In August 2012, the Securities and Exchange Commission froze the assets of North Carolina-based company Rex Venture Group to investigate allegations that the company was illegally selling securities. The company operated ZeekRewards, a multi-level marketing operation, and Zeekster.com, a penny auction site, along with other companies. The SEC may be called in to investigate business disputes when companies are accused of violating federal law.
The SEC alleges that money from new investors was used to pay the old investors, making the system a type of pyramid scheme. The SEC believes that the scheme was worth approximately $600 million. The number could actually be as high as $800 million. The SEC continues to investigate to determine how much money was invested and where it went. The company’s owner agreed to pay a $4 million fine and to help the SEC in getting back some of the money that was paid to earlier investors.
A pyramid scheme is only able to operate where there is an unlimited supply of new investors. Eventually, the scheme runs out of money and collapses. New investors lose everything. These investments or schemes are illegal under federal law. When a pyramid scheme collapses, the SEC has the ability to set aside monetary transfers made to those who bought in early as fraudulent transfers. Monies reclaimed are then pooled and shared with all who participated.
People in North Carolina who lose their money to pyramid schemes may wish to pursue legal action and make claims against the suspected companies to recover money that may have been taken under false pretenses. These victims of pyramid schemes may benefit from speaking with experienced business litigation attorneys who may clarify the victims’ rights and options.
Source: Boston.com, “$312 million recovered so far in NC Ponzi scheme,” Mitch Weiss, March 1, 2013