I Lost Money in a Ponzi Scheme ?

I sometimes watch that American Greed Show on CNBC that shows criminal schemes involving money and investments. The investments on that show usually seem like obvious scams because they offer unrealistic returns and vague details about how the returns are derived, but the enticement of each returns with no work are too hard to resist for many.

It is easy to watch or hear about those investments and think that you wouldn’t fall for that trap, but I did.

A casual acquaintance I knew was making a lot of money each month with this online Multilevel Marketing Company called Zeek Rewards. He had met the management, been to their headquarters and trusted it. Well, over this last weekend Zeek Rewards got shut down by the Feds/Secret Service (Click here for Forbes.com Article).

I listened to the sales pitch for becoming an affiliate/representative for Zeek Rewards and decided to enroll after seeing how much people were making with it. I usually stay clear of any Multi-level Marketing pitch but I joined this one because it was all online.

Honestly, it sounded too easy to make money and I didn’t really understand how the company could provide the returns they were offering to their affiliates but ignored those BIG WARNING SIGNS and joined anyways. They claimed you could just pay a service to place the required ads online for you and you would just collect the daily revenue share from the companies sales that day.

After enrolling, I spent a couple hours one day trying to honestly understand how the heck it worked as they has all these confusing methods and rules. I saw questions in the forum asking about how things worked and it just seemed too good to be true. There were people making 100% returns in months on their money without doing anything. It just seemed weird to me. Also, everytime someone mentioned the word “ponzi” you would see a rabid group of Zeek Rewards affiliates attack the comment saying the person was ignorant or not understanding the true business model.

I even read a post within the ZeekRewards support forum from a guy who had put in $10,000 for buying bids and hadn’t recruited a single paying customer for the company but his $10,000 had turned into $40,000+ in under 6 months.

I hadn’t done anything except pay some money each month to be a “Diamond” affiliate but when it came time to buying into the company by purchasing “bids” (which was how the company supposedly obtain new customers for continued growth) I decided to cancel as it just didn’t seem right.

My warnings bells were screaming in my head:

  1. Returns compounding at an unsustainable level(2-4% a day)
  2. Complicated explanation of how you made money.
  3. Doing little(or no) work for large returns.

Fortunately my common sense returned and I only lost about $200. In fact I cancelled everything a week before the Feds shut them down. I read they had over 1 million affiliates and people had quit their jobs, invested their savings, and recruited family and friends.

I was swayed by the major human vice called GREED. I knew better(especially with my finance/investments background) but it was too tempting. I feel sorry for those that lost so much but for those that read this I hope this provides a good lesson(which cost me $200).

 

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