Posted by Kathy Bazoian Phelps
Below is a summary of the activity reported for July 2014. The reported stories reflect: 10 guilty pleas or convictions in pending cases; over 20 years of newly imposed sentences for people involved in Ponzi schemes; at least 8 newly discovered schemes allegedly involving over $440 million and over 25,000 victims; and an average age of approximately 51 for the alleged Ponzi schemers in the stories reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.
Barbra Alexander, 66, a Monterey financial talk show host of “Money Dots,” was sentenced to 9 years in prison in connection with an $8 million Ponzi scheme that defrauded 49 victims of about $6.3 million. The scheme was aided by Michael Swanson, 65, and Beth Piña who were both previously sentenced. Alexander and Swanson operated APS Funding, which promised 12% returns on short-term loans for real estate buyers. Alexander used the money for jewelry, a kitchen model, and investments in Money Dots.
Jon Anderton, 58, was found to be in compliance with his restitution payment order. Anderton had been convicted in connection with a $1.2 million Ponzi scheme that defrauded 3 investors in Hawaii. Anderton had agreed in a plea agreement to make about $314,000 in restitution payments a year in order to stay an 18 month prison sentence.
Bar-K Inc. was accused of defrauding 1,500 California residents in the Bay Area out of $700 million. Walter Ng, Kelly Ng, and Bruce Horwitz are also named in a class action lawsuit relating to an alleged Ponzi scheme in which the company would represented it would lend the investors’ funds to homebuyers and developers and then pay dividends to investors from the loan proceeds. Bar-K formed a fund, R.E. Loans in 2002, which filed bankruptcy in 2011.
Ron Battistella pleaded no contest to charges stemming from a $1.3 million Ponzi scheme that promised 10% annual returns. Battistella ran a car dealer and promised investors that their investments were backed by the cars in his showroom.
David Benjamin, 48, a former Broward Sheriff’s Office lieutenant, was sentenced to 5 years in prison for his role in the Scott Rothstein Ponzi scheme. Benjamin was paid about $180,000 for assisting Rothstein by, among other things, having another lawyer’s ex-wife arrested falsely to gain an advantage in a child custody fight. Jeff Poole, 49, was also sentenced to one year and one day in connection with that false arrest. Poole had faced up to 10 years but got less because he cooperated with prosecutors.
Charles B. Blackwelder, 69, and his daughter, Cara Lynne Grumme, 41, were arrested and charged with running a $23 million Ponzi scheme. The scheme lured investors to buy shares in residential and commercial rental properties and was run through CFS LLC. More than 300 senior citizens in Indiana were defrauded. The Indiana Secretary of State Securities Division had filed an enforcement action last year against Blackwelder, his son Chad Blackwelder, and Grumme relating to CFS Inc. and a receiver was appointed over that entity.
Annette Bongiorno, 65, argued that her prison sentence should be limited to 8 years. Bongiorno was convicted recently on charges that she aided Bernard Madoff’s Ponzi scheme. The sentencing guidelines provided for a life term, and the probation department recommended 20 years. Jerome O’Hara and George Perez, 48, argued that their prison sentence should be limited to home confinement and community service. Jo Ann Cruppi argued that she should also be entitled to leniency, although no specific sentence was recommended for her. They were each convicted on charges that they aided Bernard Madoff’s Ponzi scheme. The sentencing hearings were postponed until September due to “voluminous paperwork.” In the meantime, the defendants and the government continued their battle over what assets of the defendants should appropriately be forfeited. The court agreed to permit additional briefing on the subject of when the defendants knew of the fraud, giving prosecutors an opportunity to try to show that the defendants were aware of the scheme from the outset of their employment.
Philippe Bourciquot, 46, was charged in connection with an alleged $3.1 million Ponzi scheme that targeted Haitian-Americans. Bourciquot appeared on radio shows where he solicited investors and promised them guaranteed monthly returns of 8%. About 300 people were defrauded.
Stephen Caputi, 57, had his 5 year prison sentence for assisting Ponzi schemer Scott Rothstein reduced to 40 months and 3 years probation. His restitution order was also reduced from $29.1 million to about $6.77 million. Caputi had pleaded guilty and admitted to posing as a TD Bank official on 3 occasions to defraud investors. The reductions were due to his cooperation with the government in the prosecution of others and for his assistance in the recovery $1 million from a Moroccan account into which funds had been deposited in Caputi’s name.
Robert Cassandro, 47, was sentenced to 15 months to 4 years in connection with an $11 million Ponzi scheme that defrauded his relatives and friends. He promised returns in investments in 30 single family homes he was building and pledged the houses as security for the loans.
Linda Deavers, 61, was found guilty on charges relating to a $3.5 million Ponzi scheme that targeted investors in Florida. Deavers ran the scheme through Angel Annie Humanitarian Trust LLC and promised large returns from special European trading programs.
Archie Larue Evans, 43, was sentenced to 7 years in prison and ordered to pay $3.7 million to his victims in connection with a Ponzi scheme that defrauded victims of $2.5 million. The scheme was run through Evans’ Gold & Silver LLC. Evans had initially pleaded guilty and then tried to rescind his guilty plea. He also sought delays of his sentencing due to unspecified illness. Evans had persuaded church members in the Tilly Swamp Baptist Church in which he was a pastor to investor in Gold & Silver LLC, promising quarterly interest payments of between 105% and 12%. Evans carried a gun into the courthouse for his sentencing, but it was confiscated, and Evans may now face charges as a felon in possession of a firearm and for having a firearm in a federal courthouse.
Mary Faher, 56, was charged in connection with an alleged Ponzi scheme that defrauded senior citizens out of millions of dollars. Faher’s alleged conduct in falsely claiming that victims’ investments were protected and in making false guarantees of high rates of return, were in connection with the Ponzi scheme run by Joel Wilson. Wilson had been extradited from Germany earlier this year on charges that $8 million was missing in connection with a scheme run through his company, Diversified Group. Faher was alleged paid an 8% commission on funds she sent to Wilson. Shawn Dicken was convicted earlier this year for her role in the scheme.
James Jackson Jr., 48, was convicted by a jury on charges relating to a $2.2 million Ponzi scheme that defrauded about 16 investors. Jackson used his two companies, American Senior Advisory Group and Covenant Planning Group, to defraud investors, telling them that their money would be invested through a company called AFG.
Walter P. “Buddy” Lambert, 73, was charged in connection with an alleged $5 million Ponzi scheme run through Blue Mountain Consumer Discount Co. Lambert promised investors 9% to 10% returns on their investments which were supposedly tax free and would be paid in cash. Lambert also allegedly paid a 1% kickback to Nicholas R. Sabatine III who was separately charged and who has pleaded guilty. Francis Cinelli, whose family trust operated Blue Mountain, was sued by the trustee in his bankruptcy case alleging that he falsified evidence to hide more than $2 million in income. Cinelli has not been charged criminally.
Christopher Luck, 56, and John Geringer, 48, pleaded guilty to charges that they ran a $60 million Ponzi scheme with their partner, Keith Rode, 45, through their company, Geringer, Luck and Rode LLC. They had managed an investment fund called GLR Growth Fund.
Patricia McKittrick, 72, had her 6½ year prison sentence reduced by one year. McKittrick had appealed the sentence that she had obtained in connection with a $7 million Ponzi scheme, claiming that prosecutors delayed in charging her.
Claude Darrell McDougal, 55, pleaded guilty to charges that he ran a Ponzi scheme through US Financial Alliance Consultants LLC. The scheme promised returns of 6% to 15% annually, and about 25 investors lost $2.5 million in the scheme. The victims thought they were investing in securities. McDougal admitted that he used about $1.19 million of investor funds on his personal expenses including dinners, jewelry, electronics, and furniture.
Dorris Nelson, who had previously pleaded guilty to running a $137 million Ponzi scheme through the Little Loan Shoppe, was denied her request to withdraw her guilty plea to 110 federal crimes. Nelson argued that at the time of her guilty plea she lacked access to evidence that could have been used in her defense.
Frank Preve, 70, the former head of the Banyon Group, was charged with fraud for his alleged role in the Scott Rothstein $1.2 billion Ponzi scheme. Banyon Group invested in Rothstein’s scheme, and Preve, along with George Levin, solicited investors for the scheme. It was alleged that Preve was aware a few months before the scheme collapsed that Rothstein was not keeping his commitments, but that he failed to require necessary documentation or to tell his investors.
Dee Allen Randall, 63, was charged in connection with a $72 million Ponzi scheme that defrauded about 700 people. Randall had a good reputation in the insurance industry and was an active member of the Mormon Church. He ran the scheme through his companies, including Horizon Financial & Insurance Group, Horizon Auto Funding, Horizon Financial Center and Horizon Mortgage & Investment.
Richard Reynolds aka Richard Adkins was denied his request to stay the start of his 20 year prison sentence so that he could prepare “software and marketing plan assets” to fulfill his required $4.45 million restitution obligation. Reynolds had threatened the judge by saying “I will fry this court” on his way out of the courtroom after having been sentenced.
Lawrence Schmidt, 54, was sued by the SEC seeking an injunction against him in connection with a $22 million Ponzi scheme that he ran through his companies FutureGen Capital and Commercial Equity Partners. Schmidt is believed to have fled the country when his tax lien scheme collapsed. The SEC also named related defendants, FGC Distressed Assets Investment #1, FutureGen Capital DDA CG Fund, FGC Tax Lien Fund #2, FGC Trading Fund #1, FGC SPE No. 1, FGC SPE No. 2 and FGC CM Note Fund. The SEC complaint alleges that “Commercial Partners' supposed business model was to issue debt securities to investors, many of whom were unsophisticated with limited assets, promising to pay a fixed rate or return, and invest those funds in tax liens. Schmidt failed to register these securities offering with the Commission."
Martin T. Sigillito aka Marty Sigillito aka Biship Sigillito, 65, lost his appeal of a number of issues ranging from his indictment through his sentencing. U.S. v. Sigillito, 2014 U.S. App. LEXIS 13729 (8th Cir. July 18, 2014). Sigillito was convicted on charges relating to a $70 million Ponzi scheme that he ran known as the “British Lending Program.” Sigillito is an attorney and an Anglican bishop that engaged in the BLP along with Derek Smith, a real estate investor in the United Kingdom. Smith, and two others, testified for the government, and Sigillito was convicted.
Frank Spinosa, the former vice president of a subsidiary of TD Bank, may be liable for aiding and abetting securities fraud violations in connection with conduct relating to the Scott Rothstein Ponzi scheme. Spinosa allegedly told investors that their funds existed and were in “locked” accounts. Spinosa, who had been sued by the SEC, attempted to have the claims of the SEC dismissed against him. While some claims were dismissed, the court declined to dismiss the aiding and abetting claims, finding that the allegations “support an inference that defendant Spinosa knew of Rothstein’s wrongdoing because, if the court accepts the allegations as true, as it must at this stage, there is no legitimate purpose for defendant Spinosa's actions.” SEC v. Spinosa, 2014 U.S. Dist. LEXIS 88697 (S.D. Fla. June 30, 2014).
TelexFree was a Ponzi/pyramid scheme, the bankruptcy trustee of TelexFree acknowledged in his answer to the SEC complaint. “On information and belief, the Trustee admits that the various individual debtors cited in paragraph 1 appear to have been engaged in a multi-level marketing enterprise, which, while purporting to be in the business of selling telephone service plans using Voice-over Internet Protocol (“VoIP”) technology, they were in fact engaged in a Ponzi or pyramid scheme which, in part, involved promising to pay investors for placing ads on the Internet and recruiting other investors to do same.” Co-owners of TelexFree, James Merrill, 53, and Carlos Wanzeler, 45, were indicted this month in connection with the scheme. Merrill pleaded not guilty. A Brazilian affiliate of TelexFree, Ympactus, was raided by police in Brazil in an enforcement action called “Operation Orion.” Ympactus is closely associated with Carlos Costa, who has not been indicted.
Jeffrey Watts, 41, pleaded guilty to charges relating to a $5.8 million oil and gas Ponzi scheme that he ran through his company, Blue Alpha Energy. Watts falsely represented that his company invested in oil and gas wells in Texas that were owned and operated by Arrowhead LG, LLC, an otherwise unrelated entity. The scheme defrauded approximately 45 investors.
Tyson D. Williams, 42, and D. Stanley Parrish, 42, were the subject of an SEC complaint charging them with running a $7 million mortgage-backed securities Ponzi scheme. The complaint alleges that they used their company, STV Ventures, to defraud about 50 investors by selling them collateralized mortgage obligations as unregistered brokers. The SEC is seeking an injunction, disgorgement of ill-gotten gains and civil penalties.
INTERNATIONAL PONZI SCHEME NEWS
A court ruled that victims of a Ponzi scheme run through Neovest had to pay 30% of the costs of their financial advisor’s appeal. The financial advisor, Wealthsure Pty Ltd., was initially ordered to pay all of the costs of the appeal, but the victims were later ordered to pay a percentage of the costs of the appeal.
Investors in The League are considering action against the League founders, Adam Gant and Emanual Arruda. The 150 investors lost $330 million and have alleged that it was a Ponzi scheme. It is alleged that there may have been 4,280 investors in The League who lost 90% of their money.
Sylvain Belair, the former general manager of Cosmodome, was charged in connection with an alleged real estate project in China. The scheme involved at least 47 investors who invested over $2 million. Patrick Boisvert has also been charged in connection with the scheme.
Authorities took action against Rezwealth Financial Services and associated parties Pamela Ratmoutar, Justin Ratmoutar, Tiffin Financial Corporation, Daniel Tiffin, 2150129 Ontario Inc., Sylvan Blackett, 1778445 Ontario Inc., and Willoughby Smith. A judgment was entered against the defendants banning any further activity in connection with the foreign currency trading scheme that defrauded Ontario residents. Investors were sold investment products known as “loan agreements” which investors understood to be for the purpose of trading FX under a scheme known as “Blackett Investments.” It was alleged that Blackett defrauded at least 56 investors out of more than $3 million and that Rezwealth defrauded at least 45 investors out of about $2.9 million.
David Horsley, former executive of Sino-Forest Corp., settled with the Ontario Securities Commission. The settlement provides that Horsley is permanently banned from being a public company officer or corporate director and orders him to pay a $700,000 fine to the OSC and to pay $5.6 million to investors in connection with a class action settlement.
Rashida Samji was found by regulators to have run a Ponzi scheme that defrauded more than 200 victims out of at least $100 million. Samji offered returns of 12% per year and claimed that the investors’ funds would be deposited into a trust account that would secure borrowing to a winery so that it could expand internationally. Samji worked with Arvin Patel, a former investment advisor at Coast Capital Savings who recommended her investment to clients at the credit union.
Adam Worwicker, 41, pleaded guilty to charges that he ran a £1.6 million Ponzi scheme. Worwicker persuaded his clients at his accounting firm, Fisher Phillips, to invest their money with him.
Prokon, a renewable energy developer and wind farm operator, has been accused of running a Ponzi scheme that raised nearly €1.4 billion by selling profit participation certificates to investors. The company filed an insolvency proceeding in January, and more than 4,000 creditors gathered to discuss how the company would proceed to settle the €391 million in outstanding investor claims. Prokon had promised returns of up to 8% from “environmentally responsible” investments. The company continues to operate wind turbine parks in Germany, Poland and Finland.
More political leaders are under investigation in connection with the Saradha Group Ponzi scheme.
A complaint was lodged against the Gulshan Group when it failed to pay back its investors. The main company was Gulshan Nirman India Ltd.
Subrata Adhikari, the managing director of Sumangal Group, was arrested in connection with an alleged Ponzi scheme that brought in Rs crore from about 5,000 investors. Sumangal promised investors 30% to 100% returns on their investments within 15 months.
Kolkata Weir Industries Ltd. is under investigation for running an alleged Ponzi scheme involving Rs 47.90 crore and as many as 105,809 people. The management of the company then launched a new company called Quill Kisan Credit Producer Company and persuaded investors to convert their certificates to the new company.
Surprise inspections were conducted at four locations of Prayag Group and three locations of Palian Group in connection with a probe that they are operating an unauthorized investment Ponzi scheme.
Ramesh Das and Rupak Khandel, the director and manager of Surya Micro Finance, respectively, were arrested on allegations that they were operating a Ponzi scheme that defrauded Rs 30 lakh to Rs 40 lakh investors.
Prashant Wasankar was arrested in connection with an alleged Ponzi scheme that ran 20 years and the defrauded about 5,000 investors. The amounts involved are unknown, but estimates range up to 1,500 crore. Wasankar was a stock broker and investment advisor and used his company, Wasankar Wealth Management Limited, to run the scheme.
Police arrested Sunil Saldhana, promoter of the VCare Ponzi scheme, for assaulting an investor. Saldhana had defrauded about 15,000 Christians by promising an Israel tour for 6 days and claiming that the money collected would be used to set up schools and hospitals. The investors lost Rs 34 crore.
Breifne O’Brien, 52, pleaded guilty to charges in connection with a Ponzi-like scheme in which he defrauded investors of around €11 million and used the money to buy properties for himself. O’Brien used fake letters to persuade investors that he had connections to international businessman and lawyers and that he was involved with property investments overseas along with a shipping insurance business.
The Satinsky Group was accused of running a Ponzi scheme. The chief executive, Albert Venter, denied that the business is a Ponzi scheme. The scheme was called the “New Car From R699pm” deal, and sold consumers on the idea that they could subsidize their monthly car finance installments by placing advertising stickers on their cars in return for a monthly advertising fee. Satinsky Group abruptly terminated its partnership agreement with Hong Kong based advertising company, Blue Lakes. About 20,000 people had bought into the scheme, thinking they would get a rebate on their vehicle installments in exchange for advertising.
The imam of an Ankara mosque was suspended in connection with an alleged Ponzi scheme that defrauded victims of 7 million Turkish Liras (approximately 2.4 euros). The imam promised to distribute a “share of the profit” in the future.
NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES
Digital Domain was sued by the state of Florida and was alleged to be a “de facto Ponzi scheme.” The lawsuit seeks to recover $20 million in state incentives granted to the company before it failed. Digital Domain’s CEO, John Textor, was also named in the lawsuit in addition to director John M. Nichols, director John W. Kluge II, director Kevin C. Ambler (a former state legislator), director Jeffrey W. Lunsford, director Keith “Casey” L. Cummings, director Kaeil Isaza Tuzman, accounting and consulting firm Singerlewak LLP, financial services firm Cowen & Co., investment banking firm Roth Capital Partners, investment banking firm Morgan Joseph Triartisan, private equity first Palm Beach Capital, Falcon Mezzanine Partners and partner Rafael Fogel, and Digital Domain California directors Mark Miller, Cliff Plumer and Carl Stork, a former Microsoft executive.
The accounting firm of DeWitt & Shrader PC agreed to pay a $1.8 million settlement in connection with claims of negligence and fraud arising from services provided to Ponzi schemer Keenan Hauke and his hedge fund, Samex Capital Partners LLC. The receiver of the Hauke Ponzi scheme estimates that the scheme involved about $9 million and around 100 investors. The settlement funds will go toward reimbursing the victims.
Colony Insurance co. was given permission to rescind a professional liability insurance policy issued Kwasnik Kanowitz & Associates because the court found that lawyer Michael Kwsanik lied on the firm’s application for professional liability insurance. Kwasnick had run a $8.5 million Ponzi scheme through Liberty State Financial Holdings Corp. and its subsidiary Liberty State Benefits of Pennsylvania. The companies were purportedly in the business of buying life insurance contracts from elderly people and collecting their benefits when they die.
A district court judge ruled that the trustee in the Bernard Madoff may not invoke federal bankruptcy law to recover money transferred outside of the U.S. between foreign entities. The court held that the Trustee may not sue to recover from the subsequent transferees. In an opinion dated July 7, 2014, the court held that section 550(a) does not permit “the recovery of subsequent transfers received abroad by a foreign transferee from a foreign transferor.” The court concluded that: “(1) the application of section 550(a)(2) here would constitute an extraterritorial application of the statute, and (2) Congress did not clearly intend such an application. Moreover, given the factual circumstances at issue in these cases, even if section 550(a)(2) could be applied extraterritorially, such an application would be precluded here by considerations of international comity.” See Ponzi Scheme Trustee’s Claws Do Not Always Reach Overseas.
The Madoff trustee filed an amended complaint against Bernard Madoff’s two sons, Andrew Madoff, 46, and Mark Madoff, now deceased. The amended complaint adds detail regarding the sons’ alleged knowledge of the scheme and seeks the return of more than $153 million that they took in the form of bonuses, salaries, loans, and allegedly fabricated trading profits. That figure is about $16 million higher than in the original complaint. The complaint alleges, among other things, that the brothers obstructed an SEC audit of the Madoff investment advisory business and that they identified problematic emails to be deleted and withheld from the SEC
The judge presiding over the Bernard Madoff criminal trial denied a strange motion supposedly filed on Madoff’s behalf claiming that U.S. intelligence agencies used “bio-electric sensors” to influence the case against him. The letter sought to disqualify the U.S. Attorney’s office in Manhattan, but might have been a fake. Madoff’s signature did not match his typical one and another name listed below Madoff’s was Frederick Banks, signed as “legal asst.” Banks has previously been sentenced to 11 ½ years in total in connection with various convictions for crimes including fraud. The motion was denied as “meritless,” but the order did not determine that the letter was fake.
A lawsuit against JPMorgan CEO, Jamie Dimon, and board members brought by investors in the Madoff scheme was dismissed. In the face of $2.6 billion in penalties and settlements bring paid by the bank in connection with the Madoff scheme, investors had sued Dimon and the Board for allegedly turning a blind eye to the fraud, alleging breach of fiduciary duty, securities law violations, and waste of corporate assets. The court found that the investors had not shown that they first demanded that the bank’s board pursue the legal claims or that a majority of the board could not have exercised disinterested and independent business judgment in considering that demand.
The group of 55 investors known as the Razorback Group are seeking additional sanctions against TD Bank for its role in the Scott Rothstein Ponzi scheme. The investors allege that TD Bank, who settled previous claims by the group, violated the rules of discovery by not giving accurate information and by withholding other information.
The liquidating trustee of the RRA Trust ( in the bankruptcy case of Scott Rothstein’s former law firm, Rothstein Rosenfeldt Adler) and the U.S. Government reached a settlement on how to divide about $50 million of forfeited assets seized from Scott Rothstein. The trustee and the government have been engaged in a lengthy a costly battle over the assets that led to an Eleventh Circuit decision on some of the issue giving rise to certain rights for the trustee in the assets. The settlement provides for about $28 million to go to qualified victims under the forfeiture statutes and about $21 million to creditors in the bankruptcy case. The trustee will also serve as the “restitution receiver” to distribute the funds to the victims as well as to the creditors. See Scott Rothstein Ponzi Scheme Case: A Settlement, Finally.
The Eleventh Circuit upheld a $67 million jury verdict against TD Bank which was obtained by investor Coquina Investments in connection with the Scott Rothstein Ponzi scheme. Coquina Investments v. TD Bank, N.A., 2014 U.S. App. LEXIS 14388 (11th Cir. July 29, 2014). The jury had found TD Bank liable for its conduct in misrepresenting to investors that their money was safe and could not be distributed to other investors. TD Bank appealed, arguing that Coquina did not have standing to sue because it only acted as a conduit for investors’ money and was not itself injured. The appellate court affirmed the jury verdict, noting that Coquina invested with Rothstein in its own name and suffered an economic loss from the scheme.
The United States Court of Appeals for the District of Columbia upheld the lower court’s ruling that Stanford Financial investors may not file claims with SIPC for their losses in the Stanford Financial Ponzi scheme. SEC v. SIPC, 2014 U.S. App. LEXIS 13722 (D.C. Cir. July 18, 2014). The SEC sought to require the SIPC to reimburse “customers” as defined under the Securities Investor Protection Act for their losses from the purchase of fictitious certificates of deposits in the Stanford Ponzi scheme. The appellate court affirmed the lower court’s conclusion that the investors did not fall within the statutory definition of “customers.” This decision affects about 20,000 investors who will not getting any relief from SIPC.
The trustee of the TelexFree bankruptcy case filed a motion to vacate the claims bar date in the case that had previously been set for August 14, 2014. The trustee cited concerns such as incomplete bankruptcy schedules, due process concerns, the need for time to develop a protocol for the filing and administration of claims, and the fact that over 1 million claims could be filed in the case.
Certain defendants that had been sued by the receiver of Zeek Rewards for recovery of alleged fraudulent transfers have filed counterclaims against the receiver along with a motion to dismiss the receiver’s claims against them. The defendants are Durant Brockett, Rhonda Gates, Trudy Gilmond, Jerry Napier, Darren Miller, Aaron Andrews, and Sharon Andrews and were each identified as having received over $1 million in false profits. The defendants’ counterclaims include breach of contract, tortious interference, violations of North Carolina’s Unfair and Deceptive Trade Practices Act, and deprivation of constitutional rights claims. If the claims are challenged by the receiver as frivolous and he prevails, the defendants could find themselves liable for attorney’s fees. The receiver continues to pursue fraudulent transfer claims against other defendants as well.
The Zeek Rewards receiver reached a settlement with Paul R. Burks, Dawn Wright-Olivares, and Daniel Olivares. The settlement provides that they will enter into a $600 million consent judgment “to be satisfied with substantially all of their assets.”