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Category: Writing And Branding

  • Tax Problems Mount For TelexFree In Brazil, As Criminal Investigations Continue

    Carlos Wanzeler of TelexFree allegedly fled from the United States to Brazil while U.S. investigators were closing in on the company in 2014.
    Carlos Wanzeler of TelexFree allegedly fled from the United States to Brazil while U.S. investigators were closing in on the company in 2014.

    It’s easy enough to forget that TelexFree and its principals have epic legal problems outside the United States, where the company has been found a Ponzi- and pyramid scheme and alleged operators James Merrill and Carlos Wanzeler are under criminal indictment.

    History shows, however, that the problems began in the Brazilian state of Acre in 2013. That’s when the state government seized millions of dollars tied to the MLM “program,” amid pyramid-scheme allegations. In Brazil, TelexFree operated through a company known as Ympactus.

    Certain U.S. TelexFree promoters who allegedly pushed the “program” after the Acre action have been charged with fraud in the United States by the SEC.

    Now, GazetaOnline (Brazil) is reporting in Portuguese that TelexFree may owe billions of reais in back taxes to Brazil’s federal government. (See translation to English by Google Translate.)

    At the same time, the publication is reporting that two criminal probes into TelexFree by Brazil’s government for “suspicion of tax evasion, money laundering, and to act without authorization in the financial and capital markets” continue, according to a Google translation.

    Brazil’s government may have a claim to a large portion of the money seized in Acre. For starters, it appears to be going after about R$130 million (roughly $36 million U.S.) of the R$600 million seized. If the federal government is successful, the $36 million would be transferred from state court in Acre to federal court in Espirito Santo.

    NOTE: Our thanks to Mikaella Campos of GazetaOnline.




  • Second Guilty Plea From Purported JAG Lawyer Linked To SVM Global Initiative

    svmThe docket of of New York’s Kings Supreme Court (Brooklyn) shows that Kenneth Goldstein has pleaded guilty to a charge of unlicensed practice of law and a charge of offering a false instrument for filing.

    Goldstein, a purported JAG lawyer and figure in the SVM Global Initiative story, earlier pleaded guilty to the same charges in a separate case in Bronx County. The case in Kings County notes a plea agreement. Separate charges of aggravated harassment against Goldstein in Bronx County remain unresolved, according to the docket.

    Sentencing on the unlicensed practice and false instrument charges in Kings County tentatively is set for June 8. Goldstein, free on bond, next is scheduled to appear June 14 on both sets of charges in Bronx County. The Bronx docket suggests sentencing on the unlicensed practice and false-instrument charges there was postponed in March.

    SVM is operated by New Yorker Sheila V. Tabarsi, who once claimed that the “Bush administration” was involved in an “effort to dismantle this world economy” and that the effort has been “so concentrated” and “so diligent.” She has described herself as a former Air Force member, a medical intuitive, a psychic and a “Rev.” In turn, she has described Goldstein as a “USCG JAG OFFICER” and as “LIEUTENANT COMMANDER KENNETH GOLDSTEIN.”

    Published reports have described Goldstein as a former Coast Guard petty officer.

    After more than a year, SVM appears still not to have launched its purported matrix “program” to end poverty.

    In April 2015, the PP Blog reported that “sovereign citizens” might be involved in SVM and other online “programs,” including UFunClub. UFunClub is the subject of a major investigation in Thailand.

    At one point in 2015, Tabarsi described the PP Blog as part of a terrorist organization that sought to “INCITE A RIOT and commit unprovoked ATTACKS on DECORATED UNITED STATES WARTIME VETERANS” and additionally carry out a “HATE CRIME.”

    Goldstein has claimed to the PP Blog that Tabarsi “already presented her business plan to a senatorial body and has their seal of approval.”

    NOTE: Also see BehindMLM’s 2015 review of SVM and the MLM Skeptic Blog: “Is a Scam Targeting Veterans ‘to end poverty’ citing a FAKE JAG lawyer?”




  • RECEIVER: (1) Zeek Defendant Class Action May Conclude This Year; (2) Some Claimants Still Haven’t Signed Required Release; (3) $10 Million Settlement With NewBridge Bank

    This promo for Zeek promised "passive" income. The SEC has warned about such schemes for years.
    This promo for Zeek promised “passive” income. The SEC has warned about such schemes for years.

    Three significant pieces of news from Kenneth D. Bell, the receiver in the Zeek Rewards’ Ponzi- and pyramid-scheme case:

    In a March 28 announcement on the receivership website, Bell wrote that a defendant class-action lawsuit against more than 9,000 alleged Zeek winners in the United States may conclude this year.

    “We hope to bring to a conclusion in 2016 our class action against more than 9,000 net winners, which will be a significant milestone,” Bell wrote.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina certified the defendant class of alleged U.S. winners last year. The class includes “all persons and entities who participated in ZeekRewards and received at least $1000 more in money from ZeekRewards than they put into the program.”

    The winnings came from Ponzi proceeds and must be returned, Bell contended.

    A successful conclusion to the class action could mean more money for Zeek victims, Bell has said.

    TelexFree Bankruptcy Trustee Stephen B. Darr has filed similar litigation in that scheme. Darr’s action may affect nearly 100,000 alleged TelexFree winners.

    Bell has raised concerns about some MLMers moving from fraud scheme to fraud scheme. The SEC has raised concerns about the “whack-a-mole” nature of some fraudulent schemes.

    Meanwhile, Bell wrote yesterday that tens of thousands of people who are eligible for a distribution from the receivership estate have not received a check because they haven’t filled out the required forms. Such individuals should “log into the claims portal and electronically sign the Court required Release and OFAC Certification.”

    “At some point, I will be required to distribute the funds that have been reserved for these claimants to other Affiliates who have completed the process and, therefore, hold Allowed Claims,” Bell wrote.  “I don’t want any claimant with a recognized claim to lose out on receiving a distribution simply because they did not complete all of the steps required by the Court’s Orders.”

    Bell also highlighted a $10 million settlement with NewBridge Bank, a Zeek vendor. Zeek operated through Rex Venture Group.

    “The settlement arose out of claims the receivership had against NewBridge Bank for its continuing to provide banking services to Rex Venture Group after mid-April 2012, by which time the receivership alleged that the bank and its executives knew or should have known that Paul Burks and RVG were using their accounts to conduct an illegal Ponzi and pyramid scheme,” Bell wrote.

    Details of the receivership’s potential claims and the settlement with NewBridge are available through links in the receiver’s March 28 announcement.




  • URGENT >> BULLETIN >> MOVING: Zeek Vendor Pleads Guilty To Obstructing Probe

    From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.
    From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.

    URGENT >> BULLETIN >> MOVING: (12th Update 2:57 p.m. EDT U.S.A.) In what may be a warning shot fired across the bow of payment vendors who hope to profit from Ponzi schemes, Zeek Rewards’ vendor Jaymes Meyer of Preferred Merchants Solutions LLC has pleaded guilty to a criminal charge of obstructing investigators in the Zeek Ponzi- and pyramid-scheme case.

    Meyer, 47, of Napa, Calif., was charged criminally March 10 by federal prosecutors in the Western District of North Carolina. They alleged he hatched an “elaborate obstruction of justice scheme to conceal millions of dollars from the Government using a series of domestic and foreign nominees and related bank and brokerage accounts.”

    He was specifically accused of impeding the SEC’s Zeek probe beginning in 2012 and later lying to a federal judge and Zeek receiver Kenneth D. Bell.

    Senior U.S. District Judge Graham C. Mullen is presiding over the SEC’s Zeek case.

    As the PP Blog reported in October 2014, Bell accused Meyer of directing a $4.8 million transfer from a Rex Venture Group trust account to Preferred Merchants’ account “just 19 minutes after the SEC told them about the asset freeze and imminent shutdown of RVG” on Aug. 16, 2012.

    Rex, or RVG, was the operator of Zeek. It was under the control of accused Zeek Ponzi schemer Paul R. Burks. Burks is scheduled to go on trial in July.

    By March 2015, Bell and investigators had tracked Zeek money that flowed through Preferred to the Cook Islands and real estate in the Turks and Caicos. Prosecutors’ allegations against Meyer include a notice of forfeiture of $4.8 million.

    U.S. Magistrate Judge David S. Cayer accepted the guilty plea from Meyer on March 22. Certain documents in the case remain sealed. One document shows Meyer withdrew $195,000 in Zeek money in cash.

    At least two other payment vendors may be in Bell’s sights. On Feb. 21, 2016, the PP Blog reported that millions of dollars that originated through Zeek-related transactions involving Payza and Payment World may have ended up in a collapsed Russian bank.

    NOTE: Our thanks to the ASD Updates Blog.




     

  • Hoax Weaves Conspiracy Theories And Taunts Rep. Gabby Giffords, Victims Of Arizona Mass Shooting

    Jared Loughner. Source: Wikipedia.
    Jared Loughner. Source: Wikipedia.

    Jan. 8, 2011, was a horrifying day in U.S. history. It’s the day Jared Lee Loughner shot then-U.S. Rep. Gabrielle Giffords in the head. Grievously wounded, Giffords, remarkably, survived. Six others died in the Tucson attack, including U.S. District Judge John Roll of Arizona.

    In this Jan. 9, 2011, story, the Washington Post remembers Christina-Taylor Green, a 9-year-old slain by Loughner, a conspiracy theorist who opened fire at an outdoor constituent event hosted by Giffords in the parking lot of a supermarket. Christina’s granddad, Dallas Green, once was the manager of the Philadelphia Phillies and led the team to a World Series title in 1980.

    News circulated yesterday that Loughner had just sued Giffords for $25 million, bizarrely alleging emotional distress. The document painted incredibly wild conspiracy theories. Example: The congresswoman hadn’t really been shot. Instead, she was playing a role she learned by watching Ronald Reagan movies.

    Today, however, the filing docketed in Arizona federal court appears to be a hoax. For starters, it had a Philadelphia postmark, according to Tucson News Now. Loughner is detained in Minnesota. Beyond that, the envelope sent to the Arizona court was strikingly similar to one sent earlier this month to federal court in the Eastern District of Michigan.

    The Michigan document also had a Philadelphia postmark. It purported to be a lawsuit filed against Uber by Jason Brian Dalton, a former Uber driver accused of a mass shooting in Kalamazoo. This was a hoax carried out by Jonathan Lee Riches, posing as Dalton, according to the Smoking Gun.

    If this name seems familiar to you, perhaps it’s because you read it on the PP Blog — on Jan. 28, 2009. Riches, now listed by the Bureau of Prisons as a resident of a Philadelphia halfway house with a May 10 release date from federal custody, is a fraudster and notorious pro se litigant who once tried to enter the Bernard Madoff Ponzi fray.

    As a federal prisoner, Riches eventually tried to sue Loughner, alleging that Loughner might “try to kill me for being a moderate Democrat,” according to Above The Law. Now, it seems possible that the man who once filed against Loughner now is posing as the convicted mass murderer.

    Judge Roll is memorialized in this bust at the federal courthouse in Tucson. The courthouse in Yuma is named after him and also includes a bust. Image source: Ninth Circuit Public Information Office.
    Judge Roll is memorialized in this bust at the federal courthouse in Tucson. The courthouse in Yuma is named after him and also includes a bust. Image source: Ninth Circuit Public Information Office.

    The attack on Giffords, Judge Roll, little Christina and the others was one of the most notorious in recent U.S. history. It is sickening to contemplate that they have been subjected to a hoax in which Loughner may be a victim.

    If Riches pulled this off, he’d better lay low if he attends any Phillies games this summer. The Philadelphia fans aren’t apt to take kindly to someone who serves up even more pain for the Green family while using Giffords, an American hero, as his target-in-chief.





     

     

  • SEC, Lawyer Clash Over Representation Of TelexFree Figure Sann Rodrigues; Lamborghini Once Owned By Accused DFRF Enterprises’ Ponzi Schemer Daniel Fernandes Rojo Filho Was Used To Pay Sann’s Legal Fees

    In court filings, the SEC says it has traced the ownership of a 2008 Lamborghini once owned by TelexFree figure Sann Rodrigues and determined the car once was owned by accused DFRF Enterprises' Ponzi schemer Daniel Fernandes Rojo Filho. This was the check Filho used to purchase the vehicle. Source: Federal court fililes. Masking by PP Blog.
    Small world between accused scammers: In court filings, the SEC says it has traced the ownership of a 2008 Lamborghini owned by TelexFree figure Sann Rodrigues and determined the car once was owned by accused DFRF Enterprises’ Ponzi schemer Daniel Fernandes Rojo Filho. This, according to an SEC exhibit, was the check Filho used to purchase the vehicle and, apparently, a 2006 Ferrari. Source: Federal court files. Masking by PP Blog.

    3RD UPDATE 9:36 AM EDT MARCH 17 U.S.A. This one features highly questionable dealings between an alleged MLM securities fraudster (TelexFree’s Sann Rodrigues) and an alleged Ponzi schemer (Daniel Fernandes Rojo Filho of DFRF Enterprises). Filho also has been linked to the alleged 2010 Finanzas Forex/Evolution Market Group Ponzi scheme, a Ponzi-board “program” that allegedly had ties to the narcotics trade.

    Suffice to say, this developing story has a lot of moving parts. Here’s our distillation:

    On March 14, the SEC alleged that Rodrigues — whose assets are frozen — had transferred two expensive cars to Florida attorney Robert Eckard. Eckard is representing Rodrigues in the SEC’s civil case against him and other TelexFree figures and also in the Justice Department’s criminal case against him for immigration fraud.

    The transfers potentially created a conflict of interest for Eckard, given that Rodrigues currently is jailed for civil contempt for violating the asset freeze and has not purged that contempt, according to the SEC. Getting out of hock with the court will cost the huckster at least $334,000, perhaps more. Rodrigues claims he cannot pay and that the court should free him and put him on a payment plan.

    U.S. District Judge Nathaniel M. Gorton of Massachusetts is hearing the case.

    Why didn’t Rodrigues apply the two cars to purge the contempt?

    Well, according to the SEC, the cars — a 2008 Lamborghini Gallardo and a 2012 Fisker Karma — were transferred to Eckard after the agency moved for contempt against Rodrigues in August 2015.

    The SEC further suggested in its filings that Eckard paid far below book value for the cars. In the case of the used Lamborghini, the SEC said, the lawyer paid only $30,000 for a car that months earlier had sold for five times that sum.

    Eckard paid only $20,000 for the Fisker Karma, which months earlier had sold for three times that sum, the SEC said. Fisker Karma is an electric luxury vehicle whose operator declared bankruptcy..

    Reached by the PP Blog today, Eckard pointed to court filings in which he says Rodrigues — strapped for cash because of the freeze — paid him with cars, rather than cash. And, the lawyer contended, no conflict existed and the SEC had cleared the cars from the asset freeze.

    Because Rodrigues paid with cars, not cash, it created an unusual situation with vehicle taxes, Eckard said. He added that he consulted with authorities in Pasco County and with the Florida Department of Revenue when transferring the cars to his name.

    “I did not pay anything for the vehicle, but was required to put an amount down for tax purposes, since it was not a gift,” Eckard advised Gorton about the Lamborghini.

    The Fisker Karma was accepted from Rodrigues as payment for legal fees and proved to be a lemon with bad electrical parts and bad tires, Eckard contended.

    Eckard is moving to strike the SEC’s assertions from the court docket.

    Both Rodrigues and Filho are Brazilian by birth and Florida residents. How they came together remains unclear.

    The SEC linked Rodrigues to Filho last year.

    NOTE: Our thanks to the ASD Updates Blog.

    UPDATE 3:53 P.M. EDT U.S.A. MARCH 22: Looks as though Rodrigues will be released from jail, after coming up with a plan to purge the contempt. This matter is separate from the SEC’s securities-fraud case against him filed in April 2014.




  • In Wake Of Herbalife Probe And Vemma Litigation, ESPN Asks If AdvoCare Is Pyramid Scheme And Pusher Of False Hope

    “And while the company claims its primary objective is selling products, many of its distributors tell a different story. ESPN interviewed more than 30 current and former salespeople, the vast majority of whom said their focus, and the focus of their superiors, was on recruiting other distributors. These new members, many of whom are drawn to the business’ strong religious culture or convinced of its credibility by its ties to the sports world, infuse the company with new funds — money that ultimately flows up to the powerful people who walk the stage at Success School.” — From “Drew Brees Has A Dream He’d Like To Sell You,” ESPN The Magazine And “Outside The Lines,” March 15, 2016

    advocarelogoWith Herbalife under investigation by the Federal Trade Commission and Vemma charged by the FTC with operating a pyramid scheme, ESPN has asked one of its own sponsors — AdvoCare, an MLM company — whether it is pushing a pyramid scheme.

    “Absolutely not,” replied Allison Levy, AdvoCare’s executive vice president and chief legal officer. (Link to March 11 AdvoCare video below. In its story (link below), ESPN said AdvoCare set up two cameras to record ESPN’s recording of the March 2 interview and also changed some info on its website after the network began to ask questions.)

    With MLM, one of the key questions is whether a significant percentage of products end up in the hands of retail users or whether a program’s distributors load up on product to qualify for commissions.

    Levy did not discuss the Herbalife and Vemma matters, although AdvoCare says on its website that it has 320,147 “retail customers.” Herbalife once famously said it didn’t have “visibility” into its number of retail customers, fueling concerns it was a pyramid scheme.

    One of the questions posed in the ESPN story is whether AdvoCare is drafting the unwary into its MLM program by relaying on professional athletes such as Drew Brees of the New Orleans Saints to be spokespeople for the firm. And is the company also trading on religion?

    Read the ESPN story.

    Visit the AdvoCare website to view its March 11 “media update” in advance of the ESPN story, published today.




  • SEC: Binary Options Case Triggers Investor Alert

    breakingnews725Is there a double whammy in your MLM future — first being ripped off in a binary-options “program,” only to be ripped off a second time by scammers posing as government agencies and offering purported refunds for a fee?

    Naturally some MLMers have added binary options to their offerings, with some incredible solicitations and tales being told online. BehindMLM.com, for example, recently reported on the purported death of “Bob Roberts,” an asserted figure from a “program” known as Options Rider.

    In 2015, the PP Blog reported that Quebec’s securities regulator was concerned that binary-options scammers were steering people into reload schemes and posing as government entities. Meanwhile, there was the tale of SpotFN, a purported binary-options platform that reached across the oceans and plains to pluck investors in Missouri.

    At least one Missouri investor was told his money could be retrieved by paying a fee to a purported insurance company, authorities said.

    Binary-options “programs” also are appearing on the Ponzi boards, alongside HYIP, cycler and “advertising” scams.

    In 2013, the SEC brought an action against Cyprus-based Banc de Binary Ltd., its founder Oren Shabat Laurent and three affiliates alleging “that they failed to register the offering before soliciting U.S. customers through YouTube videos, spam e-mails, and other Internet advertising.”

    Banc de Binary has agreed to pay $11 million in a settlement, the SEC said today.

    This includes “$7.1 million in disgorgement and $1.95 million in penalties to the SEC as well as $2 million in penalties to the Commodity Futures Trading Commission (CFTC), which filed a parallel action,” the SEC said.

    “Banc de Binary and its affiliates completely disregarded U.S. laws and registration requirements, and as a result they must surrender millions of dollars and be suspended from the industry,” said Michele Layne, director of the SEC’s Los Angeles Regional Office.

    Harmed investors will receive a distribution from a Fair Fund administered by the National Futures Association, the SEC said.

    Although it is nice that money apparently is available to compensate Banc de Binary customers, that’s not always the case, perhaps particularly with cross-border schemes.

    The settlement wasn’t the only news the SEC announced today. Indeed, the agency announced an Investor Alert that warns of “impersonators” tag-teaming the Banc de Binary case.

    “The SEC has become aware of some impersonators claiming to be affiliated with the SEC or other government agencies who have contacted harmed investors in this Banc de Binary case and asked them to pay a fee to facilitate their settlement payout,” the SEC said.  “It’s important for all investors to know that the SEC never makes people pay to get their money back.”

    Read the Investor Alert. “Avoid becoming a victim twice,” the SEC urged.

    Read the CFTC’s statement, which says a U.S. federal court has imposed “a permanent ban on offering or trading any further off-exchange binary options to U.S. customers.”

    Read Banc de Binary restitution information from the National Futures Association.




  • At Chicago Symposium, SEC Highlights Pyramid Scheme Task Force And Notes ‘Whack-A-Mole’ Nature Of Online Scams

    “These frauds are easily duplicated, and at times, we find ourselves playing ‘whack-a-mole,’ chasing the same set of fraudsters who, after feeling a bit of heat, simply close down one scheme and quickly set up a new one under a different name.” — Andrew Ceresney, SEC Enforcement Division director, March 2, 2016

    EDITOR’S NOTE: Type “whack-a-mole” into the PP Blog’s search box near the upper-right corner to find our stories that touch on frauds rising to replace other frauds. Examples include so-called “programs” that claim to be “advertising” companies or to have an “advertising” component — for example, Zeek Rewards, TelexFree, Banners Broker and AdSurfDaily. If you’re in an “advertising” program such as MyAdvertisingPays (MAPS) or TrafficMonsoon, you should asking some serious questions and thinking about whether serial fraudsters are whacking you.

    When one scheme collapses, another quickly rises to replace it. Many such schemes operate simultaneously, drafting the unwary into multiple miseries. Ill-gotten gains or losses pile up in the billions of dollars. Yes, billions.

    Of course, “whack-a-mole” is not limited to “advertising” schemes. There are “cycler” schemes such as “The Achieve Community” and its Ponzi-board equivalents. Meanwhile, there are HYIP schemes such as “Profitable Sunrise” and its Ponzi-board equivalents. MoneyMakerGroup and TalkGold are examples of Ponzi boards. The scammers now have added social media such as YouTube, Facebook and Twitter to their arsenal. Vulnerable people and population groups are constant targets.

    Scams such as WCM777 that claim to have a “product” also are part of “whack-a-mole.”

    **________________________________**

    cautionflagLet’s begin by encouraging you to read Andrew Ceresney’s opening remarks at a joint symposium today sponsored by the SEC and the University of Illinois at Chicago. (Link at bottom of story. Also see Twitter links.)

    UIC promoted the event on its website, titling it “How to Detect and Combat Fraudsters Who Target Our Immigrant Groups and Affinity Communities Through Pyramid and Ponzi Schemes.” The institution notes it is “one of the most ethnically and culturally diverse universities in the country,” so it was a perfect place to host such a confab.

    Ceresney is the SEC’s director of enforcement. One of the things the PP Blog noted while reading the text of his remarks is that it included a subhead titled “Pyramid Schemes and Multi-Level Marketing.”

    This reflected on ongoing effort by the SEC to educate the public that the presence of a “product” in a scheme does not necessarily mean no scam is under way. Many MLMers erroneously believe that a “product” (or purported one) offered for sale cures all ills. That is simply not the case. A year ago in Congressional testimony, the director spoke about a “coordinated effort” to disrupt pyramid schemes.

    Ceresney today provided more details on a new Task Force that is combating pyramid fraud. Here is part of his remarks (italics/bolding added):

    After seeing an increase in complaints regarding pyramid schemes and affinity fraud, the SEC formed a nationwide Pyramid Scheme Task Force in June 2014 to provide a disciplined approach to halting the momentum of illegal pyramid scheme activities in the United States. The goal of the Task Force is to target these schemes by aggressively enforcing existing securities laws and increasing public awareness of this activity.

    The Division is deploying resources to disrupt these schemes through a coordinated effort of timely, aggressive enforcement actions along with community outreach and investor education. More than fifty SEC staff members are part of the nationwide Task Force, which is enhancing its enforcement reach by collaborating with other agencies and law enforcement authorities. We are also using new analytic techniques to identify patterns and common threads, thereby permitting earlier detection of potential fraudulent schemes.

    Collaboration with other regulators, including criminal authorities, is an important goal of the Task Force. To advance this goal, the Task Force has hosted an interagency summit attended by over 200 representatives from other federal and state agencies and has presented at local trainings and agency-specific conferences. And, of course, we have partnered with other regulators and criminal authorities to bring high-impact actions in this space. For example, one month after we filed our enforcement action against the operators of the TelexFree pyramid scheme, two of TelexFree’s principals were charged by the criminal authorities.

    Will the “program” you’re currently pitching become the subject of a “high-impact action?” Time will tell.

    In 11 SEC actions since 2012 involving pyramid operators, the damage resulted in ill-gotten gains or losses totaling more than $4.2 billion, Ceresney said today.

    Read his opening remarks at today’s Chicago symposium.

  • DEVELOPING STORY: TelexFree Rep Sued By Trustee Claims Herbalife ‘Executives’ And ‘Personnel’ Helped Sell Him On Alleged Ponzi/Pyramid Deal

    newtelexfreelogoDEVELOPING STORY: (Updated 9:23 p.m. ET U.S.A.) A TelexFree rep being sued by the court-appointed bankruptcy trustee for the return of more than $2.6 million in alleged winnings from the judicially declared Ponzi- and pyramid scheme claims that Herbalife “executives” and “personnel” attended a March 2014 TelexFree event in Boston and helped sell him on the ill-fated deal.

    In January, Trustee Stephen B. Darr sued Jose Neto of Worcester, Mass., in one of two proposed defendant class actions that includes thousands of other alleged TelexFree “winners” globally. Neto was one of 23 named winners with U.S. addresses. The other lawsuit is against 33 named winners with addresses outside the United States. All in all, the cases could affect nearly 100,000 TelexFree members who allegedly received fraudulent transfers.

    Neto responded to the lawsuit in a filing docketed Feb. 16. Among other things, he claims he believes TelexFree was a legitimate business and that executives from both TelexFree and Herbalife showed proof of TelexFree’s legitimacy.

    From the body of Neto’s response (italics added/light editing performed):

    TelexFree was presented to me as a multi-level marketing network, similar to Herbalife . . . (as a matter of fact, executives of Herbalife gave us several lectures and workshops about this topic). As such, it is intrinsic to the nature of this business that the highest level members, meaning the ones that started to work with the product before and built a stronger network, will have higher gains compared to the others.

    From an affidavit by Neto (italics added):

    In March 2014 at the International Love Event in Boston (ON YOUTUBE), TelexFree announced that it would be launching its own credit card, and people could no longer use money order or cashier’s check to buy more “partnership shares”, but solely the “TelexFree Card”. On this same, held for over 4,000 people, Carlos Wanzeler and James Merrill asserted to us once again that the company was 100% in compliance with the laws and along with the Herba Life personnel, he showed us on a PowerPoint presentation the certificates from the Secretary of State.

    The filing by Neto does not name the Herbalife “executives” or “personnel” on hand at the Boston TelexFree event. Wanzeler and Merrill are TelexFree executives who were charged criminally by the office of U.S. Attorney Carmen Ortiz of the District of Massachusetts after an investigation by the U.S. Department of Homeland Security. The SEC has sued Wanzeler and Merrill.

    Herbalife, which is confronting a Federal Trade Commission probe over its business practices, did not immediately respond to a request for comment from the PP Blog on Neto’s claims. The claims raise new questions about whether MLM firms may be targeting vulnerable population groups and the extent to which Herbalife reps also were involved in TelexFree.

    Neto claims in his filing that he recruited 24 participants for TelexFree. Many members of his downline appear to have Hispanic names. The SEC has said TelexFree targeted Spanish- and Portuguese-speaking communities.

    Activist investor and short-seller Bill Ackman has claimed Herbalife targets vulnerable population groups and is a pyramid scheme. Herbalife had denied the allegations.

    Neto claims he has paid taxes on TelexFree money he earned legitimately and that Darr is trying to hold him accountable for money he never removed from the program.

     

     

  • ‘BidsThatGive’ Operator Listed As Oregon’s Biggest Tax Scofflaw

    Randall Jeffers in a pitch for BidsThatGive. From the PP Blog archives, July 2012.
    Randall Jeffers in a pitch for BidsThatGive. From the PP Blog archives, July 2012.

    UPDATED 12:41 P.M. ET U.S.A. Remember “BidsThatGive,” the bizarre auction “program” linked to MLM huckster Randall Jeffers that surfaced just prior to the spectacular collapse of Zeek Rewards in 2012 amid Ponzi-scheme allegations?

    Among other things, BidsThatGive was notable for reckless name-dropping and claiming it existed to feed children and prevent them from becoming sex slaves. The then-upstart commandeered the names of Chelsea Clinton, presidential adviser Doug Wead and NBC News anchor Lester Holt — all while soliciting $25,000 in “certified funds” from purported “founders” and promising “Presidential Ambassadors” they could qualify for an”Exotic Car, Yacht, RV or Home.”

    One promo for BTG, as it was known, promised that that the “opportunity’s” most successful distributors would receive an “orphanage in your name.”

    From the 2012 BTG promo, as reported by the PP Blog (italics added):

    “ . . . what we do is we take a quarter-million dollars out of the company’s profit, right? It’s not coming out of your pocket; it comes out of the company profit, and we’re going to establish an orphanage in your name. So, that’s your little slice of heaven. You don’t have to manage it or run it. We’ll put some cameras up and you can see the kids that you actually pretty much saved their life, and that’s just an emotional reward for you, as well as all the monetary things that you’ve already earned.”

    Nevada has revoked the business registrations of BidsThat Give and a related company known as BTG180.

    And now, according to a Feb. 25 story in the Oregonian that cites state records, Randall Jeffers is Oregon’s biggest individual tax scofflaw, owing more than $3.8 million in personal income tax.

    BTG, meanwhile, has carded an “F” from the Better Business Bureau.

    In 2014, Jeffers was a plaintiff in a trademark-infringement case that named Zeek figure Robert Craddock a defendant and accused him of engaging in a “shake down” bid against BTG affiliates.

    In an unrelated matter, Craddock later was charged and convicted of scamming the Deepwater Horizon oil-spill fund of more than $100,000.