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Banking and Finance

Zeek Victims Face Sept 5th Deadline To File Claims

 Victims of the $600 million ZeekRewards Ponzi scheme have approximately 24 hours to timely submit a claim to ensure they are afforded a chance to participate in the funds recovered by the court-appointed receiver.  According to receiver Kenneth D. Bell, victims of the largest Ponzi scheme in North Carolina's history face a midnight deadline on September 5th in order for their submission of a proof of claim to be considered timely.  While Bell recently indicated that over 100,000 claims had been submitted thus far, previous estimates pegged the total number of victims as at least 800,000 - meaning hundreds of thousands of potential claims could be at risk of being permanently lost.

The Court approved the Receiver's proposed claims process on May 8, 2013, giving investors until September 5, 2013 to submit claims for review and approval by the Receiver. According to the Update, significant effort was required just to provide the required notice to potentially interested parties.  Due to the sheer amount of potential claimants (the Receiver estimated there were approximately 2.2 million unique User IDs), the Receiver attempted to send 1.7 million emails notifying individuals of their rights under the claims process.  Of these 1.7 million emails, approximately 1.3 million were successfully delivered.  Of the approximately 420,000 emails that were not delivered, the Receiver ended up sending more than 330,000 postcards to physical mailing addresses, as well as over 7,000 postcards to financial institutions that could feasibly hold claims.  

The Receiver opened an online claims portal on May 15, 2013, which was to serve as the central mechanism by which investors could submit claims.  In a recent update, the Receiver indicated he had received nearly 54,000 claims to date.  Including claims marked as "in progress" on the Claims Portal, the aggregate amount of potential claims submitted thus far is approximately $355 million.  This amount slightly exceeds the total amount of funds recovered to date by the Receiver, which is currently approximately $325.1 million.

After the claims portal closes, the Receiver plans to seek court approval of the next phase of the claims process, including the proper method to determine claims and how to deal with claimants who object to the Receiver's claim determination.  It is expected that once the Receiver issues his claim determinations to the respective claimants, he will then seek approval for an interim distribution of a to-be-determined amount.  

The Receiver has posted a list of frequently asked questions on his website here.

The ZeekRewards Claims Portal is here.

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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