CHARLOTTE (AP) — Items owned by a North Carolina company that bilked more than $600 million from investors in a Ponzi scheme are being auctioned to help a federal court-appointed receiver recoup some of the money. The merchandise includes a warehouse, office building and furniture, as well as promotional materials such as water bottles, coffee mugs and pens.
But half of the more than 1,000 items on the list for the Rex Venture Group’s auction next week are reminders of the owner’s country music past.
Paul Burks owned Rex Venture, which operated Lexington, N.C.-based online company ZeekRewards. Burks, 66, was a former county music disc jockey and magician, who performed in nursing homes in the 1980s and early 1990s.
Federal investigators found a massive country music memorabilia collection in 2012 after Burks’ company was shut down during a fraud investigation. The memorabilia include pictures and prints autographed by country music stars, record label awards and costumes made by an iconic Nashville designer.
“It’s a big collection and is drawing a lot of attention,” said William Lilly Jr. of Iron Horse Auction Co., of Rockingham, N.C.
The company is handling the two-day auction, which begins Monday. People can view the items on the company’s website.
A federal judge two months ago gave permission to receiver Kenneth Bell to sell Rex Venture’s personal property items at a public auction.
Bell, a Charlotte attorney, said Monday that the collection was found in a company warehouse. He said he couldn’t put a value on how much the items were worth, but said proceeds of the auction will be added to a fund for people who lost money in the scam.
The auction is the latest development in one of the largest Ponzi schemes in U.S. history.
Authorities say Burks was the mastermind of the scam, which attracted 1 million investors, including nearly 50,000 in North Carolina.
Rex Venture operated several online ventures, including Zeekster.com, a penny auction site, and ZeekRewards, a business designed to drive traffic to the penny auction.
The Securities and Exchange Commission, which closed the operation Aug. 17, 2012, accused Burks in a civil complaint of fraud. The SEC said the scheme used money from new investors to pay the earlier ones. Investigators also say Burks siphoned millions for his personal use. But he has not been charged with a crime. He has agreed to pay a $4 million penalty and cooperate with the receiver.
Burks has told The Associated Press he couldn’t discuss details of the case, but that he never told anyone to invest more money than they could afford.
Long before Rex Venture, Burks, who grew up in Louisiana, worked as a country music disc jockey. He became friends with country singer David Houston, who had a string of country hits in the 1960 and 1970s.
In the 1980s, Houston began performing at nursing homes, saying he wanted to give something back to the community. Burks joined him, opening as a magician who also sometimes sang and told jokes. He worked with Houston until the country singer’s death in 1993.
At the time of Houston’s death, Burks was living in North Carolina.
Several items being auctioned belonged to singer Barbara Mandrell, who performed with Houston at the beginning of her career in the early 1970s. They include an outfit she wore in the mid-1990s: matching blue jacket, pants and boots. She also signed a guitar.
Meanwhile, the victims are still waiting to see if they will get any money back.
Of the hundreds of millions that were paid out to investors, Bell has recovered more than $320 million. So far, 175,000 people have filed claims.