The Zeek Rewards Receivership collected $405,187 from net-winners during the third quarter of 2018, according to its latest quarterly report filed with the U.S. District Court for the Western District of North Carolina. This recovery effort targets individuals who profited from the massive Ponzi scheme by receiving more money than they invested.
Discussions continue with other net-winners regarding the return of their illicit gains. These clawback actions are a standard component of Ponzi scheme receiverships, allowing the court-appointed Receiver to reclaim funds paid out to early investors using money from later victims. Federal courts have consistently affirmed these efforts, deeming funds received from a fraudulent scheme as illegitimate profits subject to recovery for the benefit of all victims.
An appeal challenging a judgment that compels top earners to return their winnings is still proceeding through the federal court system. This appellate process can add years to the overall recovery timeline as parties contest the legal precedents and specific applications of fraudulent transfer laws.
The $13.1 million Payza/VictoriaBank dispute remains a significant challenge for the Receivership. Payza, an online payment processor, was a critical channel for funds moving into and out of Zeek Rewards before its collapse. The Receiver initiated an intervention lawsuit to secure funds held by VictoriaBank, a Moldovan institution, which are believed to originate from Zeek Rewards operations. VictoriaBank has moved to dismiss the Receiver's lawsuit.
A status conference on the Payza/VictoriaBank matter was scheduled for January 2019 to determine next steps in the legal proceedings. Resolving this international banking dispute is crucial for maximizing the overall funds available for distribution to victims.
Since the Receivership began in 2012, it has marshaled $375.2 million in assets. Of that amount, victims with approved claims have already received $345.5 million through multiple distributions. Zeek Rewards, operated by Rex Venture Group, LLC, was a North Carolina-based online penny auction and retail profit sharing program. The U.S. Securities and Exchange Commission filed a complaint in August 2012, alleging it was an unregistered securities offering and a colossal Ponzi scheme that defrauded over a million people.
The scheme's founder, Paul Burks, was later sentenced to 14 years in prison for wire fraud, mail fraud, and tax fraud in connection with the operation. His conviction underscored the criminal nature of the enterprise and the vast scope of its deceit.
Victims with allowed claims are estimated to recover between 80% and 85% of their original investment by the time the entire receivership process concludes. This projected recovery rate is notably high for a Ponzi scheme of this scale, largely due to the Receiver's aggressive pursuit of clawbacks and asset recovery.