Money for nothing
It sounded too good to be true. For a small investment, anywhere from a hundreds bucks up to $10,000, you could buy into the penny-auction business known as ZeekRewards, which would spin off a piece of its daily profits directly into your account. And if you recruited some friends to the party, your share would increase exponentially.
We know about ZeekRewards and its penny-auction arm Zeekler.com because for the last six months, people have been trying to sell it to half of our staff. A glance into the details revealed a few disturbing facts.
For one, a Google search of “Zeek rewards scam” returned a long list of sites that seemed to be operated by Zeek itself, and its parent company, Rex Venture Group, operated in Lexington by CEO Paul Burks.
The site zeekrewardsscam.co, the first thing that comes up in the Google search, is a glowing endorsement of the program, complete with a
gram, complete with a sign-up box. The first YouTube video on the list — “Warning! Don’t join ZeekRewards until you watch this 2-minute video” — is by another ZeekRewards pitchman.
Fortunately, none of us bought into ZeekRewards — Though admittedly some were tempted.
It’s a neat piece of Google-bombing, but certainly very suspicious.
Second, Zeekler itself purported to make its “profits” off of its penny-auction site — a dynamic wherein bidders must pay to place bids that cost about dollar apiece but only up the auction price by a penny. Say an iPad is on the block, and ends up selling for $100 after 10,000 bids. The winner must pay the $100 for the iPad, plus whatever she spent on the bids she made at $1 per. If she made 500 bids, the iPad cost her $600. And if her friend made 400 bids but failed to “win” the iPad, he has spent $400 on nothing but the thrill of the auction. But the penny auction site has theoretically made $10,100 on the iPad. In this way, penny auctions tread dangerous territory between gambling and outright scammery.
But ZeekRewards was something else: a way to buy into the profits Zeekler’s auction site made by making a cash deposit, placing ads for the auctions and then watching the profits roll in. That’s how it was pitched to us, anyway.
But users complained that the Zeekler penny-auction site had been plagued by fraud, automated bidding bots that artificially drove up the price of auctions and general consumer apathy. And when the Securities and Exchange Commission shut them down on Aug. 16, they accused Burks of running a Ponzi scheme, using money from new investors to pay off older ones.
Fortunately, none of us bought into ZeekRewards — though admittedly some were tempted.
And according to the SEC, more than 1 million people, many of them local, bought into the big pitch.
Burk has paid $4 million to settle the SEC charges without admitting or denying anything. But the civil suits are rolling in as we speak.
We saw it coming a mile away. It’s hard to make money, and you can’t get rich overnight without actually doing something.
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