SPOKANE, Wash. - Several Spokane residents fell victim to an online auction website where you could pay pennies on the dollar for hundred dollar items that the government said was a front for a sophisticated Ponzi scheme.
The Securities and Exchange Commission has announced fraud charges against Zeek Rewards group and frozen its assets.
"It was simple. It wasn't anything difficult," Ponzi scheme victim Joseph Barnes said.
On a fixed income and trying to make it big, Joseph Barnes and his friend, June Robbins, signed up for Zeek Rewards. They paid $10, and then $10 more, and were eventually asked to add new clients and post ads.Zeek Rewards Ponzi scheme
"Get people to come in and buy bids. $10 to get in on the penny auction," Barnes said.
The two attended standing-room only meetings at restaurants in the Spokane Valley and purchased $100 brochures for about $50 citing law firms and stating their company was debt-free.
Company representatives would talk about self-marketing, signing up others below you, and big money.
"There was a lady that called in one night, and she had 94,000 people she had signed up. She was making $250,000 a month," Barnes said.
According to the SEC complaint, however, the company Rex Venture Group was paying out first investors with new investors' money and offering clients investment contracts not approved by the SEC. Money from people like Joseph and June was paying the wealthiest of the bunch.
"They had promised that it wasn't, over and over again, and promised that this wasn't a pyramid, and it wasn't a Ponzi scheme, and that it was something anyone could make money at," June Robbins said.
Robbins and Barnes didn't spend more than $60 each but were ready to spend thousands. Now they're just happy to have any money left at all.
"I had about six or seven people I was getting ready to introduce to it also. I'm glad I didn't," Barnes said.
"Legitimate investments, they ebb and flow. They have peaks and valleys, even with the high-risk ones. You need to be aware, you are not going to get consistently high returns just by handing your money over to somebody," Chelsea Dannen with the Spokane Better Business Bureau said.