PAUL BURKS – BEFORE ZEEK

To understand Zeek Rewards/Zeekler, we need to go back to the beginning of its founder Paul Burks, and the companies he started prior to forming Zeek Rewards/Zeekler.

In January 1991, Burks founded Ages, Inc., which was described as an “Advertising Media” company, according to state records. Burks was the only employee listed on an annual report filed with the N.C. Secretary of State in 1991, and the business’ address was a residential home on Maegeo Drive. The entity was suspended by the secretary of state in 2003 after failing to comply with reporting requirements.

In June 1997, Burks founded Signed and Numbered International Inc., which was described as a general wholesale and miscellaneous retail company. Burks was the only employee listed on an annual report filed in 1998, and the business’ address was listed as a residential home on Fairview Drive. The company was dissolved in May 2005 after failing to report to the secretary of state.

Burks said Lighthouse America replaced Signed and Numbered International, Inc. in a YouTube video, describing the business as a telephone calling card business.  Lighthouse America, which has a sign in front of Burks’ property at 121 W. Center St. Ext., was not registered with the North Carolina or Nevada Secretary of State.

THE BIRTH OF REX VENTURE GROUP

In January 2003, Burks founded Rex Venture Group, a limited liability company. While Rex Venture Group’s headquarters is at 803 W. Center St. in Lexington, North Carolina the business’ principal office is listed in Las Vegas, Nev., according to Nevada state records. In North Carolina, Rex Venture Group also has an office listed at 121 W. Center St. Ext., according to North Carolina state records. The company was issued a “certificate of existence with status in good standing” from the state of Nevada in November 2011.

Burks launched multiple programs before the inception of Zeek Rewards and Zeekler.com, including an email service called New Net Mail and an online business store company called Free Store Club. In the YouTube video, Burks said Free Store Club was very successful, adding that it had a user base of more than three million people around the world.

THE BIRTH OF ZEEK?

According to a Zeek “training” website, Zeekler started its life in March 2010 as “FSCAuction.”  FSC was a part of Rex Venture Group called “Free Store Club.” In June the auction was renamed Zeekler, and for a few months, it was also known as a different auction under Rex Venture Group called MyBidShack, but was made a separate auction in December 2010.

NPros, however, had a different story. It claimed that Zeekler didn’t start until they acquired a Georgia Penny Auctioneer called iTicketBid, in September 2010. iTicketBid had a history of failing to deliver promised items. Georgia had ruled that penny auctions must be licensed by the state auction commission and drove “Wavee” out of business as of July 2010.

It seems the truth is a combination of the two: Rex Venture Group did start FSCAuctions in April 2010 (some remnants can still be found on Facebook and such via Google search), FSC Auctions was renamed Zeekler in June 2010, and sometime after that it acquired or merged with MyBidShack. For a while both were operating together, but with different comp plans. Zeekler bought iTicketBid in September 2010 and merged it into Zeekler. In December 2010 the two separate websites (Zeekler and MyBidShack) were merged again with a new affiliate plan and re-launched as merely Zeekler. MyBidShack remained active but it was a portal into Zeekler.

If you search MyBidShack’s current whois record you’ll see its registrant is indeed Zeekler, handled by Paul Burks, and shares same address as Zeekler/ZeekRewards. MyBidShack was owned in early 2011 by Darryl Douglas, who became one of the top three at Zeekler.

To conduct auctions, one must have a license. North Carolina Auctioneer Board confirms that Rex Venture Group holds Auction Firm license #9401, issued in March 2012.  This means that Rex Venture Group/Zeekler operated for almost TWO full years without obtaining the proper auction license.  Zeek Rewards/Zeekler is a subsidiary of Rex Venture Group.

ZEEK REWARDS – EARLY RED FLAGS

When Zeek Rewards was launched, it was offering a 125% (ROI) rate on investment to all affiliates.  This was a carbon copy of what ASD Cash Generator offered to its members before it was shut down by the Secret Service on August 1, 2008.  Many of the top players of ASD became part of Zeek Rewards. Thus what we believed to be the influence for the 125% rate of return to its affiliates.

With all the major players from ASD on board, Zeek soon began to explode in growth.  They continued this 125% ROI comp plan up until the end of 2011 when they were told this would get them in trouble with the federal authorities.  Zeek then hired Gerald Nehra as their legal advisor, and Keith Laggos as a MLM consultant to get them in compliance.  In early 2012, more legal advisors were added to strengthen their desire to become “legitimate” in the eyes of the federal regulators.  All of a sudden affiliates were warned they could not use the term investing when promoting Zeek Rewards/Zeekler, as this would get them in trouble with the federal  regulators.  This is when Zeek introduced their point program replacing the 125% ROI comp plan.  But the affiliates did not listen and YouTube video’s were everywhere touting Zeek as an investment opportunity and passive income.

ZeekRewards is the “rewards program” for Zeekler, a “penny auction” website where bidders purchase bids, to be spent on items.  People would pay for bids for various items up for bidding, using one bid at a time. The last person to get the bid in “wins” the item. Then they could pay for the item, or choose to “cash out” the item and receive the difference between the MSRP and the “bid price.”

In ZeekRewards, to “share” in the profit pool, you needed to give away at least 10 bids (you had to buy them first), and post an ad every 24 hours, and you needed to be a paying affiliate as well. Prior to a major change in April 2012, you were required to have at least two paying affiliates under you (silver, gold, or diamond, $10, $50, or $99 per month respectively) as well.  For every bid you bought and gave away, you earned one “VIP ProfitPoint” in your pool. At the end of every day, ZeekRewards would declare a daily profit share, which averaged about 1.4%.

I am not going to go into all the different ways Zeek claimed you could earn from being an affiliate, because the penny auction was the key to Zeek.  This is where they claimed all income to pay the affiliates came from, and Zeek was allowing you to share in this profit pool.  Zeek kept 50% and they paid out 50% to the affiliates from this daily profit.

MORE RED FLAGS EMERGE AS ZEEK CONTINUES TO GROW

As hard as they tried to change their business model, other issues started cropping up that caused major problems for Zeek Rewards.  They had processing problems, they had payment problems, and people complaining they were not receiving the items they won in the penny auction. As their problems mounted their growth continued almost unabated despite these problems.

Suddenly Paul Burks announced that Zeek had terminated affiliates from six foreign countries claiming that these six countries were on the OFAC restricted list for American companies to do business. The only problem was according to OFAC, they did not have any sanctions against them and were not banned by American companies to do business with them. No further explanation was given by Paul or Zeek as to what really happened with the affiliates from these six countries.

Then at the end of May Zeek suddenly announced they had to switch from their two local banks as they were no longer capable of handling their tremendous growth.   But the problem was this announcement came over the Memorial Day weekend.  To further compound the problem, they told the affiliates they had only until June 1 to have the checks they were sent cleared or they would not be honored by the banks. They would need to have new checks issued if they did not clear by June 1.  In many instances this only gave the affiliates 2 days for their checks to clear, which was impossible to accomplish as most checks take up to 10 days to clear.  We are not talking about funds being made available in the account to use, but cleared through the ACH system.

But this sudden change also caused even more problems, as they would not reveal who the new bank Zeek was using to process their business.  Instead they announced an E-Wallet program that all payments and deposits had to be used by the affiliates. All of a sudden people were finding that their credit card payments were being processed from South Korea, Russia, China, Panama, Malta, Cypress and possibly several other countries causing even more confusion among the affiliates.  Rather odd that a mega-million dollar debt-free company as Zeek claimed could not maintain its own merchant account with banks in the U.S., but had to use foreign banks to process its credit card transactions.  When inquiries were made, Zeek refused to comment.

Just as they were recovering from all these problems, new problems struck Zeek.  In June, a TV station ran a story about Zeek and said the North Carolina Attorney General had said that Zeek was legal.  This prompted the North Carolina Attorney General to hold a press conference saying they had not said Zeek was legal, and contacted the TV station to issue a corrected report. Of course all the Zeeksters had run to promote that the North Carolina Attorney General had reviewed Zeek and said it was legal ignoring the station had to retract the story and had took their story down.  Zeek managed to make it through most of the month of July without any more major problems hitting them, but it was to be short-lived.

THE BEGINNING OF THE END

Then on July 24th, 2012, a bombshell was announced by Zeek.  Their paid MLM consultant Keith Laggos was terminated abruptly and Zeek would not comment on it.  When Keith left, he made a statement that Zeek would be hit by the FTC within six months.  This news set off a firestorm with Zeeksters.  Before they had recovered from that bombshell, on Aug 3, the North Carolina State Employee’s Credit Union was warning its members that Zeek was fraudulent.  A new firestorm swirled around this news for the next few days.

Then just as everything was settling down, on August 7, the North Carolina Attorney General announced that they were concerned about Zeek, and had requested information (CID-Civil Investigative Demand) from Zeek about their business practices.  What no-one knew at the time was this request had been made on July 6, but Zeek had not informed any of its affiliates about this request until the North Carolina AG made it known on the 7th.

Then the Zeek management team and Zeeksters went into overdrive claiming this news would be great for Zeek as they would prove they were a legitimate business; and make them grow even more. But before Zeek could recover from this latest bombshell, another one was to befall Zeeksters. On Monday, August 13 Zeek announced their training and recruiting sessions were being cancelled for the week and no explanation given or discussion allowed. This followed on the 15^th that the red carpet event that was scheduled for the following Wednesday had been cancelled, and again no discussion allowed.  Before the dust settled on this news, on the afternoon of the 16^th, Zeek abruptly shut down their office and put a sign in the window that the office would be closed for the rest of the week.  Later that afternoon Zeek’s website went offline as did its Facebook page and forum. Then it was reported that employees were seen leaving out the back door with boxes of office supplies and the locks on the office had been changed.  Speculation ran wild as to what was happening and had happened. Of course all payments were stopped when the website went offline.

FINAL BOMBSHELL ANNOUNCED

Then on Friday morning the final bombshell was announced.  The SEC/Secret Service had shut down Zeek as a massive Ponzi, and Paul Burks had entered into a plea deal paying a $4 million dollar fine, turning the company over to the court, and all assets of Zeek had been frozen by the court.  A Secret Service agent was at Zeek headquarters interviewing Zeek affiliates that had come to the office to see if it was open.

Just like in the ASD case, immediately everyone blamed the SEC for shutting down a legitimate company, Zeek could not possibly be a Ponzi, they had no proof it was a Ponzi, the government wanted the money, too many people were becoming rich and the rich did not want that to happen, Paul was railroaded into turning over the company with the threat of prison if he didn’t cooperate, he was denied to have an attorney to advise him, and the list of complaints, gripes, and innuendo’s all directed at the “evil” government continued unabated on all the financial forums and blogs.

What is known now is that Paul Burks had been providing the SEC hundreds of thousands of documents, financial and electronic records, and had been doing so for some time.  He did have legal counsel advising him every step of the way, and was not forced into any plea deal.

SO WHAT IS THE STATUS OF ZEEK NOW?

Zeek is closed and will never come back. The court has appointed a temporary receiver that will oversee all the assets of Zeek and will be responsible for returning all the money he can retrieve to the true victims of Zeek. No-one knows how long this will take.  There was over $375 million dollars paid to affiliates and Zeek employees and executives.  It is reasonable to assume that the receiver will institute clawbacks against the major winners of Zeek, and those same winners will do everything in their power to keep as much of their ill-gotten gains as they can.  It will depend on how long this process takes before any restitution can be made to the victims.

All the payment processors are cooperating with the receiver to determine the monies in and out of the Zeek affiliates accounts for the accounting to be completed of all these funds.  If there are any buildings or other hard assets of Zeek, they will have to be sold to be added to the pool of funds for the victims.  There is no way a time-table can be established for how long all of this will take. But this is not going to be resolved any time soon.  It could take up to 2 years, maybe longer, before this is all settled.

As of this writing, there are two class-action lawsuits being filed against Paul Burks and Zeek. There is also a group considering filing a lawsuit against the SEC claiming they stopped a legitimate company and lied about Zeek being a Ponzi.  The only problem with all of these potential lawsuits:  None can go forward until the receiver has accomplished the task he has been assigned.  The only person who has standing in the Zeek case is Paul Burks, as he was the owner of Zeek/Rex Venture Group.  All the affiliates do not have any standing whatsoever in Zeek/Rex Venture Group.  This was tried in the ASD case, and there were over 90 lawsuits filed against the government for shutting down ASD.  All were denied for lack of standing in the case. Besides, the SEC did not shut down Zeek, the court did. So to overturn the verdict, they would need to sue the judge, not the SEC.

DUE DILIGENCE IN THE AFTERMATH OF ZEEK

What is truly sad is that there were a lot of really good people who have been hurt financially by the closure of Zeek. Many invested, and yes they were investing contrary to what Zeek tried to claim, far more than they could afford to lose.  There is no doubt many may lose their homes, cars or both, their retirement funds from their involvement in Zeek.  Many will also lose friendships and family members because they got them into Zeek. The problem is they did not do any real due diligence about Zeek or they would not have joined. There were many who were exposing Zeek for the Ponzi it was, but no-one wanted to listen. The information was out there, it was just ignored or they didn’t want to find it.  After all you could make $40,000 a month placing one ad per day and letting your points roll-over from each 90-day period until it would be paying you $40,000 a month.  At least that was the dream, it just wasn’t reality; as now too many have found out the hard way.

There never is any pleasure or satisfaction in being right about Ponzi, and Zeek is no exception.  We were doing all we could to warn people not to join, or if they were in Zeek to get out as fast as possible before the coming fall. All we can do is hope and pray the next time people will listen to us when we sound the warning; for the truth is we do know what we are talking about.

Note: Some information came from KSChang and his Analysis of Zeek Rewards, and from Oz at BehindMLM.