Counterargument
This is a Line by line rebuttal of the SEC complaint against ZeekReward.
(Courtesy of http://investamerica.biz/)
I hope there is some politician out there with the nerve to fight the SEC and make a VERY big name for their self. You will definitely have the backing of a very large group of people in the order of millions.
Below is a line by line rebuttal of the SEC complaint. If numbers are skipped the statement is true or was addressed redundantly through the document.
The complaint can be found at:
http://www.sec.gov/news/press/2012/2012-160.htm
SUMMARY OF ALLEGATIONS
1. The SEC claims the Bids were unregistered securities. Securities are like stocks and hold a value based on the potential value of a company or entity. The value of securities are directly tied to the success or failure of the entity. They are like legal tender in that they can be used and sold with a face value. In fact Bids are like cookies for the girl scouts. They are a specific product that has no value outside the use as a bid in the penny auction of the specific company. There is no guarantee and in fact bids expired after 30 days if not used. Expired bids in effect created the profit margin for the company just like cookies that were purchased but expired due to age.
Also the SEC claims zeek rewards was a ponzi scheme. A Ponzi scheme is solely dependent on the timing and position of an individual to prosper. In fact most people that joined even in the beginning never made an income at all where some of the later members via their effort created successful incomes. In addition, most affiliates after time purchased bids months later with funds from pocket up to the date the SEC closed the company. This counters the argument that all money came from new affiliates.
2. The SEC claimed that “investors” were solicited over the internet implying that the proper qualifications for investors was not met. In an investment the client expects some type of a return on their funds with an immediate buy back value. In fact the “bids” were a purchase of a product similar to toilet paper with no guarantee and no return. The bids had a specific value for a specific purpose for a specific time and that was to bid in the penny auction.
Additionally, there is nothing illegal about selling products or services over the internet. The SEC labeled a bid a security but what would prevent them from labeling an Amway bar of soap or cell phone time a security? The label was arbitrary and in fact the bid has no relation to a security especially since it expired in 30 days. The bid expired in order to force the use as a sample and as a margin. Who would buy a “security” that they knew would expire in 30 days and have no value.
3. The SEC labeled the VIP as “bids” when in fact the VIP is just a point system for tracking the effort of the individuals in the pool. The only relationship to a bid was to credit the affiliate with EFFORT ONCE and ONLY when a bid was given to a customer. You did not receive VIP when you ran an ad, you did not receive VIP when you purchased a Bid. You only earned a VIP when you GAVE the bid as a SAMPLE to a prospective customer representing your “relative effort” in the pool.
Once again the SEC erroneously labels the Bids as a Security. Additionally they called the “premium subscriptions” a security. I do not believe the SEC investigated what a premium subscription is. In fact it was a wholesale to retail internet website and carried a value in “bids” in the penny auctions. Unfortunately they use the term VIP Bids in the penny auction which is confused with VIP (POINTS) in the tracking program for effort. They are totally unrelated and the “VIP Bids” in the auction provided NO value in the VIP (points) for determining effort. If the SEC charge that a retail website is a “security” then all internet websites now become a security.
4. Once again the allegation calls zeek a ponzi based on an emotional self proclaimed definition without any proof. As stated elsewhere. A ponzi depends highly on timing and positioning and NOT effort. Also the it was the earlier members that purchased more bids than new members. Most did not make a decision to buy bids until months after joining the affiliate program. Also it was possible to start with NOTHING and with as little as $10 a month for the website and $10 in bids, anyone with effort could make an income without further purchases from pocket. The label is improper.
5. The SEC once again calls the affiliates investors when in fact there was never an investment opportunity. An investment like a stock will grow in value without the “investor” doing anything. In fact as demonstrated elsewhere, affiliates could only make money based on their relative effort of advertising to find customers to give bids to.
The charge that 98% of all funds came from NEW clients is absolutely false. In fact the majority of funds came from individuals that had been in the program for quite some time. Most NEW affiliates were very cautious and purchased very few if ANY bids for the first few months. It took an affiliate quite some time to be confident in the program and operation. Most that purchased large sums of bids actually bid in the auctions to prove they could win something before buying more bids.
I personally had affiliates that spent nothing but had a gift of their monthly subscription and a limited number of bids in the range of 10 – 30 bids to bootstrap them to success. These individuals built their accounts to thousands of VIP by finding customers and giving away their profit share bids as samples through effort. These individuals worked for months putting in time from a foreign country only to have the SEC illegally steal their effort. One specific affiliate with nothing out of pocket actually found a “customer only” that purchased over $40,000 in bids creating an instant $4000 cash that she immediately turned into VIP to build into 18,000 VIP that was about to net her $1800 a month from effort that the SEC stole. This girl did everything correctly. Started for free and built her business by “customers only” and lost it all. The SEC destroyed her hope and chance in life from a third world country that zeek was the only salvation for. Why did she not receive $40,000 from the SEC for her direct sale of a “real” product used by a “real” customer that purchased bids for the sole purpose of bidding and winning in the auction?
6. The claims of the $225 million in foreign banks may have been true but they were NOT at risk of immediate dissipation. Due to the nature of the math, if the affiliates started to cash out their accounts the funds would have covered what was owed. Of course none of the individuals filing this claim were smart enough to pass the required math to know the facts. They just make their charges with no logical foundation. The idea that the money only came from the customers / affiliates is not unusual. In fact most EVERY MLM or direct sales markets mostly to customer / affiliates. When they stop buying the product the company fails. That is no different for zeek.
7. How is the SEC going to determine what is owed to whom? Because the redistribution of wealth in the company was to those running ads and finding customers to give bids to and as I have proven elsewhere is directly proportional to what effort / bids you purchased, what method would be fair other than the contracted agreement the affiliates signed when they joined the program?
Remember, we all signed a contract that specifically stated what bids were and how we could create an income. Zeek followed the contract and paid everyone that earned according to the contract.
Are you going to just go through the books and find out how many bids everyone purchased and give their money back? Are you going to give the $40,000 purchased back to the customer that entered the auctions and probably one many times that in product or are you going to give it to the affiliate that sold the product directly? That will be interesting when you have to pay some people that purchased tens of thousands of dollars in bids that fed the system and have never drawn anything. Yet their accounts hold the highest VIP. This is exactly why it is NOT a ponzi because early people have still never been paid.
Do you arbitrarily pay a new person back their $100 and do NOT pay back the person that bought $10,000 months ago?
Are you going to take the contracted funds away from individuals that earned the money according to US contract law by doing what was required of the contract?
How about people that purchased thousands of dollars for others. Do you give the funds back to the person purchasing the funds or the person that received the bids? You might ask why a person would buy bids for their downline? Once again if you knew any math you would know the answer to that.
I have watched the SEC take funds paid to affiliates but not credit them for bids they purchased.
Once again it is not a ponzi based on or position but a compensation system based on contracted effort to increase the position and value of the company internet website via advertising and giving away sample bids to penny auctions.
Remember, every bid given away was earned as contracted or purchased directly by the affiliate.
The SEC illegally intervened in a contracted program that NEVER missed a payment other than though delays by the banking industry and holding companies or the confiscation of funds by the SEC. The SEC should be required to pay a HEAVY fine for this illegal action that caused the failure of income for hundreds of thousands of people that are now out of work.
In fact, the SEC by the very action of taking the funds and distributing back to the people, turns the program into a ponzi by removing the risk from the affiliate. Now they truly were in the deal with a guarantee by the government they would lose nothing or be insured. Is the government going to back and insure ALL programs they feel people potentially lose money in if they do nothing?
JURISDICTION AND VENUE
8. The SEC has no authority because the bids nor the premium subscriptions are a security. They are a product with NO investment value at the time of contract.
9. Once again the SEC of NC has NO jurisdiction and should be FINED for the illegal disruption of commerce.
FACTUAL ALLEGATIONS
13. Penny Auctions are successful all over the world and particularly in Europe. There are thousands of them. People may complain about only one winner or specific companies may not administer them correctly but that is NO grounds for calling them a ponzi.
THE ZEEKREWARDS OFFERING
16. Once again the SEC claims bids are an investment and security which is NOT true. They have NO value or guarantee of value and are only used to determine the highest bidder in an auction.
The SEC is totally misinformed. Now they call the matrix a security. Are they going to shut down every company in the thousands that use a matrix compensation plan because they now deem a matrix to be a security?
Why was zeek prejudicially singled out for these claims?
17. Once again the SEC calls the Retail Profit Pool and Matrix a security. The retail Profit Pool is a Marker or the VIP discussed earlier. It has no security value. In fact if the affiliate does not continuously produce effort by finding customers and giving bids away their share in the retail profit pool goes to zero in 90 days. It is a mathematical model for determining effort and has NO value by itself.
18. The SEC once again erroneously labels the affiliates investors. There was NOTHING to invest in. Every dime in the program was made from the contracted effort of the individuals paid for by the affiliates and or customers that purchased bids. Affiliates purchased bids for samples just like purchasing Amway products to give to customers to get the customer interested in purchasing more product.
19. The defendants are not offering securities so should not be required to file.
1. THE RETAIL PROFIT POOL
20. There was never a promise of daily profit share offered. At least not in the contract I signed. There were mathematical models presented as examples to show how the program worked.
22. I highly disagree and it is provable that little or no effort is required. If that was the case your income would depend on time and placement as in a ponzi and that is absolutely not true. You can also look at the stats and find a large disparity of income from new and old alike and it is all based on effort.
24. Of course the funds are in multiple financial institutions because no company has ever outgrown the banks like zeek requiring multiple financial institutions. The affiliates and company funds are not co-mingled. The funds become the company property on bid purchase and the company maintains the control until paid out to individuals.
26. Automatic customer purchase and bid give away was terminated long ago after the company was notified they should not do so.
27. The average person made about $0.80 a day running an ad in the beginning. Who has the right to determining what the financial value of running and ad should be? Does the SEC dictate what companies pay for services rendered? Running more ads did not specifically increase an individuals profit share but in general increased the probability of a customer buying bids and therefore increasing their profit share.
28. What a bogus charge that the profit share works like a stock. It also works like hours on a time-clock or minutes on a cell phone. It is just a mathematical model on how to determining the daily share just like Amway and every other MLM company that uses BV, PV or other payment of volume.
29. This is an outright lie or a totally uneducated statement. The advertising and giving away bids reburies increasing effort by the affiliate as their VIP increase. The service rendered was the service received and that was a top rating in the internet search engines. Companies pay hundreds of millions of dollars to obtain the internet ratings of zeek due directly to the efforts of the affiliates. Internet ranking is what zeek paid the affiliates to accomplish via their effort.
30. Not completely true. The affiliate ALWAYS received cash. However they could choose to have the computer rebuy bids up to the value of their daily profit share earned.
33. This point is beyond discussion because it is obvious the individual filing the complaint flunked math. If everyone takes their profit share for the day then NO bids are purchased. If NO bids are purchased then NONE are given away. If NONE are given away then there are NONE to be used in the next auction. If NONE are used in the auction there is NO profit share for the day. If there is NO profit share for the day there is NO payment and everything stops. This is only ONE of the neat features of this compensation program. As long as the company does not pay out more than 1.5% average daily, there are retiring points, people forget to do their ad, affiliates do not get their required customers etc the company can NEVER pay out more than it takes in, especially if they only pay 50% of the take. Remember, bids expire in 30 days so put that in your mathematical pipe and smoke it. Even if there were 3 billion VIP that were all created by bids, how many are now expired today. The reason there is so much trash about this program is because no one but myself and a handful of people in the world understand the math. Once again this proves the VIP are NOT a security but only a marker to determine the relative effort of each individual to the pool. The VIP are only a RELATIVE number to represent the portion of the profit pool via effort that each individual claims. The VIP has NOTING to do with the number of bids outstanding other than determining the ratio of bids used that day.
35. Rebutted the same rhetoric elsewhere.
2. THE MATRIX
36. Once again I cannot believe the SEC is so naive to call the matrix a pyramid. The government has virtually the same structure with an unlimited width instead of two. The payment on the matrix depends on EFFORT once again. It is NOT possible to make money from the matrix without effort. I could build a million people below someone but unless they meet the qualifications they will not get paid. There are more qualifications to get paid on more of the matrix. If this were not true, why do some of my people with thousands of downline have NO income from the matrix? Did anyone check out the uneducated individual that filed this stuff? Who is the firm behind this? I forgot it was a government lawyer. Are there no REAL lawyers out there to help us tear this apart in a class action suit?
Once again, why was zeek singled out for using a matrix? There are hundreds if not thousands of companies that use the structure. It appears there is an agenda some place and a good lawyer should be able to beat this case on just this aspect.
37. You just made my point above.
38. What an uneducated individual. You just said above correctly that you needed two to qualify now you say again you need to do nothing to get paid on the matrix. Don’t you or your firm at least proof read the previous paragraph? For your information, which you are lacking a lot of Mr. SEC. The matrix has NOTHING do to with bids. You are paid for selling subscriptions for wholesale / retail websites and other benefits such as VIP bids (not VIP).
41. Bull. If that was true how do you account for the thousands of dollars of bids I purchased months after joining. Do you still consider me NEW? When am I NOT new. In fact in my eleventh month I purchased close to $70,000 in new bids from outside funds for myself and downline. Can anyone disbar this guy before he hurts himself. He sure has hurt a lot of us. PS – I was not the only one to buy bids many months into the deal. Virtually everyone does.
DEFENDANTS’ OPERATION OF A FRAUDULENT PONZI AND PYRAMID SCHEME
45. Once again it is hard to talk to someone that flunked math. The 1.5% is a critical number based on this type of pool. Just like Amway and others that set percentages at 4%, 3% etc per level and come up with a 50% payout. The election of 4% and 3% is completely arbitrary and could just as well have been 2% and 5%. In fact companies arbitrary change comp plans all the time to keep the affiliates excited. It has nothing to do with deceiving them. The fact that Burks changed the percentages caused excitement because no on knew daily what their share was. By changing it the affiliate daily stayed involved. It was motivation not deception. If he used the required 1.5% a day everyone would know the numbers in advance and never look at the system causing a loss of interest and a slower growth.
Again the company can be nothing but profitable with this compensation plan. Get a math expert to explain it to you. See some of the comments above for a clue, like most of the bids expire preventing a meltdown.
Let me make this perfectly clear. The number of bids used in the auction are not what is important to the compensation plan. It has to do with the “relative effort” of each qualified individual based on the funds in the pool. The number of bids used is NOT important but the SHARE of those bids is the import issue based on effort. The bids are strictly a product used by “customers” trying to skillfully out maneuver their opponents in the auction.
46. The number of bids given are known not to be used. People sign up relatives and they never get spent. If not used they are still available for the company to award should they need to. The SEC and everyone misses the main point. The business model is to get more people to the website and join the program just like any business would. Based on internet ranking it is pretty obvious they were successful.
By the way it was noticed by all seasoned affiliates that someone was spamming bids in the last few weeks and now we know it was probably the SEC trying to get statistics. Do you really think I am going to bid against you when you have an unlimited bunch of bids set on auto bid executive? Only a fool would bid against himself way beyond the value of the product. Just because we decided not to participate in your bidding test does not mean we do not bid for real and the auctions do not work. I cannot believe you really know how many bids were spent.
Also see my statement in 45 above. The number of bids used daily are NOT the determining factor. Once again you mix up VIP bids (auction only) and VIP (points) representing relative effort to company growth. The bids did bring in people. Every person I brought into the program was specifically introduced to the auctions and how they worked. Without the product mechanism then nothing worked. As example if I give away 1000 bars of Amway soap and only 10 people use the soap and buy more does not mean I was not successful in getting new customers and growing my program. The number of bars or bids given is not important if the outcome is the increase of business. Is the SEC going to monitor every company and decide that McDonald’s cannot give away to many free cokes?
47. Once again you are absolutely wrong in your numbers. Most new affiliates buy very few bids. Only the seasoned affiliates that have been educated to the whole process purchase the majority of bids long after they have been in the program. What do you consider new? Am I NEW at eleven months by buying $70,000 in bids from outside sources? The SEC is totally uninformed or lying about the actual bid purchases.
Also to say the company cannot pay individuals on the sale of subscriptions to retail websites to other affiliates is crazy. Are you going to close down Godaddy? I get paid on selling websites to affiliates all the time. Are you going to shut down every internet company marketing websites and paying affiliates.
What is wrong with an affiliate being a customer? In zeek we needed to give our bids to customers or we received NO profit share. The purchase of bids did nothing by itself toward earning on your effort. The bids had to be given to customers.
48. This argument is crazy. The members of Costco are the ONLY purchasers in Costco. Many were all given samples, a special permit to enter the store and look around on a limited basis. The majority of the members are the ones buying the products. Just like in zeek if the individuals stop buying bids or in Costco if the members stop buying products the company would collapse immediately. That is true of ANY business. If the individuals buying the product stop buying the product the company will close. Why is zeek treated different on who can buy products compared to any other business? In fact most companies offer an incentive program like member points for buying so all their customers are technically members and the law should apply equally to every company offering discounts or incentives to individuals. When are you going to shut down Groupon that works the same way? I get paid as an affiliate of Groupon to get other affiliates that end up being purchasers of the coupons.
49. This is an uneducated statement based on a lack of mathematical understanding or an outright lie. I have already covered this above. Bids expire and the number of VIP is NOT an issue; it is only a relative number to represent the effort of each individual. The number of VIP have NOTHING to do with the total mathematical pay out. If everyone took their funds out one day, the next day there would be NO or a very limited payout just based on the math. I hate it when people make statements they know nothing about and then try to pass it on as truth. Once again they are NOT investors. The SEC is making a false statement and passing it on as truth.
50. The statement is again uneducated or a lie. Get someone with a math background to explain it to you. The company would NOT become insolvent. The payout would automatically adjust to the high cash draw and the limited bids purchased for new customer activity.
51. Once again this is and uneducated statement or a lie. In either case the person making the claim is incompetent to be writing this charge. The matrix pays on MONTHLY subscriptions from members buying the wholesale / retail websites. As long as the members want the internet stores, the payment will continue and commissions paid with NO new members. Of course if people stop buying the product there will be no further commissions just like people stopping the purchases in any company.
52. What and absolutely incredibly naive statement. The numbers presented show that the company is accurate on their math model. The claim 50% to the distributors and 50% to the company. Considering the payments to employees, property, equipment and services there is a substantial reserve of $225M. I have already shown the math that the company asset is protected because the compensation system will NOT allow a “run on the bank”. Why someone with virtually no math or at least appears they did not learn the math when the were told, is allowed to process this claim is a complete disgrace to the entire law firm.
RISK OF FURTHER DISSIPATION OF INVESTOR FUNDS
53. It is hard not to call the writer of the claim an idiot but I will not. Instead I will maintain he is highly uneducated in math or a liar. Anyone with a basic ability to add and subtract can see that $162M taken in and $160M paid out is a profit of $2M. This does not include the fact that July was a five week pay month and the company made a special AUGUST payment in advance due to pay processor delays most likely caused by SEC investigations at the pay processors. This means the company paid out probably twice as much for July than would have been paid in August had the SEC not shut the company down. This means the company profits would have probably been close to $50M plus for the month of August. This is precisely why the SEC should be heavily fined for illegally shutting the company down and causing major loss to revenue for the affiliates and the company.
54 and 55. I would expect the individual owning the company to make money on his business. That is what capitalism is about. Of course the government into redistribution of wealth would never understand that. I am surprised he did not take 25% or about $50M.
56. This statement is absolutely true only because the SEC is rapidly depleting the funds. As I stated before, the mathematics would not allow the system to fail.
58. Once again an uneducated statement or a lie. Please get a math professional to educate you instead of repeating these false claims.
FIRST CLAIM FOR RELIEF
59. The incorporated paragraphs are in error either by lack of education or an outright lie.
60 – 62. False. As proven the bids are NOT a security and therefore are not subject to securities law.
SECOND CLAIM FOR RELIEF
63 – 65. The incorporated paragraphs are in error either by lack of education or an outright lie. As proven the bids are NOT a security and therefore are not subject to securities law and specifically no fraud was intended.
THIRD CLAIM FOR RELIEF
66 – 68. False charges for the same reasons above. No securities were involved and no fraud intended.
PRAYER FOR RELIEF
I.
We the people request the court absolve any charges against Zeekrewards.
II.
We the people request NO judgements be entered against Zeekrewards, the owners, employees or other agents.
III.
We the people request that all funds be released back to Zeekrewards and other accounts confiscated by the SEC. We request a heavy fine be paid by the SEC to be equally distributed to Zeekrewards and the affiliates for the unjust intervention in capitalism with the intent to redistribute the wealth according to a government plan.
Should the court decide to close Zeekrewards, that the distribution of funds including any fines on the SEC, be paid directly based on VIP in each account which represents each individuals effort in the program.
IV.
All defendants, and any employees or agents of Rex Venture, be absolved of any wrongdoing and requirements.
IV. Second Time
This is a prime example of the inattention of the writer of the charge. Thy did not even pay attention to their own writing.
We the people request any charges and fines against Paul Burks be released. The gains received were through legitimate business practices.
V.
We the people request all charges and penalties against Paul Burks be dropped and any frozen assets released. We specifically request the SEC be fined heavily and the fine be paid directly to Paul Burks for their uneducated statements and cause of closure of Zeekrewards along with personal and emotional damages caused.
VI.
We the people request the control of or any continued investigation be immediately dropped and the SEC be specifically barred from any further action against Zeekrewards and defendants.
VII.
The main prayer for relief is that the court grant we the people to continue our business with zeekrewards as was the operation prior to the unjust intervention by the SEC.
In addition, we the people demand that a heavy fine be levied against the SEC for this unnecessary and unjust intervention that caused a major disruption in the operation. Virtually EVERY member of zeekrewards was receiving what they contracted for and is satisfied with the current compensation model.
We believe that bids are products and in no way are the bids, VIP or subscriptions securities and should be designated as so and do not fall under the SEC for guidance or control.
Closure
It has always been the tactic of the SEC to attack companies with these nebulous charges that are not founded in any logical or legal basis. The attempt by the SEC to control commerce by dictating how people should be compensated is not their right or position. Every single company marketing products or services depends on their customers, affiliates or members whatever you call them. Some products have a limited or one time purchase value such as a bed or bids. Because a person may only buy one bed or a certain number of bids does not make it illegal for companies to create marketing programs that attract continuous new clients. Virtually every company depends on current clients for stability and NEW clients for growth. To single out zeekrewards is prejudicial, political and illegal. Just because a company would fail if all the customers stop purchasing does NOT make the company a pyramid.
In the meantime, I lost money…my brother lost money, my friends lost money…just like the other million people.
It sucks!
But I had a Plan B that i was building..I know how important it is to have many income streams….Hearing that Zeek closed got me mad for a few minutes…..but I went on to make money with my other business.
Call or email me…
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Ethan The Marketing Pro
Sometimes, I see comments from people who believe that this is nothing but a MLM program or a pyramid scheme or a ponzi scheme or a gifting program or that it’s network marketing.
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What follows is an unbiased, 3rd party Momentis Energy of the product and business opportunity. If you will allow me, I will also interject some interesting findings of my other research into the company and the MLM/Network Marketing Industry as well.
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If we were to look at this statistic and apply it only to those who “Stuck With It”, The True Network Marketing Success Rate would then be closer to 95%, as opposed to 5%.
My phone rings all day from fellow network marketers who see the potential but want to find out more about it first. To be honest, most of them are people who can’t afford to pay a fee! They are choosing to join my no investment opportunity because they can clearly see how the 
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