SEC shuts down $600 million Ponzi scheme in Lexington

A $600 million Lexington-based online Ponzi scheme on the verge of collapse was shut down by the Securities and Exchange Commission on Friday, the regulator said, and many investors will be able to recoup their money from assets now frozen.

ZeekRewards.com, run by online marketer Paul Burks and his Rex Venture Group allegedly raised money from more than a million people around the world, promising large payouts in a profit sharing program. The company said it was making money buying investment contracts.

But the company lied about how profitable it was, and was making cash payouts with new investors' money, the SEC said.

“ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing," said Stephen Cohen, associate director in the SEC's enforcement division. "In reality, their cash was just going to the earlier investor.”

In July, the company brought in $162 million and paid out $160 million, buoyed by investors who put their money back in the program instead of cashing out.

In total, ZeekRewards paid out $375 million and had $225 million in investor money still on hand. That money is now frozen, the SEC said.

Burks had taken out several million for himself and paid about $1 million to family members.

Burks will settle the charges without admitting or denying guilt, the SEC said. He will pay a $4 million penalty.

The SEC filed its complaint in the federal court in Charlotte. The court will handle distribution of the remaining money to investors.

Lexington is about an hour northeast of Charlotte, in Davidson County.