Did Zeek Ever Even Have a Product?

The SEC shuts ZeekRewards.com as a ponzi scheme. Unfortunately, it looks like they are probably right.

No doubt you’ve heard about what is turning into national news. The U.S. SEC says the company is an online Ponzi scheme, and the news has cast a pall over the industry. You can read the SEC filing below.

Even worse, the company may never even have had a product in the first place. The company’s “product” was what they called “bids” that its members could make in auctions. But industry insiders I spoke with are now casting doubt on whether any auctions ever actually took place, which would, of course, make it a straight-up fraud.

Where are the hundreds of thousands of products sold at auction? Where are all the personal photos and Facebook posts and tweets about iPads bought for $5? The hundred dollar flat screens?  I know I’d post that.

It was big: $162 million taken in the last month alone with nearly 800,000 members. According to my friend Kevin Thompson in his post yesterday, Zeek appears to have fought real hard to profit from a legal and compliance “gray area” including requiring members take an online compliance course and other actions. But nothing could overcome the reality, if proven factual, that auctions were never consummated.

What’s really surprising was the frenzied attack by so many agencies. Reports of the SEC, Attorney General, and the Secret Service (really?), all claiming a scalp. Makes one suspect this was more than a case of overly optimistic online marketers, but likely an outright Ponzi. And those who had money in it will likely never recover it.

Unfortunately, aggressive players like these hurt not only the people who believe in them but the many more millions who work in legitimate companies, building businesses and helping people.

Says the SEC: “The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors.”

Ugh.

The case is SEC v. Rex Venture Group LLC, U.S. District Court, Western District of North Carolina, No. 12-00519.

U.S. SEC COMPLAINT: SEC says shuts ZeekRewards.com $600 million Ponzi scheme

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