Two from state plead guilty in Ponzi scheme

Investors reportedly lost $850 million

A Clarksville woman and man pleaded guilty in federal court in North Carolina on Wednesday to conspiracy charges related to an Internet Ponzi scheme that bilked hundreds of thousands of investors out of a reported $850 million.

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Dawn Wright Olivares, 45, pleaded guilty to charges of securities- and wire-fraud conspiracy and tax-fraud conspiracy. Her son-in-law, Daniel C. Olivares, 31, pleaded guilty to one count of securities-fraud conspiracy.

The two, who were charged initially in December, were freed on $25,000 unsecured bonds after Wednesday plea hearings in Charlotte, N.C., before U.S. Magistrate Judge David Cayer, according to court records.

They could be sentenced to up to five years in prison and fined up to $250,000 on each charge against them. According to a plea agreement, Dawn and Daniel Olivares agreed to pay $400 million in restitution to all the victims of the Ponzi scheme.

No sentencing date was set Wednesday, according to the court records.

A newsletter in December from court-appointed special master Kenneth Bell stated that there were 170,000 victims who were due to receive money back because of the scheme, according to a web-site set up for the victims.

A U.S. Securities and Exchange Commission lawsuit filed in federal court in Charlotte in August 2012 stated the company for which the Olivareses worked, ZeekRewards.com, sold securities to 1 million investors in the United States and overseas from January 2011 to August 2012.

The company is owned by Paul Burks of Lexington, N.C., according to court records. Litigation of the SEC’s suit against ZeekRewards.com, Burks, parent company Rex Venture Group and others is ongoing.

The criminal complaint in federal court against the Olivareses alleges that Dawn Olivares, who was ZeekRewards’ chief operating officer, made $7.2 million from the scheme. Daniel Olivares, who was the company’s senior technology officer, made $3.1 million. Burks, the complaint states, made $10.1 million.

According to information from the government, ZeekRewards.com invited people to invest in the company,promising 50 percent shares of profits. The profit reports were fictitious. Any returns that went to investors were from incoming funds of other investors.

The company also had a program that promised to pay commissions and bonuses to those who recruited other investors. Those commissions and bonuses also were made from money other investors paid in.

Dawn Olivares, Burks and others also issued Internal Revenue Service Form 1099 to investors in 2011 that purported to report income they received from participating in the bogus investment programs, according to the court records.

The forms they sent out reported to the IRS that their investors had income from ZeekRewards totaling $108 million in 2011 when the company actually paid less than $13 million to the investors. As a result, the investors filed false IRS tax returns reporting the imaginary income, according to the complaint.

Arkansas, Pages 7 on 02/06/2014

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