U.S. Securities Exchange Commission shutdown Rex Venture Group LLC, the company that operates ZeekRewards.com and Zeekler, after filing fraud charges. The company's assets have been frozen and officials say that Zeek Rewards and Zeekler operated a $600 million Ponzi scheme.
The company's Chief Executive Officer, Paul B urks, 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.
Burks agreed to settle the SEC's charges against him without admitting or denying the allegations. He agreed to pay a $4 million penalty and relinquish his interest in the company. The court has appointed a receiver to manage and distribute the remaining assets to investors.
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 sign at Rex Venture Group's headquarters on Thursday. On Friday, U.S. Secret Service agents were sniffing around 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.
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.
North Carolina Attorney's General office has opened a hotline for concerned Zeek Rewards affiliates or Zeekler.com retail customers. The number is (919) 716-6046.
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.
