A federal judge in Charlotte delivered a message Tuesday to a Napa Valley financier: What Zeek Rewards giveth, the federal government taketh away.
In Jaymes Meyer’s case, that includes his freedom.
The CEO of Preferred Merchants LLC in Napa, Calif., will serve 15 months in prison and pay a $4.8 million judgment for attempting to hide millions in assets connected to the Rex Ventures Group, the Lexington-based parent company of Zeek Rewards, which prosecutors describe as one of the largest Ponzi schemes in U.S. history.
Preferred Merchants was part of Rex Ventures’ financial network. In 2012, when the U.S. Securities and Exchange Commission began investigating Rex Ventures and its Zeek Rewards marketing scheme, a court agreed to freeze all of the company’s assets. It also appointed Charlotte attorney Ken Bell to recover and redistribute what he could of the estimated $800 million in losses suffered by Zeek Rewards investors worldwide.
The U.S. Secret Service received a seizure warrant for the $17.4 million in Rex Ventures assets held by Meyer and Preferred Merchants. Those assets were also under the freeze order.
According to prosecutors, Meyer first misled the SEC by implying that his company did not control any Rex Ventures assets. Later, Meyer secretly wired $4.8 million from a Rex Ventures trust to a brokerage account he controlled, prosecutors say. He used that money to build homes in Napa, Calif., and the Caribbean, while taking other measures to hide his Rex Ventures holdings.
In March, Meyer pleaded guilty to obstruction of justice. As part of the deal, he forfeited the two homes. Bell said Tuesday the receivership also seized $1 million in cash that has been added to what has been recouped.
That amount now stands at $361 million. Bell says the receivership has redistributed $250 million to 107,000 court-sanctioned victims. There is also money set aside for about 40,000 other people with approved claims who are still completing the steps required to receive a payment, he said.
Meanwhile, Paul Burks, the head of Rex Ventures and alleged mastermind of Zeek Rewards, was found guilty in Charlotte federal court last month of fraud and conspiracy in connection with the operation. He faces up to 65 years in prison and a $1 million fine, and will be sentenced by Cogburn at a later date.