by Angela Nazworth | August 20, 2012 2:09 pm
The Securities and Exchange Commission (SEC) is accusing the owner of ZeekRewards.com and Zeekler.com of a $600 million Ponzi scheme.
“Unbeknownst to its investors, ZeekRewards is, in reality, a massive Ponzi and pyramid scheme,” the SEC said in the official complaint.
Approximately 98% of ZeekRewards’ total revenues, and the purported share of ‘net profits’ paid to current investors, are comprised of funds received from new investors, according to the SEC.
Zeekler.com and ZeekRewards are currently shut down.
Paul Burks, the owner of the penny auction sites, along with Rex Venture Group, is being accused of raising more than $600 million from about 1 million investors nationwide and overseas since 2011. The SEC says this was done by making unregistered offers and sales of securities through the ZeekRewards website via “premium subscriptions and VIP bids.”
The SEC claims that the $225 million in investor funds that the defendants currently hold are at risk of depletion. The $225 million in question is what authorities have frozen.
“I was in shock,” an anonymous Zeek user told International Business Times after learning of the company’s alleged deceit. “I thought it was going to be a rather simple inquiry and investigation and they would reveal to the attorney general that it was a very profitable business model and that everything was going to be OK.”
Zeek users affected by the scheme are encouraged to call a hotline the North Carolina Attorney General’s has opened: 919-716-6046.
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