People in Chesterfield, and around the world, are worried they will lose their money after putting their money in what they thought was the investment of a lifetime.
The Securities and Exchange Commission has shut down what it's calling a $600 million Ponzi scheme that lured one million investors worldwide. ZeekRewards.com was a penny auction site where people bid on things like computers and cruises.
People also became investors, putting in anywhere from $1000 to $10,000. But the SEC says that money was being used to pay back earlier investors in what it calls a classic pyramid scheme that was about to collapse.
"It's very, very depressing," said Nick Hall of Chesterfield. He says he invested $1000 in ZeekRewards about six weeks before it was shut down by the SEC.
"I put the money in this and in six weeks we were, in theory, up around $5,000," said Hall.
Hall says he persuaded friends and family to invest, too, and says his email contacts show hundreds of other investors greater Richmond.
"We were a lot of smart people in the Tri-cities who were fooled by one man," said Hall.
"I was very upset," added his friend Darin Vauter, a fellow investor. "Knowing that I had dollars out there that were supposed to be working for me and now I can't touch them."
The Securities and Exchange Commission says ZeekRewards.com was started by Paul Burks in North Carolina in January 2011. Friday, the SEC slapped it with a lawsuit, accusing ZeekRewards of fraud and freezing its assets of $225 million in 15 foreign banks.
The SEC hopes to return money to investors through a receivership, but says obligations exceed that cash. The Commission says Burks is cooperating without admitting or denying the allegations. It says he siphoned several million dollars for himself and family and must pay a $4 million penalty.
Hall says he and his friends hadn't even tried to collect their perceived earnings yet.
"They gave you 90 days to earn on your points," Hall explained. "So from an economic standpoint you're a fool to pull money out of your bucket for 90 days. In hindsight, it all makes sense."
Hall got some banks to cancel his cashier's checks to ZeekRewards that hadn't been cashed yet, but now says he faces what investors across the country are reporting, that some banks say the Uniform Commercial Code prevents them from stopping the payments.
"I've gotten family and friends' money invested in this thing under me," said Hall. "I found it my personal responsibility to do everything in my power to get their money back."
So how can investors get their money back? An attorney in the Charlotte, NC office of the McGuireWoods law firm has been appointed receiver. He and a team will oversee investor reimbursements but are just beginning to assemble the process. A website has been established with information: http://www.zeekrewardsreceivership.com.
Also, if an investor's check hasn't been cashed in 90 days, they can file a declaration of loss with the bank that issued the check.
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