SEC v. Rex Venture Group LLC et al., Case No. 3:12-CV-519 (W.D. N. Carolina). It seems as though we are reading about a new Ponzi scheme almost every day. On August 22, the SEC announced it filed a settled action against Rex Venture Group d/b/a ZeekRewards.com and Paul R. Burks for operating a massive $600 million Ponzi and Pyramid Scheme. Defendants solicited investors through the Internet and other means to participate in the ZeekRewards program for a companion website, Zeekler.com, through which the Defendants operated penny auctions. The ZeekRewards program offered opportunities to earn money which involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC. Defendants promised investors a share of the company’s profits in the form of daily profit share awards. The Defendants represented that the daily dividends would average 1.5 percent per day, which created the false impression that the company was profitable. However, in reality, the investor payouts were not related to the company’s profits. The revenues and “net profits” paid to investors were comprised of funds received from new investors in classic Ponzi scheme fashion.
Without admitting or denying the SEC’s allegations, Defendants consented to permanent injunctions against future violations of the registration and antifraud provisions of the federal securities laws. Burks also agreed to relinquish his interest in the company and its assets, and to pay a $4 million civil penalty. The Court approved the judgments, and also ordered an emergency asset freeze and appointed a receiver, both as requested by the Commission.