LEXINGTON, N.C. (AP) — In the hardware store on SouthMain Street, the owner pulled Caron Myers
aside to tell her about thebest thing to happen in years to this once-thriving furniture andtextile town.Did
she hear about the online company ZeekRewards?For a small investment, she could make a fortune. He had
invested. Sohad his grandsons. And so were more and more people in Lexington,including doctors, lawyers and
accountants.Skeptical at first,Myers drove a few blocks to the company’s one-story, red-brick officeand
spotted a line of people circling the building. She was sold, andplunked down several thousand dollars. But
months later, Myers, likehundreds of thousands of others, discovered the truth: ZeekRewards was
ascam."I was duped," Meyer said. "We trusted this man. The community is still in
shock."Authoritiessay owner Paul Burks was the mastermind of a $600 million Ponzi scheme —one of the
biggest in U.S. history — that attracted 1 millioninvestors, including nearly 50,000 in North Carolina. Many
wererecruited by friends and family in Lexington, a quintessential smalltown where neighbors look out for
each other.But what investorsdidn’t know was that regulators had received nearly a dozen complaintsabout
ZeekRewards and the related site Zeekler.com, but failed to takeaction for months, leaving the company free
to recruit tens of thousandsof new victims.The Securities and Exchange Commission, whichclosed the operation
Aug. 17, said Burks was selling securities without alicense. The Ponzi scheme was using money from new
investors to pay theearlier ones.Burks has agreed to pay a $4 million penalty andcooperate with a federal
court-appointed receiver trying to recoverhundreds of millions of dollars.Investigators say Burks, a former
nursing home magician, siphoned millions for his personal use. But he has not been charged.Inhis first
public comments, Burks told The Associated Press he couldn’tdiscuss details because of lawsuits by victims
trying to recoup money."Everything will come out in time," said Burks, 66, standing in the doorway
of his home.Asked if he had anything to say to victims, he shook his head."I never told anyone to
invest more money than they could afford," Burks snapped. "I didn’t tell them to do that.
Never."He said if they lost money, "it’s their fault. Not mine. Don’t blame me."ButCal
Cunningham, a former prosecutor representing investors in alawsuit, slammed Burks — and regulators for
taking so long to act."It’swhy we need a full hearing on what happened in a court of law — whetherthat
be our civil case or a criminal proceeding. A lot of people werehurt," he said.____Burks started
Zeekler in early 2010 asan online penny auction site. His business experience included nearlyfour decades in
multilevel marketing programs — such as Amway —including failed attempts to launch similar businesses of his
own.Inpenny auctions, consumers compete to pay pennies on the dollar for namebrand products such as iPads.
Each bid costs as much as $1, soparticipating can become expensive and the sites can earn nice profitswhen
multiple users bid against each other.In January 2011, heincorporated aspects of multilevel marketing into
the business when helaunched ZeekRewards. The program offered a share of the penny auction’sprofits to
people who invested money, promoted the company on otherwebsites and recruited other participants.Under a
complicated formula,investors were issued "profit points" that grew every day.Investmentswere
capped at $10,000, but people could invest on behalf of theirspouses, children or other relatives. Some
mortgaged homes to raisetheir investment.At first, ZeekRewards complied when investorssought to cash out.
And that became the best ad of all: happy investorswith their checks in Facebook photos.People who didn’t
trust themail traveled long distances to drop off checks at the cramped officebuilding where security guards
allowed only seven inside at a time.Employees collected money and wrote out receipts at the office
clutteredwith dozens of plastic mail bins stuffed with check-filled envelopes.To withdraw money, investors
filed an online request — or called — andthen had to wait for a check.By the end of 2011, it seemed
likeeverybody in Lexington was talking about ZeekRewards. Many saw it as away to make extra cash to pay
bills or help family."No one was in it to get rich," said Mary Bell, a 75-year-old seamstress from
Lexington who scraped together money to invest.SarahChavez wanted extra money for her daughter’s frequent
hospital visitsfor leukemia. Her husband worked in a factory, and they invested $7,000."It’s hard to
believe in something like that. But everyone told us it was a sure thing," she said.Burks mostly kept
to himself, and few locals knew anything about the quiet, balding man with thick glasses.Inthe 1980s and
early 1990s, the Shreveport, La., native toured nursinghomes in the South as a magician with country singer
David Houston.Burks moved to Lexington in the early 1990s because his wife was fromthe area.In 2000, Burks
ran for the state House as a Libertarian, but he collected only 330 votes.Then he became a local
celebrity.Mostafternoons, he ate lunch at the same downtown restaurant with anentourage of managers.
Conference calls with investors were posted onYouTube. He produced glossy brochures touting the
company."Inaddition to the mind-blowing savings, you can create more wealth thanyou have ever thought
possible with ZeekRewards’ geometricallyprogressive matric compensation plan," the brochure said.Burks
also hired some of the industry’s top attorneys and analysts to promote his company.Thepublicity paid off.
When the Association of Network MarketingProfessionals held its annual convention in March 2012, it
calledZeekRewards the model of legal compliance.___But behindthe scenes, there were troubling signs,
according to documents, companyemails and consumer complaints reviewed by the AP.In early June,the state of
Montana gave ZeekRewards the boot. Montana requiresmultilevel marketing companies to register. But
ZeekRewards didn’tsubmit any paperwork — even after warnings, said Luke Hamilton, aspokesman for the
attorney general’s office."We started getting a lot of complaints," he said.InAugust, a North
Carolina employees’ credit union warned customers notto invest in ZeekRewards because it was a
"fraudulent company."But regulators received complaints long before then.Ina Nov. 23, 2011,
complaint filed with the North Carolina AttorneyGeneral’s office, Wayne Tidderington of Florida called
ZeekRewards an"illegal" Ponzi scheme. He said a relative had invested $8,000 and thecompany
guaranteed a return of 125 percent every 90 days.Theattorney general’s office can ask a judge to shut down a
businessbecause of deceptive trade practices. But it forwarded Tidderington’scomplaint to the secretary of
state’s office because it looked like itmight involve securities. The secretary of state’s office,
however,declined to take action because it didn’t believe it had thejurisdiction, spokeswoman Liz Proctor
said.The complaint died."Iput it all together," Tidderington told the AP. "I gave them
theroadmap. I said, ‘Here’s a snake. Here’s the gun. Here’s the bullets.Shoot the snake.’ But they ignored
me."Over the next seven months, the attorney general’s office received nearly a dozen more
complaints.Butit wasn’t until July 6 that it issued an order giving Burks until theend of the month to turn
over all Zeek-related documents. He missed thatdeadline.Kevin Anderson, senior deputy attorney general
forconsumer protection, insisted his agency correctly handled the case,saying his office receives thousands
of complaints a year."We have to have more concrete evidence than a couple of consumer complaints
before we go to court," he said.The SEC received similar complaints during the same period, but the
agency didn’t begin its investigation until the summer.SECspokeswoman Christine D’Amico declined to comment
on the investigation,except to say the agency took action "as soon as we believed we hadsufficient
evidence to obtain an emergency court order to halt thefraud."___Months later, people in Lexington are
wondering what’s next.KennethBell, the court-appointed receiver, said ZeekRewards may have taken in$800
million. So far, he’s recovered $312 million. Hundreds of millionswere paid out to investors. Just how much
is missing? He doesn’t know.Myerssaid the community is still recovering — but the wounds are deep.People are
wondering why investigators didn’t act more quickly and whyno one, including Burks, has been
charged."There are thousandsand thousands of victims who might not have lost a penny had thegovernment
intervened more quickly," she said.Copyright 2013 The Associated Press.