URGENT >> BULLETIN >> MOVING: TelexFree Says It Has Filed For Bankruptcy In United States; Uganda’s Central Bank Issues Fraud Warning
URGENT >> BULLETIN >> MOVING: (6th update 2:36 p.m. EDT U.S.A.) TelexFree LLC and “certain of its subsidiaries and affiliates” have filed for bankruptcy in Nevada, the firm said in a statement this morning.
In its statement, the company did not directly identify the other TelexFree firms involved in the filing. A link in the statement, however, identifies the firms as TelexFree LLC, TelexFree Inc. and TelexFree Financial Inc.
A schedule included in the bankruptcy filing suggests that TelexFree owes its 30 largest unsecured creditors nearly $14 million. As much as $36 million may be owed other unsecured creditors, the filing suggests.
TelexFree is seeking to reject contracts that existed with affiliates both before and after the “program” changed its compensation plan on March 9, according to the bankruptcy filing.
Stakeholders and affiliates are called “constituents” in the statement, which attributes a remark to Stuart MacMillan, “interim Chief Executive Officer of TelexFREE.”
TelexFree is under investigation by the Massachusetts Securities Division. Prosecutors in Brazil have described TelexFree as a pyramid scheme.
Separately, the central bank of Uganda has issued a fraud warning on TelexFree and other programs, according to a report in African media. The warning follows a move by the government of Rwanda last month that banned a TelexFree enterprise.
TelexFree’s announcement of the bankruptcy filing occurred just days after the enterprise, citing unspecified “scheduling conflicts,” sought the postponement of a hearing in Alabama to consider its application for “Resale Interexchange Authority.”
TelexFree says it is in the VOIP business and provides other telecommunications services. How the bankruptcy filing would affect various TelexFree phone-service applications in various states was not immediately clear. In regulatory filings, TelexFree LLC said it posted more than $691 million in “total income” last year.
Affiliates of the TelexFree MLM “program” have been complaining about not getting paid.
The filing also takes place against the backdrop of public appeals by TelexFree for affiliates to recruit more customers. A promo earlier this month included the logos of prominent media firms in the United States, planting the seed that the firm’s MLM “program” had the backing of the companies, many of which are affiliates of major television networks in the United States.
A TelexFree arm in Brazil sought bankruptcy protection last year. Carlos Costa, a TelexFree executive in Brazil, curiously waved the flags of Portugal and Madeira while announcing the Brazil filing. Police in Europe later issued warnings that TelexFree was targeting the Madeiran community.
Alvarez & Marsal North America, LLC is serving as restructuring advisor to the Company and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE, according to the statement.
Among other things, the bankruptcy filing says TelexFree has generated more than $1 billion in revenue since 2012. The revenue surge “put tremendous pressure on the Company’s financial, operational and management systems,” TelexFree contends.
The filing seeks to reject contracts with TelexFree promoters under both an existing compensation plan implemented March 9 and an “original compensation plan” that existed prior to that date.
“At the time of the roll-out of the Revised Comp Plan, the Company decided to honor certain discretionary payments to Promoters under the Original Comp Plan,” TelexFree said in bankruptcy filings. “These discretionary payments quickly became a substantial drain on the Company’s liquidity. The Company discontinued the Pre-Petition Comp Plans and ceased making discretionary payments under the Original Comp Plan prior to Petition Date.”
TelexFree affiliates have claimed that $289 sent to the firm returned $1,040 in a year and that $1,375 returned $5,200. Some TelexFree groups solicited sums of $15,125, saying such a sum would return $57,200.
From the TelexFree bankruptcy filing, which requests contracts with affiliates to be rejected (italics/bolding added):
Under the Original Comp Plan, Promoters have and are continuing to assert substantial claims against the Debtors. While the Debtors believe that many of those claims are invalid, the Debtors continue to be burdened by the demands made under the Original Comp Plan. In addition, questions were raised as to whether the Original Comp Plan is compliant with law, which jeopardized the Debtors’ business. Although the financial demands are less under the Revised Comp Plan, the Revised Comp Plan does not generate sufficient revenues for the Debtors to continue operating their business.”
Said MacMillan, in the TelexFree media statement:
“We are taking this major step because we continue to believe in our business, our products and the enthusiasm of our world-class team. We believe that this restructuring plan, which will include significant enhancements to our governance practices and internal controls, will help us to build a stronger and more sustainable financial and operational foundation for the future.”
wonder what the soccer team does now.
Patrick do you think they are going to get away with this!! I just saw Carlos yesterday at IHOP. He does not look good.
@whip
apparently the soccer players weren’t getting paid for some time now
r they going to return our money? or what we can do in this situation? plz advise! i joined this company,because i saw my brother was making money. all started when i was due to withdraw my 1st money on 1st April.
You need to file a complaint with your country’s securities regulator immediately.
thanks Dorothy. and this can’t be good for anybody.
It’s interesting to watch people lie when you know they know what they’re saying isn’t true:
“Steve just Said on the call that the company is still moving forward and this was the best thing that the company did to help move forward for future growth. He said they are going to the new platform company to handle the problems and glitches…”
Im convinced Labriola is a very sick man. Who does he think will join this disaster now?
How can we return the money that we invested back??? Who knows we should I file a complain at to receive the money back? Please help us who knows some info.
Quick note:
The bankruptcy filing asserts that TelexFree received “an additional subpoena” from the Massachusetts Securities Division (MSD) on April 2, 2014.
The filing says MSD also issued “subpoenas for documents and information to TelexFree Massachusetts [TelexFree Inc.] on January 22, 2014 and February 5, 2014.”
Patrick
Bada bing Bada boom……..the end is near.
Quick note:
From one of the filings:
_____________________________________________________
“It is the Company’s understanding that at or about the same time that TelexFree commenced doing business, Carlos Costa set up a separate company in Brazil called Ympactus Ltda. (“Ympactus”) to distribute the TelexFree product and create a multi-level marketing network in Brazil. In July 2013, Brazilian authorities shutdown Ympactus and froze its assets after accusing Ympactus of operating as a pyramid scheme. Investigations by state and federal authorities continue in Brazil, and numerous lawsuits against Ympactus by Brazilian promoters have been filed.”
_____________________________________________________
The wording of the above is interesting, given that TelexFree is asserting that it is its “understanding” that Costa set up Ympactus.
Put another way, did the left hand know what the right hand was doing?
James Merrill, the president of TelexFree, asserted this back in early March at the Madrid convention.
“Carlos Wanzeler was up here talking about Carlos Costa . . . two of the greatest leaders that I’ve met in my life. They’re very strong. They’re courageous, and they’re fighting for you. And I want you all to know that they didn’t join my team, I joined their team. OK. They’re great leaders.”
https://patrickpretty.com/2014/03/03/were-costa-nehra-no-shows-at-telexfree-confab-in-spain-plus-telexfree-in-haiti/
Patrick
April 2 was a Wednesday, one day after the TelexFree affiliates jammed the office in Marlborough (on Tuesday, April 1) and police were called. I’m not sure what the April 2 subpoena was seeking, but it was issued quickly after the affiliates jammed the office.
Patrick
Quick note: How much revenue did TelexFree post in 2013? Here is a line from the bankruptcy petition:
“The Company’s operations are primarily booked through TelexFree Nevada [TelexFree LLC], which according to the Company’s pre-petition financial statements received approximately two thirds of the approximately $1 billion in revenues recorded in 2013.”
Patrick
The bankruptcy filing asserts that TelexFree received “an additional subpoena” from the Massachusetts Securities Division (MSD) on April 2, 2014.
Not sure if there’s any connection…but
There was mention to the responding police officers by upset members that mobbed the Telex office on April 1st of someone leaving the office with a bunch of files in their hands and getting into a car with license plates from Connecticut. For those that aren’t familiar, Conn., is a neighboring state to Mass in the United States. There was mention of a photograph of the license plate being taken. The officers in the video seemed sympathetic. Perhaps they helped things along more than we on the outside know.
From the bankruptcy filing:
_________________________________________________
The legal actions in Brazil against Ympactus also raised issues for the Company
and caused the Company to determine that it needed to restructure its Original Comp Plan. The change from the Original Comp Plan to the Revised Comp Plan resulted in daily revenues dropping to between $100,000 and $300,000 per day. In addition, asserted claims by Promoters for weekly withdrawals increased dramatically.
In the week following the introduction of the Revised Comp Plan, Promoters asserted claims for an aggregate of $8 million from their back office accounts, then an aggregate of $20 million the following week, then an aggregate of $30
million each of the following two weeks, and in excess of $86 million in the aggregate the week preceding the filing of the Cases. The majority of these asserted claims were for amounts related to the discretionary Ad Buy Back.
The problems were exacerbated by the inability of the Company to quantify the
actual claims under the Original Comp Plan. It appears that certain Promoters were abusing the Original Comp Plan by buying tens and even hundreds of AdCentral Packages for the purpose of earning funds through the discretionary Ad Buy Back, rather than selling VoIP packages as the Company intended. This practice is prohibited by the Promoter Contract. As a result, the Company could not quickly quantify the legitimate associate and Promoter compensation claims against the Company.
_________________________________________________
Patrick
Quick note: Some of the MLM vultures (a/k/a “boat sharks”) are spamming sites covering today’s big TelexFree news with offers for their “programs.” The same thing happened with Zeek and Profitable Sunrise, of course.
Hell, as we reported last year, some folks were spamming reports about the deaths of TelexFree promoters.
https://patrickpretty.com/2013/12/02/disturbing-new-low-for-mlm-telexfree-affiliate-spams-sign-up-offer-in-comments-thread-about-tragic-suicide-death-of-fellow-affiliate/
Patrick
Quick note:
Have seen spammed offers for “WAKE UP NOW,” which is called “a Guaranteed Money making Game Plan.”
Then there are offers for Talk Fusion, something else called “Pays You Daily” (“Pays you every 20 minutes :)”, something else called “One Thor” (“passive income guaranteed + bonus”), something else called “Wings Network,” something else called “ARGENT GLOBAL NETWORK,” something else called “Zija International,” something else called “3for600.”
Plus Organo Gold, plus “Nerium & Visuals,” plus “EMGOLDEX,” plus “JeunesseGlobal,” plus “MillionaireThisYear,” plus Vemma, plus “VIZINOVA, plus . . .”
What a freaking spectacle for MLM — again.
“I’m not in TelexFree, but I’m amazed how the vultures jump right in,” one observer of the spamfest noted.
Patrick
Have now seen this prompt on a Blog:
“. . . don’t wait since TelexFREE filed bankruptcy, they will all need a new investment and income. We welcome all of you with open arms . . .”
There’s a link from the Blog to a series of YouTube videos on “Zhunrize.”
Patrick
Calm down. It’s just a “glitch” on the road to the best thing that ever happened.
Sadly I know somehow how put everything he had into this including his 401K, up until end of old contract.
Hi, I’m Eagle from China, as far as I know, hunderds of Telexfree affilicates like me in China are waiting for further information, also we are looking for someone who can be on behalf of us and withdraw our invest, anybody can help us?
If u find help PLEASE!! Let me know asap
For Spanish-speakers. From Univision Boston (embedded video at station):
http://www.wunitv.com/2014/04/16/massachusetts-demanda-a-telexfree-por-presunto-fraude/
English translation by Google:
http://translate.google.com/translate?hl=en&sl=es&tl=en&u=http%3A%2F%2Fwww.wunitv.com%2F2014%2F04%2F16%2Fmassachusetts-demanda-a-telexfree-por-presunto-fraude%2F
Patrick