TelexFree, Allegedly One Of The Largest Ponzi Schemes In History, Says State And Federal Actions Against It ‘Precipitous And Unnecessary’

Effectively having been accused of rivaling Scott Rothstein’s epic Ponzi scheme, TelexFree issued a statement this afternoon that calls the government actions against it “precipitous and unnecessary.”

Rothstein’s Florida-based Ponzi scheme collapsed in 2009. It gathered about $1.2 billion before toppling, and is one of the largest Ponzi schemes in U.S. history.

On Tuesday, Massachusetts Commonwealth Secretary William Galvin described TelexFree as a combined Ponzi- and pyramid fraud that had fetched about $1.2 billion. On Thursday, the U.S. Securities and Exchange Commission — the nation’s top securities regulator — described TelexFree as a collapsed pyramid scheme that recorded $1.3 million in sales of its VOIP product between August 2012 and March 2014, but racked up liabilities of about $1.1 billion because of an attached investment scheme and tiered payouts due members.

TelexFree largely was targeted at Brazilian and Dominican immigrants, the SEC said.

In its statement today, TelexFree said it disputed “the material allegations made by these agencies and regrets that their actions impede our ability to continue to serve our customers, restructure our operations, and thereby emerge as a stronger and more competitive company.”

“Unfortunately,” TelexFree said, “the precipitous and unnecessary actions taken by the state and federal agencies have temporarily suspended the VoIP services TelexFREE customers rely on.”

Meanwhile, it asserted its Sunday Chapter 11 bankruptcy filing in Nevada demonstrated its “belief in the strength of our core business and products and the enthusiasm and dedication of our independent sales associates as well as our determination to protect the assets of the Company and maximize the recoveries for all constituents.”

The statement did not say whether four alleged hucksters charged by the SEC with fraud for pushing the TelexFree “program” would have to pay for their own lawyers. Four alleged TelexFree executives or co-owners also were charged.

TelexFree’s statement was at odds with claims made by some of its own promoters today. While TelexFree itself acknowledged the litigation filed against it by the Massachusetts Securities Division and the SEC and acknowledged its own unfinished bankruptcy case, some promoters claimed the firm had been ruled not to be Ponzi scheme and that the court had confirmed the legality of TelexFree.

See such a claim in Spanish here. See a Google translation to English here.

Read the TelexFree statement at PR Newswire.