In the aftermath of the overnight shutdown of Rex Venture Group LLC, the company that runs Zeekler.com and Zeek Rewards, the U.S. Securities and Exchange Commission (SEC) called the online auction business a $600 million online pyramid and ponzi scheme.
The company's Chief Executive Officer was allegedly accused of heading fraudulent operations. Paul Burks is accused of orchestrating the illegal venture through the website ZeekRewards.com beginning in January, 2011. Federal Investigators said it was nothing but a scam.
In a statement, the SEC issued a statement said, “According to the SEC’s complaint filed in federal court in Charlotte, N.C., customers were offered several ways to earn money through the ZeekRewards program, two of which involved purchasing securities in the form of investment contracts.”
All started with a "closed" sign at Rex Venture Group's headquarters on Thursday. On Friday, U.S. Secret Service agents showed up at the company’s office in Lexington, NC.
Special Agent Glen Kessler said the Secret Service, in coordination with the U.S. Securities and Exchange Commission, is working a joint case on Zeek Rewards.
The Secret Service does not comment on ongoing investigations, Kessler said.
Both Zeekler.com and Zeek Rewards had recently come under the scrutiny of the North Carolina Attorney General's office, after dozens of users filed complaints and inquiries in the past six months. The company, which is rooted in its penny auction website, has expanded in the past year to let users buy in through an "affiliates program." Some say the company is a good way to make a little more cash while others condemn it as the makings of a pyramid or Ponzi scheme.
The company also announced it is canceling its upcoming "Red Carpet" event, scheduled for Wednesday. The announcement, made on zeekrewardsnews.com, also advised readers to continue to monitor its websites for more information to be forthcoming.
Online reports indicate there are more than 700,000 affiliates using Zeek Rewards, however company officials gave the paper a lower estimate of more than 200,000.
