Updated 08/20/2012 09:14 PM
Lexington-based business investigated by SEC in ponzi scheme
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LEXINGTON — A Lexington-based business is in trouble with the Securities and Exchange Commission.
Until last week, Zeek Rewards was an online penny auction. On Friday, the SEC filed a civil action complaint, claiming the company committed fraud. The company has recruited nearly 1 million investors from around the world with their advertisements and has raised more than $600 million.
"I made more money in four months than I've made in my life," said friend of owner John Buckner.
However Buckner said none of the money he made was ever deposited into his account, and that is what has happened to many more who have not seen a dime of their money.
"Some folks may think everything is okay. They just don't know yet," said BBB spokesperson David Dalrymple.
Zeekler.com investors in Lexington have been coming to the front door of the business hoping for answers. However, they have continually found it locked and dark. They say they want to know what happened to their money and if they'll ever get it back."
The Better Business Bureau has been tracking thousands of complaints against the company for the past two years, earning Zeekler an F-rating. The BBB said the company advertised ways to make money by recruiting new members to invest and by using an online auction site and people jumped at it.
"In a ponzi scheme the people in the very beginning do get money. You have cheerleaders out there. You have folks all excited. Yeah I put in $3,000 and I made $6,000," said Dalrymple.
The SEC's investigators said that is the kind of return investors were promised. In a move to limit their losses, the SEC ordered an emergency freeze of the company's assets.
Attorney Kenneth Bell has been named the temporary receiver of all of Zeek's assets as the investigation continues. The owner, Paul Burks, neither confirms nor denies the allegations, but has agreed to give up the company and its assets, plus pay a $4,000,000 penalty.
According to the SEC, Burks siphoned several million dollars of investors' money and gave at least $1 million to family members.