A federal judge in North Carolina just sentenced the former ZeekRewards CEO to 15 years in prison and ordered to pay $244 million in restitution for his role in operating a $900 million Internet Ponzi scheme.
Paul Burks, the CEO of penny auction company Zeekler and ZeekRewards, was sentenced on charges of wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy after a trial showed his scam victimized more than 900,000 people.
Burks owned Zeekler and ZeekRewards through his investment company, Rex Venture Group LLC. He convinced investors that his “retail profit pool” allegedly allowed them to share 50 percent of Zeekler’s daily net profits, according to DOJ prosecutors. In reality, the available funds were redistributed in “Ponzi-style payments” based on completely bogus profits intended to give investors the impression the fund was doing extremely well. Burks was charged with making up the profit numbers.
Contrary to the claims made by the ZeekRewards CEO, nearly 98 percent of all incoming funds came from investors, whose money was used to pay earlier investors – a hallmark of any Ponzi scheme.
Prosecutors said the ZeekRewards CEO took in more than $800 million from victims in VIP bid purchases and another $97 million from subscription fees. At one point in 2012, victims were told that their investments had ballooned to $3 billion, compared with only $340 million in cash available to make good on the bogus profit report.
The ZeekRewards CEO personally profited $10 million for his part in running the scam.
Did You Invest with ZeekRewards CEO Paul Burks?
If you invested with Zeekler or ZeekRewards CEO Paul Burks, or invested in a similar scam, you may have certain legal rights that require your immediate attention.
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