Did Zeek Rewards management know about the SEC?
All our critics (are) self-appointed with no standing in the professional community (and are) behaving unprofessionally by acting on false information.
-Gregory Caldwell, “Acting” COO of Zeek Rewards on August 4th, 2012
Whilst much is still currently unclear regarding the specifics of Zeek Rewards CEO Paul Burks’ dealings with the SEC in the lead up to Zeek being shut down, bits and pieces are finally (albeit slowly) starting to trickle out into the public sphere.
With many of Zeek Reward’s executive management holding affiliate accounts to participate in the company’s Ponzi scheme, one of the most pressing queries has been the question of how aware of the SEC investigation were Zeek Rewards corporate executives, if at all.
Knowing full-well that Zeek Rewards was a Ponzi scheme and being aware of the SEC investigation and a resulting shutdown is vastly important, as such knowledge (and the suppression of it) put Zeek’s management in a conflictingly advantageous position as investors.
Whilst regular affiliates continued to re-invest the bulk of their daily ROIs and encourage new investors to come on board, continuing on unawares right until the precise moment Zeek Rewards was shut down, Zeek’s executive management, aware of the SEC situation and what was occurring, could have easily been quietly cashing out as much as possible from their personal affiliate accounts.
Indeed, if you look at the actions of some of Zeek Rewards’ more prominent executive management in the last few months of Zeek Rewards, a distinct pattern emerges.
Former COO Dawn Wright-Olivares all but vanished from the public eye after informing affiliates Zeek Rewards would not be able to pay them unless they “deposited more money” into Zeek’s e-wallet accounts (June 26th).
A week later Zeek Rewards Sales Director Darryle Douglas disappeared off the face of the planet for “personal matters” on July 30th. Such “personal matters” were never elaborated on by the company and following the official announcement, Douglas was never publicly heard from again.
Although not Zeek Rewards corporate, it’s worth noting that around the same time as Wright-Olivares’ and Douglas’ departures into obscurity, Keith Laggos, a paid consultant of Zeek Rewards, claimed that the FTC were going to shut down Zeek Rewards. He also began to promote Lyoness to his Zeek Rewards affiliate downline as a ‘Plan B’.
For his efforts, Laggos was terminated as a paid Zeek Rewards consultant on or around July 24th. To date it remains unclear whether or not Laggos also lost his “$40,000 a month” Zeek Rewards affiliate account.
Three of Zeek Rewards’ previously prominent top public figures went underground within the space of a month. And just under three weeks later, the SEC shut the company down for being a Ponzi scheme.
Hindsight analysis would indicate the witnessing of a typical Ponzi scheme pre-planned exit strategy. With everyone involved appearing to have lawyered up and refuse to make any public statements though, it appears we’re going to have to wait to get any further clarification on the matter.
In the meantime, a recently leaked email from Greg Caldwell certainly suggests that Zeek’s executive management had at least some idea of what was happening.
The email exchange in question occurred between Zeek Rewards COO Gregory Caldwell and Diamond Zeek Rewards affiliate ‘Duane DeFrees’.
On August 17th Zeek Rewards pulled the plug on their Ponzi scheme and on the 18th it was revealed that the SEC had shut them down.
Amidst these events, over a million Zeek Rewards affiliates scrambled to make sense of what was going on. Naturally many were anxious about the future of the daily ROI payments they’d been enjoying from Zeek and sought information from anyone within the company who would speak to them.
One such affiliate, Duane Defrees, reached out to Greg Caldwell (photo right) through his White Hat Solutions ‘web enquiry’ form:
Did you or did you not work to make sure Zeek was not a Ponzi scheme? I do not like to think I was so dupped and caused others to be taken in?
Can you give us any ray of hope here to pass on to our many affliates who tursted you and your imput into Zeek Rewards. Along with many others we still have Faith in first of all God and also in the counsel that seemed to be given by all in this matter.
Thank you for your answer.
I’m not sure exactly when DuFrees initial email was sent, however Caldwell (photo right) wrote back a lengthy reply on August 19th.
In it, Caldwell claims he ‘was not allowed to participate in meetings with the SEC or the attorneys‘. What attorneys Caldwell is referring to is unclear (Paul Burks personal attorneys or Zeek Rewards’ own?), however the key piece of information Caldwell reveals is that he was aware of a dialogue existing between the SEC and Zeek Rewards.
Date wise there’s no indication as to when the SEC began their investigation into Zeek Rewards, with Caldwell only confirming that Zeek Rewards ‘was ultimately shut down but not before the SEC began their investigation into Rex Venture Group‘.
One indication as to the length of the investigation was revealed yesterday by Patrick Pretty, who, through court documents filed by CEO Paul Burks’ attorney, learnt that
Paul R. Burks, the operator of Zeek Rewards, was cooperating with the SEC.
That “period of cooperation” resulted in the production of “hundreds of thousands of documents, including financial records, e-mails, and all manner of electronic files,” according to the filing by Noell P. Tin, an attorney for Burks.
“Hundreds of thousands of documents” passed between Zeek Rewards and the SEC, no doubt forming the basis of their analysis and court filings against the company. Again, when the SEC began investigating Zeek Rewards is unclear but the scope of the investigation is what’s relevant to analysis of whether Zeek’s corporate management knew of it.
Largely fuelled by nonsensical lawsuits filed by Zeek Rewards affiliates claiming the SEC had no idea about Zeek Rewards when they filed their complaint and Troy Dooly’s updates on MLM Helpdesk, it’s being heavily pushed that Paul Burks acted alone in his dealings with the SEC – with this ultimately resulting in a closed-door deal involving a $4 million fine and surrendering of Rex Venture Group (Zeek Rewards’ parent company) to the SEC.
Whilst the former might very well be true (and I’ll give Caldwell and the rest of Zeek Rewards’ management the benefit of the doubt on it), does anybody honestly believe hundreds of thousands of documents were exchanged between Zeek Rewards and the SEC with executive management left completely unaware?
I have no idea if Greg Caldwell had a Zeek Rewards affiliate account but the timing of Dawn Wright-Olivares and Darryle Douglas’ disappearances and Keith Laggos suddenly pushing ‘Plan B’ onto his Zeek downline certainly paint the picture of rats (metaphorically speaking of course) deserting a sinking ship.
Why would they do that unless they’d sniffed something was up? The finer details might have been kept from them but “Ponzi scheme + SEC investigation + requests for hundreds of thousands of Zeek Rewards documents” is an equation anyone even remotely familiar with Zeek should be able to work out. Let alone those running and who were directly involved in the day to day running and management of the scheme.
In his defense, Caldwell claims that it was the “idiots” and “morons” in the Zeek Rewards affiliate pool that not only incited the SEC to investigate Zeek Rewards, but also led to the closure of the company.
I never (got) involved with the compensation plan or the finances of the company. That job was left to the new CFO (also an innocent bystander; there less than a month) and the much respected outside CPA firm.
The compensation plan had been reviewed by no less than six or seven attorneys before I got there. Not one blessed it as perfect nor could they, given the unique nature of the program.
Most of the changes that were suggested were initiated, including those by an SEC attorney. Still other changes were underway and not yet announced.
That said, I know that Paul Burks would have done everything in his power to tweak it or adjust it to conform to any known laws if he had been allowed.
There are a lot of stunned people, including myself and some of the attorneys, that the SEC or anyone would suggest this is a Ponzi scheme. That fact was not litigated and I don’t believe can ever be proven.
More important (sic), had I ever thought the company was doing something illegal, I wouldn’t have been there.
Whether it’s post Ponzi-scheme damage control or sheer ignorance on the behalf of someone who claims to have ‘30 years experience as a licensed private investigator‘ and founder of a company that ‘provides assistance in corporate investigations, security, risk management and compliance assessment‘, I have no idea how Caldwell can claim to be “stunned” that the SEC, upon examination of hundreds of thousands of Zeek Rewards documents, came to the conclusion Zeek Rewards was a Ponzi scheme.
Caldwell attempts to play down his role as COO in the immediate period before Zeek Rewards was shut down, claiming that he
volunteered to take the operational roll as “acting COO” on a very temporary basis and had only held that for less than a month.
I never “got promoted” to COO, which would imply I became an employee of the company.
To take Caldwell at face value here is to play into the linguistic pseudo-compliance that has plagued Zeek Rewards ever since he was brought onboard as a paid compliance consultant.
In an utterly bizarre and completely destructive reflection of the MLM industry’s open willingness to embrace the absurdity of believing that the mere renaming of banning of terminology is what constitutes legal compliance, to deliberate on whether or not Caldwell was indeed Zeek Rewards’ COO is to be sidetracked.
Zeek Rewards put out a press release on July 30th, declaring publicly that
Greg Caldwell has accepted the role of acting COO for RVG where we are confident he brings all of the skills, experience and strengths required to take the RVG operation to the next level.
In accepting this role, it begs utter disbelief that Caldwell, an investigator with 30 years experience, would have blindly signed on directly under Paul Burks as Chief Operating Officer, “acting” or otherwise.
More importantly, it also begs the question as to what authority Greg Caldwell made the very public statement that all Zeek Rewards’ critics were unprofessionally spreading false information with. The statement in and of itself lends to the fact that Caldwell himself would have verified financial information proving Zeek Rewards wasn’t a Ponzi scheme before making such a statement.
One would certainly not expect anything less from someone at the helm of a field of investigators working for a firm that specialises in corporate investigations, security, risk management and compliance assessment. Yet that’s precisely what Caldwell is expecting everyone to swallow.
And just how easy would it have been for Caldwell to conduct the most basic of due diligence on a company he “accepted” an executive management position at?
“How much of the money we take in daily is from affiliates, and how much of this money is then paid out each day to affiliates?”
Paul Burks repeatedly deflected answering this question citing “proprietary information”, but in order to facilitate the running of the business one would certainly imagine this information would be made known upon request to those residing in the upper echelons of the scheme.
To suggest that this thought never crossed Caldwell’s mind, nor was the question raised between Caldwell and Burks prior to Caldwell getting on board and accepting his COO position, leaves me at a complete loss.
Well, at least it did until I read Caldwell’s offered explanation to DeFrees on why the SEC shut Zeek Rewards down:
One of my mantras, when talking to company CEOs is it doesn’t matter if the company has the best compliance department in the world or the most stringent Policies and Procedures, if you don’t know what the field is saying.
In other words, are they using the approved message the company puts out, or have they reinvented the wheel because they think they are smarter and know better than the company (or its attorneys)?
(Caldwell then includes an example of a Zeek Rewards affiliate using investment terminology)
As you can clearly see, this idiot, like so many others, was representing it as an investment.
The entire SEC investigation began because of another moron’s website in which he listed a bunch of companies where people could earn daily “interest” on their “investments”.
This coming week, a Case Management program was ready to be installed so the hundreds of compliance cases per day could be better tracked.
The company spent upwards or $40K on that program alone. Doesn’t much suggest no one cared or was promoting a Ponzi scheme, does it?
I know that Paul Burks would have done everything in his power to tweak it or adjust it to conform to any known laws if he had been allowed.
The company had numerous people “scrubbing” the Internet every day and getting Affiliate websites and blogs taken down for those who were portraying the opportunity for something other than what it was.
As fast as they were taken down, new ones sprung up, all talking about “investments” and compounding interest on the investments.
Thus when ANY regulatory body gets a whiff of a company, the first thing they do is search the internet. Guess what they found?
And, now you see how fast affiliates can get a company taken down by misrepresenting the opportunity.
As per Greg Caldwell, the SEC didn’t shut Zeek Rewards down because Paul Burks sat in his office inventing the daily ROI percentage paid out to affiliates, or that mechanically Zeek Rewards operated like an investment scheme with 90% of the money coming into Zeek Rewards being invested affiliate money, and 98% being paid out in daily ROIs also being invested affiliate money.
No, Zeek Rewards was shut down because “idiots” and “morons” were running around the internet referring to the investment opportunity as well, an investment.
And Caldwell wasn’t an employee of Zeek Rewards because, you see, he “accepted” the position of COO as opposed to having been promoted as an existing employee of the company.
This is the idiotic linguistic psuedo-compliance battle that has raged between Zeek Rewards affiliates and its critics on BehindMLM over tens of articles and now thousands of comments.
Fuelled by ringleaders like Caldwell enforcing the “a Ponzi scheme is not a Ponzi scheme if nobody refers to it as such” angle, ultimately and as repeatedly predicted what you call your Ponzi scheme doesn’t matter. What matters is whether or not you are indeed running a Ponzi scheme.
And that, Paul Burks through Zeek Rewards was.
Just like we were supposed to believe that Zeek Rewards wasn’t a Ponzi investment scheme because affiliates weren’t able to use investment terminology, so too are we now expected to believe the Caldwell and the rest of Zeek Rewards management had no idea what was going down between Burks and the SEC.
Hundreds of thousands of documents passed between the two entities, Caldwell claims he wasn’t allowed to sit in on SEC meetings and one by one, executive management slipped off quietly into the abyss.
Believe me when I say it is with no pleasure that I point out the fallacies of the multitude of MLM “authority figures” Zeek Rewards had on their payroll. Looking forward I can only hope that in documenting the catastrophic engulfment of stupidity that has gripped the throats of such a large cross-section of the MLM industry over the last two years, that the industry of linguistic compliance and wordsmithing is truly an era left behind us.
No matter who you hire, no matter what experts you get to sign off on your compensation plan and business model and no matter what your members refer to your business as, at the end of the day all that matters is the mathematical mechanics of your business. Or in layman’s terms, the flow of money.
Practically speaking in the truest sense of the words Zeek Rewards was a Ponzi scheme, with the company and its money flow having been thoroughly discussed and analysed long before the SEC got involved and shut them down.
I personally hope it’s a long time before I find myself having to enter into discussions with people to dismiss the idea that what you refer to something defines it, rather than what it is itself.
And the sooner the Greg Caldwells, the Keith Laggos’ and all the MLM attorneys, consultants and trainers who willingly participated in this nonsense and signed off on it (you know who you are) acknowledge and accept this, the better for the MLM industry at large.
Footnote: The email exchange cited in this article between Greg Caldwell and Duane DeFrees was first published on BehindMLM by reader ‘Getting Educated’ on September 1st.