One million clients and a $800 million pyramid scheme – the common thread is one Paul Burks who was convicted in Charlotte NC for his involvement in a worldwide Ponzi scheme. Burks was convicted on four counts of fraud and conspiracy.
According to reports in the Charlotte Observer:
Prosecutors say Paul Burks, a former country music disc jockey and retirement home magician, pocketed more than $10 million during 2011 alone. He is charged with mail fraud, wire fraud, conspiracy to commit tax fraud in connection with one of the largest Ponzi schemes in U.S. history. Federal prosecutors said Burks misled tens of thousands of his clients – including 50,000 North Carolinians – into investing in ZeekRewards, a short-lived, online marketing scheme that generated hundreds of millions of dollars in 2011-12.
So what’s the gig with Paul Burks
In 2011, to market his online auction site, Paul Burks started ZeekRewards. ZeekRewards offered a share of profits to online investors, those who promoted Burks’ company and recruited others to join. While investments were capped at $10,000, participants could make payments for spouses, children, and other relatives.
Burk followed an age-old process to lure his victims – a promise to provide a better than average return and the opportunity to earn substantial results. When you appeal to the basic notion of human ego and greed, you have a fertile ground for finding unsuspecting victims of a fraud in the making.
Assistant US Attorney Jenny Sugar said Burks and his team promised returns of up to 125 percent, manipulated records and exaggerated ZeekRewards’ cash flow to lure a “staggering” amount of investment.
Wait What?
That’s right the promise (the first leg of a fraudulent scheme) was a 125% return. Now really does that make sense?
Assistant US Attorney Corey Ellis, though, dismissed the descriptions of Burks as an honest businessman undermined by his own success.
“Every fraud has a fairy tale,” said Ellis, who described ZeekRewards as a “simple flim-flam” that, fueled by greed and the internet, “got out of hand.”
While ZeekRewards did pay out hundreds of millions in earnings, its actual obligations were more than $3.3 billion, Ellis said. Burks and his co-conspirators had no choice other than to use the payments from new investors to pay off the old.
While Burks held out that he had no intent to defraud, a jury saw it different. Burk faces up to 65 years in prison and a $1 million fine.
