Here we go again! Another Ponzi scheme – this one is called ZeekRewards, and brought in about $600 million. According to this article, the Feds closed down the operation and accused the mastermind, Paul Burks, of selling securities without a license. This was a huge operation, with about a million investors, many from the small town of Lexington, North Carolina. The victim list included doctors, lawyers, and accountants.
Mr Burks has agreed to pay a $4 million penalty and to cooperate with a federal court-appointed receiver trying to recover money for the alleged victims, but he had not been charged at the time the article was written. Dripping with sympathy, he said that he never told anyone to invest more money than they could afford, and if they lost money, “it’s their fault. Not mine. Don’t blame me.”
As is always the case with these things, there are complaints filed with the different regulators, but somehow that information doesn’t get to the people wanting to make the investment. In November 2011, a Florida man, Wayne Tidderington, filed a complaint with the North Carolina Attorney General’s office, calling the program an “illegal” Ponzi scheme. He said a relative who invested was guaranteed a return of 125 percent every 90 days. Not bad. At that rate, the relative’s original $8000 investment would be worth over $1 million in about a year and a half, if the proceeds were re-invested.
Apparently, the complaint died, because the AGs office didn’t believe it had jurisdiction, or some such. Mr Tidderington told the AP, in what has to be the greatest quote ever in the history of investment scams, “I put it all together. I gave them the roadmap. I said, ‘Here’s a snake. Here’s the gun. Here’s the bullets. Shoot the snake.’ But they ignored me.”
What is the little guy to do, when all of his friends and neighbors are going on about how much money they are making? That’s easy. He is going to lose all of his money. Because there is a sucker born every minute, and the scam artists know that. They also know that by paying off the early investors with the money of later investors (which is how a Ponzi scheme works) they ensure that the early investors will do the selling for them – they will brag about their big checks and tell their friends all about it.
In this complicated economy, where even the “legal” investments can end up being scams, it is sometimes hard to tell the good guys from the bad guys. And the more audacious the bad guy is, it seems, the less likely he is to truly pay for his crimes. People are awed by big money – even if it is dirty, which is why Bernie Madoff is living in college dorm-like accommodations while the petty thieves do hard time.
Trust nobody. Be a cynic. Assume that people pitching investments are thieves. Assume that friends bragging about them are fools. Assume that the authorities do not have your back. The glass is not half full. Most things don’t work out. If it sounds too good to be true…, well you know the rest. If you are going to wade into the treacherous world of investing, you better have the time, brains, and resources to really check things out. Otherwise, be warned.
Or else just read The Millionaire Wage Slave!