Ponzi Record

United States ยท January 2011 to August 2012, according to the SEC

ZeekRewards (Rex Venture Group)

The Justice Department said participants were told they could share 50 percent of the company's daily net profits through a Retail Profit Pool, that Burks made up the daily profit figures, and that about 98 percent of incoming funds came from victims and were used to pay earlier investors. The SEC said payouts had no real link to company profits.2,1

Losses as statedThe SEC described a $600 million scheme in 2012. The Justice Department later described a $900 million Internet Ponzi scheme and said that by August 2012 the conspirators claimed investments worth nearly $3 billion but had only $340 million available.1,2
Victims as statedThe Justice Department said more than 900,000 victims were induced to invest. The SEC said the scheme drew more than one million Internet customers.
Recovered for investorsReceiver Kenneth D. Bell reported $246,048,079.29 distributed, including 112,374 checks mailed on 31 July 2015, and said distributions plus pre shutdown payments would return 60 percent of allowed claimed losses.3

People and outcomes

Paul R. Burks

Settled the SEC case in August 2012 without admitting or denying the allegations, agreeing to a $4 million penalty. Convicted by a federal jury in July 2016 of wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy. Sentenced on 13 February 2017 to 176 months in prison and ordered to pay $244 million in restitution.1,2

Response: Burks settled the SEC action without admitting or denying the allegations. No statement by Burks appears in the Justice Department sentencing release.1,2

Timeline

  1. SEC announces emergency asset freeze and settled charges against Burks and Rex Venture Group.1
  2. Receiver mails 112,374 checks totalling $89,200,834.29.3
  3. Federal jury convicts Burks after a three week trial.2
  4. Burks sentenced to 176 months in prison.2

Sources

  1. US Securities and Exchange Commission, SEC shuts down $600 million online Ponzi scheme (17 August 2012)
  2. US Attorney's Office, Western District of North Carolina, Former ZeekRewards CEO sentenced to more than 14 years for operating $900 million Internet Ponzi scheme (13 February 2017)
  3. Kenneth D. Bell, Receiver, ZeekRewards Receivership home page (31 July 2015)