Sep 18, 2012 12:04 PM EDT

ZeekRewards:Nearly $300 Million In ZeekRewards.Com Assets Recovered

Nearly $300 million in assets have been recovered by the receiver handling the closed Lexington online company that is accused of operating a Ponzi scheme.

A U.S. district judge on Aug. 21 appointed Kenneth Bell as temporary receiver for Rex Venture Group LLC, the parent company of ZeekRewards.

The Charlotte attorney provided an update at

"There may be tens of millions of dollars more of recoverable assets," Bell said.

"While many of you are understandably anxious to begin the claims process, we simply can't do that until we are reasonably certain we have recovered all assets from which victims can be compensated. This process will take months, if not longer."

Judge Graham Mullen on Friday approved giving Bell until Oct. 8 to file a preliminary liquidation plan, as required by his order that created a temporary receiver and froze the companies' assets.

As part of filing fraud charges, the Securities and Exchange Commission said in its complaint that it is trying to thwart what officials say could be a financial collapse worth up to $600 million.

The companies and Paul Burks, 65, their principal owner, are accused by the SEC of raising the money through unregistered securities from at least 1 million customers nationwide. The companies were based at 803 W. Center St. in Lexington.

The SEC said 98 percent of ZeekRewards' total revenues, which the company called "net profits" paid to current investors, were in fact funds received from new investors.

Bell repeated his intention to recover assets from people "who took more out of Rex Ventures than they put in."

"Many of you received little or nothing from this enterprise. In order to make everyone as whole as possible, those who profited from participating should surrender their gains."

Bell also addressed emails, online postings and taped telephone conference calls that claim to have either spoken to him or the SEC about ZeekRewards.

"False information is being circulated by these claimants," Bell said. "I will communicate with you through this website. I also recommend that you consider only what the SEC posts on its website for its position on this matter."

ZeekRewards faces at least two class-action lawsuits, a federal case filed in Louisiana and one in Davidson Superior Court.

Both suits used the SEC complaint as boilerplate for its accusations of "fraudulent, unfair, deceptive and illegal acts and practices in the solicitation of and sale of purported investment opportunities and contracts."

The Davidson suit lists the investment amount of each person, which ranged from $100 to the maximum of $10,000. Their combined claims are $319,408, with 17 individuals investing $10,000.

In the Louisiana suit, the investment amount of the plaintiffs ranged from $250 to $10,000. Their combined claims are $38,450.

Burks created in 2010 as a penny-auction website offering items ranging from personal electronics to cash. The SEC said the website had limited success until was launched in January 2011.

One option for participating on the website was paying a monthly subscription of $10 to $99. A VIP option permitted investors to spend up to $10,000 on bids. They also could recruit investors for the website.

Investors could choose to cash in their earnings or reinvest them.

The SEC said would have had a daily payout obligation of $45 million if all "qualified" investors chose to take their daily award in cash. The company, meanwhile, was taking in an average $5 million a day at the time it was shut down.

The SEC complaint said the companies hold about $225 million in investor funding in 15 domestic and foreign financial institutions. They had paid out nearly $375 million to investors since 2011.

The SEC complaint said Burks will pay a $4 million fine for taking that amount out of the companies. He also distributed $1 million of money to family members, according to the complaint.

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