One man's personal toll of pyramid scheme
When Troy Olsen lost his job as a teacher last May in his rural Utah community, he suddenly found himself in need of a stream of money to benefit his wife and two children.
Some of his companions in Richfield, Utah, a town of 7,000 people in the central part of the state, told Olsen about a way they were making extra cash — an online multilevel marketing business based in Davidson County called Zeek Rewards.
Olsen attended meetings with about two dozen people and heard about how Zeek Rewards, with its headquarters 1,700 miles from his home, offered a route to a robust return. On its website, Zeek Rewards touted itself as a way to “be your own boss” through “income opportunity for marketing professionals.”
By August of last year, Olsen learned enough — and heard about people’s positive experiences — to take a chance. He wrote a check for $10,000 to Zeek Rewards, with an expectation that his money would turn over methodically and bring him a financial boost when he needed it most.
Instead, within days after his check cleared, the U.S. Securities and Exchange Commission on Aug. 17 seized the assets of Zeek Rewards. The supposed business — run out of a nondescript, small office on W. Center Street in Lexington adjacent to a coin-operated laundromat — turned out to be a pyramid scheme with a global reach. In seizing the assets and halting Zeek Rewards’ operations, federal authorities termed it “a $600 million Ponzi scheme on the verge of collapse.”
For Olsen, learning suddenly about the true motives of Zeek Rewards was devastating. He had sold one of his family’s cars to secure the money for the business opportunity.
“Maybe a week after my cashier’s check had cleared the bank, that’s when it got shut down,” Olsen told The High Point Enterprise.
The soft sale
The experience of Olsen reflects the personal toll of the pyramid scheme with roots in the Piedmont that eventually could affect upward of 1 million individuals. The receiver trying to sort out the assets, attorney Kenneth Bell of Charlotte, has indicated that Zeek Rewards may turn out to be the largest Ponzi scheme in U.S. history under receivership through the courts. Olsen, 45, was caught at the tail end of the classic pyramid scheme. Early investors in Zeek Rewards were paid from the proceeds of later ones — people such as Olsen — until the con collapsed.
After he lost his job 10 months ago, some of Olsen’s companions knew he was looking for a way to make extra money while he searched for a new position earning a paycheck.
“They had kept asking me previously, ‘Hey, check this out, check this out,’” he said, referring to Zeek Rewards. “So I finally checked it out, and it sounded really good.”
During meetings with other Zeek Rewards affiliates in Richfield, Olsen was told he could make money online through buying and setting up ads for products. As products sold, he would receive a percentage of the revenue.
What Olsen and hundreds of thousands of other Zeek Rewards participants didn’t know at the time is that the company wasn’t selling anything. Instead, early investors were being paid with proceeds from later ones, according to federal authorities.
During recruitment meetings at a house in Richfield, Olsen said he was approached with a soft-sale pitch to become part of Zeek Rewards. Olsen was told that his $10,000 “would build my credit in the business” and allow him to reap greater income. The recruitment of Olsen took place over a period of months, and the approach was to build a relationship of trust rather than “twist my arm,” he said.
The Zeek Rewards affiliates that Olsen met emphasized that the money he provided wasn’t an investment. But when the Securities and Exchange Commission shut down Zeek Rewards, the federal agency called it an unregistered securities business.
“They said that they would be in trouble if they called it investing,” Olsen recalls.
Coping with loss
Because he put money in so late, Olsen didn’t make anything from Zeek Rewards. When he found out that Zeek Rewards was an elaborate swindle, Olsen not only had to contend with the financial setback but the emotional fallout.
His wife knew he was taking part in Zeek Rewards, and they talked about using $10,000 from the sale of a family vehicle to make a play in the business.
“We saw it as a chance to make some money while I’m not working. Once we lost it, man, that was a big blow,” he said.
Olsen, like hundreds of thousands of other former affiliates, now is scrambling to get some portion of his money back through the court-ordered receivership.
As he moves about in Richfield, Olsen runs into people occasionally who were part of Zeek Rewards. He maintains friendships with some of them, believing they were duped by higher-ups in the Zeek Rewards pyramid.
“One of them had 1,500 people he’d signed up. I’m sure he’s lost a lot of money,” Olsen said.
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The assets of Zeek Rewards and its parent company, Rex Venture Group, were seized by the U.S. Securities and Exchange Commission on Aug. 17. Federal authorities say Zeek Rewards was a $600 million Ponzi scheme. A receiver, appointed by the U.S. District Court for the Western District of North Carolina, is attempting to retrieve assets to reimburse Zeek Rewards victims for part of their losses.
The latest development is that the receiver, attorney Kenneth Bell of Charlotte, hopes to have a formal claims process set up in the coming weeks. The website for the receivership is www.zeekrewardsreceivership.com. Global in scope, perhaps conning upward of 1 million people, Zeek Rewards was based from a small office in Lexington.