Rubes fall for a Ponzi Scheme Originated In Small North Carolina Town

Dec 8, 2004
49,477
21,297
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Maine
#1
In the hardware store on South Main Street, the owner pulled Caron Myers aside to tell her about the best thing to happen in years to this once-thriving furniture and textile town.

Did she hear about the online company ZeekRewards? For a small investment, she could make a fortune. He had invested. So had his grandsons. And so were more and more people in Lexington, including doctors, lawyers and accountants.

Skeptical at first, Myers drove a few blocks to the company's one-story, red-brick office and spotted a line of people circling the building. She was sold, and plunked down several thousand dollars. But months later, Myers, like hundreds of thousands of others, discovered the truth: ZeekRewards was a scam.

"I was duped," Meyer said. "We trusted this man. The community is still in shock."

Authorities say owner Paul Burks was the mastermind of a $600 million Ponzi scheme — one of the biggest in U.S. history — that attracted 1 million investors, including nearly 50,000 in North Carolina. Many were recruited by friends and family in Lexington, a quintessential small town where neighbors look out for each other.

But what investors didn't know was that regulators had received nearly a dozen complaints about ZeekRewards and the related site Zeekler.com, but failed to take action for months, leaving the company free to recruit tens of thousands of new victims.

The Securities and Exchange Commission, which closed the operation Aug. 17, said Burks was selling securities without a license. The Ponzi scheme was using money from new investors to pay the earlier ones.

Burks has agreed to pay a $4 million penalty and cooperate with a federal court-appointed receiver trying to recover hundreds of millions of dollars.

Investigators say Burks, a former nursing home magician, siphoned millions for his personal use. But he has not been charged.

In his first public comments, Burks told The Associated Press he couldn't discuss details because of lawsuits by victims trying to recoup money.

"Everything will come out in time," said Burks, 66, standing in the doorway of his home.

Asked if he had anything to say to victims, he shook his head.

"I never told anyone to invest more money than they could afford," Burks snapped. "I didn't tell them to do that. Never."

He said if they lost money, "it's their fault. Not mine. Don't blame me."

But Cal Cunningham, a former prosecutor representing investors in a lawsuit, slammed Burks — and regulators for taking so long to act.

"It's why we need a full hearing on what happened in a court of law — whether that be our civil case or a criminal proceeding. A lot of people were hurt," he said.
____

Burks started Zeekler in early 2010 as an online penny auction site. His business experience included nearly four decades in multilevel marketing programs — such as Amway — including failed attempts to launch similar businesses of his own.

In penny auctions, consumers compete to pay pennies on the dollar for name brand products such as iPads. Each bid costs as much as $1, so participating can become expensive and the sites can earn nice profits when multiple users bid against each other.

In January 2011, he incorporated aspects of multilevel marketing into the business when he launched ZeekRewards. The program offered a share of the penny auction's profits to people who invested money, promoted the company on other websites and recruited other participants. Under a complicated formula, investors were issued "profit points" that grew every day.

Investments were capped at $10,000, but people could invest on behalf of their spouses, children or other relatives. Some mortgaged homes to raise their investment.

At first, ZeekRewards complied when investors sought to cash out. And that became the best ad of all: happy investors with their checks in Facebook photos.

People who didn't trust the mail traveled long distances to drop off checks at the cramped office building where security guards allowed only seven inside at a time. Employees collected money and wrote out receipts at the office cluttered with dozens of plastic mail bins stuffed with check-filled envelopes. To withdraw money, investors filed an online request — or called — and then had to wait for a check.

By the end of 2011, it seemed like everybody in Lexington was talking about ZeekRewards. Many saw it as a way to make extra cash to pay bills or help family.

"No one was in it to get rich," said Mary Bell, a 75-year-old seamstress from Lexington who scraped together money to invest.

Sarah Chavez wanted extra money for her daughter's frequent hospital visits for leukemia. Her husband worked in a factory, and they invested $7,000.

"It's hard to believe in something like that. But everyone told us it was a sure thing," she said.
Burks mostly kept to himself, and few locals knew anything about the quiet, balding man with thick glasses.

In the 1980s and early 1990s, the Shreveport, La., native toured nursing homes in the South as a magician with country singer David Houston. Burks moved to Lexington in the early 1990s because his wife was from the area.

In 2000, Burks ran for the state House as a Libertarian, but he collected only 330 votes.

Then he became a local celebrity.

Most afternoons, he ate lunch at the same downtown restaurant with an entourage of managers.

Conference calls with investors were posted on YouTube. He produced glossy brochures touting the company.

"In addition to the mind-blowing savings, you can create more wealth than you have ever thought possible with ZeekRewards' geometrically progressive matric compensation plan," the brochure said.

Burks also hired some of the industry's top attorneys and analysts to promote his company.

The publicity paid off. When the Association of Network Marketing Professionals held its annual convention in March 2012, it called ZeekRewards the model of legal compliance.
___

But behind the scenes, there were troubling signs, according to documents, company emails and consumer complaints reviewed by the AP.

In early June, the state of Montana gave ZeekRewards the boot. Montana requires multilevel marketing companies to register. But ZeekRewards didn't submit any paperwork — even after warnings, said Luke Hamilton, a spokesman for the attorney general's office.

"We started getting a lot of complaints," he said.

In August, a North Carolina employees' credit union warned customers not to invest in ZeekRewards because it was a "fraudulent company."

But regulators received complaints long before then.

In a Nov. 23, 2011, complaint filed with the North Carolina Attorney General's office, Wayne Tidderington of Florida called ZeekRewards an "illegal" Ponzi scheme. He said a relative had invested $8,000 and the company guaranteed a return of 125 percent every 90 days.

The attorney general's office can ask a judge to shut down a business because of deceptive trade practices. But it forwarded Tidderington's complaint to the secretary of state's office because it looked like it might involve securities. The secretary of state's office, however, declined to take action because it didn't believe it had the jurisdiction, spokeswoman Liz Proctor said.

The complaint died.

"I put it all together," Tidderington told the AP. "I gave them the roadmap. I said, 'Here's a snake. Here's the gun. Here's the bullets. Shoot the snake.' But they ignored me."

Over the next seven months, the attorney general's office received nearly a dozen more complaints.
But it wasn't until July 6 that it issued an order giving Burks until the end of the month to turn over all
Zeek-related documents. He missed that deadline.

Kevin Anderson, senior deputy attorney general for consumer protection, insisted his agency correctly handled the case, saying his office receives thousands of complaints a year.

"We have to have more concrete evidence than a couple of consumer complaints before we go to court," he said.

The SEC received similar complaints during the same period, but the agency didn't begin its investigation until the summer.

SEC spokeswoman Christine D'Amico declined to comment on the investigation, except to say the agency took action "as soon as we believed we had sufficient evidence to obtain an emergency court order to halt the fraud."
___

Months later, people in Lexington are wondering what's next.

Kenneth Bell, the court-appointed receiver, said ZeekRewards may have taken in $800 million. So far, he's recovered $312 million. Hundreds of millions were paid out to investors. Just how much is missing?

He doesn't know.

Myers said the community is still recovering — but the wounds are deep. People are wondering why investigators didn't act more quickly and why no one, including Burks, has been charged.

"There are thousands and thousands of victims who might not have lost a penny had the government intervened more quickly," she said.
Link
 

LiddyRules

I'm Gonna Be The Bestest Pilot In The Whole Galaxy
Jun 1, 2005
143,258
50,530
644
#2
I heard the culprit is heading for a town called River City.
 

gleet

What's black and white and red all over?
Jul 24, 2005
22,541
13,853
608
Idaho
#3
Lexington, a quintessential small town where neighbors look out for each other.
Guess again, catch phrase writer.
 

lajikal

Registered User
Aug 6, 2009
16,416
3,929
373
#6
Lol. Silly slaves.
 

Haeder

South Dakota
Mar 30, 2005
5,982
4,107
608
#7
Former nursing home magician makes millions disappear?

Brilliant!

Probably pulled quarters out of the ears of prospective clients. How could they not invest?
 

tattered

Uber-Aryan
Wackbag Staff
Aug 22, 2002
24,564
8,688
918
JERZ
#8
Ham and eggers gonna ham and egg
 

MayrMeninoCrash

Liberal Psycopath
Dec 9, 2004
24,661
8,837
693
Loveland, CO
#9
Silly hayseed rubes.

I want to know how anyone falls for those penny auctions? I know they advertised on Sirius too. Hooray you paid $10 for an ipad****

(****Each "penny" worth of bid cost $1.00 in American money....enjoy that $1,000 ipad).
 

fletcher

Darkness always says hello.
Donator
Feb 20, 2006
59,523
19,737
513
jersey
#10
Silly hayseed rubes.

I want to know how anyone falls for those penny auctions? I know they advertised on Sirius too. Hooray you paid $10 for an ipad****

(****Each "penny" worth of bid cost $1.00 in American money....enjoy that $1,000 ipad).
What is the old saying? A fool and their money are soon to part? Something like that. For example, quick loan companies like Western Sky.
 

tattered

Uber-Aryan
Wackbag Staff
Aug 22, 2002
24,564
8,688
918
JERZ
#12
What is the old saying? A fool and their money are soon to part? Something like that. For example, quick loan companies like Western Sky.
At least western sky basically says up front you're dumb for taking a loan with us
 

Hate & Discontent

Yo, homie. Is that my briefcase?
Aug 22, 2005
15,794
1,347
693
#13
At least western sky basically says up front you're dumb for taking a loan with us
Seems like every time their ad changes the APR has gone up.

Sent from the USS Sulaco.
 

jules

uppity taxpayer
Jul 24, 2005
3,695
183
428
south jersey
#15
i will never understand how people who work their balls off to carefully make and save money are so easily duped to just hand it over to these snake oil salesmen.
its a shame but i have no sympathy for these dolts
 

fletcher

Darkness always says hello.
Donator
Feb 20, 2006
59,523
19,737
513
jersey
#16
At least western sky basically says up front you're dumb for taking a loan with us
True but idiots dont read the fine print, they have a structured settlement and they need cash now.
 

LiddyRules

I'm Gonna Be The Bestest Pilot In The Whole Galaxy
Jun 1, 2005
143,258
50,530
644
#17
True but idiots dont read the fine print, they have a structured settlement and they need cash now.
Call JG Wentworth 877 Cash Now

Damn my Pavlovian response
 

Wrecktum

Tounge puncher of fart boxes
Jun 29, 2006
4,382
1,486
563
Cervix spelunking
#18
Every one wants a get rich quick scheme. Not every one is prepared to work until their bodies fall apart then die like we are all going to do.
 

THE FEZ MAN

as a matter of fact i dont have 5$
Aug 23, 2002
43,015
9,846
848
#19
guy i work with is constantly getting into shit like this, he got took for thousands with quick star.
 

LiddyRules

I'm Gonna Be The Bestest Pilot In The Whole Galaxy
Jun 1, 2005
143,258
50,530
644
#21
I always thought it would be cool to have con artist abilities. Even if I didn't use them for evil, just having it in me to pull off a grift would be pretty nifty.
 

Psychopath

I want to fuck your girlfriend.
Dec 28, 2008
19,200
3,697
393
Constant sate of misery
#22
How do people still fall for these. I understand getting conned by what seem to be legitimate, like investing in a stock that turns out to be a pump and dump, or being scammed in a real estate deal. But these are pretty obvious too good to be true pyramid schemes.
 

Hate & Discontent

Yo, homie. Is that my briefcase?
Aug 22, 2005
15,794
1,347
693
#23
How do people still fall for these. I understand getting conned by what seem to be legitimate, like investing in a stock that turns out to be a pump and dump, or being scammed in a real estate deal. But these are pretty obvious too good to be true pyramid schemes.
It's not a pyramid scheme, it's a multi-level marketing company...
 

Hudson

Supreme Champion!!!!!
Donator
Jan 14, 2002
32,840
4,566
898
Land of misfit toys
#24
Googled it...this blog looks legit......
New Year has Brought New happiness for Zeekrewards members.


Dear Affiliates,

This is a serious message please don;t ignore it, we are sorry for all of those people who lost their money in Zeekrewards but we are here to help you in getting your investment back.

We have brought a simple process for all of you so that you can get your investment back from zeekrewards funds with your subscription fees for this you have to follow the following steps and send us your following details:

1.Your user name
2.Your total investment including the subscription you paid
3.Snap shot of your payment processor or you back drafts copy
4.Your Bank account or payment processor details
5.Your contact number

Process and application fees for people vary with investment.


Send all other following information to this email address:

Send you process fees to these accounts:
Payza: getyourzeekrewardsinvestmeback@gmail.com
Liberty Reserve:
Perfect money:

We hope you have understand the process you can email us for an inquire.getyourzeekrewardsinvestmeback@gmail.com

Send us text messages at: 1 (413) 282-7392

Thank you
Team Re payment
Zeekrewards

posted by Mohammed Azamat 06:12
 

Saikotic

Scraping a dull blade across your tender eyeball
Donator
Mar 5, 2005
34,048
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Right Behind You
#25
How do people still fall for these. I understand getting conned by what seem to be legitimate, like investing in a stock that turns out to be a pump and dump, or being scammed in a real estate deal. But these are pretty obvious too good to be true pyramid schemes.
People still play the lottery, don't they? Those have been around for thousands of years. People as a whole are ignorant (if not stupid) and gullible.