CHARLOTTE, N.C. -- A U.S. District Court judge has designated a temporary receiver to handle the assets of ZeekRewards following the SEC's shutdown of the website and its parent company.
Kenneth D. Bell of McGuireWoods LLP was appointed Friday by Judge Graham Mullen of Charlotte as the temporary receiver of Rex Venture Group, LLC, the company behind the penny auction website Zeekler.com and ZeekRewards.com.
The announcement was made Tuesday after the Securities and Exchange Commission filed a federal complaint against ZeekRewards and founder Paul Burks, who is alleged to have concocted the combined Ponzi and pyramid scheme in which more than $600 million was collected from an estimated 1 million investors across the globe.
According to the SEC's complaint, ZeekRewards paid out nearly $375 million to investors while holding an estimated $225 million in investor funds across 15 foreign and domestic financial institutions. The assets were frozen at the SEC's request.
The complaint continues: "Burks has personally siphoned several million dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members."
Aside from relinquishing his assets and interest in the company, Burks also agreed to pay a $4 million penalty.
According to a press release, Bell will be responsible for "marshaling and preserving" the frozen assets that were "held or possessed by ZeekRewards, held in constructive trust for ZeekRewards, and fraudulently transferred by ZeekRewards."
After identifying and securing the company's assets, the receiver will make a recommendation to the court as to how to handle the assets. The court will then allow for any affected parties to make objections to the receiver's recommendation, after which the court will make a final decision on how the assets will be handled.
As of Tuesday, no claim form or formal claims process has been established or approved by the court for those seeking to regain invested funds.
Once a claims process has been approved, the courts will likely compare information submitted from those claiming refunds along with information from the receiver's final report.
Jody Neves said she invested a few hundred dollars and knows others who invested thousands.
"The money has got to be somewhere. Where is it?" Neves said. "Is it in a big account? Is it in the guy's pocket? His house? His family? Wherever -- that's what needs to be given back to the people."
Neves said she knows there's no chance of getting back the "profits" Zeekler promised to investors, but she was at least hoping to get a refund on her initial investment.
David Dalrymple, President and CEO of the Better Business Bureau of Northwest North Carolina, said they reported Zeeker's questionable business model to federal agencies months ago.
"It was just red flag after red flag. It wasn't adding up," Dalrymple said.
Those with further questions or those wishing to contact the receiver may do so by email only. The address is info@ZeekRewardsReceivership.com.
Future updates from the receiver will be also be posted to ZeekRewardsReceivership.com, according to the release.
Concerned investors began speaking out after three signs were posted last week outside the company's headquarters at 803 West Center St. in Lexington.
A spokesperson with the Better Business Bureau told FOX8's Carter Coyle on Friday that their office began receiving complaints concerning ZeekRewards about one year ago.
Later that evening, the SEC announced it was shutting down ZeekRewards, calling it a $600 million Ponzi scheme.
The Attorney General’s office made a Civil Investigative Demand for specific documents from the company on July 6.
The Attorney General’s Office set up a hotline for Zeek Rewards affiliates. The number is (919) 716-6046. In addition, questions can be sent to Zeek@NCDOJ.gov.