Zeek Rewards scam - like 'Monopoly money'
Buried midway through a lengthy court filing on the mammoth, malicious Zeek Rewards pyramid scheme is a two-word phrase that may sum up the con — “Monopoly money.”
That’s what perpetrators of the global swindle — which was based from a small, nondescript office in Lexington — called the supposed revenues of the alleged multilevel marketing business and penny auction site.
A lawsuit filed recently by the receiver seeking to recoup money for Zeek Rewards victims — who range from thousands of residents in the Triad to people in 157 nations — details how the insiders in the pyramid scheme ripped off affiliates through promises of exponential returns. All the while, the lawsuit contends, the tight-knit group of Zeek Rewards perpetrators privately acknowledged that their scam played out through the classic Ponzi scheme tactic of using revenues from newcomers to pay off initial investors.
When the U.S. Securities and Exchange Commission seized the assets of Zeek Rewards on Aug. 17, 2012, authorities referred to it as a monumental Ponzi scheme on the verge of collapse. In the lawsuit, attorney Kenneth Bell of Charlotte, the receiver in the Zeek Rewards case, says more than 700,000 participants lost more than $700 million from January 2011 until August 2012.
“This lawsuit is one of several steps the receiver is taking in his continuing effort to force those who were responsible to repay the losses caused by their unlawful conduct,” Bell says in the legal action, which was filed in the U.S. District Court for the Western District of North Carolina.
The 40-page document lays out in detail how the perpetrators of Zeek Rewards used the facade of a penny auction site and multilevel marketing business to entice people, called affiliates, to contribute more and more money. One of the key ways that the insiders kept the con going was to lure people to become VIPs, offering them even greater returns if they would purchase so-called “bids.”
But the perpetrators of Zeek Rewards knew the whole time that the bids were illusory, the lawsuit contends. The money brought in was partially paid out as winnings to keep the scheme afloat. Indeed, one executive with Zeek Rewards referred to the bids as “Monopoly money,” referencing the fake currency used in the iconic board game.
The first affiliates to join Zeek Rewards “were told to expect profit shares of 0.5 percent to 4 percent daily,” according to the lawsuit. “As the scheme progressed, participants continued to be told to expect large, consistent daily returns.”
However, Bell says in the lawsuit that the supposed profits for early affiliates came from the proceeds of new ones recruited to Zeek Rewards. And Zeek Rewards perpetrators used the examples and testimonials of affiliates who were enjoying big winnings to draw more people into the scheme.
As with any Ponzi scheme, Bell says, “the so-called ‘profit’ awards greatly exceeded total receipts, which, of course, was unsustainable.” The lawsuit alleges that Zeek Rewards’ insiders even used “false tax notices to perpetuate the scheme,” including inaccurate filings with the Internal Revenue Service.
By its last month of its operation, Zeek Rewards was near implosion, the lawsuit says. The daily average awards were supposed to be $38.2 million, but daily receipts were averaging about $8.8 million.
As Bell concludes, the Zeek Rewards insiders “engaged in self-dealing with no regard for the fact that in a matter of months or weeks, Zeek Rewards would be unable to pay back those individuals who unwittingly bought into the lie.”
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The court-appointed receiver seeking to reclaim money lost in the Zeek Rewards pyramid scheme earlier this month filed a pair of lawsuits in the U.S. District Court for the Western District of North Carolina. Attorney Kenneth Bell, the receiver out of Charlotte, is seeking to recover more than $200 million from alleged insiders and net winners in the scheme.
The insiders listed in the court documents, including money received, include:
• Paul R. Burks of Lexington, owner and former top executive for Rex Venture Group, the parent company of Zeek Rewards. More than $10 million
• Dawn Wright-Olivares of Clarksville, Ark., former chief marketing officer of Zeek Rewards. More than $7.8 million
• Daniel “Danny” Olivares of Clarksville, Ark., a computer programmer responsible for designing and running websites. More than $3.1 million
• Alexandre “Alex” de Brantes of Clarksville, Ark., executive director of training and support services at Zeek Rewards, husband of Dawn Wright-Olivares
• Darryle Douglas of Orange, Calif., part of Zeek Reward’s senior level management involved with affiliate communications and relations. More than $1.9 million
• The late Roger Plyler of Charlotte, who handled affiliate relations for Zeek Rewards. More than $2.3 million
The largest net payout winners listed in the court documents are:
• Todd Disner of Miami, Fla., former Zeek Rewards affiliate. More than $1.8 million
• Trudy Gilmond of St. Albans, Vt., a former field liaison for Zeek Rewards. More than $1.7 million
• Jerry Napier of Owosso, Mich., a former Zeek Rewards affiliate. More than $1.7 million
• Durant Brockett of Las Vegas, a former affiliate. More than $1.7 million
• Darren Miller of Coeur d’Alene, Idaho, former affiliate. More than $1.6 million
• Rhonda Gates of Nashville, Tenn., a former affiliate. More than $1.4 million
• Michael Van Leeuwen, also known as “Coach Van,” of Fayetteville, former affiliate. More than $1.4 million
• David Sorrells of Scottsdale, Ariz., a former affiliate. More than $1 million
• T. Le Mont Silver Sr. of Orlando, Fla., a field liaison and former affiliate. More than $773,000
• Karen Silver of Orlando, former affiliate. More than $600,000
• Aaron and Shara Andrews of Lake Worth, Fla. More than $1 million through a shell company
• David and Mary Kettner of Peoria, Ariz., former affiliates. More than $930,000
• Lori Jean Weber of Land O’Lakes, Fla. More than $1.9 million through a shell company