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A TIMELINE OF THE FALL OF ZEEK REWARDS FROM A DIFFERENT PERSPECTIVE
Now that the dust has settled on the closure of Zeek Rewards, we can now take the information gleaned from the SEC/Secret Service filing and start putting together a timeline of events to match up against company issues that began occurring in 2012. I want to emphasize, this is just my opinion about the timeline of events, and is not based on any inside information of the investigation because there is none.
So what do we know for certain? We know that Paul had been providing the SEC/Secret Service hundreds of thousands of documents, as well as financial and electronic records of Zeek Rewards.
Knowing this information we can rule out that the SEC/Secret Service just dropped in on Thursday, shoved the consent agreement in front of Paul and said sign it or else without any legal representation. This is one of the stories that was making the rounds. The other story that was being told is that the “evil” SEC/Secret Service just closed down Zeek without any knowledge of how it worked, Zeek was not a Ponzi, and was a legitimate business model that was helping the little guy make a living in these hard financial times. Therefore, the SEC/Secret Service had it all wrong when they filed their charges, there were no victims, Zeek was not selling securities, and was all a rush to judgment over a few complaints that were taken care of by Zeek.
Of course these are Zeek members who had their world turned upside down seemingly overnight, but which was happening for months prior to the closure. Based on a review of the court documents, and the activities of Zeek, I have come to the conclusion that a timeline of events can be determined and tied to the SEC/Secret Service inquiry into Zeek. This is my analysis only of when I think the SEC/Secret Service began their investigation into Zeek:
My first clue in hindsight was the abrupt announcement by Zeek Rewards over the Memorial Day weekend that all affiliates had to have the checks they were issued “cleared” no later than June 1 or they would no longer be good. There is a difference between a check having its funds released to an account and the check clearing. Banks today will make available immediately a portion of a check deposited into your checking account, but all the funds are not released until the check has cleared. Meaning it has gone through the Central Clearing House and was approved funds were available by the issuing bank, i.e. the check was good.
Zeek said the reason for this action was because they had grown beyond the capabilities of their two local banks to handle their accounts due to the size of the monies being received by Zeek Rewards. When this was announced, I did not believe them for a minute. If you were changing banks, you would keep enough money in the existing accounts to allow for the checks to clear in their normal business cycle, not forcing the members to have these checks cleared within less than 3 banking days, which in most cases was impossible. They said any check not “cleared” by June 1, would have to be reissued. Going forward you would issue new checks on the new bank account, and once all the outstanding checks on the two closed bank accounts had cleared, you would just transfer over the remaining balances to your new account. This was not done. In fact, they did not have a new bank ready to take over their account. So what should have been a seamless transition became a tangled web of cloak and dagger by Zeek refusing to announce the name of the new bank.
Now that I have given you that background, it is my belief that it was around this time that the SEC/Secret Service began asking Zeek to provide them documents as referenced in the court documents. The reason I say this is because instead of announcing a new bank, Zeek announced they would be using an e-Wallet program to handle all their deposits and payments. It is my belief, and my belief only, that they did this so the major promoters of Zeek could begin withdrawing as much money as they could. I believe they tipped off the major promoters that Zeek was under investigation, and this was their way of getting as much money as possible out before any action could be taken. You see if this was done through Zeek’s bank accounts, these large transactions would have been reported on the banks SAR reports they are required to file. A major red flag if the SEC/Secret Service has been requesting documents from you and you know you are under investigation. Something they did not want the SEC/ Secret Service knowing.
To add to my belief this is when the SEC/Secret Service began their investigation into Zeek was the events that took place in rapid succession in June and July. In mid-June, we had the then COO, Dawn Wright-Olivares announcing the e-Wallet program. What was surprising is she failed miserably in describing how the e-Wallet program really worked. In her explanation she informed the affiliates Zeek Rewards would not be able to pay them unless they “deposited more money” into Zeek’s e-wallet accounts in late June. Kind of strange for a company that proudly proclaimed they were debt free. Shortly thereafter it was announced that she was moving from the COO position to becoming the CMO, and Greg Caldwell was assuming the role of “acting” COO. Dawn became almost invisible after this change in her title.
The next insider to abruptly leave Zeek Rewards was its Sales Director, Darryl Douglas. It was announced that he was on leave due to personal matters on July 30th. Such “personal matters” were never elaborated on by the company and following the official announcement was never publicly heard from again.
By this time I believe the investigation was really heating up and all the insiders knew it was now just a matter of time before Zeek would be closed. One of the most interesting and most shocking at the time it happened events was Keith Laggos, a paid consultant of Zeek Rewards since June of 2011, claimed that the FTC was going to shut down Zeek Rewards. He also began to promote Lyoness to his Zeek Rewards affiliate downline as a “Plan B”. Laggos was terminated as a paid Zeek Rewards consultant on or around July 24th, and this caused all kinds of consternation for the Zeek members. They began wondering if Keith’s prediction could possibly come true.
One more problem that was happening during all of this was Zeek was having a hard time making their payments to their affiliates, their back office was a mess and support tickets were going unanswered. Combined with all the above, the handwriting was on the wall that Zeek was imploding on itself. I firmly believe that if the SEC/Secret Service had not acted when it did, Zeek would have collapsed on its own by no later than the end of September. Their liabilities were far exceeding their income, and would not have been able to pay much longer. Of course if this happened, no-one who were victims of Zeek would have received a dime of their investment back.
Another cog in the wheel which was not announced at the time it happened was the North Carolina Attorney General had issued a CID to Zeek on July 7. It did not become known to the affiliates until the first week of August when a state credit union was advising its members that Zeek was fraudulent. This news caused a firestorm, and during this turmoil it became known the North Carolina Attorney General had requested information from Zeek. But it was several days later the affiliates found out that the request had been made back on July 7.
Then of course we had the training classes cancelled, then the red carpet event cancelled and then the closure of the office in mid-afternoon culminating in the announcement on August 18 that Zeek had been shut down by the SEC/Secret Service. A press release by the SEC stated the SEC/Secret Service had entered into an Agreement with Paul Burks on turning the company over to the government, the acceptance of the emergency asset freeze of all Zeek assets, Paul Burks consenting without admitting guilt or innocence of the charges filed by the SEC/Secret Service, and finally agreeing to paying a $4 Million Dollar fine.
My only purpose in providing what I believe was the timeline for the SEC/Secret Service action is to demonstrate that it would be impossible to review hundreds of thousands of documents, and financial and electronic records in just a few days. Too many Zeek affiliates think this happened with no warning, no investigation, and without Paul being properly represented by legal counsel. This is not true. The law firms who were representing him were more than capable of dealing with the SEC/Secret Service, and served him well.
Whether I am right or not in my timeline is not important because the most important thing was to shut Zeek down and freezing the assets of Zeek so repayment to the victims of Zeek Rewards would be as much as possible by the appointed receiver.