Judge Mullen denied VictoriaBank's motion to unfreeze $13.1 million in Zeek Rewards Ponzi funds on July 12th. This ruling keeps the money designated for victims frozen. The bank had sought access to the funds held at BNY Mellon, but the court cited the potential for irreparable harm to victims if the assets were released prematurely.

The $13.1 million represents a portion of the estimated $600 million lost by victims in the Zeek Rewards scheme. Paul Burks operated the massive internet marketing Ponzi from North Carolina. Thousands of investors worldwide contributed money to the fraudulent program before its collapse in 2012.

VictoriaBank secured an initial victory in May when the court granted its motion to dismiss the case. The court found it lacked personal jurisdiction over the foreign corporation, meaning legal proceedings against the bank itself could not continue in that specific court.

The court, however, maintained a freeze order on the funds. This was a critical distinction. The Receiver, tasked with recovering assets for Zeek Rewards victims, immediately announced an appeal of the jurisdictional dismissal. The Fourth Circuit Court of Appeals will now review that decision.

VictoriaBank then moved to vacate the freeze order. The bank argued that with the dismissal, its assets should be released. Success in this motion would have granted the bank access to the $13.1 million held at BNY Mellon.

The Receiver opposed this move. They argued that if the Fourth Circuit overturned the jurisdictional dismissal, VictoriaBank's funds would likely be moved offshore and become inaccessible. Such an outcome would leave Zeek Rewards victims without a chance to reclaim their losses.

Judge Mullen acknowledged the Fourth Circuit might disagree with his initial jurisdictional ruling. He specifically stated that if the freeze were lifted prematurely and VictoriaBank's assets became inaccessible, the Receiver would suffer irreparable harm. VictoriaBank's account with BNY Mellon is its sole domestic connection. This makes those funds the only reliable source for victim repayment if the Receiver's appeal ultimately succeeds.

The judge ultimately denied VictoriaBank's motion on July 12th. He reasoned that a stay order correctly preserves the status quo when no other adequate legal remedy exists. This decision secures the $13.1 million for now.

The funds will remain frozen pending the outcome of the Receiver's appeal in the Fourth Circuit. This offers continued hope for the thousands of individuals affected by the Zeek Rewards Ponzi.