The United States Securities and Exchange Commission recently announced fraud charges against ZeekRewards. The SEC has also instituted an emergency asset freeze against any and all assets owned by or on behalf of ZeekRewards. The SEC’s complaint alleges the ZeekRewards was a Ponzi scheme and is on the verge of collapse.
The SEC’s complaint alleges that the website ZeekRewards.com was a front by online marketer Paul Burks and his company, Rex Venture Group. Investors were promised a percentage (up to 50%) of the company’s daily profits through a profit sharing system. In return for their investments, investors accumulated points, which could be then used for a cash payout. Investors were paid with money received from new investors. According to the SEC, last month ZeekRewards paid out $160 million dollars to current investors and received $162 million from new investors. However, the company was not as profitable as it led on to be and was actually severely underfunded.
Stephen Cohen, an Associate Direct of the SEC’s Division of Enforcement, recently discussed why the SEC took such abrupt action. According to Mr. Cohen, since the amount owed to investors “drastically” exceed the amount owned by the company, the SEC needed to step in and “ salvage whatever funds remain and ensure an orderly and fair payout to investors.”
A receiver has been appointed to collect and analyze the assets held by or on the behalf of ZeekRewards, which should allow victims to recoup more money than they would have otherwise. According to the SEC’s website, over one million individuals were lured into the alleged Ponzi scheme. If you feel you were a victim of this scheme and would like to assert any rights you may have, please contact our office.