BULLETIN: Massachusetts Securities Division Issues TelexFree Complaint Form; Commonwealth Secretary William Galvin Publishes Brochure On How To Steer Clear Of Pyramid Schemes
William Galvin. Source: State brochure on avoiding pyramid schemes.
BULLETIN: (UPDATED 5:56 P.M. EDT U.S.A.) The Massachusetts Securities Division (MSD) has published a complaint form for TelexFree investors. Massachusetts Commonwealth Secretary William Galvin, who oversees MSD, also has published a brochure titled, “Illegal Pyramid Schemes Disguised as Multi-level Marketing Businesses (MLMs).”
Galvin’s investigators alleged on April 15 that TelexFree was a combined Ponzi- and pyramid scheme that had gathered more than $1.2 billion and sold unregistered securities. In November 2013, MSD alleged that WCM777, another “program” promoted in the state, also had sold unregistered securities. The U.S. Securities and Exchange Commission (SEC) later sued WCM777, alleging it was a “worldwide” pyramid scheme that had gathered at least $65 million. Likewise, the SEC has brought fraud allegations against TelexFree.
Both WCM777 and TelexFree were targeted at specific population groups, according to the allegations. Online promos show that the schemes had promoters in common and that prospects were encouraged to buy in at higher levels to receive higher payouts. Both “programs” were positioned as technology suppliers — TelexFree in VOIP and WCM777 in “cloud” computing.
As Galvin’s brochure notes (italics added):
In many illegal schemes the promoter spends little time explaining the product because the product is ancillary to the overall scheme. Recent schemes have involved products related to internet services, mobile marketing platforms, app sales, cloud computing services, and voice-over-internet applications.
These are just three of the bullet points in a warning by Galvin’s office today:
- Don’t invest because your friends tell you it’s a good investment — use your own judgment and make your own decision.
- Be wary of promoters who urge the purchase of higher positions in the distribution network to immediately increase payouts.
- Be wary of promoters who urge quick establishment of distribution networks by adding family members, children, pets, etc.
There are plenty more. Read the online warning here. Download the PDF of the brochure. Access the TelexFree complaint form here.
TelexFree discussed at conference for senior citizens:
http://www.metrowestdailynews.com/article/20140425/NEWS/140427435/11514/NEWS
Patrick
Uh-oh. Potentially taxing matters at TelexFree over 1099 forms:
http://www.bostonglobe.com/business/2014/04/25/telexfree-inc-sends-alleged-victims-parting-shot-potential-tax-liability/zIIHhlnVMxAaNGEBwzodhJ/story.html
For background: The Zeek case included charges of tax-fraud conspiracy:
https://patrickpretty.com/2013/12/20/urgent-bulletin-moving-zeek-rewards-figures-dawn-wright-olivares-and-daniel-olivares-charged-criminally-sued-civilly/
The specific allegation in the Zeek case was that Zeek caused victims to file “false tax returns with the IRS reporting phantom income that they never actually received.”
Zeek used the “false tax notices to perpetuate the Ponzi scheme,” according to the charging document.
Patrick
Darn it! Mass should be using encryption (HTTPS), not plain HTTP, for submitting this sort of info! I know there’s nothing important like taxID and such, but still…
The 1099s are an interesting position, and as fraudulent as it is, still it is logically consistent with those that maintain that their program does not offer securities or investments. If earnings, realized or not, are not investments they have to be regular income, and as non-employee compensation would not only be subject to income tax, but also to self employment FICA and Medicare tax.
Just another case of can’t have it both ways.
http://www.publico.pt/sociedade/noticia/sucedanea-da-piramide-telexfree-esta-licenciada-na-zona-franca-da-madeira-1633779
Google translate says
Successor of the pyramid Telexfree is licensed in the Madeira Free Zone
Telexfree morphing into Wings Network. Wow! A reload scam! That’s never happened before.
Filling the complaints form means compensation of victims in case SEC wins the case?
Im a víctim of telexfree, I Heard i can get a refound
On this .
The U.S. Department of Justice said this today, May 9, 2014:
_________________________________________
If you believe that you are a victim of the alleged TelexFree, Inc. scheme, please send your contact information to the following address: USAMA.VictimAssistance@usdoj.gov
_________________________________________
Patrick
i was a victim in telexfree i sabmited my money iam from kenya i wish iwill get my money back i was introdused by a freind who is also a a victim of cash usd 956 dollars i beg the us goverment to help me recover my money back pleas.