Lawyers seek $980K for handling alleged Ponzi scheme case
Posted March 13, 2013 1:55 p.m. EDT
Lexington, N.C. — Lawyers handling the assets for a Lexington-based company accused of swindling thousands of customers through its online auction website submitted their latest bill for payments, totaling more than $980,000, according to court records.
Attorneys for Rex Venture Group, which ran ZeekRewards, are requesting $907,617.21 in lawyer bills for 2,494 hours worked since December and $76,048 for expenses. They have already received $853,000 for their work. A forensic accounting firm has also billed for $617,816 for 1,809 hours of work.
The government shut down ZeekRewards last August after calling it a Ponzi scheme, yet no one has been charged. As many as 840,000 people could be fighting to get their money back, including 47,000 North Carolinians.
About $300 million has been recovered so far. Lawyers for Rex Venture Group are tasked with collecting, managing and distributing the remaining money to those who invested.
Before the company was shut down, customers lined up every day outside ZeekRewards’ storefront hoping to get rich. People all over the world signed up for the membership-based sites ZeekRewards.com and Zeekler.com, also hoping to get rich, and then the sites went dark.
The company had two sides. One was a so-called penny auction, where people could bid on items such as TVs, computers and cars. Similar to gambling, it allowed participants to place small, incremental bids. Once the auction ended, the last person who placed a bid won and had to pay the final bid price.
The other side of the company was the investment side, which encouraged customers to put their money into the company with the promise that it would grow when they recruited others to do the same.
The government said the whole operation was a fraud, the company was not legally registered to sell investments and that it could never pay investors what they were told they made.
About 98 percent of ZeekRewards' total revenue and profit paid to investors consisted of money received from new investors. Based on its financial statements, ZeekRewards would have had to pay out $45 million per day to all of its qualified investors if they elected to receive their daily award in cash. That's why the government says the business would have soon collapsed.