Darryle Douglas, a former affiliate in the Zeek Rewards scheme, denied possessing the defunct company's customer database during an August 30, 2016 deposition. This testimony came after his March arrest for failing to comply with a September 2015 court order issued by the U.S. District Court for the Western District of North Carolina. The order had specifically mandated Douglas return any copies of the Zeek Rewards database, appear for a deposition by the court-appointed Receiver, and provide all financial records from November 1, 2011, to the present for his personal and business accounts.
Douglas' arrest highlighted the Receiver's continued efforts to recover assets and information following the collapse of Zeek Rewards, a Ponzi scheme that defrauded over a million victims of hundreds of millions of dollars. By April, the Receiver indicated that Douglas had been released, suggesting he had complied with the court's demands. The deposition transcript, excerpts of which were later filed in a motion for summary judgment against Zeek's top net-winners, confirmed the August 30 date, despite an initial typo in court filings.
The Receiver's interest in Douglas intensified after he launched a new multi-level marketing opportunity called Auction Attics. Douglas had publicly claimed he would use a "business database" containing "over 2 million plus contacts" to promote this new venture. These contacts, he stated, were "previous product purchasers," leading the Receiver to suspect Douglas was referring to the highly sensitive Zeek Rewards affiliate database. The Receiver promptly demanded Douglas surrender any copies he held.
During the deposition, the Receiver's attorney pressed Douglas directly about the database. "There's a database or there is not a database?" the attorney asked. Douglas responded, "No sir." When confronted with his own public statements referring to such a database, Douglas maintained his denial. "I'm looking at something here that's posted, all right, that appears very clearly to talk about a database, all right? And you're telling me the database doesn't exist?" the attorney continued. Douglas affirmed, "Yes."
The "posting" in question was Douglas' marketing pitch for Auction Attics, where he explicitly stated, "In my business database we have over 2 million plus contacts. These are not just any contacts, these are over two million previous product purchasers." He promised to "invite as many of these proven contacts as possible to join us as early customers."
Despite the clear contradiction between his marketing materials and his sworn testimony, Douglas, after consulting with his attorney, ultimately denied the database's existence under oath. "No, there is no database like this. No, not at all," he stated. This denial came under threat of returning to the judge for further action if he was found to be withholding the information.
The Zeek Rewards database remains a critical piece of evidence for the Receiver, Kenneth D. Bell, in his ongoing efforts to identify victims, track down funds, and pursue clawback actions against net-winners. Founder Paul Burks pleaded guilty to conspiracy to commit wire fraud and tax fraud in 2016, admitting the scheme was a Ponzi. Recovering comprehensive affiliate data is essential for the equitable distribution of recovered assets to the hundreds of thousands of victims worldwide. The Receiver's office continues its work to return funds to those harmed by the $900 million fraud.