WINSTON-SALEM, N.C. — The receiver of defunct ZeekRewards.com is requesting that at least four “net winners” be ordered to pay back the money they received from the Ponzi scheme, according to the Winston-Salem Journal.
Kenneth Bell said in a legal filing on July 10 that he wants Darryle Douglas to pay $2.27 million, which represents $1.97 million in net winnings and just under $300,000 in interest since August 2012. Bell said Douglas was considered in default on July 3.
Similar requests for default judgments are filed against Todd Disner – as trustee for Kestrel Spendthrift Trust – David Sorrells and Michael Van Leeuwen. Legal filings did not disclose an amount for those net winners, although Bell has listed that Sorrells, and David and Mary Kettner “won” at least a combined $1.7 million.
In August 2012, the U.S. Securities and Exchange Commission accused Rex Venture Group LLC, Zeekler and ZeekRewards.com, all of Lexington, and Paul Burks, their principal owner, of raising $850 million through unregistered securities.
The companies raised the money from at least 2.2 million customers, including more than 230,000 in the United States and 47,000 in North Carolina. The companies were shut down and their assets frozen.
Bell has recovered $333.5 million in assets as of Dec. 31, the latest available total. He has $320 million in available assets after paying administrative and other costs.
There is no filing listed with Douglas objecting to the default judgment.
Disner has objected to Bell’s request for default judgment in a filing submitted Friday. Disner questioned the accuracy of the net winnings attributed to him by Bell, as well as the methodology used to determine the amount. He said he wants the opportunity to address Bell’s complaint against him, as well as 14 other named individuals and four companies.
Bell said he continues to collect receivership assets from financial institutions and those who took more money out of Zeek Rewards than they put in.
“We have sued more than 9,000 of these net winners in the United States,” Bell said in May. He said those net winners received combined more than $283 million.
“We will soon sue net winners who live outside the United States,” Bell said. “I remain hopeful that we will add tens of millions of dollars to the pool from which we will make final distributions to claimant victims.”
In Bell’s complaint against the company officers, filed Feb. 28, he alleges breach of fiduciary duty, unjust enrichment, the return of fraudulent transfers and other claims. Bell said Burks received at least $10 million from the scheme.
Bell is suing two officers — Dawn Wright-Olivares and her stepson, Daniel — who already have entered guilty pleas in U.S. District Court in Charlotte and face up to 10 and five years in prison, respectively.
Bell is requesting permission to set Sept. 30 as the date for initiating the first phase of repayments to claimants victimized in the scheme. He said Aug. 15 has been set as the deadline for determining if a participant’s claim will be accepted and made payable by Sept. 30.
Bell said he would pay an amount “equal to 40 percent of each reconciled claim using the rising-tide method of calculation already approved by the court.”
A rising-tide distribution is used by courts as a method to pay recovered assets to defrauded investors. The method serves to distribute money in a way that leaves as many investors as possible with the same percentage recovery of their total investment.
Bell has issued more than 160,000 email notices to people who have filed claims for refunds of their losses in the scheme. About 83,000 have provided the necessary legal releases and certification to qualify for a payment. They represent about $305 million paid into the scheme.
At that time, an additional 67,000 claimants have not filed the proper paper work. They represent $157 million in claims.