A federal judge ordered payment processor NxPay to hand over $9 million in stolen Ponzi scheme funds within five days, rejecting the company's attempt to delay the surrender.

NxPay had fought the order after settlement negotiations with the Zeek Rewards Receiver collapsed last December. The company argued that a summary proceeding wasn't the right legal vehicle to determine ownership of the funds and demanded a separate lawsuit that would give them a full opportunity to defend themselves in court.

Judge Mullen acknowledged NxPay's concerns but wasn't buying it. In his June 1st ruling, the judge concluded that forcing a separate action would be "costly and inefficient." Instead, he ordered NxPay to transfer $9,069,446.52 to the Receiver within five days, to be held in a segregated account while the case continued.

The ruling doesn't prevent NxPay from continuing to challenge the order. They can still press their claims, but now under the existing litigation rather than a new lawsuit. Both parties must appear for a status conference on June 24, 2015, at 10:30 a.m. in Charlotte's federal courthouse to discuss scheduling a contempt hearing and whether additional discovery is needed.

The decision reflects the court's concern that NxPay might make the funds "disappear" if allowed to hold them through a lengthy separate legal battle and then ultimately lose. By freezing the assets in a segregated account now, the judge ensures the money stays put while litigation continues.

Experts view NxPay's legal position as weak. The funds were definitively stolen through the Zeek Rewards Ponzi scheme, and every other entity involved has already been forced to repay their ill-gotten gains. Courts typically don't look favorably on companies trying to shield assets they can't legitimately claim.

The situation took an unexpected turn just days after the judge's order. On June 8th, NxPay filed a Motion for Reconsideration, now claiming they don't actually have $9 million to surrender. The claim raised eyebrows given that the company had never previously suggested a liquidity problem during months of negotiations with the Receiver.

🤖 Quick Answer

What did the federal judge order NxPay to do regarding the Zeek Rewards funds?
Judge Mullen ordered payment processor NxPay to surrender $9,069,446.52 in stolen Ponzi scheme funds to the Zeek Rewards Receiver within five days. The money must be held in a segregated account. The judge rejected NxPay's arguments for delaying the transfer, deeming a separate lawsuit unnecessary and inefficient.

Why did NxPay resist surrendering the funds?
NxPay argued that a summary proceeding was an inappropriate legal mechanism to determine fund ownership. The company requested a separate lawsuit to provide a full opportunity for court defense and to present their claims regarding the funds' rightful ownership.

How did the judge respond to NxPay's legal arguments?
Judge Mullen acknowledged NxPay's concerns but concluded that requiring a

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