The company, ZeekRewards.com, was floated in January 2011 by Paul Burks. It was advertised as a “private, invitation only, affiliate advertising division” of the penny auction website Zeekler.com. The scheme promised up to 50% of “daily net profits” to its investors through a points-based reward system. The SEC said that the scheme created a false impression of “extreme” profitability, but 98 percent of the revenue paid to old investors came from the money put in by new investors.
Burks, 65, who lives in Lexington, North Carolina, is the sole owner of Rex Venture Group LLC. The company runs both ZeekRewards and Zeekler. The SEC also informed that Burks has agreed to settle without admitting any wrongdoing and has also agreed to cooperate with the appointment of a receiver by the court.
Stephen Cohen, an associate SEC enforcement director said, “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.” He also said, “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.”
According to the Securities and Exchange Commission, things were already reaching towards imminent collapse as ZeekRewards took in $ 162 million while making cash payouts amounting to $ 160 million last month.