URGENT >> BULLETIN >> MOVING: TelexFree’s James Merrill, Carlos Wanzeler Indicted
Carlos Wanzeler. From: YouTube.
URGENT >> BULLETIN >> MOVING: 10th Update 9:18 p.m. EDT U.S.A.) TelexFree figures James Merrill and Carlos Wanzeler have been indicted by a federal grand jury.
The indictment, dated today, includes eight criminal counts of wire fraud and one criminal count of wire-fraud conspiracy.
Among other things, the indictment alleged that Merrill and Wanzeler conspired with each other and with “others known and unknown to the Grand Jury” to fleece TelexFree members.
The indictment describes wire transfers involving Merrill and Wanzeler that began on the day after Christmas in 2013 and continued on Dec. 27.
Here are the alleged wire transfers:
Merrill: Dec. 26. $136,200 from TelexFree Inc. account at Fidelity Co-operative Bank to Merrill.
Wanzeler: Dec. 26. $500,000 from TelexFree Inc. account at Fidelity Co-operative Bank to Wanzeler.
Wanzeler: Dec. 26. $136,200 from TelexFree Inc. account at Fidelity Co-operative Bank to Wanzeler.
Wanzeler: Dec. 26. $158,900 from TelexFree Inc. account at Fidelity Co-operative Bank to Wanzeler.
Wanzeler: Dec. 26. $22,700 from TelexFree Inc. account at Fidelity Co-operative Bank to Wanzeler.
Merrill: Dec. 27. $3 million from TelexFree Inc. account at Fidelity Co-operative Bank to Waddell & Reed Inc., to Merrill.
Wanzeler: Dec. 27. $3 million from TelexFree Inc. account at Fidelity Co-operative Bank to Wanzeler.
Wanzeler: Dec. 27. $3.5 million from TelexFree Inc. account at Fidelity Co-operative Bank to Wanzeler.
Prosecutors from the office of U.S. Attorney Carmen Ortiz of the District of Massachusetts said in a statement early this evening that assets seized in the case so far total about $140 million.
From a statement by prosecutors (italics added):
The indictment also specifies approximately 70 assets to be forfeited as proceeds of the alleged fraud scheme, or assets traceable to such proceeds, including approximately $140,000,000 seized from TelexFree’s accounts and various real assets, such as homes, condominiums, cars and two boats.
Also from prosecutors (italics/bolding/carriage returns added):
According to the indictment, TelexFree, Inc., and TelexFree LLC (collectively, “TelexFree”) provided “voice-over-internet-protocol” (“VOIP”) telephone services that allowed customers to use the Internet to make phone calls. The indictment alleges, however, that TelexFree actually operated as a pyramid scheme, in which its ongoing operations were supported, not by actually selling TelexFree’s VOIP product, but by bringing in a constant stream of new investor dollars.
Between early 2012 and March 2014, TelexFree purported to aggressively market its VOIP service by recruiting thousands of “promoters” to post ads for the product on the Internet. Each promoter was required to “buy in” to TelexFree at a certain price, after which they were compensated by TelexFree, under a complex compensation structure, on a weekly basis so long as they posted ads for TelexFree’s VOIP service.
It is further alleged that over the course of the fraud TelexFree derived only a fraction of its revenue from sales of VOIP service and the vast majority of it from new people buying into the scheme, and so TelexFree was able to pay the returns it had promised to its existing promoters only by bringing in money from newly-recruited promoters. The indictment includes eight charges of wire fraud, based on Merrill, in December 2013, wiring about $10,000,000 in TelexFree funds to personal accounts belonging to him and Wanzeler.
Also see May 27 PP Blog story on SEC allegations about how some of the TelexFree money was dissipated.
Read the Grand Jury indictment (courtesy of the ASD Updates Blog.)
Quick note: The indictment lists approximately 70 accounts/assets seized and/or subject to forfeiture, including the infamous cashier’s check for more than $10 million seized on the date of the Feds’ raid (April 15) and allegedly in the control of Joe Craft.
Other highlights:
* A check for more than $2 million made payable to Katia Wanzeler issued just four days before the raid.
* A check for nearly $3.8 million made payable to Carlos Wanzeler on April 3, 12 days before the raid.
* More than $34.6 million (edited to correct PP Blog typo) seized from I-Payout.
* More than $4.5 million from ProPay Inc.
* More than $10.5 million from Base Commerce LLC.
* More than $1.1 million from 80 cashier’s checks made payable to TelexFree “turned over to the United States” on May 9, 2014, the date Merrill was arrested.
* More than $10,000 in cash found at TelexFree headquarters on April 15, the date of the raid.
* More than $6,000 cash found in Northborough, Mass., on April 18.
Patrick
Well,
The fabulous family man and coach that Merrill’s friends and neighbors are saying Merrill is…must be true since with all the cash he was bringing in…..I’m sure he gave his cleaning crew an amazing bonus last year and bought all the uniforms for every childs sports team in his town…..NO? What “will” the neighbors think now?
From the statement today by prosecutors:
“A federal arrest warrant was issued today for Wanzeler, who is a fugitive.”
Patrick
Link to statement by prosecutors:
http://www.justice.gov/usao/ma/news/2014/July/TelexfreeIndictmentPR.html
Patrick
Quick note: Merrill’s arraignment was today. He remains free on bail, according to the Worcester Telegram & Gazette:
Patrick