Keith Laggos, an alleged insider in the Zeek Rewards Ponzi scheme, faced a final judgment of $79,191 in federal court on March 29, 2017, concluding a securities fraud case brought by the U.S. Securities and Exchange Commission. This ruling came after Laggos had already accumulated a securities violation on his regulatory record, making a prolonged contestation of the new charges impractical.
The judgment stems from Laggos's involvement with Zeek Rewards, a notorious online penny auction and multi-level marketing scheme. Operating through its parent company Rex Venture Group, Zeek Rewards promised daily returns to affiliates who purchased "VIP bids" and recruited new members. The U.S. Securities and Exchange Commission ultimately shut down the operation in August 2012, labeling it a massive Ponzi scheme that defrauded over one million people worldwide of more than $600 million.
Federal regulators identified Laggos as a key insider in the Zeek Rewards operation, alleging he profited substantially from its fraudulent structure. The SEC filed its securities fraud lawsuit against him on March 22, 2017, in the U.S. District Court for the Middle District of North Carolina. His prior regulatory infraction, which concerned non-compliance in the financial sector, meant Laggos had little ground to stand on when facing the new allegations.
Laggos provided a Statement of Financial Condition to the SEC in December, a standard practice in enforcement actions where a defendant's ability to pay a judgment is assessed. This document details an individual's assets, liabilities, income, and expenses. Based on this disclosure, a settlement agreement was reached.
The court approved the settlement days later. Under the terms, Laggos must return $79,191. This sum breaks down into three components: $36,937 in disgorgement, representing ill-gotten gains he received from the scheme; $5,316 in prejudgment interest, calculated on those gains from the time they were acquired until the judgment date; and an additional $36,937 as a civil penalty for his participation in the fraud.
The payment schedule requires an initial $10,000 due within ten days of the judgment's entry. Another $23,000 must be paid within 180 days. A third installment of $23,000 is due within 270 days. The remaining balance must be cleared within 360 days of the judgment. All funds recovered from Laggos are directed to the Zeek Rewards Receiver.
The Receiver, Kenneth D. Bell, stated that these funds will be consolidated with other recovered assets. The money will ultimately contribute to a further victim distribution payment, part of the ongoing efforts to compensate the more than one million individuals who lost money in the Zeek Rewards scheme.