Investors in the Rex Venture Group were left dumbfounded after the shutdown of the company behind Zeekler.com and Zeek Rewards by the Securities and Exchange Commission on Friday.
One after another, local investors, or “affiliates” as the company called them, showed up at the Zeeker office in Lexington on Friday after news of the shutdown began to circulate Thursday afternoon.
Most of them expressed shock and confusion.
“The internet and website was down so we decided just to ride down and figure out what’s going on. Then we got here there’s not a soul here and it’s locked,” said one Winston-Salem man. He and his wife said they have thousands of dollars tied up in Zeek Rewards.
“Boy do we feel like idiots,” he said , after hearing his investment was part of the alleged scheme.
The Winston-Salem couple said they also recruited five people into the online program including accountants and doctors.
They are just two of more than one million internet customers worldwide the SEC said invested in the company.
Neal Hendrick of Lexington said he invested $10,000. “I’m concerned,” he said. “But I have faith in the business.”
The “business” was an international penny auction website called Zeekler that allowed users to pay a monthly membership fee and buy bids for the chance to win items.
The related program Zeek Rewards was the recruitment side of the website. Members would attempt to sign up new affiliates who would then invest more money for bids.
The company's Chief Executive Officer is allegedly accused by the U.S. Securities Exchange Commission of heading a ponzi scheme. Paul Burks is accused of orchestrating the illegal venture through the website ZeekRewards.com beginning in January, 2011. Federal Investigators said it was nothing but a scam.
In a statement, the SEC issued a statement said, “According to the SEC’s complaint filed in federal court in Charlotte, N.C., customers were offered several ways to earn money through the ZeekRewards program, two of which involved purchasing securities in the form of investment contracts.”
All started with a sign at Rex Venture Group's headquarters on Thursday. On Friday, U.S. Secret Service agents were sniffing around at the company’s office in Lexington, NC.
Special Agent Glen Kessler said the Secret Service, in coordination with the U.S. Securities and Exchange Commission, is working a joint case on Zeek Rewards.
Both Zeekler.com and Zeek Rewards had recently come under the scrutiny of the North Carolina Attorney General's office, after dozens of users filed complaints and inquiries in the past six months. The company, which is rooted in its penny auction website, has expanded in the past year to let users buy in through an "affiliates program." Some say the company is a good way to make a little more cash while others condemn it as the makings of a pyramid or Ponzi scheme.
The company also announced it is canceling its upcoming "Red Carpet" event, scheduled for Wednesday. The announcement, made on zeekrewardsnews.com, also advised readers to continue to monitor its websites for more information to be forthcoming.
Online reports indicate there are more than 700,000 affiliates using Zeek Rewards, however company officials gave the paper a lower estimate of more than 200,000.
