Bounty hunter.

• Author: Martin, Edward
• Position: Cover story

ZeekRewards seemed too good to be true--and it was. Its collapse put former federal prosecutor Ken Bell on an international money chase.

In the airy penthouse of the McGuireWoods LLP law firm 30 floors above downtown Charlotte, Ken Bell describes himself as the "nicest guy in the world." That's contrary to his fearsome reputation earned as a federal prosecutor who busted a Hezbollah terrorism-money ring and corralled those involved in credit-card schemes, immigration-marriage fraud and other deceits.

Ardell Lanier was from a different world. Sixty miles northeast of Charlotte in Lexington, he and wife Edna established Lanier Hardware Inc. in 1940. In a town of about 19,000 that's known more for barbecue than banks, the hardworking Laniers prospered, selling fertilizer, tools and nuts and bolts. Lanier liked to pluck roses from his garden for friends, so Caron Myers wasn't surprised when he motioned for her to sit beside him while she was visiting the store in May 2012. He rested his gnarled hands on his cane. "I have something you really should get involved in," he told her. Lanier encouraged her to put up $10,000, but the Florida State University graduate and advertising sales representative was suspicious until she heard that some lawyers were investing in the locally based penny-auction website and business. "If lawyers are involved, you figure it's legal, right?" She invested $2,500. "I have a mother who's handicapped, and I figured if it worked out, I could maybe do something to help her."

Ken Bell never met Ardell Lanier, who died last year at age 93, but their paths now intertwine. In just 20 months, from January 2011 until August 2012, Lanier and millions of others worldwide were sucked into what Bell calls the most far-reaching Ponzi scheme ever uncovered. The ringleader was ZeekRewards President Paul Burks, a round-faced sexagenarian based not far from Lanier Hardware in a brick building that he shared with a coin laundry catering to Hispanic people. To Bell, the private attorney appointed to take over the collapsed scheme as a receiver, has fallen a daunting task. He's trying to reclaim as much as $600 million from thousands of net winners such as Lanier, in order to redistribute it to about 170,000 others who lost money, including Myers. Bell and his team of lawyers, forensic accountants, cyber experts and others had clawed back $344.8 million through late April but are still on the prowl for at least $200 million more. The effort is unprecedented in scam history, essentially unringing the bell of an alleged fraud that reached into 158 countries. The only comparable scheme, according to the U.S. Securities and Exchange Commission and other sources, was Bernie Madoff's scam, which cost his clients about $17.3 billion, far more than Burks' $850 million con. But Madoff's victims were far fewer and mostly affluent people and institutions, including Duke University.

In the ZeekRewards case, as many as 2.2 million people took part in some way, including some 50,000 in North Carolina. "There might have been Ponzis and pyramids with more money at stake, such as Bernie Madoff's," says Cal Cunningham, a Lexington lawyer who filed a lawsuit on behalf of about 100 investors. "But there's certainly no precedent for the number of people involved." His class-action case is stayed while Bell searches for ill-gotten gains. Contact with more than 25 participants in several states reveals a disproportionately older clientele, many of them retirees, and working families in need of a quick return on meager savings. "There were people on disability, people unable to keep up their house payments," Bell says. ZeekRewards limited individual investments to $10,000, though many did end runs such as purchasing in their children's names. Larger investments would have required reporting by banks and other financial institutions, a transparency the company wanted to avoid.

"While $10,000 is a lot of money, it's not so much that the feds and attorneys general were going to jump on the first wave of allegations," Cunningham says. And N.C. Attorney General Roy Cooper didn't move quickly to shut down the program. In late 2011, his office forwarded initial complaints from several Florida investors to regulators at the N.C. Secretary of State's office, who didn't act because it wasn't clear if the scheme involved securities. Cooper didn't demand Burks' records until July 2012, a month before federal authorities shut down ZeekRewards. By then, Montana state regulators had banned its operations, and the N.C. State Employees' Credit Union had warned members of the alleged fraud and stopped handling related transactions. Cooper, a likely Democratic gubernatorial candidate in 2016, declined comment...