It’s Official: SEC Shuts Down Zeek Rewards, CEO Paul Burks Fined $4 Million

Posted on 17 August 2012.

Here is the press release directly from the SEC:

Washington, D.C., Aug. 17, 2012 – The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze to halt a $600 million Ponzi scheme on the verge of collapse. The emergency action assures that victims can recoup more of their money and potentially avoid devastating losses.

The SEC alleges that online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group have raised money from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.

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. These securities offerings were not registered with the SEC as required under the federal securities laws.

The SEC alleges that investors were collectively promised up to 50 percent of the company’s daily net profits through a profit sharing system in which they accumulate rewards points that they can use for cash payouts. However, the website fraudulently conveyed the false impression that the company was extremely profitable when, in fact, the payouts to investors bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the “net profits” paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion.

“The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,” said Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement. “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”

The SEC’s complaint alleges that the scheme is teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers continue to increasingly elect to receive cash payouts rather than reinvesting their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would eventually exceed its total revenue.

Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.

According to the SEC’s complaint, ZeekRewards has paid out nearly $375 million to investors to date and holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds will be frozen under the emergency asset freeze granted by the court at the SEC’s request. Meanwhile, Burks has personally siphoned several million dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.

The SEC’s investigation was conducted by Brian M. Privor and Alfred C. Tierney in the SEC’s Enforcement Division in Washington D.C. The SEC acknowledges the assistance of the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.

Here is a copy of the SEC Complaint (Lawsuit) Against Zeek Rewards

Ty is an Internet Marketer, Blogger and Social Marketing Entrepreneur

View the original article here

It's official: SEC shuts down Zeek Awards, CEO Paul Burks fines of $ 4 million

Posted on August 17, 2012.

Here is the press release directly to the SEC:

The Securities and Exchange Commission today in Washington, DC, August 17, 2012 – announced an emergency asset freeze to halt Lugovoi and 600 million dollars in a Ponzi scheme-the system is on the brink of collapse. Urgent action to assure the victims can get more money back and possibly avoid disastrous.

The SEC alleges that the online marketer Paul Burks in Lexington, NC and his company Rex Venture Group raised money for more than a million Internet customers nationwide and foreign ZeekRewards.com, which they began in January 2011-through the site.

The SEC's complaint filed in Federal Court in Charlotte, n.c., according to the customers were offered a number of ways to earn money through the ZeekRewards program, two of which are engaged in the purchase of investment agreements as collateral. The provision of these securities are not registered with the SEC, as the case may be, in accordance with the provisions of the federal securities laws.

The SEC alleges investors were promised, along with up to 50% of the net profits of the company on a daily basis, where they accumulate rewards points that they can use the cash withdrawals through profit sharing system. However, the website of fraudulently conveyed the false impression that the company was extremely profitable, in fact, the profits of the company's net income for the investors did not join. The most and the ZeekRewards ' total revenue and "net profits" paid investors with money from new investors, is composed of a classic Ponzi scheme fashion.

"The obligations of the company to investors dramatically exceed the on hand, and that is why we need to step in quickly, to save funds it manages, and to ensure a proper and fair profit for investors," said Stephen Cohen, Associate Director of the SEC's Division of enforcement. "ZeekRewards abused the power of the Internet and lured investors by making them believe that they will get a chance to cash in on the next big thing. In reality, the money was just going to investors. "

The SEC's complaint alleges that the system is teetering investors ' funds in the event of an emergency enforcement action without its degradation of in danger of collapse. Last month, the ZeekRewards brought in about $ 162 million in total investor cash withdrawals was about $ 160 million. If customers wish to receive profits continues to instead invest their money for a higher Rewards points at the end of the day, ZeekRewards ' cash flows exceeds its total revenue.

Burks has agreed to settle the SEC's charges without having to admit or deny the allegations, and agreed to cooperate in the court-appointed receiver.

The SEC's complaint against the ZeekRewards has paid out almost $ 375 million to date and is owned by investors with about $ 225 million in investors ' funds to 15 foreign and domestic financial institutions. These funds frozen in the event of an emergency, depending on the freezing of assets, the Court granted the SEC's request. At the same time, Burks has personally siphoned a multi-million dollar Venture funds investors operate in the Rex and the ZeekRewards, and he shared at least a million dollars to the family members. Burks has agreed to give up his interest in the company and its assets, as well as pay a $ 4 million fine. In addition, the Court has appointed a receiver to collect, organize, manage, and distribute the remaining assets to the detriment of investors to return.

The SEC's investigation was carried out by Brian m. Privor and Alfred c. Tierney of the SEC's Enforcement Division in Washington, DC with the SEC to grant Quebec the Autorité des marches financiers and, with the assistance of the Ontario Securities Commission.

Here is a copy of Zeek prizes SEC complaint (lawsuit) against the

Ty is an Internet marketer, Blogger and social marketing entrepreneur

View the original article here