URGENT >> BULLETIN >> MOVING: SEC Charges TelexFree, Executives And Key Promoters — Including Sann Rodrigues And Faith Sloan

Faith Sloan as show in a YouTube video promoting TelexFree, an alleged pyramid scheme that "mainly targeted Dominican and Brazilian immigrants in the U.S," the SEC said.

Faith Sloan as shown in a YouTube video promoting TelexFree, an alleged pyramid scheme that “mainly targeted Dominican and Brazilian immigrants in the U.S.,” the SEC said.

URGENT >> BULLETIN >> MOVING: (19th Update 5:45 p.m. ET U.S.A.) The U.S. Securities and Exchange Commission (SEC) has filed charges against the alleged TelexFree pyramid scheme and a federal judge has granted an asset freeze.

TelexFree was a sham to mask an investment scheme known as “AdCentral” in which affiliates were told they could earn money without selling anything as long as they placed “meaningless ads” for the the program’s VOIP product on the Internet “and recruit[ed] others to do the same,” the SEC charged.

The TelexFree “program” was targeted mainly at “Dominican and Brazilian immigrants in the U.S.,” the SEC alleged.

One of its key promoters, Sanderley Rodrigues de Vasconcelos, also known as Sann Rodrigues, has a history of both pyramid-scheming with telephone products and affinity fraud, the SEC said.

On March 9, after TelexFree had received subpoenas on Jan.  22 and Feb. 5 from the Massachusetts Securities Division, according to assertions in TelexFree’s bankruptcy case filed earlier this week, TelexFree changed its compensation scheme. The Securities Division is the state-level regulator in Massachusetts and is overseen by Commonwealth Secretary William Galvin.

Galvin filed a state-level civil action against TelexFree on Tuesday that alleged an epic Ponzi and pyramid scheme that had gathered more than $1.2 billion. Records now show the SEC was in court on the same day, filing a federal case under seal and seeking an asset freeze. A federal judge granted the freeze yesterday, and the seal was lifted today, the SEC said.

“Prior to the rule change on March 9, 2014, there was no requirement that AdCentral promoters actually sell any VoiP packages in order to receive their weekly payments,” the SEC charged. “Indeed, TelexFree and its promoters repeatedly emphasized that AdCentral members did not have to sell anything — they simply had to post the internet ads. The slogan repeated over and over was “everybody gets paid weekly.”

Named defendants in the SEC’s action are TelexFree Inc., TelexFree LLC, TelexFree co-owner James Merrill of Ashland, Mass., TelexFree co-owner and treasurer Carlos Wanzeler of Northborough, Mass., TelexFree CFO Joseph H. Craft of Boonville, Ind., and TelexFree’s international sales director, Steve Labriola of Northbridge, Mass.

Also charged were four individual promoters:  Sanderley Rodrigues de Vasconcelos, formerly of Revere, Mass., now of Davenport, Fla., Santiago De La Rosa of Lynn, Mass., Randy N. Crosby of Alpharetta, Ga., and Faith R. Sloan of Chicago.

How much they allegedly earned was not immediately clear.

Sloan is a notorious pusher of HYIP fraud schemes, and de Vasconcelos, also known as Sann Rodrigues, is a former defendant in an SEC pyramid-scheme and affinity-fraud prosecution.

The SEC is the top securities regulator in the United States.

“This is one of several pyramid-scheme cases that the SEC has filed recently where parties claim that investors can earn profits by recruiting other members or investors instead of doing any real work,” said Paul G. Levenson, director of the SEC’s Boston Regional Office.  “Even after the SEC and other regulators have alleged that such programs are a fraud, the promoters of TelexFree continued selling the false promise of easy money.”

Named a relief defendant as the alleged recipient of fraud proceeds from TelexFree was TelexFree Financial Inc. of Coconut Creek, Fla.

“It was incorporated by Craft on December 26, 2013,” the SEC alleged. “Its officers and directors are Wanzeler and Merrill, and Wanzeler is its registered agent. On December 30 and December 31, 2013, it received wire transfers totaling $4,105,000 from TelexFree, Inc. and TelexFree, LLC.”

Also named a relief defendant was TelexElectric LLLP of Las Vegas. “It was formed on December 2, 2013,” the SEC charged. “Its general partners are Wanzeler and Merrill. Financial statements prepared by Craft indicate that TelexFree made a $2,022,329 ‘loan’ to TelexElectric.”

In addition, Telex Mobile Holdings Inc. of Las Vegas was named a relief defendant.

“It was incorporated on November 26, 2013,” the SEC alleged. “Its officers are Wanzeler and Merrill. Financial statements prepared by Craft indicate that TelexFree made a $500,870 ‘loan’ to Telex Mobile.”

The PP Blog reported the existence of asserted TelexFree intracompany loans on March 9.

Craft, the SEC said, “has been the chief financial officer of other multi-level marketing companies.”

The Boston Globe is reporting this afternoon that during a raid of the TelexFree Massachusetts office Tuesday by the FBI and the Department of Homeland Security, Craft “tried to leave the scene with a laptop and cashier’s checks totaling nearly $38 million.”

In its complaint, the SEC said that “on April 11 (just before TelexFree filed for bankruptcy), Merrill and the wife of Wanzeler obtained cashier’s checks in the total amount of $25,552,402. The checks are payable to TelexFree, LLC.”

Citing information it had received from a bank, “TelexFree, LLC sent $10,389,000 to an entity known as TelexFree Dominicana, SRL,” the SEC alleged. Records suggest this transaction occurred on April 3, 2013.

And federal “wire transfer records show that Wanzeler wired $3.5 million to the Oversea-Chinese Banking Corporation in Singapore on January 2, 2014, the SEC alleged.

“The Commission has not yet been able to obtain a complete set of statements from the defendants’ banks, brokerage firms, and credit card payment processing services,” the SEC said in its complaint. “However, the information available to date, from bank records and other financial records as well as from statements made by various defendants, indicates that Merrill and Wanzeler, who had sole authority to transfer TelexFree corporate funds until the bankruptcy filing, have caused more than $30 million to be transferred from TelexFree operating accounts to themselves and to affiliated companies in the past few months.”

Merrill received $3,136,200 on Dec. 26 and Dec. 27, 2013, the SEC alleged, citing bank statements. On the same dates, Wanzeler “received $4,317,800,” the SEC alleged.

Again citing bank statements, the SEC alleged that approximately $14.3 million “was transferred to newly-created brokerage accounts in the name ofTelexFree, LLC” in December 2013. The complaint outlines other money routes prior to the bankruptcy filing, which seeks the “authority to reject all existing AdCentral contracts” with TelexFree promoters.

The PP Blog reported on Monday that TelexFree was seeking to reject the contracts.

SEC investigators, according to the fraud complaint, plucked a number of online videos featuring TelexFree’s top promoters.

“When telling his success story in an internet video on March 13, 2013, Rodrigues stated, ‘Just place your ads every day and everyone gets paid weekly,'” the SEC charged. “He also asked and answered the following question: ‘What company in the country, in the world, you can make money . . .  you don’t need to sell anything? Now it exists. TelexFree.'”

In April 2013, Crosby was quoted in a video as saying, “What if you were with a company that would pay you just to advertise the service? . . .  They’re paying us to advertise the service. It’s just that simple.”

He added that members do not have to “worry about selling to the public,” the SEC charged.

During the same month — April 2013 — the SEC brought fraud charges against a “program” known as Profitable Sunrise, calling it an international pyramid scheme. Sloan also was a Profitable Sunrise promoter, according to her website.

Just two months after the Profitable Sunrise action, Sloan allegedly was flogging TelexFree.

“Sloan stated in an internet video on June 12, 2013, ‘Place your ads, and you go about your day,'” the SEC charged.

“You do that for seven days a week, you get paid every single week,” the SEC continued, quoting Sloan.

She added, “You don’t have to build,” the SEC charged.  “You don’t have to sell.”

Like similar schemes before it that had collected hundreds of millions of dollars — AdSurfDaily, Zeek Rewards, Imperia Invest IBC, Pathway To Prosperity and Profitable Sunrise — TelexFree had a presence on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup.

And what about the photos showing Merrill posing in front of a large building In Massachusetts? The SEC said they were part of the scheme to defraud.

From the SEC’s complaint (italics added):

The “Founder” section of the TelexFree website includes a photo of Merrill standing in front of a large three-story building, with the caption “Mr. Merrill in front of the headquarters of Telexfree in the USA.” At least two versions of the marketing presentation on the company website contained a photo of Merrill and a photo of the same building with the caption “The Company HS: United States.” The use of the building photo is misleading. TelexFree, Inc. does not own or occupy the entire building. In fact, it originally shared a single suite (consisting of a receptionist, conference rooms, and cubicles) with 28 other companies. Only in December 2013 did it move into its own suite, which occupies a portion of the first floor. TelexFree, LLC has no physical office at all, just a mailing address in Nevada.

From the SEC’s statement on the TelexFree case (italics added):

According to the SEC’s complaint, the defendants sold securities in the form of TelexFree “memberships” that promised annual returns of 200 percent or more for those who promoted TelexFree by recruiting new members and placing TelexFree advertisements on free Internet ad sites.  The SEC complaint alleges that TelexFree’s VoIP sales revenues of approximately $1.3 million from August 2012 through March 2014 are barely one percent of the more than $1.1 billion needed to cover its promised payments to its promoters.  As a result, in classic pyramid scheme fashion, TelexFree is paying earlier investors, not with revenue from selling its VoIP product but with money received from newer investors.

Read the SEC complaint.

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20 Responses to “URGENT >> BULLETIN >> MOVING: SEC Charges TelexFree, Executives And Key Promoters — Including Sann Rodrigues And Faith Sloan”

  1. Faith Sloan coming to Massachusetts.

    “It’s GONE, MacCready….”

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  2. It’s probably been reported before, Sanderley Rodrigues de Vasconcelos is mentioned in this SEC complaint from 2006:
    http://www.sec.gov/litigation/complaints/2006/comp19715.pdf

    The complaint is about offering securities to Brazilians and Brazilian-Americans. Which is completely different from TelexFree which was offering securities to Brazilians and Brazilian-Americans.

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  3. Too bad that Ken Russo was not promoting this too! He deserves to be indicted for all his Ponzi pimping and criminal activities.

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  4. Faith Sloan FB: “Don’t Cry For Me, Argentina….”

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  5. During raid, TelexFree executive tried to leave with $38 million
    http://www.bostonglobe.com/business/2014/04/17/sec-freezes-assets-telexfree-and-eight-people-affiliated-with-company-alleged-fraud/fZwPyvFkLJD6nDy9BKaHiK/story.html

    While federal agents searched the Marlborough headquarters of TelexFree Inc. on Tuesday, the company’s chief financial officer tried to leave with a laptop and a bag holdingcashier’s checks worth nearly $38 million, according to court records filed by US securities regulators.

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  6. Tony H: During raid, TelexFree executive tried to leave with $38 million
    http://www.bostonglobe.com/business/2014/04/17/sec-freezes-assets-telexfree-and-eight-people-affiliated-with-company-alleged-fraud/fZwPyvFkLJD6nDy9BKaHiK/story.html

    Thanks, Tony. Added the Globe link to the story above several minutes ago.

    Patrick

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  7. Lynndel “Lynn” Edgington:
    Too bad that Ken Russo was not promoting this too!He deserves to be indicted for all his Ponzi pimping and criminal activities.

    yeah but he has to be shitting a brick anyway. Who knows which one he’ll get caught in. You know a net search was done on sloan and the times they were in the same ‘programs’ can’t be ignored.

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  8. Good news!

    Hopefully the SEC will shut it down soon so they can start giving back whatever is left to victims. They should charge everyone at the top and even team builders so they can repay any profits for a victim fund.

    For any victims who want to know how to file a complaint or lawsuit against TelexFree visit:’

    http://www.telexfreevictims.blogspot.com

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  9. Faith Sloan FB: “Don’t Cry For Me, Argentina

    no one is crying for you. Um were you even in Argentina?
    And by the way…who did the design for your moms apartment….??? K mart meets frightening? really????
    to funny you think thats class?

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  10. The scammers preying on the TelexFree losers are coming out of the woodwork:

    “UNDERGROUND TIP TO GET YOUR MONEY BACK FROM TELEXFREE, INC UNDER CERTAIN CONDITIONS”

    http://www.unidadmundial.com/telexfree.html

    SD

    .

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  11. Curious to know opiao of you what will be the decision of the judge on the Telexfree at the SEC’s website says that more judges and ponzi seems undecided

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  12. shipdit:
    The scammers preying on the TelexFree losers are coming out of the woodwork:

    “UNDERGROUND TIP TO GET YOUR MONEY BACK FROM TELEXFREE, INC UNDER CERTAIN CONDITIONS”

    I first saw that link posted on Faith Sloan’s fb page by a person calling herself Nancy Berry. Doing a Site: search on the link shows that it used to be Nancy’s TelexFree recruiting site. Looks like Nancy is trying to get folks both coming and going. Nice person (where’s that sarcasm tag when you need it?).

    Am I the only one who wonders how Faith Sloan let herself screw up so bad here? For years she’s been swinging ~enough~ of a downline that she could cut back room deals or at least get special treatment from the operators of what ever scheme she was helping pimp but she never got deep enough into the soup that she’d be named in a complaint. Till now.

    And it isn’t like she didn’t see this day coming. With the court process in Brazil it was only a matter of time till one (or more) started in the US.

    I gave her grudging respect for how she handled her downline in Profitable Sunrise. The “Easter Gift” was a rare “sell by date” warning label for anyone with the wit to read it and Faith certainly recognized it. She also transitioned out of promoting “ProSun” long enough before sunset not to leave her front and midline people in the dark.

    But how the hell did she let herself get dragged down the rabbit hole here? Yes, she’s moved on already but not far enough and there are far too many public connections between her and the other insiders for the regulators to ignore. For years she was an outsider with inside access, a pimp not a perp. Yea, the line gets blurred but this time she was flat out on the wrong side of it when the music stopped.

    Not that I’m complaining mind you.

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  13. Here is a list of things that is NOT being covered:

    1. While TelexFree scammers were busy transfering money to one another and their shell companies, thousands of Brazilians were not being paid for months.

    2. United States Citizenship and Immigration Services might be interested in the fact that most of TelexFree promoters in MA are also illegally in the country mostly through visa overstaying and that Sann has hired a bunch of them to promote TelexFree so investigators should go through his downline in both Boston and Florida and check the immigration status of each Brazilian and other ethnic group. In other words, it would be a major immigration violation bust as well. The IRS should also check on how taxes were avoided or being paid using ITN numbers or fake social security numbers.

    3. There is a company in Minas Gerais, Brazil, called Disque-A-Vontade which allegedly provided the servers and equipment used by TelexFree in the USA and Wanzeler is related to the owners of such company? How much money ended up transferred to them?

    4. Many of these guys may have converted payments into cash and trusted the money to be held by relatives in Brazil or the U.S. So if money is missing, I would look into that possibility.

    5. Sann Rodrigues probably has more involvement in the money part although he might claim he was just a promoter. Might be worth to check if he had made any secret contracts with the company to receive money “on the side.”

    Pull their greens cards if they have any as they also violated U.S. immigration laws by committing federal fraud. Look for sham marriages to see how they obtained their green cards as well. In some cases, Brazilians and others with money will pay someone to marry them in order to obtain their green cards.

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  14. The alleged pitchman Randy N. Crosby is based in Alpharetta, Ga., according to the SEC.

    On July 8, 2013, we reported on a TelexFree-related document that provided instructions to recruits on how to make walk-in bank deposits.

    http://patrickpretty.com/2013/07/08/telexfree-affiliates-gave-adsurfdaily-like-coaching-tips-instructed-prospects-to-make-deposits-at-bank-of-america-and-to-copy-slips-to-team-leaders-gmail-address-for-expedited-service-t/

    In the story above, you’ll see an image of those directions taken from a PDF file circulating on the Internet. As the story above notes, based on info in the PDF:

    “It was 57 degrees in Alpharetta, Ga., when this screen shot was taken to instruct TelexFree participants on how to deposit money . . .”

    This was so much like AdSurfDaily that I wouldn’t doubt the ASD people were helping TelexFree drive things behind the scene — so, acammers on to another scam. ASD had plenty of help in Georgia. I’m wondering if there is an HYIP wing in and around Alpharetta and whether it was working with a wing in Massachusetts.

    The Gmail address to which recruits were instructed to send proof of their bank deposits started with “sdelarosa” and finished with a compound word that ended with the word “pool.”

    Of course, one of the TelexFree defendants is Santiago De La Rosa, of Lynn, Mass.

    I’m also thinking that Crosby might have been one of the passengers on the “private jet” that flew from the Dominican Republic to Haiti and that Carlos Wanzeler and Steve Labriola also were on the plane. Others, too.

    What a freaking racket! Do a Hispaniola jaunt. Do one in Spain under the “old plan.” Then change the “plan” to slow redemptions to a crawl. Then get a bunch of cashier’s checks totaling in the millions in advance of your race into bankruptcy court in your mail-drop state on a Sunday. Then hold a board meeting to put others in charge — possibly after amending or backdating some bylaws to give yourself an out in case someone questions deals that did not appear to be at arm’s length when making intracompany loans.

    Patrick

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  15. GlimDropper: And it isn’t like she didn’t see this day coming. With the court process in Brazil it was only a matter of time till one (or more) started in the US.

    Hello Glim,

    Even allowing for promoters’ MLM Stepfordianism, I’m still dumbfounded that they’d keep going AFTER the death threats against judicial officers in Brazil and AFTER the freeze there in June 2013.

    What those death threats did was signal the world’s regulators and prosecutors to pay attention to TelexFree because it had members who’d threaten to kill to get their way. When there’s a threat to kill, of course, the governments not only take it seriously, but consider the possibility that the threat might be carried out against any person in law enforcement with an interest in TelexFree.

    And now, of course, Sann Rodrigues appears to be getting into a “blame Nehra” mode. I wouldn’t doubt that was the strategy all along: Dangle a fee. Use the shingle as the veneer. Improve the core story by suggesting the U.S. Attorney General was on the TelexFree train.

    GlimDropper: But how the hell did she let herself get dragged down the rabbit hole here?

    There are carrots in those rabbit holes, Glim. She saw one. It looked very much like the Zeek and Profitable Sunrise carrots.

    And, like those two “programs,” there was a lawyer to blame if the need arose. (Profitable Sunrise, it seems, used a fake lawyer, demonstrating that even those “work.”)

    Good to see you, Glim.

    Patrick

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  16. GlimDropper: Am I the only one who wonders how Faith Sloan let herself screw up so bad here? For years she’s been swinging

    But how the hell did she let herself get dragged down the rabbit hole here

    Those FB pics she posted of furniture she bought her parents was the last straw for me.

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  17. Tony H: The [2006 Sann Rodrigues SEC] complaint is about offering securities to Brazilians and Brazilian-Americans. Which is completely different from TelexFree which was offering securities to Brazilians and Brazilian-Americans.

    You wrote this two days ago — and it still keeps swimming through my mind, Tony.

    It neatly distills this situation into the tragicomedy it is.

    I remember that, after the Feds seized the $80 million in the ASD case, some folks in MLM saw it as adding to Andy Bowdoin’s star power and put him in their videos and webinars as the featured huckster. The same thing happened with Dawn Wright-Olivares at Zeek after the SEC filed its action and the Secret Service started to police up the money. Dawn become a video star for another “opportunity.”

    Maybe someone in MLM will give Sann a Bowdoin/Wright-Olivares-like opportunity to see if his new rank as a two-time SEC defendant can help put fannies in the seats. Maybe they’ll tape him in his requisite hot car and display the trophy he received at the Spain confab.

    Patrick

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  19. Am I the only one who wonders how Faith Sloan let herself screw up so bad here? For years she’s been swinging

    w

    I hope they take her all ill gotten gain and send her to jail

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  20. You should look into the Hmong promoters as well. They have cheated many poor Hmong people. These people need to go to jail as well. Biggest Hmong promoters live in CA.Their promoters video are all over the internet in Hmong cheating their own people. They must be pay everyone they cheated.

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