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Zeek Rewards' Receiver Ken Bell Addresses Media

10:37 PM, Aug 27, 2012   |    comments
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Written By:  Mark Geary, WFMY News 2 and Matt Evans, The Business Journal

Greensboro, NC -- The SEC has called Zeek Rewards a $600 million ponzi scheme.

Last week we heard from some of the victims that want their money back. Some have gone as far as hiring a lawyer to file a class action lawsuit.

WATCH: Victims File Lawsuit Against Zeek Rewards

WATCH: Hope For Zeek Rewards Refund Lies In Receiver

The receiver who has taken control of the alleged Ponzi operation ZeekRewards said he intends to work as quickly as he can to return funds to victims, but starting the process of tracking down the money for them has been like "drinking from a firehose."

On a conference call with reporters Monday, receiver Ken Bell from the Charlotte law firm McGuireWoods LLP said he can not yet say when investors in the now-shuttered ZeekRewards program may see all or some of their money back. First, he said his office needs to secure as much money as possible for the repayment pool, and the amount of information to go through is massive.

"You have to know how big your bucket is before you know how much you're going to be able to ladle out," he said.

Bell was appointed following the U.S. Securities and Exchange Commission-ordered shutdown of ZeekRewards and its parent company, Rex Venture Group, in Lexington. CEO Paul Burks did not admit wrongdoing but agreed to pay $4 million in penalties.

The SEC said ZeekRewards, which purported to offer participants a share of profits from an associated penny auction website, was in reality a massive Ponzi scheme that relied on funds from new investors for payouts. The SEC estimated that as much as $600 million had moved through the program, and as many as 1 million people may have put money in.

Bell said that after his first week of investigation he believes both estimates may be low. He said there may be as many as 2 million victims, but he did not give a revised dollar estimate.

But he said ZeekRewards is "the largest or one of the largest Ponzi schemes ever to go into receivership."

Bell said his office has located and begun securing as much as $100 million in assets for eventual return to victims, but there is no way to know how long it will take to find as much as may be recoverable. He said he intends to move as quickly as possible, but it will be better to wait until he thinks he's found as much money as he can before starting to return that money to victims.

He said he's heard from many victims who are trying to cancel the payment of cashier's checks sent to ZeekRewards prior to the shutdown. He said according to the court order, those checks are considered assets of the program that will have to go into the pool for repayments, so they will be cashed by the receivership.

He said the best thing Zeek investors can do at this point to speed the recovery of their money is to stop emailing and calling his office directly for information, because he said responding to those inquiries delays investigative work.

He said he intends to soon begin posting more information on the official receivership website, www.zeekrewardsreceivership.com, and he asked that investors use the contact information on that website to ask for or provide information.

News 2's Mark Geary interviewed Elon Law Professor Mike Rich to see what chance victims will have at receiving their money. Professor Rich also said that people who made money off of Zeek will have to return it.

"The reason why the receiver can still recover [the funds] is because they're not true profits," said Professor Rich. "They're money that was stolen from other investors."

If you would like more information about the receiver, visit this website: http://www.zeekrewardsreceivership.com/

The SEC has called Zeek Rewards a $600 million online Pyramid and Ponzi scheme.

According to the SEC, about one million people were involved with the company.

WFMY, The Business Journal

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