SEC Shuts Down $600 Million Ponzi

[flyingpylon]

Anyone familiar with this case (ZeekRewards.com)?  It's likely to be the largest Ponzi scheme in US history by the number of victims (1 million).

http://sec.gov/news/press/2012/2012-160.htm

I'm posting about it mostly because when it was initially presented to me by a family member, my experience with the PP allowed me to resist the initial temptation to make a quick buck and take a step back to do a lot of research.  Not only did I not get involved but I decided to share my concerns with other family members, for which I took a fair amount of heat and ridicule.

Any other stories about this or other "get rich quick" schemes, and how the philosophy behind the PP might have helped you?

[dualstow]

  Not only did I not get involved but I decided to share my concerns with other family members, for which I took a fair amount of heat and ridicule.

Are you now getting your due praise?

[flyingpylon]

Are you now getting your due praise?

Ha! Not exactly... "denial" ain't just a river in Egypt! I suspect it will be a while, if ever.  This one really seems to have brainwashed many of its supporters, it's almost cult-like.

[MediumTex]

The PP provides a nice framework for an "always-on" type of skepticism.

When skepticism is mated with humility, a person becomes hard to bamboozle, snooker or hornswoggle.

[flyingpylon]

The PP provides a nice framework for an "always-on" type of skepticism.

Yes, this is it exactly.  I think my new motto is "Distrust, but verify."

[dualstow]

Are you now getting your due praise?

Ha! Not exactly... "denial" ain't just a river in Egypt! I suspect it will be a while, if ever.  This one really seems to have brainwashed many of its supporters, it's almost cult-like.

There was an episode of This American Life (I think) on the Bernie Madoff scandal & fallout. It featured a guy whose brother-in-law hated him because he convinced his sister, the in-law's wife, to diversify out of 100% invested in Madoff. "All I'm saying is diversify." He was hated for years, decades even. Suddenly, when the scandal hit, he was the hero of the family. "You're a genius!" "All I was saying was diversify", he replied. :-)

[craigr]

The PP provides a nice framework for an "always-on" type of skepticism.

When skepticism is mated with humility, a person becomes hard to bamboozle, snooker or hornswoggle.

Yep. I firmly believe: "You can't cheat an honest man."

Many good cons play on the victim's desire, deep down, to get something that they probably believe may not be totally legit. I suspect that many of Madoff's victims thought they were getting market beating returns due, partly, to insider info they thought Madoff was getting with a wink and a nod.

It's my hope someone following the Permanent Portfolio will immediately become suspicious whenever someone is promising market beating returns and easy riches. This particular deal from the SEC release reeked of fraud from top to bottom.

[flyingpylon]

From the article:

Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.

*Sigh*

I suppose this is par for the course.

While that is true (and I agree with your sentiment), my understanding is that the SEC action is a civil action that just shuts the business down and freezes assets.  It gives other agencies the time to sift through all of the data to bring criminal charges later.  I suspect this thing is far from over, though it may take years to fully resolve it.

[MachineGhost]

While that is true (and I agree with your sentiment), my understanding is that the SEC action is a civil action that just shuts the business down and freezes assets.  It gives other agencies the time to sift through all of the data to bring criminal charges later.  I suspect this thing is far from over, though it may take years to fully resolve it.

The SEC provided the usual hyperbolic claims in press releases or media stories when it does its typical "guilty until proven innocent" shut down.  I took a look at ZeekRewards last year as to the possbility of getting involved with it it as the returns seemed quite good.  My big objection to it was that it was quite simply tacky.  Selling funny-money to be applied to penny auctions that have the appearance of lower prices than when priced in USD seemed unethical to me.  I did not think there was an issue with the compensation plan as there was funny-money being sold and fees earned on the penny auctions that would be paid out pro-rata to affiliates.  However, I could not reconcile why so many customers would be so guillible into participating in sleight-of-hand auctions rather than eBay.  I get the same wonder when I see infomercials for penny auction sites on TV.

[flyingpylon]

The SEC provided the usual hyperbolic claims in press releases or media stories when it does its typical "guilty until proven innocent" shut down.  I took a look at ZeekRewards last year as to the possbility of getting involved with it it as the returns seemed quite good.  My big objection to it was that it was quite simply tacky.  Selling funny-money to be applied to penny auctions that have the appearance of lower prices than when priced in USD seemed unethical to me.  I did not think there was an issue with the compensation plan as there was funny-money being sold and fees earned on the penny auctions that would be paid out pro-rata to affiliates.  However, I could not reconcile why so many customers would be so guillible into participating in sleight-of-hand auctions rather than eBay.  I get the same wonder when I see infomercials for penny auction sites on TV.

1.5% daily ROI? Yeah, I'd say that was "quite good".  Did you really think that was possible somehow?

[MachineGhost]

1.5% daily ROI? Yeah, I'd say that was "quite good".  Did you really think that was possible somehow?

I was thinking in terms of the monthly income being earned which was decent.  If the ROI was 1.5% a day, I must have missed that hallmark of a Ponzi.  I really didn't care to dig that deep into it.