The two were associated with the Lexington-based company which owned and operated Zeekler and ZeekRewards. Court records said the conspirators claimed Zeekler was generating massive retail profits from its penny auctions and that the public could share in such profits through investment in ZeekRewards.
In July, a federal jury convicted Paul Burks, who ran the online auction site, of multiple charges. Burks is currently awaiting sentencing. Tweet Copyright by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The CB Insights tech market intelligence platform analyzes millions of data points on venture capital, startups, patents , partnerships and news mentions to help you see tomorrow's opportunities, today. Expert Collections are analyst-curated lists that highlight the companies you need to know in the most important technology spaces. It offered people who invested money, promoted the company on other websites and recruited other participants a share of auction profits.
Some mortgaged homes to raise their investment. The Securities and Exchange Commission shut down ZeekRewards about 20 months later, calling it a Ponzi scheme on the verge of collapse. Burks' former chief operating officer, Dawn Olivares, and her tech-savvy stepson have made plea deals with prosecutors and are expected to testify against him.
Olivares became friends and worked with Burks on multilevel marketing companies since in the s. He was a former county music disc jockey and performed as a magician in nursing homes in the s and '90s. After Burks' company was shut down, federal investigators found a massive country music memorabilia collection that has since been auctioned off to refund investors.
Thus, the scheme could only stay afloat so long as new investor contributions were sufficient to satisfy the amount of outflows. Due to the likelihood that those funds would soon be exhausted, the Commission initiated an emergency enforcement proceeding and sought an asset freeze in August Burks becomes the third person to be charged in connection with the scheme after Dawn Wright Olivares and Daniel Olivares were charged in December and currently await sentencing.
The indictment of Burks has not only been rumored for some time, but also comes as the court-appointed Receiver, Kenneth D. Bell, begins his quest to recover "false profits" from thousands of victims that were fortunate enough to profit from their investment. The receiver's efforts to recover these "false profits" will become markedly easier in the event that Burks pleads guilty to the fraud, since the guilty plea or conviction of a Ponzi schemer allow the use of the "Ponzi presumption" that significantly simplifies the burden of proof required in the so-called "clawback" actions.
While mail fraud and wire fraud charges are commonly brought against individuals associated with Ponzi schemes, the Burks indictment also includes a tax fraud conspiracy charge that centers around the issuance of IRS Form 's to victims that reported fictional income derived from the scheme.
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