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Bell v. Disner

United States District Court, W.D. North Carolina, Charlotte Division

January 27, 2017

KENNETH D. BELL, in his capacity as court-appointed Receiver for Rex Venture Group, LLC d/b/a ZeekRewards.com, Plaintiff,
v.
TODD DISNER, in his individual capacity and in his capacity as trustee for Kestrel Spendthrift Trust; TRUDY GILMOND; TRUDY GILMOND, LLC; JERRY NAPIER; DARREN MILLER; RHONDA GATES; DAVID SORRELLS; INNOVATION MARKETING, LLC; AARON ANDREWS; SHARA ANDREWS; GLOBAL INTERNET FORMULA, INC.; T. LEMONT SILVER; KAREN SILVER; MICHAEL VAN LEEUWEN; DURANT BROCKETT; DAVID KETTNER; MARY KETTNER; P.A.W.S. CAPITAL MANAGEMENT LLC; LORI JEAN WEBER; and a Defendant Class of Net Winners in ZEEKREWARDS.COM; Defendants.

          ORDER ON PROCESS FOR DETERMINING THE AMOUNT OF FINAL JUDGMENTS AGAINST NET WINNER CLASS MEMBERS

          Graham C. Mullen United States District Judge

         On November 29, 2016, this Court entered an ORDER (Doc. No. 142) granting the motion of Kenneth D. Bell, the court-appointed Receiver for Rex Venture Group, LLC (“RVG”), for Summary Judgment Against Remaining Named Defendants and Partial Summary Judgment Against the Net Winner Class (“Summary Judgment Order”). Pursuant to the Summary Judgment Order, the Court has now entered Final Judgments against each of the named Defendants in the amount of their net winnings from the ZeekRewards scheme. See, e.g., Doc. Nos. 148-151.[1] In entering Final Judgments against the Named Defendants, the Court relied on the sworn testimony of the Receiver's expert witness, David Turner, and his calculation of the net winnings attributable to each of the Named Defendants based on the available books and records of the RVG Receivership. See Doc. # 134-47, p.43.

         In the Summary Judgment Order, the Court also entered partial summary judgment against the Net Winner Class, finding that the net winnings they received from ZeekRewards were fraudulent transfers that must be repaid to the Receiver and are subject to a constructive trust for the benefit of the Receivership Estate. The only issue now remaining before the Court with respect to the Net Winner Class is how to fairly and efficiently determine the amount of the Final Judgment (ZeekRewards net winnings plus pre-judgment interest) to be paid by each member of the class.[2]

         The Receiver has proposed a process, described below, for determining the amount of the Final Judgment to be entered against each member of the Net Winner Class in accordance with the Summary Judgment Order. Counsel for the Net Winner Class has stated that the Net Winner Class has no objection to that proposed process. Accordingly, the process for determining the amount of the Final Judgment to be entered against each member of the Net Winner Class shall be as follows:

1. The amount of net winnings (“Net Winnings”) received by each Net Winner Class member shall be calculated in the same manner as the Final Judgments entered against the named Net Winners in this action. See Doc. # 134-47, p.43; Doc. Nos. 148-151. Specifically, Net Winnings shall be calculated as total cash paid-out by RVG less outside cash (excluding reinvested funds generated as part of the ZeekRewards Program) used to purchase VIP bids, retail bids, and subscriptions (VIP bids Retail bids Subscriptions). Each Net Winner Class member's net winnings shall be the total amount of the net winnings associated with their respective usernames, [3] aggregated first by matching usernames with the same valid nine-digit Social Security numbers (SSN) in the ZeekRewards database and then including additional usernames associated with the same class member based upon the “Payee” field in the ZeekRewards database.
2. On or before January 31, 2017, the Receiver shall notify each Net Winner Class member of the amount of their ZeekRewards Net Winnings as reflected in the available books and records of the RVG Receivership.
3. The Receiver shall notify each member of the Net Winner Class of the amount of their Net Winnings by email to the email address provided by the net winner in connection with any account included in determining the amount of Net Winnings as well as any other email address that has been provided by the net winner following the appointment of the Receiver. The Receiver shall also post a link on the Receivership website that allows class members to receive notification of the amount of their Net Winnings. In the event that the notice cannot be delivered to any email address provided by the Net Winner, the Receiver shall send a letter to the last known physical address of the Net Winner informing the Net Winner of the proceedings and the availability of the amount of his or her Net Winnings on the Receivership website.[4]
4. Class Counsel for the Net Winner Class shall (i) post a notice on the Net Winner Class website describing the process set forth herein and (ii) communicate to the Net Winner Class the availability from the Receiver of the Net Winnings amount for each class member. Class Counsel shall not be required to provide the amount of Net Winnings to each class member or otherwise communicate with class members. The Court finds these multiple means of notice to be fair, appropriate and the best notice that is practicable under the circumstances.
5. On or before March 31, 2017 (or at least 60 days following the initial email transmittal of the Net Winning amounts to class members if the Receiver's email notice occurs after January 31, 2017), each class member shall, if they choose to do so, respond to the calculation of their Net Winnings from the RVG records. The response must be in writing (sent to the Receiver either electronically or by mail to the email and mail addresses designated in the Receiver's notice of the Net Winner Class member's net winnings) and must include:
1) The Net Winner Class member's specific proposed alternative calculation (in US$) of Net Winnings; and
2) Evidence supporting the alternative calculation, including, without limitation, independent documentation (such as bank records).
3) In responding to the Receiver's calculation of their Net Winnings, Net Winner Class members must “set forth specific facts that go beyond the mere existence of a scintilla of evidence.” Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir. 2013). See also, DiQuollo v. Prosperity Mortg. Corp., 984 F.Supp.2d 563, 570 (E.D. Va. 2013)(“the law is well established that uncorroborated, self-serving testimony of a plaintiff is not sufficient to create a material dispute of fact ….”). They cannot “solely rely on mere [] denials . . . .” Id.
In calculating any alternate amount of Net Winnings, a Net Winner Class member may only include money paid into RVG / ZeekRewards and received from ZeekRewards for the particular class member's usernames (as defined above). No “expenses” or other “setoffs” are permitted to be deducted from this amount, including but not limited to, expenses alleged to have been incurred in participating, promoting, recruiting other participants, paying for the accounts of others or loaning money to other participants. See Summary Judgment Order at 23-24; Order dated January 14, 2015, Doc. No. 98, at 7-8 (denying as a matter of law counterclaim by net winners to “setoff” alleged costs and expenses incurred as a Zeek Affiliate).
6. Final Judgment shall be entered against any Net Winner Class member who does not respond to the Receiver's calculation of their Net Winnings on or before the response deadline in the amount of their Net Winnings as calculated by the Receiver plus prejudgment interest, calculated at the North Carolina statutory rate of 8% per annum from August 17, 2012, which is on or after the date of the last fraudulent transfer payment to each Defendant, to November 29, ...

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