Monday, 13 July 2015

How Receivers Distrubute Funds

This is the latest information from the ZEEK REWARDS receivers regarding distribution of THEIR recovered funds. It uses a system called the 'Rising Tide' method . This doesn't mean that Banners Broker affiliates will be using this system, but the information below will give you an idea of what to expect and the time scales involved:


I am pleased to announce that we will be making a second partial interim distribution to all Affiliates who hold Allowed Claims on the next Court authorized distribution date (July 31, 2015), which, when combined with the first partial interim distribution and the amounts paid by Zeek Rewards before it was shut down, will return to victims 60% of allowed claimed losses due to the Zeek Rewards Ponzi scheme.

There has been some confusion about how the amounts of distributions are calculated using the Court ordered “rising tide” method. The rising tide method of loss calculation is designed to make every recognized claimant equally whole (as a percentage of their investment). Take for example two recognized claimants, each of whom invested $10,000 into the Zeek Rewards Ponzi scheme. The first claimant received nothing back from Zeek Rewards while the scheme was operating. The second claimant received $4,000 out of Zeek Rewards before it was shut down. Under the rising tide method, the second claimant is deemed to have already received 40% of her investment back, while the first claimant has received nothing back. When we made the first partial interim distribution of 40% the first claimant received $4,000, but the second claimant did not receive a distribution check.

When the second interim partial distribution is made, the first claimant will receive an additional $2,000, and the second claimant (who did not get a first distribution) will receive $2,000. This will ensure that both claimants have received 60% of the amounts they invested. While some Affiliates have complained about the rising tide method, I believe it is the most fair way to make the Zeek Rewards victims equally whole; two investors put $10,000 into the scheme and each will receive $6,000 total, whether it was received from the scheme itself, or from distributions from the receivership, or a combination of both.

There also has been some confusion about our quarterly distributions. Some mistakenly believe that they will receive a distribution every quarter. There was a first partial interim distribution and will soon be a second. Each quarter we send distribution checks only to claimants who completed the claims process since the last quarter.

Unfortunately, nearly 50,000 claimants with recognized claims have not received a first, nor will they receive a second, partial interim distribution. The only reason for this is that those 50,000 claimants have not electronically signed the Release and OFAC certification available through the claims portal. Many have called or emailed asking for personal assistance signing and submitting these forms. We will soon create and post on the receivership website an instructional video showing how to electronically sign and submit the Release and OFAC certification through the claims portal. The cost to create and post this video will be a minimal expense to the receivership.

We have received calls and emails asking that we cut off the recovery rights of the 50,000 recognized claimants who have not completed the process and distribute their share of distributions to those who have. That day may come, but it has not yet. I will give each claimant with a recognized claim every opportunity to receive their share of the recovery. Nonetheless, I implore everyone to promptly complete the Court required process. Sometime before the end of the receivership I will have no option but to ask the Court for permission to distribute all remaining receivership assets to only those recognized claimants who have completed the process.

If your contact information has changed, or the claims portal shows that you were issued a check that you have not received, or a check you were mailed was issued in the wrong name, please click on the following link to learn how to let us know:

After this second partial interim distribution, the receivership will maintain sufficient funds to pay those claimants who have not yet, but hopefully will, electronically sign the Release and the OFAC certification, and sufficient funds to allow the receivership team to continue to pursue additional recoveries for the ultimate benefit of eligible Affiliates. We are not going to hold onto money that we could otherwise distribute to victims.

We are in negotiations or litigation with financial services firms to recover tens of millions of dollars for Affiliates. The litigation against U.S and foreign net winners (those who took more money out of the scheme than they put in, essentially holding the victims money) is progressing. I remain confident that we will succeed in all of these efforts. Unfortunately, litigation is never quick, and once we have judgments against the net winners, in amounts exceeding $200 million, we will have to collect on those judgments. I don’t anticipate making a third partial interim distribution for quite some time because the funds for such a distribution will largely have to come from litigation recoveries that will take quite some time.

I know and understand that recovering only 60% of your investment is not what you want. I have read letters from and spoken to many of you. I know the hardships that Zeek Rewards inflicted on thousands of people. It may be no comfort, but a 60% recovery by victims of a Ponzi scheme is unusually high, and I am proud that the receivership team spends less as a percentage of total recoveries than any receivership of which I am aware.

I am entirely confident that when we are finished with our work on your behalf your total recovery will be more than the 60% we will distribute. I ask you for your patience, and thank you for your continuing support.

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