BULLETIN: Judge Frees TelexFree Figure James Merrill On Bail, But Imposes Tight Restrictions

James Merrill.

James Merrill.

BULLETIN: (3rd Update 5:56 p.m. EDT U.S.A.) A federal judge in Massachusetts has permitted TelexFree figure James Merrill to be freed on bail, but has imposed tight restrictions.

In granting Merrill bail, U.S. District Judge Timothy S. Hillman overruled U.S. Magistrate Judge David Hennessy, who agreed with federal prosecutors and ruled last month that Merrill should continue to be detained pending trial because he posed a flight risk.

Hillman today yanked Merrill’s passport, placed him in the custody of his wife Kristen, ordered his wife to supervise him and “to notify the court immediately in the event the Defendant violates any conditions of release or disappears,” ordered three pieces of real estate to be used as collateral for a $900,000 bond, ordered Merrill to remain in Massachusetts and to seek permission to travel outside the state and ordered him not to seek international travel documents.

In addition, Hillman imposed an 8 p.m. to 8 a.m. curfew on Merrill, ordered him to wear an electronic monitoring bracelet and to “avoid all contact directly or indirectly, with any persons who are or who may become a victim or potential witness in the subject investigation or prosecution and any co-conspirators.”

At this stage, the judge said in his bail ruling, the government “has presented a strong case against Merrill,” but “has failed to meet its burden of proof that no condition or combination of conditions would assure the Defendant’s presence” at trial on a charge of wire-fraud conspiracy.

Merrill’s family bonds and community ties in Massachusetts appeared to have weighed heavily in the judge’s decision to free Merrill on bail. Regardless, Hillman placed travel restrictions on Merrill’s wife and children.

“The Defendant’s wife and children must agree to surrender their passports and agree not to seek new passports or international travel documents without prior written approval of the Court,” Hillman ruled.

The bail ruling does not mean that TelexFree has been found not to be a pyramid- or Ponzi scheme. Rather, it means that Merrill can go free pending trial. Some TelexFree affiliates falsely have claimed repeatedly that the “program” has been cleared of fraud charges.

From the judge’s ruling (italics/carriage returns added):

This Court recognizes that Merrill, if convicted, could face a substantial sentence and that the case against Merrill appears, at this juncture, to be a strong one. Additionally, the government argues that Merrill, unlike many white collar criminals, has both a place to flee to and the means to go there. It is this factor that Magistrate Judge Hennessey’s decision to detain Merrill relied most heavily upon. However, this Court finds the government has not been able to offer enough concrete evidence supporting this argument to overcome the factors discussed above which weigh against Merrill’s risk of flight.

While the government has identified overseas accounts belonging to TelexFree, it cannot show how much money is in these accounts nor that Merrill is able to access them; in fact the affidavit of TelexFree’s interim CEO states that Merrill no longer has signatory authority over any accounts. Moreover, while the government points to Merrill’s international network of supporters, it has not offered proof that there are any individuals, with the possible exception of [co-defendant Carlos] Wanzeler, who would actually help Merrill flee.

Prosecutors have contended that TelexFree had “a disturbingly cult-like quality” and that U.S. promoters would be in position to assist Merrill in going on the lam. Wanzeler allegedly fled to Brazil after TelexFree’s headquarters in Marlborough, Mass., was raided on April 15.

Prosecutors said they had no comment on the bail decision.

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7 Responses to “BULLETIN: Judge Frees TelexFree Figure James Merrill On Bail, But Imposes Tight Restrictions”

  1. Quick note: There are social-media reports — apparently originating among TelexFree affiliates in Brazil — that the judge’s decision to free Merrill on bail means the prosecution is guilty of abuse and that Merrill’s arrest May 9 was unlawful.

    The judge’s decision does not mean that at all.

    Separately, iG (Brazil) is reporting that the website of a “program” known as “Paymony” has gone offline:

    http://economia.ig.com.br/2014-06-17/paymony-empresa-de-ex-lider-da-telexfree-sai-do-ar.html

    Paymony is some sort of bizarre venture in which participants purportedly “mine” a purported Bitcoin-like currency. It almost certainly is a reload scheme targeting TelexFree members.

    See April 2014 review at BehindMLM.com:

    http://behindmlm.com/companies/paymony-review-digital-currency-ponzi-scheme/

    The MLM HYIP sphere is getting more dangerous by the hour.

    Patrick

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  2. Someone is targeting TelexFree members on Twitter with an offer for a “program” known as “ClickDreams.”

    There are photos of big checks, cars, mansions and exotic properties.

    Titles/Cost of entry is broken down in this fashion:

    * BARÃO (R$ 650.00)

    * CONDE (R$ 2.950,00)

    * PRÍNCIPE (R$ 17.700,00)

    * IMPERADOR (R$ 35.400,00)

    The “program” says, “You are a dreamer.”

    Patrick

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  3. The site Gazeta Online has made many materials on Telexfree. A story published today shows that the Securities and Exchange Commission (SEC), in Brazil, never authorized the Telexfree announcing quotas Hotel.

    http://gazetaonline.globo.com/_conteudo/2014/06/noticias/dinheiro/1489910-um-ano-apos-ser-bloqueada-fraudes-da-telexfree-vao-alem-da-piramide.html

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  4. Guilherme: The site Gazeta Online has made many materials on Telexfree. A story published today shows that the Securities and Exchange Commission (SEC), in Brazil, never authorized the Telexfree announcing quotas Hotel.

    http://gazetaonline.globo.com/_conteudo/2014/06/noticias/dinheiro/1489910-um-ano-apos-ser-bloqueada-fraudes-da-telexfree-vao-alem-da-piramide.html

    Thanks for this, Guilherme.

    Patrick

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  5. Quick note: There are social-media reports — apparently originating among TelexFree affiliates in Brazil — that the judge’s decision to free Merrill on bail means the prosecution is guilty of abuse and that Merrill’s arrest May 9 was unlawful.

    The judge’s decision does not mean that at all.

    No abuse here at all just difference of opinion on legal arguement.

    The number changes and the origin of the original thought comes from many different places but it is a frame work that USA law is based in.
    It is best that X number of guilty be freed rather than imprison one innocent.

    And a person has the right to a trial.

    These are difficult ideas to keep in mind when the emotional side of our feeling of right and wrong come in to play. Law is different than emotional thought. And that’s actually a good thing. It prevents mob justice. Law isn’t perfect but we need to have civility in how we carry it out.
    I feel from the bottom of heart that Merrill is guilty and have to say it felt satisfying when he was jailed. However, I think the federal judge did the right thing. ( Ok everyone hold off from throwing your popcorn at me…lol)
    Holding a man in prison, taking his freedom away without trial is very serious. The federal judge has put many precautions in place to hopefully prevent what the first judge was worried about, and that was, Merrill fleeing the country. The judge put in to place certain requirements and responsibilities for not only Merrill to addhere to but also his wife, children and even his sister with putting her house up as part of his bail being granted.
    Perhaps the judge chose these as his requirements of the release counting on the information that Merrill is the family moral man he claims to be and he won’t screw his wife, children and sister. He’ll show up for his day in court.
    I’m also very confident that the FBI and Homeland security have him wrapped in a blanket of surveillance. I’m comfortable that he isn’t going to go to far.
    My emotional side says? Damn …a guy that convinced himself that he was “changing lives” but in reality was scamming poor people around the world out of their hard earned cash selling a dream come true…hmmmm I think, he may not see going back to the jail cell he had a taste of as an option. He may think, well, I can go to jail and not see my family for 10 years and I’m stuck in a stink hole, or go to a fabulous island and live on the beach and not see my family again.
    Only time will tell if Merrill has changed his moral code.
    Apparently Wanzeller has gone for the 2nd choice and left his wife and children to face the shame at home of what he’s done.
    A** H***
    Law is slow. Some times in the process we may think the bad guys have an up. The smart card player holds his hand to his chest.

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  6. So, it looks like all of those “Character reference letters” actually may have done some good, after all. I still find it amusing that owning a cleaners and coaching youth sports can somehow neutralize being half-owner of a Billion dollar pyramid scheme.

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  7. ASDUpdates: I still find it amusing that owning a cleaners and coaching youth sports can somehow neutralize being half-owner of a Billion dollar pyramid scheme.

    Yep, but it is still nice to see the wheels of justice turning for a change.

    SD

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