Friday, August 24, 2012

How to stop (or at least slow down) online Ponzi schemes

The Zeek Rewards ponzi scheme shut down by SEC is the largest Ponzi scheme in the US ever, involving up to a million victims. While it only involved $600 Million dollars, and Madoff and Stanford involved billions, most victims of Madoff and Stanford are rich, while victims of Zeek are mostly middle class everyman.

Such a scheme are organized into FOUR levels:

Mastermind and "cadre" -- the one who setup the whole scheme, and the inner circle that implemented it. They KNOW it's a scam, and they are out to scam people.

Core shills -- those who who were first recruited, usually "MLM Stars / Recruiter" with established group of downlines. They know it's probably not legitimate, but they will drag the judas goats into it any way. And they have plausible deniability, or they will pull their team out just before the endgame so they will be thanked instead of getting tarred & feathered.

(See Six types of MLMers)

Judas Goats -- goats that will "lead" sheep to slaughterhouse, and would be spared themselves, judas goats were told by core shills to recruit as many people as possible, and make plenty of money in the process. And they believe it's legitimate because core shills told them it is. They will gladly demonstrate how much money they made.

Sheeple -- the victims, 98-99% of all participants, who were convinced by the judas goats (who they trusted) to join (and sometimes, become Judas goats themselves).

In the past, Ponzi prosecution had been limited to the mastermind and cadre.  The core shills were almost never charged.

In order to prevent the spread of Ponzi schemes, as they just get better and better (Zeek is a refined version of Ad Surf Daily Ponzi), I ask FTC, SEC, and other law enforcement agencies to consider taking a further step:

Arrest and prosecute the "core shills", who knew enough to be considered a part of the conspiracy.  Core shills should be publicly identified, prosecuted, and prohibited from participating in further similar schemes and/or speak for / recruit for / endorse such similar schemes.

Without the core shills to spread the word and recruit, there would be few if any judas goats, and thus, less sheeple to victimize.

History has shown that core shills survive from scheme to scheme, often keeping their own downlines / cult of personality, and often, get out before the end of the scheme, having been invited in early, cashed out early, and moved on to another scheme.

Merely taking off the head leaves the body alive to seek another "head" to attach itself to, and to grow again.

It is documented that several of the top members in ASD moved onto Zeek, and became top members as well.

FTC shows indications of moving that way when they prosecuted a handful of top affiliates in Burnlounge, who had benefited heavily from their participation.

It is time for SEC to do the same for the Ponzi schemes.

What do you think?

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  1. Hi KF,

    Any thoughts on the two class-action suits (by Law Offices of J. Calvin Cunningham & Patrick Miller LLC) against Zeek Rewards & Co.?

  2. No idea on either one. Neither has a reputation for class action lawsuits, and the receiver's appointment clearly puts ALL lawsuits on hold.

    I seriously doubt you'll get any more money through a lawyer then through the receiver directly. You'll probably get LESS as lawyer needs his own fees.

    For a more neutral perspective, check, run by Kevin Thompson and his panel of 'experts' on receivership, Ponzi, and recovery. They said they are not suing, they're just giving free info.

  3. Agree with you 110%. Both the masterminds, their inner circle and the Core Shills are essential for these schemes to make money for the first three classes you identify. They should all become criminally and civilly liable for their actions as a matter of law. I would go further and suggest that the Judas Goats can only be permitted one rodeo before they move up the criminal ladder and become Core Shills