July 29, 2015

Receiver reaches out to winners in NC scam

Published 12:00 am Tuesday, April 2, 2013

CHARLOTTE (AP) — A federal court-appointed receiver is urging people who profited from a $600 million Ponzi scheme to negotiate a possible settlement or face legal action.
Kenneth Bell has threatened to pursue claims against thousands of people who made money from online company ZeekRewards, which was based in Lexington, N.C.
Bell posted a letter Monday on the ZeekRewards receivership website, saying investors, whom he refers to as net winners, have until May 31 to negotiate. If they don’t contact his office by then, he will take them to court.
“The time for court action is drawing closer. I am sending this message to make sure that net-winners understand that there is an opportunity for settlement, but that the window for opportunity is closing,” he said.
The letter is the latest development in one of the largest Ponzi schemes in U.S. history.
Authorities say ZeekRewards owner Paul Burks, 66, of Lexington, was the mastermind of the scam that attracted 1 million investors, including nearly 50,000 in North Carolina.
The Securities and Exchange Commission, which closed the operation Aug. 17, said Burks was selling securities without a license. The Ponzi scheme was using money from new investors to pay the earlier ones.
The Associated Press found that federal and state regulators had received nearly a dozen complaints about ZeekRewards and the related site Zeekler.com, but failed to take action for months, leaving the company free to recruit tens of thousands of new victims.
Investigators say Burks, a former nursing home magician, siphoned millions for his personal use. But he has not been charged. He has agreed to pay a $4 million penalty and cooperate with Bell.
Burks has told the AP that he couldn’t discuss details of the case, but that he never told anyone to invest more money than they could afford.
Bell said ZeekRewards may have taken in $800 million. So far, he’s recovered $312 million. Hundreds of millions were paid out to investors. Bell said he wants to use some of that money to help the victims.

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