SEC Official Speaks On TelexFree Case At ‘Fraud Affects Every Community’ Event At FTC, Announces ‘Pyramid-Scheme Task Force’ And Tells Audience That ‘Program’ Consumed Entire $50,000 Retirement Account Of Trusting Mom

“We know of at least one victim who borrowed, I think, $50,000 from his mother and gave it all to [TelexFree]. And it was her entire retirement.” Melissa Armstrong, assistant chief litigation counsel, U.S. Securities and Exchange Commission, Oct. 29, 2014

Melissa Armstrong of the SEC at an FTC event today. Source: FTC video.

Melissa Armstrong of the SEC at an FTC event today. Source: FTC video.

UPDATED 12:19 P.M. EDT OCT. 30 U.S.A. Affinity fraud was one of the topics at an all-day symposium today at the Federal Trade Commission (FTC). The event was titled, “Fraud Affects Every Community.”

Melissa Armstrong, assistant chief litigation counsel for the U.S. Securities and Exchange Commission (SEC), was one of the featured speakers. Her topic was the SEC’s pyramid- and Ponzi case against TelexFree and how TelexFree was a form of affinity fraud.

In her view, Armstrong said, some TelexFree promoters exploited members of the Dominican and Brazilian communities.

And, she told the audience, the scheme spread over YouTube, Facebook, Twitter, Instagram and though local pitchfests.

“They sold a version of the American dream that was [meant] to appeal to recent immigrants,” she said.

Over time, Armstrong said, TelexFree gathered “hundreds of millions of dollars from hundreds of thousands of promoters. It had promised to pay them back to the tune of [about] $5 billion.”

“The message was always consistent: You could go from having nothing to having it all in a very short time with this program,” she said. “The organizers would travel from city to city.”

Organizers “were given the rock-star treatment,” she said. Recruiters provided “testimonials.”

And, she said, “training centers were nothing more than recruitment centers.”

“Ministers” of church congregations helped the scam spread, Armstrong said.

Armstrong also touched on TelexFree’s April 2014 bankruptcy filing. And, without mentioning TelexFree co-owner Carlos Wanzeler by name, she said he “fled to Brazil” and now faces criminal charges in the United States.

Former TelexFree President James Merrill also faces criminal charges.

The SEC now has a “newly established pyramid-scheme task force,” Armstrong said.

Armstrong’s remarks begin at about the 4:22 mark below.

More information on the “Fraud Affects Every Community” FTC symposium, including the roster of speakers and topics, is available here.

Topics:

  • Welcome/Introduction
  • A Look at the Marketplace for Different Communities
  • How and Why Fraud Affects Different Communities
  • Getting More Specific: Community Case Studies on Fraud
  • Education and Community Outreach: An Open Discussion
  • Fraud Research: Building on Solid Data
  • Wrap Up

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5 Responses to “SEC Official Speaks On TelexFree Case At ‘Fraud Affects Every Community’ Event At FTC, Announces ‘Pyramid-Scheme Task Force’ And Tells Audience That ‘Program’ Consumed Entire $50,000 Retirement Account Of Trusting Mom”

  1. Hi Patrick,
    Please do not only talk about the Brazilian and Dominican Immigrants but also include the poor Africans especially we in UGANDA! This thing was more in Uganda than any other African Countries. Can you imagine defrauding someone who lives on less than two dollars a day!
    Any way i thank you once gain for your endeavors in informing we the gullible and partially informed masses here in Africa!

    Patrick, is it necessary at this point in time to assist the FBI and HSI as a victim?
    Thank you!
    GODFREY

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  2. Godfrey wasikye: Patrick, is it necessary at this point in time to assist the FBI and HSI as a victim?

    Hello Godfrey,

    You may find this site useful:

    http://www.fbi.gov/stats-services/victim_assistance/seeking-victim-information/telexfree-inc.-case

    Patrick

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  3. please look for africa also and not American and other places, we have some people invest a lot of money and we could not also let our money investing to be lost

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  4. John david Mzengi:
    please look for africa also and not American and other places, we have some people invest a lot of money and we could not also let our money investing to be lost

    Hello John david,

    Please see the page below. It is by the U.S. FBI and the U.S. Department of Homeland Security. You’ll notice a link to a questionnaire near the bottom.

    http://www.fbi.gov/stats-services/victim_assistance/seeking-victim-information/telexfree-inc.-case

    Patrick

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  5. HELP US TO GET BACK OUR MONEY BY SELLING ALL THE ASSES OF TELEXFREE
    BECAUSE WE CAN NOT RECOVER FROM THIS DEADLY LOSE.

      (Quote)

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