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Buildings and property once owned by Rex Venture Group (the parent company of Zeek Rewards) will be up for auction sometime in the next 60 days.

For those who haven’t followed the Zeekler story, you can learn more here and here. The quick version goes something like this:

In August 2012, the Securities and Exchange Commission froze all assets of Zeekler.com, an online penny auction that attracted over 1 million investors. The SEC accused Zeek’s founder, Paul Burks, of operating a $600,000,000 Ponzi scheme.

At the time, Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement, said:

“[Zeekler’s] obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors…”

The SEC claimed that 98 percent of Zeek Rewards’ total income was comprised of funds received from new investors.

Following the fallout, Burks agreed to pay a $4,000,000 fine. Additionally, a court-appointed receiver was tasked with paying back the many investors who poured money into the Zeekler pot. There were 50,000 investors in North Carolina alone.

Many of those investors are still waiting for their compensation.

Ken Bell, the federal court-appointed receiver, recently got the green light to auction [obviously there’s some irony here] Zeekler assets including:

  • The former Zeekler warehouse
  • The company’s main office at 803 W. Center St., Lexington, NC
  • More than 1,200 items ranging from office furniture to country music and entertainment memorabilia
  • Zeekler promotional items [for those who enjoy salt in their wound]

Bell said selling the property at auction is the best option.

“The proposed sale at auction will result in additional cash being deposited in the receivership estate’s accounts and will increase the overall recovery for claimants…”

According to a recent article at the Dispatch, Bell and his team have recovered approximately $325,000,000 for Zeek’s investors. $550,000,000 worth of claims were filed through the official claim process that closed in September 2013.

The Zeekler story is a sad one, and many penny auction skeptics cited their downfall as just one more example of the dangers of penny auctions. However, critics reached that conclusion somewhat erroneously.

Zeekler set itself apart from the typical penny auction model by incorporating a multilevel marketing aspect into their business model. At it’s most basic level, the ZeekRewards program promised willing investors a share of the penny auction’s profits. As an investor, you had to buy bids [which you would then sell or give away to others], promote Zeekler on other websites [think spam], and recruit other investors [to encourage additional growth]. If you were aggressive in these efforts, you were given profit points and could earn payouts over time. The problem resulted when ZeekRewards’ potential payouts were greater than its profits.

All that to say, this business model was a bit different from legitimate penny auctions such as Beezid and QuiBids.

Those interested in the upcoming Zeekler asset auction should contact the Iron Horse Auction Co. of Rockingham, NC or visit ironhorseauction.com.