This past week, the Securities and Exchange Commission closed ZeekRewards on fraud charges. An emergency asset freeze was placed on $600 million to stop the alleged Ponzi scheme on the verge of collapse. The emergency action assures that victims can recoup more of their money and potentially avoid devastating losses.
The North Carolina-based company, also under the name zeekrewards.com, Zeekler, and Rex Ventures Group, has investors in the Snake River Region. People buying into ZeekRewards are asked to drive bidders to penny auctions in order to get a share of the proceeds.
Ponzi and pyramid schemes promise huge profits and use money provided by later investors to pay off earlier investors. Eventually the scheme collapses and investors lose money.
In all cases, investors need to watch out for promises of unrealistic returns. Unfortunately, seniors are targeted, so its important to learn the signs of fraudulent activity.
Heres a list of other activities:
Boiler rooms. Scammers call from telephone banks (boiler rooms) to promote investments like penny stocks (low-priced or micro-cap stocks) that may be worthless or that may be offered at inflated prices. To avoid such scams, check out the broker, get a written prospectus, and ask questions. Some of these callers are brokers with disciplinary records or have even had ties to organized crime.
Pump-and-dump penny stocks. The con artist buys up a quantity of penny stocks and then falsely promotes the stock to investors through phony hot tips in websites, emails, voice messages and other communications. After the stock price has been driven up (the pump), the promoter then sells his or her shares (the dump). The stock price crashes and investors lose their money.
Exotic or offshore foreign investments. People have lost big sums buying shares in ostrich farms, oil and gas ventures, precious metals, mines, or unregistered foreign investments. Some of these investments are promoted as a way to avoid income tax. Buy only legitimate investments and stick with mainstream investment channels. For example, real international stocks can be purchased through mutual funds. Avoid adventures when investing your money. Go ahead, be boring.
Promissory notes. These are investments that offer above-market fixed returns. While some are legitimate, some are fraudulent and worthless. Watch out for promises of unrealistically high returns.
Fraudulent bank or currency investments. Scammers promise very high returns for investing in these. In the past, a con artist would call this a prime bank investment and mention foreign banks that might not exist. More recently, this has been called a risk-free guaranteed high yield investment or some similar name, and banks are not mentioned as often.
Advance-fee stock-purchase scams. Con artists contact investors and offer an unrealistically high price for a stock or other investment. To ensure the sale, the investor is asked to pay a large advance sum as a deposit or transaction fee. Its a scam the purchase does not happen, and the investor loses the advance fee.
Robb Hicken: 947-2115