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Ponzi Scheme Claims Process Made Available Until Sept. 5
MADISON, Wis. (5/22/13)--A federal court in North Carolina has approved and implemented the claims process related to the Rex Venture/Zeek Rewards Ponzi Scheme, which victimized credit union members and involved at least $19.8 million in losses to credit unions.

As of May 15th, individuals may file a claim using the online claim form  provided at the Zeek Rewards Receivership website. To access, use the link. The claims process will be available until Sept. 5, according to a May 8 decision in the U.S. District Court for the Western District of North Carolina.

The Credit Union National Association was instrumental in providing advance notice to credit unions of the scheme. CUNA participated in BITS Fraud Steering Committee ad hoc calls related to the scheme. On August 12, 2012, the Securities and Exchange Commission had shut down the North Carolina-based Rex Venture Group, which did business as  Zeek Rewards and as penny auction site

Credit unions can share the information with members who were impacted by the scheme and appropriate individuals within the credit union to help answer any questions members may have, said Julie Esser, director of new alliances, CUNA Strategic Services, who is one of CUNA's staff liaisons with BITS.

In its complaint filed, SEC had said the $600 million Ponzi scheme, which was then on the verge of collapse, attracted  more than one million online customers, including many credit union members, who were promised 50% of the company's daily net profits through a profit sharing system that involved accumulating rewards points redeemable for cash payouts (News Now Oct. 26, 2012).

SEC's complaint said that 98% of Zeek Rewards' total revenues and  "net profits" paid to current investors was comprised of funds from new investors.  Other activity involved money orders, cashier's checks, debit and credit cards and automated clearinghouse transactions, with check amounts ranging from $10 to $10,000.

In October of 2012, CUNA said more than 8,200 checks, totaling $19.8 million, were issued by about 1,150 credit unions affected by the scheme. CUNA notified credit unions with valid e-mail addresses and whose members had been affected by the scheme, and notified CUNA Mutual Group, which issued three Risk Alerts to policyholders.

For more information use the links.

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