ZeekRewards CEO Sentenced For $900M Ponzi Scheme

CHARLOTTE, N.C. – In a landmark financial crime case, U.S. Attorney Jill Westmoreland Rose revealed today that former ZeekRewards CEO Paul Burks has been sentenced to 176 months in prison for masterminding a $900 million Internet Ponzi scheme.

Burks, 70, of Lexington, N.C., was also ordered to serve three years of supervised release and pay $244,000,000 in restitution. He was convicted in July 2016 after a three-week trial that saw him charged with wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy.

According to court documents, Burks owned and operated Zeekler, a fraudulent penny auction company, and ZeekRewards, its advertising division. He convinced over 900,000 victims, including over 1,500 from Charlotte, to invest in his scheme, falsely claiming that Zeekler was raking in massive profits from penny auctions, allowing investors to share these gains through ZeekRewards.

Burks and his conspirators promised investors a guaranteed 125% return on their investments. They misled victims into believing they could participate in the Retail Profit Pool (RPP), which purportedly allowed them to share 50% of Zeek’s daily net profits. However, Burks fabricated these figures, as he did not maintain accurate books and records. The majority of incoming funds came from new investors, who were then used to pay off earlier victims in a classic Ponzi scheme fashion.

Despite claims of massive success, Burks and his conspirators had only $340 million available to pay out investors when they fraudulently represented that their investments were worth nearly $3 billion. The scheme became unsustainable as it grew, eventually collapsing under the weight of its own lies. Michael Rolin, Special Agent in Charge of the United States Secret Service, Charlotte Field Division, and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), joined U.S. Attorney Rose in today’s sentencing announcement.