A jury expected to be selected Tuesday will have to decide whether Paul Burks intended to mislead investors five years ago with fanciful promises of percent returns at a time the economy limped out of the Great Recession.
Burks is charged with mail fraud, wire fraud and conspiracy to commit tax fraud in one of the biggest cases of the past decade involving alleged Ponzi schemes.
The trial could run four weeks. From a small, brick building in Lexington, North Carolina, Burks ran an online auction site. To drive customers to his auction site, Burks in launched a complicated online vehicle called ZeekRewards.
It offered people who invested money, promoted the company on other websites and recruited other participants a share of auction profits. Some mortgaged homes to raise their investment. Montana requires multilevel marketing companies to register. But ZeekRewards didn't submit any paperwork — even after warnings, said Luke Hamilton, a spokesman for the attorney general's office.
In August, a North Carolina employees' credit union warned customers not to invest in ZeekRewards because it was a "fraudulent company. In a Nov. The attorney general's office can ask a judge to shut down a business because of deceptive trade practices. But it forwarded Tidderington's complaint to the secretary of state's office because it looked like it might involve securities. The secretary of state's office, however, declined to take action because it didn't believe it had the jurisdiction, spokeswoman Liz Proctor said.
I said, 'Here's a snake. Here's the gun. Here's the bullets. Shoot the snake. Over the next seven months, the attorney general's office received nearly a dozen more complaints. But it wasn't until July 6 that it issued an order giving Burks until the end of the month to turn over all Zeek-related documents.
He missed that deadline. Kevin Anderson, senior deputy attorney general for consumer protection, insisted his agency correctly handled the case, saying his office receives thousands of complaints a year. The SEC received similar complaints during the same period, but the agency didn't begin its investigation until the summer.
SEC spokeswoman Christine D'Amico declined to comment on the investigation, except to say the agency took action "as soon as we believed we had sufficient evidence to obtain an emergency court order to halt the fraud. Hundreds of millions were paid out to investors. Just how much is missing? He doesn't know. Myers said the community is still recovering — but the wounds are deep.
People are wondering why investigators didn't act more quickly and why no one, including Burks, has been charged. Facebook Twitter Email.
During these events, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. They also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.
Burks also failed to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, for tax year , Burks issued fraudulent IRS Forms s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.
Burks will be ordered to report to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility.
All federal sentences are served without the possibility of parole. Olivares, were previously sentenced to 90 and 24 months in prison and three years of supervised release, respectively, for their involvement in the scheme.
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