Complaint Review: Zeek Rewards/Rex Venture Group
Zeek Rewards/Rex Venture Group SEC Shuts Down $600 Million Online Pyramid and Ponzi Scheme Internet
The SEC alleges that investors were collectively promised up to 50 percent of the companys daily net profits through a profit sharing system in which they accumulate rewards points that they can use for cash payouts. However, the website fraudulently conveyed the false impression that the company was extremely profitable when, in fact, the payouts to investors bore no relation to the companys net profits. Most of ZeekRewards total revenues and the net profits paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion.The obligations to investors drastically exceed the companys 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 SECs 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.The SECs complaint alleges that the scheme is teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers continue to increasingly elect to receive cash payouts rather than reinvesting their money to reach higher levels of rewards points, ZeekRewards cash outflows would eventually exceed its total revenue.Burks has agreed to settle the SECs charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.
According to the SECs complaint, ZeekRewards has paid out nearly $375 million to investors to date and holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds will be frozen under the emergency asset freeze granted by the court at the SECs request. Meanwhile, Burks has personally siphoned several million dollars of investors funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.The SECs investigation was conducted by Brian M. Privor and Alfred C. Tierney in the SECs Enforcement Division in Washington D.C. The SEC acknowledges the assistance of the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.# # # http://www.sec.gov/news/press/2012/2012-160.htm
This report was posted on Ripoff Report on 08/18/2012 05:56 PM and is a permanent record located here: http://www.ripoffreport.com/reports/zeek-rewardsrex-venture-group/internet/zeek-rewardsrex-venture-group-sec-shuts-down-600-million-online-pyramid-and-ponzi-schem-929229. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year. Ripoff Report has an exclusive license to this report. It may not be copied without the written permission of Ripoff Report. READ: Foreign websites steal our content
If you would like to see more Rip-off Reports on this company/individual, search here: