EDITOR’S NOTE: Our theory about Zeek Rewards is that it’s a slow-motion, pyramid-style Ponzi scheme being driven by any number of clueless affiliates who do not understand they are being influenced by steroidal puppeteers and MLM’s Great Wing of Willfully Blind Hucksters, Religious Frauds and Disingenuous Opportunists, PR Amateurs, Government Agitators and Unindicted Felons and Misdemeanants. We had a similar theory about AdSurfDaily. Read this document (courtesy of the ASD Updates Blog) and see if you agree that Zeek affiliates need to be asking some very serious questions about their “program.”

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UPDATED 1:39 P.M. EDT (U.S.A.) If you expected to be less confused about Zeek Rewards after listening to Jim Gillhouse and Troy Dooly chat up Zeek COO Dawn Wright-Olivares Friday night on ACES Radio Live, you’re apt to have come away disappointed — or perhaps even more confused. (Link to recording at bottom of editorial.)

The 86-minute show began with something that resembled a hopeful note: Gillhouse implied he’d hold Zeek’s feet to the fire and play “bad cop” to Dooly’s “good cop” because of various controversies swirling around Zeek. Co-host Dooly, though, seemed to bristle at the “bad cop” remark.

“Well, it ought to be interesting because I’m learning that bad cops don’t usually have all the facts,” Dooly said.

With that remark, the radio program more or less devolved into a session in which Wright-Olivares was permitted to ramble . . . and ramble . . . and ramble. The questions Dooly put to a top MLM executive who represents a company that plants the seed it offers a return of more than 1 percent a day without being the Bernard L. Madoff Investment Securities LLC of multilevel marketing were asked with sugary and/or leading preambles — with Dooly effectively stifling the worthy aims of his co-host and coming off as Zeek’s PR flack and spin doctor.

When Zeek’s story is compared to the tale of Madoff’s relatively modest (compared to Zeek) but unusually consistent returns of around 10 percent a year, Zeek is outperforming the notorious Ponzi swindler by a factor on the order of 30 to one. Zeek, though, insists it is not offering an investment. It also preemptively denies it is a “pyramid scheme” and plants the seed it will terminate any affiliate who suggests Zeek is offering an investment program.

Gillhouse tried. He deserves credit for that.

After not liking how Gillhouse framed a question to Wright-Olivares in the context of Zeek’s purported revenue-sharing program and recruitment efforts and how it purportedly spits 50 percent of its revenue with affiliates, Dooly behaved as though the question were asked of him and not the Zeek executive.

The information was “proprietary,” Dooly insisted.

He then bizarrely planted the seed that the ACES Radio Live show could get in trouble with a “regulator” for asking such a question and that Zeek itself could get in trouble for even responding to such a question. Dooly also implied that someone with dubious motives had set up Gillhouse by supplying him with bogus questions to make Zeek look bad. Such questions were offensive to American Capitalism, Dooly implied.

At one point in the “interview,” Wright-Olivares planted the seed that jealous competitors were after Zeek — in addition to the fraudsters and hackers who were making Zeek look bad in the eyes of its financial vendors, including offshore payment processors.

And there also was accidental comedy: Dooly called Zeek’s legal and compliance team the “crackpot team” when he meant the “crack team.”

We think he meant that, at least.

Gillhouse tried to make the show something other than a Zeek commercial and even caused Wright-Olivares to get snarky in one of her responses, but his own co-host made sure the Zeek executive had a cocoon into which she could retreat with no meaningful follow-up questions asked to tie up any of the incongruities about Zeek.

Although Dooly ventured that Zeek was “the most complex thing I’ve ever seen,” he did precious little to strip away any of the layers of complexity to show Zeek in the plain light of day.

“Proprietary” ain’t gonna cut it with Zeek — not with Zeek’s business model, not with criminals behind green curtains in the era of white-collar fraud relying on the word to coverup or sanitize massive fraud schemes, not after AdSurfDaily, not even if Zeek’s lawyers come on the show with the aim of turning on one of Dooly’s belt-high softball tosses in the middle of the plate and driving it into the upper deck of MLM La-La Land Stadium with the robotic Stepford fans rising to their feet in full Stepfordian awe. (Dooly’s suggestion that Gillhouse and/or the radio show itself could get in trouble for not being precise when asking questions is almost too strange to contemplate, so we are choosing not to contemplate it right now. Our plate is already filled with bizarre tales — JSS Tripler/JustBeenPaid, which has promoters in common with Zeek and  plants the seed it can outperform Madoff on the order of 50 to one, for instance.)

It’s this simple if you are a Zeek affiliate and have questions about the company: Assume that Dooly is trying to wear two hats (at least) and therefore is not an independent voice. He is making personal appearances at Zeek Red Carpet events, posing for the camera with Wright-Olivares and even permitting his image to be shown in what effectively is a commercial for Zeek. Then, he’s “interviewing” Wright-Olivares on the subject of Zeek.

What you are observing, unfortunately, is Troy Dooly and a Zeek executive in MLM Radio La-La Land, a cheerleader quizzing a woman who apparently is committed to her own bizarre talking points and even running interference for her. Paul Burks is the purported boss of North Carolina-based Rex Venture Group LLC, Zeek’s purported parent company. Burks and Wright-Olivares go way back, Wright-Olivares says.

At the heart of the Zeek flap are questions such as these:

• Does Zeek’s penny-auction arm (Zeekler) constitute a gambling operation and therefore put the entire Zeek enterprise at risk?
• Does Zeek’s MLM arm (Zeek Rewards) make the company vulnerable to charges that it is selling unregistered securities as investment contracts because of the seed Zeek plants that a return of between 1 percent a 2 percent a day is possible — thus putting the entire enterprise at risk?
• Are Zeek’s purported tens of thousands of affiliates exposing themselves to charges they are helping Zeek sell unregistered securities?
• Given Zeek’s business mix, what agency is its principal regulator?
• Because any number of Zeek affiliates also are promoting highly dubious opportunities or obvious scams on well-known Ponzi scheme forums such as MoneyMakerGroup and TalkGold, is Zeek coming into possession of funds tainted by fraud and depositing those funds in its own bank and payment-processing accounts?
• Why is Zeek, a U.S. company, auctioning sums of U.S. cash and telling successful bidders it will pay them via offshore payment processors linked to fraud scheme after fraud scheme promoted on the Ponzi boards?
• Why has Zeek had problems with at least two U.S. banks? (And why is Wright-Olivares now suggesting that the banks and affiliates are to blame?)
• Why are Zeek customers openly complaining on a Zeek support forum that they have not received their auction winnings for weeks or even months?
• Why is Zeek apparently closing itself to would-be prospects in Montana?
• How is Zeek paying employees? How many employees — as opposed to independent contractors — does it have?
• Why were/are some of the “employees” Zeek lists on its website participants in cash-gifting schemes, matrix-cycler schemes and autosurf Ponzi schemes such as AdSurfDaily?
• Is Zeek relying on volunteers to catch up on a considerable backlog of customer-service issues — and calling the volunteers “employees?” Why would Zeek permit either volunteers or employees associated with various forms of online fraud effectively become spokespeople for Zeek? (Note: AdSurfDaily also relied on “volunteers.”)
• Was Paul Burks or any Zeek executive, employee or volunteer involved in AdSurfDaily in any capacity? Did any Zeek executive, employee or volunteer receive any compensation from the remissions pool established by the government in the ASD Ponzi case? Did Zeek, whose business model is similar to ASD, come into possession of any money that flowed from the ASD remissions pool?
• Is there a chance that Zeek’s growth was fueled in part by money originally seized in the ASD case and returned to participants last fall in the form of remissions payments?
• Why is purported MLM expert Keith Laggos, who ventured an opinion that ASD was not a Ponzi scheme, a consultant to Zeek?
• MLM attorney Gerald Nehra, an expert witness for AdSurfDaily, ventured an opinion that ASD was not a Ponzi scheme. Why is Nehra’s law firm purportedly doing work for Zeek?

While Wright-Olivares was rambling Friday night, she did say two attention-getting things. One was delivered almost as a throw-away line; the other was a butchered attempt to spin a major negative into a positive.

First, the butchered spin attempt: After Zeek implied on its Blog on May 28 that it voluntarily was closing two U.S. bank accounts, Wright-Olivares suggested Friday night that the closings were less than voluntary.

One of the banks simply was too small to handle Zeek’s rapidly expanding business, a circumstance that left the bank president “devastated,” Wright-Olivares said. But at the same time she was saying that, she also was implying that the bank booted Zeek because of all the problems associated with doing business with the firm. (Emphasis added.)

“Well, our bank of 15 years came to us and said, ‘You’re just way too big. We can’t handle this.’ This is like the small bank in Lexington, North Carolina, and the president of the bank was devastated . . .” Wright-Olivares said.

She went on to explain that Zeek had opened an account at a second bank, apparently after the multimillion-dollar MLM firm had approached a branch office to open the account instead of consulting with the main office. Although Zeek told the branch office what business it was in and apparently managed to get an account started, the matter got kicked upstairs and Zeek ultimately got booted, Wright-Olivares implied.

“They didn’t do their due diligence” at the branch office, she curiously explained.

Now, the throw-away line:

After Gillhouse asked her if Zeek’s profit pool is a “50/50 split” between Zeek and participating affiliates, Wright-Olivares said, “Yeah, the Retail Points Pool — the revenue shares . . . actually, [Zeek President and CEO] Paul [Burks] — Paul manages all that.”

Wright-Olivares went on to explain that Burks gives “us” up to 50 percent of Zeek’s daily net, an answer that strongly implied that she was both a Zeek executive and an affiliate sharing in the profit pool. Neither Gillhouse nor Dooly asked whether Burks made the revenue-sharing calculations in the plain light of day with other executives observing the process, whether Wright-Olivares also drew an executive’s salary from Zeek, whether her COO title was simply an in-house designation and whether she essentially was just an affiliate with a fancy title and more responsibilities.

The answer to those questions could be important because Zeek’s business model strongly resembles that of Florida-based AdSurfDaily, which the U.S. Secret Service said in August 2008 — nearly four years ago — was operating a massive online Ponzi scheme. Like Zeek, ASD positioned itself as a revenue-sharing program that split 50 percent of its daily receipts with affiliates, awarding them an unusually consistent gain of about 1 percent a day.

And like Zeek, some ASD executives held fancy titles. In the end, however, the titles that ASD handed out appeared to be simple naming conventions designed to create the appearance of legitimacy. No evidence has emerged that any purported executive with the possible exception of ASD President Andy Bowdoin was anything other than an affiliate who held a fancy title in ASD’s MLM la-la land. Bowdoin effectively was alleged to be a glorified affiliate of his own company, with federal prosecutors saying that he’d placed an ad for a failed, dissolved business in his own “advertising” rotator to qualify for a payout from ASD’s revenue pool.

Moreover, the Secret Service alleged that, contrary to assertions by Bowdoin that ASD was paying out to affiliates 50 percent of the daily revenue it generated from sales,  ASD was not doing what it said it was doing.

“Rather, Bowdoin manufactured the revenue numbers to deceive members into believing that they could reasonably expect to receive an average daily return on their investment with ASD of at least 1%. This percentage in no way corresponded to the daily revenue that ASD was generating, but had been determined by ASD’s operators to be the amount needed to attract a steady stream of newcomers,” the Secret Service alleged in an affidavit originally filed under seal in February 2009, as the agency’s then-eight-month-old probe into ASD’s businesses practices continued.

In essence, the Secret Service alleged that Bowdoin was the man behind the colloquial green curtain and that he and unnamed others were fudging numbers and compartmentalizing information to keep the $110 million ASD scam afloat. Participants needed to hear a certain number or they weren’t apt to play, and Bowdoin and his coconspirators delivered that number — 1 percent a day — all while insisting ASD was not offering an investment product and giving themselves a further out by claiming revenue-sharing payouts were not guaranteed.

There have been no allegations of wrongdoing against Burks or Wright-Olivares or Zeek, but the remarks by Wright-Olivares are troubling.

“Paul manages all that?”

In closing, we present to you Paragraph 16 of a U.S. Secret Service affidavit filed on Feb. 26, 2009. This document was part of a seizure action that targeted the bank accounts of certain ASD members. We urge readers who may be members of Zeek not to listen to anyone who argues the document has no relevance in the context of the Zeek “program.” Indeed, you are about to read something that speaks compellingly about criminality — and steroidal puppeteers and Stepfordians — within the MLM universe:

16. Bowdoin and his [silent partner and 12DailyPro] sponsor knew that it was illegal to sell investment opportunities to thousands of individuals; thus, they were careful not to call participants “investors” but rather referred to them as “members.” Moreover, there were careful not to call payments to “members” “return on investments”; rather, they referred to the income program as a “rebate” program (A review of the ASD account database actually revealed ASD used the term “ROI” as a payment category for members). Although they were careful not to explicitly state that any income from ASD was guaranteed, both ASD founders intended that prospective members understood that they would receive better than market returns. Bowdoin and his sponsor were paying the stated 150% return and knew that ASD members expected that return. Bowdoin and the sponsor had discussed the need to pay at least one percent a day to members for members to promote the program to others.