ZeekReceiver Going After Paul Burks

 

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION
___________________________________
SECURITIES AND EXCHANGE COMMISSION,  Plaintiff,  vs.  Civil Action No. 3:12 cv 519

REX VENTURES GROUP, LLC  d/b/a ZEEKREWARDS.COM, and  PAUL BURKS,  Defendants.
___________________________________
DEFENDANT PAUL BURKS’ RESPONSE TO RECEIVER’S MOTION SEEKING AMENDMENT OF AGREED ORDER APPOINTING TEMPORARY RECEIVER AND FREEZING ASSETS OF DEFENDANT NOW COMES

defendant Paul Burks, and responds in opposition to the motion filed by Kenneth D. Bell (“Receiver”) seeking amendment of the Agreed Order Appointing Temporary Receiver and Freezing Assets of Defendant Rex Ventures Group, LLC (Doc. No. 4) (“Agreed Order”). Mr. Burks opposes the Receiver’s request to expand the definition of “Recoverable Assets,” as it specifically pertains to Paul Burks, beyond the scope of the consent order entered by this Court on August 17, 2012.

In support of this motion, the defendant shows the following:

1. The instant action stems from an investigation by the Securities & Exchange Commission (“SEC”) into Rex Ventures Group, LLC and its sole shareholder Paul Burks. Prior to entering into a consent agreement with the SEC, Rex Ventures Group, LLC operated.

Because it clearly fits within the text and spirit of the Agreed Order, Mr. Burks does not oppose modifying the Agreed Order to enable the Receiver to more clearly define—and better receive—funds identified as “cashier’s checks, certified checks, money orders, and other forms of payment that are being held by the Receivership Defendant that have not been deposited with a bank.” (Doc. 14 ¶ 6) Case 3:12-cv-00519-GCM Document 20 Filed 08/29/12

Zeekler.com, a penny auction website, and ZeekRewards.com, an internet-based affiliate program used to promote the Zeekler.com website. [private_platinum]

2. On August 17, 2012, following a period of cooperation between Mr. Burks and Rex Ventures Group, LLC, and the SEC—cooperation that included the production of hundreds of thousands of documents, including financial records, e-mails, and all manner of electronic files—the defendants entered into a consent agreement with the SEC. Immediately after these filings took place, the Court, inter alia, entered the Agreed Order.

3. The language of the Agreed Order is clear. This Court appointed the Receiver to marshal the assets of the Receivership Defendant, Rex Ventures Group, LLC, and its order defined the scope of his authority consistent with that mandate. Rex Ventures Group, LLC is the sole Receivership Defendant, and “Receivership Assets” are defined as assets of the business, namely, “those assets: (a) held or possessed by Receivership Defendant; (b) held in constructive trust for the Receivership Defendant; and (c) fraudulently transferred by the Receivership Defendant.” (Doc. 4 at 2)

4. Without sufficient justification or cause, the Receiver now seeks to expand his powers and previously defined scope of authority in order to include Mr. Burks’ personal accounts.

5. While asserting that the Agreed Order “does not specifically address the freezing of assets” in Mr. Burks’ possession, (Doc. 14 ¶ 5) the Receiver ignores the fact that the Agreed Order clearly designates the specific assets that are to go into receivership. Pursuant to the Agreed Order, the Court appointed a temporary receiver “for the purpose of marshaling and preserving all assets of the Receivership Defendant,” and accordingly froze certain assets of Rex Ventures Group. Case 3:12-cv-00519-GCM Document 20 Filed 08/29/12 Page 2 of 6

6. The Receiver’s argument in support of expanding his reach into Mr. Burks’ personal assets is unsupported. Indeed, there is no factual basis for the Receiver’s motion other than references to the SEC’s Complaint, assertions which Mr. Burks neither admits nor denies. The Receiver has not referenced any facts, affidavits, or other evidence in support of his assertion that freezing Mr. Burks’ personal assets is necessary. Thus, there is no record to support the Receiver’s motion.

7. Relying solely on the SEC’s assertions in its Complaint, the Receiver’s motion accuses Mr. Burks of having “misappropriated and secreted approximately $11 million.” Continuing to quote from the SEC’s Complaint, the Receiver asserts that “approximately $4 million [of the $11 million] … remain[ed] in the possession, custody or control of Burks as of August 17, 2012.” (Doc. 14 ¶ 3)

8. As the SEC and federal government are well aware, more than half of this approximately $11 million was paid to the Internal Revenue Service for 2011 and 2012 estimated taxes. Moreover, as the filings in this matter make clear, Mr. Burks was also assessed a $4 million fine by the government.

9. Lacking a factual basis to support his motion, the Receiver lacks a legal basis, as well. Ordinarily, a party seeking an asset freeze must demonstrate that the party is “likely to succeed on the merits.” Securities and Exchange Commission v. Cavanagh, 155 F.3d 129, 132 (2nd Cir. 1998). Here, however, Mr. Burks has settled the SEC’s claim against him. There is, therefore, nothing upon which to base a determination of likelihood of success on the merits. The Receiver has not met his burden.

Mr. Burks wired $3,615,254.27 to the government today and made arrangements for the balance- – $384,745.73– to be wired tomorrow morning. Case 3:12-cv-00519-GCM Document 20 Filed 08/29/12 Page 3 of 6

10. Not only has the Receiver failed to assert a factual basis for his motion to expand his reach, no such factual basis exists. Rex Ventures Group, LLC generated revenue from three sources: (1) retail bid sales; (2) Zeekler.com penny auction sales; and (3) membership in the ZeekRewards.com affiliate program. Upon information and belief, revenues from retail bids alone were substantially greater than moneys retained by Mr. Burks. These sales were made absent any connection to the allegedly improper business conduct that resulted in the Agreed Order. Indeed, the only revenue stream that is traceable to any allegedly improper conduct is revenue earned from the ZeekRewards.com affiliate program.

11. There is no basis and no need to freeze Mr. Burks’ personal funds. Mr. Burks has never expatriated the assets of Rex Ventures Group, LLC or his personal money. He has fully cooperated in the SEC investigation, which included examination of relevant financial records.

He is 65 years old, married, a two time cancer survivor, and has lived in Lexington, North Carolina for 23 years. He has never been a defendant in any action, civil or criminal, until this matter. Mr. Burks is aware of the importance of this proceeding and will abide by any orders this Court imposes.

WHEREFORE, the Defendant requests that the Court deny the Receiver’s motion. Case 3:12-cv-00519-GCM Document 20 Filed 08/29/12

This the 30th day of August, 2012
Respectfully submitted,
s/ Noell P. Tin

Noell P. Tin
Tin Fulton Walker & Owen, PLLC
301 East Park Ave.
Charlotte, NC 28203
Phone: (704) 338-1220
Fax: (704) 338-1312
[email protected]
COUNSEL FOR MR. BURKS
Case 3:12-cv-00519-GCM Document 20 Filed 08/29/12 Page 5 of 6

CERTIFICATE OF SERVICE
I certify that I have served the foregoing DEFENDANT PAUL BURKS’ RESPONSE TO RECEIVER’S MOTION SEEKING AMENDMENT OF AGREED ORDER APPOINTING TEMPORARY RECEIVER AND FREEZING ASSETS OF DEFENDANT on opposing counsel
by submitting a copy thereof through Electronic Case Filing, to be sent to:

John J. Bowers Kenneth D. Bell
Securities & Exchange Commission McGuireWoods LLP
100 F Street, NE 201 North Tryon Street
Washington, DC 20815 P.O. Box 31247
Email: [email protected] Charlotte, NC 28231
Email: [email protected]

This the 30th day of August, 2012.
s/Noell Tin
Noell P. Tin
Case 3:12-cv-00519-GCM Document 20 Filed 08/29/12 Page 6 of 6
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Comments (2)

  1. Greetings Former Zeeksters,

    Please step back and look at the ?Big Picture?. By most comments I see that many are brainwashed and believe what the government wants you to think. Zeeks was a Rock Solid company! It just was not along the lines of the government?s way of only limiting high profits and success to a very small percentage. Remember this as you keep reading? The government wants struggling robot workers, not successful leaders!

    Zeeks was one of the most amazing business model ever introduced. If you look at the growth, profits, cash on hand, and financial responsibilities it all makes absolute sense. The company was profiting 2 million a month, all going back in, and we were only just getting started! What? That doesn?t happen in the corporate world. Greed doesn?t allow it, Corporate Greed doesn?t allow such Fast and Widespread growth. Zeeks was going to be the most successful company in the world within a few years, and millions of people were going to be part of it!!! Millions and millions of people would have been successful, debt free and self sufficient. Well sadly that is not how it works in this world my friends.

    Let me break down the BIG PICTURE for everyone? ?They, the government? was in fear of this business model because ?They? were losing control. Zeeks had grown at an unprecedented rate and already had over One million affiliates in less than two years. Then on top of that we were doubling every two months with a real potential of approximately 15 million within the next year. The government felt pressure because too many people were going to be successful too fast. Overall there would be less interest in government controlled financial institutions. There would have been less interest in the Stock Market/Banking/Etc. With the potential of Zeek?s growth even more people would have been transferring their money out of profit limiting government controlled situations into a successful business model! Zeeksters would have also been starting up even more other small businesses and that is not what ?They? want.
    Think about this, If you and I, the little fish (the masses), are successful in something like Zeeks, we would not risk our money in an unpredictable stock market or banking investments. We would also be debt free, having the ability to pay cash for almost everything and not need to depend on ?Credit? so much either. We would also be able to shop locally more, and at more expensive smaller establishments because we would all have more money to spend.
    Now this is tolerable on a small scale but when it goes viral (multi-millions) and the 3%?ers (Big Business/Corporate Giants/Media Advertising/Etc) start losing control they will put a stop to it anyway they can.
    The main fact is that ?They?, the CIA, Secret Service? Ultimately, The New World Order wants us all to struggle, be in debt and DEPEND on them!
    Now in these times, because of new technology and brilliant minds who think outside the box the little guy has a chance to compete with those 3%?ers and THEY ARE SCARED!!! And when they get scared of losing power they use that power to shut it down and hold us back.

    Also let me ask you all these questions, if Zeeks was such a scam and Paul Burke was such a crook don?t you think he would have taken more than a 2% profit from a so called $600 million Ponzi Scheme? Don?t you think he would have ?siphoned? more than just one million dollars to his family members? Don?t you think the top people in the company would have off shore accounts setup with enough money for the rest of they?re lives, ready to run and hide because they can?t show their faces to anyone? What about Dawn Wright Olivares, yes she was making the most of any affiliate but do you think she made enough money for the rest of her life? Do you really think this woman can even go out in public? Do you really think any of the Zeeks management have lives anymore? They have been made to look like criminals by our corrupt controlling ?New World Order? via the CIA via the Secret Service via the Securities and Exchange Commission (SEC) via the Attorney General (AG)!
    Then there is You and I, we are all made to look like fools to prove a point. To knock down our big dreams, to cage us like animals and to scare the general public out of thinking we can all be financially secure, living better lives and even make it big someday!

    Listen here is the bottom line, anything can be made to look like a Pyramid or Ponzi Scheme and that is what ?T?hey did. When will everyone realize that the whole world is a pyramid? no matter what, it all trickles UP! Whoever starts or runs something will earn more and be a little more successful then those at the bottom, that is common sense. Mr Burke has been made to look like a scammer because he was thinking outside the greedy corporate American box. He was changing too many lives for the better with his ingenious business ideas. So what it came down to was that Mr Burke was given an ultimatum to give up any chance of a fight and walk away with hefty fines or be labeled and ?made to look like?, Bernie Madoff and other real crooks when in fact Mr Burke did nothing wrong. And at 65 yrs old what would you do? I don?t care how solid the company was and how many top attorneys you hire, when it comes to battling the government, they will twist things around to look like however they want, to win the power struggle and sustain control over the general public. They will forever continue to ?Save Us from Ourselves?.

    Overall, this stinks to high heaven with government conspiracy to keep us all in the palm of their hand begging for a crumb! On top of it all, at the end of the day, THEY do win because now the majority are SCARED (of MLM and Self Employment) and will continue to struggle and slave away at their corporate government controlled JOB!

    To my fellow Entrepreneurs? Do Not let this hold you back.
    Say it with me?
    I WILL FOREVER BE AN ENTREPRENEUR AND WILL ALWAYS FIGHT FOR MY PIECE OF THE PIE!
    WE NEED MORE LOVE AND UNITY, AND I WILL NEVER STOP DREAMING FOR BETTER DAYS TO COME FOR ALL OF HUMANITY!!!
    God Bless
    🙂

    1. AGREEMENT WITH SILVA

      I agree with you wholeheartedly (100%). I was hoping they would be able to open their doors again, and I am sure Paul and the gang were hoping the same thing too. But I think you are right. Someone just wants to take all of his money, so even if they do get to re-open, none of our money will be in our accounts any longer, (I don’t believe) and we would have to start over. Unfortunately, many of us probably don’t have the money to re-purchase all our bids back. Therein lies our problem. So, whomever started this inquiry has hurt over 2 million people and all our dreams. Its like they just took away and shut down 2 million jobs over night. How can they sleep at night! And you are absolutely correct! They were doing nothing wrong and absolutely everything right!

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