Tuesday, October 30, 2012

Funky Shark is no more: realized it's going to die like Zeek (not the way you think)

News just spread that Funky Shark, a venture that is supposed to be penny auction done right, legal, and such, everything that Zeek wasn't, decided to refund all founders and apparently, close up shop and NEVER launch their business.

The following e-mail is now being spread:

Please read this communication in it’s entirety as it contains important information crucial to your business with Funky Shark.
Today marks a sad day for us all here at Funky Shark. I’m sorry to report that we’ll be cancelling the launch of Funky Shark. We’re sorry to those of you that were excited about the launch. We want to ensure everyone that we will be providing refunds for everyone, making them completely whole.
Funky Shark is a unique twist on the idea of being able to qualify for commissions resulting from penny auction profits and bid sales. But based on advice from our legal counsel, we have recently discovered that the way we executed our Founder program may violate certain securities laws in the United States.
While this news has come as an extreme shock to us, our immediate response was to ensure that all Crown Members be made whole. The goal is to restore all members to their original situation before starting the program. This means the following:
Any Crown Member who paid the $1,000 and has not received any commissions from the Founder program will be refunded their entire $1,000 payment.
Any Crown Member who has received commissions from the Founder program will have the difference between commissions collected and the $1,000 Crown Member fee reimbursed to them. The sum of our reimbursement and collected commissions will total $1,000; thus, rendering the member whole.
As for the Crown Members who have received more than $1,000 in commissions from the Founder program, they’re not due any additional funds. The sum of collected commissions have exceeded the $1,000 fee paid; therefore, they’ve gained from the program, not lost.
Regarding the administrative fees collected when you joined, those funds will also be refunded in similar fashion.
Due to these actions that we’re taking to remedy this error, in conjunction with our business model, our confidence in the future success of Funky Shark as a penny auction is greatly reduced. We really cannot in good conscience move forward with the penny auctions. In order for the penny auction to be profitable, there needs to be a lot of activity with the auctions. We lack confidence in this regard.
The Business Manager web site will remain live so that you can receive future updates from Funky Shark and it will remain live until all members have been refunded.
We ask that you please remain patient and give us the opportunity to work with our legal counsel and payment processors to devise a plan to get everyone accommodated. Our commitment to you is that we will work quickly and diligently around the clock to resolve this matter.
Please log into the Business Manager (Back office) for refund instructions and details.
We will keep you well informed of our efforts and progress.
Funky Shark
Funky Shark was supposed to be Zeekler done right, none of the illegal Ponzi like ZeekRewards. So what did it do, and why would it attract the wrath of the SEC much like Zeek?

The answer is simple: Funky Shark did a fundamental error with their "founder program" even before it launched. Here's one such proof:

That's right, Funky Shark was selling founder positions for $1000 each and this guy, desperate to sign on more people, is willing to give up his "refund" (i.e. getting paid to recruit people) to sign up more people.

That's a pyramid scheme, but that's not the problem.

Selling founder positions makes the positions a "security", much like stock in a company. And thus, a "security" that falls under purview of the SEC, the Securities and Exchange Commission, the very agency that shut down Zeek.

Since Funky Shark was not registered as securities (or even considered their founder positions as security), they will be charged with the SAME CRIME that Zeek was charged with: selling unregistered securities.

(yes, this is an excerpt from the complaint filed by SEC on Zeek Rewards)

TheMLMAttorney Kevin Thompson had highlighted this back in 2011, and I had commented on this on why are so many dumb MLM founders can't follow this simple advice.


That's right, Zeek was NOT shut down because it's a Ponzi scheme... It was for failure to register with the SEC and insisting it's not an investment.

Let this be a lesson... even if the founders have the utmost heart and intent to "do things right", by NOT consulting a MLM attorney from the VERY BEGINNING, they can do things SO WRONG as to prevent a proper startup of the company.

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