Early yesterday morning, hot on the heels of ex-Zeek Rewards paid consultant Keith Laggos warning that the FTC has ’put out letters to the top big four banks asking them not to open up accounts for penny auctions‘, a report came in from a Zeek Rewards affiliate claiming that various affiliates in their downline had been contacted by the North Carolina State Employee’s Credit Union (NCSECU):
I had one of my downline call me yesterday and tell me that the (NC) State Credit Union called his wife and told her (since she got her money order there) that they were giving her a call because it had come to their attention that Rex Venture Group, LLC was fraudulent.
His wife went on to tell the bank employee why Zeekrewards is not fraudulent! Yearly 1099, Compliance Testing, can not be a pyramid in the way it works. And the bank employee said she had no idea how Zeekrewards truly worked.
Then tonight another downline called me worried because (NC) State Credit Union had apparently gotten a letter stating Rex Venture Group, LLC is fraudulent and they wanted to pass that on to their customers.
The above was published on Zeek Rewards’ Facebook page on Thursday but has since been deleted by the company.
NCSECU operate out of North Carolina (where Zeek Rewards is based) and state they are a ‘not-for-profit financial cooperative owned by its members, founded June 4, 1937 with 17 members and $437 in assets’.
As of March 2012, SECU serves 1.7 million members with just under $25 billion in assets through 242 branches, 1,100+ ATMs, six Contact Centers.
Naturally when an official banking institution starts calling up and warning their customers that a company is fraudulent, twice no less, people take notice and want to investigate for themselves.
In an attempt to verify the Zeek Rewards affiliate’s claims above, BehindMLM readers contacted NCSECU in an attempt to get some further clarification. Namely who was advising the credit union Rex Ventures and Zeek Rewards were fraudulent and what criteria was used to arrive at this conclusion.
Reader ‘Al’ sent the following email off to NCSECU,
Is it true that your credit union believes that Zeek Rewards, based in Lexington, NC, may be a massive ponzi scheme and is alerting its customers to exercise caution?
and received the following reply:
Thank you for your inquiry. That is the latest information we have about Zeek Rewards. Thank you.
Note that Al explicitly referred to Zeek Rewards as a ‘Ponzi scheme’, with the credit union responding that indeed that was the latest information they’d received on the company. From who NCSECU had received this information though still remained a mystery.
At around this time as this was happening, the Zeek Rewards affiliate who made the original now deleted post on Facebook made a further clarification on the call they’d received from their downline:
The downline whose wife was contacted by the bank teller said the bank had received an email regarding this situation.
Again, exactly who had sent the email warning that Zeek Rewards was a Ponzi scheme to NCSECU was not divulged.
At this point I sent off my own correspondence to Leigh Brady, NCSECU’s media contact representative, seeking my own clarification on the matter.
While I waited for a reply, BehindMLM reader Mr. Wallace got on the phone and spoke to ‘Cory’ from ‘ NC Credit Unions Risk Managment‘. Cory
did verify they (NCSECU) are telling there customers to be aware of Rex Ventures.
He would not tell me if they came to this on there own or if it came from AG or FTC.
At this point we had no less than four instances of communications with NCSECU indicating that NCSECU were warning their customers about Rex Ventures and Zeek Rewards.
The reply I then received from NCSECU’s media contact representative however conflicted with all four of these accounts:
No – we have not advised our members that Rex Venture Group is fraudulent. We do, however, recommend to members that they always practice due diligence in investor education.
Curious as to the stark difference in position between NCSECU’s media contact representative and their other staff, I sent the following in reply,
A Cory from NC Credit Unions Risk Managment has advised that NCSECU are “warning customers to be aware of Rex Ventures” (he wouldn’t advise however who had provided NCSECU this information).
Additionally I’ve been in contact with a Zeek Rewards affiliate who claims NCSECU called his wife up to warn and advise that NCSECU had information that led them to believe Rex Ventures (Zeek Rewards) was fraudulent. His wife then
Is it possible to clarify this information as it seems to differ from what you’ve told me.
Shortly thereafter I received the following reply:
Our Risk Management Group did have a call this morning. Again, SECU has not indicated the Rex Ventures is fraudulent.
SECU is simply asking its members to be vigilant in their due diligence of Rex Ventures.
Stopping short of stating Rex Ventures and Zeek Rewards were a Ponzi scheme and fraudulent as others had been warned, Brady nonetheless confirmed that NCSECU were indeed warning their members about Rex Ventures.
Whether or not NCSECU warn their members about dealings with all companies or are specifically targeting Zeek Rewards and Rex Ventures is currently unclear.
Twenty minutes later after I received my final clarification response from NCSECU, BehindMLM reader ‘Brad’ shared his own experience with NCSECU:
just got off the phone with a representative from the NC State Employees’ Credit Union and he did confirm that they are encouraging members to be careful about Zeek Rewards because Zeek is possibly fraudulent.
The rep answered the questions directly and provided very limited commentary or insight.
I kept pressing him for additional information such as how the NC SECU came to this decision, but he did not say except they think Zeek Rewards is possibly fraudulent.
Completely different to the reply I received from the media contact representative and again confirming NCSECU’s suspicions about Zeek Rewards and Rex Ventures.
Brad also sent in an email to NCSECU,
I have had a few Zeek Reward affiliates approach me to join their lucrative company. However, I have had some other friends tell me that the North Carolina State Employees’ Credit Union, and possibly other financial intermediaries, believe that Zeek Rewards is fraudulent.
Is that the NC SECU position on Zeek Rewards or are the people who told me this misinformed? Is Zeek Rewards a fraudulent company? I cannot afford to lose money and impact my securities licenses if it is.
Thank you for any assistance.
and received the following reply from ‘Jeremy Pittman’, curiously citing Ripoff Report and the Better Business Bureau:
Zeek Rewards is indeed a fraudulent company. Please refrain from entering into any type of business with this company as there have been several claims of fraudulent activity reported with Zeek Rewards.
Numerous reports of fraud have been given to the Better Business Bureau and other reports of fraud are listed on scam reporting websites. Please visit the links below to familiarize yourself with the company and some of the things that have been said about them.
Thank you for your inquiry and have a great day!
Language wise, Pittman’s reply was the strongest against Zeek Rewards, specifically warning Brad to ‘refrain from entering into any type of business with‘ Zeek Rewards.
With the exception of my own correspondence with NCSECU’s media contact, who confirmed that NCSECU were warning people but not that NCSECU believed Zeek Rewards and Rex Ventures were fraudulent, all other attempts to contact NCSECU by readers since the original Facebook posting have confirmed that at the very least the North Carolina State Employee’s Credit Union are warning their members about Zeek Rewards and Rex Ventures.
At worst, they’ve ‘received information‘ (an email from persons unknown) indicating Zeek Rewards is a Ponzi scheme and are urging members to ‘refrain from entering into any type of business‘ with either Zeek or Rex.
Just to reiterate, it’s still not known who warned NCSECU and what criteria was used to verify Zeek Rewards as a Ponzi scheme and Rex Ventures as fraudulent. Should that information come to light I’ll be sure to update this article.
In the meantime looking at the bigger picture, is it possible that Keith Laggos’ predictions have already come into fruition or are starting to?
I’m of course not privy to the inner workings of banks and credit unions, but I’d imagine it would only be after a thorough investigation and consultation with their legal teams that they’d be willing to state and confirm that they believe a company is a Ponzi scheme and fraudulent.
At this stage I’m unaware of any other banks or credit unions (in North Carolina or otherwise) warning their members against Zeek and Rex, however I have read numerous accounts of banks calling up customers to check whether or not credit card charges from Zeek Rewards’ offshore processors are legit or not.
With allegedly millions of affiliates participating in Zeek Rewards, no doubt the volume of these calls going out might certainly have raised a few eyebrows in the banking sector.
Naturally I’ll update the article if any further developments occur and in the meantime anyone who gets any further information from NCSECU regarding the situation is welcome to share it with us in a comment below.
With uncertainty still looming over NCSECU’s source warning them that Zeek Rewards is a Ponzi and Rex Ventures fraudulent, this is definitely one of the more stranger stories surrounding Zeek Rewards I’ve thus far covered. Hopefully with time we can get to the bottom of it and find out exactly what’s going on.
One would hope it’d take much more than employees reading some reports over at Ripoff Report, the Better Business Bureau and “scam reporting websites” for them to start proactively warning their members against doing business with a company.
Update 4th August, 2012 – Brad has received the following clarification from NCSECU, quoting one of their senior Vice-Presidents:
It has come to our attention that our responses about Zeek Rewards are being used to present arguments concerning the company.
We have officially taken the position that NCSECU is not confirming our denying fraud, but that we’ve received several reports of fraud. One of our internal departments has conducted research on the company and received several negative findings.
It is the credit union’s stance that we should always try to keep our members’ best interests at heart. The information is not to bash or incriminate Zeek Rewards, but merely to inform our membership of the potential dangers of investing in their company.
One of our Senior Vice Presidents had the following to say about the company:
“SECU has not indicated that Rex Venture Group is fraudulent. SECU recommends to members that they always conduct due diligence in investor education, and we are advising members to conduct due diligence of Rex Venture Group.
Additionally, SECU recommends that members contact the NC Attorney General’s office with consumer complaints or the NC Secretary of State’s office with any investor concerns. ”
Still no clarification as to who sent NCSECU the “reports of fraud” they’ve received or what ‘negative findings’ their own investigation revealed.
Despite what several employees have stated, NCSECU aren’t confirming or denying fraud but are warning members about the ‘potential dangers of investing in’ Zeek Rewards, based on ‘negative findings‘ found when NCSECU conducted their own research into Zeek and Rex Ventures.
I think that speaks for itself. A third-party credit union has received information, conducted their own investigation and concluded that Zeek Rewards is worth warning their members over.
When was the last time your bank called you up to warn you about money you were going to invest into a company?
Update August 4th, 2012 – Zeek Rewards is claiming to have contacted NCSECU, who they state were “slandering” the company with information that was ‘unfavorable to Zeek Rewards and false‘.
Newly appointed COO Greg Caldwell claims he
called the head of Risk Management to track down the origin of the memo.
Upon being discovered, the person responsible admitted he really didn’t know anything about the laws regarding direct selling or how to identify a legitimate network marketing company or opportunity.
This indicates that the memo originated internally and differs from NCSECU’s initial claims that they’d “received an email” indicating that Zeek Rewards is fraudulent.
Caldwell claims Zeek Rewards has “intervened” and ‘shut down the misinformation at its source‘, crediting Zeek Reward’s attorneys for “taking action”. What that means in a practical sense and whether or not NCSECU will continue to warn members about investing in Zeek Rewards is unclear.
Caldwell advises Zeek Rewards affiliates that they are ‘their own worst enemy‘, urging them not to publish any rumours or allegations about the company sourced from a third-party.
Caldwell closes by warning that any affiliates found doing so ‘will be held responsible‘.