NxPay Claims Empty Pockets After Court Orders $9 Million Payout

A payment processor tied to an $850 million Ponzi scheme is now telling the court it can't pay what it owes.

NxPay lost its legal battle to keep stolen Zeek Rewards funds on June 1st when a judge ordered the company to surrender $9 million to the court-appointed receiver. The money was supposed to sit in receivership while the case played out.

Then came the excuse.

On June 8th, NxPay filed a motion claiming it didn't have the cash. The company said it was "financially unable to meet such a financial obligation." Instead of the full $9 million, NxPay wired $1 million to the receiver—just 11 percent of what the court demanded.

Michael Busher, chairman of NxSystems (NxPay's parent company), blamed two problems in his sworn declaration. First, NxPay paid out the stolen Ponzi funds directly to Zeek investors. Second, thousands of account holders triggered chargebacks through their banks after learning about the court-ordered freeze.

Busher claimed NxSystems couldn't stop the chargebacks. Customers bypassed the company entirely and pulled money back through their banks like disputing a credit card charge. The difference, Busher wrote, is that banks execute these transactions instantly without notifying the processor. NxSystems might not learn about them for months or even longer.

When news of the freeze spread, chargebacks flooded in. Busher said the company didn't discover some of these unauthorized withdrawals for a year and a half after they occurred.

The real issue: NxPay knowingly processed payments for a Ponzi scheme that defrauded investors out of nearly a billion dollars. Now the company claims financial hardship. Busher noted that NxPay's business has "steadily declined" since its association with the case became public and after losing banking relationships.

The court hasn't ruled on NxPay's motion for partial relief from the order.

What Busher's declaration doesn't explain is how a company processing massive volumes of illicit funds suddenly can't find $9 million. NxPay profited from handling Zeek Rewards payments while the scheme was running. The chargebacks and payouts to investors that now excuse the company from compliance are the same transactions that generated fees for NxPay when the fraud was alive.

The receiver faces the same problem every Ponzi case does: tracing and recovering stolen money from intermediaries who benefited from the scheme. NxPay's claim of poverty rings hollow when weighed against its role in facilitating one of the largest frauds in recent memory.

The $1 million already transferred provides little comfort to victims still waiting to recover what they lost.

🤖 Quick Answer

What happened with NxPay's court-ordered payment to the Zeek Receiver?

NxPay, a payment processor linked to an $850 million Ponzi scheme, was ordered by a judge on June 1st to surrender $9 million to the court-appointed receiver. However, on June 8th, the company claimed financial inability to comply, transferring only $1 million instead—approximately 11 percent of the court's directive.

Why did NxPay claim it couldn't pay the full amount?

NxPay's chairman Michael Busher filed a sworn motion asserting the company was "financially unable to meet such a financial obligation." The motion attributed the payment shortfall to two specific financial problems, though the details remained part of the ongoing legal proceedings regarding the stolen Zeek Rewards funds.

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