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Tag: Zeek Rewards

  • ** UNCONFIRMED ** Some Credit Cards Or Payment Accounts Tied To Zeek May Be Getting Charged For Subscriptions In Aftermath Of Collapse ** UNCONFIRMED **

    UPDATED 12:18 P.M. EDT (U.S.A.) There is a report on the MoneyMakerGroup Ponzi forum today of at least one member of the Zeek Rewards’ “program” getting charged $99 for a monthly renewal:

    Here’s how the post read (italics added):

    “Your Diamond renewal has been processed
    Order Total: 99.00
    Order Date: 8/5/2012 6:06:51 PM
    Subscription Renewal Date: 7/29/2012
    Order Number: [deleted by PP Blog]
    This will appear on your statement as ZeekRewards.com.
    Thanks!
    ZeekSupport

    The poster went on to point out that the “[d]ates are off though.”

    And the poster also asked, “Anyone else get this? Probably old renewal only processed now, knowing how slow they’ve been.”

    Last week, the state of Maine cautioned Zeek members to contact their service-providers to cancel Zeek billings. Here is the statement from Maine’s Office of Securities and Bureau of Financial Institutions in its entirety (italics added):

    Maine’s Office of Securities and Bureau of Financial Institutions today alerted consumers that federal regulators recently took action to stop an alleged massive online “profit sharing” Ponzi scheme that appears to have attracted Maine investors. The site, ZeekRewards.com, was placed into receivership and had its assets frozen by a North Carolina District Court on August 17 following an action by the U.S. Securities and Exchange Commission (SEC) for securities fraud against the site, as well as a related entity, Rex Venture Group, LLC, and internet marketer Paul R. Burks of Lexington, N.C.

    According to the SEC’s complaint, ZeekRewards and defendants raised $600 million dollars from more than one million internet customers and investors nationwide and overseas through the website, ZeekRewards.com, which began operating in January, 2011. Customers were offered several ways to earn money through the ZeekRewards profit-sharing program, which the SEC alleges was marketed in violation of federal law. ZeekRewards operated a classic Ponzi scheme by paying the first wave of investors with new funds solicited from subsequent investors using false and misleading statements.

    “Some Maine financial institutions reported receiving requests for assistance from customers who invested in ZeekRewards.com, so, unfortunately, we have good reason to believe there may be a number of Maine victims of this scheme,” said Bureau Superintendent Lloyd LaFountain III. LaFountain encouraged anyone who purchased an interest or otherwise invested in ZeekRewards through a monthly subscription or other recurring payment plan administered by their financial institution to contact the institution immediately to make sure future payments are not deducted from the customer’s account.

    The receiver in this case has identified $225 million in investor funds in 15 foreign and domestic financial institutions, but is still currently identifying assets and victims of the scheme. Securities Administrator Judith M. Shaw urged investors to stay abreast of developments by monitoring the receiver’s website: www.zeekrewardsreceivership.com. Shaw pointed to another resource for investors, an SEC site to keep investors apprised of updates, www.sec.gov/divisions/enforce/claims/zekerewards.htm.

    “Scam artists rely on the internet as a reliable forum for perpetuating fraud,” noted Shaw. “The fact that this scheme reportedly pulled in over one million investors worldwide underscores the importance of thoroughly investigating any kind of profit-making venture before investing, regardless of how the venture is styled or presented The Office of Securities stands ready to assist all Maine citizens with objective information so that investors can make informed investment decisions.”

    Last Updated: August 31, 2012 12:33 AM

    Visit the webpage of the Maine Office of Securities and Bureau of Financial Institutions.

  • The Bizarre Wordplay Of ‘ProfitClicking’

    “25. Individual PC members are not responsible for the performace [sic] of PC or any other programs, products, and services provided by PC. Individual PC members, including those who introduce, sponsor, or refer other members, incur no liabilities or obligations in respect of PC’s financial decisions and directions and any other programs, products, and services launched.” — From the ProfitClicking Terms of Service, Sept. 3, 2012

    ProfitClicking, the nascent follow-up scam to JSS Tripler/JustBeenPaid that surfaced last month amid claims of the sudden retirement of purported JSS/JBP operator Frederick Mann, appears to be trying to tell affiliates that they’ll incur no liability for promoting the “program.”

    And even as it does this, ProfitClicking is disclaiming any liability on the part of the “opportunity”:

    “Participants agree to hold the ProfitClicking! owners, managers, and operators harmless in respect of any losses incurred as a result of participation in any activity related to ProfitClicking!” the “opportunity” claims in its Terms.

    The development occurs on the heels of the collapse of Zeek Rewards, which the SEC described as a $600 million Ponzi- and pyramid scheme that recruited investors by making them believe they’d joined a sort of online nirvana that provided a return of 1.5 percent a day. Zeek’s Aug. 17 collapse already has triggered at least two class-action lawsuits, the appointment of a receiver who has signaled he’ll pursue winners for ill-gotten gains and the seizure of Zeek-related money by the U.S. Secret Service.

    Like JSS/JBP before it, highly secretive ProfitClicking plants the seed that it will pay even more than Zeek.

    One of the Zeek-related, class-action lawsuits is targeted at Zeek operator Paul R. Burks and 10 “John Does,” meaning the plaintiffs are targeting individuals believed to have profited from the alleged Zeek Ponzi scheme or perhaps helped Burks pull off the scam.

    Given that disclaimer language never has succeeded in warding off a fraud prosecution or private lawsuit in HYIP Ponzi land, ProfitClicking’s words aimed at insulating itself are virtually meaningless. Whether ProfitClicking actually believes it can provide legal cover for its pitchmen is unclear. What is clear is that the ProfitClicking Terms — like the JSS/JBP Terms before it — read like an invitation to join an international financial conspiracy.

    If you’re a ProfitClicking promoter, good luck at your deposition in the post-AdSurfDaily*, post-Legisi**, post-Pathway To Prosperity*** and post-Zeek era when a private attorney or lawyer for the government asks you why you were promoting a “program” that advertised a return in the hundreds of percent per year and made you affirm you were not with the “government.”

    Some highlights from the ProfitClicking Terms (italics added):

    6. I affirm that I am not an employee or official of any government agency, nor am I acting on behalf of or collecting information for or on behalf of any government agency.

    7. I affirm that I am not an employee, by contract or otherwise, of any media or research company, and I am not reading any of the PC pages in order to collect information for someone else.

    22. It is your responsibility to check your payment system accounts to be sure you actually received all payments that you should have received. Because certain payments are made member to member in PC, the PC system cannot confirm that any payments between members were actually made.

    24. In the event of a disagreement between two members regarding payments, it is the responsibility of the members involved to resolve the disagreement. The PC managers hold no responsibility at all in such scenarios.

    Here’s one way to read the Terms: Either ProfitClicking or its affiliates can rip you off — and there’s not a damned thing you can do about it.

    With Zeek’s Paul Burks confronting litigation on at least three fronts and with “John Does” being part of the mix, ProfitClicking’s words are just more HYIP drivel.

    * ASD operator Andy Bowdoin was sentenced to 78 months in federal prison for his Ponzi scheme.

    ** Legisi operator Gregory McKnight faces sentencing Sept. 11 for his Ponzi scheme. Legisi pitchman Matt Gagnon, meanwhile, faces civil judgments in the millions of dollars, along with a criminal charge.

    *** Pathway To Prosperity’s alleged operator Nicholas Smirnow is listed by INTERPOL as an international fugitive.

  • Missouri Orders Alleged HYIP Operated By Christopher Hanson To Cease And Desist; Scheme Reached Into North Carolina, State Alleges; Tough Economic Times Give Scammers Opportunity To ‘Pull Schemes Directly From The Pages Of The Fraud Playbook,’ Official Says

    Missouri Sectetary of State Robin Carnahan

    UPDATED 10:52 A.M. EDT (U.S.A.) Christopher Hanson of Springfield, Mo., has been ordered to “cease and desist” from offering an HYIP “featuring supposed ‘leveraging’ on U.S. Treasuries,” the office of Secretary of State Robin Carnahan announced.

    Missouri state securities regulators described the scheme as a hybrid that married Hanson’s HYIP to a prime-bank scheme.

    “In tough economic times, everyone is looking for ways to make money, which gives fraudsters ample opportunities to pull schemes directly from the pages of the fraud playbook,” Carnahan said.

    Regulators at both the state and federal level have issued repeated warnings about HYIP and prime-bank swindles. Walter Clarence Busby Jr., a figure in the AdSurfDaily Ponzi scheme in 2008 and a companion fraud scheme known as Golden Panda Ad Builder, was implicated by the SEC in three prime-bank swindles in the 1990s.

    “The cease-and desist-order alleges that Hanson sold unregistered securities and committed securities fraud by failing to disclose material information to investors,” Carnahan’s office said.  “According to the order, Hanson assured investors that their investments were risk free or ‘safe’ and were backed by a U.S. Treasury program. Hanson promised investors that they would quickly receive high rates of return on their investments, some in as little as 24 hours. To date, investors have not received any return on their investments.”

    Hanson, according to the state’s order, is a former insurance salesman who was fired in 2005 “for failure to disclose reportable events on a Uniform Application for Securities Industry Registration Form . . . and failure to fully cooperate with a regulatory inquiry and internal requests for information.”

    By 2011, Hanson was in the HYIP business, according to Missouri state investigators — at least one of whom was corresponding with a Hanson investor in New York, according to the state.

    The New York investor, according to Missouri investigators, “was referred to Hanson through an attorney in North Carolina.”

    Also named in the order are Hanson Holdings LLC of Springfield and IBS Investments LLC, also of Springfield.

    Read the Missouri order for additional details.

    North Carolina recently was rocked by the collapse of Zeek Rewards, which the SEC described as a $600 million Ponzi- and pyramid scheme.

  • URGENT >> BULLETIN >> MOVING: U.S. Secret Service Has Seized Zeek Money

    URGENT >> BULLETIN >> MOVING: (UPDATED 8:59 P.M. EDT U.S.A.) The U.S. Secret Service has seized more than $11.5 million allegedly traceable to the Zeek Rewards MLM “program,” according Preferred Merchants Solutions LLC (PM), which cited an “asset seizure warrant” in a new court filing.

    PM is a Zeek vendor. The company also says it is in possession of between $10 million and $15 million of “unprocessed checks” linked to Zeek. Moreover, the company has advised a federal judge that there may be an additional $3 million in checks that were not processed due to “processing errors.”

    The Secret Service confirmed on Aug. 17 that it was investigating Zeek. The filing by PM is believed to be the first public document that shows the agency is seizing Zeek-related money. The SEC has described Zeek as a $600 million Ponzi- and pyramid scheme.

    PM, according to Florida records, is a Miami-based company. The company, whose registration in Florida was marked reinstated on July 2, also lists an address in Napa, Calif., in Florida records.

    Separately, North-Carolina-based Four Oaks Bank & Trust Co., which earlier said it needed more time to establish how much it was holding in Zeek-related funds through Rex Venture Group LLC, has advised the judge it does not have an account in the Rex name “or any other direct relationship” with Rex.

    However, the bank went on to say that it “does have a commercial account in the name of “Nx Systems Inc.” and that the bank “froze the entire NX Systems’ Commercial Account” on Aug. 17.

    Rex Venture is Zeek’s purported parent company.

    Nx Systems was a Zeek vendor. What the freeze of its “entire” commercial account means to other NX Systems’ customers was not immediately clear. Four Oaks advised the judge that it could not “independently certify” the amount of funds Nx Systems holds in the name of Rex and that Nx Systems told the bank it was working on a reconciliation for presentation to the court.

    Earlier this year, Zeek identified NX Systems as a service-provider. Zeek also scolded members for making phone calls to NX Systems, which operates an entity known as NxPay.

    See June 26 story on BehindMLM.com.

    Link to PM filing (courtesy of ASDUpdates.)

  • Zeek Operator Paul R. Burks Was Cooperating With SEC Prior To Date Of Ponzi Complaint, New Filing Suggests

    Paul R. Burks, the operator of Zeek Rewards, was cooperating with the SEC prior to the filing of the Aug. 17 complaint that alleged Zeek was a $600 million Ponzi scheme and pyramid fraud, a new court filing suggests.

    That “period of cooperation” resulted in the production of “hundreds of thousands of documents, including financial records, e-mails, and all manner of electronic files,” according to the filing by Noell P. Tin, an attorney for Burks.

    The filing does not specify when the cooperation began or say whether others inside of Zeek knew that the SEC had access to Zeek records prior to the filing of the complaint and a freeze on the assets of Zeek’s parent company, Rex Venture Group LLC. But it may explain at least in part why Burks agreed to settle the case without admitting or denying the allegations and to cooperate with Kenneth D. Bell, the court appointed receiver: The SEC effectively already had been inside the company.

    Separately, First Premier Bank of Sioux Falls, S.D., has advised Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina that it is holding more than $31.2 million in three separate Rex Venture accounts frozen under court order. The largest Rex account at the bank holds more than $30.9 million. A smaller account holds more than $284,000, and the smallest account holds only $90, according to a filing by the bank.

    To date, court filings suggest that Rex Venture has an account at Charles Schwab that holds $10.3 million in cash and more than $4.94 million in securities. The company also has an account at North Carolina-based NewBridge Bank that holds more than $11.64 million.

    Rex Venture also holds an account at Four Oaks Bank & Trust Co. Inc., another bank in North Carolina. The bank has asked the judge to give it until Sept. 3 to say how much it is holding because of the “complexity of the financial information that must be analyzed and the need to obtain relevant information from a third party.”

    All in all, the SEC said on Aug. 17 that the Burks-controlled entities used 15 foreign and domestic financial institutions.

    Burks’ personal assets were not frozen in the Aug. 17 SEC action, and the accused Ponzi schemer wants to keep it that way, according to court filings.

    “There is no basis and no need to freeze Mr. Burks’ personal funds,” his attorney wrote in response to a motion by Bell that raised the possibility that “Recoverable Assets” were controlled by Burks and his family. “Mr. Burks has never expatriated the assets of Rex Ventures Group, LLC or his personal money. He has fully cooperated in the SEC investigation, which included examination of relevant financial records. He is 65 years old, married, a two time cancer survivor, and has lived in Lexington, North Carolina for 23 years. He has never been a defendant in any action, civil or criminal, until this matter. Mr. Burks is aware of the importance of this proceeding and will abide by any orders this Court imposes.”

    One of the remaining mysteries of Zeek is how and when key executives found out about the SEC probe and whether they or other insiders feathered their own nests prior to the collapse.

  • BULLETIN: CFTC Says California Man At Helm Of Ponzi Scheme Targeted At Deaf Christians; Marc Perlman Charged With Fraud Amid Claim He Advised Investor To Sell House Quickly And Plow Proceeds Into Forex Scheme

    BULLETIN: The CFTC has gone to federal court in the Southern District of New York, alleging that Marc Perlman of Rancho Cucamonga, Calif., and his firm, iGlobal Strategic Management LLC, were running a commodity-pool and Forex Ponzi scheme targeted at deaf Christians.

    Perlman and the company have been charged with fraud. The CFTC said the scheme sucked in “at least $670,000 from at least 17 people.”

    In at least one instance, the CFTC charged, Perlman encouraged an investor “to sell a house at a price that would result in a quick sale, stating that the profits that the iGlobal Investor would earn with iGlobal would make up for the lost equity.”

    It is at least the third major fraud scheme targeted at the deaf community since 2009. In October 2010, the SEC charged an entity known as Imperia Invest IBC in a caper that sucked in millions of dollars and affected thousands of people with hearing impairments. In 2009, the FTC charged Affiliate Strategies Inc. (ASI) in a government-grants scam. The Noobing autosurf was in the ASI stable of companies, and promotions were targeted at the deaf.

    Both Imperia Invest and Noobing were promoted on the MoneyMakerGroup and TalkGold Ponzi forums — the same venues from which Ponzi schemes such as AdSurfDaily and alleged Ponzi schemes such as Zeek Rewards were promoted.

    “Perlman furthered his and iGlobal’s fraudulent scheme by playing upon the Christian faith of certain iGlobal investors, using claims about his own faith and references to scripture to obtain the trust of certain iGlobal investors,” the CFTC charged.

    Victims hailed from Arizona, California, Florida, Georgia, Michigan, Oregon, Utah, Washington and Pennsylvania, the CFTC said, noting that Perlman is deaf.

    “Perlman offered to have calls with certain potential iGlobal Investors through a video phone system that enables communication through sign language,” the CFTC charged. “During these calls, Perlman told certain potential iGlobal Investors that he was offering them the opportunity to invest in a forex investment system that would yield profits of 10 percent each month. He later revised this projected number to 5 percent after certain iGlobal Investors invested funds.”

    The U.K. Financial Services Authority assisted in the CFTC probe, CFTC said.

    Read the complaint.

  • ALERT >> ALERT >> ALERT: Judge Dismisses Lawsuit Filed Against United States By AdSurfDaily Figures Todd Disner And Dwight Owen Schweitzer, Later To Become Zeek Promoters

    BULLETIN: A federal judge has dismissed the November 2011 lawsuit against the United States by AdSurfDaily figures Todd Disner and Dwight Owen Schweitzer.

    The dismissal of the lawsuit by U.S. District Judge Rosemary Collyer came on the same day she sentenced confessed ASD Ponzi scheme operator Andy Bowdoin to 78 months in federal prison.

    After their ASD days, Disner and Schweitzer went on to become promoters of Zeek Rewards, which the SEC now describes as a $600 million Ponzi- and pyramid scheme. ASD was a $119 million Ponzi scheme.

    Disner reportedly now is involved in an effort to raise funds to sue the SEC for its role in the Zeek case. Disner and Schweitzer also raised funds to sue the government for its role in the ASD Ponzi case, but Collyer today dismissed their complaint.

    From Collyer’s order of dismissal in the case brought by Disner and Schweitzer, who alleged the seizure of their records on ASD’s database was unconstitutional (italics added).

    They allege that federal agents seized money, uncashed checks, unendorsed checks, books, computers, and other assets and records created and maintained by Plaintiffs in the computers and servers that were in the custody and control of ASD. Plaintiffs maintain that their information was encrypted and password protected. Specifically, Mr. Disner claims that he is owed $53,000 . . . On September 17, 2008, the Government returned to ASD the computers that it had seized . . . Mr. Schweitzer avers that he cannot remember where his checks/money orders were drawn, that he put $3,500 into ASD, and that he was involved with ASD for “only a few weeks before it was shut down.”

    Read the full ruling.

  • URGENT >> BULLETIN >> MOVING: AdSurfDaily Ponzi Schemer Andy Bowdoin Sentenced To 78 Months In Federal Prison — Maximum Under Plea Agreement

    Thomas A. "Andy" Bowdoin

    URGENT >> BULLETIN >> MOVING: (UPDATED 5:20 P.M ON SEPT 4.) AdSurfDaily President Andy Bowdoin has been sentenced to the maximum term in federal prison under his plea agreement: 78 months.

    The sentence was handed down minutes ago by U.S. District Judge Rosemary Collyer of the District of Columbia. ASD was a $119 million Ponzi scheme operating over the Internet between 2006 and 2008 and creating thousands of victims.

    Separately, Collyer issued an order that authorized the U.S. Department of Justice to reopen remissions, meaning that ASD victims who missed the January 2011 filing deadline will have an opportunity to gain a pro rata share of the remainder of ASD proceeds seized by the U.S. Secret Service in 2008.

    “Thomas Bowdoin was a master of fraud and deception, cheating victims out of their hard-earned money and savings with his get-rich scheme,” said U.S. Attorney Ronald C. Machen Jr. of the District of Columbia. “His actions cost his victims millions of dollars and now they will cost him his freedom. This sentence will protect the public from Mr. Bowdoin’s scams and hold him accountable for his crimes.”

    A top U.S. Secret Service official said the agency is using a variety of tools to bring scammers to justice.

    “Capitalizing on the strength of our financial task force partnerships, we aggressively pursue criminals using computer experts, forensic specialists, investigative experts and intelligence analysts,” said Dennis Ramos Martinez, special agent in charge of the Orlando Secret Service office.

    Machen’s office declined to comment today on whether the ASD probe was ongoing.

    Bowdoin is 77.

    In November 2011, ASD figure Kenneth Wayne Leaming was arrested by the FBI on charges of filing false liens against at least five public officials involved in the ASD case. Two of the officials were federal prosecutors. One was the lead Secret Service investigator.

    Machen’s office — without referencing the FBI allegations against Leaming — today praised the work of former Assistant U.S. Attorneys William Cowden and Vasu B. Muthyala. And Machen’s office also praised U.S. Secret Service agent Roy Dotson. All three men allegedly were targeted with false liens from Leaming, a purported “sovereign citizen.”

    Leaming, 56, is jailed near Seattle.

    Bowdoin’s sentencing today occurred against the backdrop of the collapse of Zeek Rewards, which was accused by the SEC Aug. 17 of operating a $600 million Ponzi- and pyramid scheme that potentially affects more than 1 million people. Zeek’s business model was similar to ASD’s business model. The U.S. Secret Service also is investigating Zeek.

    Here’s what prosecutors in the District of Columbia said today about ASD’s business model (italics added):

    ASD’s business model promised members the opportunity to earn 125 percent (initially 150 percent) on each dollar paid into ASD, as long as the members viewed other members’ websites for a few minutes each day on ASD’s Internet page, commonly referred to as the ASD “rotator.” Bowdoin also promised members commissions for recruiting other members into the program.

    While a small percentage of ASD members who invested early in the program could earn the extraordinary rates of return, the promised opportunity was illusory for the vast majority of ASD members. Indeed, due to the fact that ASD’s pyramid-style business model relied entirely on an ever increasing influx of new money to fund the debt owed to earlier members, the vast majority of members could never earn the promised rates of return, making the promised opportunity fraudulent.

  • As Zeek Apologists Solicit Funds And Plant Seed They’ll Sue SEC, Guest Columnist Asks, ‘Whose Lawyer Is This Anyway?’

    DISCLOSURE: Gregg Evans, a longtime member of the antiscam community, is a longtime PP Blog contributor. He was not compensated for this column, and his views are not necessarily the views of the PP Blog.

    Whose Lawyer Is This Anyway?

    By Gregg Evans

    A group of Zeek Rewards’ affiliates claim they have retained SNR Denton to do, well, something about the SEC taking over Rex Venture Group, Zeek’s corporate parent. What they intend to do is a mystery at this time. You see, Rex Venture Group, and with it Zeek, is dead. Nothing left but the shell that is in possession of a court-appointed receiver.

    There can be no resurrection here: Paul Burks, the previous owner has turned the company over voluntarily to the receiver and, under the terms of the consent judgment, he cannot change his mind, he cannot appeal, he cannot argue that he didn’t violate securities laws and he can’t reboot the company under a different entity.

    Zeek is no more: All that’s left is to gather up all the money and distribute what’s left back to those that it was stolen from.

    The first problem with this is that not all that was stolen can be recovered, a part of it is going to be spent in the effort to return it and not everyone lost, which means some people won. Fairness, and by the way the law, says that those winners should have to return not only their ill-gotten gains, but in fact they should also return part of their original investment so that they proportionately bear the same loss rate as everyone involved.

    In short, if the average “investor” is only going to recover $30 of the $100 they sent in, why should someone who sent $10,000, and profited in the end, only have to return their net winnings? It’s only fair that they should in fact have to return all their profits, but also 70% of their contributions, so that they bear the same loss as everyone else. If you sent in $10,000 and didn’t take out a dime, I think you’ll see the logic there. If, on the other hand, you were among the early investors who made a sizable profit, you may think differently.

    Zeek presented in online pitch as “Passive Income!” opportunity.

    It was once claimed that some affiliates were “earning” over $1 million a month from Zeek. If you’re a big winner, you might be quietly hoping that the receiver isn’t going to try to get anything back from you and you might be thinking that if he does, you might be wise to get an attorney to do everything legally possible to prevent any of your “profits” being taken from you to be added to the pool of funds eventually refunded to the people who weren’t as lucky as you. Well and good. I don’t agree with you, but then again, I wasn’t getting a million dollars a month in Zeek “profit sharing.” You’re certainly entitled to the best legal talent you can pay for.

    Ah, but you’re too greedy to even accept that. No, you’re not going to use your own money to get that very pricey legal team working to keep you from losing money in the Ponzi scheme like almost all the others, you want the losers to contribute to a fund to pay your lawyers.

    That’s chutzpa, Sparky.

    The names so far mentioned as being behind this legal effort are hardly innocents. Among them are some names very familiar to those of us who follow online investment frauds, Ponzi schemes and MLM hucksters. These are the big recruiters. They pimped this scam, flaunted the money they were raking in, money that was ultimately stolen from their own downlines. Now they’ve cranked up their downlines, incited the victims and are shouting from the Internet hills about the injustice of the evil government shutting down their favorite scam, because, after all, it was still paying.

    Never mind the $3 billion deferred liability that Zeek Rewards had only $225 million to pay. Never mind that only 2% of Zeek’s revenue came from an actual business and that 98% of the money paid out in the end was coming from new money paid into the affiliates programs. (The very definition of a Ponzi scheme.)

    I’d venture you’d be a little less admiring of Paul Burks if the SEC, Secret Service and North Carolina Attorney General had not investigated this scam and it had collapsed of its own weight a few weeks or days later than the SEC action. There were signs that Zeek was in fact about to implode in the very near future anyway. Had that happened I’d expect a few of you would be raising complaints as to why the authorities had let the scam continue when they knew about it and had been investigating it. (Search “CMKX Scam” for an example of that.)

    But with apologies to Arlo Guthrie, that’s not what I’m here to talk about.

    I’m here to talk about your lawyers, and how you’re trying to get the people whose stolen money you have, to pay lawyers so you don’t have to give any of that stolen money back. First, you’re asking people to send the money to you, not to the lawyers. Second, you’re telling them to please not call the lawyers.

    This raises a few issues. To begin with, if the people involved lost money they can of course take advantage of the tax code to at least save on their taxes. They could also, if they retained counsel in relation to their business deduct that money, too. They cannot deduct any contribution they make to someone else’s legal bills.

    In order for them to be able to say they paid a lawyer in relation to a business expense, the IRS is pretty insistent that they paid lawyers, not paid someone else who paid a lawyer, especially when the lawyer in question won’t even take your calls. I’m not an attorney myself but I’m pretty certain that some ethical rule somewhere says you have to take calls from your client. Which brings us to another thing:

    Who is the client, and what is the client’s interest?

    In a solicitation letter published on the Internet, the people soliciting donations say that the law firm will only communicate with 12 people. Forgive me if I take that to mean that only those 12 people are formally the clients represented, and that means that the attorney’s in question MUST represent those 12 people and ONLY those 12 people, and any interest any other people may have that is against the clients are by default adversarial.

    So if, for instance, those 12 people were all net winners wishing to avoid a clawback action, hundreds of thousands of investors who lost would be the enemy, and by the tenets of the legal profession, said lawyers would be opposed to their interests in any conflict. There were early reports of over a million investors in Zeek Rewards. At a later news conference, the receiver said that number may well be over 2 million.

    Mathematically speaking a Ponzi scheme results in at least 88% of participants who are net losers, a percentage that rises the longer a scheme continues, so of the 2 million, 1,760,000 people are likely net losers here. But these lawyers are only looking out for the 12, who I’ll bet are all net winners.

    I’ll go out on a limb and say that all of them are big-time winners; at least one had a video posted showing off a new luxury home he implied was paid for with Zeek Reward profits. And they want the losers to pay for their lawyers, because after all, Zeek was still paying. There was over $225 million left in the till and if the evil government had just minded their business they could have gotten a pretty good chunk of that, too.

    So, am I wrong? I’m talking now to the 12 people who are allowed to call the lawyer, and to the lawyer, too for that matter. I think this is rotten to the core, but prove me wrong. Make public the retainer agreement between whoever the clients are and SNR Denton.

    If you’re good enough and shameless enough to get your victims to pay for your lawyers, good on you, but I think you owe it to the people you’re asking to pay for it to show them just exactly what they’re paying for, and whose interest is being represented here.

    Oh, and since you’re telling people to pay you, and not the lawyers, and since that means they can’t deduct it on their taxes, I ‘d like to offer my own opinion that any money you get is regular income as far as the IRS is concerned, and you’d better report every penny of it as such.

  • URGENT >> BULLETIN >> MOVING: Charles Schwab Accounts Holding Nearly $18.6 Million In Name Of Accused Zeek Operator Paul Ray Burks Or Rex Venture Group Have Been Frozen

    URGENT >> BULLETIN >> MOVING: (UPDATED 12:16 P.M. EDT (U.S.A.) The office of the corporate counsel for Charles Schwab in San Francisco has informed a federal judge that it is holding almost $18.6 million in two accounts linked to the alleged Zeek Rewards’ Ponzi scheme.

    One of the accounts is in the name of Rex Venture Group LLC and has more than $10.3 million in cash and more than $4.94 million in securities, according to court filings. Rex Venture is Zeek’s purported parent company.

    The second Schwab account, meanwhile, holds more than $2.3 million in cash and more than $1.3 million in securities, Schwab informed the court. The second account is in the name of Paul Ray Burks, Zeek’s alleged operator.

    Schwab has “frozen” the assets in both accounts under court order, the firm said in a court filing.

    Separately, North Carolina-based NewBridge Bank has certified in court filings that it is holding more than $11.64 million in an account under the name of Rex Venture Group LLC, Zeek’s purported parent company. Zeek announced suddenly on May 28 (Memorial Day) that it was closing its NewBridge account and advised members to cash checks before June 1 or they would bounce.

    Why so much money remained in the account was not immediately clear.

    Other court filings suggest that Rex Venture also had money on deposit at Four Oaks Bank & Trust Co. Inc., a bank in North Carolina. Four Oaks has asked the court to give it until Sept. 3 to comply with an order to specify precisely how much Rex had on deposit at the institution.

    Extra time was needed because of the “complexity of the financial information that must be analyzed and the need to obtain relevant information from a third party,” the bank informed the court.

    Four Oaks did not identify the third party.

    When the U.S. Secret Service brought the AdSurfDaily Ponzi case in 2008, it was discovered ASD President Andy Bowdoin had more than $65.8 million in 10 personal bank accounts.

    On Aug. 17, the SEC alleged that Zeek was a massive Ponzi- and pyramid scheme that had gathered about $600 million.

    ASD operator Andy Bowdoin is scheduled to be sentenced tomorrow on a charge of wire fraud.

    Zeek is known to have members in common with ASD. The U.S. Secret Service also is investigating Zeek.

     

     

  • UPDATE: ASD’s Andy Bowdoin Asks Judge For Mercy; Requests Sentence Of ‘Time Served’ And ‘Home Incarceration’ In Ponzi Scheme That Gathered At Least $119 Million And Caused Millions Of Dollars In Losses

    Thomas A. "Andy" Bowdoin

    UPDATED 2:32 P.M. EDT (U.S.A.) Confessed Ponzi schemer Andy Bowdoin of AdSurfDaily has asked U.S. District Judge Rosemary Collyer for mercy and for a sentence of “time served” and “home incarceration.”

    Federal prosecutors have asked Collyer to sentence Bowdoin to 78 months, the maximum sentence under a plea agreement Bowdoin signed in May.

    Bowdoin, 77, is scheduled to be sentenced Aug. 29 in an online Ponzi caper federal prosecutors now say gathered at least $119 million and created at least 9,000 victims. The ASD patriarch has been jailed since June. Collyer ordered him jailed after prosecutors produced evidence that Bowdoin continued to promote scams — including another 1-percent-a-day scam — after the U.S. Secret Service raided ASD in August 2008 and arrested Bowdoin on Ponzi-related charges in December 2010.

    The other 1-percent-a-day scam was AdViewGlobal, which collapsed in 2009. Bowdoin also promoted “OneX,” which prosecutors described as an ASD-like pyramid scheme.

    Bowdoin’s sentencing is expected to be closely watched by members of Zeek Rewards, which the SEC described Aug. 17 as a $600 million online Ponzi and pyramid scheme that potentially could affect more than 1 million participants. Zeek’s business model of suggesting a return of more than 1 percent a day was possible strongly resembled the ASD business model.

    “As an initial matter, Mr. Bowdoin pleaded guilty to the instant offense [wire fraud] [and] stands before this Court accepting of its punishment,” Bowdoin’s attorneys wrote in a memo to Collyer. “The Defendant does not accept punishment bitterly, but understands that he has committed a crime and that he must be punished.”

    Bowdoin, according to his lawyers, disputes a government analysis that pegs total ASD losses by investors at $75 million. The actual loss, the lawyers argued, was $19 million.

    “Mr. Bowdoin does not make this objection to minimize his activities,” the lawyers argued. “He only wishes to put the extent of the harm caused by his activities in the appropriate context.”

    But Bowdoin’s advancing age and declining health are factors the judge should consider when sentencing Bowdoin, whose wife also is sick, the attorneys argued.

    Bowdoin is remorseful for his illegal conduct and has accepted responsibility for his crime, his attorneys argued to the judge.

    Unlike many Ponzi scheme cases, the government was able to seize tens of millions of dollars of assets in the ASD case before they could be dissipated, according to court filings. In August 2008, the U.S. Secret Service seized about $80 million from 15 ASD-related bank accounts.

    Other seizures occurred in December 2008 and December 2010, for much smaller amounts, according to court filings. Some of the later seizures involved the bank accounts of individual ASD members.