Saturday, August 25, 2012

Are you the success story, or the "Judas Goat"?

A judas goat leading lambs to the slaughter
A judas goat leading lambs to the slaughter (Photo credit: Wikipedia)
People in suspect schemes often defend their pet scheme with the "it paid me" defense. It is a fallacy. Sometimes, they don't even get paid. It's "my friend / my upline / my relative / someone I know got paid".

Apparently they never heard of the "Judas Goat".

Judas Goat is a trained goat that goes out, and leads other goats or lamb to a specific destination, often, a slaughter house.

In general, the judas goat's life is spared while the rest of the flock are slaughtered.

That is exactly how a Ponzi or a pyramid scheme works; some people will get paid, the rest gets fleeced, but they don't know it yet. And they may be taught to bring in even *more* people, "share the wealth / opportunity", so to speak.

In other words, in a pyramid scheme, everybody is a judas goat.

Friday, August 24, 2012

WARNING: "reload" scams targeting Zeek Rewards Ponzi victims

On the Internet there are a LOT of "opportunities" pledging their innocence, and going after Zeek victims any way. Enough so, that North Carolina Department of Justice, Attorney General's Office, issued a special alert warning any Zeek victims of falling for a "reload scam".

One such company, whose name starts with a V, even announced a "rescue plan" for all Zeek affiliates. After the outcry, they quickly reversed course and claimed they are being mistaken for another scam.

Another company, whose URL starts with U, is far less worried about their image. Why? Because they are a penny auction site too.

But then comes the ultimate shills... or self-delusionals... who believe that Zeek's innocent and should be restarted. These are the people who created a petition on, and later, on And people signed them because they are gullible, that they believed their uplines when their uplines sprouted garbage about "the competition told lies to the government about us".

And now, these people want your DONATION. That's right, they need YOUR MONEY to help them restart a scam, whose owner had already capitulated.

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.

Thursday, August 23, 2012

Bad Argument: the shifting goalpost

The best example of "shifting goalpost" is the "No True Scotsman" fallacy. However, there are many others. It's such that they are very popular fallacies used by defenders of suspect schemes, when they need to "revise" their statement when critics point out holes in their reasoning or evidence.

The proper name for this fallacy is "ad hoc rescue", where the arguer keep revising the original argument by adding more and more exceptions. Though the term "shifting goalpost" is a better visual metaphor. It may take a form similar to this. 

B: You can make legally a ton of money with Acme XYZ! Just work the system!
A: But Acme XYZ requires you to put in money first. That's investment, not work. 
B: Uh, right! Invest in Acme XYZ and make lots of money!
A: But Acme XYZ insists they are not an investment. Says so here _______.
B: Uh... You just don't understand the system! It's new hybrid! 

B just keep changing his argument that he got backed into a corner, and had to invent some new sh__.

Wednesday, August 22, 2012

Tuesday, August 21, 2012

UPDATE: The reddit "confession" is probably a hoax

Previously there was a "confession" on reddit by a person who claimed to be top echelon in the Zeek Ponzi scheme.

I had copied it here and posted it as I didn't have time to analyze it for how true it is. The initial reaction seems to be 'it fits what we know'.

As it turns out, it fits a little TOO WELL.

Two of the responses from this alleged confessor did not help.

Then I check the image itself, as many people pointed out some logical errors on it.

I performed "Error level analysis" on it. It shows some definite manipulation around the "VIP Points" section. (Not that I am a forensic image analyst)

I am now quite sure that the picture itself was real, but the VIP points were embellished.

7 Step Test of MLM company

Kevin Thompson, a MLM attorney, outlined 7 criteria that makes a MLM company successful. I thought... the same 7 criteria would make a great "test" whether that MLM company would work at all.

1) Leadership
2) Product
3) Design
4) Systems
5) Compliance
6) Capital
7) Field

Rate your opportunity A+ to F in each of the 7 categories, be honest, be tough. If it fails or is below average in even ONE of the 7 areas, perhaps you should consider something more... mature. 

Monday, August 20, 2012

Hanlon's Razor... about stupidity and malice

Some times, in my study of scams and their victims (many of whom have been brainwashed into becoming scammers themselves) it comes to a point where I wonder whether it is their stupidity or their malice that is driving them.

My research brought me to Hanlon's Razor, which essentially states:
Never attribute malice to something that can be adequately explained by stupidity
 And that, leads to an expanded version by M.L. Plano
Never attribute to malice what can be explained by stupidity. Don't assign to stupidity what might be due to ignorance. And try not to assume your opponent is the ignorant one -- until you can show it isn't you.

NEWSFLASH: Bidify, who many view as ZeekRewards clone, abandons comp plan

Just got word (though I got a heads up from someone who was intimately involved with Bidify) that Bidify has abandoned its comp plan. Bidify was a very close clone of now dead Ponzi scheme called ZeekRewards.

Sunday, August 19, 2012

NEWSFLASH: One of the top Zeek affiliates confessing now on Reddit [UPDATE] Image supplied is a fake

UPDATED: The image supplied was manipulated. Thanks for comments pointing out the various problems. 

As I said, I haven't check. Chances of the main story being true just took a nosedive. 

UPDATED: Full explanation why this is probably a hoax is at my other blog entry.

This is a snapshot of the Reddit Page in question:

I can’t take it anymore, after reading all these comments I don’t care. I know everything that happened, I was greedy and I was selfish and I am exposing everything I know because I am probably the only affiliate high up that will do so:
I was personally introduced by a couple in Hawaii as I was vacationing about ZeekRewards and Zeekler. Daryl Douglas which I have connections with as well communicated on a regular basis. I was told I could join as an affiliate in May of 2011, and I signed on with 10K because I was told what nobody else besides us at the top were, and it was the following:
“ZeekRewards is designed as bid purchases but in reality the cash is from new affiliates, there is a design to slow the growth and plans to keep this running for at least 2 years before it crumbles.” The plans were shown to me clear in writing and I even had access to the actual earnings from the penny auction which was very low.
I knew I would make money, because a few affiliates were “planted” in some of the fastest growing MLM states, Florida, Utah and a couple others. Every who was planted put in 10K or got a loan knowing they would get their return. Not only were we guaranteed are money back from Daryl Douglas and Dawn Wright Olivares, we had direct contact information. I myself spoke to Dawn about twice a week and I allegedly knew that this would fall apart in 2 years or just a bit less.
The month is November 2011: I start recruiting some people, showing them how much I am making. I am dishonest telling them I only started with $500 and where I am at now, which is only about 30,000 points from May. I am making about $500 per day and show a guy who is trying to sale me insurance. He looks at it and of course believes it signing up just a bit later.
I know from speaking to Dawn on a regular basis that we are nothing more then just a recruitment scheme, luring in people one after the next by telling people about the penny auctions and how much they make which in reality it makes up less than 2% of the profit coming in, but they don’t have to know that.
By December I start recruiting more people, but I start using Facebook knowing that I don’t want too many local enemies since I am doing everything out of my small business. I also know that the people in early will get their money back… it’s all timing and a recruiting game now.
I add as many friends as possible on Facebook (5,000) being the limit and build report, anyone who doesnt talk to me I delete and move to the next. I know that the money is there and Zeek continues to grow.
That month I become Senior Executive in ZeekRewards, I have my 6 diamonds and a few gold and silver affiliates. Nobody has put big money in yet other then $500 here and 1,000 there.
I get a call from Daryl Douglas, his account is nearing 400,000 VIP, he tells me how he recruits and his personal success.. I know I need to push the recruiting more.
I start working even harder at Zeek, but by this point and time one of the affiliates I recruited in November of 2011 is a recruiter himself. He pulls in doctors, lawyers and more even unapproved spreadsheets are going around showing what you will make. The business grows, but remember only a few planted affiliates know the true business model, we use our backoffices to lure people in with the large amounts we are making. We know better not to tell anyone else because when it all crashes it will trickle back up to us, we continue presenting the “penny auction” as usual.
By now I almost have 500 people in my Matrix and my account is over 100,000 VIP. I have pulled out just over 10K and show people proof of checks occasionally to lure them in. It works.
I start hosting group meetings out of my business getting the word out, the group grows and grows every week and so does my account, know that the bigger the VIP, the easier to lure people in and the more my cashout option will be.
By this time ZeekRewardsNews which is the official blog and news site ZeekRewards is launched keeps affiliates up to date as well as their Facebook page. The news site is only used to build a trusting relationship with readers, nothing more than just to lure people in.
Updates range from when the site will be down, maintenance, and upcoming details.
May 2012: This marks the date Zeek changes banks, the banks are offshore in South Korea. I have a personal call with Dawn and she tells me how fast the business is growing, gives me a few numbers of what we are making per day, at the time we are over 3 million per day- the actually penny auction site bringing in about 10-15k per day while the other is all affiliate money.
No more paper checks are being sent out by Zeek, simply because of using off-shore bank accounts, Zeek hides the mess by using ewallets NXpay, AlertPay and SolidTrust. Zeek hopes that some people wont know how to take the money from their account leaving more in for us we we cashout.
Zeek happily allowed anyone who requested money to take money out knowing that checks and proof would entice more people to join and put more money in- this worked just as was planned by Dawn, Daryl and Paul.
It’s the end of May 2012, I get an urgent call from Paul surprisingly, he tells me that the payouts and VIP accounts are growing to fast and he doesnt want to scare people away. He manages the Retail Profit Pool and continues to average it at 1.5% so others don’t pull their money out leaving more for all of us.
Paul uses about 1.9 to 2% on Thursdays, 1.4% Fridays and weekends are about 0.8%. I am told by Paul as well as Dawn later in a conference call to draw out money but not all of it.
Dawn: “Don’t draw all of your money out, it will be too suspicious for those who see your account and its under 10,000 VIP or really low” We don’t want people catching on, pull out a decent amount but leave quite a bit in there.
My VIP at the time was over 500,000… I drew out over $35,000 per week in increments. and I knew that all funds that I actually wanted had to be out soon.
It’s now the mid of June, I get call from Dawn telling me that the plugs will be pulled on the company in August and to take out what I need or can. I set my account to 0 taking out $60,000 here, $40,000 there totaling a little over $350,000 in the period of just 2 months.
I’m not allowed to tell anybody on my team, even the guy below me who has 2 accounts for him and his wife that total nearly 500,000 points. I give hints and recommend he takes some money out to take a nice vacation, he does pull out a little over $50,000.
I know that by exposing the scheme it will only be bad for me at this point and time, there is no point. I tell people on the team to 0 out their accounts to move over to Bids That Give (this was a hint) but few listened.
we are now in August, people still ask to see my account, even after pulling out over $350,000 recently my VIP remains at 474,000.
The final meeting I have people want to buy bids, I know I could refuse seeing that we are coming to an end, but that would only cause suspicion if I refused.
It’sTuesday August 14, just a few days before Zeek shuts down its site. I get a final call from Dawn telling me thank you, we are walking a way before we can continue paying out anymore. We talk and I know it’s coming to an end.
Dawn asks me where my VIP on the account is making sure I have a good amount in there to cover the trail, in the even I didn’t they could manually input the numbers for me. I did leave close to 500,000 in my account. In Zeek total since I started I have taken out close to $800,000 being the top guy in my state and knowing how the scheme worked and when it would end.
What I did was dishonest, greedy, hurtful and more. Why am I admitting this? Because I am ashamed, it doesn’t matter anymore. I created many debts as only a few people on my team pulled out what they initially made. It’s too late to come out and knowingly admit my name now…
All the updates on ZeekRewards News about prepaid cards, ZeekBates and other new stuff coming out was just a shame to funnel in more money and keep the money in the affiliates accounts.
I even told people that with the new updates the VIP earnings would double from the revenue, I lied. I did many wrong things,and now I admit them
You see, this was organized and disguised so well, that thousands of people got hurt. Call me an idiot, tell me to burn in hell, but I am the only affiliate in the upline with connections to Dawn, Daryl and Paul who will share my story- my story is the truth and I believe people should know for the sake of their own good.
Zeek was nothing more than a hurtful scheme, buying fake customers and more.
Proof of Backoffice:
This I can publicly display.... This is where my account was before Zeek was shutdown...
Also for those who aren't familiar or up to date with the news an article and videos are found here of basically what happened: 

I have not had a chance to analyze this for accuracy, on how much of this can be guessed and how much can be invented, but this is getting a bit too accurate to be completely fictional.

UPDATE 21-AUG-2012.

Several people pointed out that it can't be a real member's page if there's still bonus points. This prompted me to take a deeper look at the picture and whether it's manipulated. While the picture looks relatively normal, as many pointed out, there's an odd blue rectangle about the VIP Points.

Using Error Level Analysis, I was able to detect a rectangle there that should NOT be. Thus, it is highly likely that the VIP Points section was pasted in. It is even a couple pixels off. Not that I know anything about image forensic analysis.

Jimmy, a fellow critic, did a bit of digging, and found the ORIGINAL picture it was based on:

As I said before, much of this can be guessed and invented. Looks like someone decided to hit a scam while it's down.

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ZeekRewards aftermath: how much did my analysis get right?

For those who haven't heard the news, ZeekRewards had been shut down by the SEC as a huge $600 MILLION Ponzi scheme. 

I had been tracking the scam since April 2012 (and actually a bit before that), and I wrote this hub. 

The hub was apparently was so damaging to the scam, one of their consultants sent a bogus takedown notice to my host trying to get rid of it. He succeeded only for about 7 days. 

And while I am glad to have finally been "vindicated", this has been a learning opportunity as well. How much did I get right, and how much did I get wrong? Let's go through my own hub and analysis, and compare it with the SEC complaint, and see how close did I get without any of the SEC's resources. 

1: Introduction and History of Rex Venture Group, Zeekler, and ZeekRewards

Both SEC and I agree that Zeekler started in 2010 and ZeekRewards started in January 2011. This is public info. I have the info that Zeek didn't get NC auctioneer's license until early 2012, but that is not relevant to the SEC investigation. 

2: Is ZeekRewards paying out too much money?

I had predicted only tens of millions of VIP points. I was way too conservative. The SEC complaint said the VIP point total is close to three BILLION. I was off by factor of 100. 

3: Is ZeekRewards an investment?

As I stated, ZeekRewards is an investment based on the Howey Test, and that is indeed what SEC charged RVG with... multiple violations of the Securities Act. 

4. Is ZeekRewards a Ponzi scheme?

SEC does indeed contend that ZeekRewards is a Ponzi scheme, and an emergency asset freeze order was signed by a judge, and Paul Burks agreed to turn over all RVG assets to a court appointed receiver, plus cough up all 4 million that remained of his ill-gotten profits. 

So I was mostly right... 3.5 out of 4. And I was guilty of UNDERestimation.