The 72-year-old Boise woman’s voice asked sheepishly about ZeekRewards after hearing about it this week. Laura, who asked not to be identified, said she’d heard only bits and pieces about what was happening to the North Carolina-based company.
“I knew I could get good information from the BBB,” she said. She lost $10,000 in the company that was taken over by the Securities Exchange Commission on Aug. 17.
In an email, just hours later, Rick from Idaho Falls thanked BBB: “I was glad to see that Zeek was shut down in a Ponzi scam. Thanks for saving a few folks from more losses.”
Gary, of Boise, pleaded for updated information in an email on Thursday: “Any word on ZeekRewards all we can get is Internet hype. Can you assist there are several hundred people in the Boise area that were involved.”
And Paul, of Meridian, said this was all going to be resolved and Zeek Rewards would come out unscathed, and that a group of Idahoans is filing a lawsuit to stop this investigation.
The investigation into ZeekRewards began after Better Business Bureau received massive inquiries and complaints.
President of BBB serving North Carolina David Dalrymple told Forbes more than 30,000 inquiries were fielded within a month.
“In twelve years as the president here, I cannot compare that to any level of inquiry for any other business. Ever," he told Forbes.com. BBB contacted authorities and notified them of concerns they were answering.
In May, Idaho BBB was inundated with inquiries on the “penny-auction” company Zeek Reward, and began referring them to North Carolina.
“We were getting calls of three, four and five a week,” says Dale Dixon, CEO BBB serving the Snake River Region. “We had contact with attorneys asking for advice on this company.”
Rex Venture Group LLC, an online subsidiary of Lighthouse America, a company established in 1997 in Nevada, operates Zeekler.com and ZeekRewards.com. ZeekRewards operated as investment wing, the other wing of the company known as Zeekler functioned as an online "penny-auction" site, where bidders could place a bid of one cent on an item and reap as much 50 percent in the daily profit shares.
ZeekRewards, the investment wing, guaranteed 1.5 percent daily-returns to its customers. Customers usually reinvested these "profit points" rather than cashing out. 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.
When the company was seized, more than 2 million people around the world had put up cash in the zeekrewards.com Ponzi scheme. SEC officials closed the operation because the obligations to investors drastically exceeded the company’s cash on hand, and the company engaged in classic Ponzi scheme fashion.
The SEC alleges Rex Venture and owner Paul R. Burks fraudulently offered and sold securities in an unregistered offering as part of a combined Ponzi and pyramid scheme on the verge of collapse.
“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.”
A receiver, Kenneth D. Bell of McGuireWoods LLP, is gathering ZeekRewards investment history and harmed investor information. Contact his office at info@zeekrewardsreceivership.com.
Robb Hicken is the media contact for the BBB serving Snake River Region. Reach him at 947-2115 or rhicken@boise.bbb.org.
