USA ZeekRewards Affiliates Going After Paul Burks

 

Nearly 100 Zeek affiliates have filed a class-action lawsuit against Rex Venture Group, Zeek Rewards and chief executive officer Paul Burks, claiming damages from the company’s “fraudulent, unfair, deceptive and illegal acts.” The state court action, filed in Davidson County Superior Court about 4 Wednesday afternoon, seeks damages for all affiliates and demands a jury trial.

The lawsuit is being brought by about 82 named affiliates. Numerous other unnamed individuals could be inserted into the lawsuit at a later date, the filing said. Most of the affiliates included in the lawsuit are from North Carolina, including numerous individuals from Davidson County. Affiliates claim to have lost amounts ranging from $1,000 to $10,000.

The lawsuit targets Rex Venture Group and Zeek Rewards, which was shut down by the U.S. Securities and Exchange Commission last week after an investigation that alleges the company was operating a $600 million Ponzi scheme. It also targets Burks, the company’s top executive who allegedly personally took and siphoned off millions of investor funds.

The lawsuit is also aimed at upper-level affiliates who, over time, solicited others to join the program, knowing it was a Ponzi scheme all along, according to the filing. Those upper-level affiliates, who were not named in the lawsuit, allegedly received significant sums of cash from Zeek Rewards in the weeks and months leading up to the SEC action.

The SEC put a halt to Zeek’s assets Friday, in fear that the company would soon collapse.

Zeek Rewards, which began in January 2011 as an exclusive advertising hub, was one of the first penny auction-based programs to present profit-sharing opportunities to its customers. In the program, affiliates bought in by purchasing large quantities of bids and doing advertising for the penny auction site Zeekler.com, which is also maintained by Rex Venture Group. For buying bids and placing ads, affiliates received a daily payout from the company’s “daily net profits” from what was reported to be the penny auction site.

In reality, though, about 98 percent of Zeek Rewards’ “daily net profits,” and subsequent daily payouts, were derived from funds from new affiliates, according to the SEC’s complaint filed in federal court in Charlotte. The SEC called it “classic Ponzi scheme fashion.”

During the company’s run, some affiliates claim to have pulled out up to $40,000 to $60,000 per month. Yet, because the program advised its users to withdraw money slowly, most affiliates didn’t receive any money at all, let alone enough to cover their initial investment.

The affiliates who filed suit Wednesday are mostly from North Carolina, and in particular the Triad region. All are seeking various sums of money. Two plaintiffs, Jose and Sara Chavez of Davidson County, invested $7,000 in Zeek Rewards, claiming they need their savings to provide medical care for their daughter who has leukemia, according to the lawsuit.

Another plaintiff, Davidson County resident Preston Everhart, invested $3,000 in Zeek Rewards and is deployed in Kuwait with the Army National Guard.

Lexington Attorney J. Calvin Cunningham, who represents the plaintiffs, was unavailable for comment Wednesday afternoon.

Several affiliates listed in the lawsuit were also unavailable for comment.

The court-appointed receiver, Charlotte attorney Kenneth Bell, began his investigation into Zeek Rewards on Monday. Bell, who will collect and marshal remaining investor funds, has also set up a website, www.zeekrewardsreceivership.com, and email, [email protected], for affiliates.

Plaintiffs, not mentioned above, include:

Michael Madaris, of Stanly County, $10,000 invested; Caron L. Myers, of Davidson County, $2,500 invested; William J. Morrow, of Guilford County, $500 invested; Tonja H. Robbins, of Davidson County, $1,000 invested; Dale Kevin Robbins, of Davidson County, $10,000 invested; Rachel F. Robbins, of Davidson County, $500 invested; George and Sharon Grubb-Benson, of Davidson County, $5,000 invested; Penny Gordon Benson, of Davidson County, $5,000 invested; Deby Duff, of Davidson County, $1,000 invested; Janis Gibson Kaufman, of Guilford County, $4,000 invested; Nicole F. Stevenson, of Guilford County, $1,000 invested; Tony and Brenda Sedberry, of Montgomery County, $10,000 invested; Dianne Robinson, of Montgomery County, $10,000 invested; Larry Blackburn, of Montgomery County, $10,000 invested.

Jose L. Cadena, of Clintondale, N.Y., $5,500 invested, Angela Callicutt, of Montgomery County, $179 invested; Javier of Edinburg, Texas, $2,100 invested; Derek Page, of Guilford County, $8,000 invested; Maegen Ruth Williams, of Moore County, $2,500 invested; Jason Matthew Hensley, of Montgomery County, $1,000 invested; Lynda W. Breeden, of Forsyth County, $500 invested; Jonathan Sedberry, of Montgomery County, $10,000 invested; Piper Caviness, of Forsyth County, $2,129 invested; Marilyn Anderson, of Forsyth County, $2,190 invested; Tina Barry, of Davidson County, $1,000 invested; Delores Oglesby, of Guilford County, $628.95 invested; Maxine Owen, of Guilford County, $2,000 invested; Wesley Andrew Lohr, of Mecklenburg County, $2,000 invested; Patricia H. Lohr, of Davidson County, $1,000 invested; Sharon Lohr Long, of Davidson County, $1,000 invested; Jason Matthew Hensley, of Montgomery County, $1,000 invested.

Lloyd D. Lohr, of Davidson County, $10,000 invested; Arnold Timothy Madaris, of Pageland, S.C., $1,000 invested; Jodi Small Curtis, of Davie County, $10,000 invested; Almetia Mack, of Guilford County; $1,128 invested; Gary A. McNeill, of Guilford County, $3,000 invested; Andrea Scheir-Crowder, of Guilford County, $1,000 invested; Jeanne Suggs, of Guilford County, $1,128 invested; Chase Leonard, of Guilford County, $3,200 invested; Carol Sullivan, of Forsyth County, $10,000 invested; Amy Christensen, of Davidson County, $6,500 invested; Brittany Baker, of Rockingham County, $1,200 invested; Robert W. Uber, of Guilford County, $5,000 invested; Andrew Chandler, of Randolph County, $1,000 invested; William Walker, of Randolph County, $1,000 invested; Corby Kennedy, of Randolph County, $500 invested; Maelee Arnold, of Randolph County, $250 invested.

Vicki F. Axsom, of Guilford County, $5,000 invested; Mary Quay, of Randolph County, $1,700 invested; Brittney Conner, of South Boston, Va., $250 invested; Bernard F. Walraven, of Guilford County, $2,000 invested; Maria Christina Quintanilla, of McAllen, Texas, $1,000 invested; Pedro Mungula, of Hidalgo, Texas, $1,000 invested; Paula R. Farmer, of Davidson County, $1,225 invested; Betty S. McNair, of Montgomery County, $2,500 invested; Amy L. Slingerland, of Rowan County, $1,000 invested; Lee Ann M. Kimble, of Montgomery County, $1,000 invested; Patrick F. McNair, of Montgomery County, $500 invested; Brian W. Peele, of Guilford County, $3,000 invested; Courtney Leonard, of Davidson County, $2,000 invested; John M. Riley, of Forsyth County, $10,000 invested; Mike Bush, of Davidson County, $5,000 invested.

Clint Vaughn, of Davidson County, $10,000 invested; Kimberly Blanchette, of Davidson County, $2,000 invested; Darlene Jackson, of Guilford County, $1,000 invested; James Edward Merritt Jr., of Forsyth County, $10,000 invested; Verna Margo Merritt, of Fort Pierce, Fla., $10,000 invested; John N. Riley, of Wake County, $5,000 invested; Christel Oliphant, of Guilford County, $3,000 invested; Robert Eads, of Yadkin County, $1,500 invested; Chad Jason Adams, of Yadkin County, $4,000 invested; Mickey Seth Mantel, of Davidson County, $2,500 invested; Rene Trevizo, of McAllen, Texas, $1,000 invested; Dianna S. Alger, of Stanley, Va., $10,000 invested; Jean Ellen Warner, of Davidson County, $100 invested; Eunice Graham, of Piney Flats, Tenn., $5,000 invested; Dennis Earl Thompson, of Davidson County, $10,000 invested; Monica Jollie, of Davidson County, $3,000 invested; Jean Busse, of Davidson County, $1,000 invested; Jay Wilson, of Durham County, $4,000 invested; Chad Kirkendall, of Davidson County, $10,000 invested.

Source: The TimesNews