SEC Shut Down Zeek Over Ponzi Scheme Allegations; Not Surprised
In the least surprising bit of news that I’ve seen today, Zeek Rewards has been shut down by the Securities and Exchange Commission (SEC) due to allegations of running a Ponzi scheme. According to the SEC, this was a $600 million scheme by a company with about a million users worldwide.
In a press release issued late Friday afternoon, the SEC called the company a $600 million Ponzi scheme on the verge of collapse, alleging that company revenues were soon to dip below its cash payouts to its customers and that the company’s chief executive officer, Paul Burks, siphoned off millions of investor funds to family members. – the-dispatch.com SEC shuts down Zeek, calls it pyramid, Ponzi scheme
The reason this isn’t surprising to me is because recently I was approached about the Zeek Rewards business opportunity. Some people I knew had made a return on their investment with very little effort. They were trying to get me to sign up in their downline. While I was being pitched the idea I was doing some google research on the program and the company. I could tell right off something wasn’t right and by the way the plan worked it was obvious there was something going on here that wasn’t exactly legal. This comes after Zeek Rewards admitted in February 2012 that the company’s then business model was illegal. At the time they apparently adjusted to be in compliance with the law however the numerous results questioning their validity threw up many red flags to me.
Despite mountains of evidence from affiliates, observations of the mechanics of Zeek Rewards payouts and tracking of commissions paid out to thousands of affiliates, claims that Zeek Rewards were paying out a daily ROI that consisted of mostly new affiliate money, were often dismissed. – behindmlm.com THE FACTS: Dissecting the Zeek Ponzi apocalypse
The way it was explained to me was that through Zeek Rewards program affiliate investors could partake in a share of the company’s profits made from their penny auction site Zeekler.com. That too was shut down today. As an affiliate you would pay a monthly fee to participate. Then, you would place an ad for packets of bids for the penny auction site. There was a free option as well but the return would of course be smaller. Every day that you placed an ad you would be eligible to share in the days profits. The ads were the equivalent of posting a link on a site like Craigslist. Sounds easy enough right? You know what they say about something appearing too good to be true. Instead of withdrawing the profit you made for the day the company urged affiliates to use that money to buy more bids to give away in order to get a higher revenue share percentage. The person that was trying to convince me to become an affiliate in their downline was actively trying to sell their motorcycle so they could invest more money into the Zeek Rewards affiliate program. Luckily the bike has yet to sell.
If you are familiar with penny auctions or how they work they are a bit of a cautionary type of auction themselves. You don’t bid what you’re willing to pay but you pay every time you make a bid. The price of the item that you bid on goes up by one cent every time a bid is made. So even though your final winning price may be low for the item you are purchasing you’ve already spent money bidding to get to that price. It costs you money whether you win or lose. That is definitely not for me.
Now this doesn’t mean that investors weren’t making any money. People were making money. As a matter of fact shortly after Zeek Rewards got shut down affiliates took to a Change.org petition to try to get the company’s doors back open. At present almost 38,000 people signed the petition. The problem is the company was on the verge of collapse and a whole lot of people were going to lose a whole lot of money.
The site BehindMLM has covered Zeek Rewards extensively throughout its existence and has broken down the particulars of their troubles and why the program was a scheme doomed to fail. Some of the questions they raised in the articles I read confirmed my suspicions about the program and kept me from investing any money with them.
The Attorney’s General office has opened a hotline for concerned Zeek Rewards affiliates or Zeekler.com retail customers, which can be reached by calling (919) 716-6046. A call to the line early Friday evening said the mailbox was full.
I can imagine.