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Case 5:19-cv-00170-gwc Document 1 Filed 09/26/19 Page 1 of 7

UNITED STATES DISTRICT COURT 2oi, SEP 26 AH 10: 19


FOR THE DISTRICT OF VERMONT

UNITED STATES SECURITIES AND


EXCHANGE COMMISSION,

Plaintiff, CivilNo.: 5:19,C\/.,\7 C)


v.

TRUDY GILMOND, OLIVE GILMOND, and


KELLIE KING,

Defendants.

COMPLAINT TO SET ASIDE FRADULENT CONVEYANCE


AND FOR OTHER RELIEF

Plaintiff, the United States Securities and Exchange Commission ("SEC" or

"Commission"), for its compliant, alleges as follows:

A. Introduction

1. This is a civil action against Trudy Gilmond to recover the proceeds from a

fraudulent transfer designed to hinder, delay and defraud creditors, including the Commission.

B. Jurisdiction and Venue

2. The Court has jurisdiction over this case under 28 U.S.C. § 1345, because the

Plaintiff is an agency of the United States, as well as 28 U.S.C. §§ 3301-3308 (the Federal Debt

Collection Procedures Act ("FDCPA")).

3. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(2), because the

subject property is located within this district.


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C. Parties

4. Plaintiff, the United States Securities and Exchange Commission, seeks to enforce

collection of a Judgment entered against Trudy Gilmond in SEC v. Trudy R. Gilmond, Case No.

3:15-0091-GCM (W.D.N.C.) (the "Judgment").

5. Trudy Gilmond is a Judgment debtor ordered to disgorge $1,752,673.47, plus

prejudgment interest of $169,084, and to pay a civil penalty of $150,000. Trudy Gilmond has

not made any payments towards the Judgment. Trudy Gilmond resides in St. Albans, Vermont.

6. Olive Gilmond resides in St. Albans, Vermont. Olive Gilmond is named as a

party to this action, because she may claim an interest in the real property at issue in this action.

7. Kellie King ("King") resides in St. Albans, Vermont. King is named as a party to

this action, because she may claim an interest in the real property at issue in this action.

D. Background

8. Trudy Gilmond unlawfully promoted and sold securities in the form of investment

contracts with ZeekRewards.com ("ZeekRewards"), a combined Ponzi and pyramid scheme

securities offering fraud.

9. From January 2011 to August 2012, Paul R. Burks ("Burks") raised more than

$850 million from approximately one million investors through an unregistered and fraudulent

offering of securities in the form of investment contracts through ZeekRewards, a website Burks

owned and controlled through his company Rex Venture Group LLC ("RVG").

10. On August 17, 2012, the Commission filed a settled emergency civil action

against Burks and RVG, shutting down ZeekRewards, freezing all its assets and appointing a

Receiver.

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11. From at least September 2011 until ZeekRewards was shut down in August 2012,

Trudy Gilmond was one of the most successful and prolific promoters of ZeekRewards,

persuading investors to buy the ZeekRewards securities as part of an unregistered distribution for

which no securities registration exemption was available. For her efforts, Trudy Gilmond

received: at least $461,963.90 in transaction-based commissions; at least $1.3 million in bogus

profit sharing; and helped ensure ZeekRewards' success.

12. Aware that ZeekRewards was under investigation by several law enforcement

agencies and that the business was in serious trouble in 2012, Trudy Gilmond and others

withdrew substantial sums of money from the scheme before it was shut down, without advising

investors that the scheme was likely to collapse.

13. On February 28, 2014, the Receiver, in a matter related to the SEC's suit, sued a

group of RVG participants who received more money from ZeekRewards than they paid in to

ZeekRwards (the "Clawback Action"). Trudy Gilmond was one of the defendants.

14. On May 29, 2015, Judgment was entered in the Clawback Action against Trudy

Gilmond in the amount of $2,129,522.27. Trudy Gilmond has not paid any portion of this

judgment.

15. On December 4, 2015, the Commission filed a separate complaint charging Trudy

Gilmond with violating Sections 5(a), 5(c), 17(a) of the Securities Act, and Section 15(a)(l) of

the Exchange Act.

16. On June 21, 2017, the SEC obtained its Judgment against Trudy Gilmond for

disgorgement and prejudgment interest totaling $1,921,757.47 and a civil penalty of$150,000.

Trudy Gilmond has not paid any portion of the Judgment.

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Case 5:19-cv-00170-gwc Document 1 Filed 09/26/19 Page 4 of 7

E. Fraudulent Transfer

17. Shortly after the SEC filed suit against RVG on August 17, 2012, Trudy Gilmond

began withdrawing substantial sums of money from the ZeekRewards scheme.

18. Trudy Gilmond used multiple entities, banks, and individuals to transfer the funds

she received from the fraud.

19. Between August 2013 and January 2014, Trudy Gilmond transferred at least

$400,000 through several accounts.

20. She then withdrew the funds in over 35 cash withdrawals under the $10,000 Bank

Secrecy Act reporting requirement.

21. In March 10, 2014, four days after Trudy Gilmond received notice that the

Receiver filed suit against her, she conveyed certain real property located at 3798 Ethan Allen

Highway, St. Albans, Vermont ("Subject Property") to her mother Olive Gilmond.

22. Trudy Gilmond conveyed the Subject Property for no consideration. At the time

of transfer, the Subject Property was an undeveloped lot. During the next year, Trudy Gilmond

managed the construction of a home on the Subject Property costing approximately $250,000.

The expenses for the construction were paid in cash.

23. During a post-judgment deposition, the SEC questioned Trudy Gilmond about the

transfer of the Subject Property and the construction on that property.

24. Trudy Gilmond falsely denied ever owning the Subject Property.

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Case 5:19-cv-00170-gwc Document 1 Filed 09/26/19 Page 5 of 7

Countl

Fraudulent Transfer under 28 U.S.C. § 3304(b)(l)(A)


With Intent to Hinder, Delay or Defraud a Creditor

25. The SEC realleges and incorporates the above allegations.

26. Trudy Gilmond transferred the Subject Property to her mother, Olive Gilmond,

with actual intent to hinder, delay or defraud a creditor.

27. Trudy Gilmond transferred the Subject Property to an insider, her mother, Olive

Gilmond.

28. Trudy Gilmond falsely denied owning the Subject Property during a deposition.

29. After the transfer of the Subject Property, Trudy Gilmond continued to exert

control over the Subject Property by managing the construction.

30. The transfer was substantially all of Trudy Gilmond's assets.

31. Before the transfer occurred, Trudy Gilmond was served with a complaint by the

Receiver.

32. The above acts by Trudy Gilmond are "badges of fraud."

33. Olive Gilmond did not take the Subject Property in good faith and for a

reasonably equivalent value and is not, therefore, a good faith transferee.

Count II
Fraudulent Transfer under 28 U.S.C. § 3304(b)(l)(B)
Did Not Receive Reasonably Equivalent Value for the Transfer

34. The SEC realleges and incorporates the above allegations.

35. The transfer from Trudy Gilmond to Olive Gilmond described above was

fraudulent as to the SEC, since Trudy Gilmond did not receive reasonably equivalent value for

the transfer and Trudy Gilmond intended to incur, or believed or reasonably believed that she

would incur, debts beyond her ability to pay as they become due.

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36. Olive Gilmond did not take the Subject Property in good faith and for a

reasonably equivalent value and is not, therefore, a good faith transferee.

Count III
Fraudulent Transfer under 9 V.S.A. § 2288(a)(l)
With Intent to Hinder, Delay or Defraud a Creditor

37. The SEC realleges and incorporates the above allegations.

38. The transfer from Trudy Gilmond to Olive Gilmond described above was

fraudulent as to the SEC, since Trudy Gilmond did not receive reasonably equivalent value and

the transfer rendered Trudy Gilmond insolvent.

39. The transfer to Olive Gilmond was fraudulent as to the SEC, since it was made

with the actual intent to hinder, delay or defraud the SEC.

40. With respect to the fraudulent transfer described above, the following badges of

fraud are applicable and are to be considered in determining actual intent:

(a) the transfer was to an insider;

(b) the transfers were made shortly after Trudy Gilmond was served with a complaint by
the Receiver;

(c) the transfer dissipated nearly all of Trudy Gilmond's assets;

(d) Trudy Gilmond misled the SEC when questioned about her ownership of the Subject

Property and her involvement with the construction project on the Subject Property; and

(e) no consideration was received by Trudy Gilmond in exchange for the transfer.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff, the United States Securities and Exchange Commission,

respectfully requests the Court to adjudge and decree as follows:

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Case 5:19-cv-00170-gwc Document 1 Filed 09/26/19 Page 7 of 7

A. Pursuant to 28 U.S.C. § 3306(a)(l), the avoidance of the fraudulent transfer to

Olive Gilmond, and ordering the sale of the Subject Property with the sale proceeds distributed

to the Commission to the extent necessary to satisfy the Judgment entered against Trudy

Gilmond;

B. Pursuant to 9 V.S.A. § 2288(a)(l), the avoidance of the fraudulent transfers to

Olive Gilmond, and ordering the sale of the Subject Property with the sale proceeds distributed

to the Commission to the extent necessary to satisfy the Judgment entered against Trudy

Gilmond;

C. That the Court award the SEC a surcharge, or alternatively, costs and fees as

allowed by 28 U.S.C. § 3011.

D. Such other and further relief as the Court deems just and proper.

Dated: September 25, 2019


Washington, D.C.

Respectfully submitted,

1/hyJ/IV
Michael J. Roessner
Attorney for Plaintiff
United States Securities and Exchange Commission
I 00 F Street, N .E., Mail Stop 5631
Washington, D.C. 20549
(202) 551-4347 (Phone)
(703) 813-9366 (Fax)

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Case 5:19-cv-00170-gwc Document 1-1 Filed 09/26/19 Page 1 of 1
JS 44 (Rev. 02/19)
CIVIL COVER SHEET
The JS 44 civil cover sheet and the ~fonnation contained herein _neither replace nor supplei:nent the fil_ing and service of pleadin~s or other papers as required by law, except as
proVIded b~ !~~al_ rules of_ c~mrt. Tots fmm, approved by the Jud1c1al Conference of the Umted States m September 1974, is requrred for the use of the Clerk of Court for the
purpose of m1!Iatmg the CIVIi docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)

I. (a) PLAINTIFFS DEFENDANTS


UNITED STATES SECURITIES AND EXCHANGE COMMISSION TRUDY GILMOND, OLIVE GILMOND, and
KELLIE KING,

(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant Franklin County
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.

Mi~Eh-1;)'?~~-fame, Address, and Telephone Number) Attorneys (I/Known)

United States Securities and Exchange Commission


100 F Street, NEMail Stop 5631
Washinqton. DC 20549-0022
II. BASIS OF JURISDICTION (Place an "X" in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an "X" in One Box for Plaintiff

~, U.S. Government 03 Federal Question


(For Diversity Cases Only)
PTF DEF
and One Box for Defendant)
PTF DEF
Plaintiff (US. Government Not a Party) Citizen of This State O I 0 I Incorporated or Principal Place 0 4 04
of Business In This State

0 2 U.S. Government 04 Diversity Citizen of Another State O 2 0 2 Incorporated and Principal Place 0 5 0 5
Defendant (Indicate Citizenship ofParties in Item III) of Business In Another State

0 3 0 3 Foreign Nation 0 6 06

IV NATURE OF SUIT (Place an "X" in One Box Only) Click here for: Nature of Suit Code Descnot1ons.
I 'i I

0 110 Insurance PERSONAL INJURY PERSONAL INJURY 0 625 Drug Related Seizure o 422 Appeal 28 use 158 0 375 False Claims Act
0 120 Marine 0 310 Airplane 0 365 Personal Injury - of Property 21 use 881 0 423 Withdrawal o 376QuiTam(31 use
0 130 Miller Act 0 315 Airplane Product Product Liability 0 690 Other 28 use 151 3729(a))
0 140 Negotiable Instrument Liability 0 367 Health Care/ 0 400 State Reapportionment
0 150 Recovery of Overpayment 0 320 Assault, Libel & Pharmaceutical 0 410 Antitrust
& Enforcement of Judgment Slander Personal Injury 0 820 Copyrights 0 430 Banks and Banking
0 151 Medicare Act 0 330 Federal Employers' Product Liability 0 830 Patent 0 450 Commerce
0 152 Recovery of Defaulted Liability 0 368 Asbestos Personal 0 835 Patent - Abbreviated 0 460 Deportation

-
Student Loans 0 340 Marine Injury Product New Drug Application 0 470 Racketeer Influenced and

0
(Excludes Veterans)
153 Recovery of Overpayment
of Veteran's Benefits
0 345 Marine Product
Liability
0 350 Motor Vehicle
Liability
PERSONAL PROPERTY
0 370 Other Fraud
.... ....
0 710 Fair Labor Standards
0 840 Trademark

0
----·
861 HlA (1395ft)
Corrupt Organizations
0 480 Consumer Credit
0 485 Telephone Consumer
0 160 Stockholders' Suits 0 355 Motor Vehicle 0 371 Truth in Lending Act 0 862 Black Lung (923) Protection Act
0 190 Other Contract Product Liability 0 380 Other Personal 0 720 Labor/Management 0 863 DIWC/DIWW (405(g)) 0 490 Cable/Sat TV
0 195 Contract Product Liability 0 360 Other Personal Property Damage Relations 0 864 SSID Title XVI 0 850 Securities/Commodities/
0 196 Franchise Injury 0 385 Property Damage 0 740 Railway Labor Act 0 865 RSI (405(g)) Exchange
0 362 Personal Injury - Product Liability 0 751 Family and Medical 0 890 Other Statutory Actions
Medical Malnractice Leave Act 0 891 Agricultural Acts
I
--"'· . ·--·· -··-'l"l!l 0 790 Other Labor Litigation ·••,TAJC ..HIT!lil/ 0 893 Environmental Matters
0 210 Land Condemnation 0 440 Other Civil Rights Habeas Corpus: 0 791 Employee Retirement 0 870 Taxes (U.S. Plaintiff 0 895 Freedom of Information
0 220 Foreclosure 0 441 Voting 0 463 Alien Detainee Income Security Act or Defendant) Act
0 230 Rent Lease & Ejectment 0 442 Employment 0 5 IO Motions to Vacate 0 871 IRS---Third Party 0 896 Arbitration
0 240 Torts to Land 0 443 Housing/ Sentence 26 USC 7609 0 899 Administrative Procedure
0 245 Tort Product Liability Accommodations 0 530 General Act/Review or Appeal of
~ 290 All Other Real Property 0 445 Amer. w/Disabilities - 0 535 Death Penalty Ul'IM"R,iltA'l"HDI Agency Decision
Employment Other: 0 462 Naturalization Application 0 950 Constitutionality of
0 446 Amer. w/Disabilities - 0 540 Mandamus & Other 0 465 Other Immigration State Statutes
Other 0 5 50 Civil Rights Actions
0 448 Education 0 555 Prison Condition
0 560 Civil Detainee -
Conditions of
Confinement

V. ORIGIN (Place an ''.X" in One Bax Only)


0 I Original O 2 Removed from 0 3 Remanded from 0 4 Reinstated or O 5 Transferred from O 6 Multidistrict 0 8 Multidistrict
Proceeding State Court Appellate Court Reopened Another District Litigation - Litigation -
(specify) Transfer Direct File
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
VI. CAUSE OF ACTION t-2_8_U_.s_._c_.§_3_3_04_an_d_9_V_.s_.A_._§-2_2_8_8(.._a...
J( __
1)_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Brief description of cause:
Action to set aside fraudulent conveyance
VII. REQUESTED IN 0 CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:
COMPLAINT: UNDER RULE 23, F.R.Cv.P. JURY DEMAND: 0 Yes MNo
VIII. RELATED CASE(S)
(See instructions):
IF ANY JUDGE DOCKET NUMBER
SIGNATURE OF ATTORNEY OF RECORD

RECEIPT# AMOUNT APPL YING IFP JUDGE ___ I~- MAG.JUDGE~~--~~~

5 ·. )9 -C. V - l7 C)