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Thoughts on the Zeekler Shutdown

It’s no secret that I am not a fan of government regulation in general and the SEC in particular. Indeed, I think what the SEC did to PokerStars amounted to nothing more than extortion.

But I would be dishonest if I said they didn’t get it right sometimes, which is what happened yesterday when they shut down Zeekler, the penny auction site that apparently used its own affiliate’s investment to pay, well to pay its affiliates. Ladies and gentlemen, that is a Ponzi scheme.

Zeekler or ZeekRewards is one of those penny auction sites like QuiBids, where people pay a certain amount for a bid and then use each bid on whatever item that is being auctioned. Each bid is worth only a penny, so each item sells for way less than normal. However, since people had to buy the bids in the first place, the total amount put into these items far exceeds the item’s market value. In other words, it’s nothing more than a form of gambling.

Zeekler was different than the others though, because it marketed itself by bringing in affiliates that would invest however much money in Zeekler. This money bought free bids for potential customers who could use those bids to place a penny bid on whatever item. In addition, affiliates had to place one ad a day on one of an assortment of different craigslist-ripoff sites advertising the free bids to potential customers that the affiliates were providing with their own money (yes, it does sound a bit suspicious doesn’t it).

For putting up their money and this ad, the affiliates were promised something like a 1.5% return per day! Which amounts to approximately one butt load% per year. (My dad calculated Zeekler would have to make as much money as Apple to pay out the obligations they had incurred, but I don’t feel like verifying this.)

I was actually given a sales pitch on ZeekRewards to come in under someone who had signed up an acquaintance of mine (like any multi-level marketing company, you get a piece of the people’s profits whom you bring on board).  The pitch immediately sounded questionable (indeed, questions about whether ZeekRewards was a Ponzi scheme are nothing new).  There was quite a few specific questions he couldn’t answer, namely:

– How much cash does Zeekler have on hand?

– Why won’t Zeekler allow you to take all of your money off the site at once (you have to do it in steps)?

– How can Zeekler manage the immense amount of accounting that would be required?

– Why would anyone buy bids for Zeekler when they can get free one’s from an affiliate who are putting up the money?

– And thus the big question; what percent of the bids are bought vs acquired for free?

Actually the only thing that gave me any confidence that Zeekler was legitimate was the fact it hadn’t been shutdown by the SEC at that point. On a side note, I should mention that regulation often just provides a false sense of security. This was even part of the guy’s sales pitch for Zeekler. And after all, how much has the SEC really saved investors here given that according to their own report, Zeekler was about to collapse anyways. They certainly didn’t save the investors in Bernie Madoff’s scheme a dime.

But I digress. Simply put, the problem was that despite that spam ad that each affiliate had to post, the affiliates didn’t add any value other than their cash investment. Honestly, this “work” affiliates had to do was a joke. The guy giving me the pitch even mentioned there were companies that you could hire to post your ad for you. (Because 2 minutes a day is just too much of a time commitment. By the way, why didn’t these companies just sign up for ZeekRewards?).

Furthermore, it’s not surprising that Craigslist wouldn’t let Zeekler affiliates post ads there since it would just be a barrage of spam. So which sites did let Zeekler affiliates post to? Well, they are sites that, from what I can tell, were set up just to be spam receptacles. Take a look at’s business products section and see if you notice anything:

It appears that every one of the sites Zeekler affiliates posted ads to was pretty much like that. Who is possibly going to use these ads? And if they do, who cares? All the bids they would get were for free and if they wanted more, it wouldn’t be too hard to find a place that offers more free bids. Indeed, why would anyone, under any circumstances imaginable, actually buy Zeekler bids?

So at least I got my question answered. It turns out that 98% of ZeekRewards revenue came from investors (cough, Ponzi scheme, cough). Which is not surprising given the only thing of value the affiliates brought to the table was their own money. As the SEC complaint states, “ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million.” (You can read the entire SEC filing here).

I wonder what goes through the heads of people like Zeekler CEO Paul Burks, Bernie Madoff, the financial ministers of virtually every Western entitlement system or Charles Ponzi himself. Was it just meant to be a temporary solution until things got out of control? How on Earth did they think they would get away with it? It simply baffles me.

In the end, my friend has probably lost his entire investment, for all intents and purposes. My parents lost a small amount one time in a similar sort of thing and eventually received a pittance payment some 15 years later (I kid you not), so Zeekler investors shouldn’t expect to get anything back. In the end, it’s the same old lesson folks: if it sounds too good to be true, it probably is. And if it looks like a Ponzi scheme, swims like a Ponzi scheme and quacks like a Ponzi scheme, then it probably is a Ponzi scheme.


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20 thoughts on “Thoughts on the Zeekler Shutdown

  1. Yes, regulation often provides a false sense of security. Most of the time, government does not provide protection from anything. When it does, there are usually unintended consequences which can be worse. The Internet provides all of the information one needs to form an educated opinion. I was pitched on ZeekRewards by a family friend for months. He couldn’t answer all of my questions, and it was clear to me the only value affiliates offered was their money. One simple Google search led me to this thoughtful analysis of ZeekRewards, where the author repeatedly states to make up your own mind and that he is not taking a position: Analyzing ZeekRewards and Zeekler, is Zeek Rewards a legal business? Who is Paul Burks? Detailed Investigation here.

    This analysis makes it very clear that ZeekRewards cannot be classified as an “investment”, there is no legitimate work involved from the affiliates, and the detailed financials of the company (and thus the source of revenues) were unknown.

    No need for financial fraud advocates. I just figured it out in a few minutes. That doesn’t mean that a person couldn’t have made money with ZeekRewards. Certainly a group of people did quite well. It just means that you should have known it was a Ponzi scheme, would eventually be shut down by the SEC, and decide whether or not it fits with your own values.


  2. Andrew says:

    That is quite a good breakdown. And look, you can sign the petition to bring Zeekler back:

    People just don’t get it. Read some of these posts:

    “Zeek has been a blessing to my family and many others. Zeek hspend more time with my family. It has allowed me to help many other families bring in an extra income working from home. Please allow them to keep their door open.”

    “Being a single mom of three and a working woman with less income,Zeek has give me so much help to get stable in this economy”

    “I am a physically disabled man in PDX, Oregon that really, really, needs this business to work so I can start other businesses. PLEASE DON’T SHUT THIS DOWN!!!!!!!!!!!!!!!!!!!!”

    Zeekler is being shut down because they don’t have any money folks. I guess what they say about a fool and his money… Sad, sad, sad…


  3. Chels says:

    I do feel bad for people that put their life savings into this program. I was approached with an invite and after doing
    some research joined as a free member. I did eventually put a few bucks in (less than $50) as I suspected it is money I will never see again.
    They claim you got paid to advertise, which in fact is completely FALSE, when I put the money I did not do anything with this program. I did not promote it, I absolutely did not place ads or even say that I did. In the back office they had a place for you to enter where your ad could be verified (like someone was going to really check). Getting to my point my VIP points grew daily, I had customers (not sure where they came from). My points were supposedly making me around $6 bucks a day.
    This was an absolute scam, but fact is alot of people that got involved knew nothing about MLMs they were shown by people they trusted, that they would make money with this company. This is the portrait they wanted to paint and how it was possible for so many to be taken in. ( I have a dog and if I throw her a bone she brings it back) Hence Paul Burks and his Co-Scammer friends being the master and the victims being the dog. He paid out just enough money to keep his victims loyal, as well as keep feeding his pocket. Sorry I guess I should not have called this an MLM because it was nothing more than scam.


    • Andrew says:

      I wouldn’t say every MLM is a ponzi scheme, more just a bad business. The down line people aren’t getting scammed out of much more than their time in things like Amway and what not (aside by buying all the motivational materials). Zeekler combined MLM with a ponzi scheme to make it one hell of a monstrosity.


  4. chachi says:

    I invested 10k 2 weeks ago.. then they said it was stuck in a que an i had to invest 112 bucks more to buy customers so that the money would be pushed from the que,,this made no sense but i did it.. i then seen i made 400 bucks when zeek was shut down… i lost my 10k, I think anyone that put money in with this 90 day drop off should find a way to get there money back..anyone after 90 days had a chance to daily tap out there funds but all of us who is under the 90 day mark had no chance at all..there should be a way to fight this and if there is i want in on it.


    • Andrew says:

      That’s awful. Hopefully you can get some, if not most back out. I had this thought after I completed the article that some people put the $10,000 max in the day before it collapsed. I would think the people that put their money in near the end would be more likely to get most of it back. We’ll see, good luck.


  5. Pembquist says:

    I know someone who put 10K in. When he told me about it I couldn’t believe it. He kept trying to explain it to me and all I could say is “what are you thinking?” He can be an impulsive person so I put it down to that. I have a standing offer to anyone with 10,000 dollars, give it to me and I GUARANTEE I will get you a 20 percent return or give you half your money back. The thing is don’t let the smugness get to your head, this was a crude grift which due to the internet and its international access pulled in a huge amount of suckers, more sophisticated grifts are considered legit. Look at the 401K phenomena. Look at financial markets in general as they apply to the retail “investor”. You can bitch about regulation but before you do remember its an imperfect world. The question I ask is would you rather have an imperfect world with atavistic capitalism with no regulation or would you rather have some restraint on the predatory sociopaths that seem reasonably abundant. Remember the SEC is pretty underfunded and remember the amount of political resources that the financial industry has.


  6. Doran says:

    I was first approached about ZeekRewards in December of 2011. Like everyone else I did not believe. I told the person who spoke with me to come back to me when he was making money. Well, by May of 2012 he was making very good money that I could verify. So, nothing ventured, nothing gained I joined at $200.00 After watching a month and seeing how it grew I went up to $5,000. As advised I did not begin taking money out until my account was growing at $200 plus per day. Then I started taking $100 a week just to get it rolling. Everything went just as advertized and I received each check on schedule until the shutdown.
    I understand that it is now verified by the SEC and/or government that ZeekRewards was a Ponzi scheme destined to eventually explode. Not disputing this. My problem is that everyone that I knew that were affiliants were comfortable with how it was going and received their payments. I understand why the SEC stepped in. The problem I have is that the SEC decided that eventually some associates would lose their “invested funds” so to make sure they stepped in and shut it down completely with no plan to help the current associates recover their funds. They made sure they every one lost their money.The government will of course get its millions in fines. Paul Burks will probably get a lot of grief but eventually walk away smelling like a rose because he pays the government what they want. We will hear about how the government will decide what to do with all the funds frozen. And maybe after years some people will receive a small portion. Problem is by then, many of the hurt individuals now will be dead and gone. I expect the government knows this.
    The SEC has had a lot of time to study ZeekRewards before making this move. To me the proper thing to do would have been to step in and take control, notify the affiliants of the decision and have a plan in place at that point to allow affilants the opportunity to at least gradually receive a portion of the money they put into the business back. I am not saying get all the money we supposed earned and purchased additional bids with. Just the funds that people intitially put directly into ZeekRewards.
    I understand why Paul Burks is in hiding. If I was a crook like he has turned out to be I would probably be asking for some type of witness protection in my dealings with the government. What angers me at this point is the SEC and/or government’s actions and failure to make plans for the thousands of citizens that have been hurt.
    Oh, by the way, I believe the government runs the biggest Ponzi scheme in the world. It is called Social Security. They require us to pay. Then take funds for other uses and then collect funds from new investors (our children) to pay for our benefits. How many years has that Ponzi scheme run? Close but so far it has not colapsed even though the government itself warns that it is always close.


  7. Pingback: Zeekler: Owned. Shout Out To All You Zeekler Comment Spammers I Had To Delete -

  8. Pingback: Zeekler Follow Up: Why Zeekler Would Have Had to Be Almost as Profitable as Apple to Work | Swift Economics

  9. Corey says:

    A friend of mine came to me about Zeekler around May I want to say. He was talking how it was the best thing ever and I was skeptical going in. Luckily I only put in 30 dollars. My buddy though, he was gung-ho about. Had me joining in on conference calls, adding me to the email lists for his upline and everything. His upline dumped in about 20k and his other buddies did the same for about 20-30k. His upline was a top-dog in another MLM before it phased out.
    Anyways, on a weekly basis my buddy called me telling me to drop what I was doing to get into Zeek. He was seeing returns, but it just didnt make sense to me where the money was coming from to pay people out. Good to know I made a great decision on this one. I did read that the government would work with people who put in 1k-10k on another site to try and get some of their money back.
    For those of you that put in alot of money, I hope it was money you could afford to lose and you were not sitting on it to be part of your retirement.


  10. Nathan says:

    If your checked has not cleared with your bank you can get them to cancel the check if you show any article about zeek being a ponzi. Sine all investors had to use a certified check (by the way that should have been a huge red flag) those checks cannot be cancelled once issued. However, in a situation as this the banks will help you out. If they will not keep in mind the certified checks expire 90 days after being issued.


  11. Fan Zhang says:

    I was a fan of Zeekler, but I think that a penny auctions like Zeekler definitely needs to register with the SEC before they can bring in investors like that. I hope that those who invested in Zeekler knew what was going on, but it seems like from the description some people definitely didn’t. It’s crazy what people will invest in before they get their facts straight.


  12. Dennis says:

    i lost $7,000 in this crap. i was in for about 3 weeks before the shutdown. i should’ve played it smart and payed my damn credit cards but i saw the money my friend was making and couldn’t help but get in. i wanted to get a head in life and this only set me back.


  13. I broke even with Zeekler after six months, but then I lost $24,000 investing money for other friends. I did a stop payment on a $10,000 cashiers check that hadn’t cleared, but the SEC decided to deposit it in a seperate account. In reality, Zeekler was paying out every penny they promised. I will always question the intent and honesty of the SEC. After they pay their attorney friends millions of dollars, we’ll be happy to see any money. By the way, there are eight or so Zeekler copycat companies that started; I have invested in three of them. Feel free to contact me if you want to discuss them.


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