wiredmikey (1824622) writes "The SEC on Friday said that it shut down a $600 million Internet-based Ponzi scheme and froze the assets of a North Carolina man and his company, who ran the website ZeekRewards.com.
Those taking part in the ZeekRewards program were allegedly promised up to 50 percent of the company’s daily profits. But the SEC claims that ZeekRewards conveyed the false impression that the company was extremely profitable when it was far from it. In July, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million, the SEC said, something that sparked concern over a scenario that could occur if customers increasingly chose to take cash payouts rather than reinvesting their money to reach higher levels of rewards points. The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors, the SEC explained.
“The emergency action assures that victims can recoup more of their money and potentially avoid devastating losses,” the SEC said. The operator has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and surrender his interest in the company. He will also pay a $4 million fine."
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