We expect to be able to ask the Court for an Order in our favor this summer. If the Court grants our request we will begin collecting those funds shortly thereafter. Hopefully that matter will decided this summer as well. Third, we are holding in reserve tens of millions of dollars earmarked for those 41, claimants who would have already received distribution checks if they would simply log into the Claim Portal and electronically sign the Release and OFAC certification.
If those claimants do not complete the process to become eligible for a distribution before the end of the Receivership we will ask the court to allow us to distribute those funds to claimants who have. The bottom line is that we expect additional recovery of tens of millions of dollars for distribution in this year or next. You now know as much as I do. Thank you for your support as we continue to work on your behalf.
On March 16, the U. The settlement arose out of claims the receivership had against NewBridge Bank for its continuing to provide banking services to Rex Venture Group after mid-April , by which time the receivership alleged that the bank and its executives knew or should have known that Paul Burks and RVG were using their accounts to conduct an illegal Ponzi and pyramid scheme.
We hope to bring to a conclusion in our class action against more than 9, net winners, which will be a significant milestone. I have written many times encouraging tens of thousands of claimants with recognized claims who have not yet received a distribution check to log into the claims portal and electronically sign the Court required Release and OFAC Certification.
At some point, I will be required to distribute the funds that have been reserved for these claimants to other Affiliates who have completed the process and, therefore, hold Allowed Claims. For the past 3. Each of the Respondents has had some role in failing to freeze and or return the outstanding Receivership Assets from this payment processing relationship. The Receiver anticipates the Court will set a briefing schedule and hearing date to facilitate the resolution of this Motion on the merits.
Disner, et al. As instructed by the Court, Mr. Edmundson will be communicating with the Net Winner Class primarily through a website and collective emails. At the end of October we will issue approximately 1, distribution checks to claimants who have not already received a distribution because they had not previously submitted the release and OFAC certification required by the Court.
Please note that all distributions are made to affiliates who filed a claim by the Court ordered deadline of September 5, , and have had their claim allowed. I have no authority to allow claims filed after that date. Contrary to misinformation circulating among some affiliates, there are no new claims being accepted.
If you are in this group, please log in to the claim portal and provide those documents through the webform available in the claim portal. Doing so will permit me to pay you on account of the money you are owed.
We will send distribution checks to all eligible claimants at the end of the receivership. Many non-US claimants have reported difficulty in cashing or depositing distribution checks. We are considering asking the Court for authority to make distributions to overseas claimants by wire transfer. Also, there would be added expenses to the receivership to solicit, receive, process and maintain required additional information from claimants, as well as additional bank fees and further governmental requirements and disclosures.
It is not clear that such additional expenses are a good and fair use of receivership funds. Many of you have asked when the receivership will end, and when a final distribution will be made.
We are in litigation, or pre-litigation negotiations, with individuals and institutions seeking to recover millions of dollars on your behalf. Most notably, we continue our litigation against a class of more than 9, net winners those who took more money out of the Ponzi scheme than they put in in the United States and in several foreign countries. Litigation takes time, and collecting on the judgments we expect to win against the net winners will also take time.
If the receivership at any time holds sufficient funds to make another interim distribution cost effective we will do so. Finally, we have been contacted by numerous Affiliate claimants regarding the lack of s being issued on account of tax withholdings that were made from such Affiliate claimant's distributions.
On December 19, , I announced that there would no longer be tax withholdings made on account of distributions to be made by the Receivership and any amounts that were previously withheld on account of prior distributions would be paid out to the Affiliate claimant from which money was withheld.
Distribution of these withholding amounts was made in late As such, no taxes have been withheld from any Affiliate claimant's distribution and no s need to be issued.
Additionally, we have consulted with tax professionals and determined that the Receivership estate will not issue s, even if requested by the claimant. We have created a reserve to insure those claimants will be paid at the same rising tide distribution percentage as all other claimants.
Unfortunately, approximately 35, claimants were not mailed a distribution check on July 31 because they still have not electronically signed the release and OFAC certification required by Court orders. We have posted an instructional video on this site showing how these forms can be electronically signed. Efforts to recover additional funds for the benefit of claimants continue. I fully expect that we will recover tens of millions of additional dollars that we can then distribute to claimants.
The rising tide method of loss calculation is designed to make every recognized claimant equally whole as a percentage of their investment. The first claimant received nothing back from Zeek Rewards while the scheme was operating. There also has been some confusion about our quarterly distributions. Some mistakenly believe that they will receive a distribution every quarter.
There was a first partial interim distribution and will soon be a second. Each quarter we send distribution checks only to claimants who completed the claims process since the last quarter.
Unfortunately, nearly 50, claimants with recognized claims have not received a first, nor will they receive a second, partial interim distribution. The only reason for this is that those 50, claimants have not electronically signed the Release and OFAC certification available through the claims portal.
Many have called or emailed asking for personal assistance signing and submitting these forms. We will soon create and post on the receivership website an instructional video showing how to electronically sign and submit the Release and OFAC certification through the claims portal. The cost to create and post this video will be a minimal expense to the receivership.
We have received calls and emails asking that we cut off the recovery rights of the 50, recognized claimants who have not completed the process and distribute their share of distributions to those who have. That day may come, but it has not yet. I will give each claimant with a recognized claim every opportunity to receive their share of the recovery. Nonetheless, I implore everyone to promptly complete the Court required process. Sometime before the end of the receivership I will have no option but to ask the Court for permission to distribute all remaining receivership assets to only those recognized claimants who have completed the process.
After this second partial interim distribution, the receivership will maintain sufficient funds to pay those claimants who have not yet, but hopefully will, electronically sign the Release and the OFAC certification, and sufficient funds to allow the receivership team to continue to pursue additional recoveries for the ultimate benefit of eligible Affiliates. We are not going to hold onto money that we could otherwise distribute to victims.
We are in negotiations or litigation with financial services firms to recover tens of millions of dollars for Affiliates. The litigation against U. S and foreign net winners those who took more money out of the scheme than they put in, essentially holding the victims money is progressing. I remain confident that we will succeed in all of these efforts. I have read letters from and spoken to many of you.
I know the hardships that Zeek Rewards inflicted on thousands of people. Disner et al. A copy of the Order certifying the class and the initial Complaint in the lawsuit are available at the following links:. By this ruling, each of the members of the Net Winner Class becomes a defendant in the case. The Receiver believes that the certification of the Net Winner Class will provide the most fair and efficient process to resolve these legal claims and recover more funds for victims.
However, any member of the Net Winner Class may of course consult personal counsel to advise them on their legal rights. Some 60, claimants have not even responded to the Letter of Determination emailed to them. Thousands more have failed to provide the release and OFAC certification required by the Court to be eligible to receive a distribution. We receive many calls and emails from claimants who have not received a distribution check claiming that they have done all that is required to become eligible.
That simply is not correct. We will send a reminder email to all holders of a recognized claim who have not completed these required steps to be eligible for a distribution. We will make the next distribution to those who complete these steps and who have not already received a distribution at the end of April.
Many distribution check recipients have asked whether we will issue IRS Forms showing the disbursement. We have consulted with tax professionals and determined that the Receivership estate will not issue s, even if requested by the claimant. Finally, many affiliates call and email asking for a claim status report or help with the claims process. Because there are , claimants we decided not to offer personal, individualized assistance by phone or email.
The costs of such assistance would be great and would significantly reduce the amount of money we have and will have available to send to all victim claimants. Please see my message of November 25, for further explanation of our reasoning. We continue to pursue additional recoveries for the benefit of the victim claimants, with great success. You can read about our efforts in our quarterly status reports filed with the Court, available on the Case Documents page of this website.
Thank you, as always, for your continuing patience and support. The Receivership will no longer withhold taxes from distributions paid to affiliates. If the Receivership previously withheld taxes from a distribution, we will issue a new check on December 23, to distribute the previously withheld funds to that affiliate. As I have said before, so that we do not expose the receivership to potential fines and penalties that would dramatically decrease the amount of money available to those claimants eligible for a distribution, we have sought assurance from the United States Internal Revenue Service that no withholding is required.
We have not been able to get such assurance. However, I have received a tax opinion from a professional that persuades me that tax withholding is not necessary. On December 23, we will mail approximately 58, checks to claimants that were mailed a distribution on September 30, from which a withholding was made.
On that day we also will mail checks to those individuals who requested through a formal request on the claim status portal that their September 30 check be reissued because the original check out was not properly delivered, was lost or was made payable to the wrong name through inadvertent error of the claimant.
In late January , we also will send distributions to those qualified affiliate claimants who completed the online claim allowance requirements after August 15, and have not yet received a check.
Somewhat frustratingly, there are nearly 62, affiliate claimants that have received a letter of determination but have not yet accepted or objected to the recognized claim. We have the funds on reserve to make a distribution to all these claimants in the same manner we did for approximately 90, affiliate claimants in September. But, unless a claim is accepted or has had an objection resolved and the affiliate claimant completes the release and OFAC certification, a distribution check cannot be mailed.
I encourage all of these affiliate claimants to go online and complete the process to be eligible for a distribution check in late January For cost efficiency reasons, we will issue checks only quarterly, so if an affiliate claimant has not completed these steps by December 31, the next opportunity to receive a distribution check will not be until late April I would much rather send all qualified affiliate claimants a check than hold those funds in a bank account.
Finally, we are making great progress in recovering and marshalling additional funds which, together with the funds we currently hold, will be later distributed to all qualified claimants.
Today, new features were added to the claim status portal in response to issues that have arisen in the distribution process. These updates allow for a claimant who is eligible to receive a distribution to be able to check the status of that distribution by logging on to the claim status portal. Second, if your check was returned to us, lost, destroyed, or your check was issued in the wrong name for example, if you inadvertently provided your Zeek username instead of your real name when you provided your payment information , you will now be able to request a new check be issued to you in the proper name.
We hope that these updates will address many of the issues you have been asking us about. With these improvements to the claims status portal we will no longer respond to emails and calls that request the status of a claim that can otherwise be answered by logging into the claim portal and checking on the status of your claim. The savings generated by this automated system will allow us to make larger distributions to all affiliate claimants holding allowed claims.
Among the inquiries to which we will no longer be responding are requests from affiliates who registered on the claims portal but did not complete and finally submit a claim. The claims system was continuously operational and was tested and verified as accurate during the claims period and afterward.
If review of your claim status shows that you did not finally submit a claim through the claim portal by the Court ordered deadline of September 5, , I have no authority to accept or permit you to file a claim thereafter, including now.
I regret that anyone who could have validly submitted a claim failed to do so. If you hold a claim eligible for a distribution, but were not mailed a check on September 30, , I encourage you to login to the claims status portal and accept the letter of determination you were issued or have any objection you raised to the claim determination resolved and submit the required Release and OFAC certification so that we may distribute money to you.
If you take these steps, you will be mailed a first interim partial distribution at the end of January By the close of business on December 1, , we will have issued Letters of Determination to all affiliate claimants who timely filed claims. Finally, we continue to receive many inquiries about tax withholdings from distribution checks.
We are trying very hard to get reliable guidance from the Internal Revenue Service. I do not want to withhold taxes from distribution checks, but unless and until I receive assurance that the IRS agrees with me, withholdings will be made. We cannot expose the receivership, and the assets which we have and from which we will make distributions to victims, to potential penalties and fines by the IRS. Various foreign claimants have reported that their banks have refused to deposit the distribution checks I have sent to you.
It is likely that these banks are mistakenly seeking to deposit the checks in the local currency instead of in United States dollars. Please inform your bank when you are depositing your check that it is in United States dollars.
I am unable to issue checks in any currency other than United States dollars. Today, a federal grand jury returned a criminal indictment against Paul Burks. The indictment alleges four felony counts, including conspiracy to commit wire and mail fraud, wire fraud, mail fraud, and conspiracy to commit tax fraud. The press release is available here. The bill of indictment is available here. I want to address the question many of you are asking about why a percentage was withheld from some distribution checks.
On September 30, we mailed more than 90, checks to claimants as part of the first partial interim distribution. For those claimants to whom checks were mailed that did not provide an IRS Form W-9 for US residents as requested on the claims portal we withheld a certain percentage for tax purposes.
I have heard from many of you that this withholding should not have been made because these distributions are not taxable. The tax laws on this issue are not entirely clear. We have attempted to get a definitive opinion from the IRS but have not yet been able to do so. Given this uncertainty we acted on the side of caution and made the withholding. If and when we receive assurance that withholding from distributions to Affiliates is not necessary we will send additional checks to those claimants from whom a withholding was made in the first interim partial distribution in the amounts that were withheld.
For US residents, online completion of an IRS Form W-9 will allow us to send an additional check in the amount that was initially withheld. EDO Corp. See also, DiQuollo v. Prosperity Mortg. They cannot "solely rely on mere [] denials.
No "expenses" or other "setoffs" are permitted to be deducted from this amount, including but not limited to, expenses alleged to have been incurred in participating, promoting, recruiting other participants, paying for the accounts of others or loaning money to other participants.
See N. For all Net Winner Class members who timely provide alternate Net Winnings calculations to the Receiver, on or before May 15, or 45 days after the deadline for submission of responses if not March 31, , the Receiver shall respond to the alternate calculation, indicating agreement or disagreement with the alternate calculation. Bullock, Jr. The Court finds that an exceptional condition warranting a Special Master exists in this Case in regard to the issues on which Judge Bullock will preside as a Special Master.
The Special Master process is needed to provide a simple, efficient and expeditious process for the Receiver and the thousands of members of the Net Winner Class to resolve any disputes over the individual Net Winnings calculations.
Also, here, as in the Claims Determination process in the SEC Action, the members of the Net Winner Class hold no jury trial right with respect to the determination of whether a disputed issue of material fact exists as to the amount of their Net Winnings or as to a voluntarily binding or required non-binding determination of the amount of those Net Winnings. The Special Master shall file the affidavit required by Rule 53 b 3 A within ten 10 days after the entry of this Order.
Further, the duties and powers of the Special Master shall be limited to those duties and powers described herein. The Special Master shall not have the power to issue any orders or impose any sanctions. The Receiver may make referrals to the Special Master at any time on or before July 15, The Request for Intervention must be made in writing by the deadline date and served via electronic mail to the opposing person or entity and the Special Master.
Net Winners may hire counsel at their own expense to represent them with respect to the Request for Intervention and subsequent proceedings before the Special Master without making an appearance in this action. In the event that the Receiver fails to provide the required information or a Reply Statement then the Special Master shall issue a decision in favor of the Net Winner.
Attendance at such hearing shall not be required. Entities may attend the hearing by telephone or other electronic means. The Special Master may engage in ex parte communications with the Court concerning all matters related to his appointment and service other than the merits of the particular Requests for Intervention and related proceedings. The Special Master shall engage in ex parte communications with the Claimant only for the purposes of discussing scheduling and logistical issues regarding the review of the Claim Data.
The Special Master shall submit his bills to the Receiver for payment. Imposing the expenses of the Special Master on the Estate is fair and reasonable. This website will be updated frequently, to include recent court filings, upcoming hearings and other important court dates. Please continue to check this website for up-to-date information.
After a three week jury trial, Paul Burks was convicted of all counts. A sentencing date has not been scheduled. More information on upcoming events will be posted as soon as it comes available. Paul Burks is charged with wire and mail fraud conspiracy, wire fraud, mail fraud, and tax fraud conspiracy. He is expected to have his initial appearance in federal court in Charlotte in the coming days.
Cayer for their initial appearance on the charges filed by Bill of Information on December 20, Both defendants were released on bond which includes supervision by a U.
Probation Officer while on release. The Defendant was sworn and advised of rights and charges. The defendant entered a plea of guilty to Count 1, investment fraud conspiracy, as charged in the Bill of Information.
We thank you for your continued patience. The decision of the Court of Appeals means that all judgments of liability against the defendant class members are now final. Based on this decision, I will now move forward to pursue collection of the Judgments or their sale to a third party.
This leaves only approximately net winners against whom the Receivership has not yet sought but intends to seek a final Judgment. That effort will proceed this summer, and all net winners who initially challenged the amount of their net winnings in the process for determining the amount of net winnings are encouraged to communicate with the Receivership at NetWinningsResponse zeeknetwinnerclass.
This favorable ruling moves us one step closer to a final distribution to claimants. Those claims must be completed before a final distribution occurs. While I have considered making another partial, interim distribution to claimants prior to the resolution of those claims, the costs of making such a distribution are substantial, and it has been my judgment so far that the costs of making additional distributions prior to the final distribution, which will reduce the amount ultimately paid out to claimants, outweigh the benefits of another small partial distribution.
We appreciate the continued patience of the claimants and will of course continue to work to complete the Receivership as soon as possible. I want to give you a status update concerning the Receivership, including our plans for future distributions to affiliate claimants holding allowed claims and pursuing additional assets. We hold funds sufficient to make another small interim, partial distribution. However, the expense associated with making such a distribution counsels against making it.
Instead, I expect to make only one final distribution at the end of the Receivership. This final distribution will be greater if we do not make small interim distributions. Also, we continue to pursue significant receivership assets through litigation against several parties, most notably the net winner defendant class members, Victoriabank of Moldova and others who supported the scheme.
Absent further settlements with the net winners with whom we have not yet settled, we will soon seek to sell the judgments against them to debt collection firms or engage such firms on a contingency basis. I very much hope that we are able to resolve this remaining litigation during As previously announced, on March 15, , the Receivership Estate made the third partial interim distribution to Affiliates who are holders of Allowed Claims against the Receivership Defendant.
If you previously have received a distribution payment from the Receivership, you will receive another payment in this distribution. Distribution checks are being sent by United States mail and may take a week or more to be delivered to Affiliates in the United States.
Delivery of distribution checks to Affiliates that are located outside the United States will take additional time. I ask your patience in the delivery process. You may request a reissuance of your distribution check if you do not receive it timely. I ask that you wait until at least April 17, to make such a request because addressing reissuance requests will reduce the amount of funds we have to make future distributions.
I thank you for your patience and your continuing support. I am confident that we will make a further distribution in the future. Cogburn, Jr. Judge Cogburn cited the need to balance the harm caused by Mr.
There is no parole available under the federal court system. The Court also ordered Mr. Burks essentially all of his assets. For similar reasons the Court found that Mr. Burks has no ability to pay a fine and declined to enter a fine. The Court allowed Mr.
Burks to remain free on bond until instructed to report to a federal prison by the Bureau of Prisons. The process of designation to a federal prison usually takes 30 days. That amount plus prejudgment interest will then become the amount of the Final Judgment to be entered against the net winner. I intend to pursue collection of these judgments vigorously, and expect the ultimate amount collected, while uncertain, will be a substantial sum. The first step in the process — notifying each Net Winner of the amount of their net winnings — is expected to begin next week.
After notification, each Net Winner is required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification using a website Net Winnings Determination Response Portal. More information and links to the Response Portal will be sent to the Net Winner Class members in the notification email.
If a Net Winner does not receive their notification by February 13, then he or she should email netwinningsresponse zeeknetwinnerclass. Hundreds of settlements have been negotiated with Net Winners and approved by the Court.
The sentencing hearing is open to the public and will be held at the Federal Courthouse at W. Trade Street, Charlotte, NC. Victims of these offenses are entitled to be heard at sentencing.
If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter zeekrewardsreceivership.
In particular, the Court would like to hear about any of the below circumstances:. I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.
I am pleased to announce that we will be making a third partial interim distribution to all Affiliates who hold Allowed Claims on March 15, If you previously have received payment from the Receivership, or receive a payment for the first time during the January 31 distribution, you will be issued another payment on March 15,
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