A former nursing home magician convicted last year of operating one of the largest Ponzi schemes in U.S. history was sentenced Monday to almost 15 years in prison and ordered to repay $244 million to his victims.
U.S. District Judge Max Cogburn sentenced Paul Burks, 70, of Lexington to 176 months on a series of charges related to Zeek Rewards, which prosecutors describe as a $900 million online Ponzi scheme that attracted almost 900,000 investors worldwide, including more than 1,500 in the Charlotte area. Almost 90 percent of the people who bought in to the operation lost money.
Noell Tin, one of Burks’ attorneys, said an appeal of Burks’ July conviction is in the works.
“While this sentence is much lower than called for by the sentencing guidelines, it is still a severe punishment, particularly given our client’s age and health,” Tin said.
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From 2010-12, Zeek Rewards promised investors returns of up to 125 percent from fraudulent penny auctions, prosecutors say. At Burks’ sentencing, Cogburn said the scheme would have needed a miracle on the order of “the loaves and the fishes” to make good on that pledge.
According to prosecutors, Burks and his management team led current and future investors to believe that Zeek Rewards had accumulated assets of almost $3 billion when in fact the company had little more than a tenth of that amount on hand. Over the two-year run of Zeek Rewards, Burks siphoned off more than $10 million for himself.
Defense attorneys Tin and Missy Owen argued during the three-week trial that Burks and his team were overwhelmed by the staggering growth of Zeek Rewards but that Burks had not committed a crime. He faced up to 65 years in prison and a $1 million fine.
Dawn Olivares, Zeek’s chief operating officer, and her stepson Daniel Olivares, the senior technology officer, were sentenced earlier to 90 months and 24 months, respectively, followed by three years of supervised release.