The U.S. Securities and Exchange Commission said it shut down a $600 million online Ponzi scheme on the verge of collapse and won a court ordered emergency asset freeze to protect some of the more than 1 million investors it had attracted. ZeekRewards.com, created in January 2011 by Paul Burks and touted as a "private, invitation only, affiliate advertising division" of penny auction website Zeekler.com, promised investors up to 50 percent of "daily net profits" through a system based on rewards points, the SEC said. The regulator said this created a false impression of "extreme" profitability, when 98 percent of revenue and so-called net profits paid to earlier investors came from newer ones. U.S. District Judge Graham Mullen in Charlotte, N.C., issued the freeze on Friday on the $225 million of investor funds that ZeekRewards still holds at 15 U.S. and non-U.S. financial institutions. Court records show they were at "imminent" risk. The SEC said Burks, 65, lives in Lexington, N.C., and is the sole owner of co-defendant Rex Venture Group LLC, which controls ZeekRewards and Zeekler. Burks agreed to settle without admitting wrongdoing and agreed to cooperate with a court-appointed receiver, the SEC said. Noell Tin, one of the lawyers for the defendants, declined to comment. According to the SEC, ZeekRewards took in $162 million last month while investor cash payouts totaled $160 million. It said that, if more customers chose to receive cash payouts rather than reinvest to boost rewards points, ZeekRewards' cash outflows would eventually exceed total revenue. "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," Stephen Cohen, an associate SEC enforcement director, said in a statement. "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." The case is SEC v. Rex Venture Group LLC, U.S. District Court, Western District of North Carolina, No. 12-00519. source Threads about ZeekRewards.com previously on DP: ZeekRewards Affiliate No. 1. MLM company in THE WORLD Zeekrewards big changes ahead ZeekRewards Review - Make Serious Money! not a scam ZeekRewards - Multi-Level Marketing | Be Your Own Boss
According to these Dumb@ss SEC people "It said that, if more customers chose to receive cash payouts rather than reinvest to boost rewards points, ZeekRewards' cash outflows would eventually exceed total revenue" Sure, that might be a problem but I heard from Zeek customers that their returns were excellent!!.. no if these dumb@ss SEC folks are complaining about if everyone wanted to cash out instead of reinvest then the company would not have enough cash flow to payout then HEEEELLLLLLLLOOOOOOOOOOO... they should go and shut down every major Bank in the U.S bcos thats exactly the same situation ANY BANK would be in...everytime u go to the bank and ask for a loan and they grant u a loan they do now phone the mint or the reserve bank and ask them to bring more money bcos they just granted Joe Soap a loan... the money does not exist...it's electronic.. so if they charge us interest on money they lend us which never existed in the first place... So why doesn't SEC got and shut them down? Cos Bank are run my the super elite secret societies like the Illuminati and Secret 7.. Pretty much the same circle of "friends" that run the US government....
IF they didnt have new members coming in, they wouldnt be able to make the payouts at all. Dont you see: Any time investors are only paid from the funds put in by new investors it becomes a scam. Of course their returns were excellent, but there has been MANY MANY times when returns are excellent but there is nothing there. There have been scams uncovered where simply not enough people signed up to continue the scam, and the scam collapsed. Banks are slightly different. Your right in the way they charge money for money that essentially doesnt exist. But in principle, banks are 'safe' as they lend money for things such as housing. I believe they can lend 32 times what they have, so while the bank might have $10Million, but might be short in cash in holdings for all its investors, they could in theory have $320Million in total assests )
Wow heard they reached out to Profiledefenders.com to do their Reputation Management work which was very badly needed but they refused to do it because of their illicit practices and extremely bad press really portrayed them as negatively as this SEC statement does.