civil procedure, the receiver may then set the matter for a hearing and/or serve an additional filing known as a "Motion to compel" which takes issue with the objections and allows the receiver to seek attorney's fees and further relief if the asserted objections are deemed by a Judge to be frivolous or designed to frustrate the receiver's purpose. Additionally, the next likely step after the subpoena, assuming the issues are not resolved, is the institution of litigation against clawback targets.

The retainer agreement is seemingly aware of this, and states that in the event the aforementioned events do happen, the "simple and reasonable flat fee of $300" does not cover representation in those instances. Instead, the client would be responsible for the attorney's services at standard hourly billing rates ranging from $200 to $375. Additionally, potential clients are informed that the fees generated may be shared with the same law firm that currently represents Fun Club USA.

Bolding mine

So the $300 rubber stamped subpoena objection could lead to thousands of dollars in additional legal fees. Funny, but I've never heard Robert mention that to his loyal affiliates.

[wserra]

As far as the conflict is concerned it's less of an issue with the $300 copy and paste subpoena service than with the general Fun Club fund raising effort.

The difference is that the "$300 copy and paste subpoena service" is run by lawyers.

[notorial dissent]

The difference is that the "$300 copy and paste subpoena service" is run by lawyers.

Being overly generous, aren't you??

This just screams conflict of interest, even if they are farming it out to another group of lawyers, and serious ethics violations.

[Gregg]

So, if 600 (half) of the people who got served sign up, the lawyer makes a quick $180K for what amounts to having a secretary enter their name into Word, printing off a form letter and then abandoning them after he's set them up to really need a lawyer. And am I reading this right that somehow the $179,500 that isn't really an expense to the lawyers is in some way credited to the benefit of Fun Club USA?

Jeesh, that's a bigger scam than Zeek was.

[EagleOne]

James Baggs, there's a name I haven't heard in a while. I met him for lunch one day regarding another MLM Pyramid scheme he and others were pimping; or at least trying too. He wanted to know why I said it was a Ponzi. Wasn't too happy with my explanation either. If my memory serves me correctly it was MBPToday. I think he has been in every MLM program known to man looking for the magic bullet to wealth.

But for a Nevada C-Corp to have any impact, doesn't it have to be in place before something happens, not after? Anyone in Zeek trying to set up a C-Corp in Nevada now would not protect them from anything, right?

[GlimDropper]

The Eagle has landed (and not you Lynn). The Fun Club filed something, sorta. [Link]

It is just another notice of appearance but this time with some sort of course of action:

Please take notice that the undersigned, Rodney E Alexander, is appearing in this matter as local counsel for the following persons who have an interest in the proceedings and intend to seek release of funds in various e-wallet accounts seized by the Receiver:

David S. Kettner
Mary A. Kettner
David C. Sorrells

Please take further notice that Michael J. Quilling with the law firm of Quilling, Selander,
Lownds, Winslett & Moser, P.C., 2001 Bryan Street, Suite 1800, Dallas, Texas 75201, has been admitted pro hac vice and is appearing as lead counsel for the named individuals.

I don't rely much on the chatter in the "Loyal Affiliates" private Facebook group, it's a mushroom factory. But the story being passed around in there is that the Soooper Secret plan to get Zeek reopened starts with the e-wallets. You see, if they can prove to the Judge that the seizure of funds in the e-wallets was illegal then that's the first step to proving all the other asset seizures were likewise illegal. And if that happens there will be no clawbacks and everyone get's their VIP points back. And no, I couldn't type that with a straight face.

But I'm half wondering if they might think there was some defect with the e-wallet freeze. Dave Kettner is Robert Craddock's partner in the Fun Club fund raising effort and Mary is Dave's wife. Both were very high up in the Zeek food chain and while I've never heard of David Sorrells till this document it was easy enough to find a scuzzy little MLM company that Kettner and Sorrells worked in together four years ago. So two of the three people named, if not all three were big winners in Zeek. I'm wondering if they have any honest expectation of getting their money out of the e-wallets or if they just inhaled too many Kool-Aid fumes while they were serving it to the loyal affiliates.

[notorial dissent]

And what do you wanna bet there won't be some kind of plea for funds and a wildly improbably, at least in the real world, story about why they are doing this in the very near future?

We really do need to set up a scorecard to keep track of all the assorted attorneys, law firms, and "interested" parties involved in this.

[Lambkin]

http://www.the-dispatch.com/article/201 ... 83[quote]A Zeek Rewards affiliate is contesting a subpoena that asks him to pay back money he earned in the alleged Ponzi scheme.[/quote]

Court records indicate that Nathaniel Woods, of Ocala, Fla., was mailed a subpoena and a letter from Bell on Oct. 31, asking him to surrender the money he made in the program as well as all documents related to Zeek Rewards and its parent company, Rex Venture Group.

Woods, who purportedly made about $496,106.34 through Zeek Rewards, filed a motion to quash the subpoena Tuesday in U.S. District Court in Charlotte. He said the subpoena was not properly served.

Among other things, Woods alleges that the subpoena was not personally delivered to him, which he said is something required by federal rules. He also argues that he did not receive proper notice of the subpoena and that it created an undue burden and expense on his life.

[GlimDropper]

Nate Woods connection to Zeek Rewards parent company Rex Ventures Group stretches back years. All of the RVG websites are offline but I've seen Google cache pages with Nate's name on them going back to 2008's "GoGo Hub" which could best be described what would happen if Google and Craigslist had a very ugly baby together and if that baby was a less than successful ponzi scheme. This preexisting relationship is my best guess for why the receiver would claim that Mr. Wood took $496,000 out of Zeek but put no money in.

(The following links are curtsey of Don Ryan's Zeek Rewards file site.)

Here's a copy of Mr. Wood's motion to quash. It's too soon to say if this motion uses the $300 objection template that Robert Craddock is helping to sell but time will tell. I somehow doubt that there was a defect with serving the subpoenas but I'll let you law talking guys address that.

Mr. Woods also entered a copy of the subpoena he received into record which is nice because I hadn't seen one posted previously.

It goes without saying that nothing has been filed yet in the Fun Club effort, I'm sure Robert has heard the phrase "Under promise and over deliver" before but nothing in his behavior indicates that he knows what that means. He's been picking fights with MLM commentator Troy Dooly and MLM attorney Kevin Thompson and that little row has it's moments of amusement but aside from that all he's doing is repeating the lies that have proven to advance his fund raising effort.

[littleroundman]

I am not a receiver, neither do I reside in the U.S.A.

BUT

if it were me acting as receiver, I would have a whole filing cabinet labelled "WTPH"

(Wants To Play Hardball) with Mr Woods file being the first one in it.

[wserra]

I would say that LRM is on the money.

Although Woods is confused about certain things, he does have a couple of points. First, he claims that the subpoena was not properly served because he "is not located within 100 miles of this Court". That isn't the standard. Rule 45(b)(2)(B), FRCvP, requires that a subpoena generally be served in the issuing District (here NCWD) or less than 100 miles from where the subpoena is returnable, not (as Woods claims) from the Court. Still, if Woods is in FL, he is in fact more than 100 miles from where he must produce the documents. Second, Woods claims that he never received notice of the issuance of the subpoena. Since he is not a party, he is not entitled to such notice. Rule 45(b)(1), FRCvP. Finally, Woods claims that he was only served by mail. He is likely correct that mail alone is not sufficient, assuming that was in fact the only method the receiver used.

Were I Ken Bell, Woods would shortly be receiving the following:

Dear Mr. Woods:

Please convey my greetings to my process server, the gentleman who just handed you this envelope and its contents, in person, at your home or place of business.

As you see, the envelope contains, in addition to this cover letter, a document very like the subpoena you previously received from me in the mail. There are a couple of small changes. While it still requires you to produce the same documents, this time it commands you to produce them at the offices of my colleagues Dewey Cheatham and Howe, exactly 99.9 miles from where you now stand. Oh, and you must appear personally as well, to answer questions under oath about the documents and your activities in relation to Zeek. My check for mileage and a day's witness fee is enclosed.

By the way, although you should surely seek legal advice if you wish, allow me to explain one thing. At your upcoming deposition, you are able to claim the privilege against self-incrimination - at appropriate moments, of course, not whenever you feel like it. But this is a civil proceeding; the Fifth Amendment therefore does not bar the Court from drawing an adverse inference from your so doing. Almost half a million, wasn't it?

See ya there.

Love,
Ken

Completely enforceable.

[notorial dissent]

And considerably less amenable to going easy on the person receiving it.

The thing about this sort of action, is that it is not if, but when and how this all gets sorted out.
The easy way, or the hard way, and it looks like Nate is going to opt for hard, stupid, and expensive on his side to get where he would be anyway.

The fact that he came out of this mess with almost half a mil without putting anything out does not bode well for his having had clean hands in the ongoing transactions.

The response from Nate reads like someone's legal boilerplate, now the question comes as to whose? Wonder if we'll see more and similar of those in the weeks to come.

[Gregg]

I have a question.

If you assume the subpoena was improperly served... you file a motion to quash it, you get a hearing scheduled, you or an attorney can not show up for that hearing and lose it by default,

or,

you or your attorney shows up for the hearing, the Court grants the motion,

and then,

the issuer then serves whomever answers the call for the hearing, who is either the movant or someone claiming to represent them.

Am I right on that?

[ArthurWankspittle]

Further to Gregg's comments, am I right in thinking the courts would take a generous view over either a request to correct the subpoena or the issue of a new one on the grounds that the recipient is a "bigger player" than first thought?
Equally, given this is a receivership, the receiver must have an obligation to minimise costs, so can't go personally serving several thousand people some of whom may have lost $50 in a scam.

[Arthur Rubin]

I have a question.

If you assume the subpoena was improperly served... you file a motion to quash it, you get a hearing scheduled, you or an attorney can not show up for that hearing and lose it by default,

or,

you or your attorney shows up for the hearing, the Court grants the motion,

and then,

the issuer then serves whomever answers the call for the hearing, who is either the movant or someone claiming to represent them.

Am I right on that?

Actually, I don't think so. I am not a lawyer, but I recall something of 1st year law notice requirements. At least if the subpoena was improperly served because of jurisdictional problems (for example, a state court subpoena issued to a party in another state), then the server cannot take advantage of the party's appearance in court to contest the subpoena to issue a new subpoena. I suspect that if the error was that it was mailed to the wrong address, then the server can mail it to the address reported to the court, unless some time limit was about to run out.