CHARLOTTE, N.C. – Back in 2012, people lined around the block of what used to be the ZeekRewards building in Lexington, expecting to cash out bids they made on the penny auction website, only to later find out they were part of most likely the largest Ponzi scheme in US history.
The man responsible, Paul Burks, of Lexington, was sentenced to 14 years and eight months in prison after being convicted last summer on four felony fraud charges.
The maximum sentence for these crimes is about 60 years, but the court considered Burks’ health complications as a major factor in the sentencing.
The judge indicating he most likely will spend his final days behind bars.
Burks is now 70 years old and has a long medical history, including cancer that required his esophagus to be removed in recent years, and he relies on a pacemaker.
At night, he has to sleep in a reclined position because of surgery. A federal judge wanted to make sure that accommodations could be made, noting his right to proper care.
Burks owned the website ZeekRewards.com, a penny-auction site which gave incentives for recruiting new investors.
The site also promised a 125 percent return on investments.
As with most Ponzi schemes, the first round of investors were paid back with large returns with new investor money.
The federal government says initial investors shared their good fortune through the site on social media and to friends, making the site go viral.
In the end, the feds believe more than 800,000 people were affected by the scam which raked in $821 million.
“I’ve got hundreds and hundreds of phone calls, emails, letters from victims here with desperate stories of what this has done to them and I think as one of the lawyers in the courtroom said today, never minimize the thought that five or ten thousand dollars is not a lot of money, because a lot of folks I’ve talked to, that was all the money they had,” Federal Receiver Kenneth Bell said.
Bell says the government has given back more than $320 million to investors who filed claims, but only roughly 129,000 people completed that process.
Those people will receive about 75 percent of their total investment in the site back by March this year, according to Bell.
That still leaves more than 670,000 people who will not see a dime of the thousands they invested in ZeekRewards.
The court ordered $244 million in restitution from Burks, but does not expect to see that money.
Burks has the right to appeal his sentence in the Fourth District Court of Appeals within the next 14 days.
He is currently being held on the same bond, and is living at home with his wife until the issue is finally settled or until a judge gives him a date to report to a federal marshal.
