Tag: Zeek Rewards

  • URGENT >> BULLETIN >> MOVING: Prosecutors Ask Judge To Approve Order That Would Reopen Remissions In AdSurfDaily Ponzi Case

    URGENT >> BULLETIN >> MOVING: Federal prosecutors have asked U.S. District Judge Rosemary Collyer for an order that would reopen the remissions process in the AdSurfDaily Ponzi case, potentially giving victims who missed the January 2011 filing deadline a chance to gain a pro rata share of the balance of seized assets.

    The U.S. Secret Service seized about $80 million in the case. To date, the government has returned about $58.8 million to about 9,000 victims. Other victims might have missed the January 2011 filing deadline because ASD’s records were a mess, prosecutors asserted.

    “The victims in this case include thousands of domestic and possibly international individuals and entities who provided funds directly to ASD,” prosecutors advised Collyer. “Although the government obtained the ASD member database, which contained the names of approximately 97,000 ASD members, it is entirely possible that this database does not contain all of the ASD victims.”

    Separately, the U.S. Department of Justice said it did not oppose a reopening of remissions.

    “Although the previous remission process was open for an extended period of time, [the Asset Forfeiture and Money Laundering Section] intends to administer a final remission process, whereby those who missed the original deadlines would be able to submit a petition for remission,” the Justice Department said in a letter to one of the federal prosecutors in the District of Columbia who is handling the ASD case.

    “While the final details are still being determined, we envision that process starting shortly after the sentencing in this case, and providing approximately 45 days from the beginning of that process for individuals to file petitions. Petitioners who satisfy the requirements of 28 C.F.R: § 9.8 would be eligible for remission, and the granted petitioners would receive a pro-rata share of the remaining forfeited proceeds. The details of this process will be posted on the Ad Surf Daily page on website of the United States Attorney for the District of Columbia.”

    Eligible claimants, according to the government’s filing, must demonstrate (italics added):

    (1) he or she incurred pecuniary loss of a specific amount; (2) the pecuniary loss was a direct result of the illegal act; (3) the victim did not knowingly contribute in, participate in, or benefit from, or act in a wilfully blind manner toward the commission of the offense; (4) the victim has not been compensated for the loss; and (5) the victim does not have recourse to other assets to obtain compensation.

    The PP Blog will update this information as needed.

    In other ASD news, prosecutors have formally put the total amount ASD gathered at $119 million, up from a preliminary figure of $110 million.

    And prosecutors noted that “less than $50,000 came from sources other than ASD members.”

    Last week, the SEC filed charges against an ASD-like “opportunity” known as Zeek Rewards. In case filings, the agency asserted that only 2 percent of Zeek’s revenue was external to the membership, making Zeek a “classic” Ponzi scheme.

    Former ASD President Andy Bowdoin is scheduled to be sentenced Aug. 29.

  • As Zeek-Related Fundraising Efforts Begin, ‘Andy’s Fundraising Army’ Down For The Final Count: AdSurfDaily Patriarch Andy Bowdoin Awaits Sentencing In Pre-Zeek, 1-Percent-A-Day Ponzi Scheme Case

    UPDATED 11:31 P.M. EDT (AUG. 26, U.S.A.) After the collapse of AdSurfDaily in 2008, there were at least four efforts to raise funds to “defend” the Ponzi enterprise and/or its participants. The PP Blog has received reports that at least one such effort is under way in the aftermath of the collapse last week of Zeek Rewards, which the SEC called a $600 million Ponzi- and pyramid scheme that had affected more than 1 million people. Zeek also is under investigation by the U.S. Secret Service and the office of North Carolina Attorney General Roy Cooper.

    Zeek members who cling to a belief that the government somehow got it wrong perhaps can save themselves both money and heartache by looking at the history of the various ASD-related efforts to “defend” the multilevel marketing “program” after the U.S. Secret Service seized 15 bank accounts (and about $80 million) in ASD-related proceeds in August 2008.

    Here are briefs on the various ASD-related “defense” efforts:

    “Andy’s Fundraising Army”: This bizarre effort was the fourth and final of a series of failed ASD-related efforts. Started by accused ASD Ponzi schemer Thomas A. “Andy” Bowdoin himself last summer (with the purported help of ASD cheerleader Tari Steward), the effort immediately devolved into a symphony of the bizarre.

    With Bowdoin effectively having been out of public view for nearly three years, the purported “army” teased potential contributors for days with a photo that showed Bowdoin smiling broadly and looking confident. Among other things, the teaser asserted there was “MORE GOOD NEWS” and plenty of reasons to help Bowdoin raise $500,000 to pay for his criminal defense.

    It went on to assert that “A Recent Survey of ASD Members Proves that the Vast Majority of You Want to Join Andy’s Fundraising Army” and that “[P]er standard and accepted industry guidelines, public opinion surveying of 140 members of a large group of members that all share a common interest or purpose, of any size, even in the millions, will give an excellent cross section of the opinions and viewpoints of the entire group.”

    But the “army” site did not describe the characteristics of the 140 ASD members purportedly sampled. Nor did it define what specific surveying “standard” it applied or define the source of the purported “industry guidelines.”

    And what would a good, MLM-like approach to raise funds for an accused HYIP scammer (1 percent a day) be without a “prelaunch” phase? With the teaser in place, a placeholder website for “Andy’s Fundraising Army” promised a full launch to come, along with the exciting opportunity for ASD members to send funds to the man accused of defrauding them to the tune of $110 million.

    But like a bad HYIP dream, the “army” website naturally missed its first advertised launch date. This was blamed on the need for more “testing,” reinforcing one of the HYIP world’s longstanding clichés. It then missed its second advertised launch date, explaining that “one last important system is being finalized.” With the first two launch dates missed, the site reported that it had set a “Final Revised Launch Date.”

    During the evening of July 26, 2011, the launch finally occurred. Like many things ASD, it provided minute after minute of MLM infamy. Indeed, Bowdoin appeared in a fundraising video with symbols of American patriotism as the backdrop.

    Among other things, Bowdoin — who in 2008 described himself as a Christian “money magnet” and advised ASD members after the Secret Service raid that “God” was on the company’s side and that “Satan” had infiltrated the government — claimed in the video that he’d been “crucified” by U.S. law enforcement.

    He blamed the ASD-related losses in civil court on a federal judge, the prosecutors and his own former defense counsel. Bowdoin asked members to provide $500,000 to help him pay his new defense team.

    It is believed he raised about $26,000 in the following weeks — but things continued to unfold like a bad HYIP dream. There was a report that a hurricane knocked the fundraising site offline, for instance. By January 2012, the site had lost its ability to collect money via PayPal. Federal prosecutors declined to comment on the development, which occurred after Bowdoin had become a pitchman for “OneX.”

    In April 2012, prosecutors described OneX as a fraudulent scheme and pyramid. Bowdoin pleaded guilty to wire fraud the following month, admitting ASD was a Ponzi scheme. His fundraising website, which published purported “expert” opinions from attorney Gerald Nehra and consultant Keith Laggos that ASD was not a Ponzi scheme, remained online for weeks after the guilty plea.

    The “Andy’s Army” site is now offline and is listed as an expired domain. In recent days, Bowdoin — as part of his plea agreement — has dropped his last remaining claim to cash seized in the ASD case. (A third ASD-related forfeiture complaint was filed by the government in December 2010. Bowdoin entered a claim.) He is scheduled to be sentenced Aug. 29.

    Nehra’s law firm later became counsel for Zeek, according to Zeek. And Laggos became a purported “consultant.”

    Todd Disner and Dwight Owen Schweitzer: Even as Bowdoin was rolling out his “army” website and repeatedly missing launch dates, ASD figures Todd Disner and Dwight Owen Schweitzer were advancing a plan to raise money to sue the government. An email attributed to Disner surfaced in July 2011 that introduced a pronoun mystery: “We plan to go after Akerman Senifit (sic) next,” the email read in part.

    Akerman Senterfitt was the name of Bowdoin’s original defense law firm in the civil portion of the ASD case. In the earliest days of the case, ASD cheerleaders on the now-defunct “Surf’s Up” forum positioned the well-known firm as the “Perry Mason” firm; the government, meanwhile, was said to be represented by “Gomer Pyle.” A federal judge was described as “brain dead” if she ruled against ASD, and a federal prosecutor was described as an individual who deserved to be placed in a medieval torture rack.

    Why Disner chose the pronoun “we” was never explained. The July 2011 email followed an April 2011 email attributed to Disner that included this declaration: “Let the games begin!”

    During this period, Disner and Schweitzer were soliciting funds to sue the government. This effort began at an unclear point of time after November 2008, the month a federal judge issued a key court ruling against ASD while saying Nehra’s opinion could not be relied upon in part because it “relied solely on the written words contained in the Terms of Service without independent investigation or review of ASD’s business records to ascertain how ASD operates in fact before opining.” (Bolding added.)

    If the judge’s ruling could be reduced to two words, it might read, “Gomer won.”

    At an unclear point in time, both Disner and Schweitzer became reps for Zeek. They filed their ASD-related lawsuit in November 2011, claiming, among other things, that the government had presented a “tissue of lies” when bringing the August 2008 forfeiture case. As part of their apparent strategy, Disner and Schweitzer pointed to purported expert opinions of Nehra and Laggos. Disner and Schweitzer produced those opinions months after ASD had lost two civil-forfeiture cases in both U.S. District Court and the U.S. Court of Appeals.

    Months later, Bowdoin himself put both Disner and Schweitzer in a box. In May 2012 — after Nehra and Laggos both had opined ASD was not a Ponzi scheme and after Disner and Schweitzer had sued the government — Bowdoin admitted that ASD was a Ponzi scheme.

    Bob Guenther and ASDMBA: In 2008, ASD member Bob Guenther became the de facto head of an entity known as the ASD Members Business Association. The stated goal of ASDMBA was to raise funds to hire Dallas attorney Larry Friedman to represent ASD members’ interests in the case.

    ASDMBA soon devolved into a circus, with Guenther using its website to promote a company that was developing an online game. Along the way, Friedman sued ASD critic Jack Arons, triggering a side drama that lasted for weeks and burying Arons in an avalanche of paperwork. (As a matter of pure PR, high-powered Friedman came out the loser for bringing out nukes against a web critic armed with a fly-swatter. The avalanche finally ended, with Arons, a Florida retiree who lives in a manufactured home, largely unscathed.) Guenther, meanwhile, refused to provide a reliable accounting of how the tens of thousands of dollars raised by ASDMBA was spent, according to members.

    Guenther bizarrely dismissed his critics as “left wing liberal no balled people,” calling one an “ignorant mouthy broad.” He also claimed ASDMBA was instrumental in returning money to ASD victims, saying the group retrieved funds for retired and active-duty police officers in Texas and California, and for a high profile Dallas Cowboy’s executive.

    Nothing in the public record suggests Guenther had any standing to perform any services on behalf of ASD members. It later emerged that Guenther was a convicted felon. Months after the 2008 formation of ASDMBA, in March 2009, Guenther was charged with two felony counts of aggravated harassment. Mesa, Arizona, police said Guenther repeatedly violated a court injunction for workplace harassment that prohibited him from nuisancing Cheyenne Mountain and Affiliates, the Arizona business that was developing the online game promoted on ASDMBA’s website.

    Guenther later accepted a plea agreement in the harassment case. No jail time was ordered.

    ASD Members International: This one was hatched by members of the pro-ASD “Surf’s Up” forum, which became Bowdoin’s official mouthpiece after the key court ruling went against ASD in November 2008. ASDMI was a purported nonprofit entity formed in Missouri. Its bizarre mission was to raise funds to litigate against the government even if the government was proceeding lawfully. In short, ASDMI planted the seed that prosecutors and investigators would be sued and/or charged with crimes.

    It is believed that at least 168 people contributed money to ASDMI.

    Included in the ASDMI braintrust was former Surf’s Up moderator Barb McIntyre, who enforced a “Poof Penalty” when ASD members left links on Surf’s Up to stories on the PP Blog.

    But if there was an ASDMI “star,” it was “Professor” Patrick Moriarty, one of the most unusual characters in the entire ASD drama. Moriarty was an early advocate for Curtis Richmond, a purported “sovereign” being who advanced a theory that all commerce was lawful as long as the buyer and seller agreed to a contract. Among other things, it was a position that would have legalized slavery and human trafficking. Richmond went on to accuse a federal judge of “TREASON” and to accuse investigators of theft.

    Richmond was hailed a “hero” on Surf’s Up, which never revealed that Richmond had been found in contempt of court for threatening federal judges and was part of a Utah “Indian” tribe a federal judge ruled a “complete sham.” (This is the “tribe” known derisively as the “Arby’s Indians” because it once held a meeting in an Arby’s restaurant in Utah. The purported “tribe” also had a purported “Supreme Court.” The address for the “Supreme Court” was the address of a doughnut shop. Richmond was sued successfully under the federal racketeering statute (RICO) by public officials in Utah targeted in a vexatious legal campaign by Richmond and other “tribe” members.)

    With Surf’s Up fanning the flames that federal prosecutors and a U.S. Secret Service agent needed to be investigated and prosecuted for their roles in the ASD Ponzi case, it emerged that Moriarty — who once sold fake academic degrees on eBay, claiming they were gag gifts — once had started a purported nonprofit in the name of a man accused of killing a woman in cold blood and ambushing two Missouri police officers and another man.

    Moriarty later was indicted on charges of tax evasion. He pleaded guilty, and was sentenced to federal prison.

    NOTE TO ZEEK READERS: This document, which was filed by federal prosecutors in December 2008, is the second of three known forfeiture complaints filed against ASD-related assets. It is highly recommended reading.

    The document was filed about four months after the original — and best-known ASD forfeiture complaint — was filed.

    The ASD case started as a civil case with a parallel criminal investigation. Zeek-related litigation may follow the same track. Ponzi investigations take time. The December 2008 ASD forfeiture complaint shows that investigators continued to “follow the money” and to destroy ASD’s cover story after the original forfeiture complaint was filed.

    It likely is true that the August 2008 complaint has received the most attention — no doubt because it laid out the core elements of the government’s case. But the December 2008 filing was tremendously damaging because it provided the first real inside glimpse into how ASD truly was operating.

     

     

  • BULLETIN: Zeek Receiver Establishes Website: ZeekRewardsReceivership.com

    “On August 17, 2012, Judge Graham C. Mullen of the U.S. District Court for the Western District of North Carolina, Charlotte Division, entered an order appointing Kenneth D. Bell of McGuireWoods LLP as temporary receiver of ZeekRewards for the purposes of marshaling and preserving all assets of ZeekRewards and those assets (a) held or possessed by ZeekRewards; (b) held in constructive trust for ZeekRewards; and (c) fraudulently transferred by ZeekRewards.”From a statement by the receiver

    The website URL for the receiver appointed to handle the SEC’s Ponzi- and pyramid-scheme case against Zeek Rewards, Rex Venture Group LLC and Paul R. Burks is ZeekRewardsReceivership.com.

    Kenneth D. Bell, a highly experienced attorney who has served both as a federal prosecutor and as defense counsel, is the receiver.

    Bell rose to national prominence as a recipient of the U.S. Attorney General John Marshall Award for Trial of Litigation. He received that award from the U.S. Department of Justice after successfully prosecuting a Hezbollah terrorist cell operating in North Carolina.

    The receivership website is not yet fully operational. Visit the site.

  • JSS Tripler/JustBeenPaid Hides Behind Zeek-Like Wordplay On Eve Of Zeek Collapse

    Frederick Mann

    On Aug. 17, the SEC filed spectacular allegations of Ponzi- and pyramid-scheme fraud against Zeek Rewards, which claimed it was not selling securities and members were not making an investment. Zeek operator Paul R. Burks was charged with selling unregistered securities as investment contracts.

    Zeek abused the power of the Internet and raised $600 million from more than 1 million participants, the SEC charged

    In August 2008, the U.S. Secret Service filed similar allegations against AdSurfDaily, a company with a 1-percent-a-day “program” similar to Zeek. Like Zeek, ASD claimed it was not selling securities and members were not making an investment. ASD operator Andy Bowdoin was indicted in November 2010 on charges of selling unregistered securities, securities fraud and wire fraud.

    Bowdoin later acknowledged he was presiding over a Ponzi scheme that had gathered at least $110 million.

    On Aug. 16 — just one day before the SEC went to court to halt the operations of Zeek — a “program” known as JSS Tripler/JustBeenPaid was clinging to its Zeek- and ASD-like cover story that it was not selling securities and members were not making an investment. JSS/JBP effectively has advertised a return of 2 percent a day: 730 percent a year.

    “I just want to know — in the amount of money that I do invest . . .  use to buy positions, is that . . . the investment that I’m doing?” a caller quizzed Frederick Mann, JSS/JBP’s purported operator.

    “Dale,” JSS/JBP’s female conference-call host, then sought to set the caller straight on the wordplay of JSS/JBP.

    “Well, first of all, we’re not investing here. We’re purchasing and we’re repurchasing. So, you need to get that verbiage clear.”

    The SEC moved against Zeek the very next day. The U.S. Secret Service also is investigating Zeek.

    Mann was a former pitchman for ASD’s scheme. Any number of Zeek members also promoted JSS/JBP.

    Bowdoin pleaded guilty to wire fraud in May 2012. He is scheduled to be sentenced Aug. 29.

    Like Zeek, JSS/JBP says it has more than 1 million members. Like Legisi, another HYIP scam broken up by the SEC and the Secret Service, JSS/JBP makes members affirm they are not with the government.

    Legisi operator Gregory McKnight pleaded guilty to wire fraud earlier this year. He faces sentencing Sept. 11.

     

  • POST-ZEEK GUEST COLUMN: Who Are These ‘Experts’ 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.

    Who are these “Experts” anyway?

    By Gregg Evans

    Troy Dooly is the latest “expert” to look like an utter fool in the wake of the Zeek Rewards collapse. For months the apparently respected MLM guru has been defending Zeek against all logic, common sense or demonstrated knowledge of mathematics.

    It turns out that — even though in Troy’s “expert opinion” and based upon his “inside knowledge” that he couldn’t share because he wanted to respect a “non disclosure agreement” — Zeek, Zeekler and Rex Venture Group was just another garden-variety Ponzi scheme.

    This one added up to $600 million if you’re keeping score. And you should be. That’s more than half a billion dollars.

    A few years ago, I decided to not actively hide my identity, but not advertise it either when 12DailyPro collapsed in a heap of scandal based solely on the figures being tossed around about how much money Charis Johnson had drawn in. It occurred to me at the time that there are people out there who will in fact kill you for that kind of coin, and more than a few of them I knew were involved in the scam. I had never received a death threat before, or at least not one I took seriously.

    Here we have again a figure that frankly boggles the mind being funneled into a rather transparent Ponzi scheme by a collection of ref whores, financial illiterates and flat-out criminals posting with glee “I got paid” at all the familiar places these kind of folks hang out. As the late Everett Dirksen once said, “A billion here, a billion there, and soon you’re talking real money.”

    And here again we have a list of supposed “experts” whose opinion proved that “this time, it’s legit.” I just have to ask, by what standard are these people experts at anything, beyond herding the suckers to the spend button?

    I, modestly, consider myself an expert in matters of investing, accounting and how money and banking work. Not just because I think so, mind you, I have an earned PhD in International Business, a MSci in Economics, an MBA and a BBA in Finance (with a shared major in Mathematics, btw).

    But honestly, if you’re taking my word for it advice-wise, you’re still a sucker, because anyone can try to impress you with what they say, you have to at least look at the motivation. My motivation is to perhaps save a few people who don’t have my background from falling for the siren song of the pimps like Ken Russo, Troy Dooly and others.

    Longtime HYIP huckster "Ken Russo," also known as "DRdave," helped lead the "I Got Paid" cheers for Zeek on the TalkGold Ponzi forum.

    You see, I’m not asking you to spend your hard-earned money on anything. I’m not encouraging you to inform your friends, relatives and co-workers about the latest sure-fire-get-rich-with-passive-income scheme. I’m just asking you to think a bit, and trying to explain how real money and business works. I happen to some pretty spiffy credentials, but it’s more important that I’m just making common sense.

    You see, some people with credentials as good as or better than mine are blinded by the easy pickings to be had if they sell out their fancy titles and initials after the name. Gerald Nehra is licensed attorney and all indications I have seen are he’s not a bad lawyer, as lawyers go. Gerry’s problem, and potentially yours, is that he’ll suspend his common sense, legal knowledge and objectivity if the check clears

    Hey, I hate to judge the man, and everyone deserves good legal representation, but Mr. Nehra has not impressed me so far. I am only familiar with two companies with which he has been publicly associated with in the last few years: ASD Cash Generator and Zeek. The operator of one is in jail waiting to find out he’s going to serve what is likely going to be a life sentence based upon his age, the other one just got their offices locked up by some combination of the Secret Service, the Securities and Exchange Commission and the North Carolina Attorney General.

    Our “expert” lawyer, one of the best reputations in MLM law around, testified that ASD wasn’t a Ponzi, and from the looks of it told Zeek that if you tell the suckers not to call it an investment, it’s Okie Dokie legally speaking. Good advice there.

    Do I think Gerald Nehra believes this? Well, as much as any lawyer believes the legal theory he’s pursuing he may, but I doubt he had a lot invested in Zeek, if you get my drift. He had, over the years built a reputation, and whether he deserved it or not (and I think not) when ASD needed to show a Federal Judge that paying old investors with new investors money wasn’t a Ponzi scheme, Nehra was right there, willing to lend his expert opinion in a Federal Court that black was white, up was down and Andy Bowdoin of ASD was a business visionary who could somehow pay 1% a day legally.

    If he’s trying to represent a defendant in a court of law, that’s his job and I have no problem with that, but if he believes it, well, a friend I once had used to say it was never a good idea to believe your own bar stories or “smoke your own dope” as he put it.

    ASD was a cheap Ponzi scheme and anyone not blinded by greed with had enough sense to tie his own laces could see that. A few “MLM Experts” and the “All Star Team of Stupid” ASD cheerleaders, sovereign citizen nutcases and Arby’s Indians couldn’t, but that’s just the kind of people loose on the streets since they changed the laws about involuntary mental patient commitment. The Indians, Sovereigns and pimps I won’t comment on here, but the lawyers did it mostly because it paid pretty well. And Ken Russo isn’t doing it because he likes people either, for what it’s worth, he just lacks the credentials to sound like much more than a crooked used car salesman. People like Troy Dooly should know better, and I suspect they do, but they have no trouble overlooking their own knowledge as long as the check clears.

  • URGENT >> BULLETIN >> MOVING: SEC Calls Zeek ‘$600 Million Online Pyramid And Ponzi Scheme’

    URGENT >> BULLETIN >> MOVING: (UPDATED 6:25 P.M. EDT (U.S.A.) The SEC has filed an emergency action in federal court in Charlotte, N.C., that alleges Zeek Rewards is a $600 million Ponzi and pyramid scheme.

    “The obligations to investors drastically exceed the company’s 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 SEC’s 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.”

    In its emergency filing, the SEC described Zeek as a classic Ponzi scheme. The agency charged that “approximately 98% of ZeekRewards’ total revenues, and correspondingly the purported share of ‘net profits’ paid to current investors, are comprised of funds received from new investors.”

    Records show that the AdSurfDaily Ponzi scheme which, like Zeek, suggested that investors would receive a return on the order of 1 percent a day, also received only about 2 percent of its revenue from sources other than members. Zeek had members in common with ASD.

    Zeek, the SEC alleged, “is teetering on collapse.”

    Zeek CEO Paul R. Burks has been charged with selling unregistered securities as investment contracts, the SEC said. Burks presided over Rex Venture Group LLC, Zeek’s purported parent company. Rex Venture also has been charged. The SEC said it was aided in the probe by the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.

    Burks’ program holds “approximately $225 million in investor funds in approximately 15 foreign and domestic financial institutions, and those funds are at risk of imminent dissipation and depletion,” the SEC charged, noting that the Ponzi potentially could affect more than 1 million people globally.

    A federal judge has ordered an emergency asset freeze and a receiver will the appointed, the SEC said.

    “Through the ZeekRewards program, Defendants offer affiliates several ways to earn money, two of which involve the offer and sale of securities in the form of investment contracts: the ““Retail Profit Pool” and the “Matrix,” the SEC charged.

    And, the agency said, the “compounding” effect has created a condition under which 3 billion Zeek “Profit Points” are outstanding.

    “Based on the ZeekRewards current outstanding Profit Point balance, the company would be obligated to pay out approximately $45 million per day if all Qualified Affiliates elected to receive their daily award in cash,” the agency charged.

    Amid Zeek claims that it paid out 50 percent of its daily net and that its business model was “proprietary,” investigators discovered that Zeek delivered an unusually consistent return of about 1.5 percent a day.

    “In fact, the dividend bears no relation to the company’s net profits,” the SEC charged. “Instead, Burks unilaterally and arbitrarily determines the daily dividend rate so that it averages approximately 1.5% per day, giving investors the false impression that the business is profitable.

    Similar allegations were made in 2008 against ASD operator Andy Bowdoin.

    Zeek’s fabled Zeekler “bids” were described by the SEC as smoke-and-mirrors. From the complaint (italics added):

    Despite encouraging affiliates to purchase and give away VIP Bids to promote and drive traffic to the Zeekler penny auction website, Defendants fail to disclose that almost none of the VIP Bids given away by Qualified investors are actually used on the Zeekler penny auction website. Of approximately 10 billion VIP Bids purchased by or awarded to investors, less than one-quarter of one percent have been actually used in auctions on the Zeekler penny auction website. Thus, the VIP Bids do little or nothing to actually promote the retail business.

    Zeek operator Burks, meanwhile, “has withdrawn approximately $11 million while operating Rex Venture and ZeekRewards, of which approximately $4 million remains in his possession, custody or control.

    Burks “distributed approximately $1 million of the funds garnered from ZeekRewards to family members,” the SEC said.

    Amid high drama and confusing website reports from Zeek yesterday, including the virtual abandonment of its office in Lexington, N.C., and petition drives by Zeek affiliates to demand the return of Zeek, it turns out that “Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver,” the SEC said.

    The U.S. Secret Service also is investigating Zeek, as is the office of North Carolina Attorney General Roy Cooper.

    Read the SEC complaint.

  • URGENT >> BULLETIN >> MOVING: U.S. Secret Service Confirms Probe Of Zeek Under Way

    URGENT >> BULLETIN >> MOVING: Zeek Rewards, the multilevel marketing program married to the penny-auction site Zeekler, is under investigation by the U.S. Secret Service and the Securities and Exchange Commission, the Secret Service confirmed at 4:14 p.m. EDT today.

    “There will be no further comment,” said Max Milien, a spokesman for the U.S. Secret Service in Washington.

    The Secret Service leads a multiagency electronic crimes Task Force in Charlotte, N.C. The Charlotte Task Force is known by the acronym CMECTF.

    Zeek, part of Rex Venture Group LLC, is based in Lexington, N.C. Paul R. Burks is Zeek’s chief executive officer.

    The Zeek probe is not the first investigation of its sort in which the Secret Service and the SEC looked into the business practices of online schemes that suggest or promise outsize investment returns. A probe of the Legisi HYIP began in 2007 with an undercover investigation by the Secret Service and state securities regulators in Michigan.

    That probe later led to civil charges brought by the SEC and criminal charges brought by the Secret Service.

    Legisi operator Gregory McKnight pleaded guilty to wire fraud earlier this year. He is scheduled to be sentenced next month. Legisi gathered more than $72 million.

    The Secret Service also led the AdSurfDaily Ponzi probe. ASD President Andy Bowdoin is scheduled to be sentenced Aug. 29.

    ASD was a 1-percent-a-day Ponzi scheme that gathered at least $110 million. Zeek Rewards has a similar business model.

    See earlier story.

  • UPDATE: North Carolina Investigators Demanded Info From Zeek On July 6; State Says It Has Not Taken Shutdown Action

    UPDATED 10:58 A.M. EDT (U.S.A.) Two new details have emerged in the mysterious shutdown yesterday of the office and websites of Zeekler/Zeek Rewards: The office of North Carolina Attorney General Roy Cooper told the PP Blog this morning that it has taken no action to shut down Zeek, the operator of an MLM and a penny-auction site.

    “We have not taken action to shut the company down and are currently working to get more information so we can pass that along to consumers who may be impacted by this,” said Noelle Talley, a spokeswoman for Cooper.

    But Cooper’s office did say that it had issued a Civil Investigative Demand (CID) to Zeek on July 6. That’s weeks earlier than initially believed and leads to questions about whether Zeek had known for five weeks that it had been under investigation and did not inform participants.

    Without providing details, Zeek announced on its Blog yesterday that it had canceled its Aug. 22 “Red Carpet” event. By early evening, the Zeek Rewards and Zeekler sites began to publish this message: “Zeek Rewards is currently unavailable. More information will be available shortly on this website.”

    Earlier in the week, Zeek announced that “there won’t be any training, recruitment or leadership calls for the next few days while planning is going on.”

    With Zeek leaving affiliates in an information vacuum, many of them took to the Web. At least two petition drives appear to be under way demanding the government to reopen Zeek. As of the time of this post, the PP Blog has been unable to confirm that an action by any government agency — state or federal — was responsible for Zeek’s sudden absence.

    The Blog still is in the process of trying to piece together events in what has emerged as a bizarre and fluid situation. Sensing Zeek affiliates were vulnerable, some MLM opportunists raced to various sites such as The Dispatch newspaper in North Carolina and YouTube with offers to join their “programs.”

    Zeek fans on the MoneyMakerGroup Ponzi forum almost immediately blamed critics for Zeek’s problems, with one poster declaring he’d already mined his profits from Zeek and was confident they could not be attached by prosecutors in the United States.

    The Better Business Bureau said this morning that it was aware of reports that the doors at Zeek’s office in Lexington, N.C., were closed. The BBB added that it would publish more information as it became available.

    Zeek is a purported arm of Rex Venture Group LLC, led by Paul R. Burks.

  • On Heels Of AG Examination, Zeek Blog Says Red Carpet Event For Aug. 22 Is Canceled

    With a headline of “Red Carpet Wednesday – URGENT,” the Zeek Blog is reporting that a Red Carpet event scheduled Aug. 22 has been canceled.

    Zeek, the operator of the Zeek Rewards MLM “program” and the Zeekler penny auction, provided no explanation for calling off the event. Zeek is a purported arm of Rex Venture Group LLC.

    The office of North Carolina Attorney General Roy Cooper said last week that it had opened an “examination” into Zeek’s business practices.

    Zeek has been dogged in recent weeks by PR disasters, including the reported firing of purported MLM expert Keith Laggos as a “consultant.”

    Earlier this week, some members of the AdSurfDaily Ponzi scheme announced a plan to “flood” a federal judge with letters of support for former ASD President Andy Bowdoin, who pleaded guilty to wire fraud in May in the ASD Ponzi case. An email circulating among ASD members that called for the judge to be flooded included two ads for Zeek.

    Some Zeek promoters also are known to have promoted ASD, a 1-percent-a-day Ponzi scheme. Two Zeek promoters — Todd Disner and Dwight Owen Schweitzer — sued the United States in November 2011. As part of the lawsuit, Disner and Schweitzer presented a federal judge an opinion from Laggos that ASD was not a Ponzi scheme.

    Like ASD, Zeek plants the seed that a return of 1 percent or more per day is possible. And like ASD, Zeek denies it is offering an investment program.

    The Dispatch newspaper of Lexington, N.C., published a story today that included a July 31 photograph of Zeek prospects waiting in line, apparently to get a chance to turn over money to the company.

    At least one apparent Zeek supporter left a comment that the newspaper’s website that asserted that The Dispatch had printed untrue things about the company and that the reporter who wrote the story had not gone through Zeek “compliance training.”

    Some Zeek supporters appear to hold the curious belief that reporters are required not to use the word “investment” when describing the Zeek “program.”

    Zeek advises its members not to use the language of investments when describing the “program.” ASD did the same thing.

    The U.S. Secret Service raided ASD in 2008, alleging that ASD has a massive Ponzi scheme that sought to avoid the use of the language of investments to keep its 1-percent-a-day program under the government radar.

    Bowdoin later was indicted on charges of securities fraud, selling unregistered securities as investment contracts and wire fraud. The 77-year-old ASD patriarch pleaded guilty to wire fraud and faces up to 78 months in federal prison.

    Federal prosecutors have asked that Bowdoin be sentenced to the maximum term despite his age, alleging he started a new 1-percent-a-day fraud just two months after the August 2008 Secret Service raid.

    This is the entirety of the Zeek Blog post today (italics added):

    Fine People,

    We regret to inform you that Red Carpet Wednesday, scheduled for Wednesday, August 22, 2012 has been cancelled. Please continue to monitor our websites for more information to be forthcoming.

  • JSS Tripler/JustBeenPaid Operator Frederick Mann Says He Can’t Appear At Prospective California Meeting For ‘Security Reasons’: ‘The [Government] People In Power — They Regard Citizens As Livestock’

    The purported operator of a “program” that claims to provide a return of 60 percent a month cannot meet with participants because of “security reasons,” according to a recording of the Aug. 9 conference call for JSS Tripler/JustBeenPaid.

    JSS/JBP’s Frederick Mann hinted to conference-call listeners that he could be arrested if he appeared at a prospective cheerleading session for JSS/JBP at a California hotel.

    “The [government] people in power — they regard citizens as livestock,” Mann said, in declining an invitation to speak to the JSS/JBP troops in person. “They farm the livestock. They want the eggs that the chicken[s] produce. And if they think somebody tries to interfere with their farming operation, they don’t like that.”

    Mann is a former pitchman for the AdSurfDaily Ponzi scheme. A “Frederick Mann” also is listed as an affiliate of the Zeek Rewards’ 1-percent-a-day scheme, but it is unclear if it is the same Frederick Mann who pitched ASD’s 1-percent-a-day scheme before the U.S. Secret Service raided ASD in 2008.

    What is clear is that some Zeek affiliates also are promoting JSS/JBP, which has acknowledged it has no registrations to sell securities and does not reveal it base of operations.

    Like JSS/JBP and ASD, Zeek has a presence on known Ponzi scheme forums.

    JSS/JBP may have ties to the so-called “sovereign citizens” movement.

    Mann has ranted against the government in previous JSS/JBP calls.

  • BULLETIN: AdSurfDaily Apologists Circulate Plan To ‘Flood’ Judge With Letters Of Support For Jailed Ponzi Schemer Andy Bowdoin; Forwarded Email Includes 2 Ads For Zeek Rewards’ ‘Program’ And Claims ASD Patriarch Was ‘Railroaded’

    “Well we have been dealt a setback today…the judge here agreed with the government to transfer us to the District Court in Washington DC… The same judge who railroaded Andy. I will make a motion for her to recuse herself and if she will not (and she will not) I will take an appeal.”Remark attributed to Dwight Owen Schweitzer that is contained within email by former AdSurfDaily spokeswoman Sara Mattoon that discusses plan to “flood” a federal judge with letters of support for jailed ASD Ponzi schemer Andy Bowdoin, Aug. 13, 2012

    Thomas A. "Andy" Bowdoin

    Former AdSurfDaily member Dwight Owen Schweitzer — later to join former ASD colleague Todd Disner as a pitchman for the Zeek Rewards 1-percent-a-day-plus MLM scheme — is quoted in an email circulating among ASD members that ASD President Andy Bowdoin was “railroaded” by a federal judge.

    The quotation attributed to Schweitzer was contained within an Aug. 13 email forwarded by Disner after being assembled by former ASD spokeswoman Sara Mattoon. Mattoon has a history of packaging communications friendly to ASD, adding her purported insights to the communications and emailing them to members. The Aug. 13 email calls for ASD members to “flood” a federal judge with letters of support for Bowdoin. The ASD patriarch and veteran securities swindler is scheduled to be sentenced Aug. 29 in the District of Columbia by U.S. District Judge Rosemary Collyer.

    Previous Mattoon emails have quoted Kenneth Wayne Leaming, a purported “sovereign citizen” now jailed near Seattle after a  2011 investigation by an FBI Terrorism Task Force. Leaming was accused of filing false liens against at least five public officials involved in the ASD Ponzi case, harboring two fugitives wanted in a separate home-business scheme, being a felon in possession of firearms and uttering a bogus “Bonded Promissory Note” for $1 million.

    Leaming, who is not an attorney, was said to be performing legal work on behalf of some ASD members.

    In May 2012, Bowdoin pleaded guilty to wire fraud in the ASD Ponzi case and acknowledged that ASD was a Ponzi scheme and that his company never operated lawfully from the inception of its 1-percent-a-day (or more) “program” in 2006. Bowdoin, 77, originally remained free on bond after his guilty plea, pending formal sentencing.

    But Bowdoin was jailed in June 2012, after prosecutors presented evidence that Bowdoin continued to promote scams after the U.S. Secret Service seized more than $80 million in ASD-related proceeds in 2008 and after Bowdoin was arrested on ASD-related Ponzi charges in 2010. Prosecutors identified those scams as “OneX,” and AdViewGlobal (AVG).

    Like ASD, AVG was a 1-percent-a-day “program.” AVG, which launched in February 2009 after the seizure of ASD-related bank accounts in 2008, vanished mysteriously in the summer of 2009 after issuing threats to members and journalists. AVG was referenced in a lawsuit filed by ASD members who accused Bowdoin of racketeering.

    Contained within the forwarded email dated Aug. 13 are at least two ads for the Zeek Rewards’ MLM which, like ASD, plants the seed that a return that corresponds to an annualized return in the hundreds of percent is possible. Precisely why the Zeek ads appeared in the email is unclear. They are attributed to a Zeek affiliate known as “Compassion Ministries” and display Zeek videos produced by USHBB Inc., a company that once produced ads for the Narc That Car pyramid scheme that collapsed in 2010 after the Better Business Bureau raised concerns about Narc and investigative reporters began to write about Narc and produce television reports about the “program.”

    Even as the Mattoon email solicited support for Bowdoin as his Aug. 29 sentencing date approaches, it cautions ASD members to “be careful” if they write to Bowdoin in jail because “they read his mail.”

    Disner and Schweitzer sued the U.S. government in November 2011, claiming the seizure of ASD’s database was unconstitutional. The lawsuit originally was filed in the Southern District of Florida, but a judge there granted a request by the government to transfer the case to the District of Columbia. The case now appears on the docket in U.S. District Court for the District of Columbia and has been assigned to Collyer.

    The Aug. 13 email from Mattoon quotes Schweitzer as saying, “Well we have been dealt a setback today…the judge here agreed with the government to transfer us to the District Court in Washington DC… The same judge who railroaded Andy. I will make a motion for her to recuse herself and if she will not (and she will not) I will take an appeal.”

    When suing the United States in November 2011, Disner and Schweitzer relied in part on a purported expert opinion from Keith Laggos that ASD was not a Ponzi scheme. Like Disner and Schweitzer, Laggos also has been linked to the Zeek Rewards’ scheme.

    Laggos reportedly was fired as a Zeek “consultant” last month. Details surrounding the reported firing remain unclear.

    Zeek is now the subject of an “examination” by North Carolina Attorney General Roy Cooper.

    Zeek’s news Blog published this baffling message yesterday (italics added):

    Hello Fine People:

    The team wanted to let you know there won’t be any training, recruitment or leadership calls for the next few days while planning is going on.  Standby for some important announcements.  Thank you for your patience!